Missed Questions

Question 1

Physical deterioration is considered curable whenever

A
it is caused by lack of maintenance.
B
it does not result in loss of economic utility.
C
it costs less to correct than the resulting value increase.
D
it can be repaired regardless of the cost.

Answer 1

C
it costs less to correct than the resulting value increase.

For example, let’s say an older office building needs to update electric and add bathrooms, repartition offices and fire safety features to meet code for resale. The cost to complete the work is estimated at $2.2 million. However, the building is fully paid for and can easily be sold for $4 million. In this case, curing the defects makes sense. However, if those numbers were reversed, as is often the case, demolishing the building and starting over with a new structure or different use (e.g., retail space, a parking garage, etc.) would be the wiser choice.

Question 2

The primary purpose of a deed is to

A   
prove ownership.
B   
transfer title.
C
give constructive notice.
D
prevent adverse possession.

Answer 2

B
transfer title.

A deed is the instrument by which ownership of a property is transferred from one person to another, while a title is evidence of that ownership.

Question 3

Carl Chauvinist, the owner of an apartment complex, lives in one unit of a triplex and routinely refuses to rent either of the other two units to a female. Can he do this?

A
Yes. He may do this if he does not use a broker or discriminate in advertising.
B
Yes. He may do this if he doesn’t ask the tenant’s age.
C
No. Carl can never discriminate on sex.
D
No. Carl must live in a single family home to discriminate.

Answer 3

A
Yes. He may do this if he does not use a broker or discriminate in advertising.

Although laws vary by state as to number of units that fall under this type of provision, if a person owns and lives in a unit, he or she is entitled to practice a certain measure of discrimination. The view is that a person’s dwelling (which includes units such as duplexes and triplexes) enjoys a degree of “sanctity” and the person may choose whom he or she brings into their “home.” Therefore, the owner could claim an exemption from federal Fair Housing laws.

Question 4

Which of the following provides a buyer with the best assurance of clear, marketable title?

A
Certificate of title
B   
Title insurance
C
Abstract of title
D   
General warranty deed

Answer 4

B
Title insurance

Title insurance provides the best assurance of marketable title.

Question 5

In general, the Foreign Investment in Real Property Tax Act (FIRPTA) requires a buyer to withhold estimated taxes equal to ____ of the sale price in any sale or exchange of property owned by a foreigner (not a US citizen).

A
3%
B
5%
C   
15%
D
20%

Answer 5

C
15%

Congress passed the Foreign Investment in Real Property Tax Act (FIRPTA) to eliminate the problem of collecting delinquent taxes from foreigners who owned and sold property in the US and left the country without paying the taxes due on the sale. The IRS currently keeps this 15% to ensure that any capital gains on the sale are paid.

Question 6

________ refers to using or altering existing listing information or keywords that are copied from one Internet site and posted or displayed for the benefit of the general public in front of a firewall at another site, without written or electronic authorization and disclosure of ownership.

Answer 6

Scraping

Scraping refers to using or altering existing listing information or keywords that are copied from one Internet site and posted or displayed for the benefit of the general public in front of a firewall at another site, without written or electronic authorization and disclosure of ownership.

Question 7

The covenant in a deed which states that the grantor is the owner and has the right to convey the title is called

A   
covenant of power.
B
covenant of warranty forever.
C   
covenant of seisin.
D
covenant against encumbrances.

Answer 7

C
covenant of seisin.

Another outgrowth of the feudal system, “seisen” derives from the French meaning to “sit upon or own” and gives owners the right to sell or transfer property at will.

Question 8

A broker and seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract?

A
There is no consideration involved.
B   
No acceptance has been given.
C
No earnest money has been enclosed.
D   
There is no current listing agreement.

Answer 8

B
No acceptance has been given.

It’s talking about the actual contract

It has not been presented to or accepted by the owner. Remember, contracts aren’t valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it’s accepted and the transaction closes, the broker will generally be entitled to his or her full commission.

Question 9

Any licensee who violates any of the provisions regarding escrow accounts may be judged to have endangered the public interest and may be subject to

A
License revocation..
B   
A temporary license suspension.
C
A fine of not more than $5000 per violation.
D   
A fine and possible imprisonment for felonious comingling.

Answer 9

B
A temporary license suspension.

According to Illinois law any licensee who violates any of the provisions regarding escrow accounts may be judged to have endangered the public interest and may be subject to a temporary license suspension.

