Which of the following statements BEST defines real property?
land and the air space above it.
land and its improvements and all included ownership rights
property that has been surveyed and identified by a full legal description
all of the rights to land and improvements as identifies in a property deed
Residents of an area with wells that go dry during severe droughts arranged with the municipality to provide city water to each property. This work is MOST likely to be funded through a
municipal bond for improvements
grant from teh Environmental Protection Agency
Which of the following events will terminate an agency relationship?
any arrest of the agent
bankruptcy of the principal
transfer of ownership of the real estate firm
violent disagreement between the principal and the agent
A homeowner hires a carpenter to build a back deck and then refuses to pay. The carpenter is entitled to take which of the following actions?
remove the deck
levy a special assessment
place a mechanic's lien on the property
petition the courts for a partition sale and recover the amount due from the proceeds
When applied to real estate sales contract, the term "recisssion" is MOST likely to indicate that the contract has been
In teh preparation of a competitive market analysis (CMA) or appraisal, which of the following situations is MOST likely to be interpreted as a stigmatizing property condition?
the presence of radon gas
undiscovered termite infestation
a history of a major crime on the site
According to the common law of agency, which of the following statements about the fiduciary obligation of confidentiality is CORRECT when an agent represents a principal in a real estate transaction?
It outlasts the termination of the agency relationship.
It must be defined in writing to be legally valid and enforceable.
It is comparable to lawyer/client privilege and cannot be violated.
It applies primarily to information about the principal's finances and motivation.
A property deed indicates that the easternmost boundary includes a fifteen-foot right of way allowing owners farther from the main road the right to cross the property. The property across which the others are allowed to pass is known as a
A prospective buyer has offered $127,800 for a condominium that appraises at $122,500 and has made a deposit of $5,000. If the buyer arranges a first mortgage of 85% of the appraised value and asks the owner for seller-financing on the difference, how much will that be?
None of the above
Which of the following terms identifies an element that is essential to creating a valid real estate sales contract?
A couple with a modest combined income and strong employment history is having difficulty qualifying for a conventional loan to purchase a home due to their income and limited cash. Which of the following sources of real estate funding is MOST likely to meet their needs?
private investment groups
the secondary mortgage market
the Government National Mortgage Association (GNMA/Ginnie Mae)
When preparing a competitive market analysis (CMA), an amenity worth $5,000 in a comparable property is BEST handled in which of the following ways?
It is added to the subject property's estimated base value.
It is subtracted from the comparable property's sales price.
It is disregarded if it represents less than 5% of the comparable's value.
It is averaged over the number of comparables used and added to the subject property.
A CORRECT statement about mortgage insurance premiums charged for Federal Housing Authority (FHA) loans is that they
may be included in the total loan amount.
may be paid in single annual installments.
must be returned after the loan balance drops by 10%.
may be paid by the seller for buyers meeting FHA low-income standards.
A licensee acting as a buyer's broker is preparing an offer for a buyer, who asks the licensee if there are any tax benefits to arranging seller-financing instead of going to a conventional lender. Which of the following statements represents the licensee's BEST response to this questions?
"Seller-financing may be better for the seller than you."
"I would have to look more closely at the other variables before I can give you an accurate answer."
"The tax consequences of different kinds of financing do not vary greatly enough to worry about it."
"Make your best offer and include a continegency allowing you to review your options with a tax accountant or tax attorney."
Which of the following types of buyer-broker agreements provides the licensee with the GREATEST assurance of receiving compensation if the buyer purchases a property?
Open buyer agency
Exclusive-agency buyer agency
exclusive buyer agency
A property owner built a house on a 7,500 square foot lot several years prior to the enactment of new zoning that requires at least 20,000 square feet for residential properties in that area. A CORRECT statement about this situation is that the
property represents a nonconforming use and nothing must be done.
municipality must grant a variance to this property and others like it.
title will have a cloud on it that must be removed prior to any future sale.
owner must purchase additional neighboring property to be in compliance.
A property owner on a private road objects to a new neighbor's choice in erecting a white vinyl fence, saying it is ugly and violates the traditional neighborhood balance of stone walls and hedges. Under which of the following circumstances could the fence be prohibited and its removal required?
A majority of all owners within 150 feet of the new fence vote for its removal.
The previous owner records a notarized affidavit attesting to the traditional aesthetic.
There is either a deed restriction or HOA in place that requires only natural fencing.
None; owners of private property cannot be restricted in their choice of home security.
Requirements governing which real estate transaction records must be kept and for how long are determined PRIMARILY by which of the following authorities?
Company policy statements.
State regulations and related rules.
