California Real Estate Exam 100% VERIFIED ANSWERS 2024/2025 CORRECT, Exams of Business Administration

Download California Real Estate Exam 100% VERIFIED ANSWERS 2024/2025 CORRECT and more Exams Business Administration in PDF only on Docsity! California Real Estate Exam 100% VERIFIED ANSWERS 2024/2025 CORRECT Broker A receives two offers on Seller B's house, which is listed for sale at $250,000. The first offer is for all cash at $200,000. The second offer is for 20% down with 80% financing for the full price. What should the broker do with respect to both offers? Present both offers to the seller as soon as possible. The two primary documents dealing with payment of a loan are the mortgage or deed of trust and a promissory note. The term that best describes a continuous urban corridor joining at least two cities is megalopolis. The term real property can also be described as the bundle of rights. The rights of a landowner to a river bordering her property are known as riparian rights. In the case of a transfer of ownership of a piece of real estate, a fixture is normally assumed to be included in the transfer. A tenant who operates a jewelry store wants to take his jewelry cases with him at the expiration of the lease. What is the best solution? He may take the cases if removal will not cause substantial damage. A legal description of property is not adequate unless land boundaries are defined. The lot and block system of property description is not also known as the rectangular survey system. What best describes the interests of the holder of a life estate? possession, use, and ownership How many acres does a section of land contain? 640 The requirement that multiple owners take title to property at the same time is a characteristic of joint tenancy. The type of ownership that provides the most complete bundle of rights is fee simple absolute. Which are most similar to each other with respect to inheriting property? joint tenancy and community property with right of survivorship (both allow for reversion to remaining owners) A statement of the goals and policies regarding growth of a community is a good definition of the general plan. The primary difference between a common interest subdivision and a standard subdivision is ownership of common areas. Which of the following is a generic term for a group of people joining together to invest in real estate? syndicate Seller A has signed a listing agreement with Broker B. Without the assistance of Broker B, Seller A sells her property and under the terms of the listing agreement owes no commission to Broker B. What type of listing agreement did Seller A sign? an exclusive agency listing A cooperating broker may represent the buyer or the seller or the listing broker This is not a type of listing agreement? multiple listing Broker A has a listing to market Seller B's house. He also has a buyer's agency agreement to find a house for Buyer C. If Buyer C becomes interested in Seller B's house what might the danger be, if any, to Broker A? the creation of a dual agency (this can be taken care of by disclosing to both parties) Who of the following owes fiduciary responsibility to the buyer? the buyer's agent A broker hired to sell a house is considered a special agent. A real estate salesperson is always considered an employee. Seller A wants to get the broadest exposure for the sale of her house but does not want to pay a commission if she sells the house herself. What type of listing will she try to establish? open listing All agency agreements for the sale of property must be in writing except creation of an agency by there are no exceptions. The most profitable single use that will generate the highest value for a piece of property is called it's highest and best use. Broker A agrees in writing to keep details of Seller B's property in his files but indicated that he will not actively market it. Seller B agrees to pay Broker A a commission if he finds a buyer. This agreement would best be described as express unilateral. Which of the following is not a characteristic of value? change An uncashed deposit check usually may be held and not deposited by the broker for how many days before an offer is accepted? until the offer is accepted Two lots, each valued at $50,000, when combined have a value of $125,000. What term best describes this added value? plottage What is deducted from potential gross income to arrive at an effective gross income? vacancy and collection loss In the income approach to estimating value, another term for the capitalization rate is rate of return. In appraising a property, the process by which dissimilarities are accounted for in comparing a subject property and a comparable property is called making adjustments. An appraisal may have more than one date on it. The date of the value estimate is the effective date. What is an example of functional obsolescence? having to get to a bedroom by going through another bedroom If you assume that depreciation occurs at an even rate, what method of calculating depreciation would you be using? economic age life method A parking lot in a downtown area being developed with office buildings is most likely an interim use of the property. Potential gross income of an investment property is the same as market rent plus other building income. The gross rent multiplier approach is a useful income approach in appraising single-family homes. Which approach to valuation estimates land and building value separately? cost approach In order to arrive at a final value estimate after applying all three approaches to value, which of the following will an appraiser do? Reconcile the three values. What type of value is the term advalorem most