Core Exam Prep 3 Real Estate

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    Turn Key project is: 

    • Approved by the authorities
    • Construction project completed ready for occupancy
    • Interior of subdivision
    • Rural subdivisions
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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. 

    An appraiser who is to appraise a commercial property with an estimated value of  $550,000 must hold which of the following appraisal license?

    • Trainee

    • Licensed

    • Certified residential

    • Certified general real estate appraiser

    Correct Answer
    A. Certified general real estate appraiser
    Explanation
    To appraise a commercial property with an estimated value of $550,000, the appraiser must hold a Certified general real estate appraiser license. This license allows the appraiser to assess properties of any type or value, including commercial properties. The other options (Trainee, Licensed, Certified residential) do not have the necessary qualifications to appraise commercial properties.

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  • 3. 

    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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  • 4. 

    The phrase used by brokers to the principal is:

    • Fiduciary

    • Ethical

    • Legal

    • Disclosure

    Correct Answer
    A. Fiduciary
    Explanation
    The term "fiduciary" refers to a legal and ethical relationship where one party (the broker) is entrusted to act in the best interest of another party (the principal). In the context of brokers, they have a fiduciary duty to their clients, meaning they must prioritize their clients' interests above their own. This includes providing honest and transparent information, avoiding conflicts of interest, and making decisions that benefit the client. Therefore, "fiduciary" is the appropriate phrase used by brokers to the principal.

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  • 5. 

    When buying a home, buyers prefer which of the following polices;

    • Fire

    • Standard

    • Earthquake

    • Inundation

    Correct Answer
    A. Standard
    Explanation
    Buyers prefer the Standard policy when buying a home because it provides coverage for a wide range of risks and hazards. This policy typically includes coverage for fire, theft, and certain natural disasters. It offers a comprehensive level of protection that gives buyers peace of mind knowing that their home and belongings are covered in case of any unforeseen events. Fire, earthquake, and inundation policies may offer specific coverage for those particular risks, but the Standard policy provides a more well-rounded and inclusive coverage for various potential hazards.

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  • 6. 

    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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  • 7. 

    As to ethics, the best guidelines to determine if an action is ethical will be found in  which of the following: 

    • The “Realtor’s Golden Rule”

    • The Business and Professions Code

    • The conduct of other real estate agents in your office

    • What is in the best interest of the real estate licensee

    Correct Answer
    A. The Business and Professions Code
    Explanation
    The Business and Professions Code is the best guideline to determine if an action is ethical because it provides a set of rules and regulations that govern the conduct of professionals in various industries, including real estate. These codes outline the ethical standards and responsibilities that professionals must adhere to in order to maintain integrity and protect the interests of their clients. Therefore, referring to the Business and Professions Code is crucial in ensuring that actions are ethical and in compliance with the industry standards.

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  • 8. 

    Demand for non-agriculture properties includes:

    • Population

    • Income

    • Housing cost

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The demand for non-agriculture properties is influenced by various factors, including population, income, and housing cost. A larger population typically leads to higher demand for properties, as more people require housing. Similarly, higher income levels enable individuals to afford non-agriculture properties, increasing demand. Additionally, the cost of housing plays a significant role, as individuals consider affordability when deciding to invest in non-agriculture properties. Therefore, all of these factors contribute to the demand for non-agriculture properties.

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  • 9. 

    The real estate agency disclosure form must be given to the parties in which of the  following transactions?

    • Sale of a theatre

    • Sale of an office building

    • Exchange of an office building

    • Sale of a residential triplex

    Correct Answer
    A. Sale of a residential triplex
    Explanation
    The real estate agency disclosure form must be given to the parties in the sale of a residential triplex. This form is required to disclose any agency relationships between the real estate agent and the parties involved in the transaction. It helps to ensure transparency and protect the interests of all parties involved in the sale of the property.

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  • 10. 

    If the city wants to acquire a commercial property by eminent domain, they: 

    • Must obtain approval from the State

    • Must pay the owner “just compensation”

    • Need not pay the owner anything

    • Will institute foreclosure proceedings

    Correct Answer
    A. Must pay the owner “just compensation”
    Explanation
    If the city wants to acquire a commercial property by eminent domain, they must pay the owner "just compensation". This means that the owner of the property must be fairly compensated for their loss of property rights. The city cannot simply take the property without providing compensation to the owner.

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  • 11. 

    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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  • 12. 

    Rostanian was denied on credit and was denied access to her credit report and  explanation for rejection for credit is not given.  Rostanian may do which of the  following:

    • Sue to clear Rostanian’s credit

    • Sue for attorneys fees

    • Damages for pain and suffering

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    Rostanian may choose to do all of the above options. Since she was denied credit and denied access to her credit report without any explanation, she can sue to clear her credit, sue for attorney's fees, and also claim damages for pain and suffering. These actions can help her seek justice and compensation for the harm caused by the denial of credit and lack of explanation.

