Practice Exam 2

80 Questions | Total Attempts: 32

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Practice Exam Quizzes & Trivia

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Questions and Answers
  • 1. 
    It is generally understood that land has what three fundamental physical characteristics?
    • A. 

      Situs, homogeneity, fixity

    • B. 

      Immobility, indestructibility, heterogeneity

    • C. 

      Indestructibility, homogeneity, uniqueness

    • D. 

      Uniqueness, immobility, fixity

  • 2. 
    An object that a tenant attaches to real property for use in the tenant's trade or business is
    • A. 

      An easement appurtenant

    • B. 

      A trade fixture

    • C. 

      An easement in gross

    • D. 

      An encroachment

  • 3. 
    A local government will implement a master plan through all of the following except
    • A. 

      Setback restrictions

    • B. 

      Taxation

    • C. 

      Inverse condemnation

    • D. 

      Eminent domain

  • 4. 
    The process of ascertaining value by comparing and evaluating values obtained from different valuation approaches is called
    • A. 

      Averaging the valuations

    • B. 

      Adjustment

    • C. 

      Reconciliation

    • D. 

      Value correction

  • 5. 
    A partially amortized loan is
    • A. 

      A loan under which the mortgage under payments pay all of the interest due but not enough of the principal to fully pay off the loan at the end of the loan term

    • B. 

      A loan wherein the payments are sufficient to pay off the entire loan by the end of the loan term

    • C. 

      A loan wherein periodic payments consist of interest only

    • D. 

      A loan wherein monthly installment payments do not cover all of the interest due

  • 6. 
    Which of the following statements is false about the VA-guaranteed loan program?
    • A. 

      The VA does not make loans.

    • B. 

      Approved lenders make the VA guaranteed loans

    • C. 

      Persons who served only in the National Guard are not eligible.

    • D. 

      The VA guarantee works much like PMI.

  • 7. 
    A conflict of interest can exist
    • A. 

      Regardless of any pecuniary gain

    • B. 

      Regardless of any actual undue influence

    • C. 

      Regardless of any evidence wrongdoing or impropriety

    • D. 

      All of the above

  • 8. 
    In regard to the manner of creation, a contract may be
    • A. 

      Express or implied

    • B. 

      Express or unilateral

    • C. 

      Express or bilateral

    • D. 

      Express or executory

  • 9. 
    A lease with an option to purchase is a
    • A. 

      Unilateral executory contract

    • B. 

      Unilateral executed contract

    • C. 

      Bilateral executory contract

    • D. 

      Bilateral executed contract

  • 10. 
    A legatee is
    • A. 

      The receiver of real property by will

    • B. 

      The receiver of real property by intestate succession

    • C. 

      The receiver of personal property by will

    • D. 

      The receiver of personal property by intestate succession

  • 11. 
    Examples of trust funds include
    • A. 

      Earnest money deposits that a prospective purchaser gives to a broker as good-faith evidence of intention to complete the transaction

    • B. 

      Rent from a broker's own real estate

    • C. 

      A broker's real estate commissions

    • D. 

      Security deposits from a broker's own real estate

  • 12. 
    Prerecorded telephone calls are referred to as
    • A. 

      Registry calls

    • B. 

      Wireless calls

    • C. 

      Robocalls

    • D. 

      Telecalls

  • 13. 
    The cost of a 35,000 square-foot is $30,800. What is the cost per square foot?
    • A. 

      $1.14 (rounded)

    • B. 

      $.86 (rounded)

    • C. 

      $.75

    • D. 

      None of the above

  • 14. 
    In a 1031 exchange, the term "boot" refers to
    • A. 

      Like-kind property held for productive use received in the exchange

    • B. 

      Cash or other not like-kind property received in the exchange

    • C. 

      The falling out of the transaction due to irreconcilable differences

    • D. 

      The rejection of recognition of the exchange by the IRS

  • 15. 
    An advertisement submitted by a licensee that fails to reveal that the advertiser is an agent, not a principal, is called
    • A. 

      An unprotected ad

    • B. 

