Final Exam #1 Flashcards by SERGE PUCHINSKY

Which of the following acts is illegal?

A. A non-licensed property owner sells a lot to a developer.
B. A non-licensed banker collects rents on behalf of the bank.
C. A licensed broker shares a commission with a real estate attorney.
D. A licensed salesperson assists a licensed broker with purchase negotiations.

C. A licensed broker shares a commission with a real estate attorney.

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An unlicensed assistant in a real estate broker’s office may

A. show property.
B. pick up keys.
C. host an open house.
D. answer questions on listings.

B. pick up keys.

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Which of the following documents must be retained by a broker for only six months?

A. Trust account records
B. Listing agreements
C. Contracts of sale
D. Unaccepted offers to purchase

D. Unaccepted offers to purchase

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In New Jersey, no ads for real estate may

A. indiscriminately promise financing.
B. refer to a home warranty.
C. contain the phrase “in the vicinity of.”
D. offer a free comparative market analysis.

A. indiscriminately promise financing.

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The supervising licensee of a main real estate office must NOT be

A. under 25 years old.
B. otherwise employed.
C. licensed in more than one state.
D. a licensed insurance broker.

B. otherwise employed.

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A Waiver of Broker Cooperation must be completed and signed when cooperation with other brokers is NOT desired by the

A. seller.
B. listing broker.
C. supervising broker.
D. prospective buyer.

A. seller.

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Prohibitions against commingling are aimed to prevent

A. mixing brokers’ funds with clients’ funds.
B. promising financing indiscriminately.
C. representing both parties in a transaction.
D. preventing brokers from lending licenses

A. mixing brokers’ funds with clients’ funds.

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All ads for real estate must specify the

A. broker’s name.
B. asking price.
C. property’s municipal location.
D. listing expiration date.

C. property’s municipal location.

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When brokers’ licenses are suspended or revoked, their salespersons’ licenses are

A. not affected.
B. affected only if they had guilty knowledge.
C. suspended until the end of the current license period.
D. suspended until they affiliate with another broker.

C. suspended until the end of the current license period.

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Real estate is defined to include all of the components of land and also

A. natural attachments.
B. trade fixtures.
C. personal property.
D. man-made improvements.

D. man-made improvements.

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The creation of dry land by the gradual withdrawal of water from the land by the lowering of its surface level is known as

A. erosion.
B. reliction.
C. avulsion.
D. accretion.

B. reliction.

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Unlike trade fixtures, other fixtures are

A. removable.
B. used in the conduct of business.
C. legally considered real estate.
D. owned and installed by a tenant.

C. legally considered real estate.

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An estate that an individual may own for a lifetime or forever is referred to as

A. a freehold estate.
B. an indeterminate estate
C. an estate for years.
D. a dominant estate.

A. a freehold estate.

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An estate in which the holder is entitled to all rights in the property is called

A. priority.
B. gross.
C. dower.
D. fee simple.

D. fee simple.

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Which of the following activities by a property owner would result in a general lien against all of his property?

A. Not paying federal income taxes
B. Borrowing money through a second mortgage
C. Owing money to a contractor for a new roof
D. Not paying a special assessment tax for new sidewalks

A. Not paying federal income taxes

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Permission to enter the land owned by another person for a specific purpose is

A. an easement.
B. a license.
C. an encroachment.
D. deed restriction.

B. a license.

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Which of the following liens serves as a notice of possible future legal actions against an parcel of real estate?

A. Curtesy
B. Tacking
C. Lis pendens
D. Defeasance

C. Lis pendens

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An easement by prescription is NOT created if the property owner

A. has observed the claimant’s use of the land.
B. specifically grants permission for use of the land.
C. allows for continuous use of the land use of the land.
D. is unaware of the claimant’s use of the land.