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  • 13. 

    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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  • 14. 

    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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  • 15. 

    BTU (British Thermal Unit) refers to:

    • Foundations

    • Heating systems

    • Conduits

    • Hip roofs

    Correct Answer
    A. Heating systems
    Explanation
    BTU (British Thermal Unit) is a unit of measurement commonly used in the heating and cooling industry to quantify the amount of heat energy required to raise the temperature of one pound of water by one degree Fahrenheit. Therefore, it is directly related to heating systems, as it helps determine the heating capacity and efficiency of such systems.

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  • 16. 

    What is true about legal aspects of real estate law?

    • Personal property can never become real property

    • Personal property can never be financed

    • Personal property can become real property

    • Real property only includes personal property

    Correct Answer
    A. Personal property can become real property
    Explanation
    Personal property can become real property refers to the fact that items that are initially considered personal property can be legally transformed into real property. This can occur through a process called "annexation," where personal property is permanently attached to real property, such as when a mobile home is affixed to a foundation and becomes part of the real estate. This transformation changes the legal status and rights associated with the property.

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  • 17. 

    Which of the following rights of ownership in real estate may an individual not have? 

    • Eminent domain rights

    • Adverse condemnation

    • Subject to transfers

    • Riparian rights

    Correct Answer
    A. Eminent domain rights
    Explanation
    Eminent domain rights are the rights of the government to take private property for public use, with fair compensation to the owner. These rights are not held by individuals, but rather by the government. Therefore, an individual may not have eminent domain rights in real estate.

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  • 18. 

    The beneficiary on a second trust deed sold it for lesser value, this is an example of:

    • Compensating balance

    • Insurance

    • Discounting

    • Profit

    Correct Answer
    A. Discounting
    Explanation
    In this scenario, the beneficiary on a second trust deed sold it for a lesser value. This situation is an example of discounting. Discounting refers to the practice of selling a financial instrument, such as a promissory note or a bond, at a price lower than its face value. In this case, the beneficiary sold the trust deed for a lower amount, potentially due to factors such as the need for immediate cash or a lack of market demand.

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  • 19. 

    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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  • 20. 

    A contract between seller and broker to sell is in a form of:

    • General power attorney

    • Novation

    • Written agreement

    • Assignment

    Correct Answer
    A. Written agreement
    Explanation
    A contract between a seller and broker to sell is typically in the form of a written agreement. This is because a written agreement provides a clear and legally binding record of the terms and conditions agreed upon by both parties. It helps to avoid any misunderstandings or disputes that may arise in the future. A written agreement also ensures that both the seller and broker have a mutual understanding of their respective roles and responsibilities in the sales transaction.

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  • 21. 

    Burg bought a mobile home from a dealer.  Now Burg wants to sell it.  Broker Fisher  listed the mobile home.  If Fisher wants to sell Burg’s mobile home:

    • Fisher may sell a mobile that is only park in a mobile home park

    • Fisher may sell only brand new mobile homes

    • Fisher may sell a mobile home that is attach to a permanent foundation approved and registered

    • Burg has to wait 1 year to put the mobile home for sale

    Correct Answer
    A. Fisher may sell a mobile home that is attach to a permanent foundation approved and registered
    Explanation
    Fisher may sell a mobile home that is attached to a permanent foundation that has been approved and registered. This means that in order for Fisher to sell Burg's mobile home, it must be securely attached to a permanent foundation that meets all necessary regulations and has been officially approved and registered. This ensures that the mobile home is stable and compliant with all relevant building codes, making it a desirable and legal option for potential buyers.

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  • 22. 

    A real estate salesperson is attempting to renew his license.  The Department of Real  Estate finds that according to the Department of Child Support Services, the party has  failed to make the required child support payments.  Under these circumstances, the  salespersons license:

    • Can not be renewed

    • Is automatically revoked

    • Can be issued on a temporary basis for 150 days

    • Can be renewed for a 4 year term

    Correct Answer
    A. Can be issued on a temporary basis for 150 days
    Explanation
    If a real estate salesperson has failed to make the required child support payments, the Department of Real Estate finds that the salesperson's license can be issued on a temporary basis for 150 days. This means that the salesperson can continue to work as a real estate salesperson, but only for a limited period of time. After the 150-day period, the salesperson will need to resolve the issue with their child support payments in order to renew their license.

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  • 23. 

    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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  • 24. 

    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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  • 25. 

    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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  • 26. 

    The following instructions were given to a real estate agent to sell properties in a new  subdivision:    Instruction 1:  Sell to women rather than men    Instruction 2:  Try to sell homes in equal numbers to Hispanics, Asians, Africans     and Caucasians  Which instruction is a violation to Fair Housing Act?

