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An investor is using borrowed money to increase the rate of return on a cash investment
in an income property. He is
a. using leverage.
b. using a trust deed.
c. kiting.
d. insolvent.
Upon payment of the debt secured by a deed of trust, the
a. trustor issues a deed for reconveyance.
b. grant deed is issued to the trustee.
c. trustee issues a release deed for reconveyance.
d. trustor now has equitable title.
A listing that does not require the listing agent to show that he or his subagents are the
procuring cause in order to earn a commission is
a. an exclusive right to sell listing.
b. an exclusive agency listing.
c. a net listing.
d. illegal.
Which of the following contains a trigger term under Regulation Z and requires further
disclosure?
a. "Assumable VA loan"
b. "Buy for less than $600 a month"
c. "Cash price, only $79,500"
d. "Rent for only $499 per month"
A real estate broker was offered a rental listing by a homeowner who stated that he
would not rent to a person of certain religious beliefs. The broker should
a. refuse to accept the listing on these terms.
b. accept the listing and leave it up to the owner to refuse any offers received from
persons of that religion.
c. accept the listing and steer persons of that religion to other properties.
d. file a complaint of discrimination against the owner.
In the absence of a special provision for such an event, an offer to purchase will
probably be voided
a. by the death of either buyer or seller before acceptance.
b. if the seller changes his mind after accepting the offer.
c. if not accepted within 24 hours.
d. if the seller should receive a higher offer from another buyer.
A woman sold her residence of 3 years for $96,500 and immediately invested in another
residence at a sales price of $150,000. Assuming a basis of $46,500 in the original
property, how much taxable gain will she have to report on this sale?
a. $7,000
b. $53,500
c. $46,500
d. None of the above
Usually, the borrower of a FHA loan is also responsible for the
a. mortgage insurance premium.
b. funding fees.
c. private mortgage insurance.
d. estoppel certificate.
All of the following are examples of fiduciary relationships EXCEPT
a. trustee-beneficiary.
b. attorney-client.
c. broker-principal.
d. grantor-beneficiary.
The term "REALTOR" is synonymous with
a. real estate broker.
b. real estate license.
c. a member of NAR.
d. a real estate company.
Correction lines, which occur at intervals in the rectangular survey system, are
necessary
a. to correct the mistakes made by surveyors.
b. to allow for magnetic fields which interfere with compasses.
c. because of the curvature of the earth.
d. because of the gravitational pull of the moon.
The homeowner has made regular mortgage payments over ten years and the housing
values in the neighborhood have steadily risen. The equity has
a. stayed the same.
b. steadily declined.
c. steadily increased.
d. fluctuated and now is less than it was when the house was purchased.
Termination of an easement appurtenant may be accomplished
a. by the servient tenement when he has another use for the land.
b. when the purpose of the easement no longer exists.
c. by a court of law when no longer used.
d. unilaterally by the holder of the servient tenement.
Which of the following is a non-freehold estate?
a. Tenancy by the entirety
b. Tenancy for years
c. estate held by a remainderman
d. Estate in reversion
A residential lot purchased 3 years ago for $10,000 has doubled in value. The house on
the lot cost $40,000 and it increased $20,000 in value. If the house and lot are sold at
market value today, how much profit will be realized?
a. $30,000
b. $40,000
c. 33 1/3%
d. 100%
A deed, which is not recorded, is
a. void.
b. voidable.
c. unenforceable.
d. valid.
Which estate is the most complete estate to own?
a. Fee simple estate
b. Qualified fee
c. Less than freehold
d. Life estate
The property tax year runs from January 1 to December 31. The taxes on a certain
house are $1,440 this year, none of which has been paid. If the house sells, not in a leap
year, and the closing date is June 12, the
a. buyer owes the seller $796.93.
b. buyer owes the seller $643.07.
c. seller owes the buyer $796.93.
d. seller owes the buyer $643.07.
The following are necessary to make a deed valid EXCEPT
a. a competent grantor.
b. covenants.
c. a granting clause.
d. a property description.
Participation Certificates (PCs) are instruments used by
a. GNMA.
b. FNMA.
c. FHLMC.
d. Farmer Mac.
