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A comprehensive set of questions and answers for the california real estate salesperson final exam. It covers a wide range of topics, including real estate contracts, property types, financing, and legal aspects of real estate transactions. Designed to help aspiring real estate professionals prepare for the licensing exam.
Typology: Exams
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(GIM) A variation of the GMRM which is used for commercial properties, but uses annual income figures. – ANS Gross Income multiplier (GRM) A number derived from comparable rental property in an area, which then used to estimate the value of a piece of real estate. The GMRM is only used for one to four unit residential properties. COMPARE: Gross Income Multiplier, which is a variation used for commercial properties that uses annual income. - ANSGross Rent Multiplier (PMI) Insurance offered by private companies to insure a lender against default on a loan by a borrower. - ANSPrivate Mortgage Insurance (RTC) An agency formed to manage the disposition of bankrupt savings and loans.
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[Date] A contract clause that gives a mortgage recorded at a later date the right to take priority over an earlier recorded mortgage. - ANSSubordination Clause A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower. - ANSAcceleration Clause A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price. Also called a purchase and sale agreement, a purchase contract, or an earnest money agreement. - ANSPurchase Agreement A contract in which something remains to be done by one or both parties is best described as a/an: - ANSExecutory contract A contract that has been put into words, either spoken or written. - ANSExpress Contract A contract that has not been put into words, but is implied by the actions of the parties. - ANSImplied Contract
[Date] A contract that has not been put into words, but is implied by the actions of the parties. - ANSImplied Contract A contract that one of the parties can disaffirm, without liability, because of a lack of legal capacity or a negative factor such as fraud or duress. - ANSVoidable Contract A counteroffer represents a change. It is a response to an offer to enter into a contract, changing some of the terms of the original offer. A counteroffer is a rejection of the original offer (not a form of acceptance), and does not create a binding contract unless the new counteroffer is accepted by the original offeror (the counterofferee). - ANSCounteroffer A couple is divorcing. The husband is ordered to convey his interest to the wife. When must she receive the Transfer Disclosure Statement? - ANSIt is not requried. A deed in which the grantor warrants the title against any and all defects that might have arisen before or during his or her period of ownership. Also called Standard Warranty Deed or Simple Warranty Deed. - ANSGeneral Warranty Deed
[Date] A deed in which the grantor warrants title only against defects arising during the time he or she owned the property, and not against defects arising before his or her time of ownership. - ANSSpecial Warranty Deed A deed that grants any interest in property that the grantor may have without making any promises, including the promise that the grantor has any interest in the property being conveyed; often used to clear clouds on title. - ANSQuitclaim Deed A deed that implies the grantor owns the property and has the right to convey it, but does not carry any warranties. - ANSBargain and Sale Deed A defect that is not visible or apparent; a hidden defect that would not be discovered in a reasonably thorough inspection of property. - ANSLatent Defect A document, required by law, which reveals specific information. For example, federal law requires that lenders give buyers a disclosure statement detailing the actual cost of borrowing money from the lender. - ANSDisclosure Statement A false or misleading statement. - ANSMisrepresentation
[Date] A fibrous material that was once very common in many building materials because of its insulating and heat-resistant value. (Now banned in most places for most uses, and subject to strict EPA regulations.) - ANSAsbestos A final lump-sum payment at the end of a loan term to pay off the entire remaining balance of principal and interest not covered by payments during the loan term. - ANSBalloon Payment A financial domain in which various entities-including banks and other financial institutions-produce and issue new securities, such as stocks, bonds, and mortgage loans. - ANSPrimary Market A financing instrument that evidences a promise to pay a specific amount of money to a specific person within a specific time frame. A written, legally binding promise to repay a debt. - ANSPromissory Note A fixed-rate mortgage set up like a 30-year conventional loan, but payments increase regularly like an ARM. Also Rapidly Amortizing Mortgage. - ANSGrowth Equity (GEM) Mortgage A gradual addition to dry land by the forces of nature, as when the tide deposits water-borne sediment on shoreline property. - ANSAccretion
