Virginia Final Exam Questions with 100% Correct Answers | Verified | Updated 2024, Exams of Advanced Education

Download Virginia Final Exam Questions with 100% Correct Answers | Verified | Updated 2024 and more Exams Advanced Education in PDF only on Docsity! Virginia Final Exam Questions with 100% Correct Answers | Verified | Updated 2024 A void contract is one that is A. not in writing. B. voidable by only one of the parties. C. rescindable by agreement. D. not legally enforceable. - Correct Answer-D. not legally enforceable. In order to be enforceable, real estate contracts must meet the legal requirements for contracts in general. For example, a contract signed by a minor or a "seller" who doesn't own the property in question was never legal to begin with and is thus "void." An option A. requires the optionor to complete the transaction. B. gives the optionee an easement on the property. C. does not keep the offer open for a specified time. D. makes the seller liable for a commission. - Correct Answer-A. requires the optionor to complete the transaction. It is up to the optionor (seller)to finish the transaction IF the optionee (buyer) decides to exercise the option. The optionee does not have to exercise the option, but would lose whatever option monies that have been deposited. When a prospective buyer makes a written purchase offer that the seller accepts, then the A. buyer may take possession of the real estate. B. seller grants the buyer ownership rights. C. buyer receives legal title to the property. D. buyer receives equitable title to the property. - Correct Answer-D. buyer receives equitable title to the property. "Equitable title" means that the prospective buyer has obtained the right to acquire ownership of a property currently owned and occupied by another. To assign a contract for the sale of real estate means to A. record the contract with the county recorder's office. The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT A. loan fees charged by the lender. B. insurance premiums for mortgage insurance payment. C. discount points and service fees. D. recording fees and title insurance premiums. - Correct Answer-D. recording fees and title insurance premiums. These are considered legal, not financing fees and therefore are not part of the Truth in Lending statement. A mortgage broker A. is a lender. B. buys mortgages in the secondary mortgage market. C. buys mortgages and resells them at a profit. D. arranges loans between borrowers and investors. - Correct Answer-D. arranges loans between borrowers and investors. Mortgage brokers function much like independent insurance agents and represent a variety of lenders. Their role is to match the circumstances of individual buyers with the mortgage program best suited to their needs. The Smiths' purchased a residence for $750,000. They made a down payment of $150,000 and agreed to assume the seller's existing mortgage, which had a current balance of $230,000. The Smiths' financed the remaining $370,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a A. wraparound mortgage. B. package mortgage. C. balloon note. D. part (junior) purchase money mortgage. - Correct Answer-D. part (junior) purchase money mortgage. Also known as a "purchase money second," this is a streamlined and often cost-effective financing option. Which of the following describes a mortgage that requires principal and interest payments at regular intervals and is called the liquidation of debt by periodic installment until the debt is satisfied? A. Amortized loan B. Annuity loan C. Acceleration loan D. Assemblage loan - Correct Answer-A. Amortized loan An impound or reserve account MOST benefits whom? A. The borrower B. The lender C. The trustee D. The trustor - Correct Answer-B. The lender. Also known as escrow accounts, impound accounts accumulate funds from closing costs and monthly payments to ensure that property taxes and homeowner's insurance are kept current. The Closing Disclosure (CD) form is A. the document used to make Fair Housing complaints. B. provided after signing a listing agreement. C. a statement of actual charges and adjustments. C. Commercial bank's 15 year loan D. Contract for deed - Correct Answer-C. Commercial bank's 15 year loan. Though 30 year loans are more common, 15 year loans are considered standard, conventional loans. Options A and B are part of various government programs to help low and moderate income families as well as veterans find affordable home financing. All of the following are true of conventional loans except what? A. They are made to the buyer without governmental insurance or guarantee. B. The qualification requirements are uniformly fixed by state law. C. They require a higher down payment than non- conventional loans. D. The policy requirements of the lenders are not uniform. - Correct Answer-B. The qualification requirements are uniformly fixed by state law. Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender. There are no state-mandated qualifying requirements for conventional loans. When real estate under an estate for years is sold, what happens to the lease? A. It expires with the conveyance. B. It binds the new owner. C. It is subject to termination with proper notice. D. It is valid but unenforceable. - Correct Answer-B. It binds the new owner. Tenancy for years is the common form of rental agreements and binds all future owners for the term of the lease. The Federal Fair Housing Act states that a prima facie case against a broker for discrimination be established after a complaint has been received because the broker has failed to do which of the following? A. The broker has failed to display a HUD Equal Opportunity poster. B. The broker has failed to hire any minority salespeople. C. The broker has failed to join the NAACP anti- discriminatory task force. D. The broker has failed to attend mandatory classes on fair housing. - Correct Answer-A. The broker has failed to display a HUD Equal Opportunity poster. Included among Fair Housing regulations is the requirement that