Practice Test A

Question 1

Which of the following is NOT considered an improvement to land?

a. Sewers
b. Roads
c. Building
d. Crops.

Answer 1

d. Crops.

Question 2

To the seller’s agent, the buyer is properly described as a:

a. client.
b. customer.
c. principal.
d. fiduciary.

Answer 2

b. customer.

Question 3

Which appraisal approach computes the value of the land separately from the buildings?

a. Cost
b. Income Capitalization
c. Market data
d. Market analysis

Answer 3

a. Cost

Question 4

A person who has absolute control of a parcel of real estate is said to own a

a. leasehold estate.
b. fee determinable.
c. life estate.
d. fee simple.

Answer 4

d. fee simple.

Question 5

Jim Thomas lets his neighbor, Shirley Blank, store her camper in his yard for a few weeks. He does not charge her rent. He has given Blank a(n)

a. easement
b. encroachment
c. estate in land
d. license.

Answer 5

d. license.

Read license as “permission”.

Question 6

The HUD-1 statement will still be used for a mortgage secured by a:

a. conventional loan used to purchase a single-family dwelling
b. single-family dwelling financed by an FHA-insured loan.
c. a duplex, in which the purchaser will live, financed by a VA-guaranteed loan.
d. reverse mortgage.

Answer 6

d. reverse mortgage.

The HUD-1 Settlement Statement is a standardized form used to itemize all charges and credits to the buyer and seller in a real estate settlement. It was once used in most home closings, but the Consumer Financial Protection Bureau (CFPB) replaced it with the Closing Disclosure form for most mortgage loan applications made after October 3, 2015.

However, the HUD-1 form is still used for certain types of mortgage transactions, most notably:

Reverse Mortgages: These loans, specifically for homeowners 62 and older, allow borrowers to convert a portion of their home equity into cash.

Mortgage Refinances (in some cases): If a refinance loan doesn’t involve a seller, a HUD-1A form (a modified version of the HUD-1) may be used.

Question 7

A legal description that defines the boundary lines is called:

a. a geodetic survey
b. metes and bounds
c. a rectangular survey.
d. a recorded plat.

Answer 7

b. metes and bounds

Question 8

Which of the following is considered dual agency?

a. Broker acting for both buyer and seller.
b. Brokers cooperating in a multiple listing service.
c. Broker listing and selling to the same person.
d. Salesperson listing two houses on the same street.

Answer 8

a. Broker acting for both buyer and seller.

Question 9

Which of the following is a lien that does NOT need to be recorded?

a. Money judgment
b. Real estate taxes
c. A tax deed
d. A voluntary lien

Answer 9

b. Real estate taxes

Question 10

The term depreciation refers to:

a. the value of real estate after the expiration of its useful life.
b. a loss of value due to any cause.
c. costs incurred to modernize a building.
d. capitalized value of rental losses.

Answer 10

b. a loss of value due to any cause.

Question 11

Whether a salesperson is associated with a broker as an employee or as an independent contractor is important…

a. for income tax purposes.
b. when applying for a license.
c. when listing property, because an independent contractor may list in her own name.
d. when establishing the escrow account.

Answer 11

a. for income tax purposes.

Question 12

A township contains:

a. 6 square miles.
b. 36 sections.
c. 18 sections.
d. 640 acres.

Answer 12

b. 36 sections.

a section equals 1 square mile.

Question 13

A merchant signs a lease for $800 a month or 6% of gross sales, whichever is more. In July gross sales were $14,000. How much is the rent for July?

a. $480
b. $800
c. $840
d. $2,800

Answer 13

c. $840

$14,000 times .06 (6%)

Question 14

Jane Smith gave the hospital a vacant lot for “as long as it is used for hospital purposes.” The hospital owns a:

a. fee determinable.
b. remainder interest.
c. homestead.
d. leasehold estate.

Answer 14

a. fee determinable.

Question 15

The buyer moves in and pays expenses and loan payments but the seller retains title in a:

a. lease-option.
b. purchase-money sale.
c. land contract.
d. Sale and leaseback.

Answer 15

c. land contract.

ON THE EXAM!

Question 16

A tenant’s written, one-year lease expires on May 1. To obtain possession on May I, the landlord must give the tenant:

a. notice by April 30.
b. 60 days’ notice.
c. one month’s notice.
d. no notice.

Answer 16

d. no notice.

Lease was predetermined - set for one year up front. No notice neccessary.

