All Chapters of Practice

Question 1

In formulating an effective business plan, a licensee should:

• clearly and specifically define each objective.
• set realistic business objectives.
• establish checkpoints within the plan in order to be able to measure the success or failure of achieving the plan.
• All of the above.

Answer 1

All of the above

Question 2

How many sales would a licensee have to make per year to gross $105,000 per year under the following fact situation?

An average sales price of $500,000, with an average gross commission on each sale of 6%, a commission split between listing and selling brokerage of 50% each, and the licensee has a 70/30 split with the brokerage (the brokerage takes 30%, the licensee takes 70%).

• 8
• 9
• 10
• 11

Answer 2

10

A 6% commission on $500,000 is $30,000 (500,000 x .06 = 30,000). The split between the brokerages is 50%, resulting in $15,000. The licensee splits 70% of that with the associated brokerage, netting the licensee $10,500. In order to earn $105,000 per year, the licensee would need to make 10 sales each year.

Question 3

Which of the following might stand in the way of achieving a well defined business plan?

• The lack of proper clothing or automobile to give the proper image
• The lack of sales experience
• The lack of personal funds in order to survive more than 2 months without receiving a commission
• All of the above

Answer 3

all of the above

Question 4

The majority of California laws impacting the practice of real estate are found in:

A: Title 10 of the California Code of Regulations

B: The California Business and Professions Code sections 10000 to 11288

• A only
• B only
• Both A and B
• Neither A nor B

Answer 4

Both A and B

Question 5

The professional organization comprised primarily of African American real estate licensees is known as the:

• National Association of REALTORS®.
• Association of African American Brokers.
• Real Estate Broker’s Institute.
• National Association of Real Estate Brokers.

Answer 5

National Association of Real Estate Brokers.

Question 6

Which one of the following is NOT a natural resource property?

• Ranches
• Rock quarries
• Forest lands
• Properties abutting the sea

Answer 6

Properties Abutting the Sea

Question 7

This course is largely about one particular area of real estate but introduces “specialized areas of real estate.” These specialized areas require additional training and knowledge beyond the scope of this course. Which is the area of real estate do we NOT consider to be a specialized area?

• Commercial
• Residential
• Natural resource properties
• Business opportunity

Answer 7

Residential

Question 8

A section 1031 tax-deferred exchange is NOT:

• a transfer of a property for a like-kind property.
• considered a professional real estate activity for the licensee.
• a method for the exchanger to defer capital gains taxes on the sale of a primary residence.

Answer 8

a method for the exchanger to defer capital gains taxes on the sale of a primary residence.

Question 9

Which statement regarding a professional home inspection is FALSE?

• The buyer may terminate the contract with no penalty based on the findings of the inspections
• The seller and buyer may openly negotiate the responsibility of any repairs revealed by the inspection
• The seller must perform all repairs requested by the buyer, or be in breach of contract
• The seller may refuse to perform any or all of the repairs discovered in the home inspection

Answer 9

The seller must perform all repairs requested by the buyer, or be in breach of contract

Question 10

When dealing with a manufactured home, a real estate licensee can sell a manufactured structure that is:

• registered with the California Department of Real Estate.
• still attached to its mobile trailer.
• brand new and not attached to anything yet.
• permanently attached to the land.

Answer 10

permanently attached to the land.

Question 11

Which of the following would hinder the success of a new licensee?

• Being a problem solver
• Taking advantage of clients
• Being willing to accept rejection and keep trying
• Being a good listener

Answer 11

Taking Advantage of Clients

Question 12

The Department of Housing and Urban Development (HUD):

• establishes and enforces laws to protect the environment.
• is a secondary market for lenders to sell mortgage loans.
• establishes and regulates VA loans.
• establishes criteria for residential property loans insured or guaranteed by the government.

Answer 12

establishes criteria for residential property loans insured or guaranteed by the government.

Question 13

Which of the following is NOT a California state law relating to the real estate industry?

• Fair Employment and Housing Act
• The Housing for Older Persons Act (HOPA)
• The Holden Act
• The Unruh Civil Rights Act

Answer 13

The Housing for Older Persons Act (HOPA)

Question 14

Which one of the following is NOT a protected class under the federal fair housing laws?

• race
• religion
• sexual orientation
• color

Answer 14

sexual orientation

Question 15

The Voluntary Affirmative Marketing Agreement, co-authored by HUD and the National Association of REALTORS®, was developed to promote:

• affirmative marketing advertisement.
• the use of the Equal Opportunity and Fair Housing logo.
• equal opportunity in the real estate industry.
• All of the above

Answer 15

all of the above

Question 16

Which definition best describes steering?

• Telling prospective homeowners about the racial, ethnic, or religious composition of any neighborhood
• Circulating rumors of an infusion of a particular ethnic group moving into a neighborhood to induce homeowners to sell
• Discouraging buyers from considering certain neighborhoods
• Refusing to make a mortgage loan for reasons other than the qualifications of the applicant

Answer 16

Discouraging buyers from considering certain neighborhoods

Question 17

Which one of the following is NOT considered to be a disability as defined by the Americans with Disabilities Act?

• Intellectual disabilities, emotional illness, alcoholism, and psychiatric disabilities
• Psychotic impairment due to use of mind-altering drugs
• A physical or mental impairment that substantially limits one or more major life activities
• Visual, orthopedic, speech, and hearing impairments

Answer 17

Psychotic impairment due to use of mind-altering drugs

Question 18

The Fair Housing Amendment Act of 1988, which addresses the issue of local regulations regarding occupancy, does NOT allow a state or local government to:

• enact rules limiting the occupancy of housing to those who are 55 years old and older.
• enact legislation restricting the number of occupants to specifically eliminate families with children.
• enact regulations regarding the maximum number of occupants for a dwelling as long as that number is reasonable.
• enact occupancy standards that apply to both private and public sector housing.

Answer 18

enact legislation restricting the number of occupants to specifically eliminate families with children.

Question 19

Which of the following phrases are permitted in advertising per HUD guidelines?

• “Large family room.”
• “A large lot ideal for the physically fit.”
• “Great bachelor pad!”
• “Near the Mormon temple.”

Answer 19

“Large family room.”

Question 20

Which one of the following private property owners is exempt from federal fair housing laws?