Question 10

At what age is a person considered "elderly" under the Illinois Human Rights Act?
QID: 2392505Mark For Review
A
Over 62
B   
Over 40
D  
Over 55
D
Over 45

Answer 10

B
Over 40

According to the Illinois Human Rights Act, “elderly” is defined as anyone over 40 years of age.

Question 11

A mechanic’s lien would be properly classified as a(n)

A
equitable lien.
B   
voluntary lien.
C
general lien.
D   
statutory lien.

Answer 11

D
statutory lien.

A “statutory lien” is one that arises out of specific law (otherwise known as statutes). By contrast, an “equitable lien” has its roots in common law or custom. A “voluntary lien” is one entered with the property owner’s knowledge and consent, such as a mortgage. A “general lien” grants a creditor the right to file a claim against all of a debtor’s assets, not just a particular property. Liens are often categorized as more than one type. A mechanic’s lien is statutory AND involuntary, for example.

Question 12

What do liens and easements have in common?

A
Both are encumbrances.
B
Both must be on the public record to be valid.
C
Neither can be done without the consent of the owner.
D
Both are money claims against the property.

Answer 12

A
Both are encumbrances.

Liens are, of course, serious in that they indicate the owner has failed to pay a debt secured directly or indirectly by the property. Easements, on the other hand, are generally a practical necessity for most residential properties.

Question 13

How many members of the Board must have been a salesperson or broker for a minimum of 10 years prior to

A
4
B   
9
C   
12
D
7

Answer 13

C
12

Twelve members shall have been actively engaged as managing brokers or brokers or both for at least the 10 years prior to the appointment, 2 of whom must possess an active pre-license instructor license.

Question 14

The system of ownership of real property in the United States is what?

A
Incorporeal
B   
Allodial
C
Command
D
Feudal

Answer 14

B
Allodial

“Allodial” is the modern form of ownership and is often contrasted with “feudal” in which land is held on the condition of rent or service due the government. For example, a medieval knight held property subject to coming to his baron’s service when called. Similarly, the baron’s land holdings were conditional on his raising an army and fighting for the king in times of conflict. Failure of any party to “perform as promised” was cause for holdings to be confiscated, often as a preliminary step to more extreme actions.

Question 15

James a property manager must maintain all security deposits in an escrow account for the duration of the lease, unless the

A
Tenant indicates to James that he/she waives the requirement.
B
James the broker has less than five property management lease contracts.
C
Lease is for less than three years.
D
Tenant waives this requirement in writing. If such a waiver is included in the lease, it must be in bold print.

Answer 15

D
Tenant waives this requirement in writing. If such a waiver is included in the lease, it must be in bold print.

According to Illinois law a property manager must maintain all security deposits in an escrow account for the duration of the lease, unless the tenant waives this requirement in writing. If such a waiver is included in the lease, it must be in bold print

Question 16

Which is the best example of functional obsolescence?

A residential home built next to a factory
B
Peeling paint
C
A house with no electricity or running water
D
A residential home with central air conditioning

Answer 16

C
A house with no electricity or running water

“Functional obsolescence” typically shows itself in one of two forms: first, in poor initial design, as in this case; second, when the features and design of the home have become outdated compared with competing properties.

Question 17

For the past 30 years Lois has operated a neighborhood grocery store. Last week the city council passed a zoning ordinance that prohibits packaged food sales in the area where Lois’s grocery store is located. The store is now an example of a/an

A
illegal enterprise.
B   
nonconforming use.
C
violation of eminent domain.
D   
variance of the zoning laws.

Answer 17

B
nonconforming use.

This is an example of “grandfathering” that’s common when new zoning rules are put into place. Basically it means that businesses and buildings that were in compliance before the new code was established may continue to operate or exist under their present owners. However, if Lois want to sell her business, it must be to an enterprise that meets the new requirement.

Question 18

An appraiser is usually paid

A
a fee based on a percentage of the appraised value.
B
a fee based on the amount of time and effort.
C
a fee agreed upon after the appraisal is completed.
D
a standard fee agreed upon by the National Appraisal Association.

Answer 18

B
a fee based on the amount of time and effort.

There are two fundamental reasons for the “time and effort” rather than valuation method. First is the fact that the differences between any two properties make it impossible to relate the complexity of the task to the value of the property. A high-end property could be a relative “no brainer” while a particular mid-market home could have dozens of variables to be analyzed. The second reason is that basing fees on value places an obvious incentive on appraisers to estimate high, thus distorting reality. It is a violation of the appraiser’s Uniform Standards to charge a fee based upon a percentage of value.

