By 1985, the market for residential housing for first-time buyers was strongest for the
sale of
a. condominium units.
b. large single-family houses of more than 1600 square feet.
c. smaller single-family houses of approximately 1000 square feet.
d. cooperative housing.
When borrowing money to buy a home, the borrower has the right of rescission
a. within three business days, including Saturday.
b. within three business days, not counting Saturday.
c. within three years.
d. at no time.
Which of the following loans would be exempt from the disclosure requirements of the
truth-in-lending laws?
a. Commercial loans
b. Personal property loans in excess of $25,000
c. Financing extended to corporations
d. Consumer loans to natural persons
When the benefits of borrowing money for investing exceeds the costs of borrowing,
you have
a. negative leverage.
b. positive leverage.
c. usury.
d. capitalization rate.
When a person who owns property in joint tenancy dies, his share goes to
a. his spouse.
b. the surviving co-tenants.
c. creditors.
d. heirs in his will.
In order to determine taxable gain on a residence, the
a. basis must be subtracted from the amount realized from the sale.
b. closing costs are subtracted from the sale price.
c. basis and the amount realized from the sale must be the same.
d. sales price is subtracted from the basis.
Federal tax laws have traditionally allowed owners of investment properties to deduct
all of the following EXCEPT
a. depreciation on land.
b. maintenance costs.
c. operating costs.
d. ad valorem taxes.
The borrower under a deed of trust arrangement is called the
a. trustor.
b. beneficiary.
c. trustee.
d. holder in due course.
Monetary benefits of investing in real estate come from
a. cash flow.
b. tax shelter.
c. mortgage reduction.
d. all of the above.
When considering a ARM loan, the lender must explain to the borrower, in writing, the
a. worst-case scenario.
b. best-case scenario.
c. average-case scenario.
d. respective credit report.
A listing to find a buyer for each of the following properties will usually be for a period
of time ranging from six months to one year EXCEPT
a. farms.
b. commercial properties.
c. residential properties.
d. industrial properties.
Regarding ownership of condominiums,
a. owners hold fee simple title to airspace within their units.
b. owners register with the Federal Securities and Exchange Commission.
c. purchasers own the airspace above their units.
d. there is the right of survivorship.
All of the following are real estate contracts EXCEPT
a. an exclusive right to sell listing.
b. a sales agreement.
c. a closing statement.
d. a lease.
When a contract appears to be good and binding but, in fact, one of the parties may
legally reject it, the contract is said to be
a. unenforceable.
b. valid.
c. void.
d. voidable.
A public records office will record which of the following documents affecting land?
a. Deed
b. Eviction notice
c. Six month lease
d. Bill of sale
When an agent’s authority arises from custom in the industry, it is identified as
a. implied authority.
b. ostensible authority.
c. customary authority.
d. conventional authority.
The beneficiary’s right, upon default, to take physical possession and collect income
generated by the property is called
a. assignment of rents.
b. reconveyance.
c. power of sale.
d. the trustee has the right, not the beneficiary.
In analyzing a mortgage loan application, a lender considers all EXCEPT
a. job stability.
b. income adequacy.
c. credit rating.
d. sales price.
If O”Malley deeds property to O”Halloran on the condition that no Englishmen live
there, what is the status of the deed?
a. The condition is grandfathered in.
b. The deed is unenforceable.
c. The deed is valid but the condition is unenforceable.
d. The deed is voidable.
In valuing a fire station, an appraiser would most likely emphasize the
a. market approach.
b. cost approach.
c. income approach.
d. capitalization approach.
Unless there is a specific agreement to the contrary, the mortgage having first priority
will be the
a. mortgage first recorded.
b. mortgage for the highest amount.
c. original construction loan.
d. mortgage with the earliest signature date.
When there are two valid property descriptions of a piece of real property,
a. metes and bounds descriptions take precedence.
b. government survey descriptions take precedence.
c. older descriptions take precedence over subsequent descriptions.
d. any description that adequately describes and distinguishes the property will apply.