• A landlord who refuses to rent to minority gang members out of concern for physical damage to the property
• A homeowner refuses to sell to an African American and does not use a real estate licensee to broker the transaction
• The property owner is a church and the church does not permit racial minorities to be members
• The rental housing is in a building with six rental units and the landlord is living in one of the units

Answer 20

A landlord who refuses to rent to minority gang members out of concern for physical damage to the property

Question 21

Which of the following are protected under the Americans with Disabilities Act?

• Compulsive gambling
• Illegal substance abuse problems
• Gender identify disorders
• HIV/AIDS

Answer 21

HIV/AIDS

Question 22

With regard to housing, which of the following classes does the California Fair Employment and Housing Act NOT protect?

• Age
• Marital status
• Sexual Orientation
• HIV and AIDS

Answer 22

Age

Under California Fair Employment and Housing Act, age is not a protected class with respect to housing. With respect to employment, age is a protected class.

Question 23

Which are conflict of interest situations?

1. Only showing your buyer properties with commission amounts over a certain percentage
2. Making an offer on a property before showing the property to your client, who is looking for the same type of property
3. Accepting a referral fee from your buyer’s lender
4. Your mother makes an offer to purchase one of your listings through a different buyer’s agent, and you do not disclose to the seller that the buyer is your mother

• 4 only
• 1 and 2 only
• 3 only
• 1, 2, 3, and 4

Answer 23

1, 2, 3, and 4

Question 24

Which statement is FALSE regarding the REALTOR Code of Ethics?

• The Code is based upon what is fair and right.
• The Code is the basis of many regulations.
• The Code is a recommendation only with no consequences for violating any portion.
• The Code is a road map to good business.

Answer 24

The Code is a recommendation only with no consequences for violating any portion.

Question 25

Which one of the followings statements about the conduct outlined in the REALTOR® Code of Ethics is NOT TRUE? * All real estate licensees can freely use the term "REALTOR®" in their advertisements * A REALTOR® can contact another REALTOR's® seller to solicit for a property management contract * A REALTOR® can contact another REALTOR's® seller for the listing contract's expiration date when the listing REALTOR® does not give the date to the inquiring REALTOR® * A REALTOR® can send mass mailings to neighborhoods where there are listed properties, even when the intent of the mailer is to solicit for those listings once their current contract expires

Answer 25

All real estate licensees can freely use the term "REALTOR®" in their advertisements

Question 26

Which of the following situations are unethical? 1. Intentional under-estimating of closing costs to a buyer 2. Intentional over-estimating of closing costs to a seller 3. Careless guesses as to closing costs to either seller or buyer 4. Intentionally not addressing the issue of closing costs with a buyer * 1 only * 1, 2, and 4 only * 1 and 4 only * All of the above

Answer 26

All of the above

Question 27

While preparing an offer to purchase, Sally's client executed a promissory note for $5,000 as a promise to pay earnest money. Sally must: * advise the client that sellers prefer the earnest money be in cash. * specify on the offer that a promissory note has been received and in what form it is in. * deposit the earnest money into her business account. * All of the above

Answer 27

specify on the offer that a promissory note has been received and in what form it is in.

Question 28

Which of the following is NOT one of the five common law fiduciary duties? * Obedience * Disclosure * Care * Humility * Loyalty * Accounting

Answer 28

humility

Question 29

"This home has one of the most beautiful views in the city" is an example of sales speak, which is also known as: * exaggeration. * misrepresentation. * fraud. * puffing.

Answer 29

puffing

Question 30

Which would NOT violate the REALTOR Code of Ethics? * Selecting only the six highest priced comparable sold properties when preparing a CMA. * Intentionally undervaluing a listing to bring about an immediate sale. * Advising a buyer to pay more than the listed price because of fierce competition in the market place and product scarcity. * Recommending an inflated price in order to obtain the listing.

Answer 30

Advising a buyer to pay more than the listed price because of fierce competition in the market place and product scarcity.

Question 31

Which of the following can the listing agent disclose to a prospective buyer without authorization from the seller to do so? * The seller's current financial condition * Facts material to the transaction and that would be disclosed as a matter of good faith * The seller's reason for selling the property * The fact that the seller is about to face foreclosure of the property offered for sale

Answer 31

Facts material to the transaction and that would be disclosed as a matter of good faith

Question 32

Which statement is TRUE with respect to ethics? * Negligent acts of a licensee do not constitute unethical conduct * Misrepresentation may occur by either an affirmative intentional misrepresentation or by nondisclosure of a material fact * A material fact does not have to be made known to a client if a licensee feels that the fact is of no importance to the client * All of the above

Answer 32

Misrepresentation may occur by either an affirmative intentional misrepresentation or by nondisclosure of a material fact

Question 33

Which one of the following is NOT a characteristic of a good record keeping routine * Record entries on the Trust Fund Bank Account Record in chronological sequence * Reconcile the trust account records on a quarterly basis * Use the same source documents consistently as the basis for recording trust fund receipts and disbursements * If more than one trust fund bank account is used, keep a separate set of records for each bank account

Answer 33

Reconcile the trust account records on a quarterly basis

Question 34

Once trust funds have been deposited into a trust account, the funds can only be withdrawn upon the signature of: * A salesperson licensed to a broker if properly authorized in writing to do so * The designated broker-officer if the trust account is in the name of corporate broker * The broker in whose name the account is maintained * All of the above

Answer 34

All of the above

Question 35

Which is an improper accounting procedure when receiving advance fees? * Recording all services to be provided from the advance money given. * Recording the amount collected. * Recording the names of the agent and the principal. * Depositing them into and disbursing them from the office business account.

Answer 35

Depositing them into and disbursing them from the office business account.

Question 36

Which is NOT accomplished by maintaining a trust account for funds received? * A trust account protects a client from a dishonest broker * A trust account provides the DRE with easy audit access to client trust funds being held * Each client in a trust account receives $250,000 FDIC insurance protection * Funds cannot be frozen pending litigation against the broker

Answer 36

A trust account protects a client from a dishonest broker

Question 37

Which of the following documents or records must be made available to the DRE when requested? A: Broker-salesperson contracts B: Trust fund account records C: All unaccepted offers D: Property Management Agreements * B and C only * B only * B, C, and D only * All of the above

Answer 37

all of the above

Question 38

The Business and Professions Code requires that a trust account be all of the following, EXCEPT: * designated as a trust account in the name of the broker as trustee. * maintained with a bank or recognized depository located in the State of California. * maintained by a CPA as trustee of the trust account.

