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Pass With This California Real Estate Exam
Multiple Choice Prep Questions and Answers.
- The first component of real estate is land, which includes: - Correct Answer-d — Land is inclusive of all listed answer choices. The northeast 1/4 of a section contains: a. 160 acres. b. 320 acres. c. 10 acres. d. 40 acres. - Correct Answer-a — There are 640 acres in a section. Divide this by four to find the area of a quarter section, 160 acres.
- How many square feet are in three acres of land? a. 130, b. 217 , c. 143, d. 43,560 - Correct Answer-a — An acre of land contains 43,560 square feet. Thus, three acres of land equals 130,680 square feet. The conversion of acreage to square feet is the most common type of math question on the state exam.
- All of the following are acceptable means to obtain title, except: a. grant. b. escheat. c. adverse use. d. descent. - Correct Answer-b — An individual may not obtain title by escheat. Only the state government may acquire title through escheat.
- There are baseline and meridian systems in California.
a. 36 b. 12 c. 3 d. infinite - Correct Answer-c — The three baseline and meridian systems in California are Humboldt, Mt. Diablo and San Bernardino.
- Which of the following would be the least desirable reference point for a metes and bounds description? a. The corner of a section. c. The corner of a quarter section. b. A township line. d. A riverbank. - Correct Answer-d — A riverbank may shift over time.
- A lot contains 73,000 square yards. How many acres does this equal? a. 29 b. 14. c. 10 d. 15.1 - Correct Answer-d — The parcel of land is described in square yards. First determine how many square feet this equals by multiplying the square yard by 9. 73,000 x 9 = 657,000 square feet. Then, divide by 43,560 (the square feet in one acre). 657,000 / 43,560 = 15.1 acres.
- Which of the following statements regarding zoning is true? a. Zoning is never retroactive. b. Aesthetic values are not an interest in the establishment of zoning. c. Zoning always takes precedence over deed restrictions. d. Zoning law always keeps commercial and residential properties separate. - Correct Answer-a — Zoning cannot apply to existing structures, only structures to be built.
- Before a new home can be occupied: a. All construction loans need to be paid off. b. A certificate of occupancy must be issued by the local building department.
c. A notice of completion needs to be recorded by the owner. d. Offsite improvements need to be complete. - Correct Answer-b — A certificate of occupancy issued by the building department is proof of habitability.
- On a zoning map, 'M' generally indicates: a. Multiple use. b. Multi-unit. c. Manufacturing. d. Mobile homes. - Correct Answer-c — M = manufacturing, C = commercial, R = residential.
- The Subdivision Map Act grants control to the: a. Corporation counsel. b. Department of Real Estate (DRE). c. Local government d. State building inspector - Correct Answer-c — The Subdivisions Map Act is controlled by local authorities. Subdivided Lands Law is controlled by the DRE.
- An owner with riparian rights has rights relating to the use and ownership of water from which of the following sources: a. rivers, streams and watercourses. b. oceans and bays. c. underground caves with water. d. swimming pools and watering systems. - Correct Answer-a — Riparian rights apply to all surface waters.
- Individual ownership of a lot and common ownership of other areas in the development constitutes a: a. Fully improved subdivision. b. Planned unit development (PUD). c. Multi-unit apartment project.
d. condominium. - Correct Answer-b — A planned unit development (PUD) has common areas in addition to individual ownership of a house.
- The Real Estate Commissioner rescinds their approval of a subdivision by: a. issuing an injunction. b. issuing a writ of prohibition. c. revoking the developer's license. d. issuing a desist and refrain order. - Correct Answer-d — To stop a development, the Real Estate Commissioner files a desist and refrain order against the developer.
- A roof on which all four sides slope to the eaves is classified as a: a. gambrel roof. b. gable roof. c. mansard roof. d. hip roof. - Correct Answer-d — A roof with four sides is called hip. A two-sided roof is gable.
- Real property does not include: a. watercourses. b. improvements. c. fences. d. leasehold estates. - Correct Answer-d — A leasehold estate is less-than-freehold, and therefore not real property.
