National Sample Test and Answers
1. The idea that no two parcels of land are identical is called:
A. Immobility
B. Subdivision
C. Uniqueness
D. Location
2. When the supply of something decreases while demand remains the same, the price will tend to:
A. Remain the same
B. Increase
C. Decrease by an undetermined value
D. Decrease by a value equal to the price
3. The physical dirt and earth rights, mineral rights, and air rights in the land are included in the definition of:
A. Attachments
B. Real property
C. Subsurface rights
D. Improvements
4. Owners with littoral rights enjoy:
A. Unrestricted use of available waters, but only to the high-water mark
B. The right of disposition
C. Unrestricted use of the surface of the earth
D. Unrestricted rights to the use of fixtures
5. Growing trees, manmade fences, and buildings are all considered:
A. Chattels
B. Land
C. Fixtures
D. Real estate
6. A new owner received the right to use a parking space in the multiunit building where she purchased a condominium. This right is an example of:
A. An improvement
B. A fixture
C. An appurtenance
D. A chattel
7. Methods of annexation, adaptation, and agreement are the legal tests for determining whether an item is:
A. A chattel or an emblement
B. A fixture
C. Land or real estate
D. Fructus naturales or fructus industriales
8. An important characteristic of personal property is:
A. Small enough to be carried by a person
B. Movable
C. Alive
D. Less than 100 years old
9. A woman planted a rose bush on her property and plans to dig it up and take it with her when her house is sold. The sales contract explicitly excludes the rose bush from the sale. This provision is necessary because it would be normally considered:
A. A trade fixture
B. Personal property
C. An emblement
D. Real estate
10. If the dominant estate and the servient estate are joined into one parcel, which of these is true?
A. The easement still exists for the entire parcel.
B. The easement is suspended but cannot be terminated.
C. The easement is terminated.
D. The new owner must bring a suit seeking severance of the easement from the combined properties.
11. When a group of more than one individual decides to buy a property, it is considered:
A. Cooperation
B. Co-ownership
C. Community effort
D. Joint venture
12. If brothers bought an investment property together, and the deed listed only each of their names, what form of ownership are they presumed to have taken?
A. Tenancy by the entireties
B. Joint tenancy with right of survivorship
C. Tenancy in common
D. In severalty
13. What form of ownership requires one person transferring ownership to someone else to manage for a third-party person?
A. Joint venture
B. Joint tenancy
C. Trust
D. Severalty
14. A man owns a cottage in fee simple. He also owns an undivided percentage interest in all the common area located in the development. The man’s ownership is probably best described as a:
A. Time-share estate
B. Time-share use
C. Condominium
D. Cooperative
15. Which is not a unity of joint tenancy?
A. Unity of title
B. Unity of ownership
C. Unity of time
D. Unity of possession
16. These are characteristics of a tenancy by the entirety except:
A. The title may be conveyed only by a deed signed by both parties.
B. The surviving spouse automatically becomes sole owner of the property upon the death of the other spouse.
C. Each spouse owns an equal, undivided interest in the property as a single, indivisible unit.
D. The surviving spouse automatically owns half of the property acquired during the marriage.
17. These systems are used to describe a legal description except:
A. Lot and block
B. Metes and bounds
C. Rectangular survey
D. Monuments
18. A man sells 4 acres of prime undeveloped property to a woman for $3.40 per square foot. How much did the woman pay?
A. $466,560
B. $592,416
C. $612,360
D. $733,860
19. A man is willing to pay $1,500 per acre. He is planning to buy the SE 1⁄4of the SE 1⁄4of the SE 1⁄4 of Section 11. How much will he pay for the land?
A. $3,000
B. $15,000
C. $6,000
D. $24,000
20. A sale is closing on August 31. Real estate taxes, calculated on a calendar year basis, have not been paid for the current year. The tax is estimated to be $2,400. What amount of proration will be credited to the buyer?
A. $1,100
B. $1,600
C. $1,485
D. $1,500
21. A seller would be responsible for providing all these items except:
A. Documents necessary to clear any clouds on the title
B. Affidavits of title
C. The deed
D. Preparation of mortgage and note
22. A seller owns a fully occupied apartment building. If he sells the apartment building to a buyer, how will the tenants’ security deposits be reflected on the closing statement?
A. Credit seller, debit buyer
B. Debit both seller and buyer
C. Credit buyer, debit seller
D. None of these
23. A buyer is purchasing a house from a seller. The single-family home is subject to an existing 30-year mortgage of $286,500 at a fixed rate of 6 percent. Under the terms of the sales contract, the buyer assumes the seller’s mortgage at 6 percent interest and pays the federally insured lender’s assumption fee of $100. In addition, the seller assists the buyer by taking back a purchase money mortgage in the amount of $25,000 at 8 percent interest. Is this transaction subject to RESPA?