Answer 38

maintained by a CPA as trustee of the trust account.

Question 39

An acceptable accounting system must show: * an accurate balance remaining in the trust account. * the balance owing to each beneficiary or on each transaction based upon recorded entries. * a chronological listing of all trust funds received and disbursed. * All of the above

Answer 39

All of the above

Question 40

If a licensee is found guilty of conversion of trust funds: * the DRE will most certainly revoke the license of the licensee. * assets of the licensee may be sold to recover the converted funds. * a receivership may be imposed on the licensee's assets in order to find and recover the converted funds. * All of the above

Answer 40

all of the above

Question 41

The unauthorized use of trust funds for personal use is known as: * commingling. * conversion. * negligence. * misrepresentation.

Answer 41

conversion

Question 42

Which one of the following is NOT considered to be trust funds? * Deposit checks made payable to a title company * Rent from a tenant of the licensee's rental property * A promissory note held as part of a property purchase price * Fees for a brokerage service to be performed in the future

Answer 42

Rent from a tenant of the licensee's rental property

Question 43

Which of the following must be disclosed in the Real Estate Transfer Disclosure Statement (TDS)? 1. Easements affecting the property 2. A non-functioning oven 3. Additions or alterations made without a permit 4. Neighborhood noise or nuisance problems.

Answer 43

All of the above

Question 44

Which of the following is NOT true regarding the obligations of a buyer? * The buyer has a duty to exercise reasonable and ordinary care and diligence in the investigation process * The buyer has no duty to investigate beyond the seller's representations in the Real Estate Transfer Disclosure Statement * A buyer cannot deny knowledge of a fact that would or could have been known to them if they are negligent in investigating the property

Answer 44

The buyer has no duty to investigate beyond the seller's representations in the Real Estate Transfer Disclosure Statement

Question 45

In California, the law requires disclosure if: * any occupant of a residence being offered for sale died in the home within the past 3 years. * The buyer inquires if the property seller was a member of a specific ethnic group. * a buyer asks if the owner or another resident had AIDS. * an occupant of the residence died from an AIDS-related illness.

Answer 45

any occupant of a residence being offered for sale died in the home within the past 3 years.

Question 46

Lead-based paint disclosure must be made in which of the following transactions? 1. The purchase of single-family residential structure 2. A property sold at foreclosure 3. Rental property certified under a federal program as "lead-based paint free" 4. The purchase of a duplex * 1 only * 1, 2, 3, and 4 * 1 and 4 only * 1 and 3 only

Answer 46

1 and 4 only

Question 47

Which of the following are red flags? 1. A smell of dampness in structure 2. Soft floors in the area around a bathroom tub 3. The use of certain brands of manufactured siding 4. Water stains on a ceiling * 1 and 4 only * 1, 2, and 4 only * None of the above * All of the above

Answer 47

All of the above

Question 48

In the Real Estate Transfer Disclosure Statement, the seller must disclose actual knowledge of which of the following environmental hazards? 1. Radon 2. Formaldehyde 3. Asbestos 4. Underground fuel storage tank * 1 and 3 only * 1,2 and 3 only * None of the above * All of the above

Answer 48

All of the above

Question 49

A buyer filing a lawsuit against a licensee alleging fraud must contain which elements? * Proof that the licensee had knowledge or should have known of the material fact and that the fact was beyond the reach of the buyer * Nondisclosure of facts or misinformation must materially affect the value or desirability of the property * The intent of the licensee was to induce action on the part of the buyer * All of the above

Answer 49

All of the above

Question 50

The seller and licensees have the legal responsibility to make the natural hazards disclosures for properties located in which of the following zones? 1. Special flood hazard zone 2. Seismic hazard zone 3. Wild land fire area 4. Dam failure inundation * 1 and 3 only * 1 and 2 only * 2 and 3 only * All of the above

Answer 50

All of the above

Question 51

The principles of Easton, as codified in California Civil Code, do NOT: * limit the liability of a real estate licensee to that which the seller has disclosed. * require a real estate licensee to conduct a reasonably competent and diligent visual inspection of a property offered for sale. * require a real estate licensee to disclose any material fact that a visual inspection reveals.

Answer 51

limit the liability of a real estate licensee to that which the seller has disclosed.

Question 52

Which of the following types of sales or transfers requires the execution of a TDS? 1. A mobile home 2. Between spouses resulting from a divorce decree 3. A duplex 4. Property sold as-is * 1, 3 and 4 only * 3 only * 1 and 2 only * All of the above

Answer 52

1, 3 and 4 only

Question 53

A real estate licensee must do which of the following with respect to agency relationship disclosure? * Have the buyer and seller confirm in writing in the contract to purchase and sell real property or in a separate document acknowledging the agency relationships involved in the transaction * Give an agency disclosure form to a seller before the seller has signed a listing agreement * Deliver an agency disclosure to a buyer as soon as practical, but in all cases prior to the execution of an offer * All of the above

Answer 53

All of the above

Question 54

Which of the following must be given to a borrower buying a home with an adjustable rate mortgage? * A loan program disclosure for each variable rate program in which the borrower expresses an interest * Subsequent disclosures each month an interest rate adjustment takes place * The Consumer Handbook on Adjustable Rate Mortgages * All of the above

Answer 54

All of the above

Question 55

Which of the following are required disclosures when selling an interest in a subdivision? * Blanket encumbrance disclosure * Annual association disclosure in common-interest ownership subdivisions * A seven calendar day right of rescission, if the sale is a subdivision with undivided interest or timeshare * All of the above

Answer 55

All of the above

Question 56

Which of the following falls within the definition of subdivided lands and subdivisions as set forth in the Business and Professions Code? * Any condominium project containing four or more units. * Any community apartment project containing five or more apartments. * Any time-share project containing five or more time share estates have terms of five years or more. * Any planned development containing one or more lots.

Answer 56

Any community apartment project containing five or more apartments.

