Real Estate Exam 2b Flashcards

Real Estate Exam 2b Flashcards

Question: Typically, when leasing real property, the

commission of the leasing agent is based upon a percentage of:A: Total annual rent collected during the first

year of the lease;B: Total cash paid by the lessee at the

time of the negotiation of the lease;C: Total rent collected

over the term of the lease;D: None of the above.

Correct Answer is : CUsually, the commission of a leasing

agent is figured on the total rent to be collected over the term of the lease. The commission can be any amount negotiated and specified in the employment contract.

Question: A title company could make a title search by

searching the records of the:A: County clerk's office;B: County recorder's office;C: Federal land office;D: All of the above.

Correct Answer is : DAll three offices could be searched by

a title company when making a title search.

Question: If the trust account contains trust funds belonging

to more than one beneficiary, the broker may not disburse any funds without the prior written consent of every principal who has funds in the account:A: If such disbursal will reduce the balance of the total funds in the account to

an amount less than the various owners have on deposit;B:

Except to pay a deposit to escrow;C: Unless disbursement

is for the purpose of refunding an earnest money deposit to

an offeror;D: Except when disbursement will be used to

close a real estate transaction of the broker.

Correct Answer is : AThe Commissioner's regulations

require the broker to secure such permission.

Question: A broker's unlicensed assistant prepares a

newspaper ad. According to the Business and Professions Code, which of the following is most correct:A: All content

for the ad must originate from or be written by the broker;B:

The broker is required to read the entire advertisement

prior to publication;C: The broker must review the

advertisement and approve it in writing prior to

publication;D: The broker's responsibility is to ensure that

the assistant is provided with accurate information.

Correct Answer is : BThe broker is required to read the

entire advertisement prior to publication. The broker must approve the ad, but that approval need not be in writing.

Question: Which of the following is the purpose of the

Federal Truth-in-Lending Act:A: To limit interest rates;B: To

regulate fees charged by lenders;C: To provide consumers

information concerning the cost of credit;D: All of the

above.

Correct Answer is : CThe purpose of the Federal

Truth-in-Lending Act is to assure consumers that they are provided information on the cost of credit.

Question: An acquired legal privilege for the right of use or

enjoyment, short of an estate, which one may have in the land of another is known as:A: An easement;B: A lease;C:

A devise;D: A riparian right.

Correct Answer is : AAn easement is not an estate, but is a

non-possessory interest one has to use land belonging to another, whereas a lease (leasehold) is a personal interest in real property known as a less-than-freehold estate (chattel real). A devise is the transfer of real property under a will. Riparian rights are natural water rights which pass automatically with the land.

Question: When loaning money to two or more

co-borrowers on a single promissory note, the lender would be best advised to increase the security on the note by inserting which of the following phrases after the names of the co-borrowers:A: Personally and corporately;B: Together as individuals;C: Individually and severally;D: Jointly and severally.

Correct Answer is : D"Jointly and severally" would mean

that the co-borrowers were obligated both together and individually for the repayment.

Question: A standard policy of title insurance protects the

insured against:A: Defects known by the insured to exist at the date of the policy that are undisclosed to the insurance

company;B: Lack of capacity of a party to any transaction

involving title to the land;C: The power of eminent

domain;D: Unrecorded easements.

Correct Answer is : BNo insurance will cover choice "A"

which represents fraud, nor choice "C" which is governmental regulations. Choice "D" is covered by extended coverage but not by a standard policy.

Question: Which of the following is true concerning

promissory notes:A: They are used as security for trust

deeds;B: They are recorded at the county recorder's

office;C: They are always used when real estate is sold;D: They are the evidence of the debt.

Correct Answer is : DPromissory notes are evidence that

money is owed by one person to another. The trust deed is the security for the note.

Question: When acquiring an easement, which of the

following methods would create an easement that could be most easily terminated for nonuse:A: Express reservation in a deed;B: A quitclaim deed from a valid owner;C:

Prescription;D: Implication.

Correct Answer is : CAn easement acquired by prescription

may be terminated if not used for a continuous period of five years. The other methods of creating an easement do not offer that opportunity.

Question: The gross rent multiplier is arrived at by

dividing:A: Gross monthly rental by market value;B: Gross

monthly rental by selling price;C: Sales price by gross

monthly rental;D: Value arrived at by gross monthly rental.

Correct Answer is : CTo determine the gross rent multiplier,

the sales price is divided by the gross monthly rental.