Question 19

Which of the following is NOT defined as a seller according to the PROPERTY DISCLOSURE ACT?

A
Beneficiary of a trust
B   
Contract purchaser or lessee of a ground lease
C
Owner
D   
Any person who has never occupied the property

Answer 19

D
Any person who has never occupied the property

The Property Disclosure Act defines a seller as “every person or entity who is an owner, beneficiary of a trust, contract purchaser or lessee of a ground lease, who has an interest (legal or equitable) in residential real property.”

Question 20

Which laws holds harmless a licensee to discover latent defects?

A
Still v. Minor 1987
B   
State of Illinois v. Paragon, et al
C
Stubby v. Flag, 2000
D   
Munjal v. Baird & Warner, Inc. et al.

Answer 20

D
Munjal v. Baird & Warner, Inc. et al.

In Munjal v. Baird & Warner, Inc. et al., 2nd Dist (1985), the Illinois Appellate Court held that a broker has no duty to discover “latent” material defects in a property if the seller has not disclosed these defects prior to the sale.

Question 21

Beginning after the 2013 renewal, individuals renewing or obtaining a managing broker’s license must complete how many CE credit hours?

A
4
B
6
C   
24
D   
12

Answer 21

C
24

Beginning after the 2013 renewal, individuals renewing or obtaining a managing broker’s license must complete the 24-hour broker management continuing education course each renewal period.

Question 22

When the lender under a deed of trust requires title insurance, who would be the most likely person to pay for it?

A   
The mortgagee
B
The trustee
C   
The trustor
D
The beneficiary

Answer 22

C
The trustor

“Trustor” is another name for the borrower and “trustee” is a “supposedly” neutral third party who holds naked legal title, the right to foreclose at the instructions of the beneficiary for non-payment of a promissory note. The beneficiary is the lender in a Deed of Trust. Even though it’s the lender who requires the insurance to protect his/her position, it’s the borrower who pays for it.

Question 23

To create a joint tenancy relationship in the ownership of real estate, there must be unities of

A
desires, ownership, claim of right, and possession.
B   
title, interest, liens, and survivorship.
C   
possession, time, interest, and title.
D
ownership, possession, heirs, and title.

Answer 23

C
possession, time, interest, and title.

This essentially means that all parties to the agreement share equally in all aspects of the property, including the length of time it’s been held. That means if one party sells or transfers interest in a joint tenancy relationship, his or her place is taken by another in the same capacity.

Question 24

Within how many days does a change in managing brokers need to be reported to the IDFPR?

A   
10
B   
15
C
20
D
30

Answer 24

B
15

Any changes in managing brokers, branch or principal offices MUST BE reported in writing to IDFPR within 15 days after the change.

Question 25

When an appraiser uses the phrase “effective age,” she is referring to

A
the number of years since the improvements were made.
B
the age of the property based upon its condition.
C
the estimated total life of an improvement.
D
the number of years during which the property will yield a worthwhile return on the investment made.

Answer 25

B
the age of the property based upon its condition.

Effective age is a combination of many factors, including location, quality of construction and maintenance, architectural style, actual age, climate and so forth. A well-built building in a desirable location will have a much longer effective life than a cheaply constructed space in a poorly maintained office park setting.

Question 26

Which of the following are the required identifications for a sponsored licensee’s web home page?

A
The licensee’s name, company name, and main office location.
B
The name of the managing broker, the firm name, and the agent’s name.
C
The name of the managing broker and the firm name.
D
The firm name, franchise name, if applicable, and the main office location.

Answer 26

A
The licensee’s name, company name, and main office location.

The sponsored licensee’s home page must include his or her name as well as the company name and location of the principal office.

Question 27

Under which of the following types of liens can both the real property and the personal property of the debtor be sold to pay the debt?

A   
Real estate tax lien
B
Mechanic's lien
C   
Judgment lien
D
Assessment lien

Answer 27

C
Judgment lien

Most liens are against a specific property, such as a primary residence. Thus, a contractor seeking payment for a new deck cannot have a homeowner’s car attached in settlement.

A judgment lien, however, is a decision directed by the courts and can apply to whatever assets it deems appropriate.

Question 28

The Civil Rights Act of 1866 prohibits discrimination in housing based on which of the following reasons?

A   
Race
B
Religion
C   
Sex
D
Age

Answer 28

A
Race

Although surprising to many, the original civil rights legislation was passed in 1866–by one vote over the veto of President Andrew Johnson.