An overencumbered property would be one with a market value of
a. $125,000 with a first mortgage of $75,000 and a second mortgage of $26,000.
b. $375,000 with a first mortgage of $25,000 and a second mortgage of $200,000.
c. $120,000 with a first mortgage of $110,000 and a second mortgage of $15,000.
d. $49,500 with a first mortgage of $20,000 and a second mortgage of $1,000 and a
third mortgage of$2,000.
Commercial property has a useful life under IRS guidelines of
a. 15 years.
b. 27 years.
c. 39 years.
d. 19 years.
An office building is on a lot valued at $40,000. It would cost $150,000 to replace the
building structure today, but the improvements have depreciated 20%. Using the cost
approach, what is the value of the property?
a. $40,000
b. $120,000
c. $160,000
d. $152,000
Title to real property passes to the grantee at the time the deed is
a. written.
b. delivered and accepted.
c. executed.
d. notarized.
A report on the claims to title is prepared. It contains a listing of the full chain of title
for 80 years. It concludes with a statement of an attorney stating the current condition
of the title and who presently has claim to it. In most states this document would be
known as a
a. title report.
b. certificate of title.
c. jurat.
d. abstract of title.
When would a metes and bounds survey be preferred?
a. To describe irregularly shaped parcels
b. For mail delivery
c. To describe property in a subdivision
d. When a brief description is needed
The total transfer of a tenant's rights to another person is called
a. an option.
b. a sublet.
c. a waiver.
d. an assignment.
Jones v. Mayer
a. affirmed the 1968 Fair Housing Law.
b. affirmed the Civil Rights Act of 1866.
c. allowed discrimination based on race.
d. was the first major fair housing legislation.
A tenant who operates a coffee shop rented a property under a lease which stated there
would be no alcohol served. The tenant subsequently began serving liquor. The landlord
would most likely seek
a. artistic license.
b. eviction.
c. condemnation.
d. injunctive relief.
After all adjustments are made to a comparable property, its comparative value for
appraisal purposes is known as its
a. adjusted market price.
b. indicated market value.
c. amended market value.
d. revised market price.
To be legally competent, a person must reach the age of
a. minority.
b. majority.
c. reasonable competence.
d. 17 years.
A mortgage lender will lend based on a proportion of the appraisal or sale price,
whichever is less. This is called the
a. loan-to-value ratio.
b. owner's equity.
c. percent return.
d. CRV.
The Texagum manufacturing Company, which was the largest employer in the city of
Westview, recently closed its plant in that city. This will probably result in
a. declining real estate values.
b. A slow-down in the construction of new homes.
c. A decline in the population of Westview.
d. All of the above.
In a _________________________ deed, the grantor warrants the property's title only
against defects occurring during the grantor's ownership and not against defects existing
before that time.
Examples of improvements that have become part of the real property would include
fences, roads, and pipelines.
Ultimately, interest rates for real estate mortgage loans are determined by the
marketplace.
One of the key characteristics of a tenancy by the entireties is that neither spouse has a
disposable interest in the property during the lifetime of the other.
The Community Reinvestment Act sets dollar amounts that lenders must set aside for
lending in their community.
Government rights limit private rights in real property by the use of appropriation.
That portion of a mortgage that requires the borrower to preserve and maintain the
pledged property is called the covenant of good repair.
Prior to offering his property for sale, Sal was within his rights in removing the sink
from the master bath.
A ____________________ license is required of a real estate broker in order to conduct
negotiations within another state.
The 1968 Fair Housing Law does not apply to an individual renting his only house
without using a broker.
The existence of a base industry is essential to the maintenance of local real estate
values.
There are no exclusions in an all-risks policy.
A lease contract that calls for rent increases that keep abreast with changes in property
taxes and utility costscontains a participation clause.
In a typical limited partnership, the organizers are the limited partners.
The purchaser of a condominium unit surrenders some personal freedoms to community
rule but exchanges freedom of choice for freedom from responsibility.
If one rents rather than owns, they would choose the ____________________ form
(HO-4).
A listing automatically will expire when the listing salesperson dies.
Office and industrial leases of five or more years often include an escalator or
____________________ clause.
As a rule of thumb, for the investor to break even, the value of raw land must double
every 10 years.
A legal description of the property typically appears in a promissory note.