A. No, because this transaction involves a purchase money mortgage taken back by the seller.
B. No, because the terms of the assumed loan were not changed.
C. Yes, because the seller is taking back a purchase money mortgage at an interest rate higher than that charged for the assumed loan.
D. Yes, because the lender’s fee on the assumed loan is more than $50.
24. All these items are usually prorated at closing except:
A. Prepaid general real estate taxes
B. Interest on an assumed loan
C. Appraisal fees
D. Rents collected in advance
25. How is earnest money treated if the buyer does not default and shows up for closing?
A. Credit seller
B. Debit buyer
C. Credit buyer
D. Debit seller
26. A tenant makes a single payment each month to the landlord. The landlord then pays the taxes, insurance on the building, and maintenance. What type of lease is this?
A. Net lease
B. Gross lease
C. Percentage lease
D. Graduated lease
27. Some tenants want to buy the house they are renting but do not have enough money for the down payment. The landlord agrees to put part of the tenants’ rent toward the purchase price. The landlord and tenants have agreed to:
A. A lease purchase
B. A sale leaseback
C. A ground lease
D. An option
28. A tenant lives in an apartment building owned by a landlord. Vandals break into the building and destroy the central air-conditioning system, making the tenant’s apartment uncomfortably warm. The next day, the tenant sues the landlord for constructive eviction. In this situation, will the tenant win?
A. Yes, if the tenant’s lease promises that the apartment will be air conditioned.
B. Yes, to claim constructive eviction, it is not necessary that the condition be the result of the landlord’s personal actions.
C. No, to claim constructive eviction, the tenant must prove that the premises are uninhabitable.
D. No, the premises are not unusable, the condition was not due to the landlord’s conscious neglect, and the tenant has not abandoned the apartment.
29. A lease that provides for rent increases at set future dates is called:
A. An adjustable lease
B. A graduated lease
C. A percentage lease
D. An interval lease
30. How many acres are contained in a parcel described as follows: the NE 1⁄4of the NW 1⁄4and the N 1⁄2 of the NW 1⁄4, NE 1⁄4, of Section 10?
A. 40 acres
B. 60 acres
C. 70 acres
D. 74 acres
31. The intersection of ranges and tiers in the rectangular survey system are called:
A. Base lines
B. Principal meridians
C. Ranges
D. Township squares
32. The end of a metes-and-bounds land description must always end at:
A. A monument
B. A benchmark
C. The point of beginning
D. A baseline
33. The grantor is conveying an interest that’s less than fee simple absolute. This explanation of the extent of ownership will be found in the:
A. Covenant of seisin clause
B. Granting clause
C. Habendum clause
D. Exceptions and reservations
34. The document used to transfer any interest in a real property is called:
A. Title
B. Deed
C. Attachment
D. Mortgage
35. All these are necessary to a valid deed except:
A. Consideration
B. Words of conveyance
C. The grantee’s signature
D. Delivery
36. The type of deed that imposes the least liability on the grantor is a:
A. Special warranty deed
B. Bargain and sale deed
C. Quitclaim deed
D. General warranty deed
37. Title is not considered transferred until the deed is:
A. Signed by the grantor
B. Accepted by the grantee
C. Recorded in public records
D. Released from escrow
38. All these are acceptable evidence of an owner’s title except:
A. A recorded deed
B. An abstract of title and attorney’s opinion
C. A title insurance policy
D. A certificate of title
39. To serve as public notice, a deed is recorded in the:
A. City where the owner lives
B. County where the property is located
C. State capital
D. Largest city in the state
40. Which of these laws extended housing discrimination protections to families with children and persons with disabilities?
A. Civil Rights Act of 1866
B. Fair Housing Amendments Act of 1988
C. Housing and Community Development Act of 1974
D. Civil Rights Act of 1968
41. The Fair Housing Act is administered by the:
A. Office of Equal Opportunity
B. Department of Housing and Urban Development
C. Department of Justice
D. Federal court system
42. One major provision of the Fair Housing Amendments Act of 1988 is:
A. A repeal of the facilities and services requirements designed by HOPA
B. The addition of sexual orientation to the list of protected classes
C. A change that made the penalties for violations more severe and also included additional damages
D. The addition of religion to the list of protected classes
43. These people are considered members of protected classes except:
A. A member of Alcoholics Anonymous
B. A person convicted of the manufacture of illegal drugs
C. A person diagnosed with HIV
D. A visually disabled person with a seeing eye dog
44. A seller states “Don’t show my house to anybody not born in this country.” In this circumstance, the real estate professional:
A. Ignores the client and shows the house to anyone
B. Must decline to take the listing with this restriction
C. May take the listing and ignore the instruction
D. May take the listing and hope no noncitizens ask to see the property
45. When an Indian couple came to a broker to look for a home to buy, he suggested they look at listings only in the neighborhood with a large Indian population. The broker violated the Fair Housing Act because his actions constitute:
A. Stereotyping
B. Blockbusting
C. Redlining
D. Steering
46. An elderly man left the family home to his second wife with the provision that when she dies, the home goes to his son by his first wife. The second wife owns a bundle of rights but does not own the right to:
A. Sell, give, or will the property
B. Mortgage the property
C. Lease the property
D. Decorate the property
47. A woman was given permission to park her car in the nearby parking garage. She then receives a notice that the garage will be replaced by a newer garage, but the owner won’t offer her a spot to park. Can the owner do this?
