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REAL ESTATE PRINCIPLES 2024 ACTUAL EXAM AND
STUDY GUIDE 200 QUESTIONS WITH DETAILED
VERIFIED ANSWERS AND RATIONALES (100%
CORRECT) /ALREADY GRADED A+
- Zoning is under the control of: a. private parties. b. government agencies. c. the Bureau of Real Estate. d. none of the above. - CORRECT ANSWER-b. government agencies.
- Easements appurtenant are for the benefit of: a. homesteaded landowners. b. adjoining (neighboring) landowners. c. the general public. d. government use only. - CORRECT ANSWER-b. adjoining (neighboring) landowners.
- A contract that is binding and enforceable in a court of law is said to be: a. proprietary. b. illusory. c. valid. d. all of the above. - CORRECT ANSWER-c. valid.
- Who makes an offer on a property that is for sale? a. Seller's agent b. Offeree (Seller) c. Offeror (Buyer) d. All oft he above - CORRECT ANSWER-c. Offeror (Buyer)
- Escrows base monthly prorations on how many days?
a. 28 b. 29 c. 30 d. 31 - CORRECT ANSWER-c. 30
- The process of proportionally dividing rents, property taxes, and fire insurance is called: a. subdividing. b. title splitting. c. proration. d. escrow debiting - CORRECT ANSWER-c. proration.
- The area of a rectangular lot that is 50 feet wide by 100 feet deep is: a. 2,500 sq. ft. b. 500 sq. ft. c. 5,000 sq. ft. d. 50,000 sq. ft - CORRECT ANSWER-c. 5,000 sq. ft.
- If the Internal Revenue Service is using a minimum of 39 years for straight-line depreciation on commercial properties, what would be the annual depreciation on a newly constructed apartment that cost $1,950,000 and had an original land cost of $585,000? a. $35, b. $15, c. $3, d. $50,000 - CORRECT ANSWER-a. $35, 9 For how much assessed value is the Homeowner's Property Tax Exemption: a. $1, b. $7, c. $2,
d. $200 - CORRECT ANSWER-b. $7,
- The difference between property taxes and special assessments is that: a. special assessments are levied for the cost of specific local improvement while property tax revenue goes into the general fund. b. assessment liens can only be levied by local improvement districts. c. foreclosure of assessment liens can only be achieved by court foreclosure d. assessment liens are always subordinate to property tax liens - CORRECT ANSWER-a. special assessments are levied for the cost of specific local improvement while property tax revenue goes into the general fund
- Misuse of the real estate appraisal report or coercion of the appraiser are now: a. misdemeanors. b. federal felonies. c. infractions. d. none of the above. - CORRECT ANSWER-b. federal felonies.
- Which of the following is TRUE concerning the Cap Rate? a. The greater the risk, the greater the Cap Rate. b. Appraised value increases when the Cap decreases. c. Finding the Cap Rate is the most difficult step in the income approach. d. All of the above. - CORRECT ANSWER-d. All of the above
- A person who is authorized by the Secretary of State to witness the acknowledgment of documents is known as a(n): a. administrator. b. librarian. c. document doctor. d. notary public. - CORRECT ANSWER-d. notary public.
- An estate for years is an example of a: a. life estate. b. fee estate. c. freehold estate. d. less-than-freehold estate for a fixed period of time. - CORRECT ANSWER-d. less-than-freehold estate for a fixed period of time.
- A broker who mixes personal funds with his or her principal's funds is guilty of: a. false promise. b. commingling. c. divided agency. d. conversion. - CORRECT ANSWER-b. commingling.
- The Real Estate Commissioner enforces provisions of the: a. Civil Law. b. Commercial Law. c. Property Law. d. Real Estate Law. - CORRECT ANSWER-d. Real Estate Law.
- Real property consists of: a. land and structures on the land. b. anything incidental to the land. c. anything appurtenant to the land. d. all of the above. - CORRECT ANSWER-d. all of the above.
- Determining the present value of a property based upon its anticipated future income and expenses is called the: a. capitalization or income approach b. replacement cost method
c. market data method d. comparison approach - CORRECT ANSWER-a. capitalization or income approach
- Which of the following is NOT one of the forces that affect the value of a neighborhood? a. Past sales considerations b. Economic considerations c. Physical considerations d. Social considerations - CORRECT ANSWER-a. Past sales considerations
- The right to reasonable use of water from a river or stream, if the land borders it: a. none of the above. b. a mineral right. c. a potable right. d. a riparian right. - CORRECT ANSWER-d. a riparian right.