A buyer arranges for a $90,000 mortgage loan with an annual interest rate of 8% and a fixed monthly payment of $745. If the first loan payment is due 30 days after the loan origination date, how much fo that payment will represent principal? (Use a 360-day year and 30-day months).
None of the above.
A homeowner without any liens on the property arranges for a loan that provides a seires of small monthly payments to the owner rather than a single large payment that must be paid back in installments. This arrangement is BEST identified as which of the following types of loans?
Shortly after taking a property listing, the listing licensee is approached by a family member who asks the licensee to prepare an offer at a significantly reduced price. Under the common law of agency, the licensee MUST
refuse to prepare or present this offer.
attempt to get the relative to match the list price.
discuss the potential conflict with an attorney prior to proceeding.
disclose the family relationship with the potential buyer to the seller.
A licensee showing some properties to a client-buyer only selects properties in areas where the owners are of the same general age, sex, and ethnic background as the client-buyer. According to the federal Fair Housing law, this conduct would be an example of an illegal practice known as
A residential property owner wants to buy a vacant lot next to the property to build a garage and small guest house. The lot has a recent appraisal of $10,000, but the property owner is prepared to pay more than that, if necessary, to be able to expand. Which of the following terms BEST identifies the amount the owner is willing to pay?
actual cash value
When a property's creditors are not fully repaid out of the proceeds of a foreclosure sale, they may make a foreclosed property owner personally liable for the balance due by bringing a legal action for a
satisfaction of mortgage
deed in lieu of foreclosure
Which of the following terms identifies a property owner who has entered into an agency relationship with a licensee?
A couple asks their buyer agent which way to take title so that a surviving spouse will inherit the other person's interest even without a will and the agent says, "joint tenancy with the right of survivorship is the way you want to go." In this situation, the agent's response is BEST described as
illegal practice of law.
valid only in community property states.
As used property management, the term "constructive eviction" is BEST understood to mean that a
landlord is building a case against a tenant for eviction.
court has made public its decision to support an eviction request.
property has been sold and the tenant has been paid to vacate the premises.
tenant has left a property after a landlord has allowed it to become uninhabitable.
In performing a direct sales comparison (market data) analysis, an appraiser would be MOST interested in data on
current cost of building materials.
demographic changes in the community.
local economic forces and population trends.
During an appraisal of a residential property, an appraiser estimates the cost of rebuilding the subject property so that it is identical to its current size and condition. This is an example of which of the following appraisal principles?
An appraiser determines that a a subject thrity-year-old residence has a replacement cost of $185,000 and is on a parcel of land worth $47,000. The structure's accrued depreciation from physical deteriotation and functional obsolescence is estimated at approximately 40%. Given this information, which of the following BEST represents the property's value?
None of the above.
Which of the following statements BEST defines what is meant by the term "material defect"?
Any condition that may change a principal's mind about buying or selling.
Any property defect that would cost more than 10% of the sales price to correct.
All conditions that add to a property's overall structural deterioration or depreciation in value.
All factors that the seller would prefer prospective buyers not to know about the seller's motivation.
A buyer-broker agreement is MOST likely to create which of the following types of agency relationships?
Which of the following government powers provides for the transfer of ownership of real property from an owner to the State in the event the property owner dies without a will or known heirs?
Which of the following statements BEST defines what a "time of the essence" clause means in a real estate sales contract?
The contract provisions must be met in a timely fashion.
The contract is subject to cancellation if any time requirement is not met.
Any party that breaches the conditions of the clause is liable for liquidated damages.
The conditions of the clause must be satisfied within forty-eight hours of acceptance or the contract becomes void.
A person who owns a house in severalty dies intestate. This person's spouse has also passed away, and one of their three children ran away from home and has not been heard from in over twenty years. Which of the following statements about the transfer of this property is CORRECT?
The property will escheat to the state since the owner died intestate.
The two known children will receive a life estate interest in the property.
The three children will be named as joint tenants with right of survivorship.
The missing child represents a cloud on the title for future property transfers.
Which of the following situations BEST exemplifies an implied agency relationship?
A new licensee becomes affiliated with a firm and begins hosting open houses.
A seller expresses an interest in finding a similar proprerty in a neighboring town and the listing licensee brings the seller to see some in-house listings.
A prospective buyer becomes quite friendly with the listing licensee during an open house and agrees to see other listings even after declining to sign a representation agreement during that meeting.
A licensee who has been going to a particular physician for over 5 years is hosting an open house and the physician comes in and talks with the licensee at length about property details and the neighborhood.
The use of which of the following construction materials is specifically banned by federal law?
Which of the following documents creates and identifies the extent of authority for a property manager acting on behalf of an owner?
local zoning laws
federal and state civil rights statutes
According to the statute of frauds, in order for real estate sales contracts to be enforceable in court they MUST be
between competent parties
If the advertising statements below about why to choose one real estate firm over another were accurate, which one would represent a violation of the Sherman Antitrust Act?