Question 17

Which of the following situations will NOT delay closing under the TRID rules?

a. Escrow amount for taxes and insurance was changed.
b. Lender could not document applicant’s overtime.
c. Applicant decided on a different loan program.
d. Prepayment penalty was added.

Answer 17

a. Escrow amount for taxes and insurance was changed.

Question 18

The Jensons own property that the city wants to use to extend the airport runway. The Jensons refuse to sell. The city may acquire this property by its right of:

a. eminent domain.
b. easement.
c. accession.
d. recapture.

Answer 18

a. eminent domain.

Eminent domain is the RIGHT, Condemnation is the process.

Question 19

Georgia Brown sold her listed home herself and didn’t owe anyone a commission. The listing she had signed was probably a(n):

a. multiple listing.
b. net listing.
c. exclusive-right-to-sell listing.
d. exclusive-agency listing.

Answer 19

d. exclusive-agency listing.

Question 20

Federal income tax regulations allow a homeowner to reduce taxable income by amounts paid for:

a. interest and property tax.
b. repairs and maintenance.
c. insurance premiums.
d. all of the above.

Answer 20

a. interest and property tax.

Question 21

A grantor becomes a lessee, and the grantee becomes the lessor, in a:

a. land contract.
b. lease-option.
c. sale and leaseback.
d. wraparound mortgage.

Answer 21

c. sale and leaseback.

Question 22

Ben Wolfe has defaulted in payment of several debts, and a court has ordered his property sold to satisfy them. Which of the following would be considered the prior lien?

a. The outstanding mortgage dated and recorded one year ago.
b. Current real estate taxes.
c. A mechanic’s lien for work that was started two months before the mortgage was recorded.
d. A court judgment rendered and recorded last month.

Answer 22

b. Current real estate taxes.

Question 23

A guarantee that the lender will commit to a certain percentage for the cost of the loan is called:

a. tariff security.
b. requirement for a prepayment penalty.
c. balloon payment.
d. rate lock.

Answer 23

d. rate lock.

Question 24

What is the function of Fannie Mae?

a. Buys FHA loans
b. Insures FHA loans
c. Makes FHA loans
d. Reviews FHA loans

Answer 24

a. Buys FHA loans

Question 25

Continuing education courses may be taken: a. in a classroom only. b. exclusively over the internet. c. entirely by mail. d. by mail, internet, or classroom.

Answer 25

d. by mail, internet, or classroom.

Question 26

As agent for a seller, a real estate broker may a. promise that the seller will accept any offer that meets the terms of the listing contract. b. solicit the buyer for an offer to purchase. c. sign an acceptance to a bona fide purchase offer. d. refuse to forward a ridiculously low offer.

Answer 26

b. solicit the buyer for an offer to purchase.

Question 27

The new combined federal TRID: a. requires a lender to provide a Loan Estimate within three business days of completed loan application. b. forbids use of the term annual percentage rate. c. prevents a broker from saying "FHA financing available" in a classified ad. d. requires all mortgage loan applications to be made on standard government forms.

Answer 27

a. requires a lender to provide a Loan Estimate within three business days of completed loan application. ## Footnote On the EXAM!

Question 28

The amount of money that would be paid by a buyer to a seller, both well-informed and neither under duress, is real property's: a. exchange value. b. market value. c. appraised value. d. salvage value.

Answer 28

b. market value.

Question 29

Property is listed for $160,000 and sells for $150,000, in a town that reassesses at sales price on transfer. The tax rate is $1.93 per $100. How much is the tax bill? a. $289.50 b. $308.80 c. $2,895 d. $3,088

Answer 29

c. $2,895 ## Footnote $150,000 times .0193 or 1.93 percent.

Question 30

A real estate broker who received a commission for the sale of a home in a transaction in which neither the buyer nor the seller was a principal acted as a: a. transaction broker. b. seller's agent. c. buyer's broker. d. dual agent.

Answer 30

a. transaction broker.

Question 31

Which of the following is NOT essential to an enforceable real estate sales contract? a. Earnest money b. Writing c. Offer and acceptance d. Consideration

Answer 31

a. Earnest money

Question 32

The lender has agreed to finance furnished condominium units. The lender has agreed to a: a. package mortgage. b. blanket mortgage. c. shared equity mortgage. d. wraparound mortgage.

Answer 32

a. package mortgage.

Question 33

A married couple who meet the ownership and occupancy requirements may sel a principal residence with no federal capital gains tax on profit of up to: a. $125,000. b. $250,000. c. $500,000. d. any amount.

