Core Exam Prep 3 Real Estate

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  • 1/150 Questions

    Which of the following is easement for non-use?  

    • Prescriptive easement
    • Appurtenant easement
    • In gross easement
    • Gross easement
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About This Quiz

This Core Exam Prep 3 Real Estate quiz assesses key knowledge areas essential for real estate professionals. Topics include easements, property types, ownership rights, and legal transactions, providing a comprehensive understanding for licensing exams.

Core Exam Prep 3 Real Estate - Quiz

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  • 2. 

    Which of the following would be considered a real property?

    • A maturing grape crop under a sales contract

    • Trade fixtures

    • A built in refrigerator in a mobile home that is not attach to the foundation

    • A bearing wall in a single family house

    Correct Answer
    A. A bearing wall in a single family house
    Explanation
    A bearing wall in a single family house would be considered a real property because it is a permanent and integral part of the structure. Real property refers to land and anything permanently attached to it, such as buildings or fixtures. A bearing wall is a load-bearing wall that supports the weight of the structure, making it an essential and immovable component of the house.

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  • 3. 

    A real estate broker may have difficulty with personal property because its ownership  rights and identification.  This is because personal property can: 

    • Be alienated

    • Be hypothecated

    • Become real property

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    A real estate broker may have difficulty with personal property because its ownership rights and identification can be complex. Personal property can be alienated, meaning it can be transferred or sold to someone else. It can also be hypothecated, which means it can be used as collateral for a loan. Additionally, personal property can become real property if it is permanently attached to land or a building. Therefore, all of the options listed (alienated, hypothecated, become real property) can pose challenges for a real estate broker when dealing with personal property.

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  • 4. 

    Alienation is the opposite of:

    • Acquisition

    • Abrogation

    • Avulsion

    • Amortization

    Correct Answer
    A. Acquisition
    Explanation
    Alienation refers to the feeling of being separated or disconnected from others or from society. Acquisition, on the other hand, refers to the act of obtaining or gaining something. These two terms are opposite in nature as alienation involves a sense of detachment or isolation, while acquisition involves obtaining or gaining something. Therefore, acquisition is the opposite of alienation.

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  • 5. 

    A deposit to purchase real estate is held by escrow.  In case of a conflict as specified in  the purchase agreement.  When is the escrow allowed to disburse the deposit?

    • Agreement of the parties

    • After a judgment

    • Arbitration

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The escrow is allowed to disburse the deposit in all of the mentioned scenarios - agreement of the parties, after a judgment, and arbitration. This means that if the parties involved in the real estate transaction agree to disburse the deposit, or if a judgment or arbitration decision requires the deposit to be disbursed, the escrow can proceed with releasing the funds.

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  • 6. 

    When an owner acquires land with riparian rights, such rights:

    • Give the purchaser absolute ownership of adjacent waters

    • Must be expressed in the deed

    • May be determined accurately from an examination of public records

    • Are only available to land adjacent to moving water, a stream or brook within the Watershed

    Correct Answer
    A. Are only available to land adjacent to moving water, a stream or brook within the Watershed
    Explanation
    Riparian rights refer to the legal rights of a landowner to use and enjoy water that is adjacent to or flows through their property. These rights are typically only available to land that is adjacent to moving water, such as a stream or brook, within a specific watershed. This means that if an owner acquires land with riparian rights, they would only have these rights for land that is next to a body of water that is flowing, rather than still or stagnant water.

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  • 7. 

    The agent’s commission for negotiating a real property lease is fixed by:

    • Real Estate Law

    • Law only if the term is one year or less

    • Agreement only if the term is over one year

    • Agreement

    Correct Answer
    A. Agreement
    Explanation
    The correct answer is "Agreement." This means that the agent's commission for negotiating a real property lease is determined by an agreement between the parties involved. The specific terms and conditions regarding the commission will be outlined and agreed upon in this agreement. This allows for flexibility and negotiation between the agent and the parties involved in the lease.

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  • 8. 

    When rent is computed on the gross sales of a business, the lease is correctly termed:

    • A net lease

    • A gross lease

    • A voidable lease

    • A percentage lease

    Correct Answer
    A. A percentage lease
    Explanation
    A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of their gross sales. In this case, the rent is computed based on the gross sales of the business. Therefore, the correct term for this type of lease is a percentage lease.

