Flashcards in Practice Test 2 Deck (150):
When a prepaid rental listing service is moving its office, notice of the new address and phone number must be provided to all its clients:
prior to the move
When a lender agrees to make a construction loan to a builder at some future date, at an agreed upon interest rate, to be used for the future development of a parcel, such an agreement would best be termed:
a standby commitment
On an FHA loan, the interest rate is set by:
an agreement between the buyer and the lender
A charge imposed on a real property is called a
Broker Bob wrote up an offer to buy real property for Buyer Don. Before Broker Bob could inform Buyer Don that his offer had been accepted, Buyer Don died of a heart attack. Under these circumstances there is:
The difference between real and personal property is that real property
Mineral rights in land are
automatically transferred (unless expressly excluded by a grantor)
The ownership rights and interest in real property are called:
estates or fees
What is not an appropriate characteristic of a fee simple estate?
it is always free of encumbrances (this is not true)
The degree, quality, nature, and extent of interest a person has in the property defines an estate in real property. An estate:
can be held with another estate in the same property (i.e. a landlord holds a fee simple estate at the same time a tenant holds a less than freehold estate)
Henry, the holder of a $90,000 promissory note secured by a first trust deed, desires to borrow $60,000 to build a house. If the note is used as security for that loan, the agreement would be regarded as:
a pledge agreement
A fee simple may be described as:
the greatest interest one may hold in land
How frequently must the real estate broker reconcile his trust account?
An estate of inheritance is:
estate in fee
Personal property can be: alienated, hypothecated, changed into real property, all of the above
all of the above
A grant deed that allows someone to retain property as long as alcohol is not consumed on the property creates a:
fee simple defeasible (allows property to be reverted back to the grantor if the clause is violated)
What is true regarding the broker's trust account?
a real estate broker is not required to maintain a trust account
All of the following are real property except: unextracted crude oil, leasehold estates in real property, an uncultivated grove of trees, easements appurtenant
leasehold estates in real property
In a lease whose duration is greater than one year, what is not required?
signatures from both the lessor and lessee. Only the lessor is legally required to sign.
A transfer of possession of real property, but not ownership is called:
The words time, title, interest & possession are most closely related to what?
These are most closely related to joint tenancy, which has the right of survivorship.
If a property with a $2,400 gross monthly income sold at an annual GRM of 10.72, what did the property sell for?
= $2,400 x 12 months = $28,800 annually
$28,800 x 10.72 = $308,736
When a married person dies intestate, his property is divided:
1/3 to spouse & 2/3 to surviving children
The correct method for a landlord to evict a delinquent tenant is by:
bringing a court action (unlawful detainer)
The right of "quiet enjoyment and possession" means the landlord must protect the tenant from: all nuisance, possession without disturbance from someone claiming paramount title, all encumbrances, none of the above
possession without disturbance from someone claiming paramount title
What notice is important for a mechanic's lien? notice of non-responsibility, notice of cessation, notice of completion, all of the above
all of the above
When the Real Estate Commissioner intends to rescind his approval of a subdivision:
he issues a desist and refrain order
Which of the following is considered to be both personal and revocable? encroachment, easement, license, option contract
A lien that covers all real property of the debtor in the county where it is recorded is called
a general lien
The verification and recordation of the document is required to create a valid:
The time period when a lis pendens is effective is: before the trial is held, until the lawsuit is dismissed, until the final judgment is rendered, in any of the above situations
any of the above situations
In construction lending, the lender will usually release the final payment to the building contractor when:
the lien period has expired
In a new subdivision, who is responsible for assuring completion of paved streets, utilities, and curbs?
The type of real estate financing instrument which transfers equitable title to real property to the buyer, but retains legal title in the name of the seller, is called:
a real property conditional installment sales contract (another name for a land contract)
A court order to sell property after the final judgment in a lawsuit has been rendered is:
a writ of execution
The term "et ux" means:
A major difference between an easement and a license is that a license is
Which of the following is the most commonly distributed according to the Statute of Succession? community property, joint tenancy, tenancy in common, separate property
Individuals do not normally have: ability to sever property, riparian rights, power of eminent domain, reliction rights
power of eminent doman
The primary purpose of a master plan is to show the location of: commercial, industrial, residential districts; public streets, seismic safety zones, all of the above
all of the above
Wayne owns a 50 unit apartment building. John, a licensed real estate broker has been hired by Wayne to manage the building. Joan lives in the building and has been designated as the resident property manager. Who has the ultimate responsibility for inspection and maintenance of the apartment building?