[Date] A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; or, when there is no valid will, a judicial proceeding in which an administrator is appointed to distribute the estate to heirs according to the laws of intestate succession. - ANSProbate A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; or, when there is no valid will, a judicial proceeding in which an administrator is appointed to distribute the estate to heirs according to the laws of intestate succession. - ANSProbate A Latin phrase meaning 'according to value'; used to refer to taxes assessed on the value of property. - ANSAd Valorem A law that requires certain types of contracts to be in writing and signed in order to be enforceable. - ANSStatute of Frauds A legal remedy in which a court orders someone who has breached a contract to perform as agreed, rather than simply paying money damages. - ANSSpecific Performane
[Date] A lender who accepts a mortgage as security for repayment of the loan. - ANSMortgagee A lender who accepts a mortgage as security for repayment of the loan. - ANSMortgagee A licensee who has both a listing and the option to buy must inform the principal of which of the following? A) The amount of profit the licensee will make B) How much the web page cost C) Agency relationship D) How much the ads cost - ANSA) The amount of profit the licensee will make A lien against all property of a debtor, instead of a particular piece of property. - ANSGeneral lien A lien that attaches only to a particular piece of property (as opposed to a general lien, which attaches to all of the debtor's property). - ANSSpecific Lien A life estate 'for the life of another,' where the measuring life is someone other than the life tenant. - ANSPur Autre Vie
[Date] A listing agreement is a contract between: - ANSThe seller and the broker. A listing agreement that entitles the broker to a commission if anyone including the seller finds a buyer for the property during the listing term. - ANSExclusive Right to Sell A listing agreement that entitles the broker to a commission if anyone including the seller finds a buyer for the property during the listing term. - ANSExclusive Right to Sell A listing agreement that entitles the broker to a commission if anyone other than the seller finds a buyer for the property during the listing term. - ANSExclusive Agency A listing of a borrower's credit history, including amount of debt, record of repayment, job info, address info, etc. - ANSCredit Report A loan containing a clause that allows the mortgagor to borrow additional money without rewriting the mortgage. - ANSOpen-End Mortgage
[Date] A loan when buyer and another investor (or seller, lender, etc.) enter into a partnership, with buyer paying an equity share in a deal in lieu of interest. - ANSShared Equity Loan A man who makes a will. - ANSTestator A method in which numerical values are assigned to different aspects of a borrower's loan application and used by lenders to gauge creditworthiness and assess credit risk. - ANSCredit Scoring A method of determining the approximate market value of a home by comparing the subject property to other homes that have sold, are presently for sale, or did not sell in a given area. - ANSCompetitive Market Analysis A month after taking a listing, the listing agent decides that he wants to make an offer to purchase the listing. What special agency disclosure is required? A) That the seller is no longer represented and should seek representation B) No additional disclosure is required C) That the agent will continue to represent the seller D) That the agent will now be a dual agent - ANSA) That the seller is no longer represented and should seek representation
[Date] A mortgage clause allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred or pledged to transfer ownership of the property. Also called Due on Sale Clause. - ANSAlienation Clause A mortgage loan that covers more than one parcel of real estate that is typically used to finance entire subdivision developments rather than an individual unit or lot. - ANSBlanket Mortgage A mortgage that permits the lender to periodically adjust the interest rate so that the rate reflects fluctuations in the cost of money. - ANSAdjutable-Rate (ARM) Mortgage A mortgage where personal property (e.g., appliances) is included in a real estate sale and financed with one contract. - ANSPackage Mortgage A naturally occurring radioactive gas that emanates from rocks; it is odorless, colorless and tasteless but has been identified as a cancer-causing agent. - ANSRadon Gas
[Date] A non-exclusive listing, given by a seller to as many brokers as he or she chooses. If the property is sold, a broker is only entitled to a commission if he or she is the procuring cause of the sale. - ANSOpen Listing A note that calls for payments of interest only during the term of the note, with a balloon payment at the end of the loan term to pay off the principal amount. - ANSStraight Note A parcel of land that separates two other parcels (i.e. a parcel between a residential and commercial strip of land) is called: A) Assessed property B) Bill of sale C) A buffer zone D) A fully capitalized property - ANSC) A buffer zone A party in a transaction to whom an agent does not have a fiduciary duty or relationship, but to whom an agent must still be fair and honest. - ANSCustomer A person appointed in a will to carry out the provisions of the will. - ANSExecutor / Executrix
[Date] A person licensed to represent another in a real estate transaction; or a person authorized to represent another (the principal) in dealings with third parties. - ANSAgent A person who borrows money and gives a mortgage to the lender as security. - ANSMortgagor A person working with a fair housing organization, who pretends to be interested in buying or renting property from someone suspected of unlawful discrimination.