- The federal civil rights law that applies to Americans with disabilities and protects them from discrimination is the: a. Unruh Civil Rights Act. b. Americans With Disabilities Act c. Fair Employment and Housing Act. d. None of the above. - CORRECT ANSWER-b. Americans With Disabilities Act
- A zoning act that requires disclosure of a property's vicinity to hazardous earthquake faults is known as the: a. San Andreas State Earthquake Act.
b. California Coastal Act. c. Alquist-Priolo Special Studies Zones Act. d. none of the above. - CORRECT ANSWER-c. Alquist-Priolo Special Studies Zones Act.
- When prices rise due to shortages of available properties, it is known as a: a. buyer's market. b. seller's market. c. lender's market. d. deflationary market. - CORRECT ANSWER-b. seller's market.
- The higher your credit score: a. the greater your chance of default. b. the better your interest rate and loan terms. c. the greater the possibility you will file a bankruptcy. d. none of the above. - CORRECT ANSWER-b. the better your interest rate and loan terms.
- Other than the initial small deposit to open the account, when are money deposits the personal property of the broker? a. Never b. Only with the permission of the buyer c Only during non-business days d. Always - CORRECT ANSWER-a. Never
- Which of the following is NOT a method to establish a real estate broker agency? a. Secret ballot
b. Implied agreement c. Express agreement d. Estoppel - CORRECT ANSWER-a. Secret ballot
- What "American" title insurance is usually requested by lenders? a. CLTA policy b. ALTA policy c. RESPA policy d. None of the above - CORRECT ANSWER-b. ALTA policy
- "QR Code" stands for: a. Quick Response Code. b. Quality Review Code. c. Quantitative Relativity Code. d. none of the above. - CORRECT ANSWER-. Quick Response Code.
- Which of the following is a requirement of a lease? a. Length of lease b. Amount of rent c. Names of parties d. All of the above - CORRECT ANSWER-d. All of the above
- When a tenant voluntarily gives up a lease before the expiration of its term, it's known as: a. forgiveness. b. forbearance.
c. suspension. d. surrender. - CORRECT ANSWER-d. surrender.
- Which of the following is NOT an essential element of a contract? a. Cash b. Mutual consent c. Capacity d. Proper writing - CORRECT ANSWER-a. Cash
- Owner A tells B that he will pay him $1,000 to paint his house. B agrees. This is an example of a: a. unilateral contract. b. bilateral contract. c. completed performance. d. warranty contract. - CORRECT ANSWER-b. bilateral contract.
- The California Department of Veteran's Affairs loan program 1s commonly known as the: a. CalVet Program. b. FHA. c. California VFW Program. d. VA. - CORRECT ANSWER-a. CalVet Program.
- Which of the following are NOT institutional lenders? a. Banks b. Private individuals c. Insurance companies
d. Mutual savings banks - CORRECT ANSWER-b. Private individuals
- The market data method is the most common approach for: a. houses. b. condos. c. vacant land. d. all of the above. - CORRECT ANSWER-d. all of the above.
- The Agency Disclosure Form tells the seller and the buyer that their agent is working as: a. the seller's agent. b. the buyer's agent. c. both seller's and buyer's agent. d. any of the above. - CORRECT ANSWER-d. any of the above.
- What type of listing entitles the listing broker named in the agency contract to a commission even if the owner sells the property privately during the listing period? a. Exclusive right to sell listing b. Exclusive agency listing c. Open listing d. All of the above - CORRECT ANSWER-a. Exclusive right to sell listing
- The first phase in the life of a contract is: a. completion. b. escrow. c. performance.
d. negotiation. - CORRECT ANSWER-d. negotiation.
- How many square feet are in | acre? a. 38, b. 43, c. 38, d. 41,560 - CORRECT ANSWER-b. 43,
- What is 395,340 square feet of area minus an area of 110 x 30 feet? a. 3,300 square feet b. 330,000 square feet c. 392,040 square feet d. 398,640 square feet - CORRECT ANSWER-c. 392,040 square feet
- A month-to-month rental agreement is usually a: a. tenancy for years. b. periodic tenancy. c. tenancy at will. d. tenancy at sufferance. - CORRECT ANSWER-b. periodic tenancy.