closely associated with? assessed value Rising mortgage interest rates will tend to lower property values. What activities of the Federal Reserve System is likely to have the most direct effect on the rates charged for consumer credit? adjusting the discount rate Which type of mortgage loan typically results in negative amortization? graduated payment A types of purchase financing that allows the seller to take immediate possession of the property but delays transfer of title is a land contract, a contract for deed, an installment sales contract. Buyer A pays $300,000 for a house putting down $60,000 and borrowing $240,000. The house appreciates 25% during the years he owns it. When he sells the house, what is his profit? $75,000 (300,000 x 0.25 = 75,000) A testator who dies testate has no need of the laws of intestate succession. Whose signature must be on a deed to make it valid? the grantor Which of the following is not a duty of an escrow agent? to conduct an independent investigation of the transaction Which of the following is true? All accretions are accessions. Extra protection for title problems on property conveyed by a warranty deed is provided by title insurance. Builder A turns over the streets in his new subdivision to the town. He does this by statutory dedication. The creation of escrow is conditional on execution of a binding contract. (Escrow is created when a binding contract is signed & conditional delivery of documents is agreed to) The process by which payments such as taxes are allocated at closing is called proration. What is true regarding title insurance policy coverage for changes in land use as a result of zoning changes? It is not covered by either ALTA or CLTA extended coverage policy. (Zoning Changes are not covered by either policy) A seller has paid taxes of $2,400 in advance on July 1 for the following year. He closes sale of the property on November 1. Who owes how much to whom? The buyer owes the seller $1,400. The term advalorem usually is associated with property taxes. The opposite of marketabletitle can best be expressed as cloud on title. Assuming that the current assessed value of a property after all exemptions have been applied is $55,000, what is the annual tax on that property? $550 (The statutory property tax rate is 1% 55,000 x 0.01 = $550) The act that extended antidiscrimination protection to business establishments is the Unruh Civil Rights Act. A mobile home advertisement must be withdrawn within how many hours of the home being taken off the market? 48 What is the term used to describe the depositing of a client's funds into the broker's personal or business account? commingling The California law that specifically prohibits redlining is the Housing Financial Discrimination Act. Practice Test 1 What is the most desirable form of deposit from a seller's point of view? an immediately negotiable check Blind ads for real estate are permitted for no properties. A broker must maintain records of a transaction for how many years from the date of closing? 3 Which of the following activities could be performed by an unlicensed assistant? creating sales brochures A broker who employs salespeople as independent contractors rather than employees has the same amount of supervisory responsibility. Real estate law in California is administered by the Department of Real Estate. A salesperson collects a commission directly from a homeowner after selling her house. Which of the following is true? The salesperson has violated the law. A violation of the Real Estate Law could result in all of the following penalties except a term of not more than one year in jail. Payments for a financial injury sustained by a person as a result of the fraudulent practices of a real estate broker would be made from the California Real Estate Recovery Fund. When must a real estate salesperson be licensed in order to receive a commission? Houses built after 1980 and sold with the assistance of a broker will require all of the following except a lead-paint hazard disclosure (cut off date for lead paint disclosure is for houses built before 1978). The Homeowner's Guide to Earthquake Safety must be provided to purchasers of one-to four- family homes built prior to January 1, 1960. With respect to disclosure, state responsibility areas deal with fire hazard. For disclosure purposes, a material fact effecting property value would include all but which of the following? the presence of a significant minority population in the community Ordnance location disclosure deals with the possibility of live ammunition from military installations in the area. An option to purchase property is considered an express unilateral agreement. At what phase of the contract process is a real estate commission generally earned? mutual consent One party agrees to sell another party a piece of property in exchange for a certain amount of money. The agreement is in writing. What type of contract do the parties have? express bilateral Which of the following types of listing agreements need not be in writing? an agent representing a landlord renting rooms in a rooming house on a week-to- week basis Owner A hires someone to burn down his building for the insurance money. They agree on all the terms including payment. The contract would be void. A real estate broker always represents the principal, who is always the buyer and/or seller. Buyer A indicates to Seller B that he wants to purchase Seller B's property for $300,000. Seller B tells Buyer A that he would be willing to sell the property for $350,000. At this point, which of the following is correct? Buyer A is the offeree; Seller B is the offeror. An exclusive authorization and right to sell