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  • 9. 

    Which of the following is easement for non-use?

    • Express reservation in a deed

    • A quitclaim deed from a valid owner

    • Prescriptive

    • Implication

    Correct Answer
    A. Prescriptive
    Explanation
    Prescriptive easement refers to the legal right to use another person's property without permission, which is acquired through continuous and uninterrupted use for a specific period of time. This type of easement is created when someone openly and notoriously uses another person's property without their permission for a certain period, typically ranging from 5 to 20 years, depending on the jurisdiction. Therefore, the correct answer is "Prescriptive" because it describes the easement for non-use that is acquired through long-term unauthorized use of someone else's property.

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  • 10. 

    The rights or power to sell property in the event of a default under the terms of the  trust deed is given by: 

    • Trustee to the trustor

    • Buyer to the beneficiary

    • Buyer to seller

    • Trustor to trustee

    Correct Answer
    A. Trustor to trustee
    Explanation
    The correct answer is Trustor to trustee. In a trust deed, the trustor (borrower) grants the trustee (a neutral third party) the power to sell the property in the event of a default. This allows the trustee to protect the interests of the beneficiary (lender) by ensuring that the property can be sold to recover the debt. The buyer does not have the power to sell the property, and the seller is not involved in the trust deed arrangement.

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  • 11. 

    The purpose of the Truth-in-Lending Act is to:

    • Regulate usurious charges for credit

    • Establish a maximum annual percentage rate

    • Assure a meanful disclosure of credit terms to the buyer

    • Limit the cost of credit to the consumer

    Correct Answer
    A. Assure a meanful disclosure of credit terms to the buyer
    Explanation
    The purpose of the Truth-in-Lending Act is to ensure that consumers are provided with clear and accurate information about the terms and costs of credit. It aims to promote transparency and protect consumers from deceptive practices by requiring lenders to disclose key information such as interest rates, fees, and repayment terms. This allows buyers to make informed decisions and compare different credit options effectively.

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  • 12. 

    Which of the following indicators would best define the purchasing power of the U.S.  dollar?

    • Discount rate

    • Gold standards

    • Interest rates on treasury notes

    • Price indexes

    Correct Answer
    A. Price indexes
    Explanation
    Price indexes would best define the purchasing power of the U.S. dollar. Price indexes measure the average price changes of a basket of goods and services over time. By tracking the changes in prices, price indexes provide insights into the inflation or deflation of a currency. Therefore, price indexes are a reliable indicator to determine the purchasing power of the U.S. dollar as they reflect the changes in the cost of goods and services that can be bought with the currency.

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  • 13. 

    Conversation about a real estate finance that includes a reference to “warehousing”  activity would probably be referring to:

    • Securities registered with the Securities and Exchange Commission

    • Large storage buildings used to secure real property loans

    • A mortgage banker collecting loans prior to resale

    • None of the above

    Correct Answer
    A. A mortgage banker collecting loans prior to resale
    Explanation
    The correct answer is a mortgage banker collecting loans prior to resale. The term "warehousing" in the context of real estate finance refers to the practice of a mortgage banker collecting loans from various sources and holding them temporarily before selling them to investors in the secondary market. This allows the mortgage banker to package and sell the loans in bulk, providing liquidity and freeing up capital for further lending activities.

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  • 14. 

    Lenders sometimes require borrowers to deposit amounts with the monthly mortgage  payments to cover some costs related to the property.  Which of the following would not  be included in such impounds? 

    • Payments for special assessments related to the improvements of the public areas

    • County/ city property taxes

    • Monthly interest

    • Insurance premiums

    Correct Answer
    A. Monthly interest
    Explanation
    When lenders require borrowers to deposit amounts with the monthly mortgage payments to cover costs related to the property, the impounds typically include payments for special assessments related to the improvements of the public areas, county/city property taxes, and insurance premiums. However, monthly interest is not included in such impounds. Monthly interest is the amount that the borrower pays to the lender as a fee for borrowing the money, and it is separate from the impound account.