A. No, because she has been parking there; she has an easement by prescription.
B. No, because she paid regularly and on time.
C. Yes, because she only had a license.
D. Yes, because she has nothing in writing.
48. A man conveyed a 1-acre parcel of land to a local school. In the deed, the man stated that the property was to be used only as a school and nothing else, and the man reserved a right of possible reentry. What kind of estate has the man granted?
A. Leasehold
B. Fee simple subject to a condition subsequent
C. Fee simple absolute
D. Curtesy
49. A man files a notice in the public record of “future lawsuit pending.” This notice reflects which of these?
A. Fee simple determinable
B. Police power
C. An encroachment
D. A lis pendens
50. A key element of an agent’s fiduciary responsibility of loyalty is to:
A. Report the status of all funds received from or on behalf of the principal
B. Avoid conflicts of interest
C. Obey the principal’s instructions in accordance with the contract
D. Place the client’s needs over his or her own
51. When a broker places trust funds of others into the company’s operating account and then withdraws funds for the firm’s use, what illegal practice has taken place?
A. Escrowing
B. DBA accounting
C. Conversion
D. Asset-liability management
52. In a buyer representation agreement, the broker acts as the agent of the buyer and must protect the buyer’s interests:
A. At all points in the transaction
B. Only during property showings
C. Until the representation agreement is signed
D. Only when negotiating on behalf of the buyer
53. An owner listed her home for sale with a broker. When the owner sold the home, she did not owe anyone a commission. Based on these facts, what type of listing did the broker and the owner most likely sign?
A. Exclusive-right-to-sell listing
B. Net listing
C. Multiple listing
D. Exclusive-agency listing
54. All this information is generally included in a listing agreement except:
A. Lot size
B. Termination clause
C. Client’s requirements for a suitable property to buy
D. Property condition disclosures
55. When may a broker’s agreement to represent a buyer be terminated?
A. The buyer dislikes the properties shown by the broker
B. Only agreements between brokers and sellers can be terminated
C. Under a mutual agreement to terminate the agency
D. None of these
56. A listing agreement is:
A. A contract between the buyer and the seller
B. A contract to purchase real property
C. An employment agreement between the broker and the sales associate
D. An employment contract between the seller and the broker
57. After making an offer but prior to receiving any response from the seller, a buyer changed their mind about buying the property. In written form, their agent sends a form stating, “Withdraw my offer.” This action is called a:
A. Counteroffer
B. Rejection
C. Breach of contract
D. Revocation
58. A real estate broker announces to the salespeople in her office that she will pay a $1,000 bonus to the top-selling salesperson each quarter. This contract is an:
A. Implied bilateral contract
B. Express unilateral contract
C. Implied unilateral contract
D. Express bilateral contract
59. A buyer makes an offer on a house, and the seller accepts in writing. What is the status of this relationship?
A. The buyer and seller do not have a valid contract until the seller delivers title at closing.
B. The buyer and seller have an express, bilateral executed contract.
C. The buyer and seller have an express, bilateral executory contract.
D. The buyer and seller have an implied, unilateral executory contract.
60. A woman offers to buy a man’s house for the full $215,000 asking price. The offer contains this clause, “Possession of the premises on August 1.” The man is delighted to accept the woman’s offer and signs the contract. First, however, the man crosses out “August 1” and replaces it with “August 3” because he won’t be back from vacation on the first of the month. He then begins scheduling movers. What is the status of this agreement?
A. Because the man changed the date of possession rather than the amount, the man and woman have a valid contract.
B. The man has accepted the woman’s offer. Because the reason for the change was out of the man’s control, the change is of no legal effect once he signed the contract.
C. The man has rejected the woman’s offer and made a counteroffer, which the woman is free to accept or reject.
D. The man technically rejected the woman’s offer, but his behavior in scheduling movers creates an implied contract between the parties.
61. All these are essential to a valid real estate sales contract except:
A. Offer and acceptance
B. Consideration
C. An earnest money deposit, held in an escrow account
D. Legally competent parties
62. The millage breakout for ad valorem taxes are library: 0.5; school: 1; school debt service: 0.5; community college: 1; vocational school: 0.5; and all others: 5. If the property is assessed at $165,000, how much is the tax bill?