the HUD Equal Opportunity signage be prominently displayed. The primary survey line running north and south in the rectangular survey system is the A. township line. B. base line. C. range line. D. principal meridian. - Correct Answer-D. principal meridian. Crossing a base line, the principal meridian is the primary reference point for locating and describing land falling within its boundaries. D. December 15th - Correct Answer-B. June 15th. Listing contracts set forth the terms and conditions under which a broker will sell a property for his or her client. When the closing takes place, the terms of the contract have been fulfilled and it expires automatically. A competent and disinterested person who is authorized by another person to act in his or her place and sign a contract of sale is called A. an attorney in fact. B. a substitute grantor. C. an agent. D. a licensee. - Correct Answer-A. an attorney in fact. "Disinterested" means being able to act in an objective manner without any hidden motivation or prospect of gain. For example, a person who made a secret deal to sign a contract contrary to his client's best interests in exchange for an under-the-table payment would not be "disinterested." A homeowner owned a house on a lot. The front ten feet of the lot were taken by eminent domain for a sidewalk. Would the homeowner be entitled to compensation? A. Yes. The land was taken for public use by eminent domain. B. Yes. He must be paid for the use of the sidewalk. C. No. He still had use of the house and lot. D. No. Compensation is not given on land taken for public use. - Correct Answer-A. Yes. The land was taken for public use by eminent domain. Governments and municipalities can only seize property (other than in criminal cases) for the public good and through eminent domain, which is a process, not an arbitrary action. Part of that process involves determining fair compensation to the owner. A recorded subdivision plat is used in the A. metric survey system. B. rectangular survey system. C. lot and block system. D. metes and bounds system. - Correct Answer-C. lot and block system. Lot and block is the "final" survey of property being readied for development and identifies each individual parcel in a subdivision. The zoning commission of Jefferson County requires that all new construction in a specific area adhere to a specific type of architecture. What type of zoning is this? A. Bulk B. Retro C. Directive D. Aesthetic - Correct Answer-D. Aesthetic. Aesthetic zoning helps ensure consistency within a neighborhood or area, thus raising its visual appeal and, very often, its desirability and value as a place to live. For the past 30 years Lois has operated a neighborhood grocery store. Last week the city council passed a zoning ordinance that prohibits packaged food sales in the area where Lois's grocery store is located. The store is now an example of a/an A. illegal enterprise. demand. Thus, when there is more mortgage money in the market place "looking for a home," borrowers have more choices, which leads to increased competition among lenders, which leads to lower interest rates. The illegal process of a banker refusing to approve loans for a neighborhood based on the racial composition of the area is A. blockbusting. B. steering. C. redlining. D. panic peddling. - Correct Answer-C. redlining. Loans may only be approved or denied on the basis of whether a specific individual and property meet established standards. Thus lenders are well within their rights to deny a loan to a particular person because he or she lacks sufficient income or has poor credit. Additionally, a loan for a partially completed home or one that doesn't meet code can also be denied. However, "macro" issues such as race or neighborhood cannot be considered. Which phrase is not acceptable to use when advertising? A. "Quiet streets" B. "Christian home" C. "Non-smoking" D. "Desirable neighborhood" - Correct Answer-B. "Christian home". If a licensee creates an ad which is explicit in its preference for or limitation of any particular religion, the ad is discriminatory. It is probably safe to say that any advertising that describes the property would be considered acceptable, while advertising that describes buyers could be considered discriminatory, especially if the buyers are from a protected class. An aggrieved party with a Fair Housing violation claim has how long to file a complaint with the Department of Housing and Urban Development? A. 1 month B. 6 months C. 1 year D. 3 years - Correct Answer-C. 1 year. If the complaint is not filed within one year, a person may still file a civil suit in a Federal Court. Under which of the following types of liens can both the real property and the personal property of the debtor be sold to pay the debt? A. Real estate tax lien B. Mechanic's lien C. Judgment lien D. Assessment lien - Correct Answer-C. Judgment lien. Most liens are against a specific property, such as a primary residence. Thus, a contractor seeking payment for a new deck cannot have a homeowner's car attached in settlement. A judgment lien, however, is a decision directed by the courts and can apply to whatever assets it deems appropriate. A mobility impaired person was renting a unit in an apartment complex. Half the units had been assigned parking spaces near the door; the other half had not. The owner A. the grantor. B. the grantee. C. the vendor. D. the vendee. - Correct Answer-C. the vendor. A portion of Wendell's building was inadvertently built on Ginny's land. This is called an A. accretion. B. avulsion. C. encroachment. D. easement. - Correct Answer-C. encroachment. The principal attributes of an encroachment are: 1) It is accidental and 2) it involves only part of a structure. Typically, the issue would be resolved by selling Wendell an easement or a lease or, if practical, actually moving the structure. If the owner of the dominant tenement becomes the owner of the servient tenement and merges the two properties, what happens? A. The easement becomes dormant. B. The easement