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Question 1. Which of the following is considered real property? A) A portable dishwasher B) A freestanding bookshelf C) Built-in oven D) A lawnmower Answer: C Explanation: Real property includes items permanently attached to the land or structure, such as a built-in oven. The other items are personal property because they are movable. Question 2. What is the primary physical characteristic that distinguishes land from other assets? A) Indestructibility B) Scarcity C) Situs D) Utility Answer: A Explanation: Land is physically indestructible, meaning its physical presence cannot be destroyed, which distinguishes it from most assets. Question 3. Which legal description method uses distances and angles to define a property’s boundaries? A) Lot and block B) Metes and bounds C) Rectangular survey D) Street address Answer: B Explanation: The metes and bounds method uses measurements and directions to describe property boundaries. Question 4. Fee simple absolute ownership is best described as: A) Ownership for a specified period B) The most complete form of ownership C) Ownership limited by another’s life D) Leasehold interest Answer: B Explanation: Fee simple absolute is the highest form of ownership, with the fewest restrictions. Question 5. Joint tenancy differs from tenancy in common in that: A) Joint tenants may have unequal shares B) There is a right of survivorship in joint tenancy C) Tenancy in common cannot be inherited D) Tenants in common must take title at the same time Answer: B Explanation: Joint tenancy includes the right of survivorship, so when one owner dies, their interest passes to the surviving owners. Question 6. Which is considered a voluntary lien? A) Mortgage B) Property tax lien C) Mechanic’s lien D) Judgment lien
Answer: A Explanation: A mortgage is a voluntary lien because the property owner agrees to it, unlike the others which are imposed by law. Question 7. What is an appurtenance in real estate? A) A right, privilege, or improvement that passes with the land B) A temporary addition to property C) Movable personal property D) A leasehold interest Answer: A Explanation: Appurtenances are rights or improvements attached to and passing with the land. Question 8. Which of the following best describes an easement? A) A right to use another’s land for a specific purpose B) A type of lien C) A form of ownership D) A government restriction Answer: A Explanation: An easement is a nonpossessory right to use another’s property for specific purposes. Question 9. The right of the government to take private property for public use is called: A) Escheat B) Eminent domain C) Police power D) Condemnation Answer: B Explanation: Eminent domain is the government’s right to take private property for public use, with compensation. Question 10. Which of the following would be considered a fixture? A) Area rug B) Wall-to-wall carpeting installed with glue C) Refrigerator D) Curtains Answer: B Explanation: Wall-to-wall carpeting installed with glue is a fixture, as it is permanently attached. Question 11. The economic characteristic of land known as “situs” refers to: A) The location’s value preference B) The physical durability of land C) The limited supply of land D) The immobility of land Answer: A Explanation: Situs refers to the location and people’s preference for certain locations, which affects value. Question 12. Which is a freehold estate? A) Estate for years B) Fee simple estate C) Estate at sufferance
C) The most profitable use is the highest value D) Value is based on comparable properties Answer: A Explanation: The principle of substitution states an informed buyer will not pay more for a property than a comparable substitute. Question 19. Which approach to value is most appropriate for a church? A) Sales comparison approach B) Income capitalization approach C) Cost approach D) Gross rent multiplier Answer: C Explanation: The cost approach is best for properties that are not frequently sold and lack income, like churches. Question 20. In a comparative market analysis (CMA), which adjustment is made to a comparable property? A) Adjust the subject property B) Adjust the comparable to match the subject C) Adjust both properties D) No adjustments are needed Answer: B Explanation: Adjustments are made to the comparable property to make it more similar to the subject property. Question 21. What is a promissory note? A) The security for a loan B) Evidence of a debt and the promise to repay C) A deed D) A lien Answer: B Explanation: A promissory note is the borrower’s promise to repay a loan, separate from the security instrument. Question 22. The secondary mortgage market: A) Makes loans to consumers B) Buys loans from primary lenders C) Sells insurance to lenders D) Provides title insurance Answer: B Explanation: The secondary mortgage market buys existing loans from primary lenders, providing liquidity. Question 23. What is a conforming loan? A) A loan that meets underwriting guidelines of Fannie Mae and Freddie Mac B) A government-insured loan C) Any loan for a residential property D) A loan with no down payment Answer: A Explanation: Conforming loans meet the guidelines set by Fannie Mae and Freddie Mac.