B. specifically grants permission for use of the land.

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In New Jersey, unless otherwise stated in the deed, a conveyance of two or more persons (not married to each other) creates a

A. joint tenancy.
B. tenancy in common.
C. tenancy by the entirety.
D. multiple tenancy.

B. tenancy in common.

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The four unities required to create a joint tenancy are time, title, interest, and

A. possession.
B. residence.
C. equity.
D. survivorship.

A. possession.

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Which of the following statements regarding ownership of real property by a corporation is TRUE?

A. Corporations cannot own property.
B. Corporations can own property in a tenancy by the entirety.
C. Corporations can own property in a severalty or tenancy by the entirety.
D. Corporations can own real estate in severalty or as a tenant in common.

D. Corporations can own real estate in severalty or as a tenant in common.

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A woman and a man live in a cooperative building. When they purchased their apartment, they automatically become lessees and

A. lessors.
B. franchisers.
C. shareholders.
D. board members

C. shareholders.

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New Jersey allows favorable property tax treatment for certain homeowners aged 65 or older, eligible veterans, and property used for

A. agriculture.
B. childcare.
C. healthcare.
D. recreation.

A. agriculture.

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Real estate property taxation in New Jersey is complex because not all townships within the state

A. express tax rates as dollars per hundred of assessed value.
B. assess property exactly at market value.
C. allow taxpayers to appeal assessments.
D. exempt religious and charitable institutions from taxes

B. assess property exactly at market value.

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If a private party purchases a tax sale certificate on a property, the purchaser cannot obtain clear title to the property for A. six months. B. one year. C. 18 months. D. two years.

D. two years.

Land acquired through eminent domain can only be taken for A. industrial use. B. environmental remedy. C. public good. D. delinquent taxes.

C. public good.

According to zoning rules, a man’s lot is too small to build the garage he wants. In order to have the garage according to his plans, he will appeal for A. an exemption. B. a repeal. C. a variance. D. a nonconforming use.

C. a variance.

Asbestos was once used in buildings for A. insulation. B. coloring in paint. C. electrical wiring. D. pest extermination.

A. insulation.

To prevent the growth of mold, a building must be free from A. direct sunlight. B. urea-formaldehyde. C. extremely low temperatures. D. intrusion from water.

D. intrusion from water.

Under the Comprehensive Environmental Response, Compensation and Liability Act, liability for the release of a hazardous substance on an owner’s property is placed on the A. landowner. B. current occupant. C. the party who caused the hazard. D. local environmental protection agency.

A. landowner.

Unlike employees, salespersons who are independent contractors cannot rely on their brokers for A. mentoring. B. office space. C. health insurance benefits. D. compensation due to them after leaving the firm.

C. health insurance benefits.

A meeting of the minds is said to have taken place when parties are in an agreement on price, down payment, and A. closing date. B. financing method. C. commission. D. earnest money.

B. financing method.

After receiving a commission payment, a broker must pay the salesperson’s share within A. two days. B. five days. C. ten days. D. 15 days.

C. ten days.

In acting as fiduciary for a principal, the broker must A. accept responsibility for the principal’s debts. B. act for the principal in a legally binding capacity. C. represent the principal in one specific capacity only. D. place the principal’s interest above all others’.

D. place the principal’s interest above all others’.

Licensees must provide sellers, buyers, landlords, and tenants with the Consumer Information Statement before any A. written documents are completed. B. properties are shown. C. discussion of that party’s “motivation or financial situation.” D. offers are created or presented.

C. discussion of that party’s “motivation or financial situation.”

Agents are expected to serve principals with informed knowledge and skills. This is referred to as their duty of A. care. B. obedience. C. accounting. D. loyalty.

New Jersey’s license law forbids an agent to represent both the seller and the buyer except with the written consent of A. both attorneys. B. both parties. C. the court. D. a supervising broker.

B. both parties.

A real estate broker noticed that none of the electrical outlets in one bedroom of the house he was showing worked. The fact of this electrical problem is referred to as A. inspection data. B. material information. C. seller fraud. D. an error of omission.