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  • 15. 

    The assessment roll for real property taxes is the listing of all taxable properties in the  assessor’s jurisdiction with the assigned assessed value for the properties.  The purpose  of the assessment roll is for:

    • Establishment of the tax base

    • Equalization of assessments

    • Establishment of the actual tax amount

    • Setting the tax rate

    Correct Answer
    A. Establishment of the tax base
    Explanation
    The assessment roll for real property taxes serves the purpose of establishing the tax base. This means that it lists all taxable properties in the assessor's jurisdiction and assigns assessed values to them. By doing so, the assessment roll provides the foundation for calculating the amount of taxes that will be levied on each property. It is an essential step in the process of determining the overall tax revenue that will be collected from property owners within the jurisdiction.

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  • 16. 

    Reserves or impounds of all of the following are recurring costs by a lender, except:

    • Special improvements assessments

    • City county, Property taxes

    • Insurance Premiums

    • Monthly interest mortgage

    Correct Answer
    A. Monthly interest mortgage
    Explanation
    The monthly interest mortgage is not a recurring cost for a lender. It is a payment made by the borrower to the lender to cover the interest on the loan. The other options mentioned (special improvements assessments, city county property taxes, and insurance premiums) are recurring costs that a lender may have to pay on behalf of the borrower or as part of the loan agreement.

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  • 17. 

    Which of the following persons would usually be in the weakest position against loss of  property due to a claim of title by an outside person? 

    • A holder of a certificate of title to property used by a title company

    • A holder of a recorded deed who rents the property

    • A holder of an unrecorded deed who occupies the property

    • A holder of an unrecorded quitclaim deed who does not occupy the property

    Correct Answer
    A. A holder of an unrecorded quitclaim deed who does not occupy the property
    Explanation
    A holder of an unrecorded quitclaim deed who does not occupy the property would usually be in the weakest position against loss of property due to a claim of title by an outside person. This is because an unrecorded quitclaim deed does not provide strong legal protection or evidence of ownership. Additionally, not occupying the property may make it easier for someone else to claim the property and potentially succeed in their claim.

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  • 18. 

    Valuable, adequate, and good sufficient means:

    • Performance

    • Just compensation

    • Consideration

    • Bilateral contract

    Correct Answer
    A. Consideration
    Explanation
    Consideration refers to something of value that is exchanged between parties in a contract. It is an essential element in a contract as it indicates that both parties have given something in return for the agreement. The terms "valuable," "adequate," and "good sufficient" all suggest that consideration is being provided in a contract. Therefore, the correct answer is consideration.

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  • 19. 

    Dual Agency is legal if: 

    • All parties know about it before close of escrow

    • Signing all contracts

    • The buyer and seller consent to it

    • Broker and escrow agree to it

    Correct Answer
    A. The buyer and seller consent to it
    Explanation
    Dual Agency is the practice where a real estate agent represents both the buyer and the seller in a transaction. In order for dual agency to be legal, it is necessary for both the buyer and the seller to give their consent to this arrangement. This ensures that all parties are aware of the agent's dual role and have agreed to it willingly. Without the consent of both the buyer and the seller, dual agency would not be legally permissible.

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  • 20. 

    Which of the following is most nearly correct concerning buyer’s agency? 

    • It is not legal in California

    • In buyer’s agency, the seller is forbidden to pay any commission directly or indirectly to the buyer’s agent

    • Buyer’s agency often gives rise to dispute over who is the “procuring cause”

    • The buyer’s broker has no agency relationship with the seller or the listing broker and is therefore not liable for their actions

    Correct Answer
    A. The buyer’s broker has no agency relationship with the seller or the listing broker and is therefore not liable for their actions
    Explanation
    The buyer's broker in a buyer's agency does not have an agency relationship with the seller or the listing broker, which means they are not responsible or liable for their actions. This means that the buyer's broker is not accountable for any misconduct or wrongdoing on the part of the seller or the listing broker.

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  • 21. 

