Simulated Exams MC Flashcards
1
Q
If evidence of active infestation is found, a structural pest control report is required to be provided for what type of transactions?
A
Pest control reports are only required of U.S. Department of Veterans Affairs (VA) and some Federal Housing Administration (FHA) transactions, such as where active infestation is observed.
2
Q
A purchaser of a condominium unit requests a copy of the conditions, covenants, and restrictions (CC&Rs) and bylaws. These documents need to be provided to the buyer within how many days of the buyer’s request?
A
CC&Rs need to be delivered within ten days of the buyer’s request. However, as a matter of good practice, CC&Rs and other mandated disclosures are to be delivered as soon as practicable.
3
Q
A contract has been fully executed when it has been: A. entered into B. signed, notarized and recorded C. signed and delivered D. completed and fully performed
A
D. Execution of a contract occurs when it has been completely and fully performed.
4
Q
When a salesperson’s employing broker dies, what does the salesperson needs to do?
A
If a salesperson’s employing broker dies, the salesperson may not conduct licensed activity until a new employing broker is named.
5
Q
Nathan agreed to list his property for sale with Broker Chan. In the listing agreement, Nathan specified Broker Chan is not authorized to accept a deposit towards the purchase price from the buyer. What happens if Broker Chan produces a buyer?
A. He must refused to accept any deposit.
B. He cannot present the offer as written.
C. If he accepts a deposit, he holds it as an agent of the buyer until the offer is accepted by the seller.
D. If he accepts a deposit and the buyer rescinds the offer prior to acceptance by the seller, Chan is entitled to one-half of the deposit.
A
C. Due to the lack of seller authorization, Broker Chan holds the deposit towards the purchase price as an agent of the buyer until the offer is accepted by the seller.
6
Q
The employment agreement between a broker and a salesperson needs to be retained by the broker and salesperson for how many years and beginning on what date?
A
Employment records between a broker and a salesperson need to be kept for three years. The three year time period begins to run on the termination of the employment.
7
Q
How soon must a broker deposit a client check that is made out to the broker’s trust account?
A
Three business days is the time allowed to deposit a client’s check into the broker’s trust account.
8
Q
If a lessee assigns their lease to someone else, the lessee:
A. is relieved of all responsibilities
B. may be responsible for rent payments
C. may be responsible for maintenance charges
D. may be responsible for both rent and maintenance charges
A
D. The assignment of a lease does not relieve the lessee (tenant) of responsibility they may have agreed to under the terms of a lease. Only an assumption of the lease will free the lessee of an agreed-to obligation.
9
Q
Insulation values are rated as "R". What does this represent? A. Resistance to heat flow B. Cost C. Thickness D. Materials used
A
A. Insulation is designed to avoid the transfer of heat. The higher the insulation’s R factor, the greater the resistance to heat loss.
10
Q
A violation of a condition in a homeowners’ association’s (HOA’s) conditions, covenants, and restrictions (CC&Rs) is:
A. more severe than the violation of a covenant
B. the same as the breach of a covenant
C. less sever than the violation of a covenant
D. unaffected by restrictions
A
A. The violation of a condition in a homeowners’ association’s (HOA’s) condition, covenants, and restrictions (CC&R’s) is considered more serious than a violation of a covenant. The violation of a condition may result in the loss of title whereas a covenant is simply a promise, the breaking of which will not result in the loss of title.
11
Q
Peter sold his home to Matt. Matt didn’t record the grant deed, but moved into the house. Peter then sold the same property to Isabella, who reviewed the county recorder’s records but did not look at the house. Peter gave Isabella a deed, which she recorded. Which of the following is true concerning title to the property?
A. Matt maintains title.
B. Isabella now owns the property since she recorded her deed and Matt did not.
C. Isabella has recourse against Matt for his failure to record.
D. Matt and Isabella are co-owners of the property.
A
A. Since Isabella failed to look at the property and determine where it was occupied, Matt retains title. Constructive notice requires that the buyer (Isabella) look at the property as well as the county records.
12
Q
Which of the following is false regarding the cost method of appraisal?
A. It is used in computing real estate values of public buildings.
B. It is hard to apply.
C. It is used in new residential homes.
D. It produces the lowest value results.
A
D. Of the three appraisal approaches, the cost approach will generally produce the highest value and the income approach will generally produce the lowest value. The reason for this is that while the cost approach shows the actual expense to replace the property, the income approach demonstrates the value based on the income it generates which is always less.
13
Q
A property owner lost their job. The owner’s loan payments were made for them since they had a(n):
A. Federal Housing Administration (FHA)-insured loan.
B. U.S. Department of Veterans Affairs (VA)-guaranteed loan.
C. California Housing Financing Agency (CalHFA) loan.
D. CalVET Home Loan
A
C. Under a California Housing Financing Agency (CalHFA) loan, the CalHFA will make loan payments for a borrower during a period of unemployment.
14
Q
Alienation of title refers to: A. a cloud on title B. angering another C. recording a homestead declaration D. transferring an estate
A
D. Alienation of title refers to a transfer of ownership.
15
Q
Successful marketing materials are generally held to include which four critical elements?
A
The essential elements of marketing materials are: attention, interest, desire, action (AIDA).
16
Q
A seller enters into an exclusive right-to-sell listing with an agent but does not receive a copy of the signed agreement. The seller, believing this relives them of any obligations, personally sells the property while the listing is in effect. What is the outcome?
A. The listing is invalid and the broker is liable to be discliplined.
B. The broker did nothing wrong.
C. The listing is valid and enforceable, but the broker is liable to be disciplined.
D. The broker may be disciplined only if they accept a commission.
A
C. The failure deliver a copy of any signed document is a violation of agency law that may warrant disciplinary action by the DRE. However, the signed listing contract is still valid and enforceable against the seller.
17
Q
To make a formal declaration that a statement is true without giving an oath is a(n): A. Acknowledgment B. Affirmation C. Affidavit D. Deception
A
B. Acknowledgment and affidavit are formal declarations that require an oath. An affirmation is a formal declaration that a statement is true without giving an oath.
18
Q
In a 1031 real estate exchange, "boot" does not refer to: A. Unlike property received B. Cash received C. Mortgage relief D. Like-kind consideration
A
D. Boot refers to any consideration in a 1031 exchange of an unlike kind.
19
Q
What must an appraiser do when they are hired to appraise a property owned by a corporation in which the appraiser owns a share?
A
Disclose their ownership interest in the property and accept the assignment. The choice of whether to retain the appraiser is left to the client.
20
Q
Who pays the points on a CalVet Home Loan? A. The buyer B. The seller C. The State of California D. No one pays the points
A
D. No points are charged on a CalVet loan. It is a land sales contract.
21
Q
A mortgage broker's fees are customarily paid by the: A. Lender B. Seller C. Borrower D. Underwriter
A
C. Mortgage broker’s fees are customarily, though not exclusively, paid by the borrower.
22
Q
A fictitious business name statement expires every?
A
The DBA (“doing business as”), also known as a fictitious business name needs to be renewed every five years from recordation.
23
Q
A lost right caused by an unreasonable delay in the pursuit of a claim is called: A. Dereliction B. Escheat C. Laches D. Tort
A
Laches is an unreasonable delay in making an assertion or claim, such as asserting a right, claiming a privilege, or making an application for redress, which may result in refusal or a lost right.
24
Q
A real property land sales contract does not need to show:
A. The legal description
B. How a dispute is to be resolved if there is a disagreement
C. Existing loans encumbering the property
D. The length of time required to pay off the contract
A
B. A dispute resolution provision is a good practice, though not required.
25
A 60 ft. by 45 ft. building is to be carpeted. 60% of the square footage will be covered at a cost of $6 per square yard. How much will the total cost of the carpeting be?
$1,080 (note, 3 feet = 1 yard, 9 square feet = 1 square yard)
26
What is the time frame for the federal Loan Estimate to be delivered to a borrower?
The federal Loan Estimate is to be delivered to a borrower within three business days of receipt of a consumer mortgage application.
27
The Federal Truth-in-Lending Act (TILA) defines the annual percentage rate (APR) as:
The annual percentage rate (APR) is stated as a percentage and represents the total cost of credit including the prepaid interest costs (points).
28
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A loan that allows the borrower to make monthly payments less than the interest accruing is referred to as a(n):
A. 80/20 loan
B. Straight lona
C. Hybrid loan
D. Option adjustable rate mortgage (ARM)
```
D. The option adjustable rate mortgage (ARM) results in negative amortization.
29
The lowest closing costs other than the down payment are realized using a:
A. Federal Housing Administration (FHA)-insured loan
B. U.S. Department of Veterans Affairs (VA)-guaranteed loan
C. CalVET loan
D. Conventional loan
Closing costs are charges related to the transaction that are paid through escrow. The CalVet Home Loan is a land sales contract and is therefore different from each of the other answer choices. There are no loan charges in this arrangement and thus the escrow charges are lower.
30
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A bank loans Lauren $850,000. Part of the loan agreement calls for Lauren to keep $20,000 of the loan funds on deposit with the bank for the life of the loan. This is an example of:
A. Prepaid charges
B. Yield enhancement
C. Risk management
D. Compensating balance
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D. Banks may require a compensating balance, which is leaving enough money with the bank to offset potential foreclosure costs. It can also be said to improve the yield and reduce the lender's risk.
31
Unless fraud is involved, an action against a licensee by the Real Estate Commissioner needs to be initiated within how many years of the occurrence of the alleged violation?
The Statute of Limitations allows a three-year period after the alleged violation for the Real Estate Commissioner to initiate an action against a licensee, except in the case of fraud where the limit is three years from the occurrence or one year of the discovery.