agreement is considered an express bilateral contract. What is the minimum age for a married person to enter into a contract? There is no minimum age for a married person. A tenant who stays in rented property after the lease has expired without the consent of the landlord is said to have an estate at sufferance. In an option agreement, the consideration is the amount paid for the right to purchase the property. The tenant's interest in property is a leasehold and is considered personal property. Broker A receives two offers on Seller B's house, which is listed for sale at $250,000. The first offer is for all cash at $200,000. The second offer is for 20% down with 80% financing for the full price. What should the broker do with respect to both offers? Present both offers to the seller as soon as possible. The two primary documents dealing with payment of a loan are the mortgage or deed of trust and a promissory note. Owner A sells a piece of his property to Buyer B. In order for Owner A to get access to the county road he needs an easement across Buyer B's property. In order to accomplish this, which of the following has to occur? Owner A must reserve an easement appurtenant for himself. A deed restriction was placed on all the properties in a subdivision prohibiting aluminum siding because of its appearance. New vinyl siding has a much more natural appearance and several owners want to use it to re-side their homes. What's the best way to change the restriction? All the homeowners in the subdivision should sign a voluntary agreement. The most serious consequence of the difference between a covenant and a condition in a deed is that violation of a condition could result in forfeiture of the land. What is the study of population characteristics called? demography Real property includes only the land, structures, and fixtures. Several people concurrently own a piece of property. They may not own the property as tenants in severalty. What is the best term to describe a situation where a person buying a property may not use the property for the manufacture of alcoholic beverages or else title will revert back to the seller? fee simple condition subsequent Which of the following best describes a trust as a form of property ownership? Title is held by the trustee on behalf of the beneficiary. Owner A may not subdivide his land. Owner A owns a 3-story building on property that is zoned for construction of a 20-story building. Owner A does not want to sell his building but wants to make some additional money from it. Assuming his actions are in accordance with local development codes, what might he do? Sell his air rights. Which of the following is a requirement to make an exclusive listing agreement valid? a definite termination date An implied agency is created by the actions of the parties. The state has taken Seller A's property by eminent domain for a highway after she listed it for sale. What happens to the listing agreement? It is terminated. The type of authority specified in an agency agreement is called actual authority. A written disclosure of agency representation is required for one to four unit residential transactions. Depositing a buyer's deposit check in the broker's business operating account is called commingling and is a violation. The principle of loyalty as a fiduciary requires the agent to put the principal's interest above all others. Under the duty of obedience, which of the following requests from the seller should the agent not obey? The seller tells the agent to only show houses to minority families. Which of the following types of listing agreements do not require the broker to be compensated unless she is the procuring cause? open listing and exclusive agency listing Broker A has a listing to sell Seller B's property. Broker A shows the property to his cousin, who is interested in the property. What problem can potentially arise? undisclosed dual agency, unless Broker A reveals the relationship to Seller B and Seller B is okay with it A buyer's agent knows that the buyer is anxious to purchase a house so that he can enroll his children in school before the school year starts. What must the agent do with this information? Keep the information confidential. In what type of listing might the broker be both principal and agent? option listing Broker A has an exclusive authorization and right to sell listing agreement to sell Seller B's house for $300,000. Broker A brings Buyer C to see the house. Buyer C immediately makes a full cash offer of $300,000 to buy the house with no contingencies in the contract. Seller B decides he can probably get more for the house and refuses the offer, raising the asking price of the house. Does Seller B owe the broker a commission? Yes, because Broker A produced a buyer who met all of Seller B's terms. Five years ago, Seller A added a deck on to her house but never got a building permit for it. What obligation, if any, does Seller A have with respect to the deck when she decides to sell her house? She must advise the buyer of the situation. Buyer A hires Broker B as a buyer's broker. Broker B assures Buyer A that her fee will be paid for by the seller. To whom does Broker B owe his fiduciary duty in this arrangement? Buyer A, because she is the principal Seller A tells Broker B, who is representing her in the sale of her house, not to disclose the fact that the house has a leaky roof. Broker B agrees and does not reveal the information to the buyer. Which of the following statements is true? Both Seller A and Broker B are liable. Broker A is hired as a buyer's broker to help Buyer B find a house. Broker A is considered a special agent. The most reliable method for appraising