CA Real Estate Exam 2024 Practice Questions with Answers 2024., Exams of Economics

Download CA Real Estate Exam 2024 Practice Questions with Answers 2024. and more Exams Economics in PDF only on Docsity! CA Real Estate Exam 2024 Practice Questions with Answers 2024. An insurance policy which combines personal liability insurance and hazard insurance coverage for a dwelling and its contents is called: Homeowner's insurance Buyer's insurance Errors and omissions insurance All of the above ✔ Homeowner's insurance Homeowner's insurance ensures comprehensive protection for homeowners. What is the status of a contract when all terms have been fulfilled and the transaction has been closed? Fully executed Terminated Voidable Unenforceable ✔ Fully executed This means that both parties have performed their obligations under the contract and there are no further actions required. At this point, the contract has been completely executed and both parties are typically released from any further obligations under the agreement. Surface rights, air rights, and subsurface rights are all rights that can be sold by a property owner while still retaining the property itself. These rights are known as: Severable rights Littoral rights Owner's rights Riparian rights ✔ Severable rights Surface rights, air rights, and subsurface rights can be sold separately and are called severable rights. When an easement allows the use of a neighboring property which automatically transfers upon the sale of either dominant or servient property, it is called what type of easement? Easement by prescription Easement appurtenant Easement in gross Easement of utility ✔ Easement in appurtenant Appurtenant means "runs with the land." Linda purchased a fee simple interest for the private use of a residential property for one week every single year. What did Linda purchase? Shares in a cooperative building A condominium Common elements Resort timeshare ✔ Resort timeshare Vacation timeshare resorts sell a fee simple form of ownership to a buyer for the private and exclusive use of a unit for one week a year. There is title work, a closing, and the buyer is conveyed a deed. What is the highest form of land ownership which includes the full and complete bundle of property rights? Fee simple defeasible Fee simple determinable Fee simple condition subsequent Fee simple absolute ✔ Fee simple absolute Fee simple absolute freehold estate is the highest level of property ownership giving the ownership giving the owner the right of possession, control, exclusion, enjoyment, and disposition. What type of ownership would allow two or more owners to have various unequal percentages of ownership? Joint tenancy with rights of survivorship Joint tenancy Tenancy in common Tenancy in severalty ✔ Tenancy in common Tenancy in common grants owners to have an equal, undivided interest in a property, but also allows owners to have varying percentages of unequal ownership as well. Progression ✔ Competition The appraisal principle of competition states that two similar businesses attract more customers when within close proximity than they would separately. Buyer Sam purchased a run down residential home in a neighborhood with many nice well kept properties. Sam intends to renovate the home and resell it for a profit. Considering the nicer homes in the neighborhood help raise his property value, what appraisal principle is Sam leveraging? Regression Progression Assemblage Substitution ✔ Progression It is the appraisal principle that a dilapidated property will gain value when the surrounding properties are well kept. Nicer homes surrounding a property that is run down will only raise the subject property's value. During the appraisal process, the appraiser will never adjust the price of the: Appraisal Comps Subject property Land ✔ Subject property During the appraisal process, the appraiser always adjusts the value of the comparables accordingly, but never the value of the subject property. While working on an appraisal report, appraiser Jake finds that the comparable property is superior to the subject property with more amenities. How will Jake make adjustments to arrive at a value of the subject property? Subtract value from comparable Add value to subject Subtract value from subject Add value to comparable ✔ Subtract value from comparable The idea is that the price a comparable home sold for with more features needs to be adjusted down to find the probable price the subject preparty will sell for without those features. The beautiful town of Big Bear is experiencing a fast influx of new residents. There are few homes on the market and no new construction developments in the works. What will this do to the price of the existing homes in the area? The prices will decline over time The prices will remain stable The prices will decline swiftly The prices will increase ✔ The prices will increase The principle of supply and demand control property values. Homeowner Paul is selling his home without a real estate agent. He places an advertisement stating "Owner Financing 3% down payment." Is Paul's advertisement in violation of the Truth in Lending Act? Yes, when a down-payment is listed, there must be a price listed also Yes, all the terms of the owner financing are not disclosed No, property owners are not regulated by TRIL advertising requirements Yes, the ad contains trigger terms ✔ No, property owners are not regulated by TRIL advertising