Question 24. Which of the following is a characteristic of a tenancy in common? A) Right of survivorship B) Unequal ownership shares allowed C) All owners must take title at the same time D) Ownership cannot be inherited Answer: B Explanation: Tenancy in common allows for unequal shares and each owner can will their share. Question 25. Which is an example of a specific lien? A) Income tax lien B) Judgment lien C) Mechanic’s lien D) Estate tax lien Answer: C Explanation: A mechanic’s lien is a specific lien against the property improved by the contractor. Question 26. The process by which land increases in size due to natural soil deposits is called: A) Avulsion B) Reliction C) Accretion D) Erosion Answer: C Explanation: Accretion is the gradual addition to land from natural causes, such as deposits by water. Question 27. A leasehold estate is also known as: A) Freehold estate B) Nonfreehold estate C) Fee simple estate D) Life estate Answer: B Explanation: Leasehold estates are nonfreehold, meaning they confer possession but not ownership. Question 28. The right to use water from a river that borders your property is known as: A) Littoral rights B) Prior appropriation C) Riparian rights D) Reliction Answer: C Explanation: Riparian rights are for properties bordering moving bodies of water like rivers. Question 29. What is the primary purpose of zoning laws? A) To levy taxes B) To control the use of land C) To issue building permits D) To establish property values Answer: B Explanation: Zoning laws control and direct the use of land within a municipality. Question 30. What is a quitclaim deed most commonly used for? A) Conveying marketable title
B) Adjustable-rate mortgage C) FHA loan D) Jumbo loan Answer: C Explanation: FHA loans are insured by the Federal Housing Administration. Question 37. What is the primary function of a deed? A) To pledge property as collateral B) To evidence a debt C) To transfer ownership D) To record a lien Answer: C Explanation: A deed is the instrument used to transfer title to real property. Question 38. What is the effect of recording a deed? A) Guarantees ownership B) Protects against unrecorded interests C) Provides constructive notice D) Makes the deed valid Answer: C Explanation: Recording provides constructive notice, informing the public of ownership. Question 39. What is required for title to pass in a real estate transaction? A) Recording of the deed B) Signature of the notary C) Delivery and acceptance of the deed D) Payment of the purchase price Answer: C Explanation: Title passes when the deed is delivered by the grantor and accepted by the grantee. Question 40. Which of the following is NOT considered an encumbrance? A) Mortgage B) Easement C) License D) Deed restriction Answer: C Explanation: A license is a temporary, revocable permission, not an encumbrance. Question 41. What is the main purpose of the secondary mortgage market? A) To regulate mortgage interest rates B) To buy loans from lenders and provide liquidity C) To originate loans D) To insure loans Answer: B Explanation: The secondary market provides liquidity to lenders by buying existing loans. Question 42. When a property is vested in one person or entity, it is owned in: A) Severalty B) Joint tenancy C) Tenancy in common
D) Community property Answer: A Explanation: Ownership in severalty means sole ownership. Question 43. Which of the following best describes a “life estate”? A) Ownership for a fixed period B) Ownership for the life of a specified person C) Ownership in perpetuity D) Leasehold interest Answer: B Explanation: A life estate lasts for the life of a specified individual. Question 44. What is the primary difference between a general warranty deed and a special warranty deed? A) The number of grantees B) The period covered by the covenants C) Whether the property is residential D) The type of property conveyed Answer: B Explanation: General warranty deeds cover the property’s entire history; special warranty deeds cover only the grantor’s ownership period. Question 45. A property manager’s primary responsibility is to: A) Maximize the property’s value and income B) Sell the property C) Refinance the property D) Survey the property Answer: A Explanation: Property managers work to maximize value and income for the owner. Question 46. What is a “tenancy at sufferance”? A) Lease with a definite end date B) Lease that automatically renews C) Tenant remains after lease expires without landlord’s consent D) Joint ownership Answer: C Explanation: Tenancy at sufferance occurs when a tenant remains after the lease has expired without permission. Question 47. What is the purpose of earnest money in a real estate transaction? A) To pay the agent’s commission B) To show buyer’s good faith C) To secure a mortgage D) To pay property taxes Answer: B Explanation: Earnest money demonstrates the buyer’s intent and commitment to the transaction. Question 48. A property owner who dies intestate and with no heirs will have their property revert to the state by: A) Escheat