32
```
The proper order of events in a court proceeding involving real estate is:
A. judgment, attachment, execution,
B. attachment, judgment, execution
C. judgment, execution, attachment
D. execution, judgment, attachment
```
B. The order of events in a court proceeding are as follows: the attachment of the property through a lis pendens to ensure its availability if a judgment is awarded. Then after judgment has been made, it is executed.
33
Which of the following is least likely to be true regarding a property that is transferred through intestate succession?
A. The owner of the property died with no will
B. The owner of the property died with a will
C. The property will be transferred through probate court
D. The property transfer requires court approval
B. Intestate means a property owner dies with no will. Under such conditions, the transfer generally requires a court approved transfer through probate court, unless a revocable transfer on death deed has been recorded.
34
A seller entered into an oral listing agreement to sell real estate with a broker without a follow-up written verification. The payment of a commission to the broker under these circumstances is:
A. unenforceable
B. enforceable
C. a violation of the regulations of the Real Estate Commissioner
D. regarded as contrary to public policy
A. An oral listing agreement fails the conditions of Statue of Frauds which requires the listing to be in writing to be enforceable. As such, the broker's fee is unenforceable in a court action.
35
```
Most real estate sales lawsuits are head in:
A. the court of appeals
B. small claims court
C. the state supreme court
D. the state superior court
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D. The state superior court is where most real estate lawsuits are generally heard. Generally real estate cases are too large for a small claims court to settle. The court of appeals and the state supreme court will only hear those cases not settled by a lower court.
36
The physical age of a house can be determined best by inspection:
A. the architectural style
B. the county records
C. the physical condition of the property
D. the original recorded subdivision map
B. County records are the most accurate way to determine the physical age of a house. The condition of a property reflects effective age but not necessarily its physical age if it is adequately maintained.
37
For a salesperson to be given the authority to review purchase agreements and contracts by their broker, the salesperson granted supervisory powers needs to have how many years of experience?
For a salesperson to be given the authority to review documents (i.e. purchase agreements and contracts) by their broker, they need to have accumulated two full years' experience within the last five years.
38
A buyer purchased a home without being informed the house was on a septic tank system. The buyer has the right to:
A. rescind the contract
B. have the broker disbarred
C. sue the escrow company for malfeasance
D. report the seller to the DRE for failure to disclose
A. Rescission is the cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into. (Seller doesn't answer to the Real Estate Commissioner; escrow officer is not responsible for disclosures; brokers are not members of the State Bar)
39
Why are warranty deeds rarely used in California but commonly used in other states?
A warranty deed places the liability on the grantor rather than a title company. Recourse against a title company under a grant deed is more effective than trying to collect from the grantor under a warranty deed.
40
What appraisal license is required to appraise a ten unit apartment building valued at $1 million?
Anything other than a one-to-four unit residential property requires a certified general appraiser license.
41
California's energy conservation disclosure requirements require that buyers of newly built homes receive a disclosure concerning what?
The rating of the insulation installed in a property (R-value) needs to be disclosed to buyers of newly built homes.
42
```
What is not essential to the creation of an agency relationship?
A. Agreement to pay consideration
B. Competency of the principal
C. Consent of the principal
D. A fiduciary relationship
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A. Agency is not necessarily a matter of compensation. The agency relationship between a client and agent exists whether or not the transaction closes and the agent receives a fee.
43
Agency disclosure is handled in what sequential steps?
D - Disclose
E - Elect
C - Confirm
44
What is wainscoting?
Wainscoting is a traditional style of wall covering in which a chair rail divides the lower portion of the wall from the upper portion which is generally of different material.
45
A broker's receipt of any deposit towards marketing costs from a seller is documented:
A. in the broker's bank statements
B. and reported to the Department of Real Estate
C. in a subaccount ledger
D. and accounted to the seller
D. Monies advanced to the broker for future marketing costs need to be accounted to the seller.
46
```
A real estate broker wrote an offer for their buyer that was contingent on the approval of the home by the buyer's father. The buyer informed the broker their father was out of the country for an unknown duration. The broker presented the offer to the seller without disclosing that the buyer's father was out of the country. The seller accepted the offer. In this example, the broker's conduct was:
A. Unethical
B. Unlawful
C. Misleading
D. Acceptable
```
B. The misleading nature of the undisclosed factor rises to the level of unlawful conduct as it places the seller in a position in which they can neither sell the property to someone else nor complete the accepted transaction. As with puffing, it is the belief and trust bestowed by the principal that causes the act to move beyond a matter of ethics and becomes unlawful.
47
```
if homes in an area represent the highest and best use of the land and are similar in architectural design, which of the following principles of appraisal apply?
A. Anticipation
B. Contribution
C. Conformity
D. Substitution
```
C. The principle of conformity holds that the maximum value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.
48
```
In the instance of condominium ownership, which of the following may be held in fee title?
A. The outside yard
B. The public hallways
C. The individual units
D. All of the above
```
D. In a condominium complex, an individual owner owns their own condo as well as a proportional share of all common areas. They can own both in fee title.
49
```
The sudden physical loss of land due to a flood is an example of:
A. Accretion
B. Avulsion
C. Ponding
D. Reliction
```
B. Avulsion is the sudden loss (or addition) of land through natural forces. Accretion is the gradual addition to property through the accumulation of layers of soil. Reliction is the gaining of land area.
50
If a newspaper advertisement for the sale of a condominium states only the annual percentage rate (APR):
A. the number of payments needs to be included
B. the down payment amounts needs to be included
C. the total financing charges need to be included
D. no other disclosures are required
D. The annual percentage rate (APR) may stand alone as financial information without providing additional financial information in a newspaper advertisement.
51
Betsy purchases a property in a rural area that receives water from a local tributary and obtains stock in a mutual water company. Which of the following statements is incorrect?
A. The mutual water company possesses the right to take water from a local source and share the water with the landowners who live in the area.
B. When Betsy sells her property, she retains ownership of her stock.
C. The mutual water company is a corporation formed by the state of California.
D. The stock owned by Betsy is appurtenant to the land.
B. Stock in a mutual water company is appurtenant to the land. Thus, when an owner sells their property, they do not retain ownership of the stock.
52
What is a stock cooperative?
A stock cooperative refers to an apartment building that is owned by a corporation. Tenancy in an apartment unit is obtained by the purchase of shares of stock in the corporation. The owner of such shares is entitled to occupy a specific apartment within the building.
53
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The concept of smart growth is most applicable to what type of property?
A. Rural
B. Urban
C. Suburban
D. Both rural and urban property equally
```
B. Smart growth is primarily an urban planning theory which seeks to concentrate growth in dense, compact urban centers. The principal objective of smart growth is to avoid sprawl.
54
Architect Franklin is studying a document related to the construction of a neighborhood. The documentation shows how the tract of land is divided into designated lots. It also displays the boundary of each lot of the development, as well as nearby streets and recorded easements. What type of document is Franklin most likely looking at?
A. Plot plan
B. Topographic map
C. Plat map
D. Conditions, covenants, and restrictions (CC&Rs) of a community
C. A plat map shows how a tract of land is divided into lots. It also displays the size, boundary locations, nearby streets, flood zones, easements and rights of way which relate to the project. On the other hand, a plot plan shows where a building and other site improvements will be located on an individual lot. In terms of scale, a plat map relates to a whole neighborhood or development while a plot plan refers to a single property.
55
Which of the following action does not constitute constructive eviction under a lease?
A. The owner fails to make necessary repairs to the property.
B. The owner makes extensive and unnecessary changes to the building, making it no longer usable for its original purpose.
C. The owner shows the property to a new prospective tenant and enters into lease negotiations with the new tenant.
D. The owner evicts the tenant after proper service of a Three-day Notice to Quit.
D. A constructive eviction occurs when the landlord substantially interferes with the tenant's use and enjoyment of the premises during the term of the tenancy, and the tenant vacates the premises due to the interference.
56
```
Return on an investor's investment is provided for through:
A. Sinking funds
B. Depreciation
C. A reserve for replacement
D. Profit
```
B. Depreciation, as an income tax deduction, is the means by which investors have their investment returned.
57
Heather, a single mother, is able to get down payment assistance as well as a below market rate on interest on her mortgage. What type of mortgage did she receive?
A. CalVet
B. U.S. Department of Veterans Affairs (VA)-guaranteed loan
C. Federal Housing Administration (FHA)-insured loan
D. California Housing Financing Agency (CalHFA)
D. The California Housing Financing Agency (CalHFA) program offers first-time home buyers special consideration. CalVet is not a mortgage program, and U.S. Department of Veterans Affairs (VA) and Federal Housing Administration (FHA) are insured and guaranteed loans arranged through mortgage brokers and banks.
58
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A husband nominates his wife to manage his will. Thus, she will function as an:
A. executrix
B. administratrix
C. administrator
D. executor
```
A. The term for manager of a will is executor. As the wife is managing the will, the correct answer in the feminine form of this word is executrix.
59
What is reconveyance?
Reconveyance is a document executed by a trustee named in a trust deed to release the trust deed lien from title to real estate, used when the secured debt is fully repaid.
60
An exception in a grant deed:
A. is the same as a reservation in a grant deed
B. voids the deed entirely
C. excludes part of the property from the grant
D. makes certain provisions of the deed voidable
C. Grand deeds transfer title to property. When an exception is stated, a portion of the property is not transferred with the grant deed. For example, consider an easement being retained by the owner, or a specific space such as highway frontage or beach frontage to be held for other purposes.
61
What is the difference between a specific lien and a general lien?
As a specific lien, a seller carryback note will stipulate the specific property that is securing the loan. If this is an income tax lien, it will be attached to everything the person owns and be classified as a general lien.
62
If an agent is unable to find an acceptable replacement home before the close escrow after verbally promising the seller that they could, what is the seller's recourse?