requirements The Truth in Lending Act and Regulation Z regulates the terms used in lending advertisements by lenders. Property owners are exempt from the advertising requirements when selling their property. Which one of the following loan types does not require a down-payment? VA loan Conventional loan Bridge loan FHA loan ✔ VA loan Loans are backed up by the Department of Veterans Affairs are offered to qualifying veterans and do not require the veterans to pay a down-payment. Discount points are a way lenders are able to charge prepaid interest in order to lower the interest rate over the life of the loan. What is the cost of the discount points based on? The down-payment required The appraised property value The loan amount The sales price ✔ The loan amount Discount points charged on all loan types are figured as a percentage of the loan amount. One discount point is equal to 1% of the loan amount. FHA loans require that borrowers provide protection to the lender in case of loan default. What must the borrower pay for to provide this protection to the lender? Credit life insurance Homeowner's insurance Mortgage insurance premium Title insurance ✔ Mortgage insurance premium UFMIP: one-time fee paid at the end of closing or can be added to the loan amount. (upfront) MIP: amount is based on the loan term, loan-to-loan ratio, and the initial loan amount. (annually) Fair housing regulations apply not only to real estate agents but also lenders. When a lender denies a mortgage application solely based on the racial demographics of the neighborhood the property is located in, the lender is guilty of: Steering Redlining Mortgage fraud Panic selling ✔ Redlining Lenders are to base credit decisions on the borrower's creditworthiness. Redlining is a violation of the Fair Housing Act. Terry received a conventional 30 year loan to purchase his home. Thanks to some large extra payments Terry will have his home paid for in only 17 years. Which of the following loan terms could charge Terry an extra fee for paying off the home so soon? Interest fee Escalation clause Subordination clause Prepayment penalty ✔ Prepayment penalty Mark is not able to make his entire mortgage payment on time each month and has fallen behind on payments. Because of his failure to pay, his lender, ABC Home Loans sent him a notice that they are calling for the remaining mortgage balance to be paid in full in one lump sum immediately. This is an example of a(n): Agent Paula found a buyer for her listing, the seller accepted the buyer's offer, and both parties received copies of the contract documents. The seller decides one week prior to closing they no longer want to sell the home. What could happen? Paula's broker owes her a commission The buyer owes Paula commission Paula did not earn a commission The seller owes Paula commission ✔ The seller owes Paula commission When an agent brings a ready, willing, and able buyer and a seller accepts the buyer's offer, the agent has essentially earned their commission. The seller is to pay the agent if the contract is terminated due to the seller's default. Larry listed his home for sale with an agent. The property was exposed to an open and free market and after a reasonable time, the property sold to a buyer unrelated to Larry. This type of sale would be considered: Fair market value Sale under duress Arm's length transaction None of the above ✔ Arm's length transaction How is real estate defined? Land and all items within the improvements Land including water, air, and improvements Property sold between buyers and sellers Commercial property, but not residential ✔ Land including water, air, and improvements A fence that extends onto the land of another from a neighboring property is called an: Encumbrance Easement Encroachment Escheat ✔ Encroachment Marvin owns an easement to use the driveway of his neighbor Bob. Marvin's property is considered the: Servient estate Life estate Dominant estate Freehold estate ✔ Dominant estate The property that benefits from an easement to another parcel. Which of the following best describes the economic characteristics of land? Demand, utility, scarcity, transferability, situs Scarcity, situs, immobility, utility, demand Situs, transferability, demand, immobility Indestructibility, demand, non-homogenous, situs ✔ Demand, utility, scarcity, transferability, situs There are five economic characteristics of land and the lack of any of these characteristics reduces the land's utility and value. Kevin is leasing a storefront to open a Pizza Parlor. Any items he attaches to the property which he will use to conduct his business would be: Property of the property owner Trade fixtures Chattel Real property ✔ Trade fixtures Items and equipment used to conduct business, such as pizza ovens, walk-in coolers, and salad bars are considered trade fixtures and property of the tenant. What is the accumulation of land caused by the natural flow of water called? Erosion Accretion Avulsion Alluvion ✔ Accretion Accretion is the accumulation of soil that collects over time due to the natural water flow. Donnie leaves his home to his third wife Trish with the clause that after her passing the home goes to his first son Logan. What type of interest does Logan have in the property? Life tenant estate Life estate Remainder man Leasehold ✔ Remainder man A remainder man is a third party interest in a property that will revert to them at the time a life tenant