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Real Estate Exam Preparation: Accurate Questions and Detailed Answers, Exams of Real Estate Management

A comprehensive guide for real estate professionals preparing for their licensing exams. It covers a wide range of topics, including types of contracts, leasehold estates, real estate broker requirements, adjustable rate mortgages, valuation principles, real estate ownership, financing arrangements, and various real estate laws and regulations. The document offers detailed explanations and answers to over 150 questions, ensuring a thorough understanding of the subject matter. Whether you are a aspiring real estate broker or an experienced professional, this resource can be invaluable in helping you achieve a guaranteed pass on your real estate exam.

Typology: Exams

2024/2025

Available from 09/16/2024

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PSI REAL ESTATE | ACCURATE QUESTIONS

AND DETAILED ANSWERS | GUARANTEED

PASS | GRADED A | LATEST UPDATE 2024-

2025 WITH 150+ QUESTIONS

What type of contract is created neither by a written agreement nor by orally spoken words but only by the actions of the parties?

  • ANSWERS-Implied Contract What type of leasehold estate represents the illegal occupation of the leased premises by the lessee?
  • ANSWERS-Tenancy at Sufference How many hours of real estate instruction are required of a Pennsylvania real estate broker candidate to be eligible for licensing?
  • ANSWERS- 30 What is the maximum length of time for a Pennsylvania exclusive listing contract?
  • ANSWERS-1 year What is the difference called between the rate of interest on an adjustable rate mortgage that is based on an economic indicator and the rate of interest on the same adjustable rate mortgage that is charger to borrowers?
  • ANSWERS-Margin What principle of value refers to the face that the highest values occur where real properties are similar to each other?
  • ANSWERS-Conformity

What is the name of the contract that creates a fiduciary relationship between a selling broker and a buyer?

  • ANSWERS-Buyer Agency Contract How long does the purchaser of a time share or campground membership have to cancel following the date the purchaser executed the purchase contract?
  • ANSWERS-Until midnight on the 5th day What is the amount of money called that can be subtracted directly from an income tax reduce that tax?
  • ANSWERS-Tax Credit What is the name of the IRS status of a real estate agent in which 90% or more of the income of the agent comes from sales production and through which the agent is individually responsible for paying income and social security taxes?
  • ANSWERS-Independent Contractor What is the name of the type of mortgage default arrangement where the mortgagor gives title to the mortgagee instead of the traditional legal procedure?
  • ANSWERS-Deed in Lieu of forclosure From the time of completion of a real estate transaction, how long must a Pennsylvania real estate broker keep records for that transaction?
  • ANSWERS-3 years What is the maximum amount of money the Pennsylvania Real Estate Commission can impose as a fine?
    • ANSWERS-$100.

What is the name of the process for changing real property into personal property?

  • ANSWERS-Severance What is a seasonal crop referred to that requires routine care and is considered to be personal property?
  • ANSWERS-Emblement What type of easement allows access to land-locked land?
  • ANSWERS-Easement by necessity What is the type of zoning change called when a municipal government allows one area of a community to be zoned differently than the remaining community when the exception is made after the zoning rules were enacted?
  • ANSWERS-Spotzoning What us the loss of the right of a property owner to file for a court injunction to prevent the violation of a restrictive covenant because of delay or inaction by a property owner? - ANSWERS-Laches What is the term for the legal status of a person who dies without a will?
  • ANSWERS-Intestate What is the most common secondary mortgage market warehouse agency for mortgage service companies?
  • ANSWERS-Federal National Mortgage Assoc. What is the official name of the party in a contract who accepts an offer?
  • ANSWERS-Offeree

What provision, section or clause in a mortgage requires a satisfaction to be filed and recorded?