B. material information.

A Megan’s Law Statement on real estate contracts and leases advises purchasers and lessees that A. licensees have a list of all known sex offenders who live in the area. B. licensees have the obligation to investigate and disclose the residency of sex offenders in the area. C. the county prosecutor has a list of all known sex offenders who live in the area. D. the county prosecutor either permits or forbids sex offenders in the area.

C. the county prosecutor has a list of all known sex offenders who live in the area.

When answering questions about a property, a good strategy for avoiding misrepresentation is to A. pass along information obtained from the seller. B. refer questioners to an expert source. C. rely on one’s own experiences with other properties. D. consult with other licensees within the agency.

B. refer questioners to an expert source.

Inducing homeowners to sell by telling them that minority persons are moving to their neighborhood is referred to as A. blockbusting. B. redlining. C. steering. D. subrogation.

A. blockbusting.

Which of the following is NOT a reason for termination of the listing? A. A fire destroyed the home that was listed B. The broker declares bankruptcy C. The broker and owner agree to cancel D. The owner discloses the presence of asbestos

D. The owner discloses the presence of asbestos

When talking with a broker about listing his home for sale, Frank Jackson made it clear that he “did not want to have the house shown to people who would change the neighborhood”. What must the broker do? A. Refuse the listing if the Frank intends to violate the Law Against Discrimination. B. Refuse the listing unless the Frank is willing to offer seller-financing. C. Accept the listing on the condition that that Frank will not be present when the house is shown. D. Accept the listing after explaining to Frank that discrimination is illegal.

A. Refuse the listing if the Frank intends to violate the Law Against Discrimination.

What are the four essential elements of a valid contract? A. Competent parties, offer and acceptance consideration, warranty, and written expression B. Competent parties, offer and acceptance, consideration, and legality of object C. Offer and acceptance, consideration, written expression, and warranty D. Offer and acceptance, competent parties, consideration, and notice

B. Competent parties, offer and acceptance, consideration, and legality of object

A comparative market analysis (CMA) offered by a broker or salesperson must never A. be offered for free. B. be called a free appraisal. C. include information on nearby properties that failed to sell. D. use comparative properties included in regular appraisals.

B. be called a free appraisal.

How many years are allowed in New Jersey for parties to a contract to bring legal suit to recover real property? A. Three B. Six C. Eight D. Ten

B. Six

In New Jersey, brokers are allowed to complete standard approved sales contracts for one-family to four-family residences and vacant lots and to A. complete tax reports. B. draft promissory notes. C. complete residential leases. D. draft commercial leases.

C. complete residential leases.

New Jersey requires that specific language appear in exact form at the top of the first page of the sales contract that alerts signers that A. the contract is legally binding. B. buying without a lawyer runs special risks. C. risk of loss or damage to the property is on the seller until closing. D. brokers are responsible for disclosing any defects of a material nature that affect the property.

A. the contract is legally binding.

The buyer of residential property constructed before 1978 must be offered, in the sales contract, a 10–day opportunity to examine the property for A. lead-based paint. B. asbestos. C. radon. D. urea-formaldehyde.

A. lead-based paint.

In contract negotiations, an offer is not considered accepted until the person making the offer A. signs the offer. B. provides earnest money. C. has been notified of the other party’s acceptance. D. receives written confirmation of the acceptance.

C. has been notified of the other party’s acceptance.

Special contingency clauses providing that the contract may be voided if the property appraises below the sale price must be part of contracts for A. planned unit developments. B. home financed by FHA and VA loans. C. all single-family homes in New Jersey. D. homes constructed before 1978.

B. home financed by FHA and VA loans.

Earnest money from the purchaser must be kept in a special account and must NOT be A. placed in a bank. B. disclosed to the seller. C. mixed with funds from other buyers. D. mixed with the broker’s own funds.

D. mixed with the broker’s own funds.

An amount of money that will serve as compensation if one party to a contract does not live up to the contract is called A. encroachment. B. earnest money. C. liquidated damages. D. novation.

