8: Disclosures Practice Test

The Michigan Seller’s Disclosure Act applies to which of the following properties?

• A. Commercial and industrial properties.

• B. Residential properties of one to four units.

• C. Residential properties being sold or leased by government agencies.

• D. All residential properties.

B

Seller Susan refuses to complete the Seller’s Disclosure form in order to sell the single-family residence she has resided in for the past 11 years. Broker Ruth should:

• A. Accept the listing and reason with Seller Susan to eventually complete the Disclosure.

• B. Complete the Disclosure herself, acting as Susan’s agent.

• C. Hire an inspector to fill out the Seller’s Disclosure form.

• D. Refuse the listing.

D

Which of the following would be exempt from having to complete a Seller’s Disclosure form?

• A. An owner selling his or her residential property that they have occupied for less than a year.

• B. An owner, selling investment residential properties of four units or less, that they have never occupied.

• C. An owner selling vacant land.

• D. An owner selling a vacation cottage that is not their primary residence.

C

A licensee acting as an agent for a seller, must disclose all of the following except:

• A. The fact that a suicide has recently taken place in the home.

• B. A leaking basement.

• C. The home’s proximity to a shooting range.

• D. A non-functioning HVAC unit.

A

Seller John completed a Seller’s Disclosure when listing his house with Broker Janet. After completing the form, the central air conditioning condenser has stopped working. Seller John should:

• A. Immediately have the seller update the Seller’s Disclosure form.

• B. Inform Broker Janet concerning the air conditioning and ask her to change the listing description.

• C. Wait until closing to inform the buyer of the non-working air conditioning unit.

• D. Repair the central air conditioning and say nothing.

A

The date that lead-based paint was banned for use in residential construction was:

• A. 1/1/1978
• B. 1/1/1979
• C. 12/31/1980
• D. None of the above

A

The lead-based ban and disclosure rules are overseen by which government authority?

• A. Michigan Department of Environmental Quality
• B. The Environmental Protection Agency
• C. The Food and Drug Administration
• D. Housing and Urban Development

B

Which of the following is true regarding testing for lead-based paint?

• A. All homes built before 1978 must be tested for lead-based paint
• B. Sellers of homes built before 1979 must test for lead-based paint
• C. A buyer may test for lead-based paint if they so choose
• D. Every home must be tested for lead-based paint before closing

C

Licensees must disclose which of the following?

• A. When they are selling or purchasing their principal residence

• B. Their license number on all contracts

• C. Their license number in all advertising

• D. Their client’s full name if asked by any participant in a transaction

A

When selling or purchasing a property for an immediate family member, a licensee must:

• A. Return their full commission to their broker

• B. Not reveal their family relationships to the public

• C. Immediately inform their broker in writing

• D. Disclose the relationship in the listing information and on all contracts

D

When any member of the public informs a licensee of their name, and/or other private information, and any interest in real estate, the licensee must:

• A. Immediately disclose their licensed status to the individual(s)

• B. Only disclosure their licensed status if they have an agency relationship with a party involved in the transaction

• C. Show a digital copy of their license

• D. Have the person(s) sign an agency disclosure form

A

While showing a property, licensee Rosita is asked by her buyers about the ethnic makeup of the neighborhood. Rosita should inform her buyers:

• A. Of the ethnic makeup of the neighborhood if she knows such information

• B. That she is prohibited from commenting on the ethnic makeup of neighborhoods and that the buyers can obtain that information online and/or at the public library

• C. That she may no longer work with them because they violated Fair Housing laws

• D. That she will provide the information to the buyers before closing

B

Hakeem is a licensed salesperson at City Realty. Hakeem is asked by a potential buyer to help identify neighborhoods with large numbers of Christian families. Hakeem should do what?

• A. Inform the buyer that he may not differentiate neighborhoods by religious composition
• B. Tell the buyer that he isn’t a Christian and therefore doesn’t know that information
• C. Tell the buyer to drive around the neighborhood and count the number of churches
• D. Inform the buyer that he will provide the information within 3 business days

A

A buyer asks their sales agent for the population and median income information for a particular neighborhood. In this case, the agent should do what?

