national exam

Which individual is responsible for ordering, preparing, and reviewing closing-related documents, such as the title policy and settlement statement?

1 The broker

2The buyer

3The closing agent

4The seller

3The closing agent

The closing agent is responsible for ordering and reviewing the closing paperwork. Depending on local custom, this may be a broker, title representative/escrow officer, or attorney

Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment?

1 $35,025

2 $54,150

3 $57,000

4 $62,100

2 $54,150

Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).

Which agency enforces Title II under the Americans with Disabilities Act of 1990, when it relates to state and local public housing, housing assistance, and housing referrals?

1 Department of Civil Rights

2 Department of Equal Opportunity

3 Department of Housing and Community Development

4 Department of Housing and Urban Development

4 Department of Housing and Urban Development

The Department of Housing and Urban Development (HUD) enforces Title II when it relates to state and local public housing, housing assistance, and housing referrals.

Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn't take possession of or title to the property. What likely happened?

1 The lender received another offer higher than the one Farquhar made at the auction.

2 The lender revised the previous owners' loan and permitted them to remain in the

property.

3 The other lien holders protested the auction sale, so the lender retained the property.

4 The previous owners redeemed the property by paying all mortgage payments and fees.

4 The previous owners redeemed the property by paying all mortgage payments and fees.

Some states have a statutory redemption period after a foreclosure sale within which the homeowners can pay all funds owed to the lender to retain ownership.

Why is it important to publicly record a deed?

1 The title insurance policy schedule of exceptions will include anything that's publicly

recorded.

2 Title insurance policies don't cover publicly recorded events.

3 Title insurance policies must be publicly recorded to be legal.

4 Title representatives and attorneys who perform title searches look for documents that are publicly recorded.

4 Title representatives and attorneys who perform title searches look for documents that are publicly recorded.

the schedule of exceptions will exclude items that aren't recorded.

Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes?

1 $17,595

2 $1,759.50

3 $17.60

4 $35.19

2 $1,759.50

To find the tax amount, multiply the assessed value by the tax rate ($35,190 × 0.05).

Your client, a builder, is considering buying three adjacent lots. They each have the same depth: 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?

1 446 feet

2 462 feet

3 464 feet

4 466 feet

1 446 feet

The total street frontage is 446 feet. Add up the square footage of the three lots and divide by the lot depth (275) to get the total street frontage. (35,750 + 53,900 + 33,000) ÷ 275 = 446

Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this?

1 Estate for life

2 Fee simple

3 Leasehold estate

4 Periodic estate

2 Fee simple

Timeshare estates are owned as fee simple estates. They convey all rights of ownership and can be sold or passed down to heirs.

Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he's making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home?

1 The area rug in the dining room

2 The banker's lamps in the den

3 The chandelier in the foyer

4 The patio heater on the back patio

3 The chandelier in the foyer

The patio heater, area rug, and banker's lamps are all free-standing and easily removed. The chandelier, however, is not a free-standing light fixture and should be considered real property.

Prior to a certain act's existence, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing. What's this act called?

1 Civil Rights Act of 1866

2 Fair Housing Amendments Act of 1988

3 Federal Fair Housing Act of 1968

4 Housing and Community Development Act of 1974

4 Housing and Community Development Act of 1974

The Housing and Community Development Act of 1974 included gender or a person's sex in the list of protected classes.

Which type of deed conveys real property from a decedent's estate to a buyer?

1 Deed in trust

2 Executor's deed

3 Quitclaim deed

4 Referee's deed

2 Executor's deed

An executor is the person in charge of administering the estate according to the will of the deceased. An executor's deed conveys real property from a decedent's estate to a buyer.

Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to use the stream located six miles away for irrigation purposes. What kind of water rights do they hold?

1 Alluvial

2 Littoral

3 Prior appropriation

4 Riparian

3 Prior appropriation

The doctrine of prior appropriation grants water rights based on need, not adjacency. Hal and Sara likely live in the western part of the U.S. where many states subscribe to this doctrine.

An agent is trying to build up business for a friend's mortgage company. She offers to charge a lower commission rate to clients who use her friend's mortgage company for their financing. What's this an example of?

1 Group boycotting

2 Market allocation

3 Price fixing

4 Tie-in arrangement

4 Tie-in arrangement

4 Tie-in arrangement

Two large local brokerage firms agreed to lower their commission rates to the same amountapproximately 1% less than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?

1 The agreement between the two firms

2 The dollar amount the competitors lost

3 The marketing efforts the two firms used

4 The size of the two brokerage firms

1 The agreement between the two firms

The fact that the firms agreed to violate antitrust laws makes this a per se violation, meaning that authorities need to make no additional inquiry into how the violation impacted the market or the intentions of the participants to find the firms guilty.

