Pre-Licensing Study Guide

Question 1

In direct mail, the envelopes and contents—under the ARDHA code of Standards and Ethics—may not imply
that they originate from a:
A. Public utility
B. Credit bureau
C. Law office
D. All of the above

Answer 1

D. All of the above

Question 2

The industry Code of Standards and Ethics applies to:
A. The developer
B. The buyer
C. The marketer
D. The developer and marketer

Answer 2

D. The developer and marketer

Question 3

Any rescission rights of the consumer may be disclosed at or before closing. Rescission rights may
_________________.
A. Be extended
B. Not be waived
C. Be waived
D. None of the above

Answer 3

B. Not be waived

Question 4

A young couple bought a unit week of time-share. In the Public Offering Statement, a rescission period of ___
days was given.
A. 3
B. 7
C. 10
D. 12

Answer 4

C. 10

Question 5

A timeshare program may be created in any unit unless expressly prohibited by:
A. The project instruments
B. The Real Estate Commission
C. Local governing laws
D. The project instruments and local governing laws

Answer 5

D. The project instruments and local governing laws

Question 6

The Commission may initiate private investigations:
A. In state only
B. Out of state only
C. Within or outside the state
D. In premiere tourist resort cities

Answer 6

C. Within or outside the state

Question 7

Discloser of Rescission Rights shall appear in bold face and conspicuous type in the:
A. Contract
B. Public offering statement
C. Deed
D. Contract and public offering statement

Answer 7

D. Contract and public offering statement

Question 8

A family, that had never seen the resort, bought a week of time-share. By law, they have ___ days to rescind.
A. 10
B. 7
C. 20
D. 15

Answer 8

D. 15

Question 9

A time-share contract is voidable by purchaser until:
A. 10 day rescission has passed
B. Received a public offering statement
C. Both husband and wife have signed the contract
D. 10 day rescission has passed and received a public offering statement

Answer 9

D. 10 day rescission has passed and received a public offering statement

Question 10

Before a developer can remove money from the escrow account, they must:
A. Have approval from county
B. Be 50% sold out
C. Complete pool
D. Construction, furnishings and landscape are substantially complete

Answer 10

D. Construction, furnishings and landscape are substantially complete

Question 11

Price increases on time-share intervals shall not be announced more than ___ days prior to effective date.
A. 10
B. 60
C. 30
D. 5

Answer 11

B. 60

Question 12

Misleading or deceptive representation would be telling the purchaser that:
A. They have 10 days to rescind
B. They can exchange their week through an exchange company
C. They will never have to pay a maintenance fee
D. Have full use of the facilities

Answer 12

C. They will never have to pay a maintenance fee

Question 13

It is acceptable to tell a purchaser that:
A. The maintenance fee will never increase
B. Taxes are exempt on a time-share project
C. They can exchange their week through an exchange company
D. Walt Disney will move next door

Answer 13

C. They can exchange their week through an exchange company

Question 14

A time-share sale should be made on the basis of:
A. Investment
B. Tax Reform Act
C. Vacation experience
D. Resale

Answer 14

C. Vacation experience

Question 15

Under the power and duties of the Commission, the Commission does not have the right to:
A. Initiate private investigations outside the state
B. Revoke or suspend the registration of a time-share project
C. Use the amenities of the resort at will
D. Prescribe to a Developer forms for submitting information

Answer 15

C. Use the amenities of the resort at will

Question 16

A public offering statement, to be valid, must be:
A. Signed
B. Dated
C. Recorded
D. Signed and dated

Answer 16

D. Signed and dated

Question 17

Any timeshare installment share must provide all disclosures required by the:
A. Interstate Land Sales Registration Division
B. Civil Rights Act of 1964
C. Title insurance policy
D. Federal Truth-in-Lending Act

Answer 17

D. Federal Truth-in-Lending Act

Question 18

On the federal level, the ____________________ agency has taken the most active regulatory role relating to
sales and marketing.
A. Department of Labor
B. Department of Agriculture
C. Federal Trade Commission
D. Department of Tourism