    If a broker is an agent of the seller, he owes to the buyer:

    • The same fiduciary obligations

    • Only the duty to answer questions honestly

    • Only a duty to disclose any items which relate directly to the sales price

    • A duty of fair and honest dealing

    Correct Answer
    A. A duty of fair and honest dealing
    Explanation
    When a broker is an agent of the seller, they owe a duty of fair and honest dealing to the buyer. This means that the broker is obligated to act in a fair and honest manner when representing the seller's interests, even though they are not directly representing the buyer. This duty includes being truthful and transparent in all dealings with the buyer, and ensuring that the buyer is treated fairly throughout the transaction. The broker must also avoid any conflicts of interest that may arise between the seller and the buyer.

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  • 22. 

    Buyer Clark contacted broker Jacob to find out if Jacob had a listing on a certain  property that buyer Clark was interested in purchasing.  Broker Jacob did not have a  listing on the property he questioned but informed buyer Clark that he would get the  full details and relates it to him.  The broker then contacted the property owner in  attempt to obtain a listing and informed the owner that buyer Clark was interested in  purchasing the property.  The owner refused the listing by informing the broker that  the property was not for sale and that he would not list the property with any brokers.    Two months later, broker Jacob was informed that the owner had in fact sold the  property to Clark without broker Jacob’s knowledge.  Given these conditions:

    • Jacob is entitled to a reasonable commission from the owner

    • Buyer Clark is liable to broker Jacob for a reasonable commission

    • Broker Jacob has invested time and labor in the transaction and therefore could recover a reasonable amount for the investment of time and labor

    • Broker Jacob is entitled to nothing

    Correct Answer
    A. Broker Jacob is entitled to nothing
    Explanation
    According to the given conditions, the owner refused to list the property with any brokers and sold it to buyer Clark without broker Jacob's knowledge. This means that broker Jacob did not have any involvement or agreement in the transaction between the owner and buyer Clark. Therefore, he is not entitled to a commission or any recovery for his time and labor invested in the transaction.

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  • 23. 

    Mr. Miller executed a full price offer to purchase Taylor’s property through Broker  Micks who held an exclusive authorization and right to sell listing.  As the broker was  leaving the office, he received another offer for $1,000 less than the listed sales price but  which contained a larger down payment and other different terms.  Micks, the listing  broker, should:

    • Tell the other broker that the property has already been sold

    • Present both offers at the same time

    • Present the offers to the sellers in the same order that he received them

    • Present the second offer only if the first offeree appears to be a credit risk

    Correct Answer
    A. Present both offers at the same time
    Explanation
    The correct answer is to present both offers at the same time. This ensures that the sellers have all the information and can make an informed decision. It is important for the listing broker to be transparent and fair in presenting all offers to the sellers.

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  • 24. 

    A real estate agent may legally represent all principals in the same transaction if:

    • He has informed all the parties

    • He has obtained consent of all to this agency relationship

    • Collecting commission for both parties with knowledge of the others

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    A real estate agent may legally represent all principals in the same transaction if they have informed all the parties involved, obtained consent from all parties to this agency relationship, and are collecting commission for both parties with knowledge of the others. This means that the agent has disclosed their role to all parties, received their consent to represent them, and is transparent about receiving commission from both sides. This ensures that all parties are aware of the agent's involvement and have agreed to the arrangement.

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  • 25. 

    In July, Spencer bought Long’s home through the listing broker Ceeley.  Ceeley in  November, when the first rain came, the tile roof leaked badly in many places.  Spencer  sued Long and broker Ceeley for the cost of the necessary new roof.  Testimony in  court showed that Long had mentioned the need of a new roof to Ceeley, but Ceeley  had nolikely:

    • Spencer was successful in the suit against Ceeley and Long was entitle to recover damages from broker Ceeley

    • Spencer recovered from Ceeley only

    • Long is not liable

    • Spenser is not entitle to recover from anybody

    Correct Answer
    A. Spencer was successful in the suit against Ceeley and Long was entitle to recover damages from broker Ceeley
    Explanation
    The correct answer is "Spencer was successful in the suit against Ceeley and Long was entitled to recover damages from broker Ceeley." This means that Spencer won the lawsuit against Ceeley and can recover the cost of the new roof from Ceeley. Additionally, Long, the original homeowner, is also entitled to recover damages from Ceeley. This suggests that Ceeley, the broker, was negligent in not addressing the need for a new roof and may be held responsible for the damages.

