Real Estate Exam Practice Questions Flashcards

Real Estate Exam Practice Questions Flashcards Johnson, who owns a ranch, gave Broker Otis an exclusive listing to sell the property. Johnson also advanced Otis $100 to advertise the sale of this dance in a brochure published by Otis. The real estate law requires that brokers must account for such funds by placing the 100 dollars

• in the brokers trust account, expend from the trust

account only for advertising the property, and provide a report to the seller that will itemize all expenditures madeB) in the brokers personal office account and spend it only for advertising the propertyC)in the brokers trust account in case the seller defaultsD) in the brokers trust account in order that the money may be returned to the seller if the property is not soldThe $100 collected by the broker is an "advance fee" because the money to pay for it is collected from the principal in advance, distinguished from advertising in a newspaper and paying for the advertising after the fact out of the commission collected. By law, in order to avoid possible misuse or errors, such advance fees must be placed in the broker's trust account and expended only for advertising the property, and brokers must provide a report to the seller itemizing all expenditures made.A) Considering the nature of real estate investments in that they are made over a long period of time, require a considerable amount of money, are harder to care for, and generally have a slower turnover, the return on these investments should be

• The same as bondsB)Higher than bonds but lower than

first trust deedsC) More than bonds and first trust deedsD) The same as first trust deedsMost investors in real estate demand a greater return than is customary with bonds or trust deeds because the risk of ownership is higher and the investment does not have the same degree of liquidity.C) When property tax increases and all other items remain the same, an income property

• Increases in value by the amount of the taxesB)

Increases in value by more than the amount of the taxesC) Decreases in value by the amount of the taxesD) Decreases in value by more than the amount of the taxesThe property will decrease in value by more than the amount of the taxes based on the reduced annual net income (assume a $500 tax increase and a 10% capitalization rate; loss of value would be $5,000).D) When a railroad needs specific land and the owner objects, the railroad may exercise the right of

• injunctionB) caveat emptorC) eminent domainD) writ of

replevinC) A fire insurance policy can be canceled by the insurance company

• At any time without noticeB) If the company gives the

insured notice within a reasonable time prior to cancellationC) Only after the company has given written notice and the insured has signed an acceptanceD) Without notice if the buyer has had excessive lossesB) A real estate salesperson who advertises a property must provide in the advertisement

• At least the salespersons nameB) the brokers nameC)

the brokers name and addressD) Both the brokers name and address and the salespersons nameA)

Which document is of importance in filling a mechanics lien?

• Any of theseB) Notice of CompletionC) Notice of

NonresponsibilityD) Notice of Cessation of LaborA) In a purchase of real property in which a land sales contract is used, the buyer has

• All of theseB) Possessory RightsC) Estate of

inheritanceD) a fee simple estateB) A man was going to build a home on a 50' by 150' lot and wanted it to fit in relation to its surroundings. This placement would be known as

• TopographyB) ElevationC) PlottageD)

OrientationOrientation is the placing or positioning of a structure on the lot with regard to exposure to the sun, prevailing winds, privacy, and protection from noise.D) Two houses were built on two adjacent lots of equal value.Construction costs and maintenance were the same. One house is appraised to be of higher value. What is most likely the reason?

• both houses were across the street from a

nonconforming house that resulted in economic obsolescenceB) one house had more economic obsolescenceC) One house was considered to have functional obsolescenceD) one house had more wear and tearC). Functional obsolescence could be one of the houses may only have a single car garage or less attractive floor plan or only one bathroom A clause in a second trust deed that permits the first trust deed to be refinanced without affecting its priority would be known as a

• Acceleration clauseB) Subordination clauseC) Lien

WaiverD) Alienation clauseB) Joe wants to purchase property but does not have the cash to pay the 85,000. He contacts Harris, who purchases the property and offers it for sale to Joe for 98000 on a land contract. The contract is

• Disguised as a mortgageB) Voidable by HarrisC)