"We work harder than any other firm to earn your business now, and welcome you back later!"
"No other agency will give you the same level of attention, including researching the best neighborhood for you."
"We search for bargains, unlike others that waste your precious time walking through unaffordable properties."
"With buyer-broker commission rates the same all over this country, we simply give you more bang for the buck!"
The provisions of the Americans with Disabilities Act (ADA) are MOST likely to apply to owners of which of the following types of property?
multiplex movie theaters
Which of the following ownership interests applies to parties who own real property as tenants in common?
The ownership interests must be equal.
The ownership interests may be conveyed separately.
The last surviving owner gets title to the property in severalty.
The ownership interests may not be transferred by will or intestate distribution.
Which of the following situations BEST characterizes a property suffering from external (economic) obsolescence?
a car dealership is located downwind from a new hog farm
a house loses value due to leaking gutters and old wiring
a school building is discovered to have asbestos problems.
a shopping center has an anchor tenant that goes bankrupt
Which of the following types of leases provides for the tenant to pay a base rent and some of the property expenses, such as utilities, maintenance, and taxes?
A listing licensee discovers the listed property has a history of faulty plumbing that has never been adequately corrected. The licensee's responsibility regarding this information is that the licensee MUST
include a reference to the plumbing in all advertising
disclose it only if asked directly by a prospective buyer
discuss it with the seller and disclose it to prospective buyers
treat it as confidential and disclose it only with the permission of the seller
The type of legal description that refers to a point of beginning, may refer to monuments, and uses distances and directions to come back to the point of beginning is
lot and block
metes and bounds
vertical land description
government rectangular system
A developer approaches a municipality with a plan to purchase an available lot in a growing neighborhood if they will allow it to be used for a combination laundry and convenience store. Which of the following characteristics of value is MOST apparent in this developer's plan?
The Sherman Antitrust Act specifically prohibits which of the following activities in the course of a real estate tranasaction?
refusal to return earnest monies
failure to disclose property defects
At the time it is signed by all required parties, what type of a contract is a real estate option contract?
A prospective buyer and an agent prepare an offer. The seller reviews the offer and accepts it with the added provision that the earnest money will be forfeited by the buyer if the buyer backs out for any reason. Which of the following statements about the situation is CORRECT?
There is a binding contract on the property.
The prospective buyer is obligated to the terms but the seller is not.
The seller has legally rejected the original offer and replaced it with a counteroffer.
The provision about the earnest money is not an essential part of a valid contract and violates the statute of frauds.
Which of the following interests in real property does a prospective buyer receive once an offer to purchase becomes a binding offer?
right to encumber
A licensee takes an "as-is" listing on a residential property downhill from an abandoned industrial site. The licensee finds a buyer for the property who discovers after closing that residual industrial waste has been leaching into the house's water supply for several years. In this situation, which of the following parties is MOST likely to have liability for the expense of correcting this problem?
The new owner only.
The industrial property's owner only.
The former residence owner and the licensee only.
The industrial property owner, the former and the current residence owners, and the licensee.
When a deed or a lien is placed in the public records in order to make them available to anyone searching the records, this is known as
recording a lis pendens
recording a satisfaction piece
providing actual notice
providing constructive notice
The terms riparian, accession, and littoral refer to which of the following property rights?
Which of the following terms identifies the ownership of real property that is complete and has no restrictions on its use or transfer?
abstract of title
prior appropriation doctrine
A municipal mass appraisal has assigned a property a fair market value of $306,750. If the municipality has a mill rate of 16.86 and assesses property at 70% of FMV, the annual taxes on this property would be which of the following amounts? (Round to the nearest dollar.)
None of the above
Which of the following general property conditions is MOST likely to be categorized as material?
a small attic
a cracked foundation
an exterior in need of paint
an outdated set of kitchen appliances
Under federal Fair Housing Act requirements, a property manager of a residential multi-unit property may legally refuse to approve which of the following situations?
Allowing a handicapped person to make any accessibility modifications to unit.
Allowing a handicapped person to keep a support animal based on a written no-pet policy that is enforced for all units.
Renting a unit in a property exclusively occupied by persons over sixty-five to a single parent with an infant child.
Renting a unit in a low-rent property to someone whose income is considerably above that of the other tenants.
According to the common law of agency, a licensee has which of the following obligations to an individual that prefers to remain a customer rather than become a client?
courtesy and patience
honesty and fair dealing
only those agreed to in writing
The name of the colorless, odorless gas often found in residential properties that represents an environmental health hazard associated with promoting lung cancer is
A developer has purchased a 17.3 acre property and intends to subdivide the property into as many building lots as possible. If each lot must be at least 12,500 square feet, and the developer must dedicate a total of 1.7 acres for roads and a subdivision recreation area, what is the MAXIMUM number of lots that can be created on this property?