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  • 26. 

    If a seller of real property inquired to his broker concerning the ethnic background of a  prospective buyer, the broker:

    • Should secure the permission of the buyer’s broker before revealing such information

    • Is obligated by fiduciary duty to disclose all material facts and therefore must disclose the requested information

    • Violates the California Fair Housing Act (the Rumford Act) if he gives the seller the requested information

    • Could give the seller the requested information as long as it is pointed out that the information may not be used to discriminate against the buyer

    Correct Answer
    A. Violates the California Fair Housing Act (the Rumford Act) if he gives the seller the requested information
    Explanation
    The correct answer is that the broker violates the California Fair Housing Act (the Rumford Act) if he gives the seller the requested information. This is because the act prohibits discrimination in housing based on factors such as race, ethnicity, and national origin. Inquiring about the ethnic background of a prospective buyer is a form of discriminatory behavior and goes against the principles of fair housing. The broker should not provide this information to the seller to ensure compliance with the law.

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  • 27. 

    When a seller makes a counter offer:

    • The offeror may change the terms without the consent of the other party

    • The offeror may not change the terms

    • The offeree becomes the new offeror

    • The offeror and offeree mutually agree to terminate the agreement

    Correct Answer
    A. The offeree becomes the new offeror
    Explanation
    When a seller makes a counter offer, it means that they are rejecting the original offer made by the buyer and proposing new terms for the agreement. By making a counter offer, the offeree (seller) becomes the new offeror, as they are now presenting their own terms for the agreement instead of accepting the terms proposed by the original offeror (buyer). This shift in roles allows the offeree to negotiate and potentially reach a new agreement with the original offeror.

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  • 28. 

    If a broker receives a personal check made payable to an independent escrow company  from a buyer as a deposit on the purchase price, the broker: 

    • Must have the buyer re-issue the check to the broker so that it can be placed in the broker’s trust account

    • Must maintain a columnar record of the deposit

    • Must deliver the check to the escrow

    • Is not required to maintain a record of the check since it was made payable to the escrow company

    Correct Answer
    A. Must deliver the check to the escrow
    Explanation
    The correct answer is that the broker must deliver the check to the escrow. This is because the check is made payable to the independent escrow company, indicating that the buyer intends for the funds to be held by the escrow company. As a broker, it is the responsibility to ensure that the funds are properly delivered to the intended recipient, in this case, the escrow company. Therefore, the broker must deliver the check to the escrow.

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  • 29. 

    Broker Abe took a listing from Mr. Cain on a commercial property.  Broker Abe then  presented an offer from the XYZ Company that was above the listed price.  Mr. Cain  accepted the offer.  However, the broker did not tell Mr. Cain that he was one of the principals in the XYZ Company.  Concerning the sale, the:

    • Broker is subject to a fine by the Commissioner

    • Seller could cancel the contract

    • Seller could do nothing since he has sold above the listed price

    • Seller must pay a commission

    Correct Answer
    A. Seller could cancel the contract
    Explanation
    In this scenario, the broker acted unethically by not disclosing his involvement as one of the principals in the XYZ Company. This lack of transparency could potentially invalidate the contract as it was based on incomplete information. Therefore, the seller has the right to cancel the contract if they choose to do so.

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  • 30. 

    Since Harris did not have the necessary $285,000 cash to purchase 300 acres of land for  future subdivision, Nishimoto agreed to purchase the land and enter into a conditional  installment sale contract with Harris, selling him the land for $298,000.  Assuming only  the above, this is a:

    • Voidable transaction by Harris

    • Void transaction

    • Disguised mortgage transaction

    • Valid purchase and resale transaction

    Correct Answer
    A. Valid purchase and resale transaction
    Explanation
    Based on the given information, the transaction between Harris and Nishimoto can be considered a valid purchase and resale transaction. Even though Harris did not have enough cash to purchase the land, Nishimoto agreed to sell the land to Harris through a conditional installment sale contract. This means that Harris will be able to purchase the land from Nishimoto and then resell it in the future. Therefore, the transaction is valid and legally binding.

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  • 31. 

