Exam 1: Definitions Exam 4

Question 1

A broker who is selling property on which he holds an option must inform the buyer that he is a(n)
A)
grantor.
B)
principal.
C)
agent.
D)
optionor.

Answer 1

principal

Question 2

All of the following are duties and obligations owed by a broker to a client EXCEPT
A)
to prepare a five-year projection for income.
B)
to inform the client of impending legislation that would increase the value of the property.
C)
to inform the principal if the property is underpriced.
D)
to be fair and honest with both the buyer and seller even though the principal will suffer a loss through the disclosures.

Answer 2

to prepare a five-year projection for income.

Question 3

A licensee can legally do all of these things EXCEPT
A)
claim an income tax deduction for a commission paid for the sale of his own property.
B)
fail to use a termination date on an exclusive listing.
C)
collect a commission or service a mortgage loan that he did not negotiate.
D)
use an open listing without a final and definite termination date.

Answer 3

fail to use a termination date on an exclusive listing.

Question 4

An attorney-in-fact with general powers can do all of the following EXCEPT
A)
sign the name of his or her principal.
B)
encumber his principal’s property with a trust deed wherein another person is the beneficiary.
C)
deal in real estate without recording his or her power of attorney.
D)
perform certain acts under a general power of attorney.

Answer 4

deal in real estate without recording his or her power of attorney.

Question 5

Alex led Carly to believe that he had the authority to act for Brian. Brian went along with Alex. The agency created was by
A)
ostensible.
B)
expressed contract.
C)
ratification.
D)
estoppel.

Answer 5

ratification

Question 6

The main purpose of a deed is to
A)
identify the parties in the transfer of title of real property.
B)
show a change of real property transfer.
C)
provide evidence of a change of title or transfer of an interest in real property.
D)
provide a legal document eligible for recording.

Answer 6

provide evidence of a change of title or transfer of an interest in real property.

Question 7

The real property taxes for the current fiscal tax year had been paid and amount to $1,380. The property was sold and the escrow closed on May 1. How much did the buyer have to pay in escrow?
A)
$230
B)
$250
C)
$270
D)
None of these

Answer 7

230

Question 8

Broker Hall owns several separate rental units. She collected the rents on some of the units and also received a deposit together with an offer to purchase one of the units. She intends to accept the offer within three days. According to the Real Estate Law, she
A)
should place all monies in her general account since she is a principal.
B)
must create a separate trust account for the deposit.
C)
must create two separate trust accounts.
D)
must place both the rent and the deposit in her trust account.

Answer 8

should place all monies in her general account since she is a principal.

Question 9

George Greedy owns a subdivision in Roughacres and intends to mail a promotional brochure to 1,000 persons. The brochure will offer gifts and prizes and state that winners will be property owners. The brochure does not state that a person must attend a sales seminar and tour the subdivision in order to be eligible for a gift or prize. Would this brochure be in violation of any law?
A)
No, it is not unlawful since each person who wins a prize is also a property owner
B)
Yes, it is unlawful since he did not disclose that a person must be present and attend a sales seminar to be eligible for a gift or prize
C)
No, it is not unlawful since he is not required to disclose that a person must attend a sales seminar in order to become eligible for a gift or prize
D)
Yes, it is unlawful since you cannot win a prize and be a property owner

Answer 9

Yes, it is unlawful since he did not disclose that a person must be present and attend a sales seminar to be eligible for a gift or prize

Question 10

Which entity has the responsibility for determining property values for real property tax purposes?
A)
Board of Equalization
B)
Assessor's office
C)
Board of Supervisors
D)
Tax commissioner

Answer 10

Assessor’s office

Question 11

A lease for a period of years that is held by the lessor is an example of
A)
personal property.
B)
freehold estate.
C)
real property.
D)
none of these.

Answer 11

personal property.

Question 12

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

Answer 12

if the company gives the insured notice within a reasonable time prior to cancellation.

Question 13

Who would provide a quitclaim deed to quiet a title?
A)
Trustor
B)
None of these
C)
Grantor
D)
Grantee

Answer 13

Grantor

Question 14

Mr. Kale wants to purchase a mountain lot from an owner on which a final report has not been issued by the real estate commissioner. He is concerned about a possible blanket encumbrance, deed restrictions, utility easements, who is responsible for street maintenance, financing, etc. The BEST single source to find the answers to these questions would be the
A)
real estate commissioner.
B)
county engineer.
C)
county planning commission.
D)
local title company.

Answer 14

local title company.

Question 15

"Privity" would most likely exist in
A)
a contractual relationship.
B)
torts.
C)
taxation.
D)
agency.

Answer 15

a contractual relationship.

Question 16

Which of the following agencies is responsible to enforce federal Regulation Z?
A)
REC
B)
FTC
C)
FEHC
D)
HUD

Answer 16

FTC

Question 17

An apartment house under construction has many prospective renters. The city now wants to widen the street. This change results in a 10% loss of renters. This loss would be an example of
A)
physical deterioration.
B)
functional obsolescence.
C)
physical obsolescence.
D)
economic obsolescence.

Answer 17

economic obsolescence.

Question 18

Considering the nature of real estate investments in that they are made over a long period of time, require a considerable amount of money, are harder to care for, and generally have a slower turnover, the return on these investments should be
A)
the same as first trust deeds.
B)
the same as bonds.
C)
higher than bonds but lower than first trust deeds.
D)
more than bonds and first trust deeds.

Answer 18

more than bonds and first trust deeds.

Question 19

What would make a deed void?
A)
Signature of grantor is spelled differently from the typed spelling on the deed
B)
Grantee is not named but is sufficiently described
C)
Grantor is set forth and has signed under a name not his own
D)
Made to a fictitious grantee

Answer 19

Made to a fictitious grantee

Question 20

Liquidation of a financial obligation on an installment basis is
A)
conversion.
B)
conventional.
C)
acceleration.
D)
amortization.

Answer 20

amortization

Question 21

A person appointed by the court to handle the estate of a person who dies intestate is a(n)
A)
administrator.
B)
attorney in fact.
C)
guardian.
D)
executor.

Answer 21

administrator

Question 22

When an existing contract is replaced by an entirely new contract, this is an act of
A)
rescission.
B)
hypothecation.
C)
subrogation.
D)
novation.

Answer 22

novation

Question 23

The remedy of unlawful detainer is most commonly used by offended
A)
grantors.
B)
lessors.
C)
trustors.
D)
holders of notes in default.

Answer 23

lessors

Question 24

Mr. Applegate purchased a home in a subdivision through Broker Able. Applegate applied for a loan and on the loan application there were two boxes that he was asked to check. One box was for marital status and the other for race. Applegate may
A)
be required to answer these two questions by the lender in order for the loan to be processed.
B)
refuse to answer the questions on race and marital status.
C)
file a complaint with the real estate commissioner.
D)
sue the broker arranging the loan and the loan officer for asking these questions on the loan application.

Answer 24

refuse to answer the questions on race and marital status.

Question 25

The courts have upheld a government's authority to enact laws for the health, welfare, safety, and morals of the general public under the doctrine of police power. All of the following are proper exercises of police power EXCEPT
A)
right of taxation.
B)
the establishment of rent control.
C)
building ordinances and permits.
D)
land-use planning and zoning.

Answer 25

right of taxation.