is unaffected. C. The easement is terminated. D. The properties retain their former status. - Correct Answer-C. The easement is terminated. "Dominant" and "servient" tenements involve two adjacent properties in which an easement is involved. For example, let's say Bridle Creek Farms and Barnstable Farms are separate parcels divided by a country lane that provides access to the county road system. The lane is owned by Bridle Creek, but the deeds of both properties stipulate that Barnstable Farms shall have unrestricted access for the purpose of accessing county roads. That access is an easement. Thus, if the owner of Barnstable Farms buys Bridle Creek Farms, the need for the easement disappears. In a gift of a parcel of real estate, one of the two owners was given an undivided 60 percent interest and the other received an undivided 40 percent interest. The two owners hold their interests as what? A. Cooperative owners B. Joint tenants C. Community property owners D. Tenants in common - Correct Answer-D. Tenants in common. In order to create joint tenancy, some form of relationship must exist between the parties involved, whether business, spousal or other. Because their interests were acquired as a gift, the parties in this instance become tenants in common, with all the ownership benefits of joint tenancy, but not the survivorship rights. Which of the following liens does not need to be recorded to be valid? A. Materialman's lien B. Real estate tax lien C. Judgment lien D. Mechanic's lien - Correct Answer-B. Real estate tax lien. The requirement for individuals to record liens is due in part to the necessity of correctly identifying the complainant. For example, not just "Jones Contracting," but the specific Jones Contracting that performed the work and is owed the money. Because they bear the D. Loan balance $170,000; interest due $425 - Correct Answer-D. Loan balance $170,000; interest due $425. Although many types of loans can become more complex in their calculations of remaining principal and interest at a particular point in time, in this case the interest portion of the payment is calculated simply by multiplying $170,000 by 6% and dividing by twelve. That results in monthly interest of $850, with half that amount, or $425 added to the principal payment at closing. To create a joint tenancy relationship in the ownership of real estate, there must be unities of A. desires, ownership, claim of right, and possession. B. title, interest, liens, and survivorship. C. possession, time, interest, and title. D. ownership, possession, heirs, and title. - Correct Answer-C. possession, time, interest, and title. This essentially means that all parties to the agreement share equally in all aspects of the property, including the length of time it's been held. That means if one party sells or transfers interest in a joint tenancy relationship, his or her place is taken by another in the same capacity. In general, the Foreign Investment in Real Property Tax Act (FIRPTA) requires a buyer to withhold estimated taxes equal to ____ of the sale price in any sale or exchange of property owned by a foreigner (not a US citizen). A. 3% B. 5% C. 15% D. 20% - Correct Answer-C. 15%. Congress passed the Foreign Investment in Real Property Tax Act (FIRPTA) to eliminate the problem of collecting delinquent taxes from foreigners who owned and sold property in the US and left the country without paying the taxes due on the sale. The IRS currently keeps this 15% to ensure that any capital gains on the sale are paid. A defaulting borrower who faces foreclosure may avoid court actions and costs by voluntarily deeding the property to the mortgagee. This is accomplished with a __________, which transfers legal title to the lienholder. A. short sale B. deficiency judgment C. deed in lieu of foreclosure D. caveat emptor - Correct Answer-C. deed in lieu of foreclosure. With the deed in lieu option, a borrower voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. The transfer, however, does not terminate any existing liens on the property. For this reason, some jurisdictions (e.g., judicial foreclosure states) frown on the usage of deeds in lieu of foreclosure. What is a Schedule of Exceptions on a title policy? A. Encumbrances B. Tax liens C. List of things not insured in the policy D. Defects - Correct Answer-C. List of things not insured in the policy. Almost no title insurance policy protects against all conceivable events. As the name suggests, B. buyers to research local businesses before purchasing a home. C. buyers to buy by comparing one house to another. D. buyers to know what the neighborhood of a house is like. - Correct Answer-C. buyers to buy by comparing one house to another. The market data approach allows buyers to compare different properties to determine which best meets their needs in terms of price, features, quality, condition, and other factors. Looking at shopping centers in the appraisal process, the social fiber of the community and distances from schools is called A. neighborhood analysis. B. market data approach. C. site analysis. D. social analysis. - Correct Answer-A. neighborhood analysis. This involves more than just driving around. It is a formal process of identifying, measuring and analyzing the influences that help determine a neighborhood's vitality and desirability. Mrs. Jones, an appraiser, is appraising a single family residence for which she has located six comparable properties, all sold within the past six months. The subject property is rented for $1,500 per month. It is a custom-built home, approximately three years old. Mrs. Jones would probably give the most weight in her final estimate of value to which of the following appraisal methods? A. Cost approach B. Sales comparison approach C. Income approach D. Gross rent multiplier - Correct Answer-B. Sales comparison approach. The sales comparison approach would be used because it is the most reliable indicator of a home's true value. Since it is a single family residence rather than a multi-unit investment