Question 57

Which type of transaction requires the use of an agency disclosure form? 1. The sale of a mobile home 2. The sale of commercial real estate 3. The sale of a 4-plex 4. The sale of a single-family residence * 2, 3, and 4 only * 1, 2, 3, and 4 * 1 and 4 only * 1, 3 and 4 only

Answer 57

1, 2, 3, and 4

Question 58

Regulation Z applies to which of the following credit situations? 1. Purchase of a penthouse condominium 2. Purchase of a 10 acre tract of land that will be subdivided and each lot individually sold 3. Purchase of a single-family dwelling 4. Purchase of an 8-plex apartment building * 1, 2, 3, and 4 * 3 only * 1 and 3 only * Neither 1, 2, 3, or 4

Answer 58

1 and 3 only

Question 59

Which type of transaction does the seller carry back disclosure requirement NOT apply to? * Residential dwellings of one-to-four units where the seller extends credit to the buyer under a contract that provides for a finance charge * A transaction where the seller extends credit to the buyer under a contract that requires more than four payments, not including the down payment * The sale of an 8-plex in which the purchaser will occupy one of the units

Answer 59

The sale of an 8-plex in which the purchaser will occupy one of the units

Question 60

Which of the following loan transactions does RESPA NOT apply to? * Residential lender approved assumptions * An 8-plex purchase * Residential purchase * Residential refinance

Answer 60

An 8-plex purchase

Question 61

Which of the following is FALSE regarding the public report issued by the DRE? * The report is optional material to be given to each prospective purchaser. * A copy of the report must be delivered to any member of the public who requests one. * The public report must be posted in a conspicuous place in any office where sales of subdivision interest are conducted.

Answer 61

The report is optional material to be given to each prospective purchaser.

Question 62

The Subdivided Lands Act disclosure requirements applies to: * the purchaser of the subdivided land. * any lender of a subdivision. * any licensee acting as a buyer's agent for a principal purchasing in a subdivision. * any subdivider working with or for the property owner.

Answer 62

any subdivider working with or for the property owner.

Question 63

Content-rich continuing education for the licensee does NOT: * help the licensee stay abreast of changes in the law. * result in higher productivity for both the licensee and the brokerage. * hinder the licensee and the brokerage in the long run because of time spent. * have an impact on risk management issues for the brokerage.

Answer 63

hinder the licensee and the brokerage in the long run because of time spent.

Question 64

After the seller and buyer have successfully entered into a contract, which of the following is NOT a duty of the licensees? * Negotiating repair issues if applicable. * Accommodating the removal of any contingencies. * Providing legal advice if legal issues arise. * Helping schedule professional inspections.

Answer 64

Providing legal advice if legal issues arise.

Question 65

A brokerage business model that offers ongoing overrides on dollars generated by agents recruited by associated agents is known as: * a traditional brokerage model. * interdependent brokerage model. * a 100% brokerage model. * house brokerage model.

Answer 65

interdependent brokerage model.

Question 66

In recent years, the most effective means of increasing licensee productivity has been: * advances in technology. * more effective systems for bulk mailing. * to require accountability. * personal assistants.

Answer 66

advances in technology.

Question 67

New licensees who want to maximize their knowledge and professionalism should pursue which of the following? * Take advantage of mentoring or coaching programs. * Affiliate with a brokerage that provides additional training. * Commit to continuing and meaningful self-education of industry practices and changing laws. * All of the above

Answer 67

All of the above

Question 68

Following the successful closing of a transaction, it is important for a licensee A: to incorporate a system for following up and maintaining an on-going relationship with the represented client B: to ask the client for referrals * B only * A only * Both A and B * Neither A nor B

Answer 68

Both A and B

Question 69

Which of the following is NOT a function of prospecting for listings? * Locating and developing FSBOs into listings. * Contacting sellers of expired listing. * Qualifying buyers. * Farming

Answer 69

* Qualifying buyers.

Question 70

When developing an effective business plan, which of the following factors should be taken into consideration? * Establishing annual goals. * Establishing a means to monitor goals. * Establishing monthly goals. * All of the above.

Answer 70

All of the above.

Question 71

Of the following, which one would create the greatest challenge for a new licensee? * More liberal qualifying requirements for first-time home buyers. * Decreasing interest rates. * Fewer licensees competing in a shrinking market. * Increasing number of foreclosures.

Answer 71

Increasing number of foreclosures.

Question 72

An effective listing presentation includes: * a recommendation of listing price based upon a market analysis. * a comprehensive marketing plan. * All of the above.

Answer 72

All of the above.

Question 73

The federal Truth in Lending Act: * applies to advertising loan or financing terms to prospective borrowers. * is commonly referred to as Regulation Z. * is enforced by the Federal Trade Commission. * All of the above

Answer 73

All of the above

Question 74

Which one of the following statements is TRUE regarding open houses? * Sellers who want single agency representation should insist upon the listing agent holding an open house on their property. * They are a new and recent means of marketing properties. * They have been proven to be the most effective way of selling an individual property. * They are an effective tool for the agent holding the open house to acquire buyers

Answer 74

They are an effective tool for the agent holding the open house to acquire buyers

Question 75

Fair housing laws prohibit advertising that: * states a religious preference or limitation. * states a preference based on race, color, or national origin. * excludes or limits based on handicap. * All of the above

Answer 75

All of the above

Question 76

Which one of the following would be a violation of the National Association of REALTORS® Code of Ethics? * A licensee included properties listed by another brokerage on a general mail flyer that advertises the services of the licensee's brokerage. * A licensee included the name of the licensee's employing brokerage when advertising a home for sale. * A licensee disclosed his or her licensee status in a newspaper ad for a property for sale. * A licensee contacted the client of another licensee in an attempt to get the client to cancel his/her current listing and list with the licensee.

Answer 76

A licensee contacted the client of another licensee in an attempt to get the client to cancel his/her current listing and list with the licensee.

Question 77

Which one of the following statements about advertising is FALSE? * A person who is not a licensee, but is advertising that he/she is, can be fined up to $20,000 and/or imprisoned for up to six months. * A licensee cannot advertise a mobilehome that is not in an established mobile home park or is not being sold with land. * Advertising violations by a licensee are not subject to license suspension or revocation * A licensee found guilty of a false advertising for land or a subdivision is subject to a fine up to $1,000 and/or one year imprisonment.

