other things to know

Question 1

The most common way for local planners to designate zoning for multiple residential units is:
A. C-3
B.A-3
C.M-3
D.R3

Answer 1

D.
The R-3 designation generally means residential property with more than one unit (e.g. A duplex is zoned R-3)

Question 2

Whatever the purpose of a land survey, the resultant description should contain:
A. All of these
B. A specific length and direction of the sides of the property
C. The area in accepted units of measure contained within the described boundaries
D. a definite point of beginning and definite parcel corners

Answer 2

A.
the land description in a survey should contain all three items listed in the answer choices

Question 3

Mr. Adams purchased an income property for $380,000. The market value of the property was $390,000 and the assessor placed a value of $370,000 on it. If he paid $80,000 down and financed the balance , his basis for income tax purposes would be:
A. $390,000
B.$370,000
C.$380,000
D. $80,000

Answer 3

C.
Basis for income tax purposes is the cost of $380,000. Financing does not influence the cost basis

Question 4

With regards to blind advertising, it is:
A. not permitted. The advertisement must include the name and address of the broker and the address of the property of the property being offered for sale
B. permitted when a broker deems that it will increase exposure of the property to potential buyers
C. not permitted. In an advertisement, a licensee must reveal licensed status
D. permitted with the owner’s permission

Answer 4

C.
Blind advertisement refers to not revealing the licensed status of a salesperson or broker, and is never permitted. It is not a requirement that an ad include the address of the property for sale.

Question 5

Davidson has an easement on Parkin’s property. If Davidson is not a property owner. her easement is a(n)
A. easement in gross
B. nonpossessory encroachment
C. restrictive easement
D. appurtenant easement

Answer 5

A.
Davidson has a personal right to use Parkin’s property (servient tenement) Since Davidson does not own property, and therefore there is no dominant tenement, it is an easement in gross

Question 6

An appraiser determines the accrual for depreciation in the use of:
A. the income approach
B. the sales comparison approach
C. none of these
D. the cost approach

Answer 6

A.
An accrual for depreciation is a part of the income approach in appraisal. Appraisers describe remaining economic life as the period over which an investor would expect to recapture an investment in a property. An accrual for depreciation is a plan for recapture an investment in a property. An accrual for depreciation is a plan for recapture during this remaining economic life.

Question 7

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

Answer 7

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

Question 8

Mr. Martin contacted Broker Katz list a property for sale for $200,000. Martin indicated to the broker that he needed a quick sale of the property. The broker contacted a prospective buyer and told him that martin would sell the property for 180,000. The buyer made an offer in the amount of $180,000, which Mr. Martin did accept when the broker presented it to him. Under these conditions, Katz:

A. violated the fiduciary relationship but did no harm as the offer was accepted
B. did not violate the fiduciary relationship as Katz was employed by Martin and acted under such authority
C. violated the fiduciary relationship as he acted in excess of authority given him
D. did not violate the fiduciary relationship as the offer was accepted

Answer 8

C.
When broker Katz told the prospective buyer that the owner would sell for less than the listing price, when the broker had not been specifically instructed to disclose that confidential information, the broker violated his fiduciary obligation to his principal

Question 9

A roof that inclines from four sides is a:
A. gambrel roof
b. hip roof
C. trussed roof.
D. gable roof

Answer 9

B.

Question 10

In the sale of real property, all of these statement concerning financing are true EXCEPT:
A. an owner who borrows and executes a trust deed is a trustor
B. selling a note for less than its face value is known as discounting
C. a mortgage is a lien on real property; an execution of a mortgage does not transfer title
D. a promissory note is security for the trust deed

Answer 10

D.
The statement is completely reversed. The trust deed is the security for the promissory note and incidental to the debt. The other three statements are true

Question 10

Unless otherwise specifically stated, a grant deed presumes to convey:
A. a life estate
B. in fee simple
C. an estate for years
D. a fee simple defeasible estate

Answer 10

B.
While a fee simple defeasible and a life estate can be transferred by a grant deed, they must be specified. An estate for years is transferred by a lease. A fee simple (absolute) is one that is not qualified, and is presumed if nothing else is specified

Question 11

Alienation expresses a meaning most nearly opposite to:
A. acceleration
B. acquisition
C. ad valorem
D. amortization

Answer 11

B.
Acquisition is the act of acquiring; alienation is the act of transferring or convey title

Question 12

James, an 11-year-old minor, owned a farm and asked his father to contract a broker to sell the farm. The father listed the property with a broker. The farm was sold and the deed was signed. James later changed his mind and wanted the form. This transaction was:
A. rescinded simply because James changed his mind
B. void because James was a minor
C. valid because the father was acting for his son
D. Void because the father arranged the sale through a broker

