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Real Estate Final

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Real Estate Principles
merrellsamantha
Quiz by merrellsamantha, updated more than 1 year ago
merrellsamantha
Created by merrellsamantha almost 11 years ago
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Resource summary

Question 1

Question
The "bundle of rights" does not include the right to:
Answer
  • Lease the property to a tenant
  • Do nothing with the property
  • Impede air traffic
  • Mortgage the property

Question 2

Question
Personal property is
Answer
  • chattels
  • personality
  • usually movable
  • all of the above

Question 3

Question
A freehold estate whose duration is limited to the lifetime of a specified person is called a/an
Answer
  • fee simple subject to a condition subsequent
  • estate for years
  • estate of inheritance
  • life estate

Question 4

Question
A leasehold estate
Answer
  • gives the tenant the right of exclusive possession
  • has an indefinite duration
  • is a nonpossessory interest
  • is an estate in reversion

Question 5

Question
when property is held in joint tenancy, upon the death of one of the joint tenants, his or her interest in the property automatically:
Answer
  • vests in his or her spouse
  • is transferred to his or her heirs
  • passes to the other joint tenant(s)
  • becomes a term tenancy

Question 6

Question
when a fee simple owner transfers title by deed, it is presumed that the new owner (the grantee) receives a/an:
Answer
  • term tenancy
  • estate in remainder
  • joint tenancy
  • fee simple absolute

Question 7

Question
the highest and most complete form of ownership, representing the whole "bundle of rights," is called a/an:
Answer
  • qualified fee
  • estate for years
  • fee simple absolute
  • estate in reversion

Question 8

Question
in addition to requiring a deed to be in writing, the statute of frauds also requires that the deed must be:
Answer
  • delivered after the grantor's death
  • recorded before it is acknowledged
  • signed by the grantee
  • signed by the grantor

Question 9

Question
in all states, a valid deed must contain:
Answer
  • an adequate description of the property
  • a habendum clause
  • a recital of consideration
  • warranties

Question 10

Question
an adverse possessor's use and possession of the land must be:
Answer
  • registered with the county clerk
  • open and notorious
  • by permission of the true owner
  • by permission of the state government

Question 11

Question
before a deed can be recorded, it must be:
Answer
  • delivered to the grantee
  • acknowledged by the grantor
  • certified by a title company
  • published in a title report

Question 12

Question
the government's power to condemn private property is called the power of:
Answer
  • eminent domain
  • dedication
  • escheat
  • accession

Question 13

Question
a valid deed transfers title when
Answer
  • the grantor delivers it to the grantee, who accepts it
  • it is acknowledged by the grantor
  • the grantee signs it
  • it is recorded

Question 14

Question
an easement on a piece of property
Answer
  • encumbers the property
  • always has a positive impact on value
  • always has a negative impact on value
  • none of these

Question 15

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

Question 16

Question
unlike general real estate taxes, special assessments are levied:
Answer
  • to pay for a specific improvement
  • every year
  • against all taxable real property within a taxing district
  • all of the above

Question 17

Question
without exception, to have legal capacity to enter into a contract a person must be:
Answer
  • at least 21 years old
  • able to read and sign his name
  • registered with the superior court
  • mentally competent

Question 18

Question
a contract is not formed if the offer is
Answer
  • revoked before its accepted
  • accepted before its expired
  • revoked after its accepted
  • accepted without any modification of its terms

Question 19

Question
consideration is
Answer
  • 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

Question 20

Question
the statute of frauds applies to
Answer
  • 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

Question 21

Question
a contract is voidable if one of the parties:
Answer
  • signed it under duress
  • under misrepresentation to persuade the other to enter into it
  • has the right to rescind it
  • all of the above

Question 22

Question
when an offer makes a counteroffer
Answer
  • 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

Question 23

Question
a broker's commission is usually a
Answer
  • 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

Question 24

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

Question 25

Question
a dual agent must
Answer
  • 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

Question 26

Question
a real estate license is required for anyone who
Answer
  • sells or leases their own property
  • sells or leases property for other people for compensation
  • all of the above
  • none of the above

Question 27

Question
when the parties agree to terms on a specific property, a contract spelling out the agreement is drawn up and signed by
Answer
  • the broker and the seller
  • the broker and the buyer
  • the sales associate and the seller
  • the buyer and the seller

Question 28

Question
the listing agreement will NOT usually contain the
Answer
  • asking price
  • selling price
  • location of the property
  • authority granted to the broker

Question 29

Question
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
Answer
  • True
  • False

Question 30

Question
the commission paid in the real estate brokerage industry is normally
Answer
  • 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

Question 31

Question
an example of a restricted covenant is a requirement that a house be a minimum size
Answer
  • True
  • False

Question 32

Question
____is defined as the possibility of loss resulting from not being able to convert an asset into cash quickly should the need arise
Answer
  • business risk
  • financial risk
  • purchasing power risk
  • liquidity risk

Question 33

Question
a _____ is a legal document used to transfer ownership rights to real estate from one party to another
Answer
  • plat
  • lease
  • sales contract
  • deed

Question 34

Question
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.
Answer
  • bargain and sale
  • quitclaim
  • unencumbered
  • special warantee

Question 35

Question
before a deed can be recorded, most states require that
Answer
  • 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