• A. Provide the information as soon as reasonably possible
• B. Refuse to provide the information because doing so violates Fair Housing law
• C. Refuse to provide the information because doing so violates the Elliot-Larsen Civil Rights act
• D. Refuse to provide the information because doing so violates the ECOA

A

Michigan real estate licensees are required to do the following when asked about the presence of registered sex offenders in a neighborhood:

• A. Disclose the presence of sex offenders if asked
• B. Only disclose the presence of sex offenders if they are within 1,000 feet of a school
• C. Inform anyone who asks that the information is available from the online sex offender registry
• D. Disclose the presence of sex offenders only if the client has children younger than 15 years of age

C

Which of these situations would LEAST likely be considered an example of fraud?

• A. Licensee Bonnie knew that buyer Ben used doctored W-2s to apply for a mortgage loan.
• B. Licensee Brent did not disclose that his seller clients were getting divorced.
• C. Licensee Lori did not tell buyer Bob about a lien on the property she had listed.
• D. Licensee Sally advertised a lower list price to get interested buyers through the door.

B

A material fact is best described as:

• A. A contractual obligation between two parties.
• B. A cause of physical depreciation on a property.
• C. Information concerning a property that could influence someone’s decision about it.
• D. Any fact related to a property’s physical condition disclosed in writing.

C

A buyer’s agent has actual knowledge of structural damage to the floorboards of a home due to termite infestation. The agent informs the client that there are no termites in the home. The buyer signs a contract to purchase the property. Could the licensee be susceptible to claims of fraud?

• A. No. He is protected by the 'as is' clause in the purchase agreement.
• B. No. He said there were no termites and that could have been true at the time.
• C. Yes. He knowingly made a potentially untrue statement that could be seen as an inducement to buy.
• D. Yes. If there were visible signs of termites, the buyer should have been able to recognize them.

C

Misrepresentation is best described as:

• A. Exaggerated statements concerning a property.
• B. Written statements concerning a property’s legal status.
• C. A mistake in a written contract.
• D. Any misleading or false statement concerning a property.

D

Of these, which is LEAST likely to be considered an example of puffing?

• A. “Best view in the city”
• B. “Exquisite décor that will make your friends jealous”
• C. “Feel like royalty in this palatial beauty”
• D. “Priced to sell; likely to go quickly in this popular neighborhood”

D

The National Association of Realtors Code of Ethics was originally written in:

• A. 1913
• B. 1927
• C. 1974
• D. 1939

A

The best example of possible constructive fraud is:

• A. A listing agent intentionally lied to a potential buyer concerning termite infestation.
• B. A buyer’s agent who mistakenly provides incorrect information concerning zoning.
• C. Intentionally lying about a leaking basement on the Seller’s Disclosure.
• D. A listing agent who refuses to disclose why the sellers are moving.

B

The NAR Code of Ethics contains how many articles?

• A. 17
• B. 22
• C. 73
• D. 3

A

The difference between actual and constructive fraud is best described as:

• A. Actual fraud is a misleading statement. Constructive fraud is the omission of relevant information.
• B. Actual fraud is intentionally making false statements. Constructive fraud is unintentionally making false statements.
• C. Actual fraud results in monetary harm to the victim. Constructive fraud does not cause any actual harm.
• D. Actual fraud is comprised of misleading oral statements. Constructive fraud is always done in writing.

B

Licensed real estate professionals who are members of NAR have what sort of relationship to the NAR Code of Ethics?

• A. Mandatory and required.
• B. Voluntary.
• C. Advisory.
• D. Fiduciary

A

What is property disclosure?

• A) The act of revealing known material facts about a property
• B) The process of obtaining a mortgage
• C) The act of transferring title to real estate
• D) The process of conducting a home inspection

A

Who is typically required to provide property disclosures?

• A) The buyer
• B) The seller
• C) The real estate agent
• D) The lender

B

What is a material fact?

• A) Any fact about a property
• B) A fact that is important or significant to a reasonable person in making a decision
• C) A fact that is only known to the seller
• D) A fact that is not readily observable

B

Which of the following is an example of a material fact?

• A) A leaky roof
• B) A history of flooding
• C) The presence of asbestos
• D) All of the above

D

What is the purpose of property disclosure?