passes away. New agent Matt is listing a home for sale which was built in 1965. What disclosure should Matt have the seller complete due to the age of the home? Lead based paint disclosure Mold disclosure Radon disclosure Asbestos disclosure ✔ Lead based paint disclosure Properties constructed prior to 1978 fall under the federal requirement to provide buyers with a lead based paint disclosure. Part of agent Connie's listing packet includes a form for the seller to complete that covers the components of the home for sale and the seller's knowledge of the condition of such items. This form is referred to as: Home inspection report Seller's condition report Listing amendment Seller's disclosure ✔ Seller's disclosure The seller's disclosure form lets the seller convey knowledge they have regarding their property to a potential buyer. This is where a seller can list any updates made or repairs needed to the best of their knowledge. Mary and Mark are buying their first home, which as built just 3 years ago. After touring the property which seems to be in good repair, they waive their right to a home inspection. After closing and moving in, they find that some of the duct work in the crawl space has fallen and is no longer attached causing the air to be released under the home. They are upset that the seller did not mention this issue and when asked, the seller states they had no idea that had happened. Is the seller at fault for not disclosing this issue to the buyers? Yes, the seller should disclose all issues No, the seller had no knowledge of the issue Yes, the seller must provide a home inspection report Yes, the seller should pay for the repairs ✔ No, the seller had no knowledge of the issue A unilateral contract is when only one party agrees to perform under certain circumstances. To be enforceable, real estate contracts must be in writing according to the: Real estate commission Statute of frauds Federal real estate act Sherman antitrust act ✔ Statute of frauds All parties entering into a real estate contract must be doing so on their own free will and not under duress. Which of the following is not a requirement to enter into a real estate contract? Parties must be US citizens Parties must have proper authority Parties must be mentally competent Parties must be of legal age ✔ Parties must be US citizens A valid contract must contain valuable consideration which means: No personal property items Cash only Something clearly offered for something else in exchange None of the above ✔ Something clearly offered for something else in exchange A valid contract must contain a two-party exchange of valuable consideration and performance. In order for a contract to convey ownership in a property transaction, the contract must include: Surface rights A legal description Rights of survivorship The full bundle of rights ✔ A legal description The contract must include a legal description that describes the property so that its geographic location is identifiable. Which of the following is not a requirement for a contract to be valid and enforceable? Competent parties Authority Notarization Valuable consideration ✔ Notarization The requirements of a valid contract includes: competent parties, legal purpose, voluntary good faith, mutual consent, and valuable consideration. In a real estate transaction when someone is forced into a contract by intimidation or some other type of coercion, it is called: Bullying Duress Stress Strong arming ✔ Duress A contract that does not have all the necessary elements of a contract is: Valid Void Enforceable by insinuation Legally binding ✔ Void A contract that does not have all the necessary elements of a contract is void and unenforceable by either party. LeAnn entered into a contract that called for $1000 in monetary damages if the contract was breached. The $1000 in the contract is referred to as: Retainer fee Breach fine Liquidated damages Lis penden ✔ Liquidated damages After the offer and acceptance, when the terms of a contract are in the process of being completed, and prior to closing, the contract is said to be: Executory Amended Rescinded Lis penden ✔ Executory When the terms of a contract are in the process of being completed. A person makes an offer to purchase a property that was shown to them by their broker, but then waits to present the offer to the seller until later that day. In the meantime, two more offers were submitted on the property. Under the rule of agency, the offer: Is considered to be void because only one offer at a time can be placed on a property Must be presented alongside the other offers to allow the seller to make a fair choice Must wait to be presented because the other offers take priority in order Must be presented first because the offer was known by the broker before the others ✔ Must be presented alongside the other offers to allow the seller to make a fair choice Sharon made an offer on her dream home and to show the seller she was a serious buyer she offered a sum of money to be held in escrow that she will forfeit if she does not fulfill her end of the deal. What is the sum of money to be held in escrow as a good faith deposit called? Prefunding deposit Broker deposit Earnest money Purchase promise deposit ✔ Earnest money A contract can include earnest money to be held in escrow as a good faith deposit which is applied toward the purchase price at closing. Once all terms of a contract have been fulfilled