property, the fact that it is rented, as well as the amount of rent, is irrelevant to the calculations. Which is the best example of functional obsolescence? A. A residential home built next to a factory B. Peeling paint C. A house with no electricity or running water D. A residential home with central air conditioning - Correct Answer-C. A house with no electricity or running water." Functional obsolescence" typically shows itself in one of two forms: first, in poor initial design, as in this case; second, when the features and design of the home have become outdated compared with competing properties. The first step in an appraisal is A. a market data comparison. B. to define the problem. C. a neighborhood analysis. D. to gather information. - Correct Answer-B. to define the problem. An appraiser is usually paid A. a fee based on a percentage of the appraised value. B. a fee based on the amount of time and effort. C. broker K defrauded her by allowing her son and daughter-in-law to see the purchase offer he brought to her. D. her consumer protection rights have been usurped by her son and daughter-in-law. - Correct Answer-B. she was under undue duress from her son and daughter-in- law, and, therefore, the contract is voidable. "Duress" is the application of coercion or pressure to influence a person to act in a way contrary to his/her best interests. Further, since voluntary participation is a key condition of any contract, Mrs. D could well be successful in such an action. A voidable contract is one that is able to be voided because Mrs D was under duress or undue influence. A broker and seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract? A. There is no consideration involved. B. No acceptance has been given. C. No earnest money has been enclosed. D. There is no current listing agreement. - Correct Answer-B. No acceptance has been given. It has not been presented to or accepted by the owner. Remember, contracts aren't valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it's accepted and the transaction closes, the broker will generally be entitled to his or her full commission. A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executedXXX. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the contract at this stage? A. Void B. Voidable C. In Breach D. Enforceable - Correct Answer-D. Enforceable. Since there were no contingency clauses, and no restrictive covenants of record. If the buyer cannot secure a change of zoning , the contract is perfectly valid as stands and is enforceable between the parties. A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? A. Tuesday, midnight B. Thursday, midnight C. Friday, midnight D. There is no rescission on a house. - Correct Answer-C. Friday, midnight. Because agreement was reached and SIGNED documents were provided on TUESDAY, Friday midnight ends the THREE-business-day period. The title to real estate passes when a valid deed is The primary purpose of Truth in Lending is to A. control interest rates on behalf of the consumer. B. control the true costs to close a transaction. C. prevent usury. D. disclose the true costs of obtaining credit. - Correct Answer-D. disclose the true costs of obtaining credit. Truth in Lending, otherwise known as Regulation Z, is intended to do away with deceptive financing tactics, especially those involving hidden costs--for example, advertising a $250 car lease as zero-down and then tacking a $1,200 upfront payment at the time of contract disguised as an "incidental" acquisition fee. When the lender under a deed of trust requires title insurance, who would be the most likely person to pay for it? A. The mortgagee B. The trustee C. The trustor D. The beneficiary - Correct Answer-C. The trustor. "Trustor" is another name for the borrower and "trustee" is a "supposedly" neutral third party who holds naked legal title, the right to foreclose at the instructions of the beneficiary for non-payment of a promissory note. The beneficiary is the lender in a Deed of Trust. Even though it's the lender who requires the insurance to protect his/her position, it's the borrower who pays for it. Discrimination is prohibited in lending practices under A. ECOA. B. RESPA. C. Truth in Lending Act. D. FNMA. - Correct Answer-A. ECOA. Passed in 1992, the Equal Credit Opportunity Act prohibits a broad spectrum of discriminatory lending practices, including the granting or denial of credit or the costs associated with borrowing based on race, gender, marital status, source of income (e.g., public assistance) and other factors. Which type of loan will result in the largest reduction of the principal balance most quickly? A. 5.5% over 30 years B. 5.75% over 20 years C. 6% over 15 years D. 7% over 20 years - Correct Answer-C. 6% over 15 years. The shorter the term of a loan, the more quickly principal is paid down and the faster equity builds. A 15- year loan at 6% interest rate would provide the LARGEST and FASTEST reduction in the principal. Interestingly, the payments on a 15-year loan are often not that much higher than the same loan with a 30-year payback. Who is the largest purchaser in the secondary market? A. Ginnie Mae B. Fannie Mae C. FHA D. Freddie Mac - Correct Answer-B. Fannie Mae. Fannie Mae stands for the Federal National Mortgage Association (FNMA). It was established by the National Housing Act specifically to start the secondary mortgage A borrower bought a $174,000 house with no down payment. The loan was probably A. a conventional insured loan. B. a VA loan. C. an FHA loan. D. a conventional loan. - Correct Answer-B. a VA loan. VA loans are zero-down instruments, while FHA loans permit low down payments in the 5% range. Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? A. Interest rate B. Monthly payments C. Finance charge D. Annual rate - Correct Answer-B. Monthly payments. Graduated payment mortgages are aimed particularly at young families who expect to see their earnings rise over the next five to ten years. As such, payments for interest and principal are less than the actual costs in the early years and gradually rise to make up the difference. The maximum permissible amounts are based on "loan to value ratios" A. based on sale price or appraised value, whichever is lower. B. not determined by federal statute in the case of FHA loans. C. based on the banker's competitive market analysis. D. fixed by law for conventional loans. - Correct Answer- A. based on sale price or appraised value, whichever is lower. Although various banks, mortgage companies and programs have different LTVs, the lower, more conservative number is used. An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down payment." Would this be in violation of the Truth in Lending Act? A. Yes. Acreage is not exempt from Regulation Z. B. Yes--since a down payment was stated. C. No. Owners are not covered by Regulation Z. D. No. Brokers can advertise the down payment. - Correct Answer-C. No. Owners are not covered by Regulation Z. Regulation Z requires disclosure of all financing terms and conditions if an interest rate, downpayment or other enticement is featured in an ad. This does not apply in this case, however, because Regulation Z applies only to institutions, not individuals selling their own property. If additional information is not provided, which of the following would be in violation of Truth in Lending? A. "FHA financing available" B. "Assumable loan" C. "No down payment required." D. "Easy financing terms" - Correct Answer-C. "No down payment required." "No down payment required" triggers the Truth in Lending disclosures because it is a specific statement about only one aspect of the financing. "Easy terms" does not trigger the regulation because it's non-specific. C. To protect the buyer from fraud D. To assure the property value is sufficient to cover the loan - Correct Answer-D. To assure the property value is sufficient to cover the loan. Jim Jones, the landlord, rents a property to Tom Smith, a handicapped person. Mr. Smith, with Mr. Jones' permission, modifies the house to suit his needs. When the lease expires, which of the following requirements would not have to be met by Mr. Smith? A. Mr. Smith must remove the "grab rails" in the bathroom that were installed for his use. B. Mr. Smith must raise the kitchen cabinets that were lowered for his use. C. Mr. Smith must repair the walls where the "grab rails" in the bathroom were removed. D. Mr. Smith must restore the wide doorways, that were installed for him, to the original size. - Correct Answer-D. Mr. Smith must restore the wide doorways, that were installed for him, to the original size. Since the width of the door will not in any way be detrimental to future tenants, there is not a requirement for the original width of the doors to be replaced by the handicapped tenant. All of the other issues must be restored to original status. A real estate licensee has a buyer agency agreement. What is the seller in this situation? A. customer B. A client C. A fiduciary D. An agent - Correct Answer-A. customer. There's an important distinction between client and customer. Unless there is a specific agreement to the contrary, licensees represent only one side in a transaction. In this case, it's the buyer who is the client and it's the licensee's obligation to negotiate a deal that's in that person's best interests, not the one that's "fairest" to both parties. A real estate agent should tell the buyer, his customer, which of the following? A. How the area's demographics have changed recently B. The seller's motivation for marketing his property C. A pending or recent zoning change D. The seller is getting a divorce - Correct Answer-C. A pending or recent zoning change. A zoning change is a "material fact"--something that can have a direct impact on the property's value or desirability. For example, if the zoning in a middle class neighborhood on the edge of a growing city was changed from residential to mixed use, it means that a number of homes could be turned into businesses, which will make the property less desirable to people seeking a quiet place to raise a family. Broker Carr, with ABC Real Estate Company, listed the property of a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller and the listing broker? A. There is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer. type. A mechanic's lien is statutory AND involuntary, for example. Which is true about restrictive covenants? A. They are placed by private parties in a deed. B. They are placed by government agencies in a deed. C. They are voidable by successive owners. D. They are a form of tax shelter. - Correct Answer-A. They are placed by private parties in a deed. Restrictive covenants are most commonly associated with subdivisions and community management associations and are intended to maintain consistency within the neighborhood. While viewed as a benefit by most, they do limit the owner's use of the property and are binding on future owners. What type of a listing agreement allows the owner to appoint an exclusive agent to sell his property, but retains the right to sell the property himself? A. Open B. Exclusive right to sell C. Multiple listing D. Exclusive agency - Correct Answer-D. Exclusive agency. Open listings mean that if the owner or any other broker or salesperson produces the buyer, the broker will lose his or her commission. Exclusive Right to Sell gives the broker his or her commission regardless of who actually sells the property, even if it is the owner. Exclusive Agency allows the seller to appoint an exclusive agent, but retain the right to sell the property himself. The illegal practice of directing minorities to areas populated by the same race or religion is called A. steering. B. blockbusting. C. redlining. D. panic peddling. - Correct Answer-A. steering. "Steering" is driving people towards particular neighborhoods, and is the correct answer to this question. On the other hand, "blockbusting" is the opposite side of the same coin. Synonymous with "panic peddling," it refers to trying to generate panic selling in a