Quick Quiz 5

Question 1

A real estate broker cannot accept a listing from a minor appointing the broker as an agent because
A) a minor does not have the capacity to enter into contracts.
B) a minor is incapable of appointing an agent.
C) the broker would breach the fiduciary relationship by misrepresenting a minor who is incapable of making adult decisions.
D) a minor has the right to disaffirm the listing contract during his minority.

Answer 1

B) a minor is incapable of appointing an agent.

A minor lacks the capacity to appoint an agent under state law.

Question 2

If an apartment owner is converting the building to a condominium project, each tenant must receive advance notice of intention to convert. What is the notice time requirement for this phase of conversion?
A) 120 days
B) 180 days
C) 30 days
D) 90 days

Answer 2

B) 180 days

Question 3

Two pest control inspection companies submitted pest control reports on the same property during escrow. The escrow officer should
A) return the reports to the broker and have him get written instructions from the seller and buyer as to which report to use.
B) use the report that requires the least work to be done.
C) return the reports to the broker and request written instructions from the seller as to which report to use.
D) request one of the pest control companies to withdraw its report.

Answer 3

A) return the reports to the broker and have him get written instructions from the seller and buyer as to which report to use.

Question 4

Broker A had a listing and cooperated with Broker B on an offer from a buyer procured by Broker B. The seller accepted the buyer’s offer and the transaction was placed in escrow. It is due to close within two or three days when Broker A learns that Broker B has arranged a sale of similar acreage at a considerably higher price to the same buyer. In these circumstances, what should Broker A do?
A) Notify the seller of the higher price
B) File an interpleader action and obtain a writ of replevin
C) Attempt to renegotiate a higher price
D) Nothing because of the imminent closing

Answer 4

A) Notify the seller of the higher price
If a broker sells a property through a cooperating broker and, while the transaction is in escrow, learns the cooperating broker is selling a similar property to the same buyer at a higher price, the broker must inform his principal since he has a fiduciary duty to the seller even though the transaction is in escrow.

Question 5

An appraiser received a $300 fee from Jones for appraising Brown's property. The appraiser may discuss the details of the appraisal with
A) Jones.
B) Brown.
C) no one.
D) anyone.

Answer 5

A) Jones.
The appraiser should preserve a professional confidential relationship with his or her client and should report the conclusions and valuation concerning the property only to the client. Although Brown owns the property, Brown is not entitled to information paid for by Jones. Lenders do have an obligation by law to provide a copy of the appraisal to a borrower under specific circumstances.

Question 6

What would create an interest in property with possessory rights but no form of title?
A) Sublease
B) Land contract
C) Mortgage
D) Easement

Answer 6

A) Sublease
A sublease is a transfer of less than the leasehold with the reversion in the sublessor and would create no form of title in the sublessee. A land contract transfers (1) possession, (2) equitable title, and (3) the right to acquire the fee title after all the conditions of the contract have been met. A mortgage does not convey any possessory interest; it is a security device.

Question 7

An investment that would best hold its value as a hedge against inflation would be a(n)
A) investment similar to an annuity.
B) no risk investment.
C) income-producing investment that would maintain its value.
D) investment that has a high degree of liquidity.

Answer 7

C) income-producing investment that would maintain its value.
An income-producing investment that would maintain its value does so by providing an increased income when inflation makes money worth less. The property thus keeps its exchange value compared to other properties and so protects against inflation.

Question 8

In real estate, the word tenancy means
A) a method or mode of holding title.
B) two or more people joined in an enterprise.
C) a tenacious person.
D) a device.

Answer 8

A) a method or mode of holding title.

Question 9

In regard to property taxes, a tax lien would be
A) on par with all others.
B) superior to mortgages.
C) inferior to other private parties.
D) inferior to mortgages.

Answer 9

B) superior to mortgages.
Real property taxes and assessment liens prevail over private real property interests. (Among themselves, these governmental liens are held to be on a parity.)

Question 10

A listing agreement is
A) all of these.
B) an employment contract.
C) a promise for a promise.
D) a bilateral executory contract.

Answer 10

A) all of these.
A listing agreement, being a promise of payment given for a promise of a personal service, is a bilateral, executory employment contract.

Question 11

When the Federal Reserve Board raises the discount rate to their borrowers, it has what effect on the money market?
A) Makes money less available
B) Makes money more available
C) Makes more marginal loans available
D) Has no effect

Answer 11

A) Makes money less available

Question 12

The trustee will deliver to the trustor a
A) quitclaim deed.
B) reconveyance deed.
C) trustee's deed.
D) grant deed.

Answer 12

B) reconveyance deed.
In a deed of trust arrangement, the trustor is the owner-borrower who has placed bare legal title in trust with a third neutral party called the trustee. When the debt to the lender (beneficiary) is satisfied, the trustee reconveys the title back to the trustor by using a reconveyance deed. A trustee’s deed would be used in case of foreclosure and would not be delivered to the trustor.