The seller can recover damages against the agent in a civil lawsuit as a result of reliance on false promise.
63
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If present at the formation of a contract, which of the following does not make a contract voidable?
A. Fraud
B. Duress
C. Undue influence
D. Illegal purpose
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D. Illegal purpose makes the contract inherently void, not voidable at the discretion of the parties. Alternatively, a voidable contract is one that can be enforced by the party who has the option to perform or not.
64
If a 16-year-old emancipated minor wishes to sell real property, their broker may:
A. not accept the listing
B. accept the listing
C. accept the listing only with a guarantee from an adult
D. accept the listing, but it will be voidable
B. The broker may accept the listing of an emancipated minor. A 16-year-old emancipated minor may be treated as an adult who has the right to buy and sell real estate.
65
If a strip of land is washed away by a flood, what is this action known as? Alluvium or Avulsion.
This is known as avulsion, which is the sudden decrease or increase of the earth on a shore of an ocean or stream resulting from the action of water. On the other hand, alluvium refers to the boundary of a property that has moved due to the relocation of a river or stream.
66
```
Which of the following is not a soil condition?
A. Alkaline
B. Adobe
C. Deciduous
D. Expansive
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C. Deciduous refers to trees that lose their leaves in the winter. Alkaline, adobe, and expansive are soil conditions.
67
What is a gore?
A "gore" is a triangular piece of land.
68
A listing broker sells an office building to a syndicate of which the broker is a member without informing the seller of this interest. Before closing, the seller discovers the broker's interest and refuses to sell. What would happen in a civil suit to collect a commission?
The broker's failure to disclose their interest in the syndication allows the seller to deny the commission to the broker.
69
Which of the following is an illegal activity for a broker under agency law?
A. Accepting commissions from both the buyer and the seller.
B. Acting as an escrow.
C. Selling their own property without disclosing their license status.
D. Depositing additional personal funds into a client's trust account.
D. Depositing personal funds into a client's trust account is an example of improper commingling.
70
A lender must notify a borrower when a final/balloon payment is due how many months/days prior to the due date?
A lender must notify a borrower when a final/balloon payment is due three to five months (or 90 to 150 days) prior to the due date.
71
When the administrator of an estate sells a parcel:
A. it needs to be sold at a public auction
B. it can only be sold "as is"
C. court approval is required
D. the sale cannot legally involve a real estate broker
C. A sale from an estate involves court and will therefore require court approval.
72
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Real estate brokers are required to have written employment contracts with:
A. all clerical staff they employ
B. non-licensees they employ
C. salespersons they employ
D. all of the above
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C. Written contracts are required to properly document a broker's employment of a salesperson.
73
Without being licensed as an escrow officer, a broker may not handle escrow activities when they:
A. represent the buyer
B. represent the seller
C. act as the principal
D. are not other wise involved in a transaction
D. The broker needs to be involved in the transaction representing one of the principals or themselves in order to act as the escrow officer.
74
A buyer is obligated to disclose to the seller:
A. that the listing price is too low
B. that the seller is mistaken regarding their representations about the zoning of the property
C. both A. and B.
D. neither A. and B.
D. The buyer has no obligation to disclose facts to the seller.
75
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The maker of a negotiable instrument is able to defend against a holder in due course in the event of:
A. forgery
B. incapacity
C. both A. and B.
D. Neither A. and B.
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C. Both forgery and incapacity are a suitable defense against a holder in due course. A holder in due course is one who has taken a note, check, or bill of exchange in due course: 1. Before it was overdue; 2. In good faith and for value; and 3. Without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated.
76
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If there is no specific closing date named in the escrow instructions, escrow is to close:
A. within a reasonable period of time
B. within 30 days
C. within 60 days
D. within 90 days
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If there is no specific closing date named in the escrow instructions, escrow is to close within a reasonable period of time.
77
The closing statements the buyer and seller get from escrow:
A. are always different from one another
B. are acknowledge before a notary public
C. are always identical to one another
D. are approved by the title company
A. The buyer and seller closing statements will always be different.
78
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Department of Housing and Urban Development (HUD) advertising guidelines are violated by which of these phrases:
A. "seeking a female roommate"
B. "good neighborhood"
C. "retiree's dream home"
D. "great location"
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C. The suggestion that a property is more suitable to one group of people -- retirees -- is viewed as discrimination. Alternatively, it is acceptable to have requirements for a roommate and state an opinion such as a "good neighborhood."
79
A subdivider needs to give a copy of the Real Estate Commissioner's public report to:
A. anyone who is likely purchase one or more lots.
B. anyone upon request.
C. only bona fide purchasers who have signed a purchase contract
D. the salespeople they employ
B. A public report issued by the Real Estate Commissioner has to be made available to anyone who requests it. The report contains all material facts regarding the subdivision, including financial matters and items of record such as CC&Rs.
80
Within how many days of execution is a landlord required to provide the tenant wit ha copy of the written lease?
A landlord is required to provide a signed copy of the lease to the tenant within 15 calendar days of its execution by the tenant.
81
Blake sold his home to Frank but remained in possession and negotiated a two-year leaseback. Frank did not record the deed. During this two-year period, Blake sold the home to Sam who then recorded the deed. Who owns the home?
Sam is the owner since he recorded the deed. Constructive notice can be either the recorded deed or possession. Since Blake retained possession, Sam had no way of knowing that Frank previously purchased the house. This makes Sam a bona fide buyer.
82
“Agency” includes relationships between licensed sales agents and their brokers and:
A. brokers and members of the public
B. finders and their brokers or principals
C. escrow officers
D. both A. and B.
D. Agency is the relationship between a licensed agent and principals as well as other brokers and finders.
83
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A seller is required to deliver earthquake safety guides to buyers of most masonry buildings with wood frame floors or roofs built prior to:
A. 2000
B. 1990
C. 1980
D. 1975
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D. A seller is required to deliver earthquake safety guides to buyers of most masonry buildings with wood frame floors or roofs built prior to 1975; if not this form of roof, then the disclosure needs to be delivered to buyers of all other homes built prior to 1960.
84
What is the minimum number of years a building may be depreciated for income tax purposes? Note this differs for residential vs. commercial.
The minimum number of years you may depreciate rental investment property depends on the type of property underlying the investment. While the period is 27.5 years in the context of residential property, the minimum number is 39 years for commercial property.
85
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Who generally benefits the most from an assignment of rent clause contained in a trust deed?
A. The trustor
B. The trustee
C. The beneficiary
D. The purchaser
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C. The “assignment of rents clause” benefits the beneficiary (lender) the most as it allows the lender to receive the rents tendered by tenants when the borrower is in default.
86
What does an elevation sheet show?
An elevation sheet is a drawing that depicts the front and side views of homes. It is used in advertisements, brochures, and other points of sale renderings.
87
Broker Chuck listed a duplex for a sale from a corporate owner. After entering into the listing, the officers of the corporation die in a plane crash. What happens to the listing?
A. It is suspended until new officers acknowledge the agreement.
B. It is unaffected.
C. It is automatically terminated.
D. It converts to a debt obligation against the corporation.
B. The employment contract is unaffected by the death of the corporate officers as the client is the corporation. new officers will be named who need to honor the terms of the listing.
88
```
A broker has an exclusive agency listing on a property. If the owner sells the property, the broker is entitled to:
A. A full commission
B. Half the commission
C. An amount agreed to with seller
D. Nothing
```
D. Nothing. Under an exclusive agency listing, the seller is not required to pay any commission to the broker when the seller personally sells the property. Payment of a fee would be required under a seller's exclusive right-to-sell.
89
If a deed provides for an easement granting ingress and egress over a neighboring property but fails to locate the easement, the:
A. deed is void
B. deed is voidable
C. servient tenement holder can specific a particular area so long as it is reasonable
D. dominant tenement holder can choose any area for access
C. If a deed provides for an easement granting ingress and egress over a neighboring property but fails to locate the easement, the servient tenement holder (owner of the neighboring property burdened by the easement) can specify a particular area so long as it is reasonable.
90
```
When one broker authorizes another broker to act as their subagent on the approval of the seller, the subagent is primarily responsible to the:
A. Seller
B. Original broker
C. Department of Real Estate (DRE)
D. Buyer's broker
```
A. Seller
91
```
The placement of a house upon the lot is referred to as its:
A. Preference
B. Zoning classification
C. Orientation
D. Location
```
C. Orientation
92
The term "Realtor" denotes:
A. Authorization to conduct real estate transactions
B. Authorization to provide real estate settlement services
C. A higher legal standard of ethical conduct
D. Membership in a real estate trade organization
D. The term "Realtor" is a trademarked term which denotes membership to a real estate trade union.
93
An "as is" clause in a general purchase contract:
A. applies only to matters of record
B. applies only to things that have been properly disclosed or are visible and observable conditions
C. is valid under the caveat emptor ("Let the buyer beware") theory
D. invalidates the whole contract
B. An "as-is" clause in a residential purchase agreement tends to create problems and questions. An "as-is" clause in a purchase agreement only applies to material facts that have been disclosed or which are visually observable.
94
When a seller's agent takes a listing which does not authorize the listing broker to accept a deposit from the buyer, what should the broker advise their agent?
When the listing does not authorize receipt of a deposit, an agent can still accept a deposit but only as an agent of the buyer.
95
```
When an opinion is coupled with advice expressing no further need for the buyer to investigate and confirm the prediction, the opinion is elevated to the level of a:
A. guarantee
B. distinct possibility
C. misnomer
D. fact
```
A. Guarantee
96
```
The cost of a capital improvement and its effect on market value are:
A. always the same
B. never the same
C. generally the same
D. rarely the same
```
D. The cost of an improvement and its effect on value are rarely the same. The contribution of the improvement is usually less than the cost.