A condominium is similar to an apartment in that:
the owner of the condo and the tenant of the apartment each have an estate in real property
Under federal income tax law, an individual may not deduct a loss on a sale of a home, unless:
it was bought as an investment and rented out
All of the following are used to determine the gain or loss on the sale of real property for income tax purposes, except: the misc. costs of sale, the brokerage commission, the purchase price, the mortgage payment
the mortgage payment
Buyer buys a property from Mr. Valdez. Mr. Valdez agrees to take back a note secured by a trust deed to satisfy a portion of the purchase price. The trust deed would be:
a specific lien
Which is least satisfactory in providing a legal description?
a property tax bill
The purpose of the Equal Credit Opportunity Act is to: standardize the methods for obtaining credit, regulate the total amount of credit given to the borrower, discourage discrimination in lending based on age, sex, race, marital status, color, religion, or national origin; all of the above
all of the above
When a real estate licensee acts as an agent for a principal without authority or color of authority and the acts are later approved by the principal, an agency relationship was created by:
When real estate is sold, if requested, a copy of the structural pest control report must be given to:
the buyer, as soon as practical
When commercial real estate is purchased today, the minimum period of time over which the owner can depreciate the improvements is:
What contributes most to the maintenance of value in a well planned community?
Conformity to proper land use objectives
In the situation where no prudent person would pay more for a piece of land than others, which of the following principles would best be applied:
In the definition of "highest and best use", one would likely find the phrase
The relationship between "effective" and "nominal" is that
effective interest is what the buyer pays, nominal interest is what is specified in the note
What is the definition of value to an appraiser? relationship of desirous persons and things desired, ability of one commodity to command other commodities, present worth of future benefits arising out of ownership of property, all of the above
all of the above
Who are the parties to a listing contract?
broker and seller
A joint tenancy may be created by: joint tenants, deeding their property to themselves, and another person, as joint tenants; tenants in common, deeding their property to themselves as joint tenants; husband and wife, deeding their property to themselves as joint tenants; all of the above
all of the above
Under the principle of substitution, one assumes that one property may be substituted for another in terms of: income, use, structural design, any of the above
any of the above
An attorney-in-fact is:
a legally competent person who has been given a power of attorney
If a broker wants to operate his business under the fictitious name of ABC Realty, he must do what before conducting business under that name?
obtain a license from the BRE under the fictitious name
A licensee must make an adjustment between the comparable and the subject property because
two properties are rarely similar concerning everything
An agent advertises that she will give a $1,000 credit in escrow to any seller who lists with her and that she will pay one half of her commission to any buyer who purchases a property through her. This type of advertising is:
legal if the disclosure is made to all parties to the transaction
An appraiser determines an estimate of value based upon what date:
the date the purchase contract is signed
A landlord and tenant mutually agreed to terminate a 2-year lease before the two year term had expired. The tenant moved out and the landlord took possession of the premises. This is called:
An appraiser will seriously consider all of the following in arriving at an opinion of value, except: property identification, definition of value, highest and best use, assessed value
A bona fide listing to sell real property must contain:
capable parties, mutual consent, lawful object, consideration, and be in writing
Which of the following is an example of economic obsolescence? a leaky roof, no parking, an oversupply of like properties in the neighborhood, a severely deteriorated bearing wall
an oversupply of like properties in the neighborhood
When would the cost approach to appraisal be most appropriately used?
What may be short rated in escrow?
When two or more contiguous parcels owned by one person have an increased value above the value of the individual lots, it is called:
"Depreciation" as used in the cost approach to appraisal may be defined as:
a loss in value from any cause
All of the following are negotiable instruments, except: an installment note, a personal check, a bank draft, a trust deed
a trust deed
Which type of policy insures against all risks to title?
No title policy covers all risks
When the value of real property increased because of an increase in population, this could be classified as:
A residential property is 15 years old, and has an average projected physical life of 40 years old. This particular property has been superbly maintained and appears as if it were just 5 years old. This represents the concept of:
Under an exclusive agency listing, broker David diligently advertised and marketed a $650,000 home owned by Mr. Marquez. Before the listing expired, Mr. Marquez found his own buyer and sold the home directly to the buyer without using broker David or any other agent. Mr. Marquez refused to pay broker David any commission. Broker David is entitled to:
When a building earns sufficient income to justify its continued operation, this is called:
The right or power to sell property in the event of default under the terms of the trust deed are given by:
trustor to trustee
Tom is a homeowner who has failed to make payments on a trust deed for two months. The trustee has recorded a notice of default. What does Tom have?
right of reinstatement, until 5 days before the trustee sale
Usually home loans in real estate finance are calculated based on:
The Franchise Investment Law is designed primarily to protect the:
prospective franchisees when considering the purchase of a franchise
What does "encumbered" mean?