neighborhood dominated by one race or ethnic group by representing that another group is about to start moving in. Which of the following closing costs is typically paid by the buyer? A. Private mortgage insurance (PMI) B. Broker's commission C. Satisfy existing liens D. A flip tax - Correct Answer-A. Private mortgage insurance (PMI) Which of the following is a closing expense typically paid by the seller? A. The broker's commission B. Inspections C. The mortgage recording Fees D. The recording of the deed - Correct Answer-A. The broker's commission. The seller pays from the broker's commission. All the other expenses are the buyer's. D. No. Carl must live in a single family home to discriminate. - Correct Answer-A. Yes. He may do this if he does not use a broker or discriminate in advertising. Although laws vary by state as to number of units that fall under this type of provision, if a person owns and lives in a unit, he or she is entitled to practice a certain measure of discrimination. The view is that a person's dwelling (which includes units such as duplexes and triplexes) enjoys a degree of "sanctity" and the person may choose whom he or she brings into their "home." Therefore, the owner could claim an exemption from federal Fair Housing laws. Homeowner Tanya acquired the ownership of land that was deposited by a river running through her property by A. reliction. B. succession. C. avulsion. D. accretion. - Correct Answer-D. accretion. Accretion means the addition to a parcel of land by sand or soil deposits due to the action of a river or other body of water over time. Avulsion refers to the loss of land as a result of its being washed away by sudden or unexpected action of nature, such as a flash flood that re-routes a river. The Civil Rights Act of 1866 prohibits discrimination in housing based on which of the following reasons? A. Race B. Religion C. Sex D. Age - Correct Answer-A. Race. Although surprising to many, the original civil rights legislation was passed in 1866--by one vote over the veto of President Andrew Johnson. A bill of sale is used to transfer the ownership of what? A. Real property B. Fixtures C. Personal property D. Appurtenances - Correct Answer-C. Personal property. Personal property differs from "real property" in a number of respects, most importantly its portability. Cars, furniture, clothing, paintings, jewelry, appliances and just about any other non-food item one buys are examples of personal property. Restrictive covenants that run with the land A. are no longer effective when the title is transferred. B. apply only until the developer has conveyed the title. C. can be removed by a court of competent jurisdiction. D. apply to and bind all successive owners of the property. - Correct Answer-D. apply to and bind all successive owners of the property. Often put in place to maintain the consistency and desirability of a neighborhood, restrictive covenants have withstood court tests and prohibit all future owners from certain actions or modifications of their property, such as adding out-buildings or creating additions above a certain height, putting up lights to illuminate a sports court, changing the architectural style of a home and so forth. until she needs the space. Sandy did not charge Jim rent for the use of her yard. Sandy has given Jim a(n) what? A. Easement appurtenant B. Easement by necessity C. Estate in land D. License - Correct Answer-D. License. Granting the use of property for a defined period for a specific purpose is almost always a form of licensing. Easements grant only access, not ownership, use or occupancy rights. Further, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks. Anna owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which of the following types of access rights would provide the greatest protection for a prospective purchaser? A. An easement in gross B. An appurtenant easement C. An easement by necessity D. A license - Correct Answer-B. An appurtenant easement. Appurtenant easements afford the most protection since they are generally a permanent feature of the property. Thus, in the case of sale, the lake access passes to any new owners. By contrast, an "easement in gross" is between two individuals, which would severely limit the attractiveness and value of the property if the original owner wished to sell. Sam and Nancy bought a store building and took title as joint tenants. Nancy died testate. Sam now owns the store A. as a joint tenant with rights of survivorship. B. in severalty. C. as a tenant in common with Nancy's heirs. D. in trust. - Correct Answer-B. in severalty. Tom leases store space to Kim for a restaurant, and Kim installs her ovens, booths, counters, and other equipment. When do these items become real property? A. When they are installed B. When Kim defaults on her rental payments C. When the lease takes effect D. When the lease expires, if the items are not taken by the tenant - Correct Answer-D. When the lease expires, if the items are not taken by the tenant. Kim is free to move these fixtures at the end of her lease. However, if she chooses to leave them behind, they are considered a permanent part of the structure (just like a dining room chandelier in a home) and revert to Tom. Jim, Manny, and Harry are joint tenants owning a parcel of land. Harry conveys his interest to his long-time friend Wendell. After the conveyance, Jim and Manny A. become tenants in common. B. continue to be joint tenants with Harry. C. become joint tenants with Wendell. D. remain joint tenants owning a two-thirds interest. - Correct Answer-D. remain joint tenants owning a two- C. chattel D. the foundation. - Correct Answer-C. chattel. The term "chattel" refers to personal property. A square is 1/8 of a mile by 1/8 of a mile. How many acres is this? A. 10 acres B. 20 acres C. 40 acres D. 160 acres - Correct Answer-A. 10 acres. One-eighth of a mile square is the same as 10 acres. Multiply 1/8 X 1/8 = 1/64 divided into 640 acres = 10 acres The primary purpose of a deed is to A. prove