and the transaction has closed, the contract status is said to be fully: Rescinded Executed Insured Amended ✔ Executed John signs a six-month lease on an apartment beginning January 1st and ending June 30th. His lease does not automatically renew and no notice is required on his part to vacate on the expiration date. What type of lease did John sign? Estate at will Estate from period to period Estate for months Estate for years ✔ Estate for years Quit claim deed Sheriff's deed Warranty deed Beneficiary deed ✔ Warranty deed A warranty deed includes the guarantee of seisin, encumbrances, right to quiet enjoyment, further assurance, and warranty forever. On closing day, who signs the deed to transfer the property from seller to buyer? The buyer The seller The buyer and seller The seller and escrow agent ✔ The seller Only the seller or grantor is required to execute the deed to convey property to the buyer. No other parties are required to sign the deed at closing. When agents get together and have a discussion regarding setting a fixed commission rate so that they are all charging the same rate, this conversation violates what act? Homestead act Fair housing act ADA act Sherman antitrust act ✔ Sherman antitrust act This activity among agents constitutes price fixing. What duty requires an agent to place the client's best interest above all others? Honesty Loyalty Respect Obedience ✔ Loyalty Steve tells listing agent Shelly his basement leaks but, only when it rains hard for long period of time, so no need to mention it to buyers. He insists it's really no big deal. Which of the following is true? Shelly must be obedient and not mention it Shelly should trust her client Shelly cannot withhold known material facts Shelly should only mention it if the buyer asks ✔ Shelly cannot withhold known material facts Not disclosing a material fact would be illegal and the agent does not have to obey the seller in this situation. If an agent is accused of puffing, what does that mean? Fraud Lies Misrepresentation Exaggeration ✔ Exaggeration For example, "This home has the most gorgeous view of any home anywhere." Exaggerated opinion, but not a misrepresentation of a material fact. Describing the property would be acceptable in advertising, however, describing the type of buyer desired would be considered: Descriptive advertising Discriminatory Target marketing Effective advertising ✔ Discriminatory In advertising, describing the property would be acceptable. Describing the type of buyer would be considered discriminatory and a violation of Fair Housing laws. Betzy is working with buyers under a written buyer's agency agreement. The buyers decide they want to purchase a home that Betzy has listed. If Betzy does not obtain permission in writing from all parties to represent both parties she would create: Single agency Dual agency Specific agency Undisclosed dual agency ✔ Undisclosed dual agency All parties to a contract must agree in writing to the dual agency. Ben listed his home with agent Carrie. He told her he wanted a minimum of $225,000 and anything over and above that amount she could keep as commission. This type of compensation arrangement is called: Net listing Reverse listing Normal listing Exclusive agency listing ✔ Net listing Net listings are legal in California, but are illegal in most states. Davis is a subagent of listing agent Luke. Who does Davis work for? Buyer Seller Buyer and seller Luke ✔ Seller Only showing homes in a certain part of town to people of a certain nationality is called: Panic selling Redlining Blockbusting Steering ✔ Steering Steering is a violation of Fair Housing laws. A hispanic man called a landlord regarding a home for rent online. The landlord tells him the property is already rented. His white friend then called the landlord to inquire about the property and he arranged an appointment to show him the home. This is discrimination based on: Race Familial status Income Religion ✔ Race Landry owns a duplex and personally occupies one of the units. He has one unit for rent and refuses to rent it to anyone with small children because kids are loud. If he refuses applicants with children has he committed a violation or any discriminatory acts? Yes, he can be fined Yes, he has to rent to anyone Yes, he has discriminated based on familial status No, he is exempt from Fair housing regulations because he owns a dwelling with 4 or less units and personally occupies one of the units 90% ✔ 90% $225,000 /$250,000 = 0.9 = 90% Since the appraised value is greater than the contract price, the appraisal value is irrelevant in this scenario. Seller Jared owes property taxes on closing day since taxes are paid in arrears. The taxes are $1,300. What is the seller's share of taxes if closing is April 10th using the 365 day method and the seller owns the day of closing? $356 $352 $359 $469 ✔ $356 $1300 / 365 days = $3.56 100 days x $3.56 = $356 How many acres are in a lot that measures 250 x 325? 