Answer 77

Advertising violations by a licensee are not subject to license suspension or revocation

Question 78

California real estate law requires that: * all brokers maintain a main office located within the state. * a real estate brokerage must be identified with a sign on or near the office's main entrance. * any branch offices must have an identifying sign on or near the office's main entrance. * All of the above

Answer 78

All of the above

Question 79

In today's marketplace, which one of the following types of advertisement mediums is the most effective? * Brokerage and/or personal websites * Newspaper * Television * Open houses

Answer 79

* Brokerage and/or personal websites

Question 80

Which one of the following examples is the most cost effective form of advertising available to a brokerage? * Brokerage signs placed on listed properties * REALTOR® magazine * Billboard * Newspaper

Answer 80

Brokerage signs placed on listed properties

Question 81

California law requires that any person using the Internet to advertise their services for which a real estate license is required: * can only do so if he or she has earned the Internet REALTOR® designation. * has to restrict the advertisement to appear to only residents of California. * will need to register their personal website address with the California Department of Real Estate. * must hold a California real estate license and identify the licensee's employing brokerage on the advertisement.

Answer 81

must hold a California real estate license and identify the licensee's employing brokerage on the advertisement.

Question 82

Which of the following characteristics is NOT critical to receiving recommendations? * Regular, meaningful post transaction communication. * A thorough and ongoing explanation and education of the client as the transaction progresses. * Sharing details of prior clients' transactions * Being a good listener and responding to the needs and wishes of the client. * Timely communication and response to any client complaint.

Answer 82

Sharing details of prior clients' transactions

Question 83

A listing agreement that permits the listing licensee to receive a commission for any sale of the property that occurs during the listing period, no matter who procures the buyer, is: * a net listing. * an exclusive right to sell listing. * an open listing. * an exclusive agency listing.

Answer 83

an exclusive right to sell listing.

Question 84

California requires delivery of the agency disclosure form by the listing agent for: * business opportunities * any sale of 1-to-4 residential units and commercial properties * mobilehomes not yet placed upon a lot when sold by a real estate licensee

Answer 84

any sale of 1-to-4 residential units and commercial properties

Question 85

Under which circumstance should a licensee prepare a CMA? * To assist a lender in establishing market value when the property is pledged as collateral for a loan * To establish market value for an attorney in preparation for a divorce settlement * To assist a seller to establish a realistic listing price * To assist an individual injured in an auto accident to file a lawsuit for injuries against the property owner

Answer 85

To assist a seller to establish a realistic listing price

Question 86

Which statement is FALSE regarding delivery of the Agency Disclosure form? * The pamphlet must be given to a purchaser of a mobilehome and the land upon which it sits * The pamphlet must be given prior to the signing of a listing agreement * The pamphlet does NOT have to be given to potential sellers of a 50-unit apartment building * A verbal explanation of the agency relationship that will be in force should be given along with the form

Answer 86

The pamphlet does NOT have to be given to potential sellers of a 50-unit apartment building

Question 87

Which statement is TRUE regarding a Comparative Market Analysis (CMA)? * It relieves the licensee of any liability if the buyer overpays for the property, as long as the sales price is within the suggested range of the CMA. * It is an informal assessment of establishing a suggested listing price by comparing the property to similar properties currently on the market, expired listings, pending sales, and closed sales. * It is a substitute for an appraisal to establish market value of a listed property. * It should never be prepared by a licensee wanting to list a property.

Answer 87

It is an informal assessment of establishing a suggested listing price by comparing the property to similar properties currently on the market, expired listings, pending sales, and closed sales.

Question 88

Which one of the following does NOT apply to the enforceability of a listing contract? * It must state a definite expiration date * It must contain an automatic renewal provision * It must be signed by the seller and the licensee * It must be in writing under the Statute of Frauds

Answer 88

It must contain an automatic renewal provision

Question 89

With respect to the Estimated Seller's Proceeds statement, which of the following is/are true? * Adjusted statements should be given if the listing price is reduced or if an offer is presented for a price less than the listed price. * The initial statement is based on the established listing price. * The California Association of REALTORS® makes available to its members an Estimated Seller's Proceeds form. * All of the above

Answer 89

All of the above

Question 90

A type of listing agreement that allows the seller to employ multiple licensees at the same time with a commission owed only to the licensee procuring the buyer is known as: * an exclusive right to sell listing. * an exclusive agency listing. * a net listing. * an open listing.

Answer 90

an open listing.

Question 91

Which statement is FALSE regarding listing contracts? * A seller can revoke the authority given in the listing contract any time prior to a sale of the property * Death, incompetence, or bankruptcy of either principal or agent terminates a listing contract * A listing contract is automatically terminated if an impossibility of performance occurs * Specific performance is a remedy if one of the parties to a listing contract unilaterally terminates the agreement

Answer 91

Specific performance is a remedy if one of the parties to a listing contract unilaterally terminates the agreement

Question 92

The most weight when assisting a seller to determine a listing price should be given to: * expired listings. * closed sales. * current active listings. * pending sales.

Answer 92

closed sales.

Question 93

While assisting a buyer to determine an offering price, a buyer's agent should: * take into consideration the length of time the property has been on the market compared to average time on market for similar properties. * prepare a CMA for each property the buyer is considering purchasing. * advise the buyer of possible seller responses to an offer that is unreasonably low. * All of the above

Answer 93

All of the above

Question 94

Which one of the following is NOT a duty owed by a buyer's agent to a seller? * Disclosure of all material facts * Confidentiality * Honest and fair dealing and good faith * Diligent exercise of reasonable care and skill

Answer 94

Confidentiality

Question 95

Which one of the following is NOT a fiduciary duty required of an agent? * Loyalty * Contrition * Obedience * Confidentiality * Accounting * Care * Disclosure

Answer 95

Contrition

Question 96

Which one of the following is NOT an advantage of buyer's agency? * Buyers will have the benefit of a licensee's expertise in finding the right property, negotiating the purchase and attending to closing details. * Buyers can freely communicate confidential information without fear that disclosing that information will weaken the buyer's negotiating position. * The efforts that a buyer's agent exerts on behalf of the buyer are not compromised or limited by any obligation to represent the seller. * The use of a buyer's agent guarantees that the buyer will get a property for the lowest price possible.

Answer 96

The use of a buyer's agent guarantees that the buyer will get a property for the lowest price possible.