Answer 18

C. Federal Trade Commission

Question 19

In order for a deed to be valid, which of the following need to be included?
A. Signature of the grantee
B. Consideration
C. A grantor having legal authority to execute deed
D. Consideration and the grantor having legal authority to execute deed

Answer 19

D. Consideration and the grantor having legal authority to execute deed
The developer shall not be required to prepare and distribute a Public Offering Statement

Question 20

The developer shall not be required to prepare and distribute a Public Offering Statement if the Developer has
registered and there has been issued a Public Offering Statement or similar discloser document which is
provided to the purchasers under the following:
A. Securities and Exchange Act of 1933
B. Fair Housing Amendment of 1989
C. Federal Interstate Land Sales Full Discloser Act
D. Securities and Exchange Act of 1933 and Federal Interstate Land Sales Full Discloser Act

Answer 20

D. Securities and Exchange Act of 1933 and Federal Interstate Land Sales Full Discloser Act

Question 21

A Public Offering Statement need not be prepared if delivered in the case of:
A. A Developer sells his personal time-share unit
B. A Marketer for the Developer sells his personal unit
C. Group reservations made for fifteen (15) or more people as a single transaction between a hotel for
hotel accommodations where deposits are made and held for more than three (3) years in advance
D. None of the above

Answer 21

C. Group reservations made for fifteen (15) or more people as a single transaction between a hotel for
hotel accommodations where deposits are made and held for more than three (3) years in advance

Question 22

The Tennessee Time Share Act provides for cancellation of a contract 10 days after signing or 15 days if
purchaser has not seen the project. Who may cancel the contract?
A. The purchaser only
B. The developer only
C. The developer and the purchaser, by mutual consent
D. Any of the above

Answer 22

D. Any of the above

Question 23

The “Holder in Due Course Rule” promulgated by the Federal Trade Commission (F.T.C.) in 1975 was designed
to preserve the claims of consumers who purchased goods and services on an installment basis whose
contract are subsequently sold or assigned to a third party. This rule applies to:
A. Right-to-use timeshare programs
B. Camping membership
C. Non-fee time-share
D. All of the above

Answer 23

D. All of the above

Question 24

A time-share salesperson could be in violation of Securities Act of 1933 if they sold time-share as:
A. Rental pool
B. Resale of unit for profit
C. Whole ownership
D. Rental pool and resale of unit for profit

Answer 24

D. Rental pool and resale of unit for profit

Question 25

Under the Truth-in-Lending Act, which of the following disclosures are not required? A. Identity of creditor B. Amount financed C. Names of spouse and children D. Annual percentage rate

Answer 25

C. Names of spouse and children

Question 26

Disclosures by the Federal Truth-in-Lending Act include: A. Late charges B. Insurance C. Late charges and insurance D. None of the above

Answer 26

C. Late charges and insurance

Question 27

The purpose of the Truth-in-Lending Act and Regulation A is to: A. Disclose the cost of credit B. Protect against race discrimination C. Insure purchaser gets seven (7) full days of use D. There is no Truth-in-Lending Act

Answer 27

A. Disclose the cost of credit

Question 28

Regulation Z places limitations on what you can say about financial terms on advertising or oral sales presentations. If you use the amount of percentage of down payment or finance charge, you must include: A. Number of payments B. Period of payments C. Amount of payments D. All of the above

Answer 28

D. All of the above

Question 29

If a salesperson violates Regulation A and/or the Truth-in-Lending Act, who is held responsible? A. The developer B. The project director C. The salesperson D. The resort manager

Answer 29

C. The salesperson

Question 30

What is the Tennessee Real Estate Commission (TREC)?

Answer 30

The Judicial Body of the Real Estate industry in Tennessee

Question 31

Following discriminatory practice, you should make complaint within ________ Days

Answer 31

180

Question 32

What is a time share estate?

Answer 32

Ownership or leasehold estate in property devoted to a time-share fee, tenants in common, time span ownership, interval ownership, and a time share lease

Question 33

What is an acquisition agent?

Answer 33

. Licensed and attempts directly to encourage any person to attend a sales presentation for a time share program

Question 34

What is an exchange agent?