Answer 33

c. $500,000.

Question 34

The amount of commission due a salesperson is determined by: a. agreement between broker and seller. b. agreement between broker and salesperson. c. the local association of REALTORS. d. state law.

Answer 34

b. agreement between broker and salesperson.

Question 35

The practice of refusing to lend mortgage money in certain neighborhoods is called: a. blockbusting. b. redlining c. birddogging. d. steering.

Answer 35

b. redlining

Question 36

In a real estate sale, transfer tax fees are usually paid by the: a. seller. b. state. c. buyer. d. broker.

Answer 36

a. seller.

Question 37

Which of the following should you accept as evidence or proof of ownership of an estate in land? a. Quitclaim deed b. Title insurance policy c. Warranty deed d. Affidavit

Answer 37

b. Title insurance policy

Question 38

An appraiser would NOT generally use which of these items to determine the replacement cost of a building? a. Square footage b. Unit in place c. Original cost d. Quantity survey

Answer 38

c. Original cost

Question 39

Which of the following hazards requires a federal disclosure form in a residential purchase? a. Radon b. Lead-based paint c. Formaldehyde d. Asbestos

Answer 39

b. Lead-based paint ## Footnote Houses made before 1978.

Question 40

Frank rents an apartment under a two-year written lease. After one year, the building is sold. Which statement is TRUE? a. The sale has no effect on Frank's tenancy. b. Frank must renegotiate with the new owner. c. Frank must leave after 60 days' notice by the owner. d. The new owner is free to increase the rent immediately.

Answer 40

a. The sale has no effect on Frank's tenancy.

Question 41

In 1977 a family purchased their house and lot for $53,000. They made no major improvements. They recently sold it for $224,550. How much do they owe on their gain? a. Nothing. b. Nothing, if they purchase another home within 24 months. c. 15% d. 20%

Answer 41

a. Nothing.

Question 42

A REALTOR is: a. any active broker. b. an attorney-in-fact. c. any licensed agent. d. a member of a trade association.

Answer 42

d. a member of a trade association.

Question 43

A broker received two offers at once, one through a salesperson in his office and one from a competitor. The broker should: a. submit the salesperson's offer first because he is the lister. b. submit both offers at the same time. c. submit the competitor's first as a matter of courtesy. d. reject both offers and tell the seller to try for a higher price.

Answer 43

b. submit both offers at the same time.

Question 44

The act by which all parties agree to the terms of a contract is known as: a. legality of object. b. consideration. c. meeting of the minds. d. informed consent.

Answer 44

c. meeting of the minds.

Question 45

A refusal to rent to a couple because they are unmarried violates: a. no law. b. New Jersey law. c. the Civil Rights Act of 1866. d. the Fair Housing Act of 1968.

Answer 45

b. New Jersey law.

Question 46

Exemption from a portion of property taxes is available to: a. qualified veterans. b. qualified senior citizens. c. qualified nonprofit organizations. d. all of the above.

Answer 46

d. all of the above.

Question 47

Those who are entitled to inspect all documents recorded in the county clerk's office include: a. bank employees. b. private individuals. c. tax assessors. d. all of the above.

Answer 47

d. all of the above.

Question 48

Seller lists a home for $400,000 and listing broker tells a prospective buyer to submit a low offer because the seller is desperate. Buyer offers $320,000 and seller accepts. In this instance, a. the broker violated the agency relationship. b. the broker did not act improperly, because no one was hurt. c. the action was proper because it obtained a quick offer. d. the broker was properly looking out for buyer's interests.

Answer 48

a. the broker violated the agency relationship.

Question 49

When real property is sold at a foreclosure sale and not enough money is realized to pay the mortgage, the lender may: a. seck a deficiency judgment. b. foreclose on other real estate owned in that county. c. file a garnishment of the borrower's wages. d. ask a court to seize the borrower's bank accounts.

Answer 49

a. seck a deficiency judgment.

Question 50

Which of the following represents economic obsolescence? a. Rusted boiler b. Poor floor plan c. Outmoded plumbing d. Car lot next door

Answer 50

d. Car lot next door

Question 51

The law that requires MOST real estate contracts to he in writing is known as the statute of: a. descent. b. estoppel. c. frauds. d. limitations.

Answer 51

c. frauds.

Question 52

Bart O'Malley is a licensed salesperson who completed a difficult transaction. Bart may accept a bonus from: a. the grateful seller. b. the buyer c. his own broker. d. any of the above.

Answer 52

c. his own broker.