97
```
A listing broker needs to present all offers until:
A. an offer is accepted
B. escrow is opened
C. all contingencies are removed
D. escrow is closed
```
D. Unless otherwise instructed, all offers need to be presented until the close of escrow, the point at which the sale becomes final.
98
```
A lease is classified as a(n):
A. freehold estate
B. estate at sufferance
C. personal property interest
D. remainder in interest
```
C. A lease is a personal property interest. A lease can also be called a less-than-freehold estate, as a freehold estate constitutes ownership. An estate at sufferance is not a lease since the occupant has no right to occupy the property. A remainder in interest is future interest that will become a freehold estate once title has been transferred.
99
The license of a salesperson working at a branch office is held at:
A. Department of Real Estate (DRE) headquarters in Sacramento
B. broker's primary place of business
C. branch office
D. salesperson's personal residence
B. A salesperson's license hangs at their supervising broker's primary place of business, never a branch office.
100
An owner of an investment firm has a securities dealer license, but not a real estate broker license. The owner advertises and sells real estate for their clients. Since these transactions require a real estate broker license, who will prosecute the owner for violation the real estate law?
A. The U.S. Attorney General
B. The California Attorney General
C. The California Real Estate Commissioner
D. The local District Attorney General
D. The local District Attorney is the authority that will prosecute the owner in this case. This is not a federal crime subject to action by the U.S. Attorney General , and the DRE can only discipline licensees.
101
A seller sues their broker for making a false promise when they entered into an oral listing agreement. What is the likely outcome?
A. The Statutes of Frauds protects against the agent since the listing contract wasn't in writing.
B. The seller is at fault for allowing the agent to work without a written contract.
C. Oral agreements cannot demonstrate evidence of a false promise.
D. The agent is liable for any damages as a result of the false promise regardless of the Statute of Frauds since the agent breached their agency duty to the seller.
D. A false promise imposes liability on a broker whether the promise was made in writing or orally.
102
```
Property can be transferred without consideration with a gift deed. however, the transfer by a gift deed may be voided by:
A. the grantee
B. a creditor of the grantor
C. a debtor of the grantor
D. the trustee
```
B. Creditors of a grantor may void a transfer by a gift deed. The grantor cannot gift the property to another in order to avoid debt held by a creditor.
103
The least protection from a defect in a property's title is provided by a(n):
A. standard policy of title insurance
B. American Land Title Association (ALTA) title policy
C. guarantee of title
D. abstract of title
D. An abstract of title is simply a report showing the chain of title issued by the title company after a search of title records. It does not provide protection from title defects, and a disclaimer in the report indemnifies the company against any missing or inaccurate records. A standard policy of title insurance and American Land Title Association title policy are both insurance policies. A guarantee of title is a formal guarantee by the title company.
104
```
A grant deed with an "X" is:
A. Valid
B. Voidable
C. Unenforceable
D. Void
```
A. A grant deed with an "X" is valid. However, it will require proof that the "X" was an intended signature by the grantor.
105
In a carryback transaction, the seller as the beneficiary:
A. lends the money to the trustee
B. delivers a promissory note to the trustor
C. signs the trust deed and delivers it to the trustee
D. receives the promissory note and trust deed
In a carryback transaction, the seller as the beneficiary, receives the promissory note and trust deed, much like a lender. Both documents are signed by the buyer/borrower.
106
A dragnet clause in a mortgage covers:
A. future court actions that might be anticipated
B. any additional parties added in the future to the loan
C. whatever future advances may be made on a loan
D. all activities of the heirs and assignees of the borrower
D. A “dragnet clause” in a mortgage reflects any future advances made to or on behalf of the borrower.
107
```
Two similar locations are leased on a long term basis, one for a government building and the other for a used car lot. Using the capitalization approach to appraise the properties, the government building would demand a ________ capitalization rate (cap rate).
A. Lower
B. Similar
C. Higher
D. Cannot be determined
```
A. A government building would demand a lower capitalization rate (cap rate) than a used car lot. Cap rates move in the same direction as risk and create a change of value opposite to their direction. Thus, a higher risk, such as in the case of a used car lot, will require a greater return on investment (i.e. higher cap rate) and a lower value.
108
The Energy Efficient Ratio (EER) rating concerns:
A. air conditioning and heating units
B. environmental conservation measures
C. electrical energy usage
D. utility efficiency of n income-producing property
A. The Energy Efficient Ratio (EER) rating is listed on newer heating and air conditioning units. Superior ratings earn the product an energy star label.
109
```
A sewer district’s right to run pipes through a homeowner’s property is an example of a(n):
A. servient tenement
B. personal loss
C. easement in gross
D. riparian right
```
C. Utility easements are classified as easements in gross. An easement in gross is an easement which belongs to an individual and is not appurtenant to or transferred with a property.
110
In order to obtain an easement by prescription, one must:
A. use the property
B. live on the property
C. physically confront the owner of the property
D. own the property
A. A prescriptive easement requires use of a property for a period in excess of 5 years without a claim of ownership. One does not need to live on a property or physically confront the owner to acquire a prescriptive easement.
111
If an appraiser finds the interior walls and the inside of the exterior walls have a similar temperature, this indicates:
A. the doors and windows are well sealed
B. the insulation is sufficient
C. more ventilation is needed on the property
D. the heater is sufficient
B. If the interior walls and the inside of the exterior walls have a similar temperature, this indicates the insulation is sufficient.
112
```
What type of notice is given by recording a deed?
A. Mutual notice
B. Separate notice
C. Constructive notice
D. Actual notice
```
C. Constructive notice is a matter of recording a document or something that is visually obvious. Actual notice requires personal delivery by mail or in person.
113
The Real Estate Settlement Procedures Act (RESPA) is administered and enforced by the:
A. Department of Real Estate (DRE)
B. Department of Housing and Urban Development (HUD)
C. Department of Business Oversight (DBO)
D. Consumer Financial Protection Bureau (CFPB)
D. The Real Estate Settlement Procedures Act (RESPA) mandates lenders disclose all mortgage related charges on mortgages used to purchase, refinance, or improve on-to-four unit residential properties. RESPA is currently administered by the Consumer Financial Protection Bureau (CFPB), though was previously overseen by the Department of Housing and Urban Development (HUD).
114
```
Who is primarily responsible for disclosing to a buyer the existence of a Mello Roos tax assessment on a parcel of real property?
A. The escrow officer
B. The listing agent
C. The selling agent
D. The seller
```
D. All property disclosures are ultimately the responsibility of the seller.
115
The Alquist-Priolo Special Study Zone earthquake disclosure requirement applies only to:
A. specific types of structures such as residential properties located in known earthquake fault zones
B. every structure in known earthquake fault zones
C. specific building types in all counties in California
D. unimproved properties in high risk areas
A. Since most disclosures refer to one-to-four unit residential properties and it is only necessary in known earthquake zones, this answer is most appropriate.
116
A land sales contract clause which prohibits any prepayment at any time after the year of the sale:
A. is not enforceable
B. voids the contract
C. needs to be complied with by the vendee
D. is voidable at the discretion of the vendee after five years
A. Prohibiting prepayment under a land sales contract is unenforceable after the first 12 months following the sale. With both land sales contracts and trust deed loans, there are limits on how long a lender can penalize a borrower for prepayment of the loan.
117
The owner of a residential property found guilty of discrimination in violation of the Rumford Act may be required to:
A. sell or lease the property to the aggrieved person
B. find a similar property to rent to the aggrieved person if one is available
C. pay a civil penalty of $10,000
D. Any of the above
D. The California Rumford Act may carry potential penalties for discrimination violations, including being forced to sell or lease the property to the aggrieved person, locating a similar property for them, or civil penalties up to $10,000.
118
```
Which of the following is not considered to be a contract?
A. A net listing
B. A mortgage
C. A deed
D. A land sales contract
```
C. A deed is a written instrument which, when signed and delivered (executed), conveys title to real property from one person (grantor) o another (grantee). Listings are employment contracts. Mortgages are loan contracts. A land sales contract is a contract by name.
119
The adjusted cost basis of a personal residence is the property's:
A. original cost
B. original cost minus improvements plus interest expense
C. original cost plus improvements minus depreciation
D. original cost plus improvements
D. The adjusted cost basis of a personal residence is a number developed for income tax purposes. It requires adding the cost of any improvements made to the property to the original cost paid. There is no depreciation allowance for a personal residence.
120
```
Consider a loan broker who negotiates a $4,000 hard money junior trust deed that is due in three years. The maximum commission the broker can charge is:
A. $400
B. $200
C. $800
D. $600
```
D. $600. Hard money loan is a real estate loan made by private lenders funded in cash. Commission for hard money lenders is set by law within the Business and Professions Code. The total fee is limited based on the length of the loan term, whether it is a first trust deed or junior mortgage, and the amount of the loan. On a junior trust deed and note, the maximum commission for a term less than two years is 5%; for a term of two years but less than three years, the maximum is 10%; and for a term three years or greater, the maximum is 15%.
121
On the transfer of real property, a previous grant of an unlocated easement is:
A. valid
B. void upon transfer
C. voidable by the servient tenement if not used for five years
D. voidable by the servient tenement since a deed cannot be the instrument used to create an easement
A. An easement created by a deed cannot be voided by nonuse. Also note that a servient tenement has no authority to void an easement.
122
Which of the following is most likely to require an appraisal?
A. Any sale of real estate
B. A new subdivision
C. A U.S. Department of Veterans Affairs (VA)-guaranteed loan
D. A land sales contract
C. Of the choices offered, only a U.S. Department of Veterans Administration (VA) guaranteed loan is required to have an appraisal to justify the agreed-to sales price/loan amount.
