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PA National Practice Exam - Colibri Real
Estate-Graded A
Earl orally agreed to an 18-month lease with landlord Blake. Is this contract enforceable? Yes, all oral leases are enforceable. No, all leases for longer than one year must be in writing to be enforceable. Yes, all leases for longer than 6 months are enforceable. No, it is not enforceable unless Earl is older than 50 years old. - ANSWER-No, all leases for longer than one year must be in writing to be enforceable. On a $280,000 loan, the lender charges a 2 point service charge. How much does the borrower have to pay for just these two points? $28, $ $2, $5,600 - ANSWER-$5, 160 County Drive has 4 acres of open pasture and a 1,900 square foot home. The home has 2 bedrooms and 4 bathrooms. Call 555-555-5555 now for information! What is missing from this advertisement that makes it a blind ad? The price The broker's identification The reason the property is for sale How long the property has been on the market - ANSWER-brokers identification A(n) ________ is one that conflicts with the ordinances that were enacted after the use commenced. illegal conforming use enhanced nonconforming use escheat use legal nonconforming use - ANSWER-legal nonconforming use Why is the condition of bearing walls more important than non-bearing walls? Bearing walls protect the home from the outdoor elements and radon gas. Bearing walls are part of the interior framework of the house. Bearing walls support the ceiling and the roof. Bearing walls are much weaker than non-bearing walls. - ANSWER-Bearing walls support the ceiling and the roof. The cost to replace an improvement with original materials is known as
replacement cost. placebo cost. cloning cost. reproduction cost. - ANSWER-reproduction cost Real estate licensees should know enough about building ordinances to be able to conduct a professional home inspection. provide solid legal advice. answer all client questions about a building's compliance. alert clients of potential problems in a home. - ANSWER-alert clients of potential problems in a home. Which parties typically purchase title insurance once the transaction is complete? The HUD and seller The lender and buyer The licensee and buyer The broker and lender - ANSWER-The lender and buyer Broker Austin represents a party in a transaction where there is a dispute regarding the deposited escrow money. What should Austin do? Hold the money until both parties (or their lawyers) provide a written release. Claim the escrow money for himself and move it into his personal account. Split the money evenly between the buyer and seller and let them fight it out. Immediately release the money to the party he represents. - ANSWER-Hold the money until both parties (or their lawyers) provide a written release. What is a disadvantage of real estate investment? There is very low risk. It is not highly liquid. The cost of improvements may be depreciated or deducted over an arbitrary period of time. Real Estate has shown an above average rate of return. - ANSWER-It is not highly liquid. A type of mortgage which allows the lender to increase the outstanding balance of a loan up to the original amount of the loan in order to advance additional funds is called an wraparound mortgage. take-out mortgage. open-end mortgage. spiral mortgage. - ANSWER-open-end mortgage. If a cooperating broker accepts the offer of subagency from a listing broker, to whom does the cooperating broker owe fiduciary duties? Seller Listing broker
The Quarry Mountain Subdivision requires all properties to have fences that are at least 8 feet tall surrounding each property. This is an example of a zoning restriction. an easement. escheat. a deed restriction. - ANSWER-deed restriction In the appraisal process, looking at the number of recreational facilities, the distances to schools and adequacy of public transportation is called demographic analysis. market data approach. neighborhood analysis. comparative market analysis. - ANSWER-neighborhood analysis. What is a forecast of income and expenses that can be projected over five years? Cash flow statement Stabilized budget Balance Sheet Capital budget - ANSWER-Stabilized budget A stabilized budget is a forecast of income and expenses that can be projected over a short period of time, usually five years. Which of the following legal description methods has been used the longest in the US? The rectangular survey system The recorded plat system The British survey system The metes and bounds system - ANSWER-metes and bounds A written pledge by a lender to lend a certain amount of money to a qualified borrower on a particular piece of real estate for a specified time under specific terms is a(n) bridge approval. delivered approval. conditional approval. permanent acceptance. - ANSWER-conditional approval How does the Federal Reserve control lenders? They set the range of acceptable loan amounts. All loan underwriters are employed by the Federal Reserve. They tell lenders what percentage of assets they must keep as reserves. They set the number of loans that can be made. - ANSWER-They tell lenders what percentage of assets they must keep as reserves. If a cooperative corporation cannot pay its bills, what would happen? Only the residents who have not paid their rents on time can be affected.