Question 97

Regarding contingencies inserted into a purchase agreement for the benefit of the buyer, which one of the following statements is FALSE? * The buyer's agent has a duty to monitor and assist the buyer in performing the requirements needed to satisfy the contingency * The seller is legally permitted to act in bad faith to prevent a buyer from satisfying the contingency * The buyer's agent must always work in the best interest of the buyer to do all that is necessary to protect the interests of the buyer * The buyer may need assistance in evaluating the Loan Estimates presented to the buyer by competing lenders

Answer 97

The seller is legally permitted to act in bad faith to prevent a buyer from satisfying the contingency

Question 98

Which group of people would NOT be targeted to develop a successful client base? * Close friends * Real estate licensees * Relatives * First time home buyers

Answer 98

Real estate licensees

Question 99

Which one of the following statements is TRUE regarding a buyer representation agreement? * Buyer representation must be by written agreement under the Statute of Frauds * The exclusive representation agreement affords the licensee more protection than the open representation agreement * A written buyer representation agreement must contain a clause requiring the buyer to pay commission in addition to that received from the seller. * A buyer representation agreement must contain a provision that the buyer is not free under any circumstance to purchase a property through another licensee for a specified period of time

Answer 99

The exclusive representation agreement affords the licensee more protection than the open representation agreement

Question 100

A buyer has no recourse against their agent if the buyer's agent: * shares with the listing agent that the buyer has recently won the state lottery. * refuses to hire a lawyer to resolve a legal problem that arises during the transaction. * discloses confidential information about the buyer without the written consent of the buyer. * advises the listing agent that the buyer will pay more for the property than the offer indicates.

Answer 100

refuses to hire a lawyer to resolve a legal problem that arises during the transaction.

Question 101

Which one of the following statements is FALSE? * When asked for referrals, the agent should recommend more than one inspection company. * If a buyer selects an inspector that the agent knows has a reputation for poor performance, the agent should disclose this information to the buyer. * When the agent refers just one company, the agent could be at risk for liability if the referral makes a mistake. * If it is in the best interest of the client, the agent should reject the reports from the professionals hired to perform the inspections.

Answer 101

If it is in the best interest of the client, the agent should reject the reports from the professionals hired to perform the inspections.

Question 102

Which fiduciary duty requires licensees to put the interest of their principal ahead of the personal and business interest of the licensee? * Loyalty * Obedience * Disclosure * Accounting

Answer 102

Loyalty

Question 103

With respect to the dispute resolution clause in the purchase and sale agreement, which of the following statements is FALSE? * In addition to the parties to the contract, real estate licensees are also subject to the dispute resolution process * A party has the right to use traditional litigation process if they choose, even though they have previously agreed to mediation and arbitration * Once signed, the parties agree that any dispute or claim in law or equity not settled through mediation shall be decided by binding arbitration

Answer 103

A party has the right to use traditional litigation process if they choose, even though they have previously agreed to mediation and arbitration

Question 104

The standard form purchase agreement does NOT require the seller to perform which one of the following with regard to repairs? * Obtain receipts for repairs performed by others * Provide copies of receipts and statements to the buyer prior to final verification of condition * Prepare a written statement indicating any repair performed by the seller and the date of such repair * Have the property reinspected by the buyer's original inspector

Answer 104

Have the property reinspected by the buyer's original inspector

Question 105

In the standard form purchase and sale agreement, which statement regarding earnest money is correct? * It limits the amount to be retained by the seller to 3% of the purchase price if the property being purchased is an apartment building. * It requires the signature of both buyer and seller or arbitration or judicial decision before the release of funds to any party * It stipulates that the seller shall retain liquidated damages in the amount of the earnest money deposit regardless of the amount.

Answer 105

It requires the signature of both buyer and seller or arbitration or judicial decision before the release of funds to any party

Question 106

Once an agreement has been reached, the person for whom a contingency has been inserted cannot: * refuse to exert due diligence to cause the contingency to be satisfied within the time specified in the contract. * agree to perform the balance of the contract even though the contingency has not been satisfied.

Answer 106

refuse to exert due diligence to cause the contingency to be satisfied within the time specified in the contract.

Question 107

In a purchase and sale agreement, the dates specified in the contract: * can only be extended by written agreement of all the parties to the contract. * are not absolute, and failure to perform by the date specified is a breach of the contract. * are not affected by the "time is of the essence" clause in the contract. * mean that the party to perform by the date specified must do so within a reasonable time of that date.

Answer 107

can only be extended by written agreement of all the parties to the contract.

Question 108

Which statement is FALSE with respect to writing a contingency? * It is important to specify if silence on the part of the party claiming the benefit of the contingency is to be treated as approval or disapproval of the contingency * It is not necessary to specify the time within which the contingency is to be fulfilled * The contingency should be specifically stated, including the time within which it must be fulfilled * It is important to specify whether the contingency can be waived by the buyer, seller, or both

Answer 108

It is not necessary to specify the time within which the contingency is to be fulfilled

Question 109

Which one of the following would NOT constitute the unauthorized practice of law by a real estate licensee? * Rendering opinions on the tax implications of a 1031 exchange * Filling in blanks on a purchase and sale agreement per the instructions of a client wishing to make an offer on a property * Giving advice as to the implications of legal documents or particular clauses within those documents * Giving advice on how a client should take title to a property being purchased

Answer 109

Filling in blanks on a purchase and sale agreement per the instructions of a client wishing to make an offer on a property

Question 110

Which statement regarding an earnest money deposit is FALSE? * It should always be delivered to the seller at the time the offer is presented * It can be a promissory note, check, cash, or other item of value * It can be held until an agreement has been reached by the parties if so agreed to in the purchase and sale agreement * It must be deposited within 3 business days of agreement if being held uncashed as agreed until a contract has been reached

Answer 110

It should always be delivered to the seller at the time the offer is presented

Question 111

With respect to the preparation of the purchase and sale agreement by a licensee, which one of the following is FALSE? * A copy of the offer must be given to the client at the time of signing the offer * A copy of the offer is not given to the client until an agreement has been reached with the seller * All offers must be presented to the seller in a timely fashion, regardless of their merit or the existence of other offers * All of the blanks should be filled in as per the directions of the client

Answer 111

A copy of the offer is not given to the client until an agreement has been reached with the seller

