Flashcards in Practice Test 3 Deck (150):
Each of the following is considered personal property, except: a corn crop prior to harvest, oranges that have not been picked but sold under contract, stock in a mutual water company, gold which has been mined
stock in a mutual water company
When a broker wants to store documents electronically, rather than on paper, the storage method must not be altered. What method of electronic storage is required by the Bureau of Real Estate?
WORM (write once, read many)
An "estate" in real property is held by which of the following? trustee, beneficiary, a life tenant
life tenant (holds a freehold estate)
The zoning for a subdivision said that each lot must contain a minimum of 15,000 square feet. The deed restrictions said that each lot must contain a minimum of 10,000 square feet. Which would control?
zoning (whichever is more restrictive will control)
Mary owns one parcel of land and is trying to show that exceptional circumstances exist which justify the using of land in a way which is prohibited by current zoning laws. Her intended use would not be detrimental to the public. She would probably petition the planning commission for a:
All of the following statements about covenants and conditions are false, except: the violation of a covenant results in the loss of title, a violation of a covenant can result in the loss of title, covenants and conditions must be for the benefit of the general public, private covenants and conditions are usually enforced by local government
a violation of a covenant can result in the loss of title
The best way for the Federal Reserve Board to create a tight money market would be to:
raise the discount rate and sell government bonds
Copies of termite reports filed with the Structural Pest Control Board within the preceding two years can be obtained upon request and the payment of a fee by:
In the cost approach to appraisal, the phrase "reproduction cost" is different from "replacement cost" in that "replacement cost" measures:
the present cost using utility (comparable usefulness)
When a vendee in a land contract is paying the vendor impounds for taxes and insurance, those payments may not be disbursed for any other purpose without the consent of the:
A "plot plan" is used by a builder for the purpose of:
showing placement of construction and related land improvements
When an appraiser arrives at the value of an income property by considering the income produced and the percentage rate of return which can reasonably be expected to be earned on the investment, she is applying a process called:
the capitalization approach
If an investor were to restore a property to a former or improved condition without changing the plan, form, or style of the building, this would be described as:
The broker of a real estate office should know that Workers' Compensation Insurance is only required for:
all employees of the broker
When land is divided into districts according to use by police power, this is called:
Which would be defined as a fixture in the law? a built-in stove in a mobilehome, area rugs in a home, crops after harvest, something incorporated into the land
something incorporated into the land
What is a quiet title action?
a court suit to remove a cloud on title
Upon moving into the home he had just purchased, Mr. Jones discovered that his neighbors garage was four feet over on his property line. If a friendly settlement cannot be negotiated, Mr. Jones should:
sue the neighbor
In typical economic times, investors who make long-term investments:
have more risk than those who make short-term investments
Withdrawals from the real estate broker's client trust account can be made by the broker or by who, when authorized by the broker?
anyone employed by the broker
What is a violation of fair housing laws?
the landlord requires a co-signer exclusively for tenants who are single
What form of ownership would commonly be subject to double taxation?
In appraising real property, a separate site analysis is considered least important:
when applying gross rent multiplier
The "R-value" of insulation stands for its:
resistance to heat flow
The US Attorney General would likely act to enforce the Federal Open Housing Law when:
a conspiracy exists to practice resistance to the Federal Fair Housing Law
When a lender makes a loan without a down payment and without a government guarantee, the lender would be best protected by:
An owner of an apartment building is considering an extensive modernization program. In making his decision, he should put the most emphasis on:
net effect on income
The recording of documents related to real estate transactions will NOT accomplish:
giving actual notice of the content of the documents to third parties who may not be effected by the documents
The security of a trust deed may be impaired if:
it is recorded after work of improvement had commenced on the property
When rent is based on a portion of the gross receipts of a business, the lease is called:
a percentage lease
Property can be transferred in all of the following ways, except; court order, public grant or dedication, eminent domain, executive sale
Under federal income tax law, the "basis" of real property is the property's:
When appraising income property with the capitalization approach, what is not a component of net operating income?
personal income taxes
Property taxes are described as "ad valorem" taxes. "Ad valorem" most nearly means:
according to value
Under California law, when property taxes have not been paid real property is sold to the state on June 30. The most important aspect of this sale is that:
it starts the running of the redemption period
Prepaid rent received by a landlord is treated as taxable income:
in the year collected
A "water table" is defined as:
the depth at which water is found
What is a commercial acre?
an acre minus deductions for streets, alleys, sidewalks, etc.