A. $1,200.25
B. $1,402.50
C. $1,405.75
D. $1,800.50
63. Which of these characteristics apply to a real estate tax lien?
A. Specific, involuntary lien
B. Specific, voluntary lien
C. General, involuntary lien
D. General, voluntary lien
64. The market value of an undeveloped parcel is $40,000. Its assessed value is 40 percent of market value, and properties in its county are subject to an equalization factor of 3.00. If the tax rate is $2 per $100, what is the amount of the tax owed on the property?
A. $480
B. $960
C. $1,080
D. $1,800
65. To give notice of a potential claim against the property and establish priority, a creditor may file:
A. A lis pendens
B. An attachment
C. A general lien
D. A specific lien
66. A man and a woman are married, 65 years old, and retired. They have almost $800,000 in equity in their home, but they don’t have enough cash to travel as they’ve always dreamed of doing. The couple should consider which of these financing alternatives?
A. Novation
B. An adjustable-rate mortgage
C. A reverse mortgage
D. A growing equity mortgage
67. A document that indicates a loan has been made is a:
A. Promissory note
B. Mortgage deed
C. Deed of trust
D. Satisfaction
68. A house is listed for $250,000. A man buys it for $230,000, with a 20 percent down payment. He borrows the balance on a fixed-rate mortgage at 6 percent. The lender charges 4 points. If there are no other closing costs involved, how much money does the man need at closing?
A. $7,360
B. $26,000
C. $46,000
D. $53,360
69. A deed of trust involves these terms, except:
A. Lender
B. Borrower
C. Trustee
D. Mortgagor
70. This month, a man made the last payment on a mortgage loan secured by a woman. The man’s lender must execute a:
A. Release deed
B. Promissory note
C. Possessory note
D. Satisfaction of mortgage
71. These are roles of the Federal Reserve System except:
A. It counteracts inflationary trends.
B. It creates a favorable economic climate.
C. It maintains sound credit conditions.
D. It makes direct loans to buyers.
72. The primary mortgage market lenders that have most recently branched out into making mortgage loans are:
A. Credit unions
B. Endowment funds
C. Insurance companies
D. Savings associations
73. One way a borrower can obtain a mortgage loan with less than 20 percent down payment is by:
A. Obtaining a package loan
B. Obtaining a blanket loan
C. Obtaining private mortgage insurance
D. Obtaining permission from the FDIC
74. A package loan includes:
A. Real and personal property
B. Private mortgage insurance
C. Multiple parcels or lots
D. Cash for the construction of improvement on real estate
75. To qualify for most conventional loans, the borrower’s monthly housing expenses and total other monthly obligations cannot exceed what percent of the total gross monthly income?
A. 28 percent
B. 36 percent
C. 41 percent
D. 45 percent
76. A property is listed for sale at $235,000. A buyer’s offer of $220,000 is rejected by the seller. Six months later, the seller reduces the price to $225,000. Another buyer offers $210,000, and the seller accepts because the seller has found another house to buy and needs to close quickly. The property is subsequently appraised at $215,000. Which of these figures most accurately represents the property’s market value?
A. $210,000
B. $215,000
C. $225,000
D. $235,000
77. When appraising a newly built home, an appraiser likely uses the:
A. Sales comparison approach
B. Income approach
C. Cost approach
D. GRM
78. Buyer A purchases a small house in a highly desirable neighborhood consisting of much larger and more expensive homes. Buyer B buys a nearly identical house in a neighborhood of homes of similar size and market value. What economic principle best describes the reason why buyer A paid more than buyer B?
A. Plottage
B. Substitution
C. Regression
D. Progression
79. The land on which a house was built is worth $50,000. The house was constructed in 1990 at a cost of $265,000 and was expected to last 50 years. Using the straight-line method, determine how much the house has depreciated by 2014.
A. $28,600
B. $96,600
C. $127,200
D. $145,200
80. A complete history of property’s legal activities, including liens and encumbrances, would be:
A. A title insurance policy
B. Unrecorded documents
C. A chain of title
D. An abstract
81. Which of these would be covered in a standard title insurance policy?
A. Defects discoverable by physical inspection
B. Unrecorded liens
C. Forged documents
D. Easements and restrictive covenants
82. In real estate, a sales associate is typically:
A. An independent contractor
B. An employee of a licensed broker
C. A licensee who performs real estate activities on behalf of a broker
D. A combination office manager, marketer, and organizer with a fundamental understanding of the real estate industry who may or may not be licensed
83. A real estate broker had a listing agreement with a seller that specified a 6 percent commission. The broker showed the home to a prospective buyer, and the next day, the buyer called the seller directly and offered to buy the house for 5 percent less than the asking price. The seller agreed to the price and informed the broker in writing that no further brokerage services would be required. The sale went to closing 6 weeks later. Based on these facts, which of these statements is true?