    • Sell to women rather than men is discrimination

    • Try to sell homes in equal numbers to Hispanics, Asians, Africans and Caucasians is discrimination

    • None of the above

    • Both A and B

    Correct Answer
    A. Both A and B
    Explanation
    Both options A and B are violations of the Fair Housing Act. The Fair Housing Act prohibits discrimination on the basis of sex and race, among other protected characteristics. Instruction 1, which states to sell to women rather than men, is a form of gender discrimination. Instruction 2, which instructs to sell homes in equal numbers to specific racial or ethnic groups, is a form of racial discrimination. Both of these instructions go against the principles of fair housing and equal opportunity.

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  • 27. 

    When used in real estate, which of the following terms are usually used with such  adjectives as “good”, “sufficient”, “adequate” and “valuable”? 

    • Unilateral contract

    • Performance

    • Consideration

    • Commission

    Correct Answer
    A. Consideration
    Explanation
    In real estate, the term "consideration" is typically used with adjectives such as "good", "sufficient", "adequate", and "valuable". Consideration refers to something of value (such as money or services) that is given in exchange for a property or a promise to do something. These adjectives describe the quality or amount of consideration being offered in a real estate transaction.

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  • 28. 

    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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  • 29. 

    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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  • 30. 

    If you are asked to appraise a property built in 1910 for the present, which of the  following would you use? 

    • Cost of living index in 1910

    • Original cost in 1910

    • Cost of living index

    • Today’s cost of reproduction less depreciation

    Correct Answer
    A. Today’s cost of reproduction less depreciation
    Explanation
    To appraise a property built in 1910 for the present, the most appropriate measure to use would be "Today's cost of reproduction less depreciation." This measure takes into account the current cost of rebuilding or reproducing the property, while considering any depreciation that may have occurred over time. It provides a more accurate valuation by considering both the current cost and the condition of the property. The other options, such as the cost of living index in 1910 or the original cost in 1910, do not take into account the current market conditions and may not accurately reflect the property's present value.

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  • 31. 

    A broker placed the following ads, 4 bedrooms 3 bathrooms, pool, spa, $154,000 call   991-2345.  Which of the following is true about the ads?

    • Deceptive ad

    • Blind ad

    • Misleading ad

    • Applicable ad

    Correct Answer
    A. Blind ad
    Explanation
    A blind ad is an advertisement that does not provide specific information about the product or service being advertised. In this case, the ad only mentions the number of bedrooms and bathrooms, the presence of a pool and spa, and the price, without providing any other details or information about the property. Therefore, it can be considered a blind ad as it lacks specific information that would help potential buyers make an informed decision.

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  • 32. 

    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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  • 33. 

    An unlicensed employee may not do all of the following in a real estate office, except:

    • Quote interest rates

    • Quote property values

    • Type the listings for the salespersons

    • Show properties for the salesperson

    Correct Answer
    A. Type the listings for the salespersons
    Explanation
    An unlicensed employee may not type the listings for the salespersons in a real estate office. This task typically requires knowledge of real estate laws and regulations, as well as an understanding of the specific properties being listed. Therefore, it is not appropriate for an unlicensed employee to handle this responsibility.

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  • 34. 

    When buying a single family residence with the aid of an unlicensed person.  If the  unlicensed person receives compensation, the agency that will prosecute the unlicensed  person is:

    • District attorney of the respective county

    • Real estate commissioner

    • Police department

    • Superior court

    Correct Answer
    A. District attorney of the respective county
    Explanation
    When buying a single family residence with the aid of an unlicensed person, if the unlicensed person receives compensation, the agency that will prosecute the unlicensed person is the District Attorney of the respective county. The District Attorney's office is responsible for prosecuting criminal offenses, and in this case, the unlicensed person would be prosecuted for engaging in real estate activities without the required license.

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  • 35. 

    A clause on a trust deed where the lender’s right shall be secondary to a subsequent  trust deed: 

    • Open end clause

    • Prepayment penalty clause

    • Subordination clause

    • Granting clause

    Correct Answer
    A. Subordination clause
    Explanation
    A subordination clause is a clause in a trust deed that states that the lender's right to the property will be secondary to a subsequent trust deed. This means that if the borrower defaults on their loan and the property is sold, the lender with the subsequent trust deed will have priority in receiving payment from the proceeds of the sale before the lender with the original trust deed. This clause is often included to protect the interests of the lender with the subsequent trust deed and may be used in situations where multiple loans are taken out on a property.

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  • 36. 

    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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  • 37. 

    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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  • 38. 