      A disapproved ad

    • C. 

      A blind ad

    • D. 

      A secret ad

  • 16. 
    Shellet v. Kraemer held that 
    • A. 

      Private racially-based restrictive covenants are invalid under the Fourteenth Amendment.

    • B. 

      Only racially-based discrimination by federal, state, and local governments is prohibited under the Fourteenth Amendment.

    • C. 

      Only racial- and religious-based discrimination by federal, state, and local governments is prohibited under the Fourteenth Amendment.

    • D. 

      Only religious discrimination by federal, state, and local governments is prohibited under the Fourteenth Amendment.

  • 17. 
    Rent is typically paid in _____, in which case the buyer would be ______ for the portion of the month remaining after closing.
    • A. 

      Advance, credited

    • B. 

      Advance, debited

    • C. 

      Arrears, credited

    • D. 

      Arrears, debited

  • 18. 
    A contract in which a property  owner grants someone the right to purchase the property for a specified amount during a specified period of time is
    • A. 

      A right of first refusal

    • B. 

      A graduated lease

    • C. 

      An option contract

    • D. 

      A ground lease

  • 19. 
    A listing agreement in which a seller reserves the right to sell the property to a buyer the seller procures without obligation to pay a commission to the seller's exclusive agent is called
    • A. 

      An open listing

    • B. 

      An exclusive tight to sell listing

    • C. 

      A net listing

    • D. 

      An exclusive agency listing

  • 20. 
    The Residential Lead-Based Paint Hazard Reduction Act requires that
    • A. 

      Sellers must test for the presence of lead based paint in residential dwelling units

    • B. 

      Lead-based paint on walls of residential dwelling units must be removed before the unit can be sold or rented

    • C. 

      Knowledge about whether lead-based paint was used in the dwelling must be disclosed

    • D. 

      Lead water pipes must be replaced before the property can be sold or rented

  • 21. 
    If a property disclosure agreement is required for the sale of a residential property consisting of 1 to 4 dwelling units, when must the buyer or a buyer's agent be given the disclosure statement?
    • A. 

      After all contingencies have been satisfied

    • B. 

      Before the close of escrow

    • C. 

      Within 3 business days of the buyer's signing the purchase agreement

    • D. 

      Prior to the buyer's signing a purchase agreement

  • 22. 
    The unauthorized use of another's funds for one's own use is called 
    • A. 

      Conversion

    • B. 

      Commingling

    • C. 

      Ratification

    • D. 

      Reconciliation

  • 23. 
    A property management agreement is usually
    • A. 

      Created by ratification

    • B. 

      A verbal agreement between a property owner who has property to manager and a property manager

    • C. 

      Created by estoppel

    • D. 

      A written agreement between a property owner who has property to manage and a property manager

  • 24. 
    A final payment on a loan that is not fully amortized is a 
    • A. 

      NegAm payment

    • B. 

      Level interest payment

    • C. 

      Installment payment

    • D. 

      Balloon payment

  • 25. 
    Which of the following statement is false?
    • A. 

      A CMA is prepared by a broker

    • B. 

      A CMA only considers recently sold similar properties

    • C. 

      A CMA may consider properties currently listed

    • D. 

      A mark data appraisal does not consider properties that are not sold

  • 26. 
    In case an item is scarce, but has no demand, the item would
    • A. 

      Have a high market value

    • B. 

      Have great functional utility

    • C. 

      Command a high market price

    • D. 

      Be essentially worthless

  • 27. 
    A known cause of cancers in animals and possibly in humans that is extensively used to make building materials is
    • A. 

      Radon

    • B. 

      Mesothelioma

    • C. 

      Formaldehyde

    • D. 

      Carbon monoxide

  • 28. 
    To exercise eminent domain, an appropriate governmental body must satisfy certain requirements, including
    • A. 

      That the property must be taken for the public good

    • B. 

      That the governmental body must pay at least 110% of the property's assessed value

    • C. 

      That the governmental body demonstrate that the taking will result in an increase in the property's fair market value

    • D. 