Question 13

Appraisers have the most difficulty in determining the value of
A) basic cost data.
B) accrued depreciation.
C) capitalized income.
D) replacement cost new.

Answer 13

B) accrued depreciation.
Depreciation is the difference between the replacement cost new of the improvements and their present value measured at the same date. The older the building, the more difficult it is to estimate replacement cost and depreciation accurately.

Question 14

All of these are characteristics of a fee simple estate EXCEPT that it is
A) freely transferable.
B) of indefinite duration.
C) freely inheritable.
D) free of all encumbrances.

Answer 14

D) free of all encumbrances.
Due to taxes and special assessments, privately owned real property is never free from all encumbrances. It is possible to own property in fee simple and still have many encumbrances on it (such as a mortgage). The three characteristics of a fee simple estate are: freely inheritable, freely transferable, and of indefinite duration.

Question 15

Private restrictions placed by a landowner may be in the form of covenants or conditions restricting or limiting the use of the land. Private restrictions may be created by

Answer 15

deed or written agreement.

Question 16

An investor purchases an investment property. An appraisal of the property showed a 12% return. The broker gives the buyer a financial report on the property but fails to take into consideration vacancies and management fees. The broker is guilty of
A) false promises.
B) misrepresentation.
C) caveat emptor.
D) fraud.

Answer 16

B) misrepresentation.
If the vacancies and management fees had been taken into account, the property would return less than 12%. Therefore, a false statement of fact, or misrepresentation, was made by the broker. (Misrepresentations may be either “fraudulent” or “negligent.” Since the facts in the question are silent about any fraudulent intent, the act is presumed to be “negligent misrepresentation.”)

Question 17

The degree of angle of a roof, or slope, is termed
A) shingle.
B) span.
C) hip.
D) pitch.

Answer 17

D) pitch.

Question 18

To restore an old home to its original condition without making any changes in the floor plan or style is referred to as
A) modernization.
B) remodeling.
C) reclamation.
D) rehabilitation.

Answer 18

D) rehabilitation.

Rehabilitation is restoring without changes in floor plan or style.

Question 19

When dealing with the public, a broker may NOT
A) do any of these.
B) remain silent as to material facts concerning the property known only to the broker.
C) delegate any of the broker’s duties to other persons.
D) receive a commission from both buyer and seller.

Answer 19

B) remain silent as to material facts concerning the property known only to the broker.
A broker has a duty to disclose material facts; failure to disclose material facts to the parties involved could be considered negative fraud.

Question 20

When dealing with the public, a broker must
A) not refuse to take a listing.
B) delegate responsibilities to another person.
C) do all of these.
D) disclose all material facts known only to himself or herself.

Answer 20

D) disclose all material facts known only to himself or herself.
A broker has a duty to disclose material facts; failure to disclose material facts to the parties involved could be considered negative fraud. As long as there is no illegal discrimination involved, there are many reasons why a broker may refuse to take a listing. For example, many brokers will refuse to take an unreasonably overpriced listing.

Question 21

Which is real property?
A) Land and buildings
B) Natural and artificial barriers immovable by law
C) Easements and rights-of-way to an adjoining property
D) Any of these

Answer 21

D) Any of these

Question 22

A written statement that is sworn to or affirmed in the presence of a notary is a(n)
A) affidavit.
B) ratification.
C) estoppel.
D) allocation.

Answer 22

A) affidavit.

Question 23

A tenant would be justified in abandoning a property in all of these situations EXCEPT when
A) the landlord threatens expulsion.
B) excessive or unwarranted changes or alterations in the property are made by the landlord.
C) dilapidated conditions are created by the tenant.
D) property is taken by eminent domain or condemnation.

Answer 23

C) dilapidated conditions are created by the tenant.
A tenant is an owner of an interest in real property and therefore is subject to eminent domain and condemnation proceedings. In every lease or rental agreement the landlord implies (by law) that his tenant will have the quiet possession and enjoyment of the premises during the tenancy. The landlord shall not unlawfully interfere with this covenant by threatening expulsion or by excessive or unwarranted changes. In the event he does breach this covenant it may be deemed constructive eviction and the tenant would be justified in terminating the lease and abandoning the premise.

Question 24

Which statement would be TRUE with regard to bearing walls of a building?
A) All of these
B) They can be built at any angle to doors or windows.
C) They are usually built sturdier than other walls.
D) They are seldom moved during remodeling.

Answer 24

A) All of these

Question 25

The required written agreement of broker-salesperson is a regulation of
A) NAR.
B) the real estate commissioner.
C) no one.
D) the Real Estate Board.

