If, in showing a property, the salesperson said, “In my opinion, this house is absolutely
the greatest in the world,” the salesperson
a. could lose his license for fraud.
b. is guilty of misrepresentation.
c. is puffing.
d. is guilty of redlining.
After purchasing a property, the buyers found a neighbor’s fence was two feet inside of
their property line. If discussion fails to resolve the problem, the buyers should consider
filing suit against the
a. title company.
b. neighbors to remove the encroachment.
c. neighbors for adverse possession.
d. broker even though he was not aware of the encroachment.
Which of the following would be the highest tax rate?
a. 38 mills
b. $3.80./$100
c. $38/$1,000
d. no difference
A valid enforceable sales agreement must
a. contain the grantor and grantee’s signatures.
b. be accompanied by an earnest money deposit.
c. be written and delivered.
d. be written and mailed.
When creating an agency relationship, agency authority
a. expects that to become an agent, one must agree to perform and actually be paid for
the performance.
b. enables the principal to grant property rights to the agent who may convey them to
third parties.
c. can be conferred by acts of the principal to another party.
d. is limited to a few acts within a single trade or business.
A typical broker-salesperson employment contract should include all of the following
EXCEPT
a. sales commission splits and earned bonuses.
b. services to be supplied by the broker.
c. tax withholding requirements.
d. employment status.
An estate in severalty means
a. there are several ways to own real property.
b. several owners of real property.
c. ownership severed from any other ownership interest.
d. sole ownership by married couples.
Persons wishing to defer federal income tax on the sale of a personal residence must
have lived in the residence
a. 180 days.
b. six months.
c. one year.
d. two years of the last five.
The following public improvements would most probably be funded by a special
assessment EXCEPT
a. installation of street lights.
b. curbs.
c. reconstruction of city sewage plant.
d. widening of neighborhood streets.
When a person signs a note with no guarantee to the person receiving it, he is said to be
signing it
a. with recourse.
b. without recourse.
c. in blank.
d. jointly and severally.
What basic principle is involved in the requirement that a real property contract must be
in writing to be valid?
a. Bill of sale
b. Statute of Frauds
c. Uniform Commercial Code
d. Statue of Limitations
Which of the following is most likely to specialize in large, commercial participation
loans?
a. Mortgage banks
b. Savings and loans
c. Farmers home loan association
d. Life insurance companies
Net operating income on rental property is computed by deducting expenses from
a. net cash flow.
b. adjusted gross income.
c. net gross income.
d. rate of return.
Showing a prospective buyer homes only in particular neighborhoods based on race,
color, religion, sex, national origin, non-handicapped or adults only is known as
a. block busing.
b. redlining.
c. steering.
d. subrogation.
A home with a cost basis of $40,800 in 2003 is resold today for $80,000. Commissions
and closing expenses are $5,600. What is the adjusted sales price?
a. $5,600
b. $33,600
c. $72,300
d. $74,400
Which of the following requires a public sale?
a. Strict foreclosure
b. Entry and possession
c. Deed in lieu of foreclosure
d. Power of sale
The phrase “a poor man’s will” has often been applied to
a. severalty ownership.
b. joint tenancy.
c. tenancy in common.
d. tenancy in common.
All of the following are important to a mortgage lender when determining whether or
not to make a real estate loan EXCEPT
a. the needs of the borrower.
b. the borrower’s income.
c. the appraisal.
d. child support payments.
A beneficiary allows a clause in his contract stating that another lender’s interest will be
allowed to take precedence over his at some later date. This clause is known as
a. a subrogation clause.
b. a rogata clause.
c. a subordination clause.
d. hypothecation.
John and Jay are brothers who received title to a property from their father. When they
decided to sell the property, Jay was out of town. In order to properly transfer title, the
deed could be signed by
a. John alone, since they are brothers.
b. John, with a properly recorded power of attorney from Jay.
c. John and the father, since the father was the original owner.
d. no one, since both must be present.