single family homes is the sales comparison approach. You spent $10,000 to remodel your bathroom and found that it only added $5,000 to the overall value of your house. This is an example of what economic principle? contribution The market value of a property is its most probable price. In the sales comparison approach, a condition of sale adjustment would be made for a property that had been subject to foreclosure. In order for a use to be considered the highest and best use of a property, it must be physically possible as well as legally permissible, financially feasible, maximally productive. The positive effect on value that larger home shave on a smaller home in the neighborhood is known as progression. Total depreciation from all sources is a good definition of accrued depreciation. a note purchaser. Which of the following pairs consists of terms meaning essentially the same thing? foreclosure and trustee's sale A purchaser of a $200,000 home using Federal Housing Administration (FHA) financing would have to make a minimum cash investment of $6,000 (FHA Purchasers Must Invest A minimum of 3%) What is not be considered an institutional lender? mortgage company Buyer A is purchasing a home for $375,000 and is getting a mortgage loan at a loan-to-value ratio of 80%. The lender is charging 2 points to secure a lower interest rate. How much will the borrower have to pay in points? $6,000 (1 point = 1%) The right of redemption exists in the case of a judicial foreclosure. In a deed of trust situation, who can claim the property in the event of a default of payments on the mortgage loan? beneficiary The court order to evict the former owner of a home that has been sold through a trustee's sale is called unlawful detainer. Which of the following do not make direct mortgage loans? mortgage brokers Protection extended to home owners to avoid losing their homes as a result of an installment purchase of goods or services was created by the Unruh Act. What is the first month's interest on an amortized 30 year loan for $250,000 at 7% interest? $1,458 A holographic will is valid if it is completely handwritten by the maker of the will (testator/testatrix). Which of the following in not a requirement for a valid deed? the signature of the grantee Buyer A closes on a house for which he borrowed $300,000 to purchase. Two days later, he changes his mind about buying the house and wants to use his right to rescind the mortgage. Can he? No. The product of accretion is known as alluvium. A mortgage lender provides a borrower with a good faith estimate of the closing costs and a special booklet that meets HUD requirements. The lender is complying with what law/act? RESPA The property of a person who dies intestate and with no heirs will be claimed by the state in a process called escheat. The form of deed that carries no warrantees, implied or actual, is a quitclaim deed. Closing of title in escrow is considered complete when documents are recorded. Escrow instructions given by one party at a time to the escrow agent are called unilateral A seller pays the yearly taxes of $3,600 in advance on July 1. He closes on the sale of the house on November 15. Who owes what to whom? The buyer owes the seller $1,340. An escrow agent pays a referral fee to any brokers who send him business. Which of the following is correct? He is breaking the law. Which of the following terms does not belong with the others? marketable title An owner occupied home is entitled to how much of an exemption from the value of the property for tax purposes? $7,000 The primary focus of the 1866 Civil Rights Act was preventing housing discrimination on the basis of race. Title insurance premiums a repaid according to local custom and negotiation. An uncashed deposit check may be kept by a broker for whatever time period the principal authorizes. What is the annual inflation factor permitted for local property taxes? 2% The California Fair Employment and Housing Act was formerly known as the Rumford Housing Act. Disclosure requirements for a real estate agent are limited to material facts and all agency relationships. A material fact and a material defect are the same thing sometimes. Damage or destruction that occurs to a property before escrow closes but after the purchase contract is signed is the responsibility of the seller. What is the limit on the cost of work that can be done by an unlicensed contractor? less than $500 Use of the term Realtor unless one has the right to use the term is illegal, can result in loss of license, is unethical. The practice of real estate without a real estate license is prosecuted by the district attorney in the appropriate jurisdiction. A real estate salesperson working as an independent contractor will have workers' compensation coverage. A warranty of authority makes the principal responsible for certain agents actions. Special disclosures that must be made by sellers of condominiums and common interest subdivisions include minutes of the past 12 months of homeowners' association meetings. Under the appropriate circumstances, all but which of the following disclosures will be required to be provided by a seller? demographic change disclosure Buyer A signs an agreement with Seller B to purchase her home. Seller B changes her mind about selling, but Buyer A still wants the house. Buyer B files a suit for specific performance. Houses built before what year require a lead-based paint disclosure to buyers? 