1.66 1.52 1.86 1.89 ✔ 1.86 250 x 325 = 81,250 ft 81,250 / 43,560 sq ft in an acre = 1.86 acres Sharon purchased a home for $100,000 with an 6% annual interest rate. Her payments are $800 per month. How much of her first payment will go to principal? $600 $300 $500 $800 ✔ $300 $100,000 loan x 0.06 (6% interest) = $6000 $6000 / 12 months = $500 monthly interest $800 - $500 = $300 When agent Andy took a listing he promised the seller that he would advertise the property in a magazine until it was sold. Andy did not do the advertising that he promised. Andy is guilty of: Objective fraud Constructive fraud Actual fraud Comprehensive fraud ✔ Actual fraud Actual fraud is an act intended to deceive another, such as making a false statement, making a promise without intending to perform it. A broker who holds a valid listing on a property places a classified ad for the property containing only the following information "For Sale - 3 bedroom, 2 bath home with swimming pool. Asking price $165,000. Telephone 555-9276". This type of advertisement would be an example of a: Silent ad Qualified ad Display ad Blind ad ✔ Blind ad Blind advertising is any real estate advertisement that does not properly identify the broker. A salesperson must always remember to include the employing broker's name in the advertisement. Which of the following is an example of less-than-freehold estate? Estate in severalty Fee simple determinable estate Leasehold estate Fee simple estate ✔ Leasehold estate Freehold and various forms of fee simple estates mean ownership, while a leasehold estate means renting. If an appraiser is appraising a special purpose property, he would probably use the: Income approach Market data approach Land residual approach Cost approach ✔ Cost approach Most commonly used to appraise special purpose properties or buildings, such as schools and libraries. The main purpose of "RESPA" (Real Estate Settlement Procedures Act) is to: Provide consumers with enough information to enable them to shop for settlement services Place a fixed limit on settlement costs on residential property of 4 units or less To standardize settlement services throughout the United States Place a fixed limit on settlement costs in all real estate transactions ✔ Provide consumers with enough information to enable them to shop for settlement services. Definitions of market value is least concerned with: Market cost Objective value Value in exchange Open market ✔ Market cost Market cost is the present value worth of a commodity to draw on the open market. How much an item cost has no relevance to its value. What type of an appraisal license is required to appraise a commercial strip mall valued at $700,000? Certified general license Retail appraisal license Certified residential license Residential real estate license ✔ Certified general license Property taxes are described as "ad valorem" taxes. "Ad Valorem" most nearly means: Replacement value According to value Market value Reproduction value ✔ According to value In order to comply with the regulations of the state Housing Law, a person should seek the issuance of a building permit from: The California Department of Real Estate Assure a prospective purchaser that an offer meeting the terms of the listing will be accepted by his principal Find a purchaser and accept a deposit with an offer to purchase ✔ Find a purchaser and accept a deposit with an offer to purchase. An appraiser's narrative appraisal report of a single-family residence probably would contain no reference to: A special studies zone map The neighborhood amenities The appraiser's qualifications A buyer's financing ✔ A buyer's financing The narrative appraisal report does not contain the buyer's financial condition because how you pay for the property is not relevant to the value of the property itself. The unit of comparison when using the market data approach to appraise single-family residence, is the: Capitalization rate Square foot Cubic foot Entire property ✔ Entire property Which of the following approaches to value estimate tends to set the upper limits of value? Replacement Income Comparable sales Market comparison ✔ Replacement Cost (replacement) approach is the process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the replacement cost of the building, less depreciation. When a situation is such that damages would not provide an adequate remedy (like for a breach of contract), a suit for specific performance could be successfully brought by all of the following except: The seller of a condo One of the principals being represented by an attorney-in-fact A licensed real estate broker acting as agent for the principals The buyer of an income property ✔ A licensed real estate broker acting as agent for the principals. Suits for specific performance are a remedy provided by a court that orders the losing side to perform its part of a contract instead of paying monetary damages to the winner. In real estate, brokers cannot sue for specific performance. Less-than-freehold estates consist of estates held by: Optionees Trustees Lessees Grantees ✔ Lessees If five people own property as joint tenants, And one of the owner dies, his heirs become tenants in common with the surviving co- owners They need to not own equal interest in the property Each co-owner has a separate legal title to his undivided interest There is still only one title to the whole property ✔ There is still only one title to the whole property. Joint tenancy = TTIP (unity of time, title, interest, possession) No matter how many joint tenants are there, there is still only one title to the entire property. Each tenant must hold an equal interest in the property. An increase in the availability of money would lead to which effect? Interest rates would not be affected due to RESPA guidelines Interest rates would go down Interest rates would go up Interest rates would not be affected due to truth in lending ✔ Interest rates would go down. Allison has just qualified for her salesperson's license. How much time does she have to file her application to practice? 