C. liquidated damages.

When home purchasers apply for mortgage loans, the right of rescission A. does not apply. B. gives them three days to change their minds. C. gives them five days to change their minds. D. is determined between the applicant and the lender.

A. does not apply. ## Footnote In New Jersey, homeowners generally have a three-business-day right of rescission for certain types of mortgage transactions, like refinancing or home equity loans, but not for purchase loans. This right allows you to cancel the loan contract and receive a full refund of all fees within 20 days of exercising your right.

Land contracts are a means of A. leasing. B. subdividing. C. seller financing. D. purchasing vacant lots.

C. seller financing.

A business signed a lease on a property for 24 months. This type of lease is referred to as A. an estate for years. B. a periodic estate. C. a tenancy at will. D. a tenancy at sufferance.

A. an estate for years.

In New Jersey, a lease prepared by a licensee must indicate the A. firm’s adherence to fair housing requirements. B. fees that the firm will earn from arranging the lease. C. business relationship the firm has with respect to parties named in the lease. D. licensee’s prior experiences with preparing leases for the same property.

C. business relationship the firm has with respect to parties named in the lease.

If a tenant makes improvements to a property, the improvements A. violate the lease. B. become fixtures. C. become the property of the tenant. D. must be paid for by the landlord.

B. become fixtures.

Constructive eviction refers to an action taken by A. lenders. B. licensees. C. tenants. D. landlords.

C. tenants.

The two main documents in a mortgage are the mortgage and the note. The note is A. an appraisal. B. a disclosure statement. C. a financing instrument. D. a security instrument.

C. a financing instrument.

The acceleration clause in a mortgage A. explains limits of future interest rates. B. specifies penalties for prepayments. C. prevents future purchasers from assuming the loan. D. assists the lender if the borrower defaults.

D. assists the lender if the borrower defaults.

An alternative to foreclosure is for the mortgage lender to accept A. a deed in lieu of foreclosure. B. a lis pendens. C. an estoppel certificate. D. a reduction certificate.

A. a deed in lieu of foreclosure.

In a fully-amortized mortgage loan, regular payments are applied first to A. principal only. B. interest owed. C. principal and interest equally. D. first mortgage, then junior liens.

B. interest owed.

By definition, an “estate for years” A. has no termination date. B. is for a fixed term. C. must be for at least two years. D. requires a written lease.

B. is for a fixed term.

The main type of mortgage loans that shift interest-rate risk from the lender to the borrower is the A. FHA mortgage. B. bi-weekly mortgage. C. adjustable-rate mortgage. D. conventional mortgage.

C. adjustable-rate mortgage.

In mortgage lending, points are a form of A. sales tax. B. closing fees. C. prepaid interest. D. escrow payment.

C. prepaid interest.

The term used to describe mortgage loans that are arranged entirely between the borrower and the lending institution is A. conventional loan. B. private loan. C. dominant loan. D. conforming loan.

A. conventional loan.

One of the main advantages of FHA loans is that they A. are interest-free for the first four years. B. reduce property taxes. C. eliminate the possibility of foreclosure. D. require very low down payments.

D. require very low down payments.

At what time must lenders provide the “Your Home Loan Toolkit” to prospective borrowers? A. At the time borrowers come in to discuss loan options B. Within three business days of completed loan application C. Any time prior to closing D. Upon proof that applicants have discussed various loan with at least three lenders

B. Within three business days of completed loan application

The New Jersey Housing and Mortgage Finance Agency offers favorable mortgage terms to homebuyers who purchase homes in A. rural areas. B. urban target areas. C. landmark preservation areas. D. Industrial Site Recovery areas.