Voidable by JoeD) A valid sale and resaleThe vendee gets the use of the property, time to pay off the credit extended by the vendor, and other benefits of ownership such as increasing equity and income tax benefits.D) Alienation expresses a meaning most nearly opposite toA) AccelerationB) AmortizationC) AcquisitionD) Ad valoremAcquisition is the act of acquiring; alienation is the act of transferring or conveying titleC) All of these statements about depreciation are true exceptA) It can be a loss of value due to wear and tearB) It includes all influences that reduce the value of property below replacement costC) It is a loss of value from any causeD) It always is concerned with intrinsic factors but never with extraneous factorsD) A seller employed a broker through an authorization to sell, which included an authorization to accept deposits. Upon accepting a deposit from a potential buyer and before presenting the offer to the seller, the broker misappropriated the money. The risk of loss is

• The buyers because the broker was acting as his agent

in handling the depositB) Both the buyers and the sellers because neither was at faultC) The sellers because he had given the broker specific permission to accept depositsD) The buyers because he could have avoided any misappropriation by making his check out to an independent escrow company of the sellerC) The term laches is best described asA) a court with no jurisdictionB) a deficiency judgmenetc) inexcusable delay in asserting a legal rightd) a writ of attachmentC) A minority prospect came to you and requested to see a specific house in a minority neighborhood. You can lawfully assume the prospect is

• Trying to test youB) interested in a house in a minority

neighborhoodC) Unable to quality for VA or FHA housing and you should refuse to show prospect any houseD)

interested in a house with a particular type of architectural styleD)

A person purchased a property for 70000 and made a 14000 down payment. If the person borrowed the balance of the purchase price, it would be considered a purchase money trust deed if the borrower received this amount from

• A lenderB) A friendC) Any of theseD) The sellerC)

A money judgment given by a court is effective to create a lien

• in the county where the judgment is obtainedB) in the

entire state by filling with the clerk of the courtC) anywhere in the USD) If recorded in the county where the defendants property is locatedA duly recorded abstract of judgment affects all the property of the debtor in the county where it is recorded. It may be recorded in any county or counties.Items that a landlord owned apartment building and a condominium project would have in common would be

• After development of five units both would be under the

subdivision lawB) Separate tax bills sent to each tenantC) Occupants of both have a fee interestD) Occupants of both have estates in real propertyD) An appraiser is employed to advice as apartment owner of the economic feasibility of construction of a swimming pool.The appraiser would be most concerned with which valuation principle.

• IntegrationB) SubstitutionC) regressionD) ContributionD)

A mortgage loan is identified asA) any recorded instrument related to financial transferB) a loan collateralized by real propertyC) An unsecured noteD) A promissory noteB) Franklin offered to perform all of the obligations in a purchase contract. This act is considered a

• DemandB) ConvenantC) ConditionD) TenderTender is

the act by which one offers to perform under a contract. It is not the actual performance.D) Buyer purchased a property from Seller on August 15,

• Buyer was to take possession as of September 30,

2006, with all perorations to be as of the same date. On November 1,2005 Seller had paid the taxes for the fiscal year of 2005-2006. The escrow closing statement would show

• Seller pays Buyer for 3 months taxesB) Seller pays

Buyer for 9 months taxesC) Buyer pays Seller for 3 months taxesD) Buyer pays Seller for 9 months taxesThe taxes have been paid to July 1, 2006, which is three months short of the close of escrow, September 30, 2006. The seller is obligated to pay the buyer for the taxes for the months of

July, August, and September.(1) C.O.E.: September 30,

2006(2) D.I.: July 1, 2006Date of item: Taxes paid to July 2006(3) Short of C.O.E. 3 mos. Therefore, seller owes 3 mos.A) Local zoning ordinances determining use of land and building may also determine

• All of theseB) SetbacksC) SizeD) Location of

BuildingsA) An easement is a(n)A) specific lien on real propertyB) equitable restriction on real propertyC) general lien on real propertyD) encumbrance on real propertyAn easement is an encumbrance, but not a lien or a restriction. Liens and restrictions are other types of encumbrances.D) Williams owned 40 acres of land in 1955, which she subdivided into 65 lots and placed a restriction in each deed that said these lots may "not be sold to non Caucasians." This restriction is

• unenforceable through court action because it is a

violation of the US constitutionB) prohibited by local, state and federal statutes and regulations of all real estate commissionsC) None of theseD) Valid until Williams DiedA)