ownership. B. transfer title. C. give constructive notice. D. prevent adverse possession. - Correct Answer-B. transfer title. A deed is the instrument by which ownership of a property is transferred from one person to another, while a title is evidence of that ownership. A special warranty deed differs from a general warranty deed in that the grantor's covenant in the special warranty deed A. applies only to a definite limited time. B. covers the time back to the original title. C. is implied and is not written in full. D. protects all subsequent owners of the property. - Correct Answer-A. applies only to a definite limited time. The more common deed in most states is the general warranty, because it establishes the ownership trail and validity of title going back to the original recorded ownership (for example, the purchase of Manhattan Island and all subsequent divisions, subdivisions and resales). Under a special warranty deed, an owner transfers property guaranteeing the quality of title only during the period of his or her ownership, leaving subsequent buyers vulnerable to prior claims. When the grantor does not wish to convey certain property rights, he or she A. must note the exceptions after the closing. B. may not do so, since the deed conveys the entire premises. C. may note the exceptions in the deed of conveyance. D. must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor. - Correct Answer-C. may note the exceptions in the deed of conveyance. Most commonly known as "restrictive covenants," such deed restrictions are often used to maintain the consistency of a neighborhood by, for example, stipulating that only traditional home styles of a particular size and painted in traditional colors may be constructed and occupied within the subdivision. These are encumbrances on the property since they limit current and future owners in how they use the property. When a claim is settled by a title insurance company, the company acquires all rights and claims of the yard and the local sewer company had an easement for pipes running under that area, he would have to find another location for his pool, even if it was not as desirable. The list of previous owners from whom the present real estate owner derives his or her title is known as the A. chain of title. B. certificate of title. C. title insurance policy. D. abstract of title. - Correct Answer-A. chain of title. The "chain" links together the successive owners of a property from the most recent to the original recorded title holder. In addition, it notes other relevant information such as mortgages, judgments, liens, death of title holders, inheritors and so forth. When an appraiser correlates the three approaches into a final estimate, he A. averages the estimate. B. accords the greatest weight to the median value. C. selects the estimate nearest to that desired by the employer. D. reconciles the differences according to the type of property being appraised and the quantity and quality of data available. - Correct Answer-D. reconciles the differences according to the type of property being appraised and the quantity and quality of data available. In order to maintain accuracy and "transparency" of his calculations, an appraiser reconciles differences and does not average comparable sales to arrive at a final value. Apartment buildings in an area were selling for $100,000 and a buyer offered $100,000 for an apartment building. The buyer is operating on the principle of A. highest and best use. B. conformity. C. substitution. D. increasing returns. - Correct Answer-C. substitution. An appraisal principle, "substitution" holds that the maximum value of a property is that price for which a comparable, equally desirable property can be purchased in a timely manner. For example,if two 4- bedroom homes with equal features, age, condition, lot size and desirability are on the market at the same time, buyers would not pay $250,000 for one when the other is available for $240,000. However, if the $240,000 is on the market now, but the owner wants to delay closing for six months while the other is available for immediate occupancy, there may well be buyers willing to pay the premium. When an appraiser uses the phrase "effective age," she is referring to A. the number of years since the improvements were made. B. the age of the property based upon its condition. C. the estimated total life of an improvement. D. the number of years during which the property will yield a worthwhile return on the investment made. - Correct Answer-B. the age of the property based upon its condition. Effective age is a combination of many factors, including location, quality of construction and D. No, because noise from aircraft passing overhead is not recognized as affecting property values. - Correct Answer-B. Yes, because of economic obsolescence. Economic obsolescence occurs when factors unrelated to the property itself and outside of the owner's control diminish its value. A quick way to judge whether or not a property has become economically obsolete is to analyze whether, under the new circumstances, the location would still be chosen as a home site and, if yes, at what value compared with the current property. The Adams family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered the monetary value of the home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an example of the principle of A. diminishing return. B. balance. C. regression. D. substitution. - Correct Answer-C. regression. The regression principle is the reason people are cautioned against owning the most expensive house in the neighborhood. It's an observation of the fact that lower priced homes (and commercial buildings) have a much greater downward pull on the value of higher end properties than the other way around. In doing a market analysis, an appraiser found a recently sold property where the owners had just gone through a divorce. The property had been listed for $260,000 for 3 months but was purchased for $170,000 by one of the spouses. Should the appraiser use