Sherman, who owns property in a life estate, neglects the property, significantly diminishing its value. This is called ______.

1 A lease option

2 An act of waste

3 An estate at sufferance

4 A possessional prerogative

2 An act of waste

This is called an act of waste. Acts of waste damage or deteriorate a property's value.

When using the MARIA acronym to test whether an item is a fixture, what do the two As stand for?

1 Acceptability of the fixture and agreement of the parties

2 Adaptability of item and accessibility to the property

3 Adaptability of item to land's use and agreement of the parties

4 Allowable use and acceptable use

3 Adaptability of item to land's use and agreement of the parties

The two As in MARIA stand for adaptability of the item to the land's use and agreement of the parties.

A homeowner has $80,000 of principal left to pay on her mortgage. Her home was recently appraised at $156,000, which is $13,000 more than what she purchased it for. How much equity does she have in her home?

1 100%

2 $13,000

3 $76,000

4 $80,000

3 $76,000

To find how much equity she has, subtract the amount she still owes on her mortgage from the appraised value.

A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?

1 $250,000

2 $265,957

3 $276,596

4 $650,000

3 $276,596

To calculate this, start with 100% minus a 6% commission, which is 94% or .94. Take $250,000 plus $10,000 and divide this amount by .94.

Henry submits an offer on a condo and includes an earnest money check for 10% of his offer, which the seller accepts. Later on at closing, he brings a cashier's check for $34,450 (comprising the remaining half of his 20% down payment and $7,950 in closing costs). What's the condo's purchase price in whole dollars?

1 $132,500

2 $265,000

3 $344,500

4 $88,333

2 $265,000

Subtract the closing costs from cashier's check amount ($34,450 - $7,950=$26,500) for half of down payment. The total DP was double this ($53,000). Next, divide $53,000 by 20% (to find purchase price ($53,000 ÷ .2=$265,000). Purchase price is $265,000.

Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.

1 Covenant

2 Easement

3 Grant

4 License

4 License

A license is permission to do something on another's land without actually possessing any interest or ownership in the land.

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. Assuming every transaction for the month was shared with a cooperating brokerage, what is Jared's brokerage's commission rate?

1 2.3%

2 3.8%

3 6.5%

4 7.6%

3 6.5%

Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

Because of the topography of Elsie's and Lawrence's respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence's property line. What word or phrase best describes Elsie's fence?

1 Easement in gross

2 Encroachment

3 Servient estate

4 Visible easement

2 Encroachment

Elsie's fence is an encroachment on Lawrence's property. An encroachment is a fixed intrusion onto another person's property.

A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount he'll pay over the life of the loan?

1 $1,108,292.40

2 $500,000

3 $608,292.40

4 $750,000

1 $1,108,292.40

To find the total amount paid back, multiply the monthly payment by the total number of payments: $3,078.59 x 360 = $1,108,292.40.

When real estate licensee Brian discovered that real estate licensee Arnold was using a "Choose Your Neighbor" letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®?

1 A charge of agreeing to discriminate by limiting access to the property

2 A charge of misrepresenting the property for sale

3 A charge of not fulfilling his fiduciary duties to his client by not conducting a complete

marketing plan

4 A charge of unfair practice because his mother did not get one of the "Choose Your

Neighbor" letters

1 A charge of agreeing to discriminate by limiting access to the property

REALTOR® Brian could charge Arnold with violating Article 10 of the Code of Ethics, which prohibits REALTORS® from agreeing to discriminate against people belonging to a protected class.

A buyer has a 30-year, $750,000 loan with a 5.75% interest rate. How much of the first monthly payment is interest?

1 $10,869.57

2 $3,500.93

3 $3,593.75

4 $3,750.27

4 $3,750.27

Multiply the principal balance by the interest rate: $750,000 x .0575 = $43,125;. Then find the monthly rate by dividing $43,125 by 12 to get $3,593.75. Since the principal balance is less the next month, the interest amount will change too.

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?

1 $3,200

2 $3,600

3 $4,000

4 $800

2 $3,600

An 80% LTV ratio means the buyer is financing 80% of the purchase price. Eighty percent of the purchase price is $320,000, and one point, or 1%, of this amount is $3,200.

Trina is a licensee at Midtown Homes. Which of these factors indicates that she's classified as an employee?

1 She's eligible to participate in the firms 401k retirement plan.

2 She's required to belong to the National Association of REALTORS®.

3 She works from both her home office and an office the firm provides.

4 The brokerage firm supervises her.

1 She's eligible to participate in the firms 401k retirement plan.

The one factor that applies only to employees is Marge's eligibility to participate in the firm's 401k retirement plan.