      That the governmental body must demonstrate that the property was not used in conformance with existing zoning laws

  • 29. 
    A description such as T2N, R3E, SBL&M would be what kind of land description?
    • A. 

      U.S. government survey system

    • B. 

      Metes and bounds system

    • C. 

      Lot, block, and tract system

    • D. 

      Recorded plat system

  • 30. 
    Brownfields are defined  by the EPA as 
    • A. 

      Real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of hazardous substance, pollutant, or contaminant.

    • B. 

      Areas that are soaked or flooded by surface or groundwater frequently enough or for sufficient duration to support plants, birds, animals, and aquatic life. Wetlands generally include swamps, marshes, bugs, estuaries, and other inland and coastal areas, and are federally protected

    • C. 

      Areas of low, flat, periodically flooded land near steams or rivers

    • D. 

      A large hole used for the purpose of waste disposal

  • 31. 
    Which of the following is not a method used to estimate reproduction or replacement cost?
    • A. 

      Square-foot method

    • B. 

      Quantity survey method

    • C. 

      Age-life method

    • D. 

      Unit-in-in place method

  • 32. 
    Which of the following statements is false?
    • A. 

      Mortgage loans can be issued by the Consumer Financial Protection Bureau.

    • B. 

      Mortgage loans can be issued by private mortgage insurers.

    • C. 

      Mortgage loans can be insured by the FHA.

    • D. 

      Mortgage loans can be insured by certain state-government entities.

  • 33. 
    Which of the following statements is false?
    • A. 

      All real estate agency compensation is subject to negotiation.

    • B. 

      If an agent representing a buyer receives compensation indirectly from the seller, the agent is a dual agent.

    • C. 

      By accepting or retaining the benefit of an act made by an unauthorized agent or by an agent who has exceeded his or her authority, a principal can create an agency by ratification.

    • D. 

      An agent does not necessarily represent the person paying the commission.

  • 34. 
    State laws differ as to whether a seller of a single-family home must disclose that
    • A. 

      The seller is a Buddhist

    • B. 

      The roof leaks when it rains

    • C. 

      The seller's wife was murdered in the house four years ago

    • D. 

      The heater doesn't work

  • 35. 
    Joel's Pain Shop has a lease under which Joel pays the landlord a fixed rent amount each month and the landlord pays all of the operating expenses of the premises. Joel's Paint Shop has what kind of lease?
    • A. 

      Percentage lease

    • B. 

      Net lease

    • C. 

      Graduated lease

    • D. 

      Fixed lease

  • 36. 
    When requested to provide title insurance on a property, a title insurance company usually utilizes their own set of records called
    • A. 

      A chain of title

    • B. 

      A title plant

    • C. 

      An abstract of title

    • D. 

      An opinion of title

  • 37. 
    There are only two source of passive income:
    • A. 

      Rental activity and a business in which the taxpayer does not materially participate

    • B. 

      Interest and rental income

    • C. 

      A business in which the taxpayer materially participates and rental income

    • D. 

      Dividends and rental income

  • 38. 
    The suggestion, as a fact, to a party that which is not true committed by another party who does not believe it to be true and who makes the suggestion with the intent to deceive the first party, who was deceived to his or her detriment, such as by being induced to enter into a contract is
    • A. 

      Deliberate misrepresentation

    • B. 

      Intentional misrepresentation

    • C. 

      Fraud

    • D. 

      All of the above

  • 39. 
    Kenny is real estate salesperson who found a buyer for a home that sold for $750,000. Kenny's employing broker split the 5% commission for the sale with the listing broker. The agreement between Kenny and his employing broker provides that Kenny receive 40% of his employing broker's commission on every sale Kenny procures. What is Kenny's commission on this transaction?
    • A. 

      $18, 750

    • B. 

      $9, 375

    • C. 

      $15, 000

    • D. 

      None of the above

  • 40. 
    The key to the front door of a house would most likely characterized as
    • A. 

      Personal property

    • B. 

      An emblement

    • C. 