  • ANSWERS-Pefeance What is the term that refers to the breach of a contract?
  • ANSWERS-Default From whom may a Pennsylvania real estate for which a person has ownership, the right of possession and actual possession?
  • ANSWERS-Complete Good Title What occurs when the rate of interest increase on an adjustable rate mortgage and a payment cap prevents an increase in the monthly mortgage payment?
  • ANSWERS-Negative Amorization What characteristic of tenancy by the entirety allows the widow of a deceased real property owner to retain the property title?
    • ANSWERS-Right of Surviorvorship What type of lease typically allows for the construction of improvements over a long period of time?
    • ANSWERS-Ground Lease Through what means is the title to personal property transferred?
    • ANSWERS-Bill of Sale What is is the name of the list of previous owners of real property along with a record of their transfers of title?
    • ANSWERS-Chain of Title

What is the name of the compensatory amount money that is typically available to be awarded to the non-defaulting party in a contract as the result of a break of contract?

  • ANSWERS-Liquidated Damages What is the opportunity of a party to a contract to have the exclusive privilege to react to an offer prior to any other party?
    • ANSWERS-Right of First Refusall What is the name of the instrument that a surveyor used in conducting a survey?
  • ANSWERS-Transit How much time does an aggrieved party have to file a claim for compensation form the Pennsylvania Real Estate Recovery Fund including any reviews and appeals to the court judgement ? - ANSWERS-1 year What is the process of pledging real property as collateral security to obtain a mortgage without giving up possession of the property?
    • ANSWERS-Hypothecation What is the financing arrangement in which borrower pays an up-front fee to reduce the payments on the loan for the several years?
    • ANSWERS-Buydown What is the name of the value from a VA appraisal reported?
    • ANSWERS-C.R.V.= Certificate of reasonable value In the valuation of real property what is the sold price of real property called?
    • ANSWERS-Market Price

What protection is needed by a lending institution when a conventional mortgage is given to a borrower who makes a down payment of less than 20%?

  • ANSWERS-P.M.I. Private Mortgage Insurance Withing what time period must required real estate courses be completed by broker and salesperson candidates prior to successful completion of the appropriate licensing examination?
  • ANSWERS-10 years What us the type of real property ownership in which the title to real property is help by a corporation and the occupants have title to shares of stock?
  • ANSWERS-Cooperative Agreement What are the standards of construction called that are requires by most municipalities for building houses?
  • ANSWERS-Building Code How many routine inspections of a real estate office are allowed to be conducted each year by the Pennsylvania Real Estate Commission?
  • ANSWERS- 4 What type of financing is most typically provided by a lending institution when a house is built on unimproved land?
  • ANSWERS-Construction land In what type of listing is the fee to a real estate broker any amount of the sale price that exceeds a guaranteed amount to the seller?
  • ANSWERS-Net Listing

After passing the Pennsylvania salesperson's licensing examination, how long does and applicant have to apply for a license before being required to retest?

  • ANSWERS- 3 What mortgage clause allows the lender to increase the maturity of the debt when the mortgagor has breached the terms of the agreement?
  • ANSWERS-Acceleration What is the name of a contract condition upon which the contract is dependent?
    • ANSWERS-Continguency What is an attorney's written opinion of the status called?
  • ANSWERS-Certificate of title What is the minimum number of public meetings that are required to be held reach year by the Pennsylvania Real Estate Commission?
  • ANSWERS- 3 Who appoints the members of the Pennsylvania Real Estate Commission?
    • ANSWERS-Gov. of Pennsyvania For the purchase of real property, what is the result of subtracting the amount of financing from the sale price of the property?
  • ANSWERS-Down Payment The ability of the government to acquire real property against the owner for the benefit of the public.
  • ANSWERS-Eminent Domain