anything that affects or limits or burdens the title to property
The loan which allows the terms of an interest rate to increase or decrease over time is called:
a variable interest rate loan
An appraiser's primary concern when analyzing real property is:
marketability and acceptability
The monetary tools used by the Federal Reserve Board to control the money supply would include all of the following, except: raising and lowering the discount rates to the member banks, adjusting the minimum reserve requirements for banks, expanding open market operations by buying and selling US govt. bonds, changing interest rates on government insured mortgages
changing interest rates on government insured mortgages - they can't do this
When using a purchase money trust deed, the trustor:
signs the promissory note and trust deed and gives it to the beneficiary (lender)
Anyone who sells a second trust deed for less than its value is
discounting the note
Bob purchased an existing loan from a lender for $13,500. At the time he purchased the loan it had just been created and had a loan balance of $15,000. The borrower never made a payment on the loan, and Bob decided to foreclose. What is the maximum amount Bob can foreclose for?
$15,000 (the full amount of the loan)
A note payable for "interest only", is called a:
A buyer gave a salesperson a $1,000 personal note to act as the earnest money deposit in an offer to buy a home. The salesperson:
should inform the seller that the earnest money deposit is a personal note, prior to the seller's acceptance of the offer
The person who loans money secured by a trust deed on a parcel of real property is called a:
beneficiary (the lender)
In a court foreclosure sale on a trust deed:
the trustor has a redemption period
A grant deed is deemed by law to be executed when it is:
signed by the grantor
When a lender accepts a deed-in-lieu of foreclosure, the lender:
assumes junior loans
What provides the most important protection for a lender on a junior trust deed?
the borrower's equity in the property
Sam listed a home for sale with Broker Bud for $350,000. Prospective buyer Danny submitted an offer at a purchase price of $320,000, offer to expire within 3 days. The next day, Sam issued a counter-offer changing only the sales price to $330,000. When Danny did not respond within the three-day period, Sam signed an acceptance of Danny's $320,000 offer and instructed Broker Bud to deliver it to Danny. Upon receipt of signed acceptance, Danny told Broker Bud he had decided not to purchase the property. Based on the foregoing, there is:
A counteroffer terminates the original offer, so there was no offer for Sam to later accept
For a seller to relieve herself of primary liability when allowing the buyer to "take over" her existing loan, she must find a buyer who will:
assume the trust deed and note
A broker took an exclusive loan listing to negotiate a loan of $3,000 for a borrower. The listing was for 90 days. Under these circumstances, the listing would be:
illegal for the broker to take an exclusive listing for that period of time
An exclusive loan listing may not exceed 45 days
A clause in a trust deed that declares the total unpaid balance due and payable upon default is called:
an acceleration clause
Jack Russell, a real estate broker, who is not a Realtor, uses a sign which says "Realtor" at his office located at home. He pays a 17-year-old high school student $10 for each listing the student brings into the office. He keeps his client's money in his safe at home. Which of the following is not a violation of the real estate law?
- hiring an unlicensed person to solicit listings
- improper sign, using the term "Realtor" when he is not a member of the National Association of Realtors
- improper office location
- commingling the client's money with his own money in the home safe
improper office location. It's okay for him to work from home.
In order to create a valid joint tenancy, there is a requirement for:
equal ownership interests
One joint tenant may dispose of his interest by all of the following except: will, sale, gift, lease
Unlike a joint tenancy, the tenancy in common requires only one unity, unity of:
When four people own one piece of real estate in joint tenancy, they:
have one title
How many eight acre parcels would fit into a section of land?
1 section = 640 acres. 640 / 8 = 80
Ann acquires title as a single female. Ann subsequently marries. Ann then sells the property, signing her married name to the grant deed. This:
creates a cloud on title
Under the California Environmental Quality Act, if a city or county agency determines that a proposed project has no significant effect on the environment and that a full environmental impact report is not required, the public agency will issue a:
Implied covenants are not normally included in a:
What is not true about transfer of title to personal property?
the condition of title to personal property may generally be determined by looking at the public records with the same accuracy as real property - this is not true
The acknowledgment of a deed can be taken by:
an employee of a corporation buying property
When a judgment has been recorded, it provides
The main purpose of a deed is to:
provide evidence of the change of title or transfer of interest
A deed requires which of the following in order to be valid: grantee's signature, a recital, an acknowledgment, a granting clause
a granting clause
Jack sells his home to Barry who sets up residency but fails to record the deed. Jack then gives a deed to Diane for the same home. What is the outcome?