Answer 34

Agent for an exchange program

Question 35

What is a purchaser?

Answer 35

Anyone who buys a time share

Question 36

What is a Sales agent?

Answer 36

Person acting as a seller of any Time Share contract (only sell under specific time share developer)Anyone who sells a time share

Question 37

What is a person that sells more than 5 time shares a year that are not their own?

Answer 37

Time Share Resale Broker

Question 38

What is a unit?

Answer 38

Real property improvements in a project which is divided into Time share intervals

Question 39

What is a managing agent?

Answer 39

Person with management duties and responsibilities and obligations of a Time share program

Question 40

What are time share units?

Answer 40

Time share units can be created in any unit unless 1) expressly prohibited by project instruments or 2) local governing laws

Question 41

. What should be included on the Public Offering Statement?

Answer 41

The Public Offering Statement should contain:  Name of county where property is located  Legal description of property Identifications of time periods by letter, name and number  Identification of time share estates and how many units can be time share  Common expenses and voting rights  Any restrictions on use, occupancy, alterations or alienation of time share units  Ownership interest/maintenance provisions / replacement

Question 42

. ___________________ must be provided to each purchaser of a timeshare.

Answer 42

Public Offering Statement

Question 43

When do you have to give a Public Offering Statement? What is the exception?

Answer 43

Must be provided to each purchaser of a Time Share EXCEPTION: developer was registered and PO statement was provided to purchaser under Security and Exchange Act etc., then the owner of the property is not required to provide a Public Offering Statement when conveying to another individual

Question 44

What is an Escrow of Deposits?

Answer 44

When a purchaser gives deposit money it is placed in an account of an independent escrow co and held 100% during cancellation period

Question 45

Active licensees must have ___________________________________ coverage.

Answer 45

Errors and Omissions

Question 46

. In __________________________, the contract is voidable by the purchaser or the developer, until he has received ____________________________.

Answer 46

Mutual Rights of Cancellation Public Offering statement

Question 47

. In the Mutual Rights of Cancellation, the contract is voidable by the purchaser or developer until he has received a public Offering statement: ___ days if onsite inspection was made ___ days if no onsite inspection was made

Answer 47

10 15

Question 48

. In the Disclosure of Rescission Rights, you may cancel a contract. It must be in boldface and conspicuous type in every ________________________ and every ________________________.

Answer 48

Public Offering Statement contract for sale below signature

Question 49

Cancellation of contract is without penalty if they follow the Disclosure of Rescission rights. It must be refunded within _________ days after receipt of notice.

Answer 49

30

Question 50

True or False? Misleading advertisement is unlawful.

Answer 50

True

Question 51

When can the Commission issue a cease and desist order?

Answer 51

If a developer has not registered a timeshare program

Question 52

. Prize or gift promotional offers are only okay under what 2 circumstances?

Answer 52

A. Under sponsorship and with approval of firm with whom Licensee is affiliated and b. In writing signed by licensee with disclosure of all pertinent details.

Question 53

What cannot be paid to any person who does not hold a real estate license?

Answer 53

Cash rebates, cash gifts, and cash prizes.

Question 54

If for any reason, a guest has not received their gifts within a period of ________, they may be given the gift or the cash equivalent.

Answer 54

72 hours

Question 55

What are the powers of the real estate commission?

Answer 55

They can fine licensees, they can suspend your license, they can refer you to a court of law, their investigators can come by at any time during business hours to see any of your records, and they can close a development.

Question 56

. The real estate commission forms all the rules in accordance with the _____________________________________.

Answer 56

Tennessee Code Annotated

Question 57

What are the prerequisites for licensing?

Answer 57

Honest  18 years of age  resident of state  not criminal  not on probation

Question 58

True or False? An applicant who has passed the exam within the last 6 months is not necessarily qualified for a license.

Answer 58

True

Question 59

What is the renewal fee for the license?

Answer 59

$75

Question 60

1. The original license fee is $_______ Plus $_______________ for education and recovery fee

Answer 60

$90 $1

Question 61

You must renew your license _______ days prior to expiration

Answer 61

60

Question 62

You must make a minimum passing score of ________% on your license exam.