An insurance policy which fixes the insurance company’s liability to the insured to the
actual cash value of the insured property is said to provide
a. “old for new” coverage.
b. “new for old” coverage.
c. “old for old” coverage.
d. “new for new” coverage.
A property is purchased for $50,000 with a $45,000 loan. Several years later the loan
has been reduced to $40,000 and the property is sold for $55,000. What is the seller’s
equity build-up at the time of sale?
a. none
b. $5,000
c. $10,000
d. $15,000
Who, of the following would be required to have a real estate license?
a. A secretary who answers the phone in a real estate office
b. An attorney who specializes in real estate law
c. An escrow officer
d. A person who solicits buyers and sellers for a broker
A second mortgage is
a. a seller’s lien.
b. a smaller loan.
c. paid off 50/50 with a first mortgage at foreclosure.
d. junior to a superior mortgage lien.
All of the following have made home purchases by persons of modest income easier
EXCEPT
a. FHA loan insurance programs.
b. creation of extra money by the federal reserve.
c. VA loan guarantee programs.
d. income tax deductions for mortgage loan interest and taxes.
A lot measured 50″ on a county road and 80″ deep. The county assessor valued the lot
at $15,000. The tax rate is $100 per front foot. The tax bill is
a. $1,500.
b. $5,000.
c. $8,000.
d. incalculable without the millage rate.
A Torrens certificate of title does which of the following?
a. Grants title
b. Alienates title
c. Eliminates the need to search back further in time than the most recent quiet title
action
d. Guarantees against encroachments
When an existing loan at a low interest rate is refinanced by a new loan at an interest
rate between the current market rate and the rate of the old loan, the result is a
a. combined rate.
b. blended loan.
c. wraparound loan.
d. merged loan.
An individual who is contemplating the purchase of a mortgage as an investment should
have
a. the property appraised.
b. a credit check made on the borrower.
c. the title searched.
d. all of the above.
To whom can a borrower turn for a direct loan for the financing of a single-family
dwelling?
a. Federal Housing Administration
b. Mortgage broker
c. Insurance company
d. Savings and loan institutions
A homeowner policy would typically cover the house and garage but not other
structures on the property such as a guesthouse or garden shed.
A protected class is a class of people that by law are protected from
____________________.
The HUD Settlement Statement required of all federally related real estate lenders is
known as the ____________________.
The term ‘scheduled gross” refers to projected gross income if fully leased.
With a net listing, the sales commission is a fixed dollar amount.
If the face amount of the homeowner’s policy is less than 80% of replacement cost, the
____________________ equals the insurance carried divided by 80% of today’s
replacement cost times today’s cost to replace the damaged portion.
To cover personal property and any additions or alterations to the unit not insured by
the association’s policy, a condominium unit owner’s form (HO-6) is available.
Brokers who wish to operate outside their home state will usually be required to file a
notice of consent with the secretary of state in each state in which they wish to operate.
GNMA will guarantee all loan types.
____________________ is the increase in property value that the owner hopes will
occur while owning it.
When the debt is paid off the lender sends to the trustee the note, the deed of trust and a
request for ____________________.
Any earnest money deposits paid by the purchaser must be placed in a proper trust
account.
“Old for old” means that the policy pays only the depreciated cost.
A forged deed could result in a valid conveyance of title.
To ____________________ the debt is the creation of money by the Federal Reserve to
purchase Treasury securities.
A mistake includes innocent misrepresentation, ignorance, inability, or poor judgment.
In several states, a land trust allows an owner to create a trust wherein he is both the
trustor and the trustee.
For an agreement to be enforceable it must be supported by ____________________ to
demonstrate that a bargain has been struck between the parties to the contract.
A promise not to act by one or more of the parties to a contract is known as
____________________.
Any damage caused by the removal of the fixtures is the responsibility of the
____________________.