- An on-site residential manager: a. is a tenant of the property. b. handles tenants' complaints. c. maintains the premises. d. all of the above. - CORRECT ANSWER-d. all of the above.
- You're a landlord who discovers that one of your tenants is having new carpet installed in his apartment without your consent. To protect yourself you should file a(n): a. cease and desist order. b. mechanic's lien. c. unlawful detainer action. d. notice of non-responsibility. - CORRECT ANSWER-d. notice of non-responsibility.
- Easements are created by: a. express grant (in writing). b. implication of law. c. long-term use (prescription). d. all of the above. - CORRECT ANSWER-d. all of the above.
- Depreciation for tax purposes is a yearly tax deduction on the taxpayer's income tax form. Which of the following is NOT acceptable for depreciation? a. Your office building b. Your apartment building c. Your shopping center d. Your owner-occupied residence - CORRECT ANSWER-d. Your owner-occupied residence
- Installment sales and exchanges have as their primary purpose: a. tax postponement. b. passing property to heirs. c. tax deduction. d. none of the above. - CORRECT ANSWER-a. tax postponement.
- Which of the following is FALSE concerning a grant deed? a. The keyword is "grant." b. It is signed only by the grantee. c. It is considered executed when signed by the grantor. d. Grant deeds contain implied warranties. - CORRECT ANSWER-b. It is signed only by the grantee.
- If a person dies without a will, the procedure for transferring the deceased's property to his or her heirs is called: a. accession. b. intestate succession. c. escheat by the federal government. d. none of the above. - CORRECT ANSWER-b. intestate succession.
- Which of the following is NOT a type of property lot? a. Curb lot b. Interior lot c. Key lot d. Comer lot - CORRECT ANSWER-a. Curb lot
- Which of the following would prevent the contractual requirement of genuine consent? a. Menace b. Undue influence c. Duress d. All of the above - CORRECT ANSWER-d. All of the above
- The rate the borrower is actually paying (including interest, points, and loan fees) is called: a. the wishful interest rate. b. the partially realized interest rate c. the effective interest rate. d. all of the above. - CORRECT ANSWER-c. the effective interest rate.
- In a trust deed, the borrower is usually the: a. trustee. b. beneficiary. c. trustor. d. none of the above. - CORRECT ANSWER-c. trustor.
- What federal case in 1968 upheld the 1866 Civil Rights Act? a. Easton v. Strassburger b. Huber v. the State of California c. Jones v. Mayer d. None of the above - CORRECT ANSWER-c. Jones v. Mayer
- A condominium does NOT have: a. a separate grant deed. b. a separate trust deed. c. private ownership of land and improvements. d. a separate tax bill. - CORRECT ANSWER-c. private ownership of land and improvements.
- The closing date is:
a. always on the first day of the month. b. the date the documents are recorded. c. due before the payoff demand statement. d. the date the listing agreement is signed. - CORRECT ANSWER-b. the date the documents are recorded.
- Which of the following is NOT a duty of the escrow company? a. Negotiating broker's fees b. Confidentiality c. Deposit holder d. Conditional delivery of funds and documents - CORRECT ANSWER-a. Negotiating broker's fees
- The Real Estate Commissioner: a. replaces a court of law. b. gives legal advice. c. enforces the Real Estate Law. d. all of the above. - CORRECT ANSWER-c. enforces the Real Estate Law.
- Any sale of a substantial part of inventory or other supplies and equipment associated with a business: a. is illegal. b. is a sale-leaseback. c. requires a PRLS license. d. is a bulk sale or transfer - CORRECT ANSWER-d. is a bulk sale or transfer
- When an improvement Is permanently attached to real property it becomes:
a. private property. b. personal property. c. real property. d. none of the above - CORRECT ANSWER-c. real property.
- Which of the following is NOT a recognized legal method of land description? a. Satellite Tracking b. Metes and Bounds c. Lots, Blocks, and Tracts d. Sections and Townships - CORRECT ANSWER-a. Satellite Tracking
- The Housing Financial Discrimination Act prohibits: a. targeting. b. redlining c. redistricting. d. gerrymandering. - CORRECT ANSWER-b. redlining
- Rental agreements are designed for estates: a. from period-to-period. b. for no more than 10 years. c. in escrow. d. any of the above. - CORRECT ANSWER-a. from period-to-period.