The HUD will bail out the struggling cooperative. The corporation owning the property would be dissolved, and all of the residents could lose their interest in the cooperative. The cooperative must evict all of the current stock holders. - ANSWER-The corporation owning the property would be dissolved, and all of the residents could lose their interest in the cooperative. Which of the following would qualify as an example of retail property? A hospital A farm A shopping center A warehouse - ANSWER-shopping center The system of land ownership in the United States is known as what? The allodial system The feudal system The aristocratic system The riparian system - ANSWER-allodial The size of jurisdiction's tax base is derived by adding exemptions to market values. dividing the number of eligible properties by the total number of properties. subtracting exemptions from assessed values. multiplying the total income of the jurisdiction's property owners by the millage rate. - ANSWER-subtracting exemptions from assessed values. Tax base = assessed values - exemptionsThe The first step in the appraisal process is to estimate the value of the land. state the problem. analyze the neighborhood. gather data. - ANSWER-state the probelm Under what type of contract is a seller obligated to sell, but the buyer is not obligated to buy? Bilateral Option Chance Recovery - ANSWER-option Licensee Alex only represents the buyer in a transaction. What is Alex called in this situation? A listing agent A dual agent A single agent
Which statement about a deed in lieu of foreclosure is false? It gives the borrower an opportunity to change the loan terms. The borrowers' credit is hurt less than in a formal foreclosure. It avoids public notice of the foreclosure. There is less risk to the lender that the borrower will damage the property in revenge for the loss of the property. - ANSWER-It gives the borrower an opportunity to change the loan terms. Which of the following would be found in a management proposal? Tenant credit histories The desired demographic of the property Schedule of maintenance requirements A list of all pets residing in the complex - ANSWER-Schedule of maintenance requirements Given the net income of a property, the appraiser can determine an opinion of the value for that property by multiplying by the rate of depreciation. multiplying by the rate of economic appreciation. dividing by the percent of capital gains. dividing by the rate of capitalization. - ANSWER-dividing by the rate of capitalization. A broker induces an owner to sell by telling him that Muslims are moving into the neighborhood. This broker is guilty of greenlining. conversion. testing. blockbusting. - ANSWER-blockbusting What is the balance on an amortized loan of $780,000 after the first payment if the interest rate is 5% with a monthly P&I payment of $3,780? $779, $776, $776, $779,121 - ANSWER-$779, multiple balance by 5%, divide by 12. subtract from monthly payment. subtract final answer by balance Which form does RESPA require lenders to use to detail the costs that the buyer and seller will pay at closing? Loan Estimate Truth-in-Lending Form Closing Disclosure RESPA Settlement Statement - ANSWER-closing disclosure
Which of the following statements best describes what happens with a judicial foreclosure? The mortgaged property is transferred directly to the lender. The mortgaged property is sold without the supervision of a court. The mortgaged property is sold under the supervision of a court. The mortgaged property is transferred directly to the state - ANSWER-The mortgaged property is sold under the supervision of a court. Which of the following types of property sales typically requires a property condition disclosure? A transfer of an interest that is less than fee simple A foreclosure or deed-in-lieu of foreclosure A property transferred to the seller's parent A three unit, multi-family dwelling - ANSWER-A three unit, multi-family dwelling Bobbie decided to redeem her property after a tax sale. Bobbie exercised her legal right of rescission. statutory right of redemption. optional right of disclosure. required right of recourse. - ANSWER-statutory right of redemption. Robert owns his property and enjoys the full bundle of rights. Can he use his property as collateral for debt? Yes, Robert can encumber the property, but only if the debt is less than $10,000. Yes, Robert can encumber his property. No, Robert cannot encumber his property. Yes, Robert can encumber the property, but only if the debt is more than $50,000. - ANSWER-Yes, Robert can encumber his property. A seller decided to back out of a sales contract for no good reason. What recourse does the buyer have? To sue for specific performance To sue the state's Recovery Fund No recourse To sue the seller's broker for breaking the contract - ANSWER-To sue for specific performance Which principle is used with the Sales Comparison Approach to value? Substitution Anticipation Contribution Assemblage - ANSWER-Substitution Broker Jack has an agreement with seller Mauve that says Jack will receive compensation if anyone except Mauve sells Mauve's home. This is an example of