- Which of the following is regarded as real property? a. Growing crops that have been mortgaged. b. Crops that have been sold but have not been harvested. c. Riparian rights. d. Trade fixtures. - Correct Answer-c — Riparian rights go with the land and are appurtenant to it.
- A primary difference between real and personal property is that real property: a. can be held in joint ownership. b. is immovable. c. is always subject to depreciation. d. can be willed. - Correct Answer-b — Land is immovable, personal property is not.
- A dispute over ownership rights and interests held in real property may be settled by: a. A quiet title action. b. A partition action. c. A declaratory relief action. d. A lis pendens. - Correct Answer-a — Quiet title is a court action to clear clouds on a property's title.
- If a person dies without a will and with no identifiable heirs, the state acquires title to their real property through: a. patent. b. condemnation. c. escheat. d. forfeiture. - Correct Answer-c — Escheat is a state action to revert property to government ownership when an owner dies with no will or heirs.
- All of the following are rights of ownership, except: a. Severance rights. b. Eminent domain rights. c. Riparian rights. d. Reliction rights. - Correct Answer-b — Eminent domain is the government power to seize property written into the U.S. constitution. Reliction refers to an increase in land bordering a body of water due to receding water.
- Basic regulation of the housing and construction industries is performed by: a. the State Housing Act. b. local building codes.
c. the state Contractor's License Law. d. All the above. - Correct Answer-d — All the above. Each entity plays a role in construction and housing standards.
- The general purpose of local building codes is to assure: a. The most efficient utilization of skilled labor. b. Compliance with regulatory agencies. c. Compliance with minimum construction requirements. d. Cost effectiveness in building through uniformity of building standards. - Correct Answer-c — Local building codes are not concerned with labor, regulation or cost effectiveness.
- Private restrictions on the use of land are best created by: a. Verbal agreement. b. Ratification. c. Constructing a physical barrier around the property. d. Recording the restrictions with the county recorder, with reference made in the deed to each parcel. - Correct Answer-d — Of the answer choices provided, the best way to create a private restriction on the use of land is by recording the restrictions with the county recorder. However, a private restriction may also be created through a developer's restrictions for a subdivision or through a written agreement.
- "Potable" means: a. Drinkable water. b. Sewer systems. c. Backfill. d. Plumbing metal. - Correct Answer-a — Potable water is suitable for drinking.
- Placing two or more contiguous units under common ownership for the purpose of increasing the value is known as: a. Dual ownership. b. Severalty ownership.
c. Plottage d. Reversion - Correct Answer-c — The act of combining parcels of real estate is referred to as assemblage. The increase of value is referred to as plottage.
- Which of the following is shown on a plot map? a. Thickness of exterior walls. b. Topography of the surrounding area. c. Location of the improvement on the lot and its relationship to surrounding features. d. Foundation features and construction materials. - Correct Answer-c — Beware of the incorrect answer B. Topography, referencing the lay of the land. Topography is not included on a plot map.
- Personal property may not: a. Become real property. b. Be hypothecated. c. Be alienated. d. None of the above. - Correct Answer-d — Beware of question construction phrased in the negative, "may not." Here, you need to identify the answer selection that does not correctly complete the question. As personal property may undergo any of the activities referenced in all of the answer selections, None of the above is correct.
- The physical components of a subdivision are controlled by the: a. Department of Real Estate (DRE). b. City or county planning commission. c. Department of Architecture. d. Division of State Lands. - Correct Answer-b — The Subdivision Map Act controls the physical elements of a subdivision which is overseen by local governments.
- Mary held a life estate for her lifetime in a single family residence. She leased the residence to Martha for a five-year period, but died a few weeks after the lease began. The lease was:
a. Invalid on its face, because the holder of a life estate does not have the right to lease the property. b. Continued in effect for the full five-year term. c. Valid only during the life of the lessor (Mary). d. Valid only if Martha was unaware of the life estate when the lease was created. - Correct Answer-c — When a life estate ends, the ownership of the real estate transfers and therefore existing contracts also end.