123
Under California law, a trust deed:
A. transfers equitable title to the vendee
B. names only two parties to the agreement
C. automatically records the release of the property when the loan has been paid off
D. creates an encumbrance on the property described in the deed of trust
D. Trust deeds represent security for a note and do not transfer equitable title. There are three parties to a trust deed: trustor (borrower), beneficiary (lender), and trustee (holder of naked title). There is no automatic recording of a release of title.
124
The primary purpose of any deed is to:
A. create constructive notice of a transfer or alienation of title
B. produce a recorded document
C. identify the property involved in a real property transfer
D. give evidence of the change in title or transfer of an interest in real property
D. The primary purpose of a deed is to give evidence of a change in title. In order for the deed to provide constructive notice, it needs to be recorded.
125
```
A residential buyer needs to be notified about the proximity of a military establishment that contains explosives if the establishment is within ______ mile(s) of the property.
A. one
B. two
C. five
D. eight
```
The existence of a military installation needs to be disclosed if it is located within 1 mile of the subject property.
126
A broker presents an offer to purchase real property made by a minority buyer. The seller rejects the offer due to the buyer's race. Here, the broker may:
A. explain to the seller that their refusal is a violation of the Fair Housing Act of 1968, and that they are open to civil and criminal penalties.
B. advise the buyer of their right to file a complaint with the Department of Housing and Urban Development (HUD)
C. sue the seller for their commission
D. All of the above
D. If a seller rejects a submitted offer due to the buyer's race, the broker owes their client seller a fiduciary duty to advise them of the risks inherent in violating fair housing laws. Further, the broker owes a general duty to the buyer to advise them of their rights under the law. Finally, the broker may sue the seller for the earned commission having brought a valid offer to the seller.
127
```
An easement that does not specify a location is:
A. voidable
B. unenforceable
C. valid
D. void
```
C. An easement does not need to specify a location in order to be valid. For example, an easement in gross held by a utility company does not specify a location.
128
```
Which of the following type of rental income would be the highest?
A. Scheduled gross income
B. Gross operating income
C. Net operating income (NOI)
D. Net spendable income
```
A. Scheduled gross income is the amount that is charged to the tenants. Gross operating income is a lesser amount as it is the scheduled gross income minus vacancies and delinquent payments. Net spendable income is developed by subtracting both the mortgage payment and income taxes from the net operating income.
129
The gross rent multiplier (GRM) is determined by:
A. dividing the sales price by the gross scheduled rent
B. subtracting the vacancy factor from the scheduled rent
C. dividing the price by the number of available rental units
D. dividing sales price by net spendable income
A. The gross rent multiplier (GRM) is determined by dividing the property's sales price by the gross scheduled rent. When the GRM is multiplied by the gross income of a property, it produces an estimate of the property's value.
130
What does "discounting" refer to in the context of real estate finance?
A. The process of calculating the annual percentage rate (APR) of a given loan
B. Liquidating real property that secures a debt in a default
C. The loan proceeds disbursed to the lender when reselling a note and trust deed
D. Subordinating a debt
C. A mortgage can be resold to an investor after it is originated. In order to convert a future income stream into cash, the lender needs to "discount" its value.
131
```
A(n) reconveys the real estate to the landlord in exchange for the cancellation of the lease agreement:
A. notice of termination
B. notice to vacate
C. notice of change in rental terms
D. surrender
```
D. A surrender is a mutual cancellation of a lease agreement by the landlord and the tenant, written or by their conduct, when the tenant vacates the leased premises. A notice to vacate and a notice of termination are notices the lessor would post to begin the process of terminating the lease.
132
Which of the following documents provides the most protection to a property owner in default?
A. A first trust deed
B. A mortgage
C. A land sales conract
D. A fixed-term lease with an option to buy
B. A mortgage requires a judicial foreclosure and thus offers the greatest protection as owner is provided a longer period of time to cure the default. A trust deed is generally foreclosed through a nonjudicial trustee's sale, which can occur more quickly and provide little opportunity for the owner to cure default. A land sales contract is a quiet title court process, and a default on a fixed-term lease with an option to buy is remedied with an unlawful detainer action, both of which are relatively short and simple legal processes.
133
When a lease is for a period greater than one year, the contract does not require:
A. signatures of both the owner and tenant
B. that the lease agreement be in writing
C. a specific termination date
D. a description of the rental and its location
A. A lease does not require the signature of the owner, only a tenant. Regardless of the length of time, a lease needs to have a termination date (unlike a rental agreement) and a description of the property. Further, the lease needs to be in writing to be enforceable if it is for a term greater than one year.
134
A real estate salesperson tells their buyer, "If you buy this property then sell it in three years, you will double your money." Three years after the purchase, the value of the property has not increased. in this situation, the:
A. buyer has no recourse
B. salesperson is guilty of puffing which is not a crime
C. salesperson's broker is subject to discipline
D. salesperson and their broker may be found guilty of fraud
A salesperson and their broker may be found guilty of fraud if they make a prediction about the future represented as fact, which later turns out to be incorrect. If the buyer accepted the salesperson’s statement as fact, there are legal consequences. The definitive representation that the property’s value will double in three years rises beyond puffing.
135
Frank leased a property to Chester. Chester gave Mark an easement over the property. At the end of the lease term:
A. Frank regains the property subject to the rights of Mark
B. the easement may not extend beyond the term of Chester's lease
C. Mark has an equitable right to use the land
D. Frank regains control of the property since a tenant cannot grant an easement, only an owner
B. If an easement is given by a lessee, it ends when the lease is terminated.
136
When a real estate broker fails to address all lawful instructions given by their principal, the broker could:
A. face criminal charges
B. have their driver's license suspended
C. be liable for the principal's financial losses resulting from their actions
D. be compelled to retake the state licensing exam
C. If a broker fails to abide by the lawful instruction of the principal they represent, they may be liable for the principal’s financial loss. The failure to follow instructions would rarely rise to a level warranting criminal charges.
137
Brokerage events triggering a listing agent's preparation of a seller's net sheet includes:
A. entering into a seller's listing agreement
B. submitting a buyer's purchase agreement to a seller
C. Both A. and B.
D. Neither A. nor B.
C. The seller's net sheet is a document prepared by a seller's agent to disclose the financial consequences of a sale when setting the listing price and on acceptance of a buyer's price in a purchase offer. A seller may request this at the time of signing a listing or whenever an offer is presented.
138
When is the usefulness of the appraisal cost the lease appropriate?
A. When appraising homes in a new subdivision
B. When appraising homes of an old structure with many functional deficiencies
C. When appraising raw land intended for future construction
D. When appraising a mixed use property
B. The cost approach to appraisal is of least utility when appraising an old structure with numerous functional deficiencies. This is the result of the difficulty in accurately applying accrued depreciation for both age and functional issues. This is of little concern when appraising newer properties of any kind or estimating future costs for property development.
139
A negative declaration issued for an environmental impact report (EIR):
A. indicates no negative influence of the development on the surrounding environment
B. shows whether the developer had a previous record of poorly designed subdivisions
C. is a positive statement made by the government in favor of the developer
D. is typically issued by a governmental authority in favor of the developer
A. A negative declaration issued for an environmental impact report (EIR) indicates there are no negative effects of a proposed development to the environment. The EIR makes no historical or future judgment about the developer. it is issued after the final environmental study is complete.
140
```
When two brokers make a verbal agreement so split a commission, the agreement is:
A. void
B. voidable
C. unenforceable
D. enforceable
```
D. Oral agreements between brokers to split commissions are valid and enforceable.
141
```
An example of involuntary alienation is a(n):
A. zoning restriction
B. easement by reservation
C. eminent domain action
D. escheat
```
C. Eminent domain is the power of the state to seize private property, and thus is an involuntary transfer. Escheat is the reverting of property to the state, which is voluntary as no other provision for transfer was made.
142
```
The appraisal method that estimates the cost of all labor and materials in construction is the:
A. comparison method
B. unit-in-place method
C. quantity survey method
D. capitalization method
```
C. The quantity survey method used in the cost approach of property appraisal totals the cost of all materials and labor.
143
```
What is the maximum fee a Real Estate Settlement Procedures Act (RESPA)-controlled lender may charge to a borrower for the preparation of mandatory disclosures?
A. 0.5% of loan amount
B. $25.00
C. $100.00 for jumbo loans
D. Nothing
```
D. Mandatory disclosures are just that - mandatory. Thus, a lender cannot charge a borrower a separate fee for the preparation of these required mortgage forms.
144
Who pays mortgage insurance premiums (MIPs)?
A. The buyer under a U.S. Department of Veterans Administration (VA)-guaranteed loan.
B. The buyer under a Fannie Mae, Ginnie Mae or Freddie Mac approved loan
C. The buyer under a Federal Housing Administration (FHA)-insured loan
D. The buyer under a private mortgage insurer
C. Mortgage insurance premiums (MIPs) refer to default insurance premiums required on a Federal Housing Administration (FHA)-insured mortgage, paid both upfront and annually. The U.S. Department of Veterans Affairs (VA) loans are guaranteed. The Federal National Mortgage Association (Fannie Mae) loans require the payment of private mortgage insurance (PMI).
145
```
The Federal Housing Administration (FHA) loan fee can be paid by the:
A. Escrow officer
B. seller
C. buyer
D. Either B. or C.
```
D. The Federal Housing Administration (FHA) loan fee can be paid by either the buyer or the seller. Market conditions and the agreement of the principals will dictate who pays.
146
```
The relationship between an escrow officer and the parties to a real estate transaction is usually described as which of the following:
A. An employee
B. A facilitator
C. A mediator
D. A neutral agent
```
D. The escrow officer is a neutral agent to the two principals during escrow.
147
```
Which of the following positions requires the most advanced knowledge of accounting procedures?
