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Real Estate Principles

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Real Estate Final

Question 1 of 76

1

The "bundle of rights" does not include the right to:

Select one of the following:

  • Lease the property to a tenant

  • Do nothing with the property

  • Impede air traffic

  • Mortgage the property

Explanation

Question 2 of 76

1

Personal property is

Select one of the following:

  • chattels

  • personality

  • usually movable

  • all of the above

Explanation

Question 3 of 76

1

A freehold estate whose duration is limited to the lifetime of a specified person is called a/an

Select one of the following:

  • fee simple subject to a condition subsequent

  • estate for years

  • estate of inheritance

  • life estate

Explanation

Question 4 of 76

1

A leasehold estate

Select one of the following:

  • gives the tenant the right of exclusive possession

  • has an indefinite duration

  • is a nonpossessory interest

  • is an estate in reversion

Explanation

Question 5 of 76

1

when property is held in joint tenancy, upon the death of one of the joint tenants, his or her interest in the property automatically:

Select one of the following:

  • vests in his or her spouse

  • is transferred to his or her heirs

  • passes to the other joint tenant(s)

  • becomes a term tenancy

Explanation

Question 6 of 76

1

when a fee simple owner transfers title by deed, it is presumed that the new owner (the grantee) receives a/an:

Select one of the following:

  • term tenancy

  • estate in remainder

  • joint tenancy

  • fee simple absolute

Explanation

Question 7 of 76

1

the highest and most complete form of ownership, representing the whole "bundle of rights," is called a/an:

Select one of the following:

  • qualified fee

  • estate for years

  • fee simple absolute

  • estate in reversion

Explanation

Question 8 of 76

1

in addition to requiring a deed to be in writing, the statute of frauds also requires that the deed must be:

Select one of the following:

  • delivered after the grantor's death

  • recorded before it is acknowledged

  • signed by the grantee

  • signed by the grantor

Explanation

Question 9 of 76

1

in all states, a valid deed must contain:

Select one of the following:

  • an adequate description of the property

  • a habendum clause

  • a recital of consideration

  • warranties

Explanation

Question 10 of 76

1

an adverse possessor's use and possession of the land must be:

Select one of the following:

  • registered with the county clerk

  • open and notorious

  • by permission of the true owner

  • by permission of the state government

Explanation

Question 11 of 76

1

before a deed can be recorded, it must be:

Select one of the following:

  • delivered to the grantee

  • acknowledged by the grantor

  • certified by a title company

  • published in a title report

Explanation

Question 12 of 76

1

the government's power to condemn private property is called the power of:

Select one of the following:

  • eminent domain

  • dedication

  • escheat

  • accession

Explanation

Question 13 of 76

1

a valid deed transfers title when

Select one of the following:

  • the grantor delivers it to the grantee, who accepts it

  • it is acknowledged by the grantor

  • the grantee signs it

  • it is recorded

Explanation

Question 14 of 76

1

an easement on a piece of property

Select one of the following:

  • encumbers the property

  • always has a positive impact on value

  • always has a negative impact on value

  • none of these

Explanation

Question 15 of 76

1

the basis for zoning and other land use control laws is:

Select one of the following:

  • the government's police power

  • eminent domain

  • the civil rights act of 1866

  • the government's power to tax property on the basis of value

Explanation

Question 16 of 76

1

unlike general real estate taxes, special assessments are levied:

Select one of the following:

  • to pay for a specific improvement

  • every year

  • against all taxable real property within a taxing district

  • all of the above

Explanation

Question 17 of 76

1

without exception, to have legal capacity to enter into a contract a person must be:

Select one of the following:

  • at least 21 years old

  • able to read and sign his name

  • registered with the superior court

  • mentally competent

Explanation

Question 18 of 76

1

a contract is not formed if the offer is

Select one of the following:

  • revoked before its accepted

  • accepted before its expired

  • revoked after its accepted

  • accepted without any modification of its terms

Explanation

Question 19 of 76

1

consideration is

Select one of the following:

  • not required for contracts that have been put into writing

  • not required if the contract has a lawful objective

  • something of value exchanged by the contracting parties

  • formal execution of the contract in the presence of at least two wintesses

Explanation

Question 20 of 76

1

the statute of frauds applies to

Select one of the following:

  • a purchase agreement for a house

  • a purchase agreement for vacant land

  • a listing agreement for a piece of commercial real estate

  • all of the above

Explanation

Question 21 of 76

1

a contract is voidable if one of the parties:

Select one of the following:

  • signed it under duress

  • under misrepresentation to persuade the other to enter into it

  • has the right to rescind it

  • all of the above

Explanation

Question 22 of 76

1

when an offer makes a counteroffer

Select one of the following:

  • no contract is formed unless the original offeror accepts the counteroffer

  • the original offeror is required to accept the offeree's modified terms

  • if the original offeror does not accept the offerree's modifications, they have a binding contract on the terms originally offered

  • it create a binding contract on the offeree's modified terms, unless the modifications are unreasonable

Explanation

Question 23 of 76

1

a broker's commission is usually a

Select one of the following:

  • percentage of the property's listing price

  • percentage of the property's appraised value

  • percentage of the property's sales price

  • flat fee based on the anticipated difficulty of selling the property

Explanation

Question 24 of 76

1

in most states, in which of the following situations would a seller NOT owe a commission?

Select one of the following:

  • the transaction ends because theres a financing contingency in the purchase agreement and the buyer isn't able to make the necessary loan

  • the seller and buyer agree to walk away from the transaction

  • the seller discovers at the last minute that she does not have a marketable title

  • the seller has a change of heart and decides not to sell

Explanation

Question 25 of 76

1

a dual agent must

Select one of the following:

  • disclose all confidential information to both the buyer and the seller

  • keep each party's negotiating position confidential

  • avoid giving advice to either party

  • submit conflicts between the buyer and the seller to arbitration

Explanation

Question 26 of 76

1

a real estate license is required for anyone who

Select one of the following:

  • sells or leases their own property

  • sells or leases property for other people for compensation

  • all of the above

  • none of the above

Explanation

Question 27 of 76

1

when the parties agree to terms on a specific property, a contract spelling out the agreement is drawn up and signed by

Select one of the following:

  • the broker and the seller

  • the broker and the buyer

  • the sales associate and the seller

  • the buyer and the seller

Explanation

Question 28 of 76

1

the listing agreement will NOT usually contain the

Select one of the following:

  • asking price

  • selling price

  • location of the property

  • authority granted to the broker

Explanation

Question 29 of 76

1

Essential elements of any valid contract consists of (1) an offer (2) an acceptance (3) consideration (4) parties with capacity (5) a lawful purpose (6) in writing

Select one of the following:

  • True
  • False

Explanation

Question 30 of 76

1

the commission paid in the real estate brokerage industry is normally

Select one of the following:

  • a percentage of the mortgage

  • a fixed dollar amount per transaction

  • percentage of the gross sales price

  • included as discount points paid at the closing

Explanation

Question 31 of 76

1

an example of a restricted covenant is a requirement that a house be a minimum size

Select one of the following:

  • True
  • False

Explanation

Question 32 of 76

1

____is defined as the possibility of loss resulting from not being able to convert an asset into cash quickly should the need arise

Select one of the following:

  • business risk

  • financial risk

  • purchasing power risk

  • liquidity risk

Explanation

Question 33 of 76

1

a _____ is a legal document used to transfer ownership rights to real estate from one party to another

Select one of the following:

  • plat

  • lease

  • sales contract

  • deed

Explanation

Question 34 of 76

1

a deed that transfers any interest which a grantor may or may not have in a property without promising that the grantor actually has such an interest is called a(n) ______ deed.

Select one of the following:

  • bargain and sale

  • quitclaim

  • unencumbered

  • special warantee

Explanation

Question 35 of 76

1

before a deed can be recorded, most states require that

Select one of the following:

  • the deed be signed by the grantee

  • the deed be acknowledged by the grantor

  • the grantor must sign in the presence of a witness who also signs

  • the grantor must be a witness

Explanation

Question 36 of 76

1

in addition to the standard requirements for a contract to be valid, the statute of frauds requires contracts involving real estate

Select one of the following:

  • to be for a lawful purpose

  • to provide adequate consideration from the buyer

  • to identify parties with capacity

  • to be in writing

Explanation

Question 37 of 76

1

if the terms in the purported acceptance differ from those of the offer, then

Select one of the following:

  • a temporary contract is formed

  • a contract is still formed

  • no counteroffer is made

  • a counteroffer is made

Explanation

Question 38 of 76

1

a compilation of all recorded documents that affect a given piece of real estate is known as a title

Select one of the following:

  • opinion

  • insurance

  • abstract

  • deed

Explanation

Question 39 of 76

1

the commission paid in the real estate brokerage industry is normally

Select one of the following:

  • a percentage of the mortgage

  • a fixed dollar amount per transaction

  • a percentage of the sales price

  • included as discount points paid at the closing

Explanation

Question 40 of 76

1

in a real estate transaction, the debt obligation secured by a ____ is generally acknowledged by a _____

Select one of the following:

  • lease, defeasance

  • covenant, acceleration

  • mortgage, promissory note

  • mortgagor, deed of trust

Explanation

Question 41 of 76

1

in periods of rising interest rates, the borrower may be able to sell his property for a higher price if the new owner can assume the existing loan. Because this is not advantageous to the lender, a ____ may be included in the promissory note to preclude assumption

Select one of the following:

  • due-on-sale clause

  • defeasance clause

  • prepayement clause

  • acceleration clause

Explanation

Question 42 of 76

1

which of the following categories account of the largest portion of all mortgage credit in the US?

Select one of the following:

  • 1-4 family residential

  • multi-family residential

  • commercial

  • farm

Explanation

Question 43 of 76

1

if the mortgagor fails to make payments or defaults on other terms of the mortgage agreement, the mortgagee can begin _____ proceedings.

Select one of the following:

  • equity of redemption

  • due-on-sale

  • foreclosure

  • hypothecation

Explanation

Question 44 of 76

1

Credit history is part of a mortgage loan application

Select one of the following:

  • True
  • False

Explanation

Question 45 of 76

1

down payment on a purchase can only come from your personal savings

Select one of the following:

  • True
  • False

Explanation

Question 46 of 76

1

loan origination occurs in the secondary mortgage market within the US housing finance system

Select one of the following:

  • True
  • False

Explanation

Question 47 of 76

1

a key to minimizing risk in home loans is for the lender to have extensive local market knowledge

Select one of the following:

  • True
  • False

Explanation

Question 48 of 76

1

after a commercial loan is made, a lender may annually ask for

Select one of the following:

  • financial statements

  • rent rolls

  • proof of insurance

  • all of the above

Explanation

Question 49 of 76

1

the debt coverage ratio

Select one of the following:

  • should be greater than one

  • is meaningless

  • should be less than one

  • doesn't apply to commercial loans

Explanation

Question 50 of 76

1

the primary function of the real estate brokerage industry is to

Select one of the following:

  • match properties and customers

  • guide buyers and sellers through the complexities of real estate transaction

  • provide legal representation to clients

  • a and b only

Explanation

Question 51 of 76

1

an amortization schedule that is for 25 years:

Select one of the following:

  • will have a smaller payment than one for 20 years other factors being equal

  • will have a larger payment than one for 20 years other factors being equal

  • is illegal

  • none of the above

Explanation

Question 52 of 76

1

a listin is a written agreement between a property owner and a real estate broker authorizing the broker to sell or lease a particular property

Select one of the following:

  • True
  • False

Explanation

Question 53 of 76

1

if you sell your house and intentionally fail to disclose that you have covered all signs of a leaky basement by painting over the walls, you are probably guilty of misrepresentation

Select one of the following:

  • True
  • False

Explanation

Question 54 of 76

1

after a commercial loan is made, a lender may annually ask for

Select one of the following:

  • financial statements

  • rent rolls

  • proof of insurance

  • all of the above

Explanation

Question 55 of 76

1

the debt coverage ratio

Select one of the following:

  • should be greater than one

  • is meaningless

  • should be less than one

  • doesn't apply to commercial loans

Explanation

Question 56 of 76

1

the primary function of the real estate brokerage industry is to

Select one of the following:

  • match properties and customers

  • guide buyers and sellers through the complexities of real estate transactions

  • provide legal representation to clients

  • a and b only

Explanation

Question 57 of 76

1

which of the following statements is not true about brokers?

Select one of the following:

  • brokers serve as an intermediary in a transaction

  • brokers receive compensation in the form of commission for their services

  • brokers often specialize in certain property types

  • brokers take ownership of the item being transferred for at least a brief moment in time

Explanation

Question 58 of 76

1

in the legal relationship known as "agency," the ____ is authorized by the ____ to transact business on his or her behalf.