- What notice is filed first in regards to a mechanic's lien? a. Notice of Nonresponsibility. b. Notice of Cessation. c. Notice of Completion. d. Notice to Perform or Quit. - Correct Answer-a — An owner may prevent the attachment of a mechanic's lien by recording and posting a Notice of Nonresponsibility within ten days after they become aware of tenant-contracted improvements.
- A subcontractor uses a __________ to notify a general contractor or the owner of their right to record and foreclose a mechanic's lien against property when they are not paid. a. Notice of Default b. Right of First Refusal c. 20 - day preliminary notice d. 30 - day Notice to Vacate - Correct Answer-c — Before a subcontractor employed by a contractor may record a mechanic's lien against real estate and enforce it by foreclosure, they perfect their lien rights by serving a 20 - day preliminary notice.
- All of the following are examples of specific liens, except: a. A property tax lien. b. A blanket mortgage. c. A judgement for punitive money damages. d. A mechanic's lien. - Correct Answer-c — A judgment for punitive money damages is filed against an individual rather than a specific property. Which of the following is a lien? a. recorded notice.
b. homestead. c. easement. d. attachment. - Correct Answer-d — lien always has a dollar value. Therefore, the only correct answer is the attachment.
- If a lien covers all properties of the debtor in that county where it is recorded, it is known as a: a. lis pendens. b. specific lien. c. general lien. d. mechanic's lien. - Correct Answer-c — As the lien attaches to multiple properties owned by the debtor, versus a specific property, it is referred to as a general lien.
- All of the following are required by an occupant to establish title by adverse possession, except: a. They have occupied the property in a way which constitutes no notice to the record owner. b. The payment of taxes for five years. c. Open and notorious use. d. Hostile use. - Correct Answer-a — This question is phrased in the negative. All other answer choices are conditions that need to be met to establish title by adverse possession. Tip: the answer choices in this question may provide the answer for later exam questions on this topic.
- All of the following are appurtenances that go with the land, except: a. Buildings. b. A swimming pool. c. Fences. d. A trade fixture. - Correct Answer-d — This question is phrased in the negative. Trade fixtures are personal property and do not go with the land.
- Ownership rights and interests in real estate are called:
a. Land sales contracts. b. Estates or fees. c. Liens. d. Tenancies. - Correct Answer-b — Ownership might be a fee title or a life estate. Both are examples of a freehold estate.
- Which of the following is an example of a freehold estate? a. Beneficiary interest. b. An estate at sufferance. c. A life estate. d. An estate at will. - Correct Answer-c — A life estate is an example of a freehold estate.
- All of the following are less-than-freehold estates, except: a. An estate for years. b. Leasehold interest. c. A life estate. d. An estate at sufferance. - Correct Answer-c — Freehold is ownership. Less-than- freehold is a leasehold.
- Which of the following best describes an estate of indefinite duration? a. Estate for years. b. Life estate. c. Periodic tenancy. d. Estate of inheritance. - Correct Answer-d — An estate of inheritance is a fee title. Therefore, it lasts in perpetuity — an indefinite time.
- In what way is a tenant in an apartment like an owner of a condominium? a. Both hold a fee interest. b. The owner of the condominium and the tenant of the apartment each have an estate in real property. c. The local tax assessor needs to assess each property separately.
d. Both have ownership of an individual unit. - Correct Answer-b — The question asks for what the owner and a tenant have in common. Both interests held by an owner and tenant are described as an estate.
- The word "tenancy" in real property law most nearly means: a. Life tenant. b. The method or mode of holding interest to real property by the lessee or owner. c. The landlord-tenant relationship. d. The right to freely sell a property to another in the open market. - Correct Answer-b — As with the term "estate," both the owner's position as well as the lessee's may be described as a "tenancy."
- Appurtenant rights include the right of ingress and ___________ across adjoining properties. a. Trespass b. Traversal c. Egress d. Pro rata - Correct Answer-c — Access rights include both egress and ingress (entering and exiting), such as with a driveway easement.
- Easements which restrict an owner's ability to maintain or construct improvements interfering with a neighbor's solar energy system are known as ____________ easements. a. airborne b. solar c. galactic d. greenway - Correct Answer-b — Solar panels are generally located on the roof of a structure. A solar easement prohibits the blocking of those panels from exposure to the sun.