    Attorney in fact is:

    • A principal who has implied powers

    • Any legal competent person who has received a power of attorney from another person

    • Any person acting as a dual agent

    • Any attorney acting as an executor

    Correct Answer
    A. Any legal competent person who has received a power of attorney from another person
    Explanation
    An attorney in fact refers to any legal competent person who has received a power of attorney from another person. This means that the person has been granted the authority to act on behalf of the principal in legal and financial matters. The attorney in fact is entrusted with making decisions and carrying out tasks as specified in the power of attorney document. This role does not necessarily require the person to be a professional attorney, but rather someone who has been given the legal authority to act on behalf of another person.

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  • 32. 

    An executed contract is a contract:

    • Completed and fully performed by both parties

    • Under jurisdiction of probate court

    • Signed, notarize, and recorded

    • Novation

    Correct Answer
    A. Completed and fully performed by both parties
    Explanation
    An executed contract refers to a contract that has been fully performed and completed by both parties involved. This means that all the terms and conditions of the contract have been fulfilled and both parties have fulfilled their obligations as stated in the contract. Therefore, the correct answer is "Completed and fully performed by both parties".

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  • 33. 

    In which of the following transactions is the agent required to disclose his or her agency  relationship?

    • The exchange of a commercial property

    • The sale of a residential triplex

    • The sale of an office building

    • An installment sale of a theater

    Correct Answer
    A. The sale of a residential triplex
    Explanation
    In the sale of a residential triplex, the agent is required to disclose his or her agency relationship. This means that the agent must inform the parties involved in the transaction about who they are representing and any potential conflicts of interest. This disclosure is necessary to ensure transparency and to protect the interests of all parties involved in the transaction.

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  • 34. 

    Jimmy built a house on speculation and sold it for $282,000 receiving $262,000 cash  from the proceeding of new financing and a $20,000 note secured by a second deed of  trust.  In order to build a second house on another lot, Jimmy would like to borrow  $50,000.  If he uses the $20,000 note as part of the security, the note in this circumstance  would be a: 

    • Chattel mortgage

    • Purchase money mortgage

    • Holding agreement

    • Pledge

    Correct Answer
    A. Pledge
    Explanation
    In this scenario, Jimmy is using the $20,000 note as part of the security to borrow $50,000. This means that he is offering the note as collateral or a guarantee for the loan. A pledge is a legal term used to describe the act of offering personal property as security for a debt or obligation. Therefore, in this circumstance, the $20,000 note would be considered a pledge.

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  • 35. 

    Mr. Wilson made an offer to purchase real property.  However, she died of a heart  attack before the listing broker could notify her of an unqualified, signed acceptance by  the seller.  Based on these facts, which of the following is true?

    • Notification to the administrator or executor would bind the Wilson State

    • The death of Wilson constituted a revocation of the offer

    • The offer and acceptance constitute an enforceable contract

    • The sale would not be binding because the deed was not delivered before Wilson’s death

    Correct Answer
    A. The death of Wilson constituted a revocation of the offer
    Explanation
    The correct answer is that the death of Wilson constituted a revocation of the offer. This means that since Mr. Wilson passed away before being notified of the acceptance by the seller, the offer is no longer valid. In general, an offer can be revoked by the offeror at any time before it has been accepted, and in this case, Wilson's death acted as a revocation of the offer. Therefore, the offer and acceptance do not constitute an enforceable contract.

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  • 36. 

    A real estate licensee acts as:

    • Ratification

    • Ostensible agent

    • Dual agency

    • Fiduciary

    Correct Answer
    A. Fiduciary
    Explanation
    A real estate licensee acts as a fiduciary. This means that they have a legal and ethical obligation to act in the best interests of their clients. They must prioritize their clients' needs and goals above their own and provide them with honest and reliable advice. As a fiduciary, the licensee must maintain confidentiality, disclose any conflicts of interest, and handle their clients' finances and transactions with utmost care and honesty. This ensures that the licensee is held to a high standard of trust and loyalty in their professional relationship with their clients.

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  • 37. 