Answer 12

B.
Since the grantor was a minor, the deed is void at inception

Question 13

A commercial acre is best defined as:
A. an acre zoned for commercial purposes
B. any acre located outside of “R” zoning
C. an acre after deductions for streets and alleys
D. any parcel of 43,560 square feet

Answer 13

C.
A commercial acre is the remainder of an acre of newly subdivided land after the deduction of areas devoted to streets, sidewalks, curbs, and the like

Question 14

Which word is most closely associated with the term rider?
A. amendment
B. Person
C. Lien
D. accretion

Answer 14

A.

Question 15

A balloon payment would be a characteristic of a(n)
A. standing loan
B. Self-liquidating loan
C. partially amortized loan.
D. amortized

Answer 15

C.
A partially amortized loan is not fully paid off in installments. On the due date, the balance is paid off in a lump sum called a balloon payment because it substantially exceed any individual installment. The term “amortized” loan generally means “fully amortized”. This is a loan fully paid off by installments over its term

Question 15

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. ratification
C. expressed contract
D. estoppel

Answer 15

B. Ratification is the approval of an act performed on behalf of a person without previous authorization. When Brian went along with Alex, he ratified Alex’s authority to act on Brian’s behalf

Question 16

Two houses were built on two adjacent lots of equal value. Construction costs and maintenance were the same. One house is appraised to be of higher value. What is most likely the reason.
A. one house had more wear and tear
B. Both houses were across the street from a nonconforming house that resulted in economic obsolescence
C. One house was considered to have functional obsolescence
D. One house had more economic obsolescence

Answer 16

C.
One house must have functional obsolescence. Since the properties are in the same location, the same age, and have been maintained the same, the difference in value cannot be attributed to economic obsolescence or wear and tear. As an example, one house may have only a single-car garage or only one bathroom or a less attractive floor plan

Question 17

Rescind most nearly means:
A. rewrite
B. terminate
C. reject
D. annul

Answer 17

D.
Rescind means to annul the contract and restore the parties to the same position they held before they entered into the contract

Question 18

Brown hired a broker to find a warehouse for lease. Green hired the same broker to find a lessee for a warehouse. Each agreed to pay commission. The broker negotiated a lease between Brown and Green. Brown knew the broker was representing Green, but green did not know the broker was representing Brown. Which statement is correct?
A. Both Brown and Green are liable for commission
B. Green is liable for the commission
C. Neither is liable for the commission
D. Brown is liable for the commission

Answer 18

C.
Since the broker has a fiduciary relationship with both brown and green, this failure to get consent from both parties creates an undisclosed dual agency, or divided agency, denies the broker’s right to collect from either party.

Question 19

A buyer made an earnest money offer to purchase property , and the broker placed the funds in his trust account. After the seller’s acceptance but prior to opening of escrow, the buyer informs the broker that he has revoked his offer and demands the return of the deposit. The broker, not wanting to be involved in the conflict with respect to the disposition of the deposit funds, deposited them with the appropriate court. This would be an example of:
A. equitable disposition
B. interpleader
C. assignment
D. surrender

Answer 19

B.
Interpleader is a court proceeding by the stakeholder of property who claims no proprietary interest in it, for the purpose of deciding who among claimants is legally entitled to the property.

Question 20

Broker Hardy received a listing from Watson to sell Watson’s commercial property, along with an option for Hardy to purchase within 30 days. After 27 days, Hardy decided to exercise his option and purchase the property. Hardy must :
A. present all outstanding offers to Watson.
B. inform Watson of all material facts concerning the property
C. do all of these
D. Disclose his potential profit and obtain the written consent of the principal approving the amount of such profit.