- The Real Estate Commissioner, under the Subdivided Lands Law, is initially concerned with which court: a. Small Claims.
b. Superior. c. Federal Supreme. d. State Appeals. - Correct Answer-b — The Subdivided Lands Law is controlled by the Department of Real Estate. Since this is a state entity, the process of elimination excludes the Small Claims, Federal Supreme and Appellate courts, leaving the Superior Court as initially handling real estate disputes.
- An encroachment is: a. A fence built on an owner's property for security and privacy purposes. b. An improvement on real estate, such as a building, fence, driveway or tree, which extends onto a neighbor's real estate. c. A doctrine used by property owners to establish boundary lines. d. An exclusive right-to-use easement. - Correct Answer-b — Encroachment is an example of trespass.
- Upon moving into the home they had just purchased, the owner discovered their neighbor's garage encroached four feet over his property line. lf a friendly settlement cannot be negotiated, the owner may sue the: a. Escrow company. b. Title company. c. Agent, for failure to disclose the encroachment. d. Neighbor, since the encroachment is a trespass. - Correct Answer-d — The neighbor is the one who is trespassing and is the party the owner may sue.
- Lead-based paint was banned by the Federal Consumer Product Safety Commission in: a. 1940. b. 1973. c. 1978. d. 1996. - Correct Answer-c — Under federal law, a lead-based paint disclosure is required on all single family residential property built prior to 1978.
- Environmental hazards located on a property which pose a direct health threat to occupants include toxic mold and:
a. Building materials containing asbestos. b. Recent seismic activity. c. Carbon dioxide gas. d. Very high fire hazard severity zones. - Correct Answer-a — Building materials containing asbestos pose a direct health threat to occupants. Seismic activity and very high fire hazard severity zones are natural hazards occurring off of a property and are not man-made environmental hazards. Carbon dioxide gas is formed during respiration and is vital to sustaining life on earth. It is also not an environmental hazard.
- The Williamson Act provides property tax relief for owners of farmland and open, undeveloped land in exchange for a __________ that the land will not converted to another use. a. two-year agreement b. five-year agreement c. ten-year agreement d. twenty-year agreement - Correct Answer-c — The Williamson Act, also known California Land Conservation Act of 1965, provides property tax relief to owners of farmland and open-space land in exchange for a ten-year agreement the land will not be developed or converted to another use.
- A property owner suffers a loss because of the fraudulent misrepresentation of a broker. The owner is advised to first: a. File a claim with the Real Estate Commissioner. b. File a claim with the Real Estate Education Research and Recovery Fund. c. Sue the broker for damages. d. Collect from the broker's errors and omissions (E&O) insurance carrier. - Correct Answer-c — When a principal feels there is a grievance with a broker, they need to first pursue the broker for damages. If unsuccessful in collecting after prevailing in court, they can then submit the judgment to the Recovery Fund for payment.
- Which of the following is an example of a trust fund violation? a. Holding a deposit check uncashed prior to acceptance at the direction of the buyer. b. Holding a deposit check uncashed after acceptance at the direction of the seller. c. Holding a deposit check uncashed at your own discretion.
d. Failing to disclose a material defect to a buyer which negatively affects the value of a property. - Correct Answer-c — This question concerns the person that has authority to act regarding deposits. Only the principals can decide the proper handling of the check. Answer selection D, while a violation of disclosure law, is not a trust fund and accounting violation.
- The Real Estate Law is part of: a. The Corporations Code. b. The Business and Professions Code. c. The Statute of Limitations. d. Penal Code. - Correct Answer-b — The Real Estate Law is located in a specific state code. Not all real estate companies are corporations, so it would not be reasonable for the law to come from the Corporations Code. The Statute of Limitations has to do with time limits before which action need to be taken. Real estate brokerage is considered a profession, and thus is controlled under the Business and Professions Code.
- Commingling means the opposite of: a. Subrogation. b. Mixing. c. Subordination. d. Separation. - Correct Answer-d — Commingling is nearly identical to the meaning of the word mixing. Therefore, separation would be its opposite.