    A flood hazard report is required as part of filing for a subdivision public report.  If a  flood hazard exists, the degree of hazard must be reported.  The degrees of flood  hazard are:

    • Inundation, sheet overflow, and ponding of local storm water

    • Accretion, avulsion, and alluvium

    • Frequent, infrequent, and remote

    • Below water table, water table level, and above water table

    Correct Answer
    A. Inundation, sheet overflow, and ponding of local storm water
    Explanation
    The correct answer is "Inundation, sheet overflow, and ponding of local storm water". This answer is correct because it accurately identifies the degrees of flood hazard that must be reported as part of filing for a subdivision public report. Inundation refers to the flooding of an area, sheet overflow refers to water flowing over a large area like a sheet, and ponding of local storm water refers to the accumulation of water in a localized area. These are all different degrees of flood hazard that need to be assessed and reported.

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  • 38. 

    Ross, who owns a commercial building, enters into a seven-year lease with Roberts for  the property.  In your opinion, Robert’s lease is:

    • An estate for years

    • Personal property

    • A chattel real

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The correct answer is "All of the above." In this scenario, Roberts' lease can be considered an estate for years because it is a lease for a specific duration of seven years. It can also be considered personal property because a lease is a contractual right and can be bought, sold, or transferred like personal property. Additionally, it can be considered a chattel real because it is an interest in real property that is less than a freehold estate. Therefore, all three options are applicable in this case.

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  • 39. 

    Which of the following is real property?

    • Stock in a mutual water company

    • A trust deed

    • A mortgage

    • None of the above

    Correct Answer
    A. Stock in a mutual water company
    Explanation
    Stock in a mutual water company is considered real property because it represents ownership in the company's assets, such as land and water rights. Real property refers to immovable assets, including land and anything permanently attached to it. While a trust deed and a mortgage are both financial instruments related to real estate transactions, they are not considered real property themselves.

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  • 40. 

    Inflationary trends in the housing market affect:

    • Market values

    • Market values and sales prices

    • Sales prices only

    • Demand for housing

    Correct Answer
    A. Market values and sales prices
    Explanation
    Inflationary trends in the housing market affect both market values and sales prices. When there is inflation in the housing market, the prices of homes tend to increase. This leads to higher market values as the overall value of properties in the market rises. Additionally, higher sales prices are observed as buyers are willing to pay more for homes due to inflation. Therefore, both market values and sales prices are impacted by inflationary trends in the housing market.

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  • 41. 

    Which of the following items might be short-rated by the escrow holder? 

    • Fire insurance

    • Title insurance

    • Real estate taxes

    • Interest

    Correct Answer
    A. Fire insurance
    Explanation
    The escrow holder might short-rate fire insurance because it is possible that the policy was cancelled before the expiration date, resulting in a refund of the premium. Short-rating occurs when the insurance company refunds a portion of the premium due to early cancellation.

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  • 42. 

    Alienation expresses a meaning most completely opposite to:

    • Acquisition

    • Abrogation

    • Avulsion

    • Amortization

    Correct Answer
    A. Acquisition
    Explanation
    Alienation refers to the feeling of being isolated or disconnected from others or from society. On the other hand, acquisition means the act of gaining or obtaining something. These two concepts are opposite to each other because while acquisition involves gaining something, alienation involves feeling disconnected or separated from others. Therefore, acquisition is the most completely opposite meaning to alienation.

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  • 43. 

    Which of the following is acceptable response to sellers who have indicated their home  is not to be shown to sales of prospects who are members of the ethnic minority group?

    • I can show it to anyone I want

    • This conditions we will get a better price value and won’t drop

    • I cannot accept the listing on your property because it’s prohibited from discrimination

    • With unacceptable terms they won’t be interested

    Correct Answer
    A. I cannot accept the listing on your property because it’s prohibited from discrimination
    Explanation
    The correct answer is "I cannot accept the listing on your property because it’s prohibited from discrimination." This response acknowledges the seller's request but also states that it is against the law to discriminate based on ethnic minority group membership.

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  • 44. 