When title to real property passes by accession, the recipient receives title as the result of:
the principal action of natural waters through accretion
Certain sides of business streets are preferred by merchants because pedestrian traffic seeks the shady side of the street. The least desirable sides of the street are:
north and east
Generally, franchisors raise most of their funds from:
financing from lenders, together with money from the sale of stock and service fees from franchisees
When appraising the value of an older building using the replacement cost method, the appraiser would calculate all of the following except: cost to build improvements new, the value of the land, an appropriate capitalization rate, accrued depreciation
A percolation test is used to determine:
capacity of soil to absorb water
An agency relationship may not be created by:
subornation (means lie, trickery, or deceit)
The first step of the appraisal process is to:
define the problem
When using the market data approach, if a comparable property has a feature that is not present in the subject property, the value of that feature will be:
subtracted from the sales price of the comparable
"Backfill" used in construction can be described as:
soil used to fill in excavations or brace foundation walls
Fee schedules setting forth the cost of title policies and other services performed by title companies are set by the:
title insurance companies
Which of the following factors are not considered a cause of obsolesence? misplaced improvements, obsolete equipment, change of flight pattern at an airport, wear and tear
wear and tear
A valid written lease must include: agreement to let and take, delivery and acceptance; term, consideration, and description of the premises; a landlord and tenant with the legal capacity to enter a binding contract; all of the above
all of the above
An appraiser who uses improper methods to appraise a property for a government backed loan may be guilty of a:
In appraising income-producing property by the capitalization approach, if the property taxes go up $1,000 and all else remains equal, the property value will:
decrease more than $1,000
The major cause of loss of value in real property is due to:
A high energy efficiency ratio (EER) on an air conditioning unit means:
the unit is more efficient
When appraising real property by the income approach, the money invested in the improvements is recaptured by:
accruals for depreciation
Capitalization rates must provide for a return on, and a return of, the investment in an improvement. This is provided for by means of:
An appraiser's narrative appraisal report of a single-family residence probably would contain no reference to:
a buyer's financing
"Joist" is a construction term which means:
A prospective buyer obtained a three-month option on a parcel of real property by paying $300 to the owner. A option does:
not create a legal interest in the property for the optionee
What is the basis of the market data approach to appraisal?
How many townships are in a ranch which is 36 miles square?
Which of the following statements is most correct? property is deeded to the state on July 1, if property taxes for the prior year were not paid; the delinquent property taxpayer must make monthly payments to the state during the statutory redemption period; the real effect of a "sale to the state" by the tax collector is to start the redemption period running, but the delinquent owner remains in possession for five years; the property is automatically deeded to the state if the property is not redeemed within the first three years
the real effect of a "sale to the state" by the tax collector is to start the redemption period running, but the delinquent owner remains in possession for five years
When Carr conveyed to Jim a portion of his fee estate for a term less than his own, Carr's interest would be identified as a:
Jim has a leasehold estate = possesion of the property reverts back to Carr at the end of Jim's lease
What is usually considered to be the most crucial factor in planning a subdivision?
an accurate market analysis
When the owner of a property believes that her property has been overassessed by the county assessor, she should contact the:
Assessment Appeals Board
Mike owns a 20-unit apartment building. He reports his income on a cash basis, therefore, he can deduct all of the following for tax purposes, except: loss of income due to vacancies; depreciation of improvements; interest payments on the third trust deed; the cost of painting three units
loss of income due to vacancies
The purpose of the property tax assessment roll is to:
establish the tax base
A prospective purchaser is interested in buying a lot in the desert from a subdivider. The buyer wishes to know about sewer assessments, liens, and utilities to his lot, blanket encumbrances, and maintenance of streets. The best source of this information is the:
Real Estate Commissioner (using their final public report)
The proper method to enforce private property restrictions on real property is:
Which of the following would not be considered an appurtenance: trees, a trade fixture, a house, a swimming pool
Recording a judgment gives what type of notice?
The impounding of purchase money, commonly required by the Commissioner when approving new subdivisions for sale, is primarily for the protection of the:
the buyer of a lot in a subdivision
Who usually has responsibility for providing streets, utilities, sidewalks, and curbs in a new subdivision?
Real property in the State of California is assessed at:
100% of the taxable value
In its broadest definition, the authority of local, state, and federal governments to regulate the use of or to purchase private property in order to achieve planning goals, is derived from:
An abstract of judgment, once recorded, creates:
an involuntary lien
A short form appraisal report includes all of the following except: description of the site improvements, an accurate market analysis, a site analysis, loans and financing terms
loans and financing terms
When two properties are identical or highly similar, most buyers focus on lower price. This principal is called:
A broker acting as an agent for a principal has as much authority as:
the principal actually or ostensibly confers upon him
Which of the following would be least likely to include a legal description of a parcel of real estate? grant deed, property tax bill, escrow instructions, a preliminary title report
property tax bill
In what California case did the court rule that the seller and agent must disclose all facts materially affecting the value or desirability of the property to the buyer?