Answer 62

70

Question 63

If you terminate your affiliation, you have _______ days to notify the Commission.

Answer 63

10

Question 64

. Example: If you broker tells you to sell only to a particular group, and you do as you were instructed… you are guilty of _________________.

Answer 64

Discrimination

Question 65

What are the requirements for a contract and agreement to be made?

Answer 65

offer and acceptance  valid consideration  competent parties  legal purposes reality of consent

Question 66

Disclosure of everything related to a loan is considered _____________________________. It came into being when the banking industry was deregulated.

Answer 66

Truth In Lending

Question 67

8. ________________________ is a consumer credit protection law which is a part of Truth in Lending.

Answer 67

Regulation Z

Question 68

. When does your license expire?

Answer 68

2 years less 1 day from the date of issue

Question 69

. How do you get reinstated if you let your license expire?

Answer 69

The penalty is $50 per month for four months, then $100 per month up to nine months, after that you must retest

Question 70

Who is the developer? Can they be refused a license or registration?

Answer 70

The seller. Yes, if they are 1) immoral or 2) financially unstable

Question 71

What is an example of an exchange agent?

Answer 71

RCI Agent

Question 72

What can be a timeshare?

Answer 72

. Anything, unless 1) prohibited by other document or 2) local regulations

Question 73

What is a project instrument?

Answer 73

All documents associated with the timeshare

Question 74

If property is not a timeshare, what is it?

Answer 74

Rental or whole ownership

Question 75

When do we present the Public Offering Statement?

Answer 75

First thing in deeding. Must have rescission statement on it.

Question 76

What is the form by which nearly all business with the commission is conducted after licensing?

Answer 76

TREC-1

Question 77

. When one of the contract essentials is missing, the contract is _________________________________.

Answer 77

Voidable

Question 78

. How long do you have to spend as an affiliate before applying to be a broker?

Answer 78

3 years

Question 79

. How long after passing the test do you have to apply for a license?

Answer 79

6 months then re-test

Question 80

. Whose job is it to make sure that you renew your license?

Answer 80

The Licensee

Question 81

What is an example of a voidable contract?

Answer 81

Lacks Enforceability

Question 82

Who is responsible for misleading advertising?

Answer 82

Licensee placing advertising

Question 83

What is the most important broker responsibility?

Answer 83

Informing rep about escrow

Question 84

If the developer’s former partner is going bankrupt, is that developer’s license in jeopardy?

Answer 84

No

Question 85

. Before a timeshare is a timeshare, what is it?

Answer 85

Project

Question 86

Can you indicate that a prospective guest has won a prize?

Answer 86

No – unless they have actually won

Question 87

Can you misstate the value of gifts promised?

Answer 87

No

Question 88

How far ahead can you indicate a price increase?

Answer 88

60 days

Question 89

. Do you have to be a citizen to be licensed with TREC?

Answer 89

No

Question 90

What is the purpose of the TN real estate broker license act of 1973?

Answer 90

Protect the Public

Question 91

What are adverse facts?

Answer 91

Conditions or occurrences that have negative impact on the value of the real estate, significantly reduce the structural integrity, or significant health risks

Question 92

What is Corporeal?

Answer 92

The right to possess visible, tangible real property or personal property

Question 93

. What is Incorporeal?

Answer 93

. Non possessory rights, intangible rights in real property (right of way, easements, licenses)

Question 94

What Act says that the Real Estate Commission has to give you any charges in writing if your license is threatened?

Answer 94

Uniform Administrative Procedures Act

Question 95

What is the charge for any person acting as a broker, affiliate broker, time share salesperson, or acquisition agent without first obtaining a license?

Answer 95

Class B misdemeanor

Question 96

. Number of Real estate commission members?

Answer 96

9

Question 97

What is the term for members of TREC?

Answer 97

5 years

Question 98

Who appoints the members of TREC?

Answer 98

Governor

Question 99

What are the three grand divisions and how many members of TREC are from each division?