A. The broker was the procuring cause of the sale, but the seller properly canceled the contract; without a valid employment agreement in force at the time of closing, the broker is not entitled to a commission.
B. The broker is entitled to a partial commission, and the buyer is obligated to pay it.
C. Under the facts as stated, the broker is not the procuring cause of this sale but is still entitled to a commission.
D. The broker was the procuring cause of the sale and is entitled to the full 6 percent commission.
84. A seller listed and sold her property for $325,000. She agreed to pay the listing broker a 6 percent commission. The listing broker offered a listing 40/60 selling split to any cooperating broker who sold the property. How much did the seller pay in total commission fees?
A. $9,100
B. $11,375
C. $13,650
D. $19,500
85. A broker listed a seller’s home for $425,000 with a 4 percent commission, plus $2,500 for advertising costs. The buyer offered $380,000 and, after several counteroffers, finally agreed to $400,000. What was the total cost to the seller?
A. $16,000
B. $18,500
C. $19,000
D. $20,000
86. An individual who is authorized and consents to represent the interests of another person is:
A. A customer
B. A principal
C. An agent
D. A facilitator
87. A broker has an agency agreement to represent a seller in the sale of a house. The agreement’s expiration date is June 10. On May 5, the house is struck by lightning and burns to the ground. The seller, overwhelmed by grief, dies. Based on these facts, which of these is true?
A. The agency agreement was terminated by the fire, although the seller’s death also would have done so.
B. The agency agreement was not terminated until the seller’s death.
C. If the house had not been destroyed by the fire, the seller’s death would not have terminated the agreement; the broker would become the broker for the seller’s estate.
D. Only the mutual agreement of the parties can terminate a valid agency agreement before its expiration date.
88. A broker was hired to represent a seller to market a property and to solicit offers to purchase. The broker is called a:
A. General agent
B. Special agent
C. Facilitator
D. Nonagent
89. All these will terminate an agency relationship except:
A. The death of either party
B. The destruction of the property
C. An offer made on the property
D. An expiration of the agreement
90. A property manager’s first responsibility to the owner should be to:
A. Keep the building’s occupancy rate at 100 percent
B. Report all day-to-day financial and operating decisions to the owner on a regular basis
C. Realize the highest return possible consistent with the owner’s instructions
D. Ensure that the rental rates are below market average
91. If an apartment rents for $750 per month and the manager receives a 12 percent commission on all new tenants, how much will the manager receive when renting an apartment, assuming this commission is calculated in the usual way?
A. $90
B. $750
C. $1,080
D. $1,800
92. What is the annual rent per square foot for a 30-foot by 40-foot property that rents for $2,950 per month?
A. $l.20
B. $2.46
C. $24.65
D. $29.50
93. All these could be included in a zoning ordinance except:
A. Objectives for future development of the area
B. Permissible height and style of new construction
C. Style and appearance of structures
D. The maximum allowable ratio of land area to structural area
94. A city passed a zoning ordinance that prohibits all commercial structures more than 30 feet high. A man wants to build an office building that will be 45 feet high. To obtain permission for the building, the man may apply for a:
A. Nonconforming use permit
B. Zoning permit
C. Conditional use permit
D. Variance or zoning change
95. When an area was rezoned as residential, a store was grandfathered in and allowed to continue business. This is an example of:
A. A variance
B. Nonconforming use
C. A conditional use permit
D. An amendment
96. A new structure has been completed to the satisfaction of the inspecting city engineer. What documentation must be issued before anyone can move in?
A. Appraisal report
B. Certificate of occupancy
C. Certificate of reasonable value
D. Conditional use permit
97. Any additional capital or personal property included with a real property exchange to even out the value of a property exchange is called:
A. Cost recovery
B. A REIT
C. Boot
D. Equity build-up
98. One objective of investing in income property is to generate spendable income, also called:
A. Appreciation
B. Basis
C. Cash flow
D. Pyramiding
99. Which of these is an advantage of investing in a real estate investment trust (REIT)?
A. Direct ownership of real estate
B. At least 90 percent of the income must come from real estate
C. Access to the same tax benefits as mutual fund investors
D. Income taxed at corporate rates
100. Which of the following describes straight-line depreciation?
A. Depreciation is taken periodically in equal amounts over an asset’s useful life.
B. Depreciation is taken periodically in equal amounts over a maximum of 10 years.
C. The amount of depreciation increases each year until the asset is sold or devalued.
D. The amount of depreciation decreases each year until the asset is sold or devalued.
1. C. No matter how identical they may appear, no two parcels of real estate are ever exactly alike. Each occupies its own unique geographic location.