A. An escrow officer
B. A real estate salesperson
C. A real estate broker
D. An appraiser
```
A. Escrow officers are most similar to accountants in the nature of their assignment in a transaction. Appraisal work is more analytical and brokerage practice is more concerned with selling, people, and relationships.
148
```
The Escrow Law is contained in the:
A. Real Estate Law
B. Business and Professions Code
C. Civil Code
D. California Financial Code
```
D. Escrow is guided by the California Financial Code. It is often an ancillary service of banks and title insurance companies.
149
The U.S. Attorney General acts to enforce federal open housing laws whenever:
A. state regulations are not properly upheld by state officials
B. a conspiracy exists to undermine federal open housing laws
C. a complaint filed involves more than four units
D. a complaint filed involves less than four units
B. The U.S. Attorney General becomes involved in enforcing Federal Open Housing Laws when a conspiracy exists to undermine the laws.
150
The effective date for a residential purchase agreement is the date:
A. the deposit was given to the seller by the buyer
B. the contract was written
C. the buyer signed the contract
D. the seller's acceptance of the offer was properly communicated to the buyer
D. When an offer is made and the seller accepts the offer, the effective date of the purchase agreement contract will be when the seller's acceptance has been communicated to the buyer.
151
Which of the following is not true in a sale-leaseback transaction?
A. The seller stays in physical possession of the property
B. The seller guarantees the buyer's performance of the loan
C. The seller receives a capital contribution for their business
D. The seller becomes a tenant in the property
B. In a sale-leaseback transaction, the seller does not guarantee the buyer's performance of a loan.
152
When a buyer purchases property without being informed it is on a septic system, the buyer may:
A. report the seller to the Department of Real Estate (DRE)
B. rescind the contract
C. demand the sewer be connected to the property
D. file a complaint with the local utilities
B. When a buyer purchases a property without the disclosure that it is on a septic system, the buyer may rescind the contract.
153
A property management agreement does not authorize a property manager to:
A. locate tenants
B. enter into rental and lease agreements
C. collect rents
D. oversee costly repair projects
D. Property managers who oversee maintenance projects costing $500 or more are subject to contractor licensing requirements issued by the California Department of Consumer Affairs Contractors State Licensing Board (CSLB).
154
Consider a seller who carries back a note secured by a deed of trust. If a loan broker takes on the duty of collection, state law requires them to:
A. deliver a broker's loan statement to the note holder
B. post a bond
C. have written authorization from the holder of the note to service the loan
D. deposit the funds in a separate trust account
C. A loan broker is a licensed agent. They can service a private note so long as they have written authority from the holder of the note to do so.
155
```
A(n) __________ is a statement made by a broker concerning a possible condition which as not yet occurred but based on readily available facts.
A. fact
B. opinion
C. guarantee
D. assurance
```
B. An opinion is a statement by an agent concerning an event or condition which has not yet occurred based on readily available facts. When a statement is worded as an assurance that the events and conditions will occur, the statement reaches the level of a guarantee.
156
Rental housing loans can be insured or guaranteed through:
A. the Federal Housing Administration (CalFHA)
B. CalVET
C. California Housing Finance Agency (CalHFA)
D. the American Land Title Association
A. Only Federal Housing Administration (FHA) will insure rental property loans. CalVET and CalHFA properties require owner occupancy.
157
```
The creation of agency requires:
A. express agreement
B. consideration
C. subornation
D. None of the above
```
D. None of these conditions are required to create an agency relationship.
158
```
Which of the following is not an encumbrance?
A. A lease
B. A homestead
C. A mechanic's lien
D. A mortgage
```
B. A homestead declaration protects a portion of the owner's equity in the property from seizure from creditors. An encumbrance is something that reduces property owner's rights or equity.
159
Which of the following is not a true statement about easements?
A. An easement is owned by the dominant tenement
B. An easement in gross is a right in another's land created for the benefit of adjacent land
C. An owner cannot have an easement over their own land
D. An easement limits the use of the land by the owner
B. An easement in gross is not for the benefit of an adjacent property owner, but frequently for a utility company.
160
```
The parallel wooden beams used to support ceiling loads and floors in home construction are called:
A. studs
B. rafters
C. joists
D. headers
```
C. Joists are horizontal wooden beams which support floors and ceilings. Headers are above windows and doors. Studs are vertical elements. Rafters are diagonal beams reaching to the roof beam.
161
```
An appurtenant easement granted to a neighboring property owner fails to state the term of the easement. How long does the easement last?
A. Perpetuity
B. 99 years
C. The lifetime of the dominant tenement
D. 55 years
```
A. When no termination date or length of time is stated, an easement exists in perpetuity.
162
It is essential that every party to a real estate transaction receives a full and complete disclosure of who is representing whom because of:
A. the federal law of agency
B. the mandate from private real estate associations
C. the doctrine of imputed notice
D. the good neighbor principle
C. Imputed notice requires full and complete disclosure of who is representing whom in a transaction. Agency is not federal law.
163
The first thing an appraiser does when appraising vacant land is determine:
A. the fertility of the soil under the property
B. zoning laws which affect the use of the property
C. comparable sales prices of other vacant land
D. the highest and best use of the land
D. The first thing an appraiser does when appraising vacant land is determine the highest and best use of the subject property. This determination is needed before the appraiser can determine what properties are comparable.
164
```
Which of the following is not required when a trust deed is paid in full?
A. The trustor's signature
B. The trustee's signature
C. A deed of reconveyance
D. Both A. and B.
```
A. There is no need for a signature from the borrower (trustor) when the loan is paid in full.
165
```
The inside of a building is 60 ft. by 90 ft. and the walls on each side are 6 inches thick. What is the external total square footage?
A. 5,400 sq. ft.
B. 5,551 sq. ft.
A. 4,951 sq. ft.
A. 4,800 sq. ft.
```
B. Since the walls are 6" thick, the outside measurement is 61' x 91' = 5,551 sq. ft.
166
```
Under the Statute of Limitations, a buyer needs to bring a lawsuit for breach of written contract against a seller within:
A. 6 months
B. 3 years
C. 4 years
D. 5 years
```
C. The Statute of Limitations allows a buyer 4 years to bring suit for a breach of written contract against the seller.
167
```
A seller accepts a written offer to purchase their property. Later, the seller refuses to perform to complete the transaction. Under the Statute of Limitations, the buyer needs to file a civil action due to the seller's breach of a written contract within:
A. one year from the seller's breach
B. one year from when the buyer signs
C. four years from the seller's breach
D. four years from when the buyer signs
```
C. The Statute of Limitations allows a buyer 4 years to bring suit for a breach of written contract against the seller.
168
Broker Francis shows multiple houses he is listing to Buyer Marc and Sally Taylor, a married couple. The buyers do not like any of the properties. When Buyer Marc is away, Broker Francis shows a different house to Buyer Sally individually. Buyer Sally likes the property and submits an offer to the seller with a deposit. Who is the purchase offer submitted from?
A. Sally Taylor
B. Marc and Sally Taylor
C. Marc Taylor himself as head of household
D. None of the above as the offer is invalid since a married person cannot make an offer individually
A. When making an offer on a home, if the wife is only available to sign the offer, it is made in her name rather than both husband and wife. However, if the offer is accepted, Marc can be added to the title during escrow. Ordinarily, property purchase during marriage is treated as community property.
169
```
A licensee who designates how title is vested without any discussion with their buyer while filling out the purchase agreement may be guilty of:
A. giving legal advice
B. giving tax advice
C. potential discrimination violations
D. All of the above
```
D. The method used to vest title to a property has legal and tax consequences. The act of deciding for the buyer may be construed as being discriminatory as well.
170
```
Condominium ownership is least applicable to:
A. industrial properties
B. residential properties
C. commercial properties
D. properties built prior to 1978
```
D. Condominium is a form of ownership, not a building style or purpose. It has no relation to when a property was built.
171
Which of the following is not required for obtaining an easement by prescription:
A. Payment of taxes and assessments for a period of five years
B. A confrontation with the owner
C. Open and notorious use which is continuous for five years
D. Both A. and B.
D. Payment of taxes and assessments are required only in the instance of adverse possession, but are not required for obtaining an easement by prescription. Confronting the owner is never required of either adverse possession or an easement by prescription. Open and notorious use of the easement for 5 years is all that is required to establish a prescriptive easement.
172
An easement over real property can be terminated by:
A. a deed issued from the servient tenement
B. revocation by the servient tenement
C. a release signed by the servient temement
D. a release signed by the dominant temement
D. An easement is terminated on the release of the dominant tenement (the party that benefits from the easement).
173
In the cost approach to appraisal, the phrase "reproduction cost" differs from "replacement cost." "Reproduction cost" measures the:
A. original cost to replace the building
B. present value of the property based on its economic utility
C. present cost to build an exact replica of the property
D. original cost to build the property
C. Reproduction cost measures the present cost to build an exact replica of the property. Replacement cost is the present cost to build a structure with similar utility using modern methods and materials.
174
```
To estimate the value of rental property using the gross rent multiplier (GRM) method, an investor first determined that the monthly gross income generated by a property is $7,500. They then applied the GRM of 15. The estimated value of the property is most nearly:
A. $1,125,000
B. $112,500
C. $1,350,000
D. $135,000
```
C. The calculation is $7,500 (rent) x 12 (months) = $90,000 (annual rent) x 15 (GRM) = $1,350,000 (value). Note the rent given was monthly, but the multiplier given was annual. A helpful tip: a higher GRM (i.e. 150) in a question denotes use of the monthly rent for calculations, while a lower GRM (i.e. 15) indicates annual rent will be used.
