Fundamentals Exam

A survey has been completed, and stakes have been placed marking off the property

construct fences and driveways

A tenancy in which the tenant is in possession with the permission of the landlord, but there is no definite rental period or duration of possession, is called:

estate at will

When title to property is lost but the property boundaries remain the same, it is:

alienation

A plaintiff files a lawsuit involving a property and also files a separate document intended to provide notice of the lawsuit. This recorded notice of a pending legal action is called:

lis pendens

An increasingly common land use pattern allows for subdivisions with smaller lot sizes and little or no setback and sideyard requirements while keeping the same density ratios. These are known as:

planned unit developments

A and B sign a rental agreement in which A agrees to lease her property to B in exchange for rent. This contract is:

bilateral

A real estate agent has assisted an investor with the purchase of a number of commercial properties. The investor will be out of the country for part of the year and asks the agent to manage all aspects of those properties during that time, including advertising and leasing. The real estate agent will be:

general agent

At closing, a sale doesn't go through because the seller's anticipated transfer to another city gets suddenly postponed, and the seller no longer wants to sell. Does the seller owe the listing agent a commission in this situation?

Yes, because the seller won't provide marketable title, which is considered a default.

Legally, how much earnest money must be submitted with a valid purchase and sale agreement.

No earnest money is required

The mortgagee assigns its interests and the assignee records the assignment. The mortgagor now needs to make payments to the:

assignee

A buyer is unfamiliar with the concept of discount points and asks a licensee to explain. The licensee responds "Discount points are used to replace funds that are being held by the Federal Reserve, so that more funds are available to lend". Is this description correct?

No, discount points are used to increase the yield for lenders who will sell the loans on the secondary market.

A percolation test will examine the:

soil's ability to absorb and retain water

A 4,500 earnest money check bounces because of insufficient funds. The first thing the broker should do is:

notify the principals

A seller tells a real estate agent that she has lived in the neighborhood for a long time and would like to be selective about who buys her house; she would like the agent to tell her the race and nationality of all prospective buyers. How should the agent respond?

End her agency with the seller, as it would be a violation of the federal Fair Housing Act

A property manager bases the operating budget on:

anticipated expenses and revenue

A parcel measures 198 feet by 330 feet. It sold for 30,000$. What was the price per acre?

$20,000

Meridian and base lines relate to the:

rectangular survey method

Which of the following would characterize a tenancy in common?

Tenants can will a partial interest in the property

A buyer accepts a general warranty deed from a seller, believing that the seller is the sole owner of the property. The buyer later finds out that the seller is only a co-owner. Has a covenant in the general warranty deed been violate?

Yes, there is a covenant providing marketable title

K buys a piece of landlocked property from L on the condition that L provide an easement across the property for ingress and egress. The easement isn't recorded, K later sells the property. Is the easement still valid for the new owner?

Yes, because an easement of this type runs with the land, rather than belonging to an individual

A licensee is helping her buyer purchase some property. The buyer would like to make an offer on a corner lot that may have once been used as storage for a heating oil company. The licensee should advise her buyer to:

consult with an environmental expert

When can a minor enter into a binding contract?

if a guardian co-signs

Late on a friday afternoon, an agent receives an offer on a property that she has listed, for 10k$ less than the listed price. The sellers will be away all weekend. The agent should:

try to get the offer to them as soon as possible on Friday.

Gail gives ABC Realty a listing that stipulates it is the only real estate firm authorized to list her home. At the same time she insists on including a provision that would allow her to sell the home herself without paying a commission to ABC. Which of the following describes the kind of listing she has created?

Exclusive agency listing

A buyer makes an offer to purchase on May 2. The offer includes a promise to deposit 5k in earnest money within two business days after mutual acceptance. The offer is contingent on results of a soil feasibility report. On May 5 the seller accepts the offer. On May 11 the soil report is ordered. On May 17 the soil feasibility report comes back and is approved by the buyer. By what date does the earnest money need to be deposited?

May 7

A contract for deed wouldn't be a good idea if the seller's mortgage has a/an:

alienation clause

A buyer is getting a loan to purchase a five-acre apple farm with no residence on it. The Truth in Lending Act requires:

no disclosure because the land is agricultural

An agent is performing a competitive market analysis for a potential client, working with four comparables. Which of the following comparables would require an upward adjustment in its sales price?

Comparable X lacks a garage, which the subject property has

A prospective tenant applies to rent a unit in a 12-unit apartment building, where the owner lives in one of the units and handles all lease transactions on his own. The tenant is turned down, and believes he has been discriminated against on the basis of his race. If true, this would be:

unlawful, because this is a 12-unit building

As a property manager, you may:

offer inducements to prospective tenants

Brian purchases two parcels of land, one measuring one square mile and the other containing five acres. If he paid $2k an acre, what was his total purchase price?

1,290,000

A limited partnership is a preferable method of owning real estate investment properties because:

it allows persons with less capital available to still participate in real estate projects

Deborah sells her property to Juan, but Juan fails to record the deed. Which of the following statements is true about unrecorded deeds?