Easton v. Strassburger
In order to exist, an easement must:
have a servient tenement
Which of the following is not essential to the creation of an agency relationship: consent of the principal, competency of the principal, a fiduciary relationship, agreement to pay consideration
agreement to pay consideration
When a real estate agent acts exclusively as a buyer's agent, he cannot:
act as an exclusive agent of the seller
Mrs. Smith listed a house with Broker Bob for $250,000. Mr. Jones submitted an offer of $210,000 with the offer to expire in three days. The next day, Mrs. Smith made a counter offer with the sale price to be $230,000. When informed of the counter offer, Mr. Jones would not accept it. Three days later, Mrs. Smith delivered to Broker Bob a signed acceptance of Jones' original $210,000 offer. When Broker Bob told Mr. Jones of Mrs. Smith's acceptance, Mr. Jones told him he had decided not to buy the property. What is true?
There is no contract
The homeowner can deduct all of the following costs for his primary residence each year on his federal tax return, except: an uninsured casualty loss, local real property taxes, painting the living room, the portion of his monthly mortgage payment attributable to the payment of interest
painting the living room
Some loans must comply with the RESPA (Real Estate Settlement Procedures Act). When the loan is secured by residential real property, and contains four or less residential units, the loan must comply with the RESPA regulations if the loan is made by:
lenders whose deposits are insured by an agency of the federal government
Which method of appraisal would a licensee most likely use to appraise a restaurant?
In a real estate transaction, the term "reversion" would most nearly mean:
the interest held by the landlord in property which has been leased
The buyer of a home was not informed that the house was on a septic tank system. The buyer has the right to:
rescind the contract
What listing requires an owner to pay a commission, even though she sells the property herself?
exclusive right to sell listing
Which of the following is the largest parcel? 2 miles square, 3 sections, 6% of a township, 2 miles by 1 mile
2 miles square = 4 square miles, bigger than the other ones
Mr. Nelson made a written offer to purchase a home through Broker Starr. However, Nelson died in a car accident before Broker Starr could notify him of an unqualified, signed acceptance by the seller. What is correct?
The death of Nelson constituted a revocation of the offer
What profession commonly uses a bench mark?
When a notice of default has been recorded on a trust deed, the borrower is given a period of time to reinstate the loan. During this time, the right of possession belongs to the:
The annual percentage rate (APR) is defined by the Federal Truth-in-Lending Law as:
the relative cost of credit expressed in percentage terms
What did NOT result from the National Housing Act of 1934?
maximum construction standards
An acceleration clause is inserted into a note that is otherwise negotiable. Adding this clause:
does not limit the negotiability of the note (bc the loan can be sold to another lender)
What statement is accurate concerning mortgage bankers?
they negotiate loans which are readily salable in the secondary mortgage market
What does NOT buy loans in the secondary mortgage market?
Federal Housing Administration
The purpose of Regulation Z (Truth-in-Lending Law) is to:
assure meaningful disclosure of credit terms
Reference to a monument in a legal description is usually considered to be less desirable because
monuments may be destroyed
The Federal Truth-in-Lending Law gives the borrower a 3-day right of rescission with what type of loan?
a loan to refinance the borrower's personal residence
The unspecified maturity date on a construction loan begins from what date?
from the date of the note
When purchasing with FHA financing, a new buyer would NOT:
apply to a local FHA office for the FHA appraisal (buyers don't apply with the FHA)
A primary effect of the deregulation of savings and loans has been:
there is no limit on the interest rate savings and loan associations can pay on money deposited with them
When a lender takes a deed-in-lieu of foreclosure from the borrower, the lender:
will assume any junior liens
The best investment hedge against inflation would be in:
equity assets such as real estate
The measure of goods and services produced by the nation during any one calendar year is called:
gross domestic product (gross national product)
"Equity" can be described as: the difference between the value and the loans, the owner's share of the total property value, the initial down payment on the property, any of the above
any of the above
The terms "index, net net net, and flat" are used to describe:
The usual ceiling height in a home purchased with FHA financing is
The Truth-in-Lending Law allows borrowers a limited right of rescission. The time which is allowed for recession begins when:
loan documents are signed by the borrower
The law of intestate succession is applied to the distribution of an estate when:
there is no will
The purpose of a "release clause" in a mortgage is to:
allow the release of some properties upon partial payment, when more than one property is used as a security for the debt
Before a title insurance policy is issued, the title insurance company examines various records affecting the title to the parcel. This is called the chain of title. It then develops a summary of the chain of title called:
an abstract of title
The main purpose of "RESPA" (Real Estate Settlement Procedures Act) is to:
provide consumers with enough information to enable them to shop for settlement services
What cost and fee is considered a finance charge on the disclosure statement under the Federal Truth-in-Lending Law?