PEX piping is lightweight but not flexible. PEX piping is able to withstand both high and low temperatures and it is highly resistant to chemicals. PEX piping is strong and sturdy. PEX piping is ideal for septic systems and sewer systems. - ANSWER-PEX piping is able to withstand both high and low temperatures and it is highly resistant to chemicals. Broker Ron wants to open a separate escrow account for each transaction he is involved in. Is this legal? No, only lawyers and trust companies can open escrow accounts. No, each broker can only have one escrow account. Yes, this is legal unless he has more than three escrow accounts open at once. Yes, there is no legal limit on the number of escrow accounts a broker can have. - ANSWER-Yes, there is no legal limit on the number of escrow accounts a broker can have. One of the major considerations in a master plan is how to best maximize tax revenue. the effect of new development on traffic patterns and the environment. the effect on the voting boundaries of an area. the effect on the culture of an area. - ANSWER-the effect of new development on traffic patterns and the environment. Which of the following is a valuable skill for a property manager to have? Knowledge of building systems Knowledge of how to steer tenants into specific buildings Knowledge of appraisal Knowledge of mortgage disclosure - ANSWER-Knowledge of building systems Under the _______ of recording, title passes when the conveyance is registered on the title certificate. Binder system Torrens system Metes system Meridans system - ANSWER-Torrens system Alex's home has been on the market for eight months. What is the most likely reason Alex's home has not been sold yet? There has not been enough advertising done by the broker. The property is overpriced. The kitchen is ugly and outdated. The air conditioner is old. - ANSWER-The property is overpriced. Non-judicial foreclosure is required to foreclose on a Deed of Recovery. Chain Deed.
Deed of Trust. Deed of Liability. - ANSWER-Deed of Trust. Francis just signed the papers on a conventional 30-year, $210,000 loan. He was wondering what type of interest will he be paying on the loan. What is the correct answer? Complex interest Simple interest Revolving interest Repetitive interest - ANSWER-Simple interest Which of these statements about the Americans with Disabilities Act is TRUE? The Americans with Disabilities Act did not take effect until 2004. A duplex owner might need to remodel the kitchen in the rental unit to accommodate persons with disabilities. An apartment manager might be required to allow a tenant with a disability to widen a doorway. Since most real estate firms are private places, they do not fall into ADA's definition of a public accommodation. - ANSWER-An apartment manager might be required to allow a tenant with a disability to widen a doorway. Of the following liens: a $100,000 mortgage, a $2,500 property tax bill, and a $8, mechanic's lien, and a $25,000 judgment lien, which will be paid off first after a foreclosure sale? The $8,000 mechanic's lien The $25,000 judgment lien The $100,000 mortgage The $2,500 property tax lien - ANSWER-The $2,500 property tax lien Broker Jon is attaching a rider strip to a For Sale sign. What information is most likely on this rider strip? Jon's license number A picture of Jon The owner's phone number Jon's cell phone number - ANSWER-Jon's cell phone number If a comparable has one less bathroom than the subject, an adjustment is made by adding value to the subject. deducting value from the subject. adding value to the comparable. deducting value from the comparable. - ANSWER-adding value to the comparable. If the subject property is better, add value to the comparable. In making adjustments, one always adjusts the values of the comparables - never the subject.