      Real property

    • D. 

      An easement

  • 41. 
    What does the National Environmental Policy Act require federal agencies prepare for any development project that the federal agencies could prohibit or regulate?
    • A. 

      A wetlands preservation plan

    • B. 

      An environmental protection master plan

    • C. 

      A master plan

    • D. 

      An environmental impact statement

  • 42. 
    The value that is paid for a property acquired by eminent domain refers to the property's 
    • A. 

      Book value

    • B. 

      Scrap value

    • C. 

      Salvage value

    • D. 

      Condemnation value

  • 43. 
    A seller/owner who finances part of the purchase price of a property under a land installment contract is referred to as the
    • A. 

      Vendor

    • B. 

      Vendee

    • C. 

      Grantor

    • D. 

      Grantee

  • 44. 
    Most states require the buyer's agent disclose the agency relationship to the buyer 
    • A. 

      Before close of escrow

    • B. 

      Before the buyer signs the purchase agreement

    • C. 

      As soon as all contingencies have been met

    • D. 

      Before the seller signs the listing agreement

  • 45. 
    Ways in which a contract can typically be discharged do not include
    • A. 

      By being fully performed

    • B. 

      If the object or purpose of the contract becomes illegal

    • C. 

      Inability of one party to profit from the agreement

    • D. 

      If by the time the purpose of the contract is to be performed, it is impossible to do so

  • 46. 
    What type of deed is given at the foreclosure of a property, subsequent to a judgement of foreclosure of a money judgement against the owner or of a mortgage against the property?
    • A. 

      General warranty deed

    • B. 

      Special warranty deed

    • C. 

      Sheriff's deed

    • D. 

      Grant deed

  • 47. 
    One of the implied warranties in a grant deed is that the grantor will convey all after acquired title. This warranty means that
    • A. 

      The grantor has not transferred title to anyone else

    • B. 

      All interests in the property acquired by the grantor subsequent to the conveyance of the deed automatically pass to the grantee

    • C. 

      The property at the time of execution is free from any encumbrances made by the grantor, except for those disclosed

    • D. 

      The grantor owned the property and has the right to sell it

  • 48. 
    Which of the following statements is true?
    • A. 

      Competitors are not guilty of price-fixing if they merely agree to lower prices and subsequently do so.

    • B. 

      The more appearance of an implied agreement between or among competitors is likely to be deemed a conspiracy to fix prices, to boycott a competitor, or to allocate market shares, if, subsequent to their communication, the parties act as if such an agreement had been reached.

    • C. 

      Under the Sherman Act, the term "group action" refers to three or more persons agreeing to act.

    • D. 

      An MLS may refuse membership to a broker who discounts fees beyond a certain point.

  • 49. 
    A home has a fair market value of $550,000, a homestead exemption of $100,000, an assessed value of $468,000, and county property tax of 1.2%. What is the annual county property tax on this home?
    • A. 

      $5,400

    • B. 

      $5,616

    • C. 

      $4,320

    • D. 

      None of the above

  • 50. 
    The interstate L and Sales Full Disclosure Act is intended to
    • A. 

      Encourage interstate subdivision sales

    • B. 

      Encourage the subdivision and the development of state and federal land

    • C. 

      Prevent unscrupulous subdividers from taking advantage of the public

    • D. 

      Encourage the creation and sales of timeshares

  • 51. 
    Federal tax liens are ____ and ____ liens.
    • A. 

      Specific, involuntary

    • B. 

      General, involuntary

    • C. 

      Specific, voluntary

    • D. 

      General, voluntary

  • 52. 
    Properties are granted a nonconforming use exception are said to be
    • A. 

      Spot zoned

    • B. 

      At variane

    • C. 

      Buffered in

    • D. 

      Grandfathered in

  • 53. 
    The value measured by the cost of building, a property with current materials and labor refers to the property's
    • A. 

      Replacement value

    • B. 

      Reproduction value

    • C. 

      Book value

    • D. 

      Assessed value

  • 54. 
    Fees that lenders charge to cover expenses of processing a loan are called
    • A. 