175
```
The appraisal method used most often to value raw land is the:
A. land development method
B. land residual method
C. subdivision method
D. comparative method
```
D. The comparative method is the most common appraisal method used for valuing raw land or sites. Land residual method is only used when the property is improved by a building.
176
A buyer purchasing a property with Federal Housing Administration (FHA)-insured financing normally does each of the following except:
A. apply to the mortgage lender
B. apply directly through the FHA
C. choose a Federal Housing Administration (FHA)-approved property
D. pay mortgage insurance premiums (MIPs)
B. Homebuyers do not apply directly to the Federal Housing Administration (FHA) for a mortgage. The FHA insures mortgages but does not fund them.
177
```
Escrow instructions can be executed by:
A. buyers
B. sellers
C. third parties
D. Any of the above
```
D. A buyer, seller, or third persons may execute escrow instructions.
178
```
Certified copies of inspection reports filed with the Structural Pest Control Board (SPCB) within the preceding two years may be requested and obtained by the:
A. seller in the transaction
B. buyer in the transaction
C. broker or escrow officer
D. Any person
```
D. Anyone has a right to a copy of pest control reports filed within the previous 2 years.
179
```
A Uniform Commercial Code Financing Statement (UCC-1) is removed from record by:
A. filing a termination statement
B. a notice of abandonment
C. a notice of adjudication
D. reconveyance deed
```
A. A Uniform Commercial Code Financing Statement (UCC-1) is used to put the public on notice of a lien created by a security agreement on personal property. A UCC-1 is removed from record by filing a termination statement with the secretary of state (SOS).
180
If apartments are converted to condominiums, an existing tenant needs to be given a period of ________ to either buy the condo or vacate.
A. 30 days from public report issuance
B. 90 days from public report issuance
C. six months from public report issuance
D. six months after notice of intent
B. Once the public report is issued on an apartment conversion to condominiums, the tenant needs to be given 90 days to buy the unit or vacate the property.
181
All of the following provide constructive notice, except:
A. telephone poles across a property
B. knowledge of an unrecorded deed to a stranger
C. a recorded deed to a stranger
D. a stranger in possession of a property
B. Knowledge of an unrecorded deed to a stranger does not constitute constructive notice. Recording a deed provides constructive notice of the ownership of a property. Constructive notice is also that which is observable by visual inspection.
182
What is not essential to the creation of an agency relationship?
A. Consent to the principal
B. Competency of the principal
C. A written agreement confirming the agency relationship
D. A fiduciary relationship that exists prior to creating the agency
C. A written agreement is not necessary to create an agency relationship.
183
The __________ is the primary enforcer of anti-discrimination law in California.
A. Department of Housing and Urban Development (HUD)
B. Department of Fair Employment and Housing
C. Labor Commission
D. Department of Business Oversight (DBO)
B. The Department of Fair Employment and Housing is the California state agency primarily responsible for enforcement of anti-discrimination law. The United States department of Housing and Urban Development (HUD) is the federal agency.
184
Which of the following is least likely to appear as a debit on a buyer's closing statement?
A. Proration of property taxes
B. Interest on a loan assumed by the buyer
C. Discount points for new Federal Housing Administration (FHA)-insured loan
D. Homeownrere's insurance premiums
B. Interest on an assumed loan will be a credit on a buyer's closing statement. The transaction didn't require new financing, but rather the assumption of an existing loan. Loan interest is paid in arrears. Thus, when escrow closes, the buyer will be credited for however many days there were between the due date of the previous payment and the close of escrow.
185
```
Which of the following is not a dangerous gas?
A. Carbon dioxide
B. Carbon monoxide
C. Formaldehyde
D. Radon
```
A. Carbon dioxide is what we exhale. Carbon monoxide, formaldehyde, and radon are all potentially dangerous gases.
186
Which of the following statements is true concerning typical escrow procedures?
A. Once escrow has closed, the escrow agency changes from a dual agency to a separate agency of each principal.
B. The escrow officer may be an advocate for the best interests of both principals.
C. Once the escrow officer is in possession of a binding contract between the buyer and seller, it is said to be a "complete escrow."
D. The escrow officer can be an advisor to both the buyer and the seller.
A. Escrow officers act as dual agents during the escrow process and become a single agent to both after the close of escrow.
187
```
A window on hinges is most likely a:
A. double-hung window
B. casement window
C. bay window
D. dormer window
```
B. Casement windows have a crank that swings the window out on its hinges. Double-hung windows have an upper and lower pane, which can be raised and lowered to opened. Bay windows have multiple panes of glass and project out from the wall. Dormer windows have a separate roof and are commonly seen as projecting from a gable or gambrel roof.
188
Sally grants an easement over her land to Bill so he can access his land. The easement is recorded. Bill then buys Sally's land and later sells it to Martha without disclosing the existence of the easement. Bill ceases to use the easement for a period greater than five years. When Bill later attempts to use the easement, Martha objects. What is the outcome of this scenario?
A. The easement was lost when Bill purchased Sally's land.
B. The easement was lost by five years' nonuse.
C. Martha must allow Bill access to his property.
D. Bill may occupy the property under the theory of adverse possession.
A. An easement is terminated when the parcels are combined under one ownership.
189
Which of the following transactions is exempt from use of the Agency Law Disclosure?
A. The sale of an industrial building.
B. The sale of agricultural land.
C. The sale of a property that is five or more residential units.
D. Upon the entry into a two-year lease of a residence.
D. The Agency Law Disclosure is required on the sale of any type of real estate, but not necessary for lease agreements.
190
The Closing Disclosure published by the Consumer Financial Protection Bureau (CFPB) summarizes the final mortgage terms and details for the buyer. It needs to be delivered:
A. one week prior to the closing of the transaction
B. three business days after the buyer submits a loan application
C. at least three business days before the buyer closes on the mortgage
D. on the day of settlement
C. The Closing Disclosure replaces both the Truth-in-Lending Disclosure and the HUD-1 Settlement Statement under the TILA-RESPA Integrated Disclosure (TRID) rules. The Closing Disclosure summarizes the final mortgage terms and details for the buyer and is to be delivered to the buyer at least 3 days before the buyer closes on the mortgage.
191
```
Most of California real estate laws originally come from:
A. Napoleonic Law
B. Mexican Law
C. Spanish Civil Law
D. English Common Law
```
D. The source of most of California's real estate law is English common law. After California was acquired by the United States in 1848, all real property rights held under Spanish Civil Law were resolved through federal courts, which eventually granted federal patents for land ownership. Today, the most obvious vestige of Spanish Civil Law is the concept of community property.
192
The holder of a life estate designated as the named life cannot:
A. lease the property
B. sell their interest in the property
C. will their rights to an heir
D. borrow against their ownership interest
C. The named life and holder of a life estate cannot will their interest to another since the ownership of the property reverts to the previous fee owner or will be granted to others as a remainder interest when the life estate ends.
193
A fee simple absolute interest is defined as:
A. an estate based on a condition precedent
B. an estate for years
C. the highest interest one can have in real property
D. a life estate
C. Fee title to real estate which occurs in a fee simple absolute estate is held in perpetuity and affords the owner full, absolute ownership of property free from any limitations or conditions. Thus, it is the highest interest in real property.
194
```
Land created by a river or lake that recedes permanently belongs to the owner of the bank or shore through the process of:
A. alluvium
B. reliction
C. appropriation
D. escheat
```
B. Reliction is the exposure of land that has been covered by water which occurs when water recedes.
195
Which of the following is the most correct statement about an option to purchase contained in a lease agreement?
A. The option to purchase will generally pass with an assignment of the lease.
B. The lease creates restrictions upon the optionee
C. An option needs to provide mutual benefits and obligations
D. An option creates a fiduciary relationship between the optionor and the optionee
A. When a lease containing an option to purchase is assigned, the option will typically pass with the assignment.
196
A brother and sister held title to a duplex as joint tenants. All their other business add personal properties were held separately. The sister, who was insolvent, died with outstanding debts owed to creditors. After her death, title to the duplex is held by the brother:
A. free and clear
B. as a tenant in common with the sister's creditors
C. as a tenant in common with the tenants of the duplex
D. subject to probate procedures
A. Joint tenancy are transferred to the surviving tenant free and clear of any debt owed by the deceased joint tenant.
197
```
When a loan is secured collaterally, the loan is a(n):
A. chattel mortgage
B. loan secured by another loan
C. all-inclusive loan
D. piggyback loan
```
B. A collateralized loan is one secured by another loan, rather than a property.
198
```
The promissory note and mortgage are signed by the:
A. mortgagee
B. lender
C. trustee
D. mortgagor
```
D. Real estate mortgages are secured by property. Thus, the property owner (mortgagor) signs the promissory note and mortgage.
199
Which of the following does not describe excess land?
A. Land which does not add to the total value of the property
B. Land in excess of that used by comparable properties
C. Land that is not sufficiently utilized by the improvements on it
D. Land that is used to store unused property fixtures
D. Land being used for a practical purpose (i.e. storage) is not considered excess land.
200
```
For a retailer, the most important factor when choosing the site for a commercial property is:
A. visibility
B. easy access
C. traffic flow
D. the purchasing power of the area
```
D. Purchasing power is the most critical issue when choosing a site for a commercial retailer. When the neighborhood the business is located in has discretionary income, there is a greater possibility of profit for the business.
201
```
The Real Estate Commissioner, under the Subdivided Lands Law, deals primarily with the ____________ court.
A. Municipal
B. Superior
C. Federal Supreme
D. State Appeals
```
B. Any legal action initiated by the Real Estate Commissioner in relation to their duties under the Subdivided Lands Law is handled through the superior court system.