    Mr. Abdul owned an unencumbered lot and decided to build a single family residence  on it.  He bought $8,000 worth of lumber and had it delivered to the property.  One  week later, he obtained a construction loan for $150,000 from People’s Savings and  Loan Association.  The loan was recorded after the lumber was delivered.  Later more  lumbers were delivered and subsequently the completed structure was painted.  When  the lumber company could not collect $8,000 on the amount owed and the painter could  not collect $3,000 for the painting; they each filed a mechanic’s lien.  If the property is  sold at a foreclosure sale and nets $150,000, the amount received by People’s Savings  and Loan would be:

    • $150,000

    • $139,000

    • $142,000

    • Nothing

    Correct Answer
    A. $139,000
    Explanation
    The mechanic's liens filed by the lumber company and the painter would take priority over the construction loan because they were filed before the loan was recorded. Therefore, the amount received by People's Savings and Loan would be reduced by the total amount of the liens, which is $11,000 ($8,000 owed to the lumber company + $3,000 owed to the painter). Thus, the amount received by People's Savings and Loan would be $150,000 - $11,000 = $139,000.

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  • 45. 

    A seller was presented an offer on his home which he immediately accepted.  The  acceptance was communicated to the buyer.  Before escrow was opened, the seller  found another buyer who was willing to pay all cash.  He decided to cancel the original  contract and notified the broker of his decision.  Under these circumstances:

    • The broker is entitled to no compensation

    • The broker has an excellent legal basis to collect a commission

    • The deposit must be returned to the buyer and the buyer has no further claim against the seller

    • All of the above

    Correct Answer
    A. The broker has an excellent legal basis to collect a commission
    Explanation
    The broker has an excellent legal basis to collect a commission because the seller accepted the offer on his home and communicated the acceptance to the buyer. Even though the seller found another buyer who was willing to pay all cash, the original contract was already in place and the broker had successfully facilitated the sale. Therefore, the broker is entitled to receive compensation for their services.

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  • 46. 

    The holder of an easement that is not attached to any lands owned by the easement  holder has:

    • An appurtenant easement

    • An easement in gross

    • A servient tenement

    • An easement by necessity

    Correct Answer
    A. An easement in gross
    Explanation
    An easement in gross is a type of easement that is not attached to any specific piece of land owned by the easement holder. Unlike an appurtenant easement, which is tied to the ownership of a specific property, an easement in gross is a personal right granted to an individual or entity. It allows the holder to use another person's land for a specific purpose, such as accessing a utility line or crossing a property. In this case, since the easement is not attached to any lands owned by the easement holder, it is considered an easement in gross.

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  • 47. 

    When a real estate broker negotiates the sale of used mobile home, it is the broker’s  responsibility to give written notice of transfer to the Department of Housing and  Community Development within:

    • 3 calendar days

    • 5 calendar days

    • 10 calendar days

    • 10 business days

    Correct Answer
    A. 10 calendar days
    Explanation
    When a real estate broker negotiates the sale of a used mobile home, they are required to give written notice of transfer to the Department of Housing and Community Development within 10 calendar days. This means that the broker must inform the department of the transfer within 10 days of the sale taking place. This notification is important for record-keeping and regulatory purposes, ensuring that the department is aware of the transfer and can update their records accordingly.

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  • 48. 

    The maximum amount of a broker’s personal funds that may keep in his or her trust  account without being guilty of commingling is:

    • $100

    • $200

    • $300

    • $400

    Correct Answer
    A. $200
    Explanation
    A broker is allowed to keep a maximum of $200 of their personal funds in their trust account without being guilty of commingling. Commingling refers to the mixing of personal and client funds, which is prohibited in order to protect the interests of clients. By limiting the amount of personal funds that can be kept in the trust account, brokers are encouraged to maintain the separation between their personal finances and their clients' funds.

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  • 49. 

    When a licensee acts as an agent without authority or color of authority and the acts  are later approved by the principal, an agency has been created by:

    • Implication

    • Estoppel

    • Ratification

    • Agreement

    Correct Answer
    A. Ratification
    Explanation
    When a licensee acts as an agent without authority or color of authority and the acts are later approved by the principal, an agency has been created by ratification. Ratification refers to the act of approving or confirming an action that was previously unauthorized. In this case, the principal retroactively approves the actions of the licensee, thereby creating an agency relationship.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 06, 2011
    Quiz Created by
    Slynch1783

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