      Origination fees

    • B. 

      Discount fees

    • C. 

      Advance fees

    • D. 

      Point fees

  • 55. 
    If an agent is co-owner of a property and the other owners authorize the agent to represent the property for sale,
    • A. 

      The agent is a designated agent

    • B. 

      The other owners may not revoke the agency

    • C. 

      The agency is illegal because of a conflict of interest

    • D. 

      The other owners may cancel the agency at any time because agency is a personal relationship based on trust and confidence

  • 56. 
    A lease under which a tenant pays a fixed rent plus the landlord's taxes, hazard insurance, and all maintenance costs not specifically reserved for the landlord's maintenance is called a
    • A. 

      Triple net lease

    • B. 

      Percentage lease

    • C. 

      Graduated lease

    • D. 

      Ground lease

  • 57. 
    A lease for real property constitutes
    • A. 

      A novation and a privity of chattel

    • B. 

      A contract and a transfer of interests

    • C. 

      An option with a contract

    • D. 

      A document that must be in writing pursuant to the statute of frauds

  • 58. 
    Unless the transaction is exempt, FIRPTA requires the buyer of real property to withhold what percent of the amount realized from the sale and to send that withheld amount to the IRS?
    • A. 

      15%

    • B. 

      10%

    • C. 

      5%

    • D. 

      3%

  • 59. 
    Charles purchased a home for $350,000 with 6% fixed-rate, fully amortized 30-year loan in the principal amount of $312, 208. He makes payments of $1,872 per month. What is the amount of unpaid principal on this loan after the first month's payment?
    • A. 

      $310,336

    • B. 

      $310,450

    • C. 

      $311,429

    • D. 

      None of the above

  • 60. 
    The most important feature distinguishing a joint tenancy from a tenancy in common is 
    • A. 

      Percentage of ownership

    • B. 

      The ability to transfer the tenant's interests

    • C. 

      The percentage of possession

    • D. 

      The right of survivorship

  • 61. 
    A real estate license owes to clients a special relationship  of utmost care, honesty, trust, and loyalty known as
    • A. 

      A dual agent relationship

    • B. 

      A subagent relationship

    • C. 

      A fiduciary relationship

    • D. 

      A power of attorney relationship

  • 62. 
    A purported agreement that is not, in fact, a contract and cannot be enforced by law is 
    • A. 

      An oral agreement

    • B. 

      A voidable agreement

    • C. 

      A valid agreement

    • D. 

      A void agreement

  • 63. 
    A nonprofit private club not open to the public owns a building in which there are 5 hotel-type guestrooms, a meeting hall, a recreation room, a dining room, and other amenities used by members. This club has a policy of only renting their guestrooms to members of the club. Under the Federal Fair Housing Act this policy is
    • A. 

      Legal

    • B. 

      Illegal because private clubs cannot discriminate in rentals under any circumstances

    • C. 

      Illegal because no organization may discriminate in the sale or rental of housing

    • D. 

      Legal because all private clubs are exempt from the provisions of the FFHA

  • 64. 
    Anita purchased a home for $275,000 with a $55,000 down payment and a 5% fixed-rate loan. What is the amount of interest due for the first month?
    • A. 

      $11,000

    • B. 

      $10,000

    • C. 

      $9,500

    • D. 

      None of the above

  • 65. 
    Which of the following statements is false about a tenancy in common?
    • A. 

      All of the tenants have an undivided interest in the property.

    • B. 

      The tenants may not transfer their interest by will.

    • C. 

      The tenancy may be terminated by a voluntary partition.

    • D. 

      Each tenant may sell his or her interest in the tenancy.

  • 66. 
    A buyer's agent who is a single agent
    • A. 

      Owes fiduciary duties to both the seller and to the buyer

    • B. 

      Does not owe a fiduciary duty to the buyer

    • C. 

      Owes a duty to act fairly to the buyer but not to the seller

    • D. 

      Owes a duty to act fairly to both the buyer and to the seller

  • 67. 
    A contract cannot be valid unless
    • A. 

