Prep Course Pre Exam Flashcards
Under authority of a signed exclusive agency listing, broker Davis diligently advertised for sale the $165,000 home of owner Johnson. Before the expiration date of the listing, Johnson sold the home to a friend. Davis was refused payment of any commission. Davis is legally entitled to receive from Johnson
A) one-half commission.
B) full commission.
C) all expenses incurred in advertising the home.
D) no commission.
D) no commission.
The answer is no commission. The broker is entitled to no commission. An exclusive agency listing is one in which a broker is employed as the sole agent for the seller of real property. Under the terms of such agreements, the broker is entitled to a commission if the property is sold through any other broker but not if a sale is negotiated by the owner without the services of an agent.
An investor purchased an apartment building with a very small down payment and was able to secure financing for the balance. A year later, the investor sold the property for profit with no increase in the original investment. This is an example of A) subordination. B) inflation. C) leverage. D) debt reduction.
C) leverage.
The maximum that may be recovered from the Consumer Recovery Account against one licensee is
$250,000
A blind ad is advertising by a licensee who does not disclose in the ad
that the property is offered through an agent rather than by a principal.
A commercial acre is BEST defined as
an acre after deductions for streets and alleys.
A commercial acre is the remainder of an acre of newly subdivided land after deduction of areas devoted to streets, sidewalks, curbs, and the like.
The customary procedure used to enforce private restrictions on real property is A) an indictment. B) a desist and refrain order. C) an injunction. D) a judgment.
C) an injunction.
An injunction is a court order restraining or requiring performance by a party to a suit (such as performing acts required by property covenants or refraining from acts restricted by such covenants).
A lot that contained a structure of no value was appraised for highest and best use. The appraiser would
A) appraise the value of the land and add the cost of demolition.
B) ignore the structure’s salvage cost.
C) appraise the value of the land and ignore the cost of demolition.
D) appraise the value of the land and deduct the cost of demolition.
D) appraise the value of the land and deduct the cost of demolition.
Harris, an unlicensed person, wanted to purchase 300 acres of land for $85,000 from Stevens, who intended to subdivide the property in the future. Harris did not have the money for the purchase and convinced a friend, Williams, to purchase the property. Harris immediately entered into a land sales contract with Williams to purchase the property for $98,000. With respect to the above statements, which of the following is TRUE?
A) The original transaction is valid, but the subsequent sale is invalid.
B) Both transactions would be considered unenforceable.
C) The original purchase and subsequent sale are both valid.
D) The second transaction is illegal.
C) The original purchase and subsequent sale are both valid.
Under the 1911 Street Improvement Act, funds may be raised by the local government, benefiting a subdivider, for all the following purposes EXCEPT
A) payment for offsite improvements.
B) purchase of land for a subdivision.
C) payment for streets, walks, and curbs.
D) payment for drainage system.
B) purchase of land for a subdivision.
The 1911 Street Improvement Act authorizes the local government to order improvements and pass the expense on to the landowner. This authority cannot be used for the original purchase of the land for a subdivision.
Which would be the MOST important consideration when planning a shopping center in a suburban community?
A) Purchasing power
B) Proximity of shipping and warehousing facilities
C) Weather
D) Amenities
A) Purchasing power
Which of the following items would MOST likely be short rated in escrow? A) Real estate taxes B) Trust deed C) Insurance D) Interest
C) Insurance
The answer is insurance. Taxes, and interest in an assumption, are usually prorated in escrow. If the seller’s insurance is taken over by the buyer, the seller will be credited proportionately (pro rata) for the portion of the premium the buyer is debited for. When the buyer gets new insurance, the seller’s policy will be canceled and the premium returned to the seller by the insurance company, short rated on a uniform schedule approved by the insurance commissioner.
A broker sells a house, and a loan for the buyer is secured through a savings and loan association. The broker carefully explains all loan costs to the buyer. According to TILA-RESPA Rule, which of the following is TRUE?
A) The broker must provide the buyer with an estimate of settlement costs within one week.
B) The creditor must provide the consumer with a Loan Estimate form within three days after receiving an application.
C) The broker does not have to provide an estimate of settlement costs to the buyer because all costs were explained.
D) The lender must immediately provide an estimate of settlement costs to the buyer.
B) The creditor must provide the consumer with a Loan Estimate form within three days after receiving an application.
Under RESPA, the lender must furnish a copy of Your Home Loan Toolkit booklet prescribed by the Consumer Financial Protection Bureau, together with a Loan Estimate form of closing costs to every person from whom the lender receives a written application for a first mortgage loan.
A builder submitted building plans that included design specifications and materials for approval. When reviewing these plans, the building inspector determined that although some of the proposed materials did not comply with local building codes, the use of these materials would not constitute a safety hazard. Therefore, the inspector approved the plans. This is an example of A) a variance. B) an exception. C) an infraction. D) a permit.
B) an exception.
This is an example of an exception made by a building inspector. The term variance applies to permission to use land for a purpose that does not strictly conform to a zoning restriction. If approved by a building inspector, it is not an infraction.
When comparing physical life to economic life, the economic life usually A) is the same. B) depends on the improvements. C) is greater. D) is lesser.
D) is lesser.
The economic life is the period in which the building earns sufficient income to support itself. The physical life is how long the building will remain standing, which is typically much longer than the economic life.
A broker negotiated a loan for a client. The beneficiary did not specifically instruct the broker to record. The broker is obligated to record
A) within 10 days of the date that funds are disbursed.
B) at the same time the funds are disbursed.
C) before the funds are disbursed.
D) immediately after the funds are disbursed.
C) before the funds are disbursed.
Article 5 of the Real Estate Law stipulates the following: Unless a lender has given written authorization to the broker, the broker may not disburse the loan funds until after recording the trust deed securing the note evidencing the loan. If the lender has given the broker authority to release funds prior to recordation, the securing trust deed must be recorded, or delivered to the obligee with a written recommendation for immediate recordation, within ten days, following the disbursement of loan funds.
Who would provide a quitclaim deed to quiet a title? A) Grantor B) Grantee C) Trustor D) None of these
A) Grantor
Quitclaim deeds are executed by grantors to clear up conflicting claims or deficiencies in titles.
An escrow can be terminated by
mutual consent of the parties.
All these are necessary for the creation of an agency agreement EXCEPT A) a fiduciary relationship. B) consideration. C) mutual agreement of the parties. D) competency of the seller.
B) consideration.
Consideration is not required of an agency relationship. The agency may be a gratuitous agency.
Which is TRUE of a listing agent who gave part of his commission to the buyer?
A) He is guilty of criminal action.
B) He must disclose this to the seller.
C) He is guilty of committing a civilly wrong act.
D) He may be disciplined by the real estate commission.
B) He must disclose this to the seller.
This would be considered a material fact, so it must be disclosed to the seller.
All of the following are true regarding an appurtenant easement EXCEPT
A) the easement would run with the land.
B) the dominant tenement would benefit and the servient tenement would be burdened.
C) there must be at least two tracts of land under separate ownership.
D) the dominant tenement must abut the servient tenement at the border.
D) the dominant tenement must abut the servient tenement at the border.
The dominant tenement may have the right to cross over three or four lots in one tract, and not all the servient tenements would be immediately adjacent (contiguous) to the dominant tenement.
Which of the following elements is NOT necessary in the formation of a contract? A) Offer B) Acceptance C) Performance D) Consideration
C) Performance
The other choices are essentially found in the creation of a contract. Performance is the desired result and not essential in the formation of a contract.