Answer 20

C.
The Real Estate Law (B & P Code Section 10176 [h]) requires that broker who holds both a listing on and an option to buy the same property must, before he exercises the option to buy, “reveal in writing to the employer [owner/principal] the full amount of licensee’s profit and obtain the written consent of the employer approving the amount of such profit”

Question 21

Who is entitled to examine the records of the county recorder, without being an employee of the county recorder’s office?:
A. any interested citizen
B. Employees of the Office of the County Recorder
C. A bank employee
D. Any of these

Answer 21

D.
The records of the Office of the County Recorder are public records, with access available to all persons.

Question 22

The housing and construction industry in California is governed by which three laws?:
A. state Housing Act, building codes, Real Estate Law
B. Contractor’s license law, local building codes, State Housing Act
C. Housing and Community Development Act, Real Estate Law, Health and Safety Code
D. Healthy and Safety Code, State Housing Act, Real Estate Law

Answer 22

B.
The housing and construction industry is governed by the contractor’s license law, local building, and the State Housing Act

Question 23

The maximum possible income an income property can yield is:
A. net spendable income
B. effective gross income
C. net income
D. Gross scheduled income

Answer 23

D.
among the choices presented, gross scheduled income yield the maximum possible income an income property can yield. “ Schedules income” represents the rent currently in effect on the property in question as if the property were fully occupied. If the property has space available, in the gross scheduled income would be at the rent levels currently obtainable for the space in the local market. This represents the maximum income the property could achieve.

Question 24

What essential element is necessary between a broker and a principal when dealing with the title, right, or interest in real property?
A. Broker has the right to draw up a purchase offer
B. The rights of commission between the parties are established
C. Written contract of employment
D. Broker has the right to accept a deposit

Answer 24

C.
The Statute of frauds requires that a listing for the sale of real property, or for the negotiation of a lease for more than a year, must be in writing to be enforceable for the payment of a commission

Question 25

What is the difference between real property taxes and assessment bonds?
A. Special assessments are used for local improvements
B. Assessments have superiority over property taxes
C. Special assessments are levied by special improvement districts only
D. assessments are subordinate to real estate taxes

Answer 25

A.
Property taxes are charged in relation to the value of the property being taxed. Special assessments are imposed on real property for a specific local purpose, which requires approval of 2/3 of the voters. Taxes and assessments are said to be on parity meaning they have equal footing. Neither is subordinate to the other

Question 26

What is always considered real property?
A. Cultivated crops sold but not yet harvested
B. Extracted minerals
C. Grapes on vines sold under contract
D. stock in a mutual water company

Answer 26

D.
Real property consists of (1) land, (2) things affixed to the land, ( appurtenances, and (4) that which is immovable by law. Two examples of appurtenances are (1) easements appurtenant and (2) stock in a mutual water company. According to the Civil Code, cultivated crops would be personal property if already sold, mortgaged, or growing on leased land (emblements)

Question 27

A broker advertises in the paper that is a seller lists his property with the broker, the seller would be credited by the broker with $50 toward the commission to be paid. Also included in the advertisement is the statement that if a prospective buyer brings a copy of the advertisement to the purchase price of the property. Would the broker be subject to the discipline of the real estate commissioner with regard to this advertisement?
a. The broker would be disciplined because his promises to seller and buyers in the advertisement would constitute payments to unlicensed persons.
B. The broker can credit the seller but cannot credit the buyer
C. The broker may pay the $50 to the seller and to the buyer
D. The broker can credit the buyer but not the seller

Answer 27

C.
Neither of these promises by the broker would be a violation of law or regulations. The courts have also ruled that disclosed payments by the broker to the either the seller or buyer would not be a violation of the Real Estate Settlement Procedure Act (RESPA)

Question 28

If a minority buyer comes into a broker’s office and asks to see a specific listed home, the broker should refuse to show it to him under which condition?
A. When the seller is out of town and has instructed the broker that his house is not be shown in his absence
B. When the property is listed with a co-op broker
C. Never
D. When the agent sincerely believes it will produce panic selling

Answer 28

A.
If the seller has instructed the broker that his house is not to be shown while he is out of town, the broker as an agent of the seller must comply with the seller’s instruction. The instruction not to show the property applies to all prospective buyers, regardless of race.

Question 29

What is included as part of the finance charge in a Truth-in-Lending Disclosure Statement?
A. Title insurance fees
B. Recording and document fees
C. appraisal fee
D. Assumption

Answer 29

D.
An assumption fee is one of many fees that must be included in the finance charge to determine the annual percentage rate as part of a Truth-in-Lending Disclosure Statement. Among other fees not required are appraisal fees, recording and document fees, and the title insurance fees

Question 30

A contract signed under duress would be
A. Unenforceable
B. void
C. illegal
D. Voidable

Answer 30

D. When the mutual consent to a contract is induced by fraud, duress, menace, or undue influence, the contract is voidable at the option of the wronged party

Question 31

A, unlicensed person, offers B$1,000 an acre for 10 acres. B accepts the offer not knowing that a already has an offer of $2,000 an acre of the same parcel. The deal goes through as stated. B can:
A. Sue and get the land back
B. let the deal go through but A has to give B the excess profit
C. do nothing; the transaction stands
D. report to the Real Estate Commissioner

Answer 31

C.
there is nothing in the Real Estate Law that prohibits an unlicensed individual from purchasing land at one price and later selling it for a higher price.