None of the above
Access ramps to government buildings, grab-bars in public rest rooms, and a row of pay phones with several placed lower than the others are examples of compliance with which of the following federal laws?
Federal Fair Housing Act
Uniform Commercial Code
Americans with Disabilities Act
Which of the following appraisal methods would be the MOST appropriate one to use in the valuation of a twenty-year-old post office?
direct sales comparison (market data)
A CORRECT statement about compensation arrangements in real estate agency employment contracts is that they are
determined by application of state regulations
adjusted periodically by the closest Board of Realtors
established by negotiation between the seller and the agent
subject to change if the local housing market fluctuates dramatically during the agreement period
A lender is MOST likely to require a borrower to pay for private mortgage insurance in which of the following situations?
The buyer has a history of bankruptcies.
The property is in an area known for hurricanes.
The lender foreclosed on the property's past owner
The loan amount is for 90% of the property's value.
An unmarried carpenter bought a building lot and erected a two-story home and lived there for three years before selling it for a large profit. According to IRS regulation, what is the MAXIMUM amount of any profit that would be exempt from capital gains tax?
None since the carpenter is a professional builder
The BEST statement about the relationship between a property mortgage and a promissory note is that the mortgage
provides evidence of who made the loan to the property owner while the note identifies the face value of the loan.
provides the details of the installment payments required for the loan while the note creates the legal liability for the repayment.
creates a property lien as security for the note, which gives the details of both the amount of the debt and the terms of repayment.
creates a public record of a property's indebtedness based on the note, which identifies the property location and credit history of the property owner.
A lead-based paint disclosure notice MUST be included with a
lease for any property open to the public.
lease for office space for more than 15 employees.
listing agreement for the sale of any historic property.
sales contract for a residential property built before 1978.
Which of the following situations BEST exemplifies what is meant by "conversion of funds"?
Using client funds as a source for temporary personal loans.
Depositing an earnest money check in an office trust account.
Disbursing office funds from an operating account to cover routine expenses.
Transferring money from an account at a listing office to one at the selling office.
Which of the following statements BEST defines what is meant by "appraised value"?
An estimate of value.
A statement of value.
The most recent determination of market value.
The assessment value of a property adjusted for current conditions.
Property managers are often granted a wide range of job-related authority to act on behalf of their principal. This is known as which of the following types of agency?
Property taxes for the calendar year are $2,700, payable on December 31, for a property closing on June 15th of the tax year. Which of the following amounts is MOST likely to appear on the settlement statement for proprated taxes? (Use a 360-day year and 30-day months).
None of the above
Which of the following statements made in a property advertisement is MOST likely to be characterized as puffing?
"New home with plenty of amenities!"
"Best view of the mountains in town!"
Which of the following types of listing agreements allows a seller to contract with multiple licensees and only compensate the one that produces the buyer?
exclusive right-to-sell agency
A property owner lists a residence and specifically avoids telling the listing licensee about a leaking roof. The licensee notices water stains in a closet ceiling, but consider them old and never discusses them with either the owner or the buyer. The property is sold without disclosing this condition and the buyer sues for damages based on material misrepresentation. Do the seller and/or the licensee have any liability? Why or why not?
Neither one is liable because the buyer has the obligation to have the property inspected.
The seller is the only liable party because the licensee was never told about the problem.
The seller and the licensee are both liable because the licensee is responsible for the actions of a principal.
The seller and the licensee are both liable because it is reasonable that the licensee should have discovered the condition.
Which of the following documents is used to transfer ownership of personal property that is included in the sale of real estate?
a bill of sale
a quitclaim deed
an original sales receipt
The Truth in Lending Act is a part of which of the following federal laws?
Uniform Commercial Code
Consumer Credit Protection Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
A property owner who is selling a commercial building at a considerable profit wants to legally avoid paying capital gains on the sale for as long as possible. The seller is MOST likely to achieve this objective by
providing seller-financing to the new owner.
creating a sale-leaseback arrangement with the new owner.
reinvesting the money according to the terms of a 1031 exchange.
getting legal representation and filing for bankruptcy protection immediately after closing.
A newly licensed real estate licensee has entered into an independent contractor agreement with a firm's primary broker to work as a salesperson. Under this type of relationship, the firm is MOST likely to be responsible for paying which of the following licensee expenses?
license renewal fees
continuing education course costs
office space rent and telephone charges
When acting in a ficduciary capacity for a seller in a real estate transaction, a licensee MUST