2. B. When consumers continue to demand a product for which there is limited supply, the price generally increases.
3. B. Subsurface rights and improvements are included in the definition of real estate. Real property also includes rights and privileges.
4. A. Owners of littoral rights enjoy unrestricted use of available waters but own the land adjacent to the water only up to the average high-water mark.
5. D. The definition of real estate includes fences, buildings, and growing trees. Chattels are personal property. The definition of land would not include fences and buildings.
6. C. An appurtenance is a right or privilege associated with the property, although not necessarily a part of it. Typical appurtenances include parking spaces in multiunit buildings, easements, water rights, and other improvements.
7. B. Whether an item is a fixture or personal property may be determined by method of annexation, adaptation to real estate, or agreement of the parties.
8. B. Personal property is all the property that can be owned and does not fit the definition of real property. The most important distinction between real and personal property is that personal property is movable.
9. D. Because the rose bush is a perennial shrub, it is considered real estate.
10. C. If the owner of the dominant tenement also becomes owner of the servient tenement, or vice versa, the easement terminates. Because the same person owns both properties, there’s no need for the easement to exist.
11. B. When two or more people buy property together, it’s called co-ownership. A joint venture is a form of partnership in which two or more people carry out a single business project with no intention of establishing an ongoing relationship.
12. C. The brothers are presumed to be tenants in common because they did not indicate themselves as joint tenants with right of survivorship. Joint tenancy requires extra wording. Severalty ownership indicates one owner.
13. C. A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party. Severalty indicates one owner. Joint tenancy is a form of ownership whereby, as joint owners die, the surviving owners acquire the deceased tenant’s interest.
14. C. It appears that the man has condominium ownership because he owns the cottage as well as the interest in the common elements. Cooperative ownership is ruled out because he does not have a proprietary lease. It is not a timeshare because he clearly owns more than the right to use at specific times.
15. B. To create joint tenancy ownership, four unities are required—possession, interest, time, and title—not ownership.
16. D. Under tenancy by the entirety, title may be conveyed only by a deed signed by both parties. Each spouse owns an equal, undivided interest in the property, and the surviving spouse automatically becomes the owner upon the death of the other.
17. D. A benchmark is a permanent reference point used as a reference for marking data, not for expressing a legal description.
18. B. The woman paid $592,416:
43,560 square feet × 4 = 174,240 square feet
174,240 square feet × $3.40 = $592,416
19. B. The man paid $15,000:
1⁄4× 640 = 160
160 × 1⁄4= 40
40 × 1⁄4= 10 acres
10 acres × $1,500 = $15,000
20. B. The buyer’s real estate tax proration is $1,600: $2,400 ÷ 12 months × 8 months = $1,600.
21. D. Documentation for the new loan—preparation of note and mortgage—is the responsibility of the buyer. The seller is responsible for documents necessary to clear any clouds on the title, affidavits of title, and the deed.
22. C. The seller must pay the security deposit to the buyer who will, as the new owner, be responsible for returning the money to the tenant at the end of the lease.
23. D. The transaction would not have been subject to RESPA if the assumption fee had been $50 or less.
24. C. Appraisal fees and credit report fees are paid outside of closing (POC) by the buyer; they are not prorated.
25. C. The earnest money is brought to closing and credited to the buyer.
26. B. The one-lump sum every month to the landlord is a gross lease. In a net lease, the tenant is responsible for paying all or most of the property charges. Percentage leases are generally used by retail establishments and are based on gross sales.
27. A. The tenant typically pays a higher rent with a portion being applied to the subsequent purchase of the property. It differs from a sale leaseback, whereby the owner of the property wants to obtain equity from the building. The owner sells the building and agrees to rent it back.
28. D. Constructive eviction is a result of the landlord not providing essential services—such as the place is unsafe or uninhabitable—conditions that are not met in this situation.
29. B. A form of variable lease is the graduated lease that provides for specified rent increases at set future dates.
30. B. There are two parcels in this description denoted by the word and. The first: 1⁄4× 640 = 160; 1⁄4× 160 = 40. The second: 1⁄4× 640 = 160; 160 × 1⁄4= 40; 40 × 1⁄2 = 20.
40 + 20 = 60 acres
31. D. Township squares are the basic units of the rectangular survey system. Principal meridians and baselines are the two sets of intersecting lines in the system. Ranges are the 6-mile strips of land on either side of a principal meridian.
32. C. A metes-and-bounds description must always begin and end at the point of beginning, encircling the described property.
33. C. The habendum clause is the “to have and to hold” clause that defines the extent of ownership being conveyed.
34. B. A deed is the written document that transfers a real estate interest. Evidence of ownership (title) is written in the deed. An attachment is the process of taking a person’s property into legal custody by a court order. A mortgage provides the security for a loan.