- A property owner tells the broker that the house is connected to the sewer. The broker relays this information to the buyer, who later finds that the house has septic system in need of repair. The buyer would sue: a. The broker and the owner. b. No one, as they should have checked. c. The broker. d. The owner. - Correct Answer-a — In this instance, the buyer includes the owner in the suit as they are required to disclose a septic system on the Transfer Disclosure Statement (TDS). The broker is also named since they failed in their due diligence to be aware of the septic system.
- A salesperson representing a buyer, in selling properties listed with another broker, is directly responsible to: a. The selling broker. b. The Multiple Listing Service (MLS). c. The listing broker. d. The owner. - Correct Answer-a — The salesperson is always responsible to their broker. Unique to real estate, "selling broker" refers to the buyer's broker.
- A valid agency requires a(n): a. Written agreement. b. Express agreement. c. Attorney-in-fact. d. None of these. - Correct Answer-d — A valid agency doesn't require any of these. It can be triggered by the actions of the principal or agent.
- A listing broker may not be: a. The sole agent of the owner. b. The sole agent of the buyer. c. A sole agent of the seller. d. A dual agent. - Correct Answer-b — The listing broker, also known as a seller's broker, would naturally represent the seller. They could also represent the buyer and therefore be a dual agent. They could never represent solely the buyer.
- An agency relationship would not be created by: a. A verbal agreement. b. Ratification. c. Implication. d. Subrogation. - Correct Answer-d — Subrogation is the substitution of one person for another. Therefore, it would not create an agency relationship whereas all of the others are possible.
- A broker may never:
a. Accept a commission from the buyer and the seller. b. Sell their own property to a customer. c. Act as an escrow. d. None of these. - Correct Answer-d — All of those are legal actions for a broker.
- A seller's broker receives a full price offer on their listing. As they were leaving the office to present the offer, a broker of a second buyer hands them a separate cash offer for $10,000 less than the listed price. What should the seller's broker do? a. Present both offers at the same time. b. Suggest to the first buyer that they improve their offer before the seller's broker will present it to the seller. c. Tell the other broker the property has already been sold. d. Present the first offer and see if the seller accepts that before submitting the other offer.
- Correct Answer-a — Offers need to be submitted to the seller, whether only one or multiple. Any other choice would fail in the agent's fiduciary duty.
- Failing to provide financing in certain communities is called: a. Redlining. b. Redevelopment. c. Panic selling. d. Subordination. - Correct Answer-a — This is an example of redlining. Panic selling is similar to blockbusting.
- All of the following are examples of possible agency relationships in California, except: a. Agent for the buyer. b. Dual agent. c. Agent for the seller. d. Agent for themselves. - Correct Answer-d — An agent is a person who acts on behalf of another. Thus, an agent cannot be an agent for themselves. Here, they are a principal acting for their own account.
- All of the following will terminate an agency relationship, except: a. Mutual consent. b. Death of the agent or principal. c. Estoppel. d. Destruction of the property. - Correct Answer-c — Estoppel is a legal theory under which a person is barred from asserting or denying a fact because of the person's previous acts or words. This would not terminate an agency relationship. All the other answer selections are valid ways to terminate an agency relationship.
- All of the following is essential to the creation of an agency relationship, except: a. Agreement to pay consideration. b. Competency of the principal. c. Consent of the principal. d. A fiduciary relationship. - Correct Answer-a — The creation of agency does not require payment of a fee to be valid.
- Agency relationships may not be created by: a. Voluntary offer by the agent. b. Implied contract. c. Ratification. d. Necessity or emergency. - Correct Answer-a — Agency requires agreement of the parties. A volunteer action by the agent without the corresponding consent of the principal is insufficient.
- A real estate agent may represent all principals in a transaction if: a. They have obtained the consent of all parties to this dual agency relationship. b. They have informed all principals that they are the agent for each principal. c. They are collecting a commission from each principal with the knowledge of the other party. d. All of the above. - Correct Answer-d — In order to properly be a dual agent, the dual agency status needs to be disclosed as soon as possible and all parties must consent.