Question 29

A buyer borrows $20,000 from his mother to make a down payment. This loan must be repaid within five years, but the buyer tells the mortgage lender it is a gift.

A 
Yes, there is a "silent mortgage."
B  
Yes, it is loan fraud.
C
Yes, it is a cash-back scheme.
D
No, as long as the mortgage loan is senior.

Answer 29

B
Yes, it is loan fraud.

Loan fraud is when a borrower tells the lender that his $20,000 down payment is a gift from his mother. In reality, he must repay the $20,000. Both the borrower and his mother are committing loan fraud.

Question 30

In Illinois, which statement is correct regarding agency coupled with an interest?

A
Agency coupled with an interest is allowed.
B
This form of agency is allowed only when no principal is assigned.
C
This type of agency requires approval by the brokerage.
D
A designated agent must be assigned the to the transaction.

Answer 30

A
Agency coupled with an interest is allowed.

Agency coupled with an interest is legal in Illinois.

Question 31

What type of a listing agreement allows the owner to appoint an exclusive agent to sell his property, but retains the right to sell the property himself?

A
Open
C   
Exclusive right to sell
C
Multiple listing
D   
Exclusive agency

Answer 31

D
Exclusive agency

Open listings mean that if the owner or any other broker or salesperson produces the buyer, the broker will lose his or her commission. Exclusive Right to Sell gives the broker his or her commission regardless of who actually sells the property, even if it is the owner. Exclusive Agency allows the seller to appoint an exclusive agent, but retain the right to sell the property himself.

Question 32

An Irish immigrant owns a four-plex property where his son resides with his family. In renting a vacant unit, the owner informs an applicant that her application is denied because she is not Irish. Does this application have a case for a fair housing law violation?

A
No, since her national origin is not a protected class.
B
No, since this scenario falls under an exception to fair housing laws.
C
Yes, since the owner may not discriminate against parties based on ancestry or national origin.
D
Yes, since owners having family members as residents of a multi-unit dwelling are not exempted from fair housing law.

Answer 32

B
No, since this scenario falls under an exception to fair housing laws.

Renting a 1-4 unit apartment if occupied by the owner or family member constitutes an exception to Illinois fair housing laws.

Question 33

T/F: Tenancy by the entireties ownership CANNOT be created by operation of law, but must be created by the parties’ express intent

Answer 33

True

Tenancy by the entireties is a form of ownership that husbands and wives can choose or create by deciding to do so and declaring it as such in contracts and deeds. Tenancy in common is put in motion by state law. Community Property is a law of ownership that exists in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and some other states. Tenancy by the Entireties is an estate that is recognized in some states between husband and wife, who have equal right of possession and enjoyment during their joint lives and with the right of survivorship–that is when one dies, the property goes to the surviving tenant. (In many states, if couples do not specify “Joint Tenancy,” this form of ownership will be automatically assumed.) Tenancy in Common is a type of joint ownership by parties NOT married, that allows a person to sell his share or leave it in a will without the consent of the other owners. If a person dies without a will, his share goes to his heirs, not to the other owners.

Question 34

he Smiths’ purchased a residence for $750,000. They made a down payment of $150,000 and agreed to assume the seller’s existing mortgage, which had a current balance of $230,000. The Smiths’ financed the remaining $370,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a

A   
wraparound mortgage.
B
package mortgage.
C
balloon note.
D   
part (junior) purchase money mortgage.

Answer 34

D
part (junior) purchase money mortgage.

Also known as a “purchase money second,” this is a streamlined and often cost-effective financing option.

Question 35

T/F: A purchase-money mortgage is a mortgage issued to the borrower by the seller of a home as part of the purchase transaction.

Answer 35

True
Seller issues mortgage

Also known as a seller or owner financing, this is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels.

Question 36

T/F: Exclusive brokerage agreements (including property management agreements between a landlord and a manager) must be in writing and have an expiration date.

Answer 36

True

Exclusive brokerage agreements (including property management agreements between a landlord and a manager) must be in writing and have an expiration date.

Question 37

When does a buyer have to pay for private mortgage insurance (assuming not a VA/FHA loan)

Answer 37

A buyer has to pay private mortgage insurance if they did not have a 20%+ down payment (unless they have a VA or FHA loan).

Question 38

T/F: In sub-agency, the selling broker becomes an agent of the listing broker.

Answer 38

True

In sub-agency, the selling broker becomes an agent of the listing broker.