D) Right of disposal Answer: C Explanation: The right to tax is reserved for the government, not property owners. Question 55. What is “marketable title”? A) Title free from reasonable doubt or defects B) Title held by a corporation C) Title obtained through adverse possession D) Unrecorded title Answer: A Explanation: Marketable title is reasonably free from defects and acceptable to a prudent buyer. Question 56. What is an example of a unilateral contract in real estate? A) Exclusive right-to-sell listing B) Lease agreement C) Open listing D) Purchase and sale agreement Answer: C Explanation: An open listing is unilateral; only the seller promises to pay if the broker produces a buyer. Question 57. Which of the following would terminate an easement? A) Abandonment by the holder B) Sale of the servient tenement C) Nonuse for one year D) Property tax foreclosure Answer: A Explanation: Easements can be terminated by abandonment or merger, among other ways. Question 58. What is an example of a government restriction on land use? A) Deed restriction B) Easement C) Zoning ordinance D) Covenants Answer: C Explanation: Zoning ordinances are public land use controls enacted by government. Question 59. What does the doctrine of “emblements” refer to? A) Fixtures in a house B) Annual crops cultivated by a tenant C) Permanent improvements D) Water rights Answer: B Explanation: Emblements are annual crops grown by tenants, considered personal property. Question 60. What is the purpose of a building code? A) To regulate property values B) To ensure safety and health standards C) To assess property taxes D) To restrict ownership
Answer: B Explanation: Building codes set construction standards for safety. Question 61. A property has a right-of-way for utilities. This is best described as: A) An easement in gross B) An encroachment C) A license D) A covenant Answer: A Explanation: Easements in gross are rights for utility companies to use property for lines and pipes. Question 62. Which is NOT a type of legal property description? A) Metes and bounds B) Block and lot C) Street address D) Government survey Answer: C Explanation: Street addresses are not sufficient as legal descriptions. Question 63. What is a “cloud on title”? A) A mortgage B) Any claim or encumbrance that may affect ownership C) Title insurance D) Recording the deed Answer: B Explanation: A cloud on title is any claim, lien, or encumbrance that impairs title. Question 64. What is the difference between a mortgage and a deed of trust? A) Number of parties involved B) Both are the same C) Only a mortgage secures a loan D) Deed of trust is not a security instrument Answer: A Explanation: A mortgage involves two parties (borrower and lender), a deed of trust involves three (borrower, lender, trustee). Question 65. Which of the following is NOT a test for a fixture? A) Method of annexation B) Adaptation to real estate C) Written agreement D) Age of the item Answer: D Explanation: Age of the item is irrelevant to fixture determination. Question 66. Which of the following would be considered personal property? A) Ceiling fan B) Built-in microwave C) Patio furniture D) Wall-to-wall carpet