    A listing agreement is:

    • A promise for promise

    • A bilateral contract

    • An employment contract

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    A listing agreement is a contract between a property owner and a real estate agent, where the owner agrees to give the agent the exclusive right to sell or lease the property. It is a bilateral contract because it involves mutual promises and obligations between both parties. Additionally, it can be considered an employment contract as the agent is hired by the owner to represent them in the sale or lease of the property. Therefore, the correct answer is "All of the above" as all three options accurately describe a listing agreement.

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  • 39. 

    Seller has an easement attached to the buyer’s property.  The seller did not use the  easement for 21 years.  The seller decided to use the easement after 21 years.  The  easement is now:

    • The easement is valid

    • Terminated for non-use

    • The buyer reserves the easement

    • No one has an easement

    Correct Answer
    A. The easement is valid
    Explanation
    An easement is a legal right to use someone else's property for a specific purpose. In this scenario, the seller has an easement attached to the buyer's property. The fact that the seller did not use the easement for 21 years does not automatically terminate the easement. Unless there are specific legal provisions or circumstances that would cause the easement to be terminated, the easement remains valid. Therefore, the correct answer is that the easement is valid.

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  • 40. 

    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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  • 41. 

    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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  • 42. 

    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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  • 43. 

    A footing is which of the following?

    • A masonry course upon which the mudsill is fastened

    • Square blocks of concrete placed under floor joists

    • A slab of concrete in the rear yard area used for recreational purposes

    • A heavy concrete course placed in the ground upon which the concrete foundation is set

    Correct Answer
    A. A heavy concrete course placed in the ground upon which the concrete foundation is set
    Explanation
    A footing is a heavy concrete course that is placed in the ground to provide a stable base for a concrete foundation. It is typically wider than the foundation walls and is designed to distribute the weight of the structure evenly to the soil. The footing acts as a support for the foundation, preventing settlement or shifting of the building.

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  • 44. 

    A prepayment penalty clause on a loan means:

    • Penalty to a borrower who makes advance payments

    • Increase discount points on a government loan

    • Borrow additional money on the same trust deed

    • Pay off the entire loan

    Correct Answer
    A. Penalty to a borrower who makes advance payments
    Explanation
    A prepayment penalty clause on a loan means that if a borrower makes advance payments on the loan, they will be subjected to a penalty. This penalty is a fee or charge imposed by the lender to compensate for the interest or potential profit that they would have earned if the borrower had continued making regular payments over the agreed-upon loan term. It discourages borrowers from paying off the loan early and ensures that the lender receives the expected amount of interest income.

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  • 45. 

    Charge for the preparation of the Uniform Settlement Act is: 

    • Nothing

    • Not to exceed $10 dollars

    • $100 dollars only

    • Only if buyer decides to pay

    Correct Answer
    A. Nothing
    Explanation
    The correct answer is "Nothing" because the question is asking about the charge for the preparation of the Uniform Settlement Act, and the answer is that there is no charge.

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  • 46. 

    What type of title insurance policy covers everything?

    • ALTA

    • Extended

    • Standard

    • No title insurance policy covers everything

    Correct Answer
    A. No title insurance policy covers everything
    Explanation
    None of the title insurance policies available provide coverage for every possible issue that may arise with a property's title. While ALTA, Extended, and Standard policies offer different levels of coverage, none of them offer comprehensive coverage for all potential title issues. It is important for property owners to carefully review their policy and understand the specific coverage it provides.

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  • 47. 

    A real estate broker advertises that he will give a seller a credit in escrow with his  commission.  For any sellers who list with him, he will pay $50 and same for any buyer  who purchases a property from him.  This type of advertising is:

    • Illegal as it is a restraint of trade

    • Legal if disclosure is made to all parties to the transaction

    • Prohibited if this is a RESPA transaction

    • Legal, since the amount offered is less that $100

    Correct Answer
    A. Legal if disclosure is made to all parties to the transaction
    Explanation
    This type of advertising is legal if disclosure is made to all parties to the transaction. By offering a credit in escrow with his commission, the real estate broker is providing an incentive to both sellers and buyers. As long as this information is disclosed to all parties involved in the transaction, it is considered legal. It is important for all parties to be aware of any potential credits or incentives offered to ensure transparency and fairness in the transaction.

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  • 48. 

    Two days after entering into a contract for the sale of home, both the buyer and seller  agreed to rescind the contract.  The broker representing both the buyer and the seller: 

    • Can deduct his expenses before returning the remainder of the deposit to the buyer

    • Deposit will be divided between the seller and the broker

    • Must return the entire deposit to the buyer

    • Must file an interpleaded action in court to determine the disposition of the deposit

    Correct Answer
    A. Must return the entire deposit to the buyer
    Explanation
    The broker representing both the buyer and the seller must return the entire deposit to the buyer. This is because both parties have agreed to rescind the contract, which means that the transaction is canceled and any money exchanged should be returned. As the deposit belongs to the buyer, the broker has the responsibility to return it in full.

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  • 49. 

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

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

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

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