Question 112

The real estate purchase and sales agreement: * provides for the escrow holder to withhold taxes in compliance with the Foreign Investment in Real Property Tax Act, if applicable. * awards attorney fees to the prevailing party in the event of any proceeding arising from the real estate agreement. * contains a "time is of the essence" clause, making the dates in the contract absolute. * All of the above

Answer 112

All of the above

Question 113

Which of the following is NOT a standard exceptions to title insurance? * Any right or claim of interest that is not shown in the public records but which could be determined by an inspection of the property or by making inquires of persons in possession of the property * Encroachments or boundary line differentials that a survey would disclose * Taxes or assessments that are not shown as existing liens by any governmental taxing authority or public records * Easements shown in the public record that do not appear in the preliminary title report

Answer 113

**Easements shown in the public record that do not appear in the preliminary title report** There are 5 standard exemptions for title insurance: Taxes or assessments that are not shown as existing liens Any facts, rights, interest, or claims that are not shown by the public records, but which could be ascertained by an inspection of the land or by making inquiry of persons in possession of it. Easements, claims of easement, or encumbrances not shown by public records Any lien not shown by the public records Discrepancies, conflicts in boundary lines or encroachments or other facts that a correct survey would disclose.

Question 114

Which one of the following statements is FALSE regarding the final closing statement? * It will have a credit for every debit reflected * It begins with the selling price as a credit to the seller and a debit to the buyer * It will reflect calculations prorated between the parties on such items as property tax and association dues if applicable * It is a statement of money brought to closing by the buyer and the money disbursed to the seller

Answer 114

It will have a credit for every debit reflected

Question 115

Which of the following is NOT one of the duties of an escrow officer? * Issue receipts for the deposit of documents and funds * Secure payoff letters from existing lien holders * Settle disputes between parties which arise at closing * Order a preliminary title report

Answer 115

Settle disputes between parties which arise at closing

Question 116

Which of the following statements regarding escrow instructions is FALSE? * All escrow instructions, regardless of the form, must be approved by all parties to the transaction by written consent before the escrow officer can proceed to closing the transaction * In complex transactions, it is common for the parties to hire attorneys to prepare separate unilateral escrow instructions on behalf of their clients * If there is any conflict in the escrow instructions signed by the buyer and seller, the escrow officer must resolve the conflict between the parties before proceeding to closing * In residential transactions, the final escrow instructions will be prepared by the escrow officer and signed by the parties prior to closing the transaction

Answer 116

If there is any conflict in the escrow instructions signed by the buyer and seller, the escrow officer must resolve the conflict between the parties before proceeding to closing

Question 117

Any advice or information being sought by a buyer on the manner in which title should be taken to a property should be provided by: * the escrow agent. * the buyer's agent. * the broker of the buyer's agent's brokerage. * an attorney selected by the buyer.

Answer 117

an attorney selected by the buyer.

Question 118

The CLTA/ALTA Extended Coverage Policy: * provides for increased protection. * provides the lender with protection against the deed of trust or mortgage being recorded other than as instructed. * removes the standard policy exceptions. * All of the above

Answer 118

All of the above

Question 119

The preliminary title report will NOT advise the real estate licensees and parties to the transaction that: * there are any outstanding liens or encumbrances on the property being sold. * the buyer owns another property in the same county in which the property subject to the transaction is located. * the property taxes have been paid and what the property's tax rate is. * the parties or entity selling the property have the legal right to transfer title.

Answer 119

the buyer owns another property in the same county in which the property subject to the transaction is located.

Question 120

Which one of the following statements is FALSE regarding liens? * A mechanics lien is a type of voluntary lien * A mortgage or trust deed is the most common type of voluntary lien on a property * Involuntary liens are those that attach to a property without the consent of the owner * A judgment lien is an involuntary lien that attaches to all property owned by the debtor in the county in which the lien is filed

Answer 120

A mechanics lien is a type of voluntary lien

Question 121

Upon receipt of the preliminary title report, the licensees representing the clients in the transaction should NOT: * put the preliminary report in the file and wait for the final title insurance report at closing. * review the report and ensure that all legal owners of record are parties to the sale agreement. * if a buyer's agent, order a copy of any CC&Rs mentioned and deliver a copy to the buyer. * review the report and determine if there are items that will adversely affect the closing of the property.

Answer 121

put the preliminary report in the file and wait for the final title insurance report at closing.

Question 122

Which one of the following statements regarding easements is TRUE? * An easement appurtenant requires two adjoining properties and runs with the land * An easement in gross does not involve granting access to one landowner needing access rights through an adjacent parcel of land * An easement is the right of an individual or entity to use the land of another for a special purpose * All of the above

Answer 122

All of the above

Question 123

To hypothecate a property is to: * require the lender to establish a reserve account for taxes and insurance. * attach a lien to a property that takes priority over all existing liens. * verify the amount of the seller's loan balance prior to closing. * pledge the property as security for a loan.

Answer 123

pledge the property as security for a loan.

Question 124

Nonconforming loans: * Are generally sold to Fannie Mae by the originating lender. * Tend to demand a slightly lower interest yield. * Are loan products that fall within the established maximum loan amount. * Are often referred to as jumbo mortgages.

Answer 124

Are often referred to as jumbo mortgages.

Question 125

Which is considered a quasi-institutional lender? * Insurance company * Commercial bank * Savings and loan association * Credit union

Answer 125

Insurance company

Question 126

When a borrower defaults on a mortgage, which one of the following statements does NOT apply? * The property will be sold by the sheriff at public auction * If the proceeds received were not enough to pay off the debt, the defaulting borrower has a one year statutory right of redemption after the sale date * The highest bidder will receive a deed and occupancy at the time of the sale * If the proceeds of the sheriff's sale do not cover the judgment debt owed by the mortgagor, the mortgagee may sue to obtain a deficiency judgment if the transaction is not exempt under the anti-deficiency rules

Answer 126

The highest bidder will receive a deed and occupancy at the time of the sale

Question 127

Which one of the following statements is FALSE regarding a land sale contract? * The buyer's interest in the property is known as equitable title until the terms of the contract have been met * The buyer receives legal title when all the terms of the contract have been met, including retiring the debt in full * The seller retains possessory rights until the contract is paid in full * The parties are known as the vendor and vendee