- "QR Code" stands for:
a. Quick Response Code. b. Quality Review Code. c. Quantitative Relationship Code. d. None of the above. - CORRECT ANSWER-a. Quick Response Code.
- A lessee making payments based on gross monthly income has a: a. ground lease. b. licensing agreement. c. lease-purchase option. d. percentage lease. - CORRECT ANSWER-d. percentage lease.
- If the "exact" terms of the listing agreement are met, the listing broker is entitled to a commission, even if the: a. buyer is legally incompetent. b. broker is not licensed. c. seller is not the legal owner. d. owner refuses to sell to the buyer. - CORRECT ANSWER-d. owner refuses to sell to the buyer.
- All material facts affecting the value and desirability of a property must be disclosed on the: a. residential listing agreement. b. disclosure of agency relationship. c. transfer disclosure statement. d. none of the above. - CORRECT ANSWER-c. transfer disclosure statement.
- Which of the following is TRUE concerning negotiable instruments?
a. They are easily transferable from one person to another. b. Promissory notes are considered negotiable instruments.. c. The most common example of a negotiable instrument is a personal check. d. All of the above. - CORRECT ANSWER-d. All of the above.
- Which of the following online real estate search websites owned by NAR uses information from MLS data? a. Zillow.com. b. Trulia.com C. Realtor.com d. all of the above. - CORRECT ANSWER-C. Realtor.com
- If you made a 17% profit on the $76,000 sale of a lot, how much did you pay for the lot? a. $63, b. $65, Cc. $64, d. None of the above - CORRECT ANSWER-c. $64,
- Income-producing property owners can deduct which of federal income taxes? a. Property taxes b. Prepayment penalties c. Depreciation of building improvements d. All of the above - CORRECT ANSWER-d. All of the above
- The term "EER" is used to measure:
a. water purity. b. credit rating. c. water pressure. d. energy efficiency (the higher the better). - CORRECT ANSWER-d. energy efficiency (the higher the better).
- What do 90% of all home buyers do before contacting a real estate agent? a. Search the web. b. Meet with their private banker. c. Buy a new car. d. None of the above - CORRECT ANSWER-a. Search the web.
- A lien placed on more than one parcel, all parcels having the same owner, is known as a: a. full lien. b. blanket encumbrance. c. multi-tract lien. d. none of the above. - CORRECT ANSWER-b. blanket encumbrance.
- When someone 1s performing unauthorized work on your property, you should file a(n): a a. notice of nonresponsibility. b. notice of completion. c. writ of execution. d. abstract of judgment. - CORRECT ANSWER-a. notice of nonresponsibility.
- Demand sources for real estate loans include loans for:
a. buying property. b. refinancing. c. construction. d. all of the above. - CORRECT ANSWER-d. all of the above.
- the cancelling of an offer to contract by the original offeror is called. a. assignment. b. revocation c. mutual consent. d. counter offer - CORRECT ANSWER-b. revocation
- An ownership interest in real property that only exists for the life of any designated person or persons (often the grantee) is called a(n): a. life estate. b. estate in waiting. c. less-than-freehold estate. d. estate in remainder. - CORRECT ANSWER-a. life estate.
- What is the legal process of making an instrument an official part of the county records? a. Acknowledgment b. Recording c. Constructive notice d. All of the above - CORRECT ANSWER-b. Recording
- The salesperson exam requires what percent of correct answers to pass?
a. 60% b. 80% c. 70% d. 90% - CORRECT ANSWER-c. 70%
- A lease purchase option 1s the: a. right to renew a lease. b. right to purchase the property. c. right to terminate a lease. d. none of the above. - CORRECT ANSWER-b. right to purchase the property.
- Of the following, who is permitted to purchase property in California without court approval? a. Convicts b. Minors c. Incompetents d. Foreign persons (aliens) - CORRECT ANSWER-d. Foreign persons (aliens)
- A counter offer: a. terminates the prior offer. b. is a new offer. c. changes the terms of the prior offer. d. all of the above. - CORRECT ANSWER-d. all of the above.
- The seller must provide the buyer of a condominium with: a. the CC&Rs.
b. the bylaws. c. a copy of the most recent financial statement. d. all of the above. - CORRECT ANSWER-d. all of the above.