Question 73. What is a deficiency judgment? A) Court order to remove a lien B) Judgment for the unpaid balance after foreclosure sale C) Judgment in favor of the tenant D) Judgment to release a mortgage Answer: B Explanation: A deficiency judgment is for the lender if the foreclosure sale does not pay off the debt. Question 74. Which of the following is a bilateral contract? A) Option contract B) Listing agreement C) Purchase and sale agreement D) Open listing Answer: C Explanation: Purchase and sale agreements require promises from both parties (buyer and seller). Question 75. What is the “economic life” of a property? A) The period the property is physically usable B) The period the property produces income or value C) The period before taxes are due D) The age of the property Answer: B Explanation: Economic life is the time during which a property yields a return. Question 76. Which of the following is an example of involuntary alienation? A) Sale by owner B) Gift C) Foreclosure D) Will Answer: C Explanation: Involuntary alienation occurs without the owner’s consent, as in foreclosure. Question 77. A buyer’s earnest money is typically held in: A) The seller’s account B) A trust or escrow account C) The broker’s operating account D) The buyer’s checking account Answer: B Explanation: Earnest money is held in escrow or trust to protect both parties. Question 78. What is the function of a mortgage broker? A) Originates and services loans B) Buys loans from banks C) Brings borrowers and lenders together D) Insures mortgages Answer: C Explanation: Mortgage brokers match borrowers to lenders but do not lend their own funds. Question 79. A “fixture” is best described as: A) Personal property attached to real estate
B) Real property that can be removed C) Always personal property D) Movable property Answer: A Explanation: Fixtures start as personal property but become real property when attached. Question 80. Which appraisal approach would be most applicable for valuing an apartment building? A) Cost approach B) Sales comparison approach C) Income capitalization approach D) Gross rent multiplier Answer: C Explanation: Income capitalization is best for income-producing properties like apartments. Question 81. What is a deed in lieu of foreclosure? A) Owner sues lender B) Owner returns property to lender to avoid foreclosure C) Lender sues owner D) Owner pays off entire loan Answer: B Explanation: A deed in lieu allows owner to turn over property to lender without foreclosure proceedings. Question 82. What is the primary distinction between real and personal property? A) Value B) Method of transfer C) Mobility D) Color Answer: C Explanation: Real property is immobile; personal property is movable. Question 83. What is “police power” in relation to land use? A) Power to arrest B) Power to regulate for public health, safety, and welfare C) Power to tax D) Power to sell property Answer: B Explanation: Police power is government’s authority to regulate property for public good. Question 84. What is “adverse possession”? A) The right to use another’s land B) Taking title after occupying land for a statutory period C) Leasehold interest D) Eminent domain Answer: B Explanation: Adverse possession allows someone to claim title after continuous, hostile occupation. Question 85. Which of the following is NOT a type of freehold estate? A) Fee simple B) Life estate
B) To estimate market value C) To assess property taxes D) To set insurance rates Answer: B Explanation: Appraisals estimate the current market value of a property. Question 92. Which of the following is a characteristic of a FHA loan? A) No down payment required B) Government-insured, not government-issued C) Only for investors D) Always fixed rate Answer: B Explanation: FHA loans are insured by the government but made by private lenders. Question 93. What is the difference between “riparian” and “littoral” rights? A) Riparian is for lakes, littoral for rivers B) Riparian is for rivers/streams, littoral for lakes/oceans C) Both are for navigable waters D) Both are for non-navigable waters Answer: B Explanation: Riparian rights apply to moving water (streams/rivers); littoral to still water (lakes/seas). Question 94. Which is NOT a requirement for a valid contract? A) Offer and acceptance B) Lawful objective C) Written form D) Consideration Answer: C Explanation: Most contracts can be oral; only certain ones, like those for real estate, must be written. Question 95. What is “steering” in real estate? A) Showing only properties in certain areas based on race or other protected classes B) Refusing to show property C) Charging higher rent D) Refusing loans Answer: A Explanation: Steering is an illegal practice of guiding buyers towards or away from areas based on protected characteristics. Question 96. Which of the following is NOT an economic characteristic of land? A) Permanence of investment B) Scarcity C) Uniqueness D) Improvements Answer: C Explanation: Uniqueness is a physical, not economic, characteristic.