this as a comparable? A. Yes. You would use the actual sale price of $170,000. B. Yes--because it was a comparable type property. C. No--because it had only been listed for 3 months. D. No--because of the divorce it was not an "at arms' length" transaction. - Correct Answer-D. No--because of the divorce it was not an "at arms' length" transaction. An appraiser should not use this sale as a comparable sale. An "Arm's length transaction is defined as one in which the parties are dealing from equal bargaining positions. Parties are said to deal "at arm's length" when each stands on the strict letter of his or her rights and conducts the business in a formal manner without trusting the other's fairness or integrity and without being subject to the other's control or dominant influence as would be the case in the divorce. Once a contract is ratified, any earnest money or down payments MUST be put into the escrow account by A. the end of the 5th business day. B. the end of the current business day. C. the end of the 10th business day. D. anytime before closing. - Correct Answer-A. the end of the 5th business day. Once a contract is ratified, any earnest money or down payments MUST be put into the escrow account by the END OF THE FIFTH BUSINESS BANKING DAY, unless otherwise agreed to in writing. This money must remain in the account until the transaction has been completed - either by consummation or termination. D. Redlining - Correct Answer-B. Paying of kickbacks. RESPA concerns itself only with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited. An optionor and an optionee make a contract for an option on a commercial piece of property. If the optionee decides to exercise his option, when must he perform? A. He must exercise his option within 6 months under state law. B. He must exercise his option under the terms of the option contract. C. He must exercise his option when the optionor demands it. D. He can exercise his option whenever he wants. - Correct Answer-B. He must exercise his option under the terms of the option contract. Options are generally concerned with only two things: time and price. Whatever the parties agree to in those regards defines the terms of the option and the obligations of the parties. The Virginia Fair Housing Law does not consider which of the following a protected class? A. Handicap B. Age C. Income level D. Sex - Correct Answer-C. Income level. Under Virginia Fair Housing laws, it is illegal discriminate based on a person's race, color, religion, national origin, sex, elderliness, familial status, or handicap. A limited service agent who is selling a condominium must provide A. a list of all owners in that condominium B. a condominium resale certificate C. a statement of past due fees D. an association disclosure packet - Correct Answer-B. a condominium resale certificate. If rent has not been paid on an apartment, the landlord can convey which of the following? A. Landlord lien B. Foreclosure suit C. Unlawful detainer notice D. Caveat Emptor - Correct Answer-C. Unlawful detainer notice. If a rental payment is past due, the landlord may issue one of the following: a Five-Day Pay-Or-Quit Notice, an Unlawful Detainer Warrant, or an Eviction Notice. There is an escrow dispute between buyer Michael and seller Diane. Broker Nathan currently has the money in escrow. However, 30 days have passed and no court action has been taken. Which of the following is true? A. Nathan can leave money in escrow until the parties agree. B. Nathan must turn the money over to the recovery fund. C. Nathan must give the money to the buyer. C. Katy can commingle funds if she uses an interest bearing escrow account. A. written disclosure in the contract of sale must disclose who will receive any of the interest earned. - Correct Answer-A. written disclosure in the contract of sale must disclose who will receive any of the interest earned. In escrow accounts, the funds do not need to be held in an account bearing interest. However, if they are in such an account, a written disclosure in the contract of sale or lease at the time of contract or lease writing must disclose the specifics of any interest earned. (Who is going to receive the interest?) A Fair Housing Violation in Virginia could result from denying a person an opportunity to rent based upon A. Being over 60 B. their ability to pay C. a history of felonies D. the fact that they never paid their prior landlord - Correct Answer-A. Being over 60. Age is a category that is protected by Fair Housing laws Broker Perry needs to complete his continuing education hours. How many hours of continuing education does Perry need each renewal cycle? A. 6 hours B. 12 hours C. 18 hours D. 24 hours - Correct Answer-D. 24 hours The _____________ administers and enforces the Fair Housing laws A. Real Estate Board B. HUD C. Fair Housing Board D. Department of Law Enforcement - Correct Answer-C. Fair Housing Board. According to the state of Virginia, how is an agency relationship defined? A. Where a broker is employed by the express authority of a licensed salesperson. B. Every relationship in which the real estate licensee acts for or represents a person by such person's express authority in a real estate transaction. C. Every relationship where none of the parties have a real estate license. D. Every relationship in real estate between a licensed appraiser and licensed salesperson. - Correct Answer-B. Every relationship in which the real estate licensee acts for or represents a person by such person's express authority in a real estate transaction. A landlord may release a tenant's financial records under which of the following circumstances? A. For inspection by a potential buyer of the rental property or if the tenant gives the landlord written permission to do so B. When a potential employer makes the request in writing C. When a creditor of the tenant requests them D. When the tenant's family makes a formal request and the tenant is under the age of 25 - Correct Answer- A. For inspection by a potential buyer of the rental