- The Federal U.S. Fair Housing Act of 1968 that requires equal housing posters to be displayed at real estate offices and at lending institutions is also generally known as the: a. Federal Civil Rights Act of 1968. b. California Housing Financial Discrimination Act of 1977. c. Unruh Civil Rights Act (state law). d. none of the above. - CORRECT ANSWER-a. Federal Civil Rights Act of 1968.
- Which of the following is considered the most reliable Internet source of real estate for sale accessible by the general public? a. Zillo.com b. Realtor.com c. Trulia.com d. None of the above - CORRECT ANSWER-b. Realtor.com
- If a broker were to say to a prospective buyer "I think this is the best house on the street," the statement would be considered a(n): a. innocent misrepresentation. b. negligent misrepresentation. c. fraudulent misrepresentation. d. exaggeration of benefits (puffing). - CORRECT ANSWER-d. exaggeration of benefits (puffing).
- If the prospective investor of real property is most concerned with making money off the usefulness of the improvements, he or she would be most concerned with:
a. economic life remaining in the improvements. b. physical life remaining in the improvements. c. chronological age of the improvements. d. none of the above. - CORRECT ANSWER-a. economic life remaining in the improvements.
- The most difficult part of the cost approach is: a. finding a lender. b. estimating depreciation of older buildings. c. finding an experienced appraiser. d. all of the above. - CORRECT ANSWER-b. estimating depreciation of older buildings.
- A recorded public history of a specific property is called a: a. title provenance. b. chain of title. c. title plant. d. string of title. - CORRECT ANSWER-b. chain of title.
- In a sale-leaseback, the original property owner: a. evicts his or her tenant. b. loses money. c. becomes the lessee. d. none of the above. - CORRECT ANSWER-c. becomes the lessee.
- CC&Rs refer to:
a. conditions, control, and residuals. b. covenants, communities, and residents. c. construction, conditions, and restrictions. d. covenants, conditions, and restrictions. - CORRECT ANSWER-d. covenants, conditions, and restrictions.
- A mechanic's lien is filed against the: a. property. b. owner. c. lender. d. general contractor - CORRECT ANSWER-a. property
- Prior to receiving communication of its acceptance, a buyer can withdraw an offer: a. in writing. b. personally. c. by registered mail. d. all of the above. - CORRECT ANSWER-d. all of the above.
- Which of the following is NOT a section and township starting point in California? a. Humboldt b. Mt. Diablo c. Blythe d. San Bernardino - CORRECT ANSWER-c. Blythe
- The current status of items from the county records affecting the property's title is called the:
a. coinsurance clause. b. title insurance. c. preliminary title report. d. none of the above. - CORRECT ANSWER-c. preliminary title report.
- What must a potential listing agent do if a seller requires the agent to discriminate? a. Discriminate b. Charge a higher commission c. Refuse the listing d. Make a citizen's arrest - CORRECT ANSWER-c. Refuse the listing
- If you have an outstanding bank loan of $56,500 with monthly payments of $500 month, of which $43.76 is applied to principal, what is the interest rate on the loan? a. 8.25% b. 9.25% c. 9.69% d. 11.25% - CORRECT ANSWER-c. 9.69%
- When a married couple (filing jointly) sells their residence after living in it for two of the last five years, they don't have to pay capital gains for a profit of up to: a. $25,000. b. $120,000. c. $500,000. d. $700,000. - CORRECT ANSWER-c. $500,000.
- Compared to ordinary income tax rates, capital gains taxes are:
a. higher. b. lower. c. the same d. none of the above. - CORRECT ANSWER-b. lower.
- Real property is assessed: a. every ten years. b. each time it is sold. c. at 100% of its selling price or market value, whichever is higher. d. both b and c are correct. - CORRECT ANSWER-d. both b and c are correct.
- An appraiser using the market approach collects many recent comparable sales. If a comparable property has a feature that is NOT present in the subject property, the estimated value of the feature 1s: a. added to the sales price of the comparable. b. just noted on the appraisal but nothing is done. c. subtracted from the sales price of the comparable. d. none of the above. - CORRECT ANSWER-c. subtracted from the sales price of the comparable.
- The Federal Reserve's monetary policies influence the supply of money by: a. buying and selling government T-bonds and T-securities. b. raising and lowering the reserve requirement. c. raising and lowering the discount rate to member banks. d. all of the above. - CORRECT ANSWER-d. all of the above.