202
```
When population growth causes real estate values to increase, this is classified as:
A. substitution
B. economic advantage
C. excess profit
D. an unearned incremental increase
```
D. Appreciation through population increase is considered an unearned incremental increase as it is obtained without any expenditure on the part of the owner.
203
Which of the following is an example of a subdivision:
A. Six row houses
B. A triplex converted to condos
C. A condo converted to six timeshare properties
D. Eight timeshare properties
A. A subdivision consists of 5 or more units with the exception of timeshares which are 12 or more.
204
```
A soil pipe is a(n):
A. drainage pipe
B. sewer pipe
C. electrical conduit
D. any clay or adobe pipe
```
B. A soil pipe is a sewer pipe.
205
```
An agency relationship requires all of the following, except:
A. consideration
B. mutual consent
C. a competent principal
D. Both B. and C.
```
A. An agency relationship does not require consideration to be valid. However, it needs to have mutual consent and a legally competent principal.
206
```
When listing agents improperly delete or strike through terms or provisions in a signed purchase agreement, this act is known as:
A. interlineation
B. rearrangement
C. forgery
D. defacing
```
D. Defacing occurs when a provision in a signed document is struck out or deleted. Interlineation means to add alternative or additional statements to a contract. Forgery applies if the entire document was falsely created.
207
Without a liquidated damages provision in the purchase agreement, the seller is entitled to recover:
A. only 3% of their money losses caused by the buyer's breach
B. only 10% of their money losses caused by the buyer's breach
C. the entire amount of their money losses caused by the buyer's breach
D. none of their money losses caused by the buyer's breach
C. A liquidated damages clause in a purchase agreement sets the maximum dollar amount a seller may recover from the buyer on the buyer’s breach. By statute, liquidated damages are limited to 3% of the sales prices on an owner-occupied one-to-four unit residential property. Without the clause, the buyer may be liable for the entire amount of financial loss suffered by the seller due to the buyer’s breach.
208
```
The unit of comparison when appraising land is:
A. cost per square foot
B. cost per front foot
C. cost per acre
D. Any of the above
```
D. The unit of comparison when appraising land depends on the size and use of the subject parcel. Other than rural properties, land is generally priced by the square foot. Parcels with specific frontage, such as a beach, golf course, or property for commercial usage, may have the highest and best value based on the front foot comparison.
209
The referral of a client to a financially controlled business owed by the broker is required to be disclosed by use of a(n):
A. Agency Law Disclosure
B. Affiliated Business Arrangement Disclosure Statement
C. home inspection report
D. Conflict of Interest Disclosure
B. Referral of a client to a financially controlled business whose earnings are shared with the broker requires the broker to provide the client a written affiliated business arrangement disclosure. The conflict of interest disclosure is used when the broker has a personal or professional bias that may interfere with their fiduciary duty, as exists when the broker is related to the other party in the transaction or has an ownership interest in a property.
210
A property owner dies testate, leaving a spouse and three children. The owner's estate is distributed:
A. to their heirs by right of reversion
B. one-half to their spouse and one-half divided among the three children
C. equally among the heirs
D. in accordance with their will
D. To die testate is to die with a will, and the terms of the will dictate how the inheritance is divided.
211
```
The right to use, enjoy, and alienate real estate to the exclusion of all others most accurately describes:
A. a possessory right
B. a tenancy
C. ownership
D. an estate for years
```
C. To alienate is to transfer an interest in real estate from one person to another. Thus, while a tenancy, possessory right, and an estate for years may grant the right to use and enjoy property, they do not grant the right to alienate property.
212
```
Which of the following may also be called an estate of inheritance?
A. Fee simple interest
B. Remainder interest
C. Condition subsequent
D. Future life estate
```
A. An estate of inheritance is ownership. Fee simple refers to current ownership. A fee estate grants an indefinite, exclusive and absolute ownership interest in a parcel of real estate and is the largest bundle of rights to be held in real estate.
213
```
A buyer wishing to recover losses caused by a listing agent's negligent failure to disclose known material defects has ________ to pursue their losses.
A. one month
B. six months
C. one year
D. two years
```
d. A buyer has a statutory two-year period to pursue a seller's agent for money losses for their failure to disclose material facts.
214
```
Apartment buildings with _______ or more unit are required to have a landlord, resident manager, or responsible caretaker living on the premises to manage the property.
A. 8
B. 12
C. 16
D. 24
```
C. A resident manager or caretaker is required for apartment complexes of 16 units or more.
215
The holding of the Easton v. Strassburger court case requires brokers to:
A. explain economic conditions to the buyer
B. notify the buyer of their rights to property inspections
C. explain the meaning of "as is" in regards to a property
D. reveal all known material facts about a property
D. The holding of the Easton v. Strassburger court case requires sellers and their agents to disclose all material facts about a property to a buyer as soon as practicable. This is the case which prompted the creation and implementation of the Transfer Disclosure Statement (TDS) form.
216
Use of the Natural Hazard Disclosure (NHD) statement is required by sellers on:
A. court-ordered transfers or sales and transfers to or by governmental entities
B. transfers between co-owners and transfers to relatives or spouses.
C. Both A. and B.
D. Neither A. nor B.
D. Use of the Natural Hazard Disclosure (NHD) statement is not required by sellers on court-ordered transfers or sales and transfers to or by governmental entities as well as transfers between co-owners and transfers to relatives or spouses.
217
```
Senior citizen housing is restricted to housing for persons _____ or older.
A. 52 or 55
B. 55 or 60
C. 55 or 62
D. 65 or 72
```
C. There are two types of senior housing. The minimum age limit is either 55 or 62. The occupancy requirements are also different between the two types.
218
Broker Stella, who is not a Realtor, uses a sign which says "Realtor" at her home office. She pays a 17 year-old high school student $10 for each listing they bring into her office. She keeps her client's money in her safe at home. Which of the following is not a violation of the real estate law?
A. Paying an unlicensed person to solicit listings
B. Improper office location
C. Using the term "Realtor" when she is not a member of the National Association of Realtors (NAR)
D. Commingling the client's money with her own money in the home safe
B. The only action that is not a violation of real estate law is the location of her office in her home. All other identified activities are impermissible.
219
```
Which of the following zoning designations is suitable for land use as the site of multi-family residential developments?
A. I-3
B. R-1
C. R-4
D. MU-4
```
C. Residential use zoning is labeled with an R. Multiple units will have a number following the R other than 1, the precise number determined by each city or county.
220
All of the following terminate an easement except:
A. merger of the tenements
B. release by the owner of the servient tenement
C. abandonment
D. destruction of the servient tenement
B. The servient tenement is the party burdened by the easement and they cannot unilaterally terminate the easement.
221
```
Martin needs $25,000 to buy a new car. he owns a note secured by a $50,000 trust deed. A friend will lend Martin money if Martin gives him his note and trust deed as security. Martin would use which document to complete this transaction?
A. A chattel mortgage
B. A security agreement
C. A hypothecation agreement
D. A pledge agreement
```
D. A pledge agreement is the document used to secure a loan using another loan as security where possession is relinquished. This is similar to hypothecation, which also pledges a loan or property as security, yet possession is retained.
222
When a married person dies intestate leaving a spouse and two children, their separate property is delivered:
A. equally among the children
B. only to the current spouse
C. one-third to the spouse and two-thirds to the children
D. by escheat to the state
C. To die intestate means to pass away without a will. If a property owner dies intestate, the probate court will award the estate to the spouse and any children once all creditors have been paid.
223
```
Just as disclosure laws are written to protect the consumer, who benefits the most when a lender requires an impound account of property taxes and insurance for a real estate loan?
A. The lender and the trustee
B. The beneficiary and the trustee
C. The seller and the lender
D. The lender and the trustor
```
D. Both the lender and the trustor (borrower) benefit from the existence of an impound account since it guarantees the necessary funds will be available for property taxes and insurance when they are due.
224
A lot 300 feet deep lost 10 percent of its depth. What is the effect of the loss in depth on the value of the lot?
A. A 10% decline in value
B. A decrease of value in excess of 10% due to the change in utility
C. The price per front foot will increase
D. The price per square foot will increase
D. The loss of depth for any reason will most likely increase the price per square foot of the property since, though the value of the lot may decrease, it will not diminish proportionately with the reduction in size.
225
```
Open roof sheathing is a component of a(n):
A. wood shake roof
B. gravel and tar paper roof
C. composite shingle roof
D. fiberglass roof
```
A. Wood shake roofs feature open roof sheathing to allow air to circulate.
226
```
Which of the following is least likely to be searched by a title company when performing a title search?
A. The county clerk's office
B. The county recorder
C. The secretary of state
D. The federal registry
```
D. A title company performs a title search by viewing the records of the county clerk's office, county recorder's office, and the secretary of state. A search of the public records of all entities is required to determine a property's chain of title and any relevant records for the buyer or seller (i.e. income tax lien). A federal registry of any sort is least likely to contain information relevant to a property's title.
227
Which regulatory scheme requires lenders to publicly release mortgage data?
A. Home Mortgage Disclosure Act (HMDA)
B. Real Estate Settlement Procedures Act (RESPA)
C. Truth-in-Lending Act (TILA)
D. Equal Credit Opportunity Act (ECOA)
A. The Home Mortgage Disclosure Act (HMDA) is a collection of federal laws mandating data collection on mortgage originations and applications of lenders who meet HMDA threshold requirements. Though the other answer selections are also related to mortgage financing regulations, they do not directly relate to data collection and publication.
228
```
A farmer in central California purchases raw land to develop as a farm. The soil has a pH level above seven. What is this in reference to?
A. Acidity
B. Alkalinity
C. Alluvium
D. Accssion
```
B. The pH refers to the level of acidity and alkalinity within a soil. A soil with a pH below 7 is an acid, while on with a pH above 7 is an alkaline.