Answer 127

The seller retains possessory rights until the contract is paid in full

Question 128

Which one of the following is NOT a function of the secondary mortgage market? * It acts as a warehouse of money * It effectively redistributes funds from money-rich areas to money-poor areas * It originates second mortgages * It allows primary lenders to roll over their money and remain liquid enough to meet the demand for additional mortgage loans

Answer 128

It originates second mortgages

Question 129

When the seller is providing financing for the buyer, which one of the following is NOT a means of structuring and securing the purchase? * Land sale contract * Purchase money trust deed * Purchase money mortgage * Option contract

Answer 129

Option contract

Question 130

Which one of the following statements is FALSE regarding the transfer of ownership of real estate? * Delivery of the deed can only be accomplished by recording it in the county where the property is located * Transfer of title is accomplished by the execution and delivery of a deed * Legal title transfers to the grantee upon delivery of the deed

Answer 130

Delivery of the deed can only be accomplished by recording it in the county where the property is located

Question 131

Which one of the following scenarios helps to create a seller's market? * A rising number of foreclosures * The supply of available properties for sale exceeds the demand * The demand for property exceeds the supply * High interest rates on mortgage loans

Answer 131

The demand for property exceeds the supply

Question 132

A note that provides for debt payoff in one lump sum at maturity is called: * a note with call feature. * a balloon note. * a straight note. * an amortized note

Answer 132

a straight note.

Question 133

Which one of the following statements regarding property taxes in California is FALSE? * A property tax bill is mailed to each property owner on or before November 1st of each year. * Real property taxes can be paid in ten installments. * California has several exemptions to taxing property at full cash value. * A property tax lien attaches to the property on January 1st preceding the tax year.

Answer 133

Real property taxes can be paid in ten installments.

Question 134

If a property in California is transferred, the new owner must file a change in ownership with the county recorder within __________ of the transfer. * 45 days * 20 days * 30 days * 15 days

Answer 134

45 days

Question 135

To qualify for an exclusion from capital gain on a residential property, the homeowner must: * have both owned and occupied the property for two of the previous five years. * have deducted mortgage interest for at least two years. * have owned the property free and clear of all encumbrances. * file for the exclusion on a 1099-S.

Answer 135

* have both owned and occupied the property for two of the previous five years.

Question 136

Which one of the following statements is FALSE regarding special assessments? * Once levied, a special assessment becomes a permanent tax increase to the affected properties * Special assessments are imposed on real property owners to pay for improvements such as the construction of sewers * Only those properties that benefits from an improvement are taxed proportionally to cover the cost of the improvement

Answer 136

* Once levied, a special assessment becomes a permanent tax increase to the affected properties

Question 137

A gain is considered taxable when the property: * has increased in value. * is reassessed. * is substantially improved. * is sold.

Answer 137

is sold.

Question 138

A net gain on an asset is the amount: 1. subject to capital gain taxation. 2. remaining after capital losses are deducted from capital gains. * 1 only * Both 1 and 2 * 2 only * Neither 1 nor 2

Answer 138

* Both 1 and 2

Question 139

Sean O'Brien just sold his personal residence for $185,000. His adjusted basis is $170,000. He will pay 6% of the sales price in brokerage fees and $3,500 in closing costs. For federal income tax purposes, what is the amount of Sean's capital gain? * $0 * $400 * $3,900 * $11,100

Answer 139

* $400

Question 140

The California Documentary Transfer Tax: * applies when the consideration paid for a property exceeds $100. * is collected at the time of transfer of title. * is collected by the County Recorder. * All of the above

Answer 140

All of the above

Question 141

Property taxes in California are assessed under a system referred to as __________ . * appraised value * ad valorem * lis pendens * insured value

Answer 141

Property taxes in California are assessed under a system referred to as ad valorem. This means that each individual property will be assessed by the county assessor at its full cash value. The property tax paid is a percentage of the full cash value. * ad valorem

Question 142

Under current law, a qualified taxpayer can exclude the entire gain on the sale of his or her principal residence up to __________ if filing a single return. * $250,000 * $300,000 * $400,000 * $500,000

Answer 142

* $250,000

Question 143

In non-residential property, the amount of the required security deposit is limited to: * three months rent. * three months rent plus the cost of the improvements. * There is no limitation * three months rent plus $600.

Answer 143

* There is no limitation

Question 144

A lease CANNOT be terminated by a landlord when: * the tenant files a complaint against the landlord with the Department of Health. * the premises are destroyed and there is no covenant to replace or repair. * the tenant uses the premises for an unauthorized purpose. * the tenant refuses to pay rent.

Answer 144

* the tenant files a complaint against the landlord with the Department of Health.

Question 145

The most common type of lease in residential real estate is a __________ lease. * graduated * percentage * net * gross

Answer 145

gross

Question 146

In California, the maximum amount of security deposit allowed for an unfurnished residential property is: * three months rent. * two months rent. * one months rent. * $2,500.

Answer 146

* two months rent.

Question 147

As an agent of the property owner, the property manager has several duties, including: * achieving the highest possible net return for the property owner. * ensuring tenant satisfaction by having a well run organization staffed by competent, helpful employees. * protecting and maintaining the property on behalf of the owner. * All of the above

Answer 147

All of the above

Question 148

Which one of the following statements about property management is FALSE? * It may involve an on-site resident manager, a professional management firm, or a licensed real estate broker * It requires skills and knowledge in a number of disciplines outside that of the buying and selling of real estate * It is always limited to residential properties * It is a specialized field of real estate activity

Answer 148

* It is always limited to residential properties

Question 149

A lease gives the holder the exclusive right of __________ . * possession * remodeling * ownership * sale

Answer 149

* possession

Question 150

Commingling occurs when: * personal funds are deposited into the trust account. * trust funds are deposited into the company general account. * rents or security deposits on company-owned properties are deposited into the trust account * All of the above

Answer 150

All of the above

Question 151

Which one of the following is NOT a test applied to determine whether an item is personal property or a fixture? * The adaptability of the item * The relationship of the parties * The method of attachment * The cost of the item

Answer 151

The cost of the item

Question 152

Which one of the following is TRUE regarding leases for a definite period? * The time period may be for a month, a year, or any number of years * Death of the landlord or tenant terminates the leasehold * Most residential leases are for a definite period * A 30-day notice to vacate is required by the landlord or the tenant

Answer 152

* The time period may be for a month, a year, or any number of years