1978 Owner A discusses the terms of selling his property with Buyer B. They agree on the amount of money, the type of deed, and when the closing will be. This contract for the sale of the property is void and unenforceable. The Natural Hazards Disclosure Act requires such disclosure for virtually all properties. The major difference between a unilateral and a bilateral contract is that in a unilateral contract, only one party must act; in a bilateral contract, both parties must act. A homeowner places an advertisement in the newspaper offering her home for sale and offering to compensate any broker who brings a successful buyer to the property. The homeowner is seeking to create an express unilateral open listing. A real estate sales contract entered into by an emancipated minor is valid. Which of the following is most correct about buyer broker compensation? The fee paid by the seller is credited against the fee owed by the buyer. Farmer A plants 3 acres of his land in tomatoes and then sells his property to Buyer B. If the contract of sale is silent about the tomatoes, who has the right to harvest the crop? the new owner Which of the following is not a requirement of a valid real estate sales contract? acknowledgment A written lease may be changed by all of the following except oral agreement. A lease option for a house gives the tenant the right of possession and the right to purchase the house in the future. A broker acting without a listing agreement must follow whose instructions with respect to the buyer's deposit? the buyer's A periodic tenancy without a lease for agricultural and grazing land is assumed to run for one year. Landlord A leased an apartment to Tenant B for six months. Landlord A failed to specify when the rent payment was due. When can he expect to get his rent? -at the end of each month In addition to the usual elements of a contract, a real property land contract must include the number of years to complete the contract. Fees charged to a tenant in a mobile home park are limited to all of the following except occupancy fee. The last payment on a mortgage loan that is at least twice as much as any other payment and generally is made at the end of the term to pay off the loan is called a balloon payment. The type of note that reduces the bank's risk of changing interest rates is called the adjustable rate note. Which of the following is not true about the rights of a tenant in a lease situation? The tenant has a fee simple defeasible interest. A land owner's sub surface rights include everything except conditional use permit. In a trust ownership situation, title is held by the trustee on behalf of the beneficiary. Which of the following types of projects would least likely be subject to CEQA requirements? building permit for a single-family house Which of the following is not actually a legal form of property ownership or real estate investment? syndicate TheN1⁄2 oftheW1⁄2 oftheSE1⁄4 ofasectionof land contains how many acres? 40 acres The action required to dissolve a tenants in common ownership if the owners cannot reach an agreement is called partition. Compensation from the Real Estate Recovery Account is limited to how much per transaction? $20,000 Two types of property interest provide for possession but not ownership. They are leasehold and life estate. Broker A is hired by Seller B to market her property for $300,000. Broker A decides to buy the property himself and pays full price. A week later, Broker A sells the property for $325,000. Which of the following statements is true? Broker A should have told the seller of the deal he was going to make and gotten her permission. Real estate commissions are negotiable. How long after the acceptance of an offer does a broker have in which to place a buyer's deposit check into an escrow account? three business days after the acceptance of an offer The right of an agent to do something in the sale of a property that is not specified in the listing agreement but is accepted practice is known as inherent authority. Commingling is mixing client funds with the broker's own funds, Illegal and avoided by depositing the funds in an escrow account. An openlisting is an express unilateral contract. ABC Real Estate Company withholds Social Security from its workers' pay, pays unemployment insurance on their behalf, and withholds payroll taxes. The workers are most likely employees. The difference between an employee and an independent contractor for tax purposes is the taxes withheld by the broker. The fact that a sales person must always work under a broker's supervision makes it mandatory that, for certain purposes, the salesperson is considered an employee. Cooperating brokers represent whomever they have an agency agreement with. Buyers' brokers may be paid by either buyers or sellers. Pocket listings are governed by multiple listing service rules. Broker A takes a listing to sell a house. Broker B brings a buyer to see the house and prepares an offer on behalf of the buyer. What do we know for certain about Broker B? She is a cooperating broker. A written disclosure of agency relationships must be presented to the seller before the seller signs the listing agreement. Which of the following best describes the type of income used in the income capitalization approach? potential gross income A broker who is acting both as principal and agent may be exercising an option listing agreement. An appraiser asked to appraise a church would most likely use what valuation approach? cost approach For which of the following activities would the broker not require specific authority from the principal? to use the services of an administrative assistant to prepare the sales brochure for the house The value of the largest house located in a neighborhood of smaller homes may be affected according to the principle of regression. In the sales comparison approach, the value of a feature present in a comparable that is not