- The real estate disclosure law which became effective on January 1, 1988 refers to: a. Agency relationships. b. People who arrange credit. c. Disclosures made by sellers. d. The Truth-in-Lending Act (TILA). - Correct Answer-a — The agency disclosure law governing agency relationships became effective January 1, 1988.
- A buyer's agent prepared a purchase offer on a home for their buyer. When should the agent give the buyer the Agency Law Disclosure form? a. As soon as practicable. b. Before showing the buyer the house. c. Before preparing the offer for the buyer. d. On the opening of escrow. - Correct Answer-a — The Agency Law Disclosure is to be made as early as practical, but always before the principal signs any contract.
- A seller's agent listed a ranch for sale under an exclusive right to sell listing. A buyer's agent, working through the local multiple listing service (MLS), presented an offer which the seller accepted. During escrow, the seller's agent discovered the buyer had recently purchased many similar ranches in the area at a far higher cost per acre than had been offered in this transaction. What should the seller's agent do? a. Do nothing because the deal is in escrow. b. Disclose all information to the seller and let the seller decide what to do. c. Cancel the escrow on behalf of the seller and try to resell the property for a higher price. d. Inform the seller, but insist the deal must stay in escrow. - Correct Answer-b — The listing agent's fiduciary duty requires them to disclose all material facts to their client, including the existence of the other transactions.
- Which of the following would be a fiduciary duty of the agent of the buyer? a. Acting with the utmost care, integrity, loyalty and honesty when dealing with the buyer. b. Steering the buyer to 'appropriate' neighborhoods. c. Telling the buyer which lender to use.
d. Communicating to the seller the maximum price the buyer will be willing to pay. - Correct Answer-a — Answer choices B and C are wrong since they work against the concept of the client as the decision maker. Answer selection D is clearly wrong as it is improper to reveal confidential pricing information to the opposing party. Only A meets the requirement of fiduciary duties.
- A real estate broker acts from a position of trust for the seller or buyer. This is described legally as a(n): a. Fiduciary relationship. b. Ostensible agent. c. Dual agent. d. Independent contractor relationship. - Correct Answer-a — The relationship is described as fiduciary. None of the other answer selections describe a relationship of loyalty and trust.
- A seller listed their home for sale with their broker for $400,000. The seller told their broker it was imperative that the property be sold quickly. The seller's broker showed the property to a buyer and told them the seller was financially insolvent and would accept $380,000. Based on the seller's broker's statement, the buyer submits a $380,000 offer which the seller accepts. Concerning the seller's broker's actions, which of the following is true: a. The seller's broker violated their fiduciary obligation to the seller since they acted in excess of their authority. b. When the seller accepted the offer, the broker's actions were vindicated. c. The broker's action were proper since the seller indicated they wanted an immediate sale. d. The broker interpreted the seller's wishes and produced a sale accordingly. Acceptance of the offer made the broker's actions acceptable. - Correct Answer-a — This activity is a violation of the fiduciary duty regardless of the later actions or results.
- A seller's broker receives a written offer on a listed property. They are certain the seller will not accept it. All of the following are acceptable actions for the seller's broker, except: a. Write new terms on the back of the offer and return it to the buyer for approval. b. Change the offer price to what the broker thinks the seller will accept, and initial the change.
c. Present the offer to the seller, and upon rejection, induce the seller to make a counter offer. d. Present the offer to the seller as written. - Correct Answer-b — Changes and counteroffers must be made by the principals. Any action instigated by the agent would be wrong.
- In a real estate sale, when a broker represents only the buyer, this is referred to as a(n): a. Single agency. b. Implied agency. c. Dual agency. d. General agency. - Correct Answer-a — Either representing only the buyer or the seller would constitute a single agency.
- Before a broker may solicit for an advance fee, the advance fee paperwork must be submitted to the ____________ for approval at least 10 days prior to use. a. Department of Real Estate (DRE). b. Secretary of State. c. Department of Housing and Urban Development. d. State Insurance Commissioner. - Correct Answer-a — A broker needs to obtain approval from Department of Real Estate (DRE) prior to soliciting for an advance fee. The other government entities provided in the answer selections have no jurisdiction over the documents.