When an escrow is closed on the purchase of a home, the closing statements usually reveal that the seller has paid for certain items in advance, or may be in arrears in his payments on items which relate to ownership of that home. These items are usually prorated in escrow. What would not be prorated?
title insurance and nonrecurring fees
Ace Escrow offers a $100 "referral fee" to any real estate agent who opens escrow during the month of May. Under the Real Estate Settlement Procedures Act (RESPA), such an offer is:
not allowed under any circumstances
A subordination clause in a loan works to the benefit of the:
trustor (borrower). It allows a later loan to take priority over the existing loan.
In order to purchase a home for $300,000, a buyer borrowed $250,000 through the services of a loan broker. Each discount point charged on the loan will cost the borrower how much?
If a seller insists that a listing broker who is taking a listing discriminate against minority buyers, what should the broker do?
refuse to take the listing & explain to the seller that his discrimination violates the law
A loan broker statement is more properly referred to as a:
mortgage loan disclosure statement
When a non-licensee performs acts for which a real estate license is required, the prosecution for violation of the law by the non-licensee is handled by:
the District Attorney of the county in which the activity occurred
Which employee of a broker NEEDS a real estate license?
a hostess at an open house who never tells the clients the prices, because all the info is contained in the data sheet she hands each client
Which real estate disclosure law wen into effect January 1, 1987?
the Seller Transfer Disclosure Law
Martha and David, single people, owned a home as joint tenants. Martha borrowed $10,000 to pay medical bills without the knowledge or consent of David. She secured the loan by recording a trust deed against the home. Shortly thereafter, Martha died, with the debt still unpaid. What best describes the subsequent title vesting?
David would own all of the property free and clear of the trust deed (death terminates the lender's lien, unless the other joint tenants co-signed on the loan)
The ALTA policy of title insurance (insuring the lender) goes beyond the protection afforded to the grantee by a CLTA policy in that the ALTA policy also insures against:
the location of property lines according to a formal survey
When a buyer withdraws an offer before the offer was legally accepted by the seller:
the buyer is entitled to receive his deposit back
What is the general purpose of a building code:
provide minimum construction requirements
The grant of an unlocated easement in a transfer of real property is:
What would be considered an expense item when arriving at a net operating income for a 50-unit apartment building?
salary for a part-time gardener
A real estate appraiser will determine the capitalization rate by: band of investment, summation, market comparison, any of the above
any of the above (C.B.S.)
The primary source of funds for residential mortgages made by institutional lenders is:
In what contract does one of the parties agree not to revoke?
In construction terminology, the studs of an interior wall are supported by and rest on the
When a potentially active earthquake fault zone is located near a home, buyers must be given special earthquake disclosures. The earthquake faults are designated on maps available to the public. Typically how wide are the earthquake fault zones on a map?
When an appraiser is attempting to establish the value of a commercial building, in which of the following examples would changing economic conditions have the least impact on value?
a medical building
Accession takes place when real property is acquired by:
imperceptible addition of land by action of water through accretion
A seller must provide a buyer with a real estate transfer disclosure statement in which of the following transactions: a sale of a four unit residential building, a bankruptcy sale, a trustee sale, a husband to wife transfer
a four unit residential building
A residential purchase agreement says, "The seller will provide and pay for a structural pest control report on improvements and pay for corrective work, if any." The agent must be certain that the buyers receive a copy of the structural pest control report:
as soon as practicable before the close of escrow
An easement may be created: for the life of the grantor, for a stated period of time, for perpetuity, any of the above
any of the above
Joe sold his house to Mel, who did not record the deed, but moved in. Joe then sold the same property to Jane, who reviewed the county recorder's records, but did not look at the property. Joe gave Jane a deed, which she recorded. What would be true concerning the property?
Mel maintains title
Scott executes a deed to Bob and records it. Later, Scott seeks to void the sale, claiming that there had been no delivery to Bob. Why will Scott lose?
delivery is presumed with recording
A title company conducts a title search by searching the records of the: county recorder's office, county clerk's office, federal land office, all of the above
all of the above
Which of the following would have priority: a first deed of trust recorded March 14, 1992; a homestead recorded April 1, 1992; an assessment lien for street improvement recorded April 5, 1992; an unrecorded mechanic's lien
an assessment lien - government liens may have priority over all other liens
The added protection of an ALTA title policy over a CLTA policy is in guarding against:
a dispute over property lines which would be disclosed in a survey
Broker Smith presented a written offer to Seller Burns from buyer Taylor. The offer stated that upon acceptance buyer Taylor would deposit $15,000 in escrow. Seller Burns made some amendments by innerlining changes, but did not change the amount of the deposit. Buyer Taylor agreed to all the changes and changed the amount of the deposit to $1,000. Broker Smith should be aware that: Buyer Taylor has created a counter-offer because of the changed deposit, Broker Smith must get Seller Burns' acceptance of the counter-offer, no contract has yet been formed, all of the above are true
all of the above are true