present in the subject is subtracted from the selling price of the comparable. Among other activities, which of the following does the Federal Reserve System do to control the supply of money available for loans? set the discount rate When two people cosign a note that requires joint and several liability, it means that each cosigner can be required to pay the entire loan amount if the other defaults. Which of the following will be affected by California usury laws? a private lender making a loan to buy a house Due to an increase in his home's value, a homeowner refinances his home for an amount larger than the original mortgage. After a few years, his financial situation changes and he can no longer make his mortgage payments. Due to a downturn in the marketplace, the foreclosure sale of the house does not cover the amount of the mortgage. His lender can sue for a deficiency judgment. In a loan situation, what does a mortgage do? It acts as the security instrument for the loan. Which of the following is correct? A trustor conveys title to a trustee on behalf of a beneficiary. A buyer purchases a property for $260,000 with 100% financing and is required to obtain private mortgage insurance (PMI). Assuming the property's value has not changed, at what point will the buyer be able to stop paying for the PMI? when he has paid off $65,000 A holder in due course would probably not be able to enforce a note if the note maker used a defense of forgery. In the case of a VA loan where the buyer signed a contract prior to receiving a CRV, what are the buyer's rights? He can cancel the contract if the CRV is less than the purchase price if such a contingency is written into the contract. A deed in lieu of foreclosure will avoid a foreclosure sale. Which of the following types of mortgage loans do not fall under RESPA requirements? private loans being retained by the lender A person making loans on owner occupied residential property fewer than how many times a year is exempt from Regulation Z? 6 The secondary mortgage market includes all of the following except -FDIC Which of the following is true of VA loans? The lender can require a down payment. The VA permits refinancing under all except which of the following conditions? to purchase a second investment property home What clause in the original mortgage loan or trust deed would prevent the use of a wraparound mortgage by a seller? due on sale clause A deed of reconveyance is used to convey title from the trustee to the trustor A security instrument in a loan hypothecates the property. Owner A buys property near a lake and crosses his neighbor's property every day for more than five years to get to the lake. At this point, having never discussed the matter with his neighbor, Owner A has most likely acquired what with respect to his neighbor's property? easement by prescription According to the laws of intestate succession, where there is community property owned by Spouse A and Spouse B, in the event of the death of Spouse A, Spouse A's half of the property will go to Spouse B. In researching a chain of title on a piece of property being sold, which of the following is true? The current grantor was the previous grantee. Increasing the value of a property by constructing a building on it is called improvement. The warrantees in agrant deed are implied. Escrow agents are licensed by the Department of Corporations. Fuel oil left in the tank at the time of closing is best described as a credit to the seller. If a property is purchased subject to an existing mortgage loan, the escrow agent will ask the lender for a(n) beneficiary statement. Paying referral fees for directing title insurance business is illegal. The apportionment of tax payments at closing is known as proration. The premium for the title insurance insuring the lender is generally paid by the buyer A California real estate broker is negotiating with someone in San Francisco to buy property in Nevada. California requires him to have nothing more than his California broker's license. The major difference between a real estate broker and a real estate salesperson is that the broker can accept commissions from a client the salesperson cannot. An attorney in fact may be authorized by a power of attorney to act on the behalf of a principal in certain matters. ... The prepaid rental listing service license requires a surety bond of $10,000 Which of the following is a disclosable material fact? A new bedroom was added onto the house by the current owner. A buyer moves into a seller's property two weeks before escrow closes. The buyer would most likely be a(n) tenant. The obligation of a real estate agent to inspect a property for material defects extends to one- to four-family houses only. The California Real Estate Recovery Account is designed to compensate victims of all but which of the following? physical injury Who is responsible for disclosing material defects and material facts to the buyer? the seller, the seller's agent or the buyer's agent When a payment is made on behalf of a licensee from the recovery account, what must occur before the licensee's license can be reinstated? The licensee must reimburse the trust fund the full amount paid. Which of the following activities would not require a real estate license? selling your own commercial property The lead based paint disclosure law requires brokers to complete the disclosure form A one-family home is sold "as is" by a homeowner. Which of the following disclosures will not be required? agency disclosure Disclosures of seismic hazards and earthquake fault areas are mandatory How many members other than the commissioner are on the California Real Estate Advisory Commission? ten