35. C. The grantee does not need to sign the deed because the grantee receives the property.
36. C. A quitclaim deed carries no covenants or warranties and generally only conveys whatever interest the grantor has when the deed is delivered.
37. B. The most complete answer is delivered to and accepted by the grantee during the grantor’s lifetime.
38. A. A recorded deed is nothing more than that. Other verifications of thorough examinations of recorded documents can affect the title.
39. B. Because land is immobile, it makes sense to record all information about title to the property in the county where it’s located. Some owners frequently relocate, and they would be hard to find.
40. B. The Fair Housing Amendments Act of 1988 added disability and familial status. The Housing and Community Development Act of 1974 added sex to the list of protected classes, which is found in Title VIII of the Civil Rights Act of 1968. The Civil Rights Act of 1866 prohibits discrimination based on race.
41. B. The Department of Housing and Urban Development (HUD) handles fair housing complaints on the national level. Most states have enacted substantially similar laws, so the state agency often is involved.
42. C. The Fair Housing Amendments Act of 1988 expanded federal civil rights protections to familial status and disability. The act also changed the penalties by making them more severe and by including additional damages.
43. B. Persons convicted of manufacturing or distributing illegal drugs do not enjoy any protections under the fair housing laws, although disability is a protected class. Individuals who are participating in addiction recovery programs are in a protected class of disability.
44. B. An instruction to not show the home to someone who was not born in the United States violates the Fair Housing Act. The real estate professional should not take the listing with this requirement. He cannot simply ignore the instructions or pretend they do not exist.
45. D. Channeling home seekers toward or away from particular neighborhoods based on national origin, or any of the other protected classifications, is called steering.
46. A. The second wife owns a life estate, and she has the entire bundle of rights except the right to will the property.
47. C. A license is a personal right to enter the property for a specific purpose. There is no buildup of rights.
48. B. The man has granted a fee simple subject to a condition subsequent. If at some point in the future the land is not used as a school, the man or his heirs may exercise the right of reentry by retaking physical possession of the land.
49. D. A lis pendens is a notice filed in the public record affecting the title to property or a claimed ownership interest in it.
50. B. Reporting the status of funds is an accounting responsibility. Obeying the principal’s instructions relates to obedience. Revealing relevant information relates to the responsibility of disclosure.
51. C. Both commingling the funds and the practice of conversion are illegal.
52. A. In a buyer representation agreement, the broker acts as the agent of the buyer and must protect the buyer’s interests at all points in the transaction.
53. D. Under the exclusive-agency listing, the seller is permitted to sell the house and is not obligated to pay a commission.
54. C. When obtaining the listing, the agent should gather as much information as possible, including the lot size and property conditions. The listing also should include a termination clause. However, when taking the listing from the seller, the agent is not concerned about the seller’s future housing needs.
55. C. A broker’s agreement to represent a property buyer may be terminated for various reasons, one of which is mutual agreement between the broker and buyer.
56. D. Although the broker can subcontract the work to sales associates, the listing agreement is an employment contract between the seller and the broker.
57. D. The buyer may revoke her offer any time until she is notified that the seller has accepted the offer.
58. B. The offer of a bonus to the top-selling salesperson each quarter is an express contract because the broker clearly stated her intentions in words to the salespeople. It is a unilateral contract because she is obligated to keep her promise, but the salespeople are not obligated to perform.
59. C. Because the seller has promised to sell and the buyer has promised to buy, it is a bilateral contract. It is express because they announced their intentions in writing. The contract is executory because the sale has not yet closed.
60. C. Even changing the smallest of terms, for whatever reason, constitutes a rejection and counteroffer that the other party is not under obligation to accept.
61. C. Earnest money is an optional term in a contract, not a requirement. The essential elements of a contract are offer and acceptance, consideration, legally competent parties, consent, and legal capacity.
62. B. The tax bill is $1,402.50: 0.5 + 1 + 0.5 + 1 + 0.5 + 5 = 8.5 mills or $0.0085 per dollar of valuation: $165,000 × 0.0085 = $1,402.50.
63. A. A real estate tax is levied on an individual property. Few would argue that individuals choose to have the tax levied, hence, an involuntary lien.
64. B. The tax owned on the property is $960: $40,000 × 40% × 3.0 ÷ 100 × 2 = $960.
65. A. A lis pendens is a notice of a possible future lien. If it becomes an actual lien, the effective date of the lien is the date and time the lis pendens was filed.
66. C. A reverse mortgage allows a homeowner aged 62 or older to borrow money against the equity built up in his home. The money may be used for any purpose.
67. A. The evidence that a loan has been made is found in the promissory note. A mortgage or deed of trust provides security for the loan. A satisfaction or release indicates that the loan has been repaid in full.