B. urban target areas.

The lender is preparing to close a loan for $395,000 so the buyers can purchase their first home. In this situation, what must the lender provide three business days prior to closing? A. HUD-1 B. Home Loan Toolkit C. Closing disclosure (CD) D. Loan estimate (LE)

C. Closing disclosure (CD)

Which of the following is an example of a second mortgage? A. Home equity loan B. Reverse mortgage C. Purchase-money mortgage D. Construction loan

A. Home equity loan

What does RESPA’s Section 8 do? A. Prohibits borrowers from prepaying federally-related loans B. Requires lenders to maintain escrow accounts for their borrowers C. Permits lenders from requiring that borrowers use a particular title insurance provider D. Prohibits kickbacks to real estate licensees for referring business to lenders and title companies

D. Prohibits kickbacks to real estate licensees for referring business to lenders and title companies

Mortgage lenders make many loans with the intention of selling them on the A. automated clearinghouse. B. mortgage exchange. C. secondary market. D. government mortgage buyout.

C. secondary market.

Mortgage loans for very high amount of money are referred to as A. jumbo loans. B. elite loans. C. non-restricted loans. D. balloon loans.

A. jumbo loans.

The lender offered a rate lock to the borrowers. What is the purpose of the rate lock? A. Lender cannot ask for any more documents for the loan application B. Lender holds the agreed upon rate for a specific period of time C. Borrowers cannot shop for another loan from a different lender D. Borrowers required to start payments prior to closing

B. Lender holds the agreed upon rate for a specific period of time

Qualifying ratios are used by lenders to determine a borrower’s A. required downpayment. B. pre-approval for a mortgage loan. C. minority representation in a community. D. maximum monthly payment for housing expense.

D. maximum monthly payment for housing expense.

The location of a particular property and people’s preference for particular locations is called A. favorable value. B. substitution. C. situs. D. amenity.

C. situs.

The present worth of future benefits arising from the ownership of real property is called A. value. B. cost. C. highest and best use. D. capitalization.

A. value.

The principle that the maximum value of a property tends to be set by the cost of purchasing another is called A. substitution. B. conformity. C. supply and demand. D. contribution.

A. substitution.

Market value presupposes an arms-length-transaction, which means that it is done A. without undue pressure. B. between relative strangers. C. with attorneys representing both sides. D. without direct interaction between buyer and seller.

B. between relative strangers.

Which approach to value is most often used by brokers and salespeople when helping setters set prices for their residential real estate? A. Reconciliation B. The cost approach C. Sales comparison method D. The income approach

C. Sales comparison method

External obsolescence is caused by factors not on the subject property, so it is almost always A. irrelevant. B. leveraged. C. progressive. D. incurable.

D. incurable.

A license or certificate is required to perform A. any real estate appraisal. B. residential appraisals only. C. income property and commercial property appraisals only. D. appraisals of more than $1 million only.

A. any real estate appraisal.

An investor cannot usually sell real estate quickly without taking some sort of loss, making real estate an investment that is NOT A. tax advantaged. B. appropriate for leverage. C. a hedge against inflation. D. highly liquid.

D. highly liquid.

The object of owning income property is to generate spendable income, usually referred to as A. gross income. B. cash flow. C. boot. D. margin.

B. cash flow.

An investor’s initial cost for real estate is referred to as A. equity. B. appreciation. C. return. D. basis.

D. basis.

In the sale of a business, the Bulk Transfer Act protects the A. seller. B. buyer. C. creditors of the seller. D. creditors of the buyer.

C. creditors of the seller.

Investors in real estate investment trusts (REITs) take advantage of the same tax benefits as A. owners of income property. B. owners of individual stocks. C. annuity investors. D. mutual fund investors.

D. mutual fund investors.

Which of the following concerns would not be important to a planning board as it considers a new subdivision? A. Racial composition of prospective homeowners B. Compliance with zoning ordinances C. Assurance by bonding that sewer and street costs will be paid D. Dedication of land for streets, schools and parks

A. Racial composition of prospective homeowners

In planning a subdivision, a subdivider drafts a map of the development that shows the location and boundaries of individual properties. This map is also known as the A. plat. B. survey. C. master deed. D. section deed.