      It is in writing

    • B. 

      By its terms it can be fully performed within 2 years

    • C. 

      It has a lawful object or purpose

    • D. 

      None of the above

  • 68. 
    Hannah purchases a building for $3,000,000 that has a useful life of 30 years and an anticipated residual value of $750,000. After 10 years, what is the value of the building, if by "value" we mean the original cost less accumulated straight-line depreciation?
    • A. 

      $2,250,000

    • B. 

      $2,000,000

    • C. 

      $2,150,000

    • D. 

      None of the above

  • 69. 
    One of the advantages of condominium ownership over single family-home ownership is
    • A. 

      No maintenance

    • B. 

      No homeowners association

    • C. 

      Deductibility of mortgage interest

    • D. 

      Ease of maintenance

  • 70. 
    Which of the following is not a step that appraisers should follow in the process of developing an appraisal report?
    • A. 

      Identify the relevant characteristics of the property

    • B. 

      Determine data specific to the property

    • C. 

      Collect, verify, and analyze the data

    • D. 

      Consider the appraisal estimate that the client wishes to receive

  • 71. 
    PITI refers to 
    • A. 

      Property, interest, taxes, income

    • B. 

      Principal, interest, taxes, income

    • C. 

      Principal, interest, taxes, insurance

    • D. 

      Principal, income, taxes, insurance

  • 72. 
    What federal act is designed to prevent lenders, real estate agents, developers, title insurance companies, and other persons (such as appraisers and inspectors) who service the real estate settlement process from providing kickbacks or referral fees to each other, and from facilitating bait-and-switch tactics?
    • A. 

      Truth-in-Lending Act

    • B. 

      Real Estate Settlement Procedures Act

    • C. 

      Equal Credit Opportunity Act

    • D. 

      Consumer Financial Protection Act

  • 73. 
    Margaret was involved in a real estate transaction in which she owed fiduciary duties to neither the buyer nor the seller. Margaret likely was
    • A. 

      The seller's agent

    • B. 

      The buyer's agent

    • C. 

      A dual agent

    • D. 

      A transactional broker

  • 74. 
    A licensee must never recommend a particular inspection company (or other service)
    • A. 

      That the licensee has used more than 5 times in the past 12 months

    • B. 

      Unless the home inspection company is certified by the FHA

    • C. 

      In which the licensee has a personal interest without full disclosure to the client

    • D. 

      Unless the home inspection company is certified by the state in which the property being inspected is located

  • 75. 
    A broker has the least protection with
    • A. 

      A multiple listing

    • B. 

      An open listing

    • C. 

      An exclusive agency listing

    • D. 

      An exclusive right to sell listing

  • 76. 
    Alex offers to buy Ned's cottage for $75,000. Ned writes back that he would take $85,000. Within this scenario is not
    • A. 

      An offer

    • B. 

      A rejection

    • C. 

      A counteroffer

    • D. 

      An acceptance

  • 77. 
    Recording a deed to real property with the county recorder provides
    • A. 

      Actual notice to subsequent purchasers or encumbrancers.

    • B. 

      Constructive notice to subsequent purchasers or encumbrancers.

    • C. 

      Acknowledgement to subsequent purchasers or encumbrancers.

    • D. 

      Responsibility to subsequent purchasers or encumbrancers.

  • 78. 
    The Americans with Disabilities Act (ADA) applies to employers engaging in interstate commerce and having ____ or more employees.
    • A. 

      5

    • B. 

      10

    • C. 

      15

    • D. 

      50

  • 79. 
    Antitrust laws impose restrictions on the conduct of real estate agents toward
    • A. 

      Competitors

    • B. 

      Clients

    • C. 

      Customers

    • D. 

      All of the above

  • 80. 
    John wants to put a clause in the deed that he is transferring to Lauren that might result in the reversion of the property to John. What should John place in the deed?
    • A. 

      An affirmative covenant

    • B. 

      A negative covenant

    • C. 

      A condition

    • D. 

      A conditional use clause