Question 32

When a lender sells a promissory note for less than its face value, it is known as:
A. Yield loss
B. reinstatement
C. discounting
D. deficiency

Answer 32

C.
Counting a promissory note is where a lender sells the note for less than its face value.

Question 33

The personal, revocable, and unassignable permission or authority to do one or more acts on the land of another without possessing any interest therein is the definition of:
A. encroachment
B. license
C. easement
D. option

Answer 33

B.
A license is a personal, revocable, and unassignable permission given to another, as distinguished from an easement

Question 34

A broker lists and negotiates the sale of a home for Mr. B, a young married man. At the time of the sale the broker was not concerned with the age of his client. After the deed had been signed and escrow closed , the title company informs the broker that the seller is under 18 years of age. The deed is:
A. illegal
B. outlawed
C. voidable
D. valid

Answer 34

D.
the deed would be valid. A married person under 18 is an emancipated minor and has the legal capacity to deal in real property

Question 35

Under the Real Estate Settlement Procedures Act (RESPA) lenders are required to give borrowers:
A. the amount of mortgage interest
B. A good-faith estimate
C. an invoice not exceeding $10 for the special information booklet
D. a bill of sale

Answer 35

B.
RESPA requires the lender to furnish the borrower the following two items by delivering them in person or placing them in the mail not later than three business days after the application of the borrower is received: (1) a special information booklet prepared or approval by HUD that explains settlement costs; and (2) a good-faith estimate of settlement costs.

Question 36

A joint tenancy can be created by deeds conveying undivided interests by:
A. transfer from joint tenants deeding their interests to themselves and others as joint tenants
B. transfer from tenants in common deeding to themselves as joint tenants
C. transfer from a wife deeding her separate property to herself and husband as joint tenants
D. all of these

Answer 36

D.
Civil Code 683 enables joint tenancies to be created by (1) simple will or transfer, (2) transfer from sole owner to himself or herself and others, (3) transfer from tenants in common or joint tenants to themselves or to themselves and others, (4) transfer from husband and wife (holding title as community property or otherwise) to themselves or to themselves and others, and (5) transfer to executors of an estate or trust

Question 37

All of these costs qualify for itemized deductions by the owner-occupant of a single-family residence in the appropriate tax year EXCEPT:
A. real property taxes.
B. the cost of painting a bedroom
C. the reimbursed portion of a casualty or theft loss of 10% of the adjusted gross income
D. interest on a deed of trust

Answer 37

B.
Real estate taxes, interest on loans, and the unreimbursed portion of casualty or theft losses are acceptable deductions on an owner-occupied residence, while the cost of painting a bedroom is not tax deductible

Question 38

An appurtenant easement involves two parcels of land. The owner of the dominant tenement may:
A: transfer the interest independently of the land
B. have ingress and egress only
C. not retain easement rights with the transfer of the parcel
D. retain the benefits and the burdens of the easement

Answer 38

C. With an appurtenant easement the easement goes with the property, not the individual that receives the benefit of the easement, and transfers with the property

Question 39

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

Answer 39

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

Question 40

A salesperson unlawfully takes kickbacks in connection with licensed real estate activities. The employing broker finds out about the kickbacks, fires the sales person, and warns others in the office not to do this. Under these circumstances.
A. both the salesperson and the broker could be disciplined by the real estate commissioner
B. only the salesperson could be disciplined by the real estate commissioner
C. a court could revoke the salesperson’s real estate license
D. only the broker could be disciplined by the real estate commissioner

Answer 40

A.
A broker is responsible for supervision of employed salespersons. A failure to supervise salespersons which might contribute to the salesperson’s violation of laws could lead to disciplinary action against the broker as well as against the salesperson. Only the real estate commissioner can revoke a real estate license, never the court.

Question 41

when property tax increases and all other items remain the same, an income property:
A. decreases in value by more than the amount of the taxes
B. increases in value by the amount of the taxes
C. increases in value by more than the amount of the taxes
D. Decreases in value by the amount of the taxes

Answer 41

A.
The property will decrease in value by more than the amount of the taxes based on the reduced annual net income (assume a $500 tax increase and a 10% capitalization rate; loss of value would be $5,000