Question 36

Question
in addition to the standard requirements for a contract to be valid, the statute of frauds requires contracts involving real estate
Answer
  • to be for a lawful purpose
  • to provide adequate consideration from the buyer
  • to identify parties with capacity
  • to be in writing

Question 37

Question
if the terms in the purported acceptance differ from those of the offer, then
Answer
  • a temporary contract is formed
  • a contract is still formed
  • no counteroffer is made
  • a counteroffer is made

Question 38

Question
a compilation of all recorded documents that affect a given piece of real estate is known as a title
Answer
  • opinion
  • insurance
  • abstract
  • deed

Question 39

Question
the commission paid in the real estate brokerage industry is normally
Answer
  • 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

Question 40

Question
in a real estate transaction, the debt obligation secured by a ____ is generally acknowledged by a _____
Answer
  • lease, defeasance
  • covenant, acceleration
  • mortgage, promissory note
  • mortgagor, deed of trust

Question 41

Question
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
Answer
  • due-on-sale clause
  • defeasance clause
  • prepayement clause
  • acceleration clause

Question 42

Question
which of the following categories account of the largest portion of all mortgage credit in the US?
Answer
  • 1-4 family residential
  • multi-family residential
  • commercial
  • farm

Question 43

Question
if the mortgagor fails to make payments or defaults on other terms of the mortgage agreement, the mortgagee can begin _____ proceedings.
Answer
  • equity of redemption
  • due-on-sale
  • foreclosure
  • hypothecation

Question 44

Question
Credit history is part of a mortgage loan application
Answer
  • True
  • False

Question 45

Question
down payment on a purchase can only come from your personal savings
Answer
  • True
  • False

Question 46

Question
loan origination occurs in the secondary mortgage market within the US housing finance system
Answer
  • True
  • False

Question 47

Question
a key to minimizing risk in home loans is for the lender to have extensive local market knowledge
Answer
  • True
  • False

Question 48

Question
after a commercial loan is made, a lender may annually ask for
Answer
  • financial statements
  • rent rolls
  • proof of insurance
  • all of the above

Question 49

Question
the debt coverage ratio
Answer
  • should be greater than one
  • is meaningless
  • should be less than one
  • doesn't apply to commercial loans

Question 50

Question
the primary function of the real estate brokerage industry is to
Answer
  • match properties and customers
  • guide buyers and sellers through the complexities of real estate transaction
  • provide legal representation to clients
  • a and b only

Question 51

Question
an amortization schedule that is for 25 years:
Answer
  • 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

Question 52

Question
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
Answer
  • True
  • False

Question 53

Question
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
Answer
  • True
  • False

Question 54

Question
after a commercial loan is made, a lender may annually ask for
Answer
  • financial statements
  • rent rolls
  • proof of insurance
  • all of the above

Question 55

Question
the debt coverage ratio
Answer
  • should be greater than one
  • is meaningless
  • should be less than one
  • doesn't apply to commercial loans

Question 56

Question
the primary function of the real estate brokerage industry is to
Answer
  • match properties and customers
  • guide buyers and sellers through the complexities of real estate transactions
  • provide legal representation to clients
  • a and b only

Question 57

Question
which of the following statements is not true about brokers?
Answer
  • 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

Question 58

Question
in the legal relationship known as "agency," the ____ is authorized by the ____ to transact business on his or her behalf.
Answer
  • principal, agent
  • agent, principal
  • seller, broker
  • broker, agent

Question 59

Question
when a single broker represents both parties in a real estate transaction, a ____ agency may exist
Answer
  • fiduciary
  • buyer/seller
  • dual

Question 60

Question
which of the following is a true statement?
Answer
  • 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

Question 61

Question
which of the following is true?
Answer
  • 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

Question 62

Question
personal property is
Answer
  • movable
  • also called chattels
  • must be left with the property
  • a and b

Question 63

Question
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:
Answer
  • deficiency judgement
  • hypothecation
  • prepayment clause
  • acceleration clause

Question 64

Question
______ refers to physical land and buildings, while ______ consists of the benefits gained from owning land and buildings
Answer
  • personal property, real property
  • real property, personal property
  • real property, real estate
  • real estate, real property

Question 65

Question
the primary difference between freehold and leasehold estates is
Answer
  • 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

Question 66

Question
a claim on property as security for a debt or other obligation is known as a(n)
Answer
  • enroachment
  • lien
  • easement
  • profit

Question 67

Question
governmental powers over private property rights include
Answer
  • power of taxation
  • power of escheat
  • police power
  • all of the above

Question 68

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

Question 69

Question
an offer becomes an enforceable contract when it is accepted by the party who
Answer
  • makes it
  • receives it
  • tenders it
  • delivers it

Question 70

Question
a compilation of all recorded documents that affect a given piece of real estate is known as title
Answer
  • opinion
  • insurance
  • abstract
  • deed

Question 71

Question
the legal right to ownership of land is demonstrated in the
Answer
  • lease
  • deed
  • listing agreement
  • sales contract

Question 72

Question
amortization is the
Answer
  • 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

Question 73

Question
in order to establish good credit you should
Answer
  • 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

Question 74

Question
eminent domain is defined as "the use of land that produces the greatest long term economic return to the owner"
Answer
  • True
  • False

Question 75

Question
the debt coverage ratio must be greater than 1 or you're losing money
Answer
  • True
  • False

Question 76

Question
co-signing a note for someone else is not only a nice thing but a smart business move
Answer
  • True
  • False
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