Bob and Mary are financing $180,500 for a new home. Their lender will approve an interest rate of 5% if Bob and Mary pay two discount points at closing. How much will this cost them?

1 $180.50

2 $32,000

3 $3,610

4 $9,025

3 $3,610

A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $180,500), which is $3,610.

What does the Federal Trade Commission consider to be an unfair ad?

1 Any ad or business practice that causes or is likely to cause injury

2 Any ad that is likely to mislead consumers acting reasonably under the circumstances

3 Any ad that makes a health claim

4 Any ad with a claim that's difficult to evaluate

1 Any ad or business practice that causes or is likely to cause injury

Any ad or business practice that causes or is likely to cause injury is considered an unfair ad, according to the FTC's Unfairness Policy Statement.

Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions is most likely true?

1 Darren and Natalie are getting a USDA rural development loan.

2 Darren and Natalie are using an FHA-insured loan.

3 Darren and Natalie are using conventional financing.

4 Darren and Natalie made an all-cash offer.

2 Darren and Natalie are using an FHA-insured loan.

All loans that are either FHA-insured or VA-guaranteed require that the builder provide a one-year home warranty to protect both the buyer and the home's value.

Unauthorized practice of law and acting outside the scope of one's expertise are similar issues. Which of the following circumstances specifically relates to the unauthorized practice of law?

1 Predicting a specific tax increase or decrease

2 Predicting the return on investment for a rental property

3 Recommending specific investments

4 Writing contract addenda or additional provisions that cover unfamiliar circumstances

4 Writing contract addenda or additional provisions that cover unfamiliar circumstances

All of these actions are outside the scope of a real estate license. Writing contract addenda or additional provisions that cover unusual circumstances falls into the category of unauthorized practice of law, since a licensed attorney should do that.

When it comes to earnest money, which one of the following statements is true?

1 Earnest money is rarely the subject of lawsuits against real estate licensees.

2 Earnest money must be placed in a trust account.

3 The amount of earnest money is non-negotiable between the buyer and seller.

4 The seller dictates the amount of earnest money in the MLS listing.

2 Earnest money must be placed in a trust account.

Earnest money must be placed in a trust account, which is also known as an escrow account.

What is the purpose of earnest money?

1 To encourage the seller to come down in the asking price for the property

2 To provide the seller with funds to make required repairs to the property before selling

it

3 To retain the services of a licensee

4 To show the seller that the buyer is serious and intends to go through with the sale

4 To show the seller that the buyer is serious and intends to go through with the sale

Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease, and the other an absolute net lease. Why is his attorney arguing against the latter?

1 An absolute net lease has no legal defenses if Simon fails to pay.

2 An absolute net lease will cost more in the long run.

3 Simon will still be responsible for insurance in an absolute net lease.

4 Simon will still be responsible for taxes with an absolute net lease.

1 An absolute net lease has no legal defenses if Simon fails to pay.

Simon has absolutely no legal recourse with an absolute net lease. Simon is still on the line for payment, even if the building is damaged or destroyed through no fault of his own.

Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate?

1 Fair housing

2 Legal purpose

3 Offer and acceptance

4 The statute of frauds

4 The statute of frauds

The statute of frauds requires not only that a contract to convey real property be in writing, but also that the contract identify the parties to the contract.

Which of the following is true regarding property management agreements?

1 A property management agreement establishes a relationship between a broker and

a client, where the broker provides real estate services.

2 Property management agreements are synonymous with brokerage agreements.

3 Property management agreements may be oral or in writing to be enforceable.

4 Property managers must have a written property management agreement with all

clients.

4 Property managers must have a written property management agreement with all

clients.

Property management agreements are written contracts between a client and a broker where the broker is given compensation to manage the client's property. Property management agreements must be in writing to be enforceable.

Newt's buyer client isn't happy with him. The buyer has accused Newt of breaching his duty of ______ by mishandling the earnest money.

1 Accounting

2 Confidentiality

3 Disclosure

4 Obedience

1 Accounting

The duty of accounting requires agents to account for any funds received on the clients' behalf. This means no commingling or conversion of the earnest money, among other requirements.

Martha made an offer to buy Drake's home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.

1 Accepting partial performance

2 Rescinding the contract unilaterally

3 Suing for damages

4 Suing for specific performance

1 Accepting partial performance

In this example, Drake accepted partial performance as a means of remedying the breach of contract.

Lydia put the minimum 3.5% down on her $210,000 home. She'll have to pay an MIP. What type of loan does Lydia have?

1 Conventional

2 FHA

3 Standard

4 VA

2 FHA

Based on the minimum down payment amount of 3.5% and the fact that she's paying MIP, Lydia has an FHA loan.