The deed is still valid between Deborah and Juan

Encroachments are

considered a trespass

Sonya buys a parcel of land and pays taxes on it for five years. After she builds a home on it, the taxes she'll pay are:

Ad valorem taxes

A buyer and seller sign a contract for deed. Two weeks later, the buyer is declared mentally incompetent. The buyer's guardian contacts the seller and says that he can continue to make the buyer's payments as agreed. Which of the following is true?

The buyer can finish out the contract as the buyer's guardian has proposed

The seller tells the buyer's agent that the home has never had flooding issues, but when touring the home, the buyer's agent notices a sump pump in the basement. The buyer's agent should:

Advise the buyer that the sump pump may be a sign of flooding and that she should inquire into whether flooding is an issue

A licensee takes a listing for a house that is owned by a married couple. The husband is working overseas in the Middle East for the next two years. The wife can sign the listing agreement for her husband.

as long as he has given her a power of attorney

The purchase and sale agreement has been signed and the seller has completed the seller disclosure form. A windstorm damages the property. The seller's agent is obligated to:

contact the buyer's agent and inform him

Once a contract for deed is signed by the parties, the buyer immediately receives:

equitable title

The requirements of the Truth in Lending Act would apply to a:

loan for the purchase of a mobile home and lot for use as a principal residence

A real estate licensee is performing a competitive market analysis. He locates a comparable property that is slightly older than the subject property. The age of the comparable makes it worth $2k less. The comparable has a small porch worth $1,000 that the subject property lacks. If the comparable sold for &269,500 recently, what is the estimated value of the subject property?

$270,500

Which of the following situations would be exempt under the Fair Housing Act?

The owner of a fourplex lives in one unit and refuses to rent the other three units to students because of their national origin

A tenant signs a one-year lease. Four months later the owner sells the property to a third party, who wants to move in immediately. Which of the following is correct?

The new owner takes ownership subject to the lease and must wait until the lease ends to move in

Jamie's house is mostly rectangular, measuring 30 ft by 40 ft. There is also an enclosed triangular foyer (a fully walled-in entry area) in front, measuring four feet across, four feet along the perpendicular side, and 5.7 feet along the diagonal side. In the back, there is a screened porch, which is 40 feet long and 5 feet deep. To the side, there is an attached garage, which measure.....

1,208 ft. Living space excludes garage and porch

An assigned parking space in a lot at a condominium development would be considered a/an:

limited common element

Sam takes possession of an unused farm and begins growing crops. He sends the farm's owner a letter describing his actions. Can Sam ever become the owner of the farm?

Yes, as long as he maintains possession

Jones and Smith live across the street from each other in a subdivision that has deed restrictions prohibiting the keeping of larm animals as pets. Jones realizes that Smith is keeping a pet Shetland pony in the backyard. Jones can:

enforce the deed restriction against Smith via lawsuit

A contract signed by a person who was intoxicated at the time of the signature would be:

voidable by the intoxicated party

Sally lists her property for sale with Broker Al. Al learns that the property is about to be rezoned to a higher use. He tells Sally he would like to purchase the property himself. She agrees, and the sale closes. Six months later, Al resells the property for a significant profit. This is legal:

as long as before Sally agreed to the sale, Al informed her of the upcoming zoning change and what it would mean for the property's value

A buyer would be protected from risk of loss due to a failed heating system through:

a home protection plan

A developer wants a construction loan to build 20 homes. The lender requires a take-out commitment. This means the developer needs:

a permanent lender who will provide financing once construction is completed

What kind of property could a buyer purchase with a FHA 203(b) loan?

Four-unit dwelling where the buyer will occupy one of the units

A licensee who is taking a listing on a property finds a number of problems that need to be fixed, such as several leaking faucets and faulty electrical outlets. This would be an example of:

curable depreciation

Which of the following is true concerning federal fair housing laws?

Enforcement may be brought about by filing a complaint with the Dept of Housing and Urban Development

A landowner is negotiating the lease of his land to a developer who wants to build a mall there. They should use a:

ground lease

An apartment building has eight units; each unit rents for $80 per month. The property can also be expected to earn $4,000 per year from laundry and vending machines. An appraiser estimates that the property typically operates with a 5% vacancy factor. What is the property's estimated annual effective gross income?

$76,960

Jerry offered to buy some vacant land for $500,000. There were no contingencies in his offer, and it was accepted by the seller. Jerry was planning on building a shopping center on the property, but didn't mention this to the seller or his real estate agent. A few days before closing, Jerry learned that his financing for the shopping center had fallen through. The contract is:

valid

X and Y execute a property drawn up option agreement for X to purchase Y's commercial property. X gives $5 in consideration. The option is:

valid

A home is listed for $200,000. A prospective buyer tells the listing agent that she may make an offer for $190,000. The listing agent tells her that the seller won't accept anything under $195,000. The buyer offers $195,000 and the seller accepts. Which is correct?

The listing agent violated her fiduciary duty to the seller by telling the buyer how low the seller would go

When determining the value of a vacant lot, an appraiser will typically use the:

sales comparison approach

John wants to rent a heated garage and is willing to pay a flat rate of $100 per month. Which type of lease would this be?

gross lease

The seller