Barry has title
Taking possession gives constructive notice of his rights
With a promissory note and trust deed signed by two or more co-borrowers, when one of the co-borrowers defaults, what is the liability?
each is jointly and severally liable
In making a decision to issue a standard title insurance policy, a title insurance is most concerned with:
the chain of title
In a standard title policy, what is not considered as one of the normal procedures?
a survey of the property
An "abstract of title" is:
a written summary of the chain of title
Dolores is owner of a home which she has agreed to sell to David. A preliminary title report prepared during escrow shows:
information about a deed of trust with Dolores as trustor
Most buyers get what type of title insurance?
standard title insurance policy
An ALTA title insurance policy guards against all of the following except: an unrecorded mechanic's lien, an unrecorded easement, zoning regulations, rights of parties in possession
A standard policy insures against: encroachments, claims of persons in possession, prescriptive easements, a recorded deed that was not properly delivered and accepted
a recorded deed that was not properly delivered and accepted
The others are only covered by an extended title policy
All of the following items are normally prorated at the close of escrow, except: homeowner's insurance, property taxes and assessments, delinquent interest on unsecured loans, interest and impounds
delinquent interest on unsecured loans
An estate of inheritance or perpetual estate could also be described as:
an estate in fee
Which of the following may a minor be able to undertake without court approval: acquisition of real property through gift or inheritance, give valid power of attorney to encumber property, sell real estate through a guardian, all of the above
acquisition of real property through gift or inheritance
During escrow, the escrow officer received two structural pest control reports. The escrow officer should:
notify the buyer and seller and obtain written instructions as to which report to use
Mrs. Smith sold a home to Mr. Jones on an installment sales contract. Mr. Jones recorded the contract. Mr. Jones made a $1,000 down payment and after the sale made a few of the required monthly payments. One night Mr. Jones moved out and abandoned the house. What is true?
There is a cloud on title
The California Civil Code requires a transfer disclosure statement to be delivered by the:
transferor to transferee (seller to buyer)
Capital improvements made to residential income property after 1986 may be depreciated:
over an estimated life of 27.5 years
Once recorded, a lis pendens is effective: before the trial is held, until the lawsuit is dismissed, until a final judgment is recorded, in any of the above situations
any of the above situations
A real estate broker included the following clause in her standard listing contract: "In consideration of execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser." This is:
important to the creation of a bilateral contract (promise for a promise)
A voidable contract remains binding until it has been:
A contract has been executed when it has been:
completely and fully performed
All of the following are essential to the validity of a contract, except: a meeting of the minds, the adequate capacity of the parties to the contract, the payment of money, a legal purpose
the payment of money
All of the following are essential to create a valid contract, except: awful object, writing, mutual consent, consideration
The Statute of Frauds requires what contract to be in writing?
a contract which is not to be performed within one year of its making
In order to have a binding contract between the buyer and seller, it must: have been offered and accepted, be recorded, contain acknowledgment, all of the above
have been offered and accepted
When damages are not adequate, each of the following may request specific performances, except the: buyer from the seller, attorney-in-fact for one of the principals, seller of a large parcel of land, broker from the principal
broker from the principal
An agent who acts exclusively as the agent for the buyer:
may present offers to the seller and/or the seller's agent
When a buyer gives the agent a postdated check to accompany an offer, it:
may be retained, but must be disclosed to the seller
A licensee who misrepresents property to the buyer while acting as an agent of the seller, is subject to: discipline, civil lawsuits, criminal penalties, all of the above
all of the above
The developer of a large time-share subdivision sent advertising offering prizes to over 100,000 potential buyers, but did not disclose that they were required to attend a sales presentation to be eligible to receive the prizes. What is true?
This is illegal because the developer failed to disclose the requirement that buyers must attend a sales presentation in order to receive a prize
The most detailed and accurate method of estimating the replacement cost new of an improvement is
quantity survey method
An agent who pays part of the commission to the buyer
must inform the seller
When a licensee places an ad in the newspaper without the broker's name that reads, in total, "3 bdrm, 2 bath, den & spa, giant lot, $160,000 800-555-1212" this is:
a blind ad
All of the following contribute to the stability of a residential neighborhood except: location in the path of city growth; many families with school children in the neighborhood; conformity in uses, and occupations in the area; increasing the population density and home sale turnover rate
increasing the population density and home sale turnover rate
Why do many brokers open client trust fund accounts?
to separate the client's money from broker's money
Trust fund money can be withdrawn by whom?
any authorized employee of the broker
Alice's license has been suspended. The Real Estate Education, Research, and Recovery Account (REERA) has paid on claims by both the buyer and seller. When may Alice's license be reinstated?
when she repays the Recovery Account for money paid plus all interest