Real Estate Exam FirstTuesday Simulated Exams_1 Flashcards

Real Estate Exam (FirstTuesday Simulated Exams_1) Flashcards

• A violation of a condition in a homeowners'

association's (HOA's) conditions, covenants and

restrictions (CC&Rs) is:

a - ( More severe than the violation of a covenant )The violation of a condition in a homeowners' association's (HOA's) conditions, covenants and restrictions (CC&Rs) is considered more serious than a violation of a covenant.The violation of a condition may result in the loss of title whereas a covenant is simply a promise, the breaking of which will not result in the loss of title.

• A real estate agent may not represent all principals in a

transaction when:

d - (they fail to disclose their dual agency status the moment it arises) In order to represent both principals in a transaction as a dual agent, the agent's dual agency status must be disclosed as soon as possible.

• A real estate broker generally acts from a position of

trust for the seller or buyer. This is described legally as

a(n):

a - ( Fiduciary relationship ) This protected relationship between the client and the agent is called fiduciary. It is a position of trust that exists between the agent and their client.

• Alienation of title refers to:d -(Transferring an estate) Alienation of title refers to a

transfer of ownership.

• A metropolitan area where the cities within it have

grown together is known as a(n):

a - ( Megalopolis ) When a metropolitan area grows by the connection of various cities within it, it becomes a megalopolis.

• A loan that allows the borrower to make monthly

payments less than the interest accruing is referred to as

a(n):

d - (Option adjustable rate morgage (ARM)) The option adjustable rate mortgage (ARM), which results in negative amortization, is the correct choice.

• A real estate salesperson may only be paid a

commission by:

d - (their employing broker) Only the employing broker can compensate the salesperson. The broker receives their broker fee (commission) at the close of escrow and delivers a percentage of the fee to the salesperson involved in the transaction.

• The task of evaluating a property to qualify it as

completed by a(n):

a - ( Appraiser ) An appraiser determines value of a property rather than its condition, which is performed by a home inspector. For the purposes of qualifying the collateral which secures the loan, the lender requires an appraiser's determination of the property's value.

• State licensing of contractors protects the public

against:

b - (incompetence) State licensing of contractors requires experience and other qualifying requirements to protect the public from incompetence. These skills can be tested to acquire a license. Dishonesty, felonious behavior and fraud are legal concerns dealt with by the district attorney, not the licensing authority.

• All of the following are essential to creating a valid

contract, except:

d - (Written Documentation) This is an EXCEPT question.An oral contract may be valid, and thus D. written

documentation is the correct answer. A valid contract

requires four elements be present: capable parties,

consideration, legal object and mutual consent.

• Gloria is considering an income-producing property to

purchase as an investment. In analyzing its suitability for investment, what is Gloria most interested in?d - ( The Cap Rate )The capitalization rate (cap rate) is the annual rate of return on invested capital experienced by an investment property based on net operating income (NOI) produced by the operations of an income property. The cap rate is of critical importance to income property investors.The cap rate is calculated by dividing the NOI by the property's price.

• The real estate disclosure law that became effective

January 1, 1988 concerns:

a - (agency relationships) There are several disclosures that became effective around the late 1980s. However, the agency disclosure law is the one that became effective in

• The Transfer Disclosure Statement (TDS) became

effective in 1987.

• Marc purchased an apartment building for $2,000,000.

The list price was $2,500,000. Marc put $500,000 down and acquired a new first trust deed for the difference.

Marc's cost basis for income tax purposes is:

c - ($2,000,000) Cost basis is the cost incurred to acquire and improve property and is used primarily for tax reporting and recovery of capital. Loans have no effect on a property's cost basis, and neither does a seller's list price.

• Under the Real Estate Law, a real estate salesperson

is:

b - (An employee of the broker) This question requires us to accept a dichotomy unique to real estate. A salesperson is an employee and agent of the broker for the purposes of the Real Estate Law. However, they are generally classified as an independent contractor for tax purposes.

• How soon must a broker deposit a client check that is

made out to the broker's trust account?c - ( Three business days ) Three business days is the time allowed to deposit a client's check into the broker's trust account.

• Which of the following parties is in the weakest position

against loss of property due to a claim of title by a third party?a - (The person possessing an unrecorded quitclaim deed who does not need to occupy the property) The question speaks to constructive notice. Answer selection A refers to a quitclaim deed that is not recorded nor does the person occupy the property. Recording documents as well as physical possession of a property are both cause for someone to recognize and question an interest in property.

• A buyer's agent submitted on offer to purchase a home

to a seller along with a $10,000 personal note as the

earnest money deposit. The buyer's agent is to:

a - (Inform the seller that the earnest money deposit is a personal note prior to the seller's acceptance of the offer) The agent is obligated to inform the client of all material facts. The form of the deposit is a material fact. An agent needs to present all offers unless they are patently frivolous or the seller explicitly instructed the agent to no longer present offers.

• When representing their client to third persons in a

sale, a licensed real estate broker is b - ( Agency ) In the context of representing their client to third persons in a sale, the law of agency exists for the purpose of clarifying the conduct of an agent when dealing with a third-party for the benefit of their client.

• David listed his house for sale with Broker Paulson for

$400,000. David told Broker Paulson it was imperative that the property be sold quickly. Broker Paulson showed the

property to Henry and told him David was financially insolvent and would accept $380,000. Based on Broker Paulson's statement, Henry offered David $380,000 for his property. David accepted the offer. Concerning Broker Paulson's actions, which of the following is true?a - (Broker paulson violated his fiduciary obligation to David since he acted in excess of his authority.) The only correct interpretation of agency law is that broker Paulson acted