Answer 25

B) the real estate commissioner.

Question 26

A person who has been judicially declared incompetent and who was bequeathed three properties by his brother
A) cannot receive title to real property but can receive title to personal property.
B) can accept title only if it is placed with a trustee.
C) cannot receive title to real property because of his incompetency.
D) can accept title to real property given to him in a will.

Answer 26

D) can accept title to real property given to him in a will.
A grantee of a deed or the beneficiary of a will is required only to be alive to have capacity to hold title. Therefore, the person judicially declared incompetent can receive title to both real and personal property.

Question 27

An owner of a small investment company advertised and sold properties for a commission. In his advertisements he did not indicate that he was a licensee, and in fact, he was not. He also made false statements in his advertising. Since he failed to disclose material facts, who would prosecute this person?
A) Local law agencies
B) District attorney
C) Attorney general
D) Real estate commissioner

Answer 27

B) District attorney
The district attorney prosecutes violators of the real estate license law. Without a license one cannot receive compensation, a commission, or fee for the performance of any of the acts defined as being within the purview of a licensed broker or salesperson. Since the person in the question is not licensed, the real estate commissioner would not have the authority to discipline this individual.

Question 28

An order by a court directing an officer to sell real property to satisfy a judgment is a(n)
A) injunction.
B) writ of execution.
C) abstract of judgment.
D) deficiency judgment.

Answer 28

B) writ of execution.
A writ of execution is an order from the court to an officer, such as a sheriff, directing a sale of property to satisfy a judgment.

Question 29

In which situation could a beneficiary of a trust deed acquire an interest in an after-acquired title?
A) Trustor added improvements to the property
B) Trustor purchased additional property
C) All of these
D) Personal property later became affixed to the real property

Answer 29

C) All of these
“Title acquired by the mortgagor subsequent to the execution of the mortgage inures to the mortgagee as security for the debt in like manner as if acquired before the execution” (Civil Code § 2930). Also, the parties may agree to create a lien on property not yet acquired (Civil Code § 2883).

Question 30

Which statement is NOT true regarding an option?
A) If the optionee does not exercise the option, he forfeits the thing of value given to the optionor as consideration.
B) An optionee must give valuable consideration.
C) A separate sales agreement must be binding.
D) An option on a business opportunity can also include the site on which the business operates.

Answer 30

C) A separate sales agreement must be binding.
The option to purchase real estate is a written agreement in which the owner agrees that the buyer shall have the right to purchase the property at a fixed price within a certain time. A separate sales agreement is not necessary for the option to be binding.

Question 31

What is the indicated value of a property that produces a gross monthly income of $2,400 and an appropriate (annual) multiplier of 10.72?
A) $225,000
B) $25,000
C) $308,000
D) $108,000

Answer 31

C) $308,000
Gross monthly income $2,400 × 12 months = $28,800/year
Gross multiplier × Gross income = Value estimate
10.72 × $28,800 = $308,736 Closest $308,000

Question 32

An increase in value, resulting from improved usability where one or more contiguous lots are joined together under single ownership, would be a definition most appropriately applied to
A) plottage.
B) assemblage.
C) severalty ownership.
D) appurtenance.

Answer 32

A) plottage.
Plottage increment is the increase in value after combining lots. Assemblage is the act of combining one or more contiguous lots under single ownership.

Question 33

A fire insurance policy can be canceled by the insurance company
A) without notice if the buyer has had excessive losses.
B) only after the company has given written notice and the insured has signed an acceptance.
C) at any time without notice.
D) if the company gives the insured notice within a reasonable time prior to cancellation.

Answer 33

D) if the company gives the insured notice within a reasonable time prior to cancellation.
A fire insurance policy can be canceled only after written notice has been given to the insured with a reasonable time for cancellation to take effect.

Question 34

The right to use and enjoy another's property short of an estate is an example of a(n)
A) easement.
B) deed.
C) leasehold.
D) subordination clause.

Answer 34

A) easement.
An easement is the right to use another’s property without payment. Although it is an interest in real property, it is not a “possessory” interest and therefore is not an estate.

Question 35

Which would have the least effect on property taxes in a community?
A) Zoning and private restrictions
B) Compactness of the community
C) Number of commercial buildings and high-priced homes
D) Homestead exemptions

Answer 35

D) Homestead exemptions

Homesteads will not protect the owners from property taxes and would have the least effect on them.

Question 36

If a person paid $220 interest on an $8,000 loan for 90 days, the interest rate was
A) 9%.
B) 12%.
C) 10%.
D) 11%.

Answer 36

D) 11%.
(R × T) × P = I
(%/yr.) × $8,000 = $880*
$880 ÷ $8,000 = 0.11 = 11%/yr.
$220 Interest/90 days × 4 Quarters
$880 Interest/yr.