A. plat.

The minimum lot sizes in a subdivision and population density are usually established by A. zoning ordinances. B. the subdivider. C. supply and demand. D. the Environmental Protection Agency.

A. zoning ordinances.

Which of the following is NOT a legal description of land? A. Government survey B. Metes and bounds C. Monument and landscape D. Reference to a plat filed in the country clerk’s office

C. Monument and landscape

Through which deed does a grantor covenant that they have done nothing to encumber the property while it was in their possession, but not extending back to all previous owners? A. Warranty Deed B. Bargain and Sale Deed (CAG) C. Quitclaim Deed D. Covenant Deed

B. Bargain and Sale Deed (CAG)

Which type of deed provides the grantee with the least protection of any deed?' A. Warranty Deed B. Bargain and Sale Deed C. Quitclaim Deed D. Covenant Deed

C. Quitclaim Deed

In New Jersey, a deed will not be accepted for recording unless it contains the A. EPA statement. B. name of the brokers or salespersons. C. date of sale. D. acknowledgement.

D. acknowledgement.

A corporation can convey real estate only upon A. the filing of registration of intent in the city in which it is headquartered. B. authorization by two-thirds of its shareholders. C. approval of the state that chartered the corporation. D. a resolution passes by its board of directors.

D. a resolution passes by its board of directors.

A partition proceeding is a form of involuntary alienation in which A. an owner’s property is sold to satisfy a tax lien. B. a co-owner seeks to force another to divide or sell property. C. a claim is cancelled in favor of another. D. another person acquires title after using an owner’s land.

B. a co-owner seeks to force another to divide or sell property.

The legal process by which a court determines who will inherit the property of a deceased person is called A. probate. B. transfer. C. intestate. D. alienation.

A. probate.

In New Jersey, the duty to investigate the title of property to be conveyed belongs to the A. purchaser. B. seller. C. county clerk. D. broker.

A. purchaser.

The title insurance required by lenders protects the interest of the A. broker. B. seller. C. lender. D. property owner.

C. lender.

The closing of a real estate transaction generally involves two closings. One is the closing of the real estate sale in which the deed is delivered in exchange for the purchase price. The other is the closing of the A. escrow account. B. buyer’s loan. C. title policy. D. sales contract.

B. buyer’s loan.

The Real Estate Settlement Procedures Act (RESPA) was created to ensure that the buyer and seller in residential real estate transaction have knowledge of all A. prorations. B. existing liens. C. settlement costs. D. tax liabilities.

C. settlement costs.

At closing, a seller swears the he or she has not had a judgment, bankruptcy, filed for divorce, or taken any other action that would cloud the title through an A. acknowledgement. B. actual notice. C. evidence of title. D. affidavit of title.

D. affidavit of title.

Which of the following items is credited to the buyer at closing? A. Fuel on hand B. Earnest money C. Prepaid water charge D. Real estate tax paid in advance

B. Earnest money

At a real estate closing, who is responsible for all details that concern the title to the property? A. The seller’s broker B. The buyer’s broker C. The seller’s attorney D. The buyer’s attorney

C. The seller’s attorney

If a broker is expecting to receive a 6 percent commission on the sale of a $250,000 house, what will the commission be? A. $750 B. $1,500 C. $7,500 D. $15,000

D. $15,000

A lot measuring 240' by 400' is selling for $400 a front foot. What is the price? A. $1,600 B. $16,000 C. $72,000 D. $96,000

D. $96,000

If the frontage of a half-acre lot is 100 feet, how deep is it? A. 154 feet B. 218 feet C. 248 feet D. 436 feet

B. 218 feet

A man is purchasing a house for $325,000. His lender requires a 20 percent down payment and 2 points at closing. The man is also responsible for $2,000 in closing costs. What is the total amount of money he needs to close? A. $71,500 B. $72,200 C. $73,500 D. $75,600

B. $72,200

Final Exam #1 Flashcards

(110 cards)