68. D. The man needs $53,360 at closing: $7,360 (points) + $46,000 (down payment).
69. D. A mortgagor is the borrower in a mortgage. In a deed of trust, the borrower is the trustor, and the trustee holds naked title in trust for the beneficiary (lender).
70. D. The promissory note shows that a loan was made. The satisfaction indicates that the loan was fully repaid. Satisfaction of mortgage is also sometimes called a release but not a release deed.
71. D. The Federal Reserve helps counteract inflationary trends, creates a favorable economic climate, maintains sound credit conditions, but does not make direct loans to consumers.
72. A. Credit unions were known for short-term consumer loans but have more recently branched out into originating mortgage loans.
73. C. Private mortgage insurance provides the lender with funds in the event that the borrower defaults on the loan. This allows the lender to assume more risk so the LTV can be higher than for other conventional loans.
74. A. Package loans usually include items such as drapes, refrigerator, dishwasher, and other appliances as part of the sales price of the home. A blanket loan covers more than one parcel or lot. A construction loan finances the construction of improvements on real estate.
75. B. To be considered a conforming loan that can be sold in the secondary market, the borrower’s monthly housing expenses and total other monthly obligations must not exceed 36 percent of total monthly gross income.
76. B. The property’s market price is $210,000, while its appraised value (and most probable market value) is $215,000. The seller accepted the lower price because of the pressure to close on the new house.
77. C. A newly constructed house may be appraised using the cost approach and omitting depreciation.
78. D. The buyer’s house benefits from being a smaller one alongside larger, more prestigious ones (i.e., progression). Buyer B’s house is appropriately valued for its neighborhood.
79. C. The value of the land is not relevant to this problem. The cost of the building is divided by the number of years of its useful life and multiplied to determine the depreciation after 24 years:
$265,000 ÷ 50 = $5,300
$5,300 × 24 = $127,200
80. D. The title insurance policy lists coverage and exceptions to the policy. Unrecorded documents have not been examined. The chain of title traces ownership. The abstract is the most complete documentation of recorded liens and encumbrances.
81. C. Title insurance does not protect against claims of parties in possession because the grantee should have visited the property; nor does it cover unrecorded liens. Easements and restrictive covenants are found in the deed and should be known to the grantee.
82. C. The sales associate might be treated as an independent contractor for income tax purposes, but the salesperson must still work directly under the broker’s name.
83. D. Because the broker introduced a ready, willing, and able buyer to the seller prior to the seller’s cancellation of the listing agreement, the broker is entitled to the commission.
84. D. What the brokers agree to regarding splitting the commission is not relevant to the total cost to the seller. The seller paid $19,500 in commission fees: $325,000 × 6% = $19,500.
85. C. The seller’s total cost is $18,500: $400,000 × 4% + $2,500 = $18,500.
86. C. The agent is hired by the principal. The customer or facilitator is a third party.
87. A. An agency agreement may be terminated by either destruction of the property or death of either party. In this case, destruction of the property occurred first.
88. B. A special agent is one who is hired for a limited time and given limited authority. A broker taking a listing is generally a special agent.
89. C. An offer on the property does not terminate the agency relationship; however, the death of either party, destruction of the property, or expiration of the term does terminate the relationship.
90. C. The role of the property manager is to achieve the objectives of the property owners, generate income for the owners, and preserve and/or increase the value of the investment property.
91. C. The manager will receive $1,080: $750 per month × 12 months × 12% = $1,080.
92. D. The annual rent is $29.50 per square foot:
30 × 40 = 1,200 square feet
$2,950 × 12 = $35,400
$35,400 ÷ 1,200 = $29.50
93. A. A zoning ordinance might include restrictions for permissible height and style of new construction, style and appearance of structures, and the maximum allowable ratio of land area to structural area. Objectives for future development of the area might be found in a comprehensive plan.
94. D. Because the man’s building does not yet exist, it does not qualify for nonconforming use. A conditional use permit is issued for a special use that meets certain standards. A variance, if granted, permits the landowner to use the property in a manner that’s otherwise prohibited by the existing zoning.
95. B. Because the store had been there legally before the zoning ordinance, it’s permitted to continue operating, usually until its use changes or the building is destroyed.
96. B. Once the completed building has been inspected and found to comply with the building codes, the municipal inspector issues a certificate of occupancy or occupancy permit.
97. C. Boot is any additional capital or personal property included with the exchange transaction to balance the value of the exchange. The IRS requires that tax on the boot be paid at the time of the exchange by the party who receives it.
98. C. Cash flow is the total amount of money remaining after all expenditures have been paid.
99. C. Investors in REITs do not have a direct investment in real estate. Generally, shareholders, not the REIT, pay the tax on profits distributed.
100. A. Different depreciation rules apply for property purchased before 1987—the accelerated cost recovery system (ACRS).