Select one of the following:

  • principal, agent

  • agent, principal

  • seller, broker

  • broker, agent

Explanation

Question 59 of 76

1

when a single broker represents both parties in a real estate transaction, a ____ agency may exist

Select one of the following:

  • fiduciary

  • buyer/seller

  • dual

Explanation

Question 60 of 76

1

which of the following is a true statement?

Select one of the following:

  • mortgages are originated in the primary market

  • mortgages are sold in the primary market

  • mortgages are originated in the secondary market

  • mortgages are originated in the underground market

Explanation

Question 61 of 76

1

which of the following is true?

Select one of the following:

  • bad credit lasts forever

  • home mortgages account for the majority of mortgages in the US

  • spouses have no rights to property ownership

  • employment history doesn't matter in mortgage financing

Explanation

Question 62 of 76

1

personal property is

Select one of the following:

  • movable

  • also called chattels

  • must be left with the property

  • a and b

Explanation

Question 63 of 76

1

although most promissory notes require a series of future periodic payments to service the debt, most notes contain a provision that make the full amount (plus interest owed to date) immediately due and payable should a borrower default on the note. This provision is known as:

Select one of the following:

  • deficiency judgement

  • hypothecation

  • prepayment clause

  • acceleration clause

Explanation

Question 64 of 76

1

______ refers to physical land and buildings, while ______ consists of the benefits gained from owning land and buildings

Select one of the following:

  • personal property, real property

  • real property, personal property

  • real property, real estate

  • real estate, real property

Explanation

Question 65 of 76

1

the primary difference between freehold and leasehold estates is

Select one of the following:

  • the number of rights is greater with leasehold estates

  • leasehold estates involve property that have no liens

  • a freehold interest is an ownership interest

  • a freehold estate can only possessory

Explanation

Question 66 of 76

1

a claim on property as security for a debt or other obligation is known as a(n)

Select one of the following:

  • enroachment

  • lien

  • easement

  • profit

Explanation

Question 67 of 76

1

governmental powers over private property rights include

Select one of the following:

  • power of taxation

  • power of escheat

  • police power

  • all of the above

Explanation

Question 68 of 76

1

the primary difference between a special warranty deed and a general warranty deed is that

Select one of the following:

  • in a general warranty deed, the promises made the grantor only apply to events that occurred during the grantor's ownership of the property

  • in a general warranty deed, the promises made by the grantee only apply to events that occurred during the grantee's ownership of the property

  • in a special warranty deed, the promises made by the grantor only apply to events that occurred during the grantor's ownership of the property.

  • in a special warranty deed, the promises made by the grantee only apply to events that occurred during the grantee's ownership of the property

Explanation

Question 69 of 76

1

an offer becomes an enforceable contract when it is accepted by the party who

Select one of the following:

  • makes it

  • receives it

  • tenders it

  • delivers it

Explanation

Question 70 of 76

1

a compilation of all recorded documents that affect a given piece of real estate is known as title

Select one of the following:

  • opinion

  • insurance

  • abstract

  • deed

Explanation

Question 71 of 76

1

the legal right to ownership of land is demonstrated in the

Select one of the following:

  • lease

  • deed

  • listing agreement

  • sales contract

Explanation

Question 72 of 76

1

amortization is the

Select one of the following:

  • practice of charging interest on a loan

  • process of gradually retiring a debt by periodic payments

  • compounding of interest

  • use of debt to enhance the rate of return

Explanation

Question 73 of 76

1

in order to establish good credit you should

Select one of the following:

  • have at least 3 lines of credit (credit cards, student loans, etc)

  • have all payments in a timely manner

  • review your credit history annually

  • all of the above

Explanation

Question 74 of 76

1

eminent domain is defined as "the use of land that produces the greatest long term economic return to the owner"

Select one of the following:

  • True
  • False

Explanation

Question 75 of 76

1

the debt coverage ratio must be greater than 1 or you're losing money

Select one of the following:

  • True
  • False

Explanation

Question 76 of 76

1

co-signing a note for someone else is not only a nice thing but a smart business move

Select one of the following:

  • True
  • False

Explanation

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