One of the following licensee's actions would constitute commingling. Which is it?

1 Cynthia deposited her client's earnest money check into the firm's operating account.

2 Jenson deposited his client's earnest money check into the firm's trust account.

3 Jessica deposited her commission check into her brokerage firm's operating account.

4 Sean withdrew funds from the firm's operating funds to pay the firm's office rent.

1 Cynthia deposited her client's earnest money check into the firm's operating account.

Commingling occurs when funds in or intended for a trust account are intermixed with operating or personal funds

Tracy is looking in the MLS and sees a listing marked "REO." Which of these statements regarding REOs is correct?

1 An REO property is one that the lender is trying to help the owner sell before

beginning foreclosure proceedings.

2 Banks acquire REOs through failed foreclosure sales or deed in lieu of foreclosure actions.

3 REOs are properties that the lender has given permission to sell for less than the loan

amount.

4 REOs refer to investment properties a bank owns.

2 Banks acquire REOs through failed foreclosure sales or deed in lieu of foreclosure actions.

Failed foreclosure sales and deed in lieu of foreclosure actions result in lenders taking title to properties they previously had mortgage loans on. These properties are called real estate-owned, or REO.

Which approach to value is typically used for investment property of two- to four-family units?

1 Cost approach

2 Income approach

3 Revenue approach

4 Sales comparison approach

2 Income approach

The income approach to value analyzes a property's ability to earn future income and is typically used for single-family houses (where the primary use is as a rental property) and for two- to four-family units.

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in?

1 A deed of trust theory state

2 A lien theory state

3 An intermediary theory state

4 A title theory state

2 A lien theory state

In a lien theory state, the mortgage becomes a lien on the property, but deed remains with the buyer. Foreclosure proceedings in a lien theory state may be more difficult for the lender.

What's the estimated value by cost approach for a property if the site value is $25,000, the new cost of improvements is $100,000, and the total depreciation estimate is $15,000?

1 $110,000

2 $115,000

3 $140,000

4 $90,000

1 $110,000

To estimate value using the cost approach, an appraiser adds the site value to the cost to replace improvements, then subtracts the amount of depreciation. Here, that gives us $100,000 + $25,000 - $15,000.

Matt is a developer who's obtained a permit that he must post on the job site. Which entity inspects the various phases of his work and signs off on the permit?

1 Appraisers

2 Building department inspectors

3 Other builders

4 The plumber's union

2 Building department inspectors

Inspectors from the building department perform inspections at various phases.

Margaret has received her Closing Disclosure from the lender. To best protect her interests, what should she do with it?

1 Compare it to the Loan Estimate.

2 File it with her mortgage papers.

3 Take it to the closing.

4 Use the information to compare loan costs with those of other lenders

1 Compare it to the Loan Estimate.

Margaret should compare the Closing Disclosure figures with those on the Loan Estimate to ensure that no undisclosed changes in loan costs have been made.

Which of these is an example of severability?

1 Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.

2 Mark's contract with Reuben states that either party may sever the contract if any

contract term is only partially performed.

3 Misty's lease agreement with Thomas contains a provision that permits her to sever

the lease if Thomas doesn't remodel the apartment as promised.

4 Ricardo and Timothy are under contract in the sale of Ricardo's office building. Ricardo's tenant leases gives him the option to sever the lease agreements upon sale of the building.

1 Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.

Severability refers to the concept that a court can strike down one or more contract terms while leaving the remainder in place.

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this?

1 Acceleration

2 Alienation

3 Defeasance

4 Due-on-sale

1 Acceleration

The acceleration clause gives the lender the right to accelerate payment of the loan if the borrower defaults.

When does offer and acceptance occur?

1 When one party makes an offer, and the other party signs it and returns to the original

party

2 When one party makes an offer on a property, and the other party turns it down

3 When one party makes an offer to a second party, and the second party makes a

counter-offer

4 When one party signs a contract voluntarily with full understanding of the terms

1 When one party makes an offer, and the other party signs it and returns to the original

party

Offer and acceptance, which is also known as mutual agreement, occurs when the parties enter into the agreement with a full understanding of the contract terms. When both parties sign the contract, they're indicating that they understand and agree to the terms.

Norman, the seller's agent, notices a significant crack in the foundation that the inspector failed to note in the inspection report. Norman decides to keep this information to himself. He really needs to close this deal. Which fiduciary duty has Norman breached?

1 The duty of accounting

2 The duty of disclosure

3 The duty of obedience

4 The duty of reasonable skill and care

2 The duty of disclosure

By failing to disclose a known material fact to all of the parties to the transaction, Norman has breached the duty of disclosure.