Question: Most buyers of real property receive which of the

following types of policies of title insurance:A: A standard

policy;B: A leasehold policy to protect against the rights of

tenants;C: A certificate of title;D: An ALTA policy.

Correct Answer is : AA standard policy is least expensive,

and protects against most of the concerns that a buyer would have in purchasing the property.

Question: In making the decision of whether or not to issue

a title policy, the title insurance company would be most concerned with those documents that appear within the:A: Title guarantee;B: Title report;C: Chain of title;D: Title search.

Correct Answer is : CDocuments would be discovered

during a title search. The documents which are most significant would appear within the chain of title.

Question: The right to foreclose a trust deed, under a

trustee's power of sale, outlaws:A: In four years;B: In three years;C: In two years;D: Never.

Correct Answer is : DA trust deed is not a contract but,

rather, a conveyance of the naked legal title with the power of sale from the trustor to the trustee. Therefore, the trustee retains the right to sell the property under the trust deed at any time for the benefit of the beneficiary. The conveyance has been performed and, thus, is not under the Statute of Limitations; therefore, it never "outlaws."

Question: When comparing a straight note with an

installment note, the straight note:A: Will have equal annual

principal reduction payments;B: Will have no principal

payments during the term of the loan except on the last

payment;C: Will have a total effective interest rate greater

than if the loan were an installment loan;D: None of the

above.

Correct Answer is : BA straight note is a promissory note in

which there are no payments on the principal until the end

of the loan. There may be payments on the interest during the term of the loan or the interest may be paid at the same time the principal is at the end of the loan. The rate of interest will not necessarily be greater.

Question: A real estate agent may legally represent all

principals in the same transaction if:A: He has informed all

principals that he is the agent for each principal;B: He has

obtained consent of all to this agency relationship;C: He is

collecting commission from each principal with the

knowledge of the others;D: All of the above conditions

exist.

Correct Answer is : DA real estate agent may only

represent all principals in the same transaction if he has obtained their knowledge and consent. In this case, he could then collect a commission from all parties.Question: Unpaid real property taxes constitute a lien:A:

Prior to a mortgage lien;B: Concurrent with a mortgage

lien;C: After a mortgage lien;D: None of the above.

Correct Answer is : AIn California, real property taxes

become a specific lien on the assessed property as of March 1st, preceding the current tax (fiscal) year. Tax liens take priority over all mortgage liens, regardless of date.

Question: It is proper business practice for real property

managers to be compensated in all of the following ways, except:A: Percentage of gross receipts;B: Commission on

new leases;C: Commission on major repairs or

alterations;D: Receipt of discounts on purchases or

supplies.

Correct Answer is : DThe Institute of Real Estate

Management (IREM) recommends that property managers refrain from taking discounts or commissions arising out of purchases, contracts, or other expenditures of clients' funds, unless such income is fully disclosed to the property owner and accepted with his permission.

Question: Property is being sold whereby the purchaser is

to continue the payments of an existing amortized loan secured by a first mortgage. In order for the buyer to assume the existing mortgage without penalty, the real estate agent should check to be sure the mortgage does not include:A: An acceleration clause;B: A release clause;C: A subordination clause;D: A requit clause.

Correct Answer is : AIf a loan has an acceleration clause

that allows the lender to call the loan upon alienation of the title, then a buyer could not assume that loan.

Question: Most lenders, when they are deciding whether or

not to make a proposed real estate loan, try to minimize the:A: Overall net yield;B: Loan-to-value ratio;C: Chance of

a substandard loan becoming a part of their portfolio;D:

The borrower's difficulties which may arise in the future, such as a divorce or death.

Correct Answer is : CA substandard loan is one that is

more likely to go into default. A lender would try to reduce the possibility of any new loan being substandard.

Question: Jesse, an unlicensed employee of a real estate

broker, hands out door-hanger flyers and makes telephone solicitations, seeking buyers and sellers. Under the real estate law, his activities are:A: Unlawful for the broker;B: Commonly accepted behavior;C: Unethical for Jesse;D: Unlawful for both Jesse and the employing broker.

Correct Answer is : DWhile handing out door-hanger flyers

would not require a license, telephone solicitations would require a license. Both the broker and the salesperson have violated the real estate law.Question: A straight note:A: May be used in a real estate

transaction;B: Is a note providing that the principal owing is

to be paid at one time;C: May be secured by a mortgage;D: May be any of the above.

Correct Answer is : DA straight note may be secured by a

mortgage when it is used in a real estate transaction. It is also a note providing that the entire principal is to be paid at maturity of the loan.