An estate in severalty is one held by
a. one person.
b. two persons.
c. three or more persons.
d. joint tenants.
If a liability claim arises under Section II of a homeowner’s policy, the insurance
company will pay for
a. damages up to the policy limits.
b. damages up to the policy limits plus the legal costs of defense.
c. damages and legal costs up to the policy limit.
d. damages beyond policy limits in certain cases.
Information regarding pending law suits would be found in the
a. lis pendens index.
b. judgement roles.
c. mortgagee index.
d. grantor index.
Restrictions on the type and color of drapes, that are visible to the outside, which a
condominium owner can use in his unit, would be found in the
a. master deed.
b. CC&Rs.
c. bylaws.
d. house rules.
When an agent is given the right to transact all types of matters on behalf of the
principal, the agent serves as a
a. notary public.
b. third party.
c. universal agent.
d. special agent.
An owner is using straight-line depreciation over a 27 1/2 year period on a $65,000
rental unit. If the improvements are worth $55,000, what is the depreciation in the first
year?
a. $2,000.00
b. $2,181.81
c. $2,363.63
d. $4,363.63
A grantor warrants the extent and quality of title by using a
a. trust deed.
b. bargain and sale deed.
c. warranty deed.
d. quit claim deed.
Under federal tax laws that allow homeowners to deduct mortgage loan interest, what
would be the after-tax cost to a homeowner in the 28 percent tax bracket of a home
mortgage loan made at a 12 percent rate of interest?
a. 3.36 percent
b. 8.64 percent
c. 9.5 percent
d. 8.0 percent
What is the most correct meaning of the term “ad valorem”?
a. Appraised value
b. Property tax
c. According to the value
d. And wife
Environmental impact statements are prepared
a. before development begins.
b. during construction.
c. upon completion of construction.
d. by a homeowner.
A man put up $10,000 as earnest money on a property for sale. The next day, he needed
the money back and attempted to cancel his offer. Which of the following is true?
a. He can get out of the offer because he has a three day right of rescission.
b. The decision would be entirely up to the broker.
c. He can get out of the offer because of the six-day right of rescission.
d. He would have to revoke the offer before the seller accepted it.
When a broker fell on hard times, he stopped paying his dues to NAR for two years. He
still uses the REALTOR designation in his advertising and on his business cards. Which
of the following is true?
a. NAR can do nothing
b. The broker can be sued by NAR
c. The broker can be disciplined by the Real Estate Commission
d. The broker is a member for life, so he is free to use the REALTOR designation
The process of combining two or more parcels of land into one larger parcel is called
____________________.
Of the two principal forms of timeshare formats, the largest percent of the market is
comprised of the right-to-use format.
When land previously zoned for higher-density uses is rezoned for lower-density uses it
is known as ____________________.
Price changes for developed real property can be rapid and dramatic over short periods
of time and create ____________________ demand.
The best way to determine whether a property has an encroachment is to search the
title.
An owner-occupied residence cannot be depreciated for federal income tax purposes.
The borrower receives naked title under a deed of trust.
A tenant is living in a house that is for sale. The owner has told the tenant that he can
stay there until the house sells. Most likely, they have entered into an estate at will.
A residential lender would prefer the lowest possible payment to income ratio.
Equity sharing provides that in return for providing financing, the lender wants to share
in some of the benefits normally reserved for the equity holder.
In an effort to encourage individuals to rebuild older structure, Congress has had a
policy of giving ____________________ tax credits.
Escrow closings cannot be used when refinancing a property.
Both fiat money and real savings represent unconsumed labor and materials.
Before a newly constructed building may be utilized by tenants, the owner must secure
a certificate of inspection.
When advertising, a lender must disclose the closing costs.
In analyzing a mortgage loan application, it is illegal for a lender to consider marital
status.
The amount of property taxes an owner pays is determined by the services provided by
the city or county.
In prorating rents, the dollar amount is a credit to the seller and a debit to the buyer.
A broker leasing property for a seller for a fee is a trustee.
If an investor has to dip into cash reserves to keep a property going, the property has a
____________________ cash flow.