[Date] B) Any representations or contracts entered into by the agent on behalf of the principal are binding upon the principal and/or the principal's estate C) The agency relationship has been revoked by the agent D) Any contracts or representation made by the agent are void since the principal has already died - ANSB) Any representations or contracts entered into by the agent on behalf of the principal are binding upon the principal and/or the principal's estate A principle that says the value of a home is held down by the other homes in an area. (Usually said about the "best" home in the "worst" area.) - ANSRegression A principle that says the value of a home is helped up by the other homes in an area. (Usually said about the "worst" home in the "best" area.) - ANSProgression A process which allows a borrower to remain in possession of the property while using it to secure a loan is called: - ANSHypothecation A property is undesirable to most people because of a past event (often a crime or environmental hazard). - ANSStigmatized Property
[Date] A provision in a contract, deed, law, regulation, guideline, etc. that makes the parties' rights and obligations depend on the occurrence (or nonoccurrence) of a specified event. - ANSContingency Clause A real estate firm has an in-house title company, mortgage broker and home inspection company under one business entity. This is allowable only if: - ANSControl business arrangements are clearly disclosed to the consumer and the consumer is aware that other providers are available. A real estate installment agreement where buyer makes payment to seller in exchange for right to occupy and use property, but no deed or title is transferred until all, or a specified portion of, payments have been made. Also called installment land contract, installment sales contract, land sales contract, real estate contract, and other names. - ANSLand Installment Contract A real estate investment business with at least 100 investors, organized as a trust.
[Date] A recorded notice stating that there is a lawsuit pending that may affect title to the defendant's real estate. - ANSLis Pendens A relationship of trust and confidence, in which one party owes the other (or both parties owe each other) loyalty and a higher standard of good faith than they owe to third parties. For example, an agent is a fiduciary in relation to the principal; husband and wife are fiduciaries in relation to each other. Can be referred to as a client. - ANSFiduciary Relationship A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties. - ANSAgency A restriction on real property use, imposed by a former owner; promise to do or not do an act relating to real property; usually owner's promise to not use property in a particular way. May or may not run with land. Also called: Restrictive Covenant - ANSDeed restriction A right that goes along with ownership of real property; usually transferred with the property, but may be sold separately. - ANSAppurtenance
[Date] A sales agent is selling his own personal property, the condition of which he misrepresents. The agent is sued and raises the defense that he was not acting as an agent in this sale, but rather, was selling his own property personally. The probable outcome of the case is: A) The case will be dismissed for no cause of action B) The sales agent will be held liable C) The sales agent will win D) The broker will be liable - ANSB) The sales agent will be held liable A section of land legally described as the north one-half of the northwest quarter of the southeast quarter of a section of land, contains: A) 20 acres B) 10 acres C) 80 acres D) 40 acres - ANSA) 20 acres A security instrument that creates a voluntary lien on real property to secure repayment of a debt. - ANSMortgage A seller signs an exclusive right to sell listing agreement with a broker. However, the seller's brother-in-law makes an offer on the property the next day, not
[Date] realizing it has been placed in a listing. Which of the following statements is true?