Question 97. Which clause in a mortgage or deed of trust allows the lender to declare the entire debt due if the borrower defaults? A) Alienation clause B) Acceleration clause C) Prepayment clause D) Defeasance clause Answer: B Explanation: The acceleration clause allows the lender to call the loan due upon default. Question 98. What is the function of the Federal National Mortgage Association (Fannie Mae)? A) Insure mortgage loans B) Guarantee VA loans C) Buy and sell loans in the secondary market D) Originate home loans Answer: C Explanation: Fannie Mae buys and sells conforming loans to maintain liquidity in the secondary market. Question 99. What is the “principle of conformity” in appraisals? A) Value is highest when properties are similar B) Value is highest with unique properties C) Value is based on cost D) Value is based on income Answer: A Explanation: Conformity maintains property values when properties are similar in style and use. Question 100. What is an “open-end mortgage”? A) A mortgage with no due date B) A mortgage that allows the borrower to borrow additional funds C) A mortgage with variable interest D) A mortgage that is assumable Answer: B Explanation: Open-end mortgages allow further advances of funds under the same mortgage. Question 101. What is “eminent domain”? A) The right to regulate property B) The right to take private property for public use C) The right to tax property D) The right to restrict ownership Answer: B Explanation: Eminent domain is the government’s power to take private land for public use with compensation. Question 102. What is a “constructive eviction”? A) Tenant evicts landlord B) Tenant is forced to leave due to landlord’s neglect C) Legal eviction by court order D) Tenant breaks lease for convenience Answer: B
D) Concealing defects Answer: B Explanation: Puffing is legal exaggeration or opinion and not considered misrepresentation. Question 109. What is a “wraparound mortgage”? A) A second mortgage that includes the original mortgage balance B) A mortgage with variable rates C) A mortgage for construction only D) A mortgage for land only Answer: A Explanation: A wraparound mortgage “wraps” a new loan around an existing, unpaid mortgage. Question 110. What is a “subordination agreement”? A) Lienholder agrees to subordinate its priority B) Owner gives up title C) Lease is converted to ownership D) Mortgage is paid off Answer: A Explanation: A subordination agreement changes the priority of a lien, making it junior to another. Question 111. What is “hypothecation”? A) Pledging property as collateral without giving up possession B) Selling property at auction C) Leasing property D) Foreclosing property Answer: A Explanation: Hypothecation is the process of pledging property as security for a loan but retaining possession. Question 112. What is a “novation” in contract law? A) Substitution of a new contract or party B) Assigning a contract C) Termination of a contract D) Revocation of offer Answer: A Explanation: Novation is the replacement of an old contract with a new one, or substitution of parties. Question 113. A “mechanic’s lien” is: A) A voluntary lien B) Placed by contractors for unpaid work C) A government lien D) A mortgage Answer: B Explanation: Mechanic’s liens are involuntary and specific, placed for unpaid construction work. Question 114. What is the “rectangular survey system” also known as? A) Metes and bounds B) Government survey system C) Lot and block
D) Street address system Answer: B Explanation: The rectangular survey system is also called the government survey system. Question 115. The “bundle of rights” includes: A) Use, transfer, encumber, exclude, and possess B) Tax, foreclose, regulate, and condemn C) Lease, foreclose, and sell D) Use, sell, and tax Answer: A Explanation: The bundle of rights includes use, transfer, encumber, exclude, and possess. Question 116. What is a “reverse mortgage”? A) Loan only for buying homes B) Loan for seniors converting home equity to income C) Loan with adjustable rates D) Loan for investment property Answer: B Explanation: Reverse mortgages allow seniors to convert home equity into income. Question 117. What is the “statute of frauds”? A) Law requiring certain contracts to be in writing B) Law against fraud C) Law for property taxes D) Law for foreclosures Answer: A Explanation: The statute of frauds requires certain contracts, like those for real estate, to be in writing to be enforceable. Question 118. The “right of first refusal” gives: A) No rights to purchase B) The right to match an offer before sale to others C) The right to buy at a set price D) The right to lease property Answer: B Explanation: Right of first refusal allows a party to match an offer before the property is sold to another. Question 119. What is a “net operating income” (NOI) in real estate investment? A) Income after all expenses and debt B) Gross income minus operating expenses C) Net income after depreciation D) Income before taxes Answer: B Explanation: NOI is calculated as gross income minus operating expenses, before debt service and taxes. Question 120. A “lease option” agreement gives: A) No rights to buy B) The right to lease only