2 years from the date she passed the exam 1 year from the date she passed the exam 2 years from the date she was notified she had passed the exam 1 year from the date she was notified she had passed the exam ✔ 1 year from the date she passed the exam. Defined as a loss in value from any cause, depreciation is generally divided into three categories. The loss of value due to the normal wear and tear on a property is called: Physical deterioration External obsolescence Functional obsolescence Economic deterioration ✔ Physical deterioration This describes the normal upkeep, repair and ultimate replacement of things such as roof shingles, heating and cooling systems, appliances and so forth. The primary purpose of a listing agreement is to: Give the broker permission to sell all of his principal's properties List all improvements and amenities of the property Serve as a contract of employment between the owner and the broker Serve as a guide for a sales contract ✔ Serve as a contract of employment between the owner and the broker. A trust deed may be released from the records by: Payment in full A title report Recording a reconveyance deed Recording the note ✔ Recording a reconveyance deed In order to clear the deed of trust from the title to the property, a deed of reconveyance must be recorded with the count recorder or recorder of deeds. Blockbusting is best described as an attempt: By banks to refuse loans to homeowners in certain segments of the city By insurance companies to refuse to issue homeowner's policies to certain residents of the city To form guerilla bands to se violent action to integrate neighborhoods To panic a neighborhood into thinking property values will decline due to unwanted person(s) moving in ✔ To panic a neighborhood into thinking property values will decline due to unwanted person(s) moving in. An acknowledgement may be taken by a notary public who is: The grantor in a deed being acknowledged The mortgagee in a mortgage being acknowledged ✔ Executed contract According to the Truth-in-Lending Act, consumers must be informed of credit terms by: The trustee Escrow The broker The lender ✔ The lender It requires lenders to provide borrowers with loan cost information so they understand the cost of their credit, and so they can compare shop for loans. When a buyer gives the agent a post dated check, it: May not be accepted by the agent Must be cashed immediately May be delivered to the seller within one day May be retained but must be disclosed to the seller ✔ May be retained but must be disclosed to the seller The effective date of a real estate purchase contract is the date that: The seller accepts the offer The security deposit was made The acceptance is communicated to the buyer The offer is made ✔ The acceptance is communicated to the buyer 3 steps: offer, acceptance, communication When may a real estate broker, serving as an agent of the seller, refuse to transmit an offer to the principal? When the owner has already accepted a backup offer When the broker is acting as a gratuitous agent Never When the broker is acting on the express instructions of the principal in his refusal ✔ When the broker is acting on the express instructions of the principal in his refusal. The agent working for the principal and must carry out the principal's instructions as long as those instructions are lawful. A lease where the tenant pays the property taxes, maintenance and other expenses is a: Percentage lease Gross lease Sandwich lease Net lease ✔ Net lease When an owner sues the government to get compensated, it is known as: Condemnation Petition Escheat Inverse condemnation ✔ Inverse condemnation On a settlement statement, the cost of the lender's title insurance policy required for a new loan is usually shown as a: Credit to the seller Debit to the seller Credit to the buyer Debit to the buyer ✔ Debit to the buyer In Financing, the "secondary market" refers to the place where: Conventional loans are originated Secondary financing may be obtained FHA loans are originated Existing loans are bought and sold ✔ Existing loans are bought and sold. Real property taxes become a lien on: February 1st July 1st January 1st November 1st ✔ January 1st Next year's real property taxes become a lien on January 1st. When must all the listings in an office be renegotiated? If the couple gets divorced If there are multiple offers If the broker dies A listing can never be renegotiated ✔ If the broker dies. When an owner is selling his or her home, to whom would they most likely give a copy of a structural pest control report? To the buyer if requested To the brokers or salespeople representing potential buyers To the escrow company Their broker at the time of listing ✔ To the buyer if requested. Structural pest inspections and reports are not required by law. When requested, the reports must be delivered by the seller or listing agent before closing. Sara is a newly licensed broker and has just opened her own office. How long must she keep transaction records? 