Answer 99

East, West, Middle 3

Question 100

Who approves Real Estate schools?

Answer 100

State of TN

Question 101

What is the liability of the Real Estate Education and Recovery Account?

Answer 101

Shall not exceed $15,000 per transaction or $30,000 for the duration of any licensees career

Question 102

What must be prominently displayed in the broker’s principle place of business?

Answer 102

All Licenses'

Question 103

What is a premier Resort City?

Answer 103

Must have a population of 3,000 or more and 40% or more assessed value is hotels, restaurants, tourists gift shop, etc.

Question 104

. How long a term is the Executive Director of The TN Real Estate Commission appointment?

Answer 104

4 years

Question 105

How long is the Statue of Limitations for Record Keeping for TREC transactions?

Answer 105

4 years

Question 106

What is the penalty for Involuntary Discrimination?

Answer 106

1 st - $10,000, 2nd -$25,000, 3rd -$50,000

Question 107

. What is the fee to move your license or put it in retirement?

Answer 107

$25

Question 108

What is the fee to change your address?

Answer 108

$0

Question 109

What are the essentials of a contract?

Answer 109

A) Offer and Acceptance B) legal purposes C) consideration D) Reality of consent E) Competent parties

Question 110

Who can pay a licensee commission?

Answer 110

Broker

Question 111

How are commissions determined?

Answer 111

Negotiated never fixed

Question 112

When are real estate Commissions collected?

Answer 112

At time of closing- paid to t/s agents after rescission

Question 113

What are the restrictions for creating a time share unit?

Answer 113

. It cannot be created if 1) expressly prohibited by project instruments or 2) local governing laws

Question 114

What is excluded from the Truth in Lending?

Answer 114

Property Value or Sales Commission

Question 115

How long does a Time Share Resort have to amend an incomplete or inadequate public offering statement?

Answer 115

45 Days

Question 116

7. How long is the rescission for Camping Contracts?

Answer 116

15 Days

Question 117

How many members are on the TN Human Rights Commission?

Answer 117

9

Question 118

. How are the Members of the TN Human Rights Commission divided?

Answer 118

3 from each grand division (west, middle, east)

Question 119

What is the term of a TN Human Rights Commission member?

Answer 119

6 Years

Question 120

What is the penalty for cancellation?

Answer 120

No Penalty

Question 121

How much of a deposit must be in the Independent Escrow?

Answer 121

100%

Question 122

Who is ultimately responsible for funds even after paid over to an escrow company?

Answer 122

The Broker

Question 123

What is the result if the developer cancels a contract during applicable rescission period?

Answer 123

. Purchaser must return all materials in good condition, if materials not returned developer can deduct cost of materials

Question 124

. What are the requirements to sell timeshare?

Answer 124

License and must be affiliated with firm which is affiliated with a registered T/S project

Question 125

. When did Regulation Z come into effect?

Answer 125

1969

Question 126

. Why was the Truth in Lending and Regulation Z passed?

Answer 126

To disclose all facts in a lending transaction

Question 127

What is a managing Agent?

Answer 127

Person with management duties and responsibilities and obligations of a Time Share Program

Question 128

Is Errors and Omissions Insurance required for Inactive or Retired licensees?

Answer 128

No

Question 129

How many of the Members of the TN Real Estate Commission are from the General Public?

Answer 129

2

Question 130

The Truth in Lending is part of what legislation?

Answer 130

Consumer Protection Act

Question 131

In Civil liability the commission would be defended by _____________________?

Answer 131

The AG

Question 132

What is the penalty for any person acting as a broker, affiliate broker, time share salesperson, or acquisition agent without first obtaining a license?

Answer 132

Class B misdemeanor

Question 133

Whose responsibility is it to select the chair and Vice Chair of the TREC

Answer 133

TN Real Estate Commission(TREC)

Question 134

Who has custody and charge of the Seal?

Answer 134

. The commission Executive Director

Question 135

What are the liability limits of the R.E. Education and Recovery Account?

Answer 135

$15,000/ trans or $30,000 for the duration of any licensees career