- When a broker or their agent, acting on behalf of a client, has a competing professional or personal bias which hinders their ability to unreservedly fulfill the fiduciary duty they have undertaken, this is referred to as a(n): a. Conflict of interest. b. Sub agency. c. Dual agency. d. Violation of law. - Correct Answer-a — A personal bias suggests a conflict of interest. The other choices would be inappropriate to the question. Agency, whether dual agency or subagency, would imply a relationship with the client as opposed to some personal or professional conflict.
- A real estate broker is guilty of conversion if they: a. Acted as a dual agent without the approval of all parties. b. Split their commission with an unlicensed party. c. Used trust funds for their personal use. d. Commingled funds. - Correct Answer-c — Unlike commingling which is the mixing of client funds, conversion requires the personal use of client monies.
- The best guideline to determine whether an action is ethical can be found in: a. State legislation. b. The Business and Professions Code. c. The Preamble of the National Association of REALTORS®. d. What is in the best interest of the real estate licensee. - Correct Answer-b — The Real Estate Law is found in the Business and Professions Code, which also covers the ethical practice of licensees.
- Any broker negotiating a transaction as an agent for either party has a(n) to disclose title conditions affecting ownership or use of the property to both parties, not just their client. a. Agency duty. b. General duty. c. Fiduciary dut. d. Common law duty. - Correct Answer-b — A fiduciary duty is owed only to a broker's client. However, the broker also owes a general duty to all parties to disclose any material facts about a property, such as title conditions affecting the property's use.
- A real estate broker sends all of their title business to Wonderful Title Co. In appreciation of the business, the title company pays the broker $10 for each transaction. According to the Real Estate Settlement Procedures Act (RESPA), this practice is: a. Standard business practice in the real estate industry. b. Permissible. c. Permissible if the seller is going to pay for the title services and is told about it and approves.
d. Forbidden. - Correct Answer-d — The Real Estate Settlement Procedures Act (RESPA) explicitly protects consumers from kickbacks and uncompetitive or duplicated fees.
- _______________ are practices which are not openly discriminatory, but result in discriminatory effects. a. Implicit discrimination. b. Sanctioned discrimination. c. Overt discrimination. d. Complicit discrimination. - Correct Answer-a — Implicit suggests something that is implied or understood, though not directly expressed, eliminating answer selection B. Sanctioned discrimination and C. Overt discrimination.
- Which of the following is an attorney-in-fact? a. A principal who has been given implied powers of agency. b. An agent performing a dual agency. c. A legally competent person who has been given a power of attorney to act on behalf of another. d. A lawyer acting as the administrator of an estate. - Correct Answer-c — Note that the question contains the word 'attorney' yet the correct answer demonstrates any competent person in possession of a power-of-attorney is qualified. Thus, answer choice C is the best answer.
- A person who is not among the protected groups under the Americans with Disabilities Act (ADA) and can therefore be refused a rental is a(n): a. Alcoholic. b. Pregnant women. c. Drug addict. d. Blind individual with a guide dog. - Correct Answer-c — Only a drug addict is not a protected class under the Americans with Disabilities Act (ADA).
- A real estate salesperson's license has been suspended because money was paid out of the Recovery Account. Their license will not be reinstated: a. Until they pay the person any amount not paid by the Recovery Account. b. Until they pay the Recovery Account for half of the money, plus interest.
c. Ever, as a suspended license may never be reinstated. d. Until they repay the Recovery Account for all money paid, plus interest. - Correct Answer-d — As this is civil action, the answer selection C is inappropriate. Only the full restitution of the funds paid from the Recovery Fund allows for the reinstatement of the salesperson's license.
- When approached by members of minority groups who want to be shown property, a real estate salesperson avoids showing the buyers property in integrated areas. This would be an example of: a. Blockbusting. b. Steering. c. Redlining. d. Best business practice. - Correct Answer-b — Redlining is the refusal to make loans or issue insurance in a neighborhood. Blockbusting is related to listing efforts. Also known as panic selling, blockbusting occurs when an owner is warned about demographic changes in the neighborhood. Steering refers to the discriminatory practice of restricting the rental or ownership of a property to a specific class of people to perpetuate segregated housing.
- Which of these would create an agency relationship: a. Implication. b. Ratification. c. Express agreement. d. Any of the above. - Correct Answer-d — Agency can be created by any of those actions.
- Admiralty Escrow offers a $100 "referral fee" to any real estate agent who opens escrow during the month of May. Under the Real Estate Settlement Procedures Act (RESPA), such an offer: a. Is always allowed. b. Is allowed if disclosed to both the buyer and seller. c. Must be disclosed in the settlement statement. d. Is not allowed. - Correct Answer-d — The Real Estate Settlement Procedures Act (RESPA) does not permit referral fees or kickbacks under any circumstance.
- When a broker deposits their own personal or business funds in a client trust fund account, that act is referred to as: a. Subrogation. b. Subordination. c. Conversion. d. Commingling. - Correct Answer-d — The mixing of monies is commingling, as demonstrated here. In order for this to be conversion, the broker would have to be using client funds for personal purposes.
- The Real Estate Commissioner is authorized to: a. Impose fines on any real estate licensee who is convicted of fraudulent activities. b. Promulgate rules and regulations to enforce the California real estate laws. c. Issue non-resident real estate licenses to states which prohibit their residents from holding California real estate licenses. d. Implement federal lending legislation to encourage a healthy housing market. - Correct Answer-b — The chief officer of the Department of Real Estate (DRE) is the Real Estate Commissioner. The Real Estate Commissioner's principal responsibility is to enforce all the real estate laws pertaining to real estate practice, licensing and the Subdivided Lands Act.
- If a real estate broker fires a salesperson for an illegal act, the broker should inform the Real Estate Commissioner of the firing: a. Immediately by telephone. b. If they choose to. It is not the responsibility of the broker to inform the Real Estate Com missioner. c. Immediately in writing. It is unconditionally required. d. Never. It is unethical to interfere between the sales licensee and Real Estate Commissioner. - Correct Answer-c — Informing the Department of Real Estate (DRE) of an agent's illegal activity is an unconditional requirement. Therefore, none of the other choices can be correct.
- Agent Andy is hired by Seller Sally to list her property for sale. Sally is under financial distress and is motivated to sell quickly. Later, Agent Andy enters under contract to help Buyer Bill purchase a suitable property. Agent Andy shows Sally's property to Bill and lets Bill know Sally is desperate to sell and will accept a bid lower than the list price. Bill
promptly decides to purchase the property. Since Bill purchased the property so quickly, Agent Andy didn't have the opportunity to reveal to either party that he was acting in a dual agency capacity. Which of the following statements is least correct about this scenario? a. Agent Andy could be subject to disciplinary action by the Department of Real Estate (DRE). b. Seller Sally can recover her money losses from Agent Andy. c. Agent Andy cannot enforce the collection of a commission from Seller Sally. d. Agent Andy can still timely disclose his dual agen - Correct Answer-d — An agent who fails to promptly disclose their dual agency at the moment it arises is subject to the loss of their brokerage fee, liability for their principals' money losses and disciplinary action by the Department of Real Estate (DRE).
- In regards to items of value held in trust, which of the following statements is least likely to be true? a. Trust funds can be kept in separate interest bearing accounts. b. Trust funds for taxes and insurance may bear interest. c. Trust fund accounts must be insured by the FDIC. d. Trust funds cannot take the form of precious gems or stones. - Correct Answer-d — Trust funds come in many forms, including checks, precious metals/stones, stocks/bonds, collectibles, promissory notes, and any other item or evidence of value.
- Who may withdraw money from a trust fund? a. Any person employed by the broker. b. Only salespeople in the broker's employ. c. A corporate director. d. Any authorized employee of the broker. - Correct Answer-d — The broker is required to name the employee who is authorized to withdraw trust funds. The authorized party need not be licensed.
- If an agent discloses to their principal the race, creed, or color of a prospective buyer or tenant, has the agent committed a discriminatory act? a. No, since an agent is obligated to disclose to their principal all material facts that might influence the principal's decisions concerning any real estate transaction.