• A) To protect the seller from liability
• B) To provide the buyer with information to make an informed decision
• C) To ensure the property is in perfect condition
• D) To prevent lawsuits

B

What are the consequences of failing to disclose a material fact?

• A) The buyer can sue the seller for damages
• B) The transaction can be rescinded
• C) The seller can be subject to disciplinary action
• D) All of the above

D

What is a latent defect?

• A) A defect that is obvious
• B) A defect that is hidden or not readily apparent
• C) A defect that is caused by the buyer
• D) A defect that is not covered by insurance

B

What is a patent defect?

• A) A defect that is obvious
• B) A defect that is hidden or not readily apparent
• C) A defect that is caused by the buyer
• D) A defect that is not covered by insurance

A

What is agency disclosure?

• A) The act of revealing the agency relationship between the real estate agent and the client
• B) The process of obtaining a mortgage
• C) The act of transferring title to real estate
• D) The process of conducting a home inspection

A

Who is required to provide agency disclosure?

• A) The buyer
• B) The seller
• C) The real estate agent
• D) The lender

C

When should agency disclosure be made?

• A) At the closing

• B) Before showing a property or engaging in substantive discussions

• C) After an offer is accepted

• D) Whenever the agent feels like it

B

What is the purpose of agency disclosure?

• A) To protect the agent from liability

• B) To provide the client with information to make an informed decision about representation

• C) To ensure the agent gets paid

• D) To prevent lawsuits

B

What is lead-based paint disclosure?

• A) The act of revealing the presence of lead-based paint in a property

• B) The process of removing lead-based paint

• C) The act of inspecting a property for lead-based paint

• D) The process of obtaining a mortgage

A

Who is required to provide lead-based paint disclosure?

• A) Listing agents

• B) Sellers of all homes, regardless of age

• C) Buyers of homes built before 1978

• D) Real estate agents

B

What must be included in a lead-based paint disclosure?

• A) A disclosure form
• B) A copy of any lead-based paint inspection reports
• C) A pamphlet about lead-based paint hazards
• D) All of the above

D

What is the purpose of lead-based paint disclosure?

• A) To protect children from lead poisoning
• B) To inform buyers about potential lead-based paint hazards
• C) To ensure that all lead-based paint is removed from homes
• D) Both a and b

D

What is a stigmatized property?

• A) A property with a known environmental hazard
• B) A property that has been the site of a crime or tragedy
• C) A property with a structural defect
• D) A property that is located in a high-crime area

B

Is a seller required to disclose that a property is stigmatized?

• A) Yes, always
• B) No, never
• C) It depends on the specific circumstances and state law
• D) Only if the buyer asks

C

What is a seller disclosure statement?

• A) A document that discloses the agency relationship
• B) A document that discloses the presence of lead-based paint
• C) A document where the seller discloses known material facts about the property
• D) A document that summarizes the financial details of the transaction

C

What is a buyer's responsibility regarding property disclosure?

• A) To conduct their own due diligence and ask questions
• B) To rely solely on the seller's disclosures
• C) To hire a home inspector
• D) Both a and c

D

What is an agent's responsibility regarding property disclosure?

• A) To disclose all known material facts about the property
• B) To conduct a professional home inspection
• C) To guarantee the condition of the property
• D) To provide legal advice to clients

A

What should an agent do if they become aware of a material fact that the seller has not disclosed?

• A) Ignore it
• B) Disclose it to the buyer
• C) Advise the seller to disclose it
• D) Both b and c

D

What is the difference between a material fact and a latent defect?

• A) A material fact is obvious, while a latent defect is hidden
• B) A latent defect is a type of material fact that is not readily observable
• C) There is no difference
• D) A material fact is a legal term, while a latent defect is a real estate term

B

What is Megan's Law?

• A) A law that requires the disclosure of registered sex offenders in the area

• B) A law that prohibits discrimination in housing

• C) A law that regulates lead-based paint disclosure

• D) A law that governs agency relationships

A

What is an agent's responsibility regarding Megan's Law?

• A) To provide buyers with information about how to access the sex offender registry

• B) To disclose the presence of registered sex offenders in the neighborhood

• C) To guarantee the safety of the buyer

• D) To refuse to show properties in areas with registered sex offenders

A