[Date] A specific lien claimed by someone who performed work on the property (construction, repairs, or improvements) and has not been paid. This term is often used in a general sense, referring to materialmen's liens as well as actual mechanics' liens. - ANSMechanic's Lien A standard appraisal report form used by lenders and appraisers because it has been developed and approved by secondary mortgage market players Fannie Mae and Freddie Mac. - ANSURAR A system of ownership and fee simple title to designated areas of air space plus a percentage of ownership of common elements in the property is termed: A) Cooperative B) Chattel C) Condemnation D) Condominium - ANSD) Condominium A tangible or intangible feature that enhances and adds value to real estate. - ANSAmenity
[Date] A transaction that occurred under typical conditions in the marketplace where each of the parties were acting in their own best interests. - ANSArm's Length Transaction A type of credit scoring, where a number from 400-850 is assigned to a credit report. The lower the score, the greater the risk of default. Above 660 is an acceptable risk, 620-660 is a marginal risk, below 620 is a high risk. Also referred to as Beacon Score. - ANSFICO Score A way to convert a property's income figure into an estimated value. - ANSCapitalization A written agency contract between seller and a real estate broker, stating the broker will be paid a commission for finding (or attempting to find) a buyer for the seller's real property. - ANSListing A written agency contract between seller and a real estate broker, stating the broker will be paid a commission for finding (or attempting to find) a buyer for the seller's real property. - ANSListing A written instrument transferring the grantor's ownership of, or interest in, real property. - ANSDeed
[Date] According to the principle of conformity, a residential property maintains a higher value when it - ANSIs in the center of its subdivision. Acquiring title to someone else's real property by possession of it. The possession must be open and notorious, hostile and adverse, and exclusive. California adverse possession laws require at least five years of possession and payment of taxes throughout that period in order to be eligible for legal title. - ANSAdverse Possession Act that requires lenders to disclose consumer credit costs in order to promote informed use of consumer credit. - ANSTruth-in-Lending Act Actual lawful ownership of real property. (This is NOT a document, but rather a concept or theory dealing with ownership.) - ANSTitle Actual lawful ownership of real property. (This is NOT a document, but rather a concept or theory dealing with ownership.) - ANSTitle Actual wear and tear on something due to age, the elements or other forces. - ANSPhysical Deterioration
[Date] Additional funds in the form of points paid to a lender at the beginning of a loan to lower the interest rate and monthly payments - ANSBuydown Additional money charged by a lender for the borrower paying a loan off early. Not permitted for FHA-insured loans or VA-guaranteed loans. - ANSPrepayment Penalty Adverse possession is an example of how title to land an be acquired by: - ANSOccupancy After first reneweal, how many hours of continuing education does an agent need every four years? - ANS45 hours All information the client directs to be confidential, which, if disclosed, would have an adverse effect on the client's position. - ANSConfidential Information All of the following people need a license to practice real estate except: - ANSAny trustee selling under a deed of trust.
[Date] All property acquired by a husband and wife during a valid marriage (except for separate property) is called: - ANSCommunity Property An act contained in Title VIII of the Civil Rights Act of 1968 that created protected classes of people and prohibits discrimination when selling or renting residential property when based on race, color, religion, sex, national origin, familial status, or handicap status. - ANSFederal Fair Housing Act An agency disclosure is necessary in order to: A) Let the client know that the agent represents him B) Let the customer know that the agent represents him C) Let the seller know that agent represents the broker D) Let the buyer know that the agent represents the broker - ANSA) Let the client know that the agent represents him An agency relationship should be created by which of the following methods? A) Ratification B) Expressed written agreement C) Implication D) Estoppel - ANSB) Expressed written agreement
[Date] An agent authorized to handle all of the principal's affairs in one area or in specified areas. - ANSGeneral Agent An agent of an agent; a person that an agent has delegated authority to, so that the they can assist in carrying out the principal's orders. - ANSsubagent An agent realizes that one of the houses in her routine farm area would be a good fit for her buyer customer. The agent gets the seller to agree to pay her broker a commission if the buyer makes an acceptable offer. What kind of agency has been created if no listing agreement was entered into? A) Agency by agreement B) Agency by ratification C) Ostensible agency D) Agency by estoppel - ANSB) Agency by ratification An agent with limited authority to do a specific thing or conduct a specific transaction. - ANSSpecial Agent An attorney in fact is best described as a: A) An attorney at law