Home Hoarding Realty is advertising to the public that their managing broker has been in the business 37 years and has sold over 1,250 homes. This is an example of selfish advertising. product advertising. institutional advertising. antitrust advertising. - ANSWER-institutional advertising. A cooperative is a type of residential property. a type of commercial property. a hybrid between residential and recreational property. a type of institutional property. - ANSWER-a type of residential property. Seller Monica is selling her property to Harriet. What is Monica's primary responsibility at closing? To deliver marketable title To ensure the closing is conducted properly To ensure her agent gets paid To sign Harriet's new mortgage documents - ANSWER-To deliver marketable title What is the most common lease term for space in an office building? 3-6 months 2 years 1 year 3-5 years - ANSWER-3-5 years Gerald is 55, single, and resides on his 3 acre property. Why will Gerald qualify for a homestead exemption? Because he is over 50 years old Because he is single Because he lives on the property Because the property is larger than 1 acre - ANSWER-Because he lives on the property Mary abandoned her property by failing to pay its property taxes, and the property reverted to the state. This is an example of condemnation. a zoning exception. escheat. eminent domain. - ANSWER-escheat. New salesperson Juliet has been assigned office duty for Saturday and Sunday. What is another common term for office duty? Compliance time Floor time Chill time Time-in - ANSWER-floor time
A(n) ________ contract is one that unduly favors the party with superior bargaining power. equal dual reasonable unconscionable - ANSWER-unconscionable Should a licensee who represents both the buyer and seller tell the buyer about material defects on the seller's property? No, material defects cannot be shared with the buyer when dual agency exists. Yes, any defects known to the broker should have been disclosed to the buyer. No, the broker can only disclose material facts that the seller tells him to disclose. No, caveat emptor would apply in this case. - ANSWER-Yes, any defects known to the broker should have been disclosed to the buyer. Which clause protects a lender if he does not want the loan to be assumed by another party? Abandonment Subordination Satisfaction Alienation - ANSWER-Alienation An income producing property rents for $2,790 per month and the GRM is 97. What is the estimated market value of the property? $270, $287, $1,004, $301,550 - ANSWER-$270, How does Planned Unit Development zoning differ from ordinary zoning? It applies only to residential and commercial properties. It is organized by HUD instead of local zoning committees. It requires developers to obtain a separate building permit for every structure. It requires that multiple tracts of land be developed according to a single design for efficient use of space. - ANSWER-It requires that multiple tracts of land be developed according to a single design for efficient use of space. What is the definition of "valuable consideration" in regard to contract validity? Cash or cash equivalents Tangible goods Something specifically offered in exchange for something else Something offered by only one party - ANSWER-Something specifically offered in exchange for something else Which of the following best describes the principle of conformity?
What is another common name for the lot and block system of legal descriptions? The metes and bounds system The recorded plat method The urban survey system The triangular plat method - ANSWER-The recorded plat method A tenant who stays beyond his lease without consent of the landlord is known as a tenant at request. a freeload tenant. a tenant at sufferance. an encroaching tenant. - ANSWER-a tenant at sufferance. Morgan owned a large condominium on the ocean. She died and no legal heirs were found. Who will receive title to the property? The state or county The previous owner of the condominium unit The Federal Government The developer of the condominium complex - ANSWER-The state or county The cost of doing direct mail advertising depends on the amount you have to pay the state's Real Estate Commission for approval. the frequency of the mailings. the percent of people that reply. the date of the mailing. - ANSWER-the frequency of the mailings. Which of the following wills may be considered invalid? A will written by someone who is only 23 A will that is not signed A will that is indicated to be a "last will and testament" A will that has been completed voluntarily - ANSWER-A will that is not signed Vicky was posing as a customer of Establishment Realty. However, she was really there to see if Establishment Realty was following fair housing laws. Vicky was a tester. block watcher. yellowliner. checker. - ANSWER-tester Neal's home has been foreclosed on and sold at a Sheriff's sale. The sale brought in $500,000 and the total liabilities on the home were $425,000. Who receives the additional $75,000? The lender Neal The purchaser of the property The state's Real Estate Commission or Recovery Fund - ANSWER-neal
Who can qualify for an FHA loan? Eligible veterans only, or widows of veterans who have not remarried People with a net worth over $1,000, Anyone with qualified income Only members of protected classes - ANSWER-Anyone with qualified income When the agency relationship has been terminated, the licensee is no longer considered the principal's agent and does not owe any further duties to the principal except for loyalty and accounting. accounting and confidentiality. obedience and loyalty. care and obedience. - ANSWER-accounting and confidentiality.