3 years 2 years 4 years 1 year ✔ 3 years This includes not only closing documents, but trust fund information. all listings, all deposit slips and cancelled checks... and all documents executed by Sara in connection with her real estate practice. Ownership of an undivided interest in land with no right of survivorship is found in: Tenants in common Joint tenancy Fee simple defeasible estates Severalty ✔ Tenants in common When selling a business, real estate brokers need to know that the term "successor's liability" involves certain obligations to the: Department of corporations Internal revenue service State board of equalization Bureau of real estate ✔ State board of equalization Open listing Net listing Exclusive right to sell listing Exclusive agency listing ✔ Exclusive right to sell listing It is an agreement in which a real estate agent has the sole right to sell a specified property, usually within 3 months. During this period, the seller cannot list the property with any other agent and must pay the agent's commission even if he or she (and not the agent) finds a buyer. An unlicensed personal assistant working for a licensed broker may do which of the following activities? Host open houses Write ads and submit them to the newspaper and online approved by the broker Write up an offer for a buyer and then have the broker sign the contract later Email brokers weekly updates to the broker's clients ✔ Write ads and submit them to the newspaper and online approved by the broker. The rest of the activities are licensed activities. An exclusive agency listing guarantees the broker his commission: If the broker finds a buyer for the property If the seller sells the property If the property changes ownership for any reason Only if the sale price exceeds the listed price ✔ If the broker finds a buyer for the property. Which activity requires a real estate license? An MLS providing listing information to members A resident manager who collects rent on behalf of a building owner A service that, for a fee, matches individuals who want to buy and sell properties An executor selling a decedent's building ✔ A service that, for a fee, matches individuals who want to buy and sell properties. A balloon payment is usually associated with a: Variable mortgage that varies with the cost of living index Blanket mortgage Large payment during the term or at the end of the payment schedule Package mortgage ✔ Large payment during the term or at the end of the payment schedule. Which of these is an example of external obsolescence? Vacant, abandoned, and run-down buildings in an area Numerous pillars supporting the ceiling in a store Coal cellar in a house with central heating Leaks in the roof of a warehouse, making the premises unusable and therefore unrentable ✔ Vacant, abandoned, and run-down buildings in an area It's not about whether the house is outdated or not, but rather something outside of the home that is causing a lower value. It's usually something that cannot be cured. The word "improvement" would refer to all if the following except: A sanitary sewer system Streets The foundation Trade fixtures ✔ Trade fixtures In the cost approach to value, the appraiser makes use of the: Sales price of similar buildings in the area Estimated current replacement cost of the building Owner's original cost of the building Assessed value of the building ✔ Estimated current replacement cost of the building The price a buyer should pay for a piece of property should equal the cost to build an equivalent building. An appraiser is typically paid: A fee agreed upon after the appraisal is completed A fee based on a percentage of the appraised value A fee based on the amount of time and effort A standard fee agreed upon the National Appraisal Association ✔ A fee based on the amount of time and effort. Which of the following individuals holds a license and is therefore not entitled to a claim of adverse possession? A person who held property for 5 years after inheriting it from a parent, who was in adverse possession for 10 years A person who has been parking his car on a neighborhood's property for 20 years without permission A person who has been in possession of the property for 19 years A person who has permission to enter an orchard and has been taking apples every year for 30 years ✔ A person who has permission to enter an orchard and has been taking apples every year for 30 years. A license is a personal right that may be revoked at any time. Entering the orchard to pick apples with permission is a license. Zoning ordinances control the use of privately owed land in several ways. Which of the following ways is not a zoning control? Restricting the area in which a building may occupy Providing for control of rentals Regulation land-use Restrictive height of buildings ✔ Providing for control of rentals A person who has complete control over a parcel of real estate is said to own a: Fee simple estate Life estate Defeasible fee estate Leasehold estate ✔ Fee simple estate An easement appurtenant to real property can be terminated by all of the following, except: Revocation by the servient owner Prescription by the servient owner Merger of both the servient and dominant parcels Released by the dominant tenement owner ✔ Revocation by the servient owner An appurtenant easement is a type of easement that still applies to a property even if the owners change. A partition suit is used for which of the following? To allow construction of party walls To change a tenancy by entireties to some other form of ownership To force a division of property without all the owners' consents Determination of party fences ✔ To force a division of property without all the owners' consents.