Real estate practice exam 3 Flashcards

Real estate practice exam 3 Flashcards 49) Jackson leased his home to Sullivan with a verbal agreement to sell the property to Sullivan. Jackson knows that Sullivan has been making significant improvements to the property in reliance on that verbal agreement. Jackson now declines to sell the property to Sullivan. Which of the following best describe the rights of the parties(A) Jackson must sell because he made on ostensible agreement(B) Sullivan has no right to enforce the verbal agreement(C) Jackson must sell because the doctrine of estoppel will apply in this case(D) Jackson does not have to sell because of the statute of frauds Cdoctrine of estoppel would apply when one person allows another to rely on statements made to the detriment of that person. In this case, Jackson allowed Sullivan to rely on a verbal promise to sell and to make substantial improvements to the property. The court would stop Jackson from refusing to sell 63) why are housing prices so heavily weighted when calculating the Consumer Price Index?(A) increasing down payment amounts contribute significantly to inflation(B) the most significant portion of the CPI is building costs(C) housing prices and the associated interest cost form the bulk of most homeowners Financial outlay(D) all of the above Cthe Consumer Price Index (CPI) is designed to measure the change in the average level of prices paid for consumer goods and services by all private households. In measuring CPI, not all goods and services are treated equally or, in other words, given the same weight. Since housing prices and associated interest cost form the bulk of most homeowners outlay, changes in mortgage interest rates are heavily weighted by calculating the CPI 69) When a buyer made an offer on a home, he was given a lead based paint disclosure by the agent. The buyer decided to have an inspection made of the property and lead based paint was discovered. The buyer requested the seller have the necessary repairs be made. Does the seller

have a legal obligation to correct the situation:(A) Yes,

because lead is a known hazard(B) Yes, if the buyer has children under the age of 13(C) No, lead is no longer considered a hazard(D) No, but the existence of lead can be used as a negotiating point in the purchase DThe seller is under no obligation to correct a situation created by lead based paint. The buyer may certainly try to negotiate a change in price as a result of the possibility of lead based paint 93) a broker is acting as the agent of the seller in a transaction in which the seller carry back a second trust deed. The broker must cause the deed of trust to be recorded or advise a seller to record the trust deed(A) within one week after the close of escrow(B) one business day after the close of escrow(C) 30 days after the close of escrow(D) none of the preceding, as this is not the responsibility of the Agent Awithin one week of closing of a transaction, the broker must cause a deed of trust to be recorded with the County Recorder, or cause it to be delivered to the beneficiary with a written recommendation that it be recorded forthwith, unless written instructions not to be recorded are received from the beneficiary. If the transaction is closed through escrow and the deed of trust is delivered to the escrow holder within one week, that shall be deemed compliance on the part of the broker.51) the contract where one party holds an offer open for a definite period of time is called(A) Exchange listing agreement(B) an option(C) Novation(D) deposit receipt Ba option is a unilateral contract in which the optionor (seller) agrees to hold an offer open for the optionee (potential buyer). The optionee does not have to exercise

the option, but if the optionee decides to exercise the option, the optionor must sell

64) The practice of charging discount points on fha-insured loans is because the lender desires to(A) equalize the yield of FHA Loans to the yield of conventional loans(B) create a competitive environment between FHA loans and conventional loans(C) close the gap between FHA loans and conventional loans for sale on the secondary Market(D) all of the above DLenders would not be willing to make FHA Loans if they could not receive the same yield on FHA Loans as they do on conventional loans. The secondary Market would not be willing to purchase FHA Loans if the yield was lower than on conventional loans. If the secondary Market would be willing to purchase the loans, the yield to the lender would be less than on conventional loans. In order to solve these problems and to make these loans available to buyers, the discount points are charged. They may be paid by either the buyer or seller 2) which of the following cannot obtain a broker license(A) S corporation(B) partnership(C) foreign corporation(D) individual with two years experience as a salesperson Ba partnership cannot have a broker license in the partnership name. Each person in the partnership would have to be licensed separately

90) who funds private mortgage companies? The:(A)

government National Mortgage Association(B) Federal Deposit Insurance Corporation(C) private premiums of insurance and pools of insurance policies(D) Federal Home Loan mortgage Corporation Cprivate mortgage companies are really Mortgage Bankers. Most Mortgage Bankers fund loans themselves, through a contract with an insurance company 72) a homeowner took a $30,000 loss on his property. For federal income tax purposes, he can declare(A) $10,000(B) 40% of the loss is deductible(C) the capital gain less the loss as deductible(D) nothing is deductible Dalthough capital gains on the sale of the owner's principal place of residence may be taxed if the game exceeds a statutory amount, losses on the sale of a principal place of residence are not deductible 48) in a sale leaseback, the purchaser would be least concerned with which of the following(A) the economic life remaining in the improvement(B) the sellers Book value(C) the physical condition of the Improvement(D) the type of financing available for the purchase Bthe sellers Book value is of no interest to the buyer. The buyers basis will be his purchase price. The other three choices should be of concern to the buyer 83) if a broker does not get his commission, he is legally entitled to(A) sue the seller in court(B) file a complaint with the real estate commissioner(C) file a complaint with the federal director of Housing and Urban Development(D) all of the above Athis is a state civil matter and must be settled in a civil action filed by the broker against the party who has not paid the commission. The California real estate commissioner does not get involved with commission disputes. There's no agency of the federal government that handles commission disputes 87) which of the following is one board foot(A) 6"x12"x2"(B) 6"x6"x6"(C) 2"x7"x1"(D) 12"x8"x2" A1 board foot equals 144 cubic inches. To determine cubic inches, you would multiply the length times the width times depth. Only A is 144 cubic inches6"x12"=72" 72"x2"=144 cubic inches 1) licensee A has out-of-town relatives come to visit and he shows them several listings. He ends up helping them rent a property with an option to purchase. He should make a disclosure to(A) the listing broker(B) the listing agent(C) the seller(D) all the above and his relatives Cthe prospective purchase of the property by a person related to the licensee by blood or marriage must be disclosed by the seller. Failure to make this disclosure would be considered a violation of the agent's duty to disclose all material facts 73) which of the following would not be a valid reason for a seller to terminate a listing?(A) the broker's license was revoked(B) The seller declared bankruptcy(C) the broker

was declared mentally incompetent prior to the listing(D) the broker was declared mentally incompetent after the signing of the listing Bif the broker's license is revoked, he cannot contract with the general public, therefore the wasting would be terminated. A contract becomes void when one of the