When real property is conveyed to a party through a will. the real property is referred by what term? - ANSWERS-Devise What is the most complete estate in real property? - ANSWERS-Fee Simple What is an exaggerated term from a real estate agent,that would be considered not true? - ANSWERS-Puffing What is the process of arriving at a final market value conclusion from the estimates of three appraisal approaches to value? - ANSWERS-Reconciliation A document in which a borrower certificate the amount owed on a mortgage loan and the rate of interest. - ANSWERS-Estoppel Certificate This type of mortgage is based on the collateral security pledge of two properties? - ANSWERS- Blanket Mortgage The actual, visible, hostile, notorious, taking of another's land under a claim of title for a statutory period of time. - ANSWERS-Adverse Possession A phrase in a contract that requires the performance of a certain act within a stated period of time. - ANSWERS-Time is of the essence The use of borrowed money to finance the bulk of an investment. - ANSWERS-Leverage What is another name for Regulation Z? - ANSWERS-Truth in Lending Act What is the type of listing contract in which the owners employ one real estate broker but the owners pay no commission fee if they sell their real estate to someone who has not contacted the broker? - ANSWERS-Exclusive Agency

What is the official name of a tenant who remains in a leased property after the lease expires. - ANSWERS-Holdover Tenant A typical business arrangement that is created when individual persons invest money for real estate investments - ANSWERS-Syndicate This type of loan in which the principal as well as the interest is payable in periodic installments over the term of the loan. - ANSWERS-Amortized Loan Number of member on the PA Real Estate Commission - ANSWERS- 11 What is the profit call from the sale of real estate according to the IRS - ANSWERS-Capital Gain The fact that value must be exchanged between the parties to a valid deed refers to what real estate term. - ANSWERS-Consideration What legal action can be sought in court by a mortgagee to recover lost money when the public sale of a forced foreclosed property does not pay off the entire mortgage debt? - ANSWERS- Deficiency Judgement Rights to enter and exit land? - ANSWERS-Ingress & Engress Real estate licensee who supervises an incorporated business that sell lists of available apartment units to prospective lessees. - ANSWERS-Manager of Record What is it called when a lender initiates a court process that will result in the public sale of real property. - ANSWERS-Foreclosure What is the legal term for a buyer? - ANSWERS-Vendee

What is the name of the party being represented in an agency relation ship? - ANSWERS- Principal What the type of mortgage represents a junior lien in which the in which the second lender is used to payoff the first lender? - ANSWERS-Wraparound Mortgage This is an attached item to a leased business property that can be removed by the tenant prior to the lease expiration? - ANSWERS-Trade Fixture What is the contract that allows a junior lien to take priority over the first mortgage? - ANSWERS-Subordination Agreement When title to real property is held by a single person, it is referred to as what form of ownership? - ANSWERS-Severalty The boundary line of real property and the line indicating where the building can be built. - ANSWERS-Setback What type of lease requires the lessee to pay the rent as well as the other cost in maintaining a rented property? - ANSWERS-Net Lease "The Agency Act" Created in 1998 - ANSWERS-Transaction Licensee What approach to values used when an appraiser determines the replacement amount of a building, minus depreciation, plus the estimate land amount/ - ANSWERS-Cost Approach After a buyer's offer to purchase is accepted but before the buyer acquires legal title, what type of interest is held? - ANSWERS-Equitable Title

The difference between the market value of real property and the mortgage debt represents what value to the owner? - ANSWERS-Equity What kind of mortgage is secured by real property as well as appliances? - ANSWERS-Package Mortgage What is the type of listing contract by which a seller can employ 16 real estate offices simultaneously try to sell her real estate with only one commission be paid to the office that finds a buyer? - ANSWERS-Open listing Name of the major Pennsylvania law on fair housing and the year it originated? - ANSWERS- Penn Human Relations Act of 1955 What is the limitation that is placed on the use of real property that is generally initiated by a seller when the title is conveyed? - ANSWERS-Deed Restrictions What is a particular parcel of land called over which an easement runs that benefits an adjacent property? - ANSWERS-Servient easment If a victim of fraud or duress challenges the validity of a contract, what type of contract classification would apply? - ANSWERS-Voidable What is the act of directing prospective buyers toward particular areas of a community without regard to financial qualification? - ANSWERS-Steering This describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc. It is a finance charge expressed as an annual rate. - ANSWERS-APR How many acres are in a square mile? - ANSWERS- 640

What legal remedy allows one party in a contract to attempt to solicit the court to force another contract party in default to fulfill the agreed upon contract terms? - ANSWERS-Suit for specific performance How would a contract be described if all the parties had met all their obligations? - ANSWERS- Executed With what type of deed does the seller guarantee good title to the buyer based upon the seller's ownership interest? - ANSWERS-Special warranty deed What occurs at the end of a mortgage when the loan amount is not fully amortized? - ANSWERS-Ballon Payment What is the amount of money called that could be lost to a seller is a buyer breaches the sales contract? - ANSWERS-Earnest money deposit What is a building called that is situated over the boundary line of the real property owner? - ANSWERS-Encrochment Who is the owner of a life estate? - ANSWERS-Life Tenant What is the law that requires lending institutions to provide borrowers of federally related mortgages with a booklet explaining settlement cost? - ANSWERS-RESPA-Real Estate Settlement Procedures Act What kind of interest does a condo unit owner have in common elements?Tenancy - ANSWERS- Tenancy in Common What PA real estate licensee is not required to take a test of take any hours of instruction in real estate? - ANSWERS-Cemetery Salesperson

What PA real estate licensee is required to pass a licensing test but not take any hours of instruction in real estate? - ANSWERS-Building Owner Salesperson What PA real estate licensee require no affiliation with a real estate broker? - ANSWERS-Rental Referral Agent or Builder Owner Salesperson If a municipality requires a particular area of the community to have curbs, what is the name of the fee charged to each owner for his proportionate share of this public improvement? - ANSWERS-Special Assesment What legal concept identifies the destruction of a property by a life tenant? - ANSWERS-Waste What type of ownership exists when two persons own an unequal, fractional interest in real property without the right or survivorship? - ANSWERS-Tenancy In Common What is the type of deed that is used to transfer ownership of real estate from a trustor to a trustee? - ANSWERS-Trust Deed What is the attempt by real estate licensees to get listings by persuading owners to see their homes as the result of a concern about potential buyers who are of a particular minority group?

  • ANSWERS-Blockbusting To what real estate concept do the following expressions refer: control within the law, exclusion, disposition, enjoyment and possession? - ANSWERS-Bundle of Rights What is the title of the person who has overall responsibility for the real estate transactions of a limited partnership? - ANSWERS-General Partner How long can a Pennsylvania real estate licensee remain inactive after which that person would have to take and pass another licensing examination? - ANSWERS-5 years

What principle of law affecting real estate indicates that prior oral evidence cannot, in most cases, be used to alter the terms of a written contract? - ANSWERS-Parole Evidence Rule The right of a tradesman or contractor to file a mechanics lien is based on what theory? - ANSWERS-Enhancement of Value Theory What is the name of the law that controls all aspects of real estate in Pennsylvania? - ANSWERS-Real Estate licensing and Registration Act What are man made addictions to land called? - ANSWERS-Improvements What is the relationship of trust that a seller has with a real estate broker as the result of both parties entering into a listing contract? - ANSWERS-Fiduciary According to the Rules and Regulations of the Pennsylvania State Real Estate Commission, what type of listing contract requires certain words to be printed in bold face type? - ANSWERS- Exclusive Right to sell What is the name of a third party who receives title to real property upon the death of a life tenant? - ANSWERS-Remainder man What laws prevents real estate brokers from engaging in the discussion of setting fixed rates of compensation? - ANSWERS-Antitrust Laws What is claim that is made against a real property owner where the property is held as collateral security because of a debt? - ANSWERS-Lein What is the opportunity of one party to use the land of another for a special purpose? - ANSWERS-Easement

What is the court suit that is filled to terminate the co-ownership interest in tenancy in common or joint tenancy? - ANSWERS-Suit to Partition What is the document that a developer executes and records that creates a condominium? - ANSWERS-Declaration What is the basic right that permits a mortgagor in default to recover a property from a foreclosure sale by paying all owed costs on the property?

  • ANSWERS-Redemption What is the name of a new contract that is used for the purpose of eliminating and replacing an existing contract? - ANSWERS-Novation What is created when sellers change the buyers' terms in a written agreement of sale and then the sellers sign the document? - ANSWERS-Counteroffer In or for the transfer of title of real property to take place between two parties in a deed, what must occur? - ANSWERS-Delivery and Acceptance What type of deed gives to the grantee that weakest form of title position? - ANSWERS- Quitclaim In order for a document to have the capacity to be recorded in Pennsylvania in must meet what requirement in addition to being in writing and signed? - ANSWERS-Acknowledge What principal of value indicates that the worth of expensive real estate is decreased by the proximity to inexpensive real estate? - ANSWERS-Regression What is the transfer of interest in a mortgage from the holder of the mortgage in the primary mortgage market to a new owner for the mortgage in the secondary mortgage market? - ANSWERS-Balloon Martgage

What clause in a mortgage prevents a seller from allowing a buyer to assume the seller's existing mortgage? - ANSWERS-Alienation What is the type of life estate that is based on the life of someone other than the life tenant? - ANSWERS-Pur Autre Vie (For the life of another) What principle of value indicates that uniting two adjoining parcels of land into one may result in a higher combined land value? - ANSWERS-Plottage What is the type of real estate financing arrangement by which the seller becomes the lessee of the same property? - ANSWERS-Sale and Leaseback What is the name of the federal government agency with which real estate investment securities must be registered? - ANSWERS-S.E.C. (Securities and Exchange Comm) What is the public awareness that is given to everyone when a document is recorded? - ANSWERS-Constructive Notice What type of deed is used to transfer ownership from the trustee to the beneficiary of a trust? - ANSWERS-Trustee's Deed What is the right of a real property owner that defines the property boundary line next to a stream? - ANSWERS-Riparian What is the real estate principle used in some states that indicates that the right to use water in controlled by the state? - ANSWERS-Prior Appropriation What covenant in a general warranty deed guarantees that the seller owns the property and has the right to convey the title? - ANSWERS-Seisin

What is the particular interest that is held when a life estate is ended and the ownership goes back to the original owner? - ANSWERS-Reversionary Interest In what part of condominium property does the owner of a condominium unit have a tenancy in common? - ANSWERS-Common Elements In what type of real estates contract involving a transfer of title does the seller usually initially keep the title to the property? - ANSWERS-Installment Contract Under what government power does a municipality have the right to enforce building codes? - ANSWERS-Police Power What is a property called that was in existence before the passage of the present zoning laws and is permitted to operate contrary to those same laws? - ANSWERS-Non-Conforming Use What is the voluntary transfer of title of private land to a public governmental body? - ANSWERS-Dedication What is the ending place in a metes and bounds legal description of real property? - ANSWERS- Point of Beginning In what type of lease does the lessor pay for the property expenses? - ANSWERS-Gross Lease The actual words of conveyance of title are found in what part of a deed? - ANSWERS-Granting Clause What concept expresses the simultaneous representation by a broker of two parties with conflicting interests to a real estate transaction? - ANSWERS-Dual Agency

What variable figure expressed as an appraisal term is used to multiply the estimated gross rent of a property for the purpose of arriving at a market value of that property? - ANSWERS-Gross Rent Multiplier What status does a contract have that fails to contain all the essential elements? - ANSWERS- Viod What us the name of the party who golds the title to real estate in a trust? - ANSWERS-Trustee What type of concurrent ownership of real property is held solely by a husband and wife? - ANSWERS-Tenancy by the Entirdy What type if lien affects the ownership of only one particular piece of real estate? - ANSWERS- Specific Lein What type of mortgage would exist if the real property offeree provides the financing for the offeror? - ANSWERS-Purchase Money Mortgage What is it called when a land owner is given municipal approval to build a house higher than is currently allowed by the local ordinances? - ANSWERS-Variance A lien filed by a lumber yard against a particular indebted property owner would most probably be an example of what type of lien? - ANSWERS-Mechanics Lein According to the law of agency, what kind of fiduciary representative is the selling salesperson to the property owner as the result of a single agency listing agreement? - ANSWERS-Subageut A real estate property manager typically operates within what type of agency with the property owner? - ANSWERS-General Agency

What covenant in a warranty deed indicates that the grantor will pay the grantee for any necessary damages if the conveyed title is not good and the grantee suffers a monetary loss? - ANSWERS-Warranty forever What type of listing contract provides the greatest protection of compensation for a real estate broker? - ANSWERS-Exclusive Right to Sell A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of - CORRECT ANS-anticipation. In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT - CORRECT ANS- more variety of loan programs available. Which of the following consumers would be able to derive the most benefit from a reverse mortgage? - CORRECT ANS-A couple in their late 60?s who need to tap their home equity to help cover their expenses but do not want to sell their house. Which of these Federal laws regulates the advertisement of a lender's credit terms (rates, payment, etc.)? - CORRECT ANS-Regulation Z. Under the common law of agency, licensees owe the broker with whom they are associated all of the following duties EXCEPT - CORRECT ANS-indemnification. A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is - CORRECT ANS-an agent to the broker and a subagent to the principal. A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with - CORRECT ANS-the builder.

Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release? - CORRECT ANS-The buyer finds a better property for better terms. To what party or parties does the broker owe the fiduciary duty of care? - CORRECT ANS-the party or parties employing the broker A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should - CORRECT ANS-tell the seller that the buyer will pay more. An exclusive right to sell listing obtained by a broker associate belongs to - CORRECT ANS-the employing broker only. An agency relationship between a property owner and a property manager is usually created by

  • CORRECT ANS-a management agreement. What critical aspect of the property inspection process MUST licensees convey to prospective buyers? - CORRECT ANS-Need for inspections to be completed within the time stated in the contract. A licensee is listing a property in a known flood plain. The seller flatly denies that the structure and the property have ever been flooded. What is the licensee required to do in this situation? - CORRECT ANS-Inform the seller of the legal obligation to disclose facts regarding flood plains. Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond? - CORRECT ANS- If you feel it is in your best interest, please do so.

A seller's statement in a property disclosure document means - CORRECT ANS-the owner is disclosing known latent defects. What is the duration of a home warranty's coverage? - CORRECT ANS-as disclosed in the contract that offers the warranty A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have? - CORRECT ANS-The buyer may sue the seller for specific performance. A licensee has an agency representation agreement with a buyer. When showing another company's listing, what obligation does the licensee have to the seller and the listing broker at the other company? - CORRECT ANS-Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer. A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable? - CORRECT ANS-The seller is heavily under the influence of alcohol at the time of signing. A gross lease can be best defined as one where the tenant pays, as a part of the rent, - CORRECT ANS-no operating expenses of the leased space. A company agrees to lease a property to be used as a gambling casino. State laws prohibit gambling. This particular contract would be legally defined as - CORRECT ANS-void. When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should - CORRECT ANS-have short deadlines.

Under the terms of their listing contract, the owners may sell their house themselves and pay no commission. If their agent sells it, a commission will be due. What kind of listing contract do the owners have? - CORRECT ANS-Exclusive agency listing. During the listing presentation, the seller questions the amount of commission to be paid and is told - CORRECT ANS-the amount of commission is negotiable. A salesperson in a branch office is sued for damages by a buyer after the salesperson misrepresents a property. Who has the ultimate responsibility for the salesperson's actions? - CORRECT ANS-the supervising broker An equal housing opportunity notice MUST be - CORRECT ANS-displayed in the brokerage office. A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson act appropriately and why or why not? - CORRECT ANS-No, because it is appropriate to show any property for which the buyer is qualified. Under the Federal Fair Housing Law, which of the following is considered discriminatory advertising? - CORRECT ANS-"Catholics preferred." Salesperson Susan was at the local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. Susan should - CORRECT ANS-advise her friends this could constitute a violation of Sherman Antitrust Act. Which restrictive covenant would be considered illegal? - CORRECT ANS-A covenant that restricts selected parcels within a defined subdivision.

A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes cash flow or income over the maintenance of value? - CORRECT ANS-An individual entrepreneur who owns several apartment buildings. Even with title insurance, the policyholder may still suffer losses arising from - CORRECT ANS- land use change due to zoning ordinances. To be valid, every deed must - CORRECT ANS-be executed by the grantor. In MOST states, foreclosed property is sold through - CORRECT ANS-public auction. How does a creditor who has obtained a judgement get satisfaction against a debtor who will not pay? - CORRECT ANS-Writ of execution Timeshare ownership programs MOST often use which of the following ownership forms? - CORRECT ANS-Tenancy in common In every real estate transaction, a legal description of the real estate MUST appear in the transaction documents. What kind of legal description should be used in MOST transactions? - CORRECT ANS-The same one used in prior transfers of the parcel, verified by a surveyor An environmental impact statement typically describes the effects of a proposed project on factors such as - CORRECT ANS-Public Health and Safety When more than one approach to value is applied to a property and different indications of value are produced, how should the final estimate of value be determined? - CORRECT ANS- Reconciliation

Parcels A, B, and C are located side by side and owned by three different owners. A is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A developer believes that if all three can be purchased, the larger parcel would be worth $85,000. By assembling these under one owner they would be worth $22,000 more than their individual values. This demonstrates which principle of value? - CORRECT ANS-Plottage A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? - CORRECT ANS-Seller An amount of money, agreed to in writing by buyer and seller, that will serve as full compensation if one party does not live up to a sales contract is called - CORRECT ANS- Liquidated damages For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income? - CORRECT ANS-Mortgage loan interest, local property taxes, mortgage loan origination fees When someone has living heirs but dies without leaving a will, the estate is distributed according to the - CORRECT ANS-Statue of descent Which of the following is NOT usually prorated at closing? - CORRECT ANS-Special tax assessments A real estate brokerage company has developed standardized policies regarding the inventory of properties to be shown to prospective buyers, the company's standards for qualifying buyers, and documentation of all conversations and showings. These policies can help the firm defend itself in the event of an accusation of discrimination, but only if the policies - CORRECT ANS-require every licensee in the firm to follow them consistently The practice of inducing panic selling in a neighborhood for financial gain is - CORRECT ANS- blockbusting

What type of map is MOST useful for describing the terrain of a very hilly lot? - CORRECT ANS- Contour map A property is encumbered by a first mortgage of $60,000 and a second mortgage of $23,500. The property has just been sold at a foreclosure auction to a speculating investor for $88,000. Assume that all costs of the foreclosure sale are included in these balances. Which of the following statements is FALSE regarding the distribution of funds? - CORRECT ANS-The second mortgagee receives nothing unless he forced the foreclosure auction. When a sewer line is installed down a rural road, the cost will probably be shared by - CORRECT ANS-all current owners of real estate fronting on that road. The PRIMARY purpose of zoning ordinances is to - CORRECT ANS-implement a local master plan. Federal Truth-in-Lending laws are also known as - CORRECT ANS-Regulation Z The document used in a real estate sale that establishes the legal rights of the buyer and seller is the - CORRECT ANS-purchase contract. Why was the Jones vs. Mayer decision of 1968 important? - CORRECT ANS-By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing. An example of a contract terminated due to inability to perform would be one in which the - CORRECT ANS-seller had contracted for sale of the entire property without the knowledge or consent of the other joint tenant. A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbor's land to gain access to the river. He pays the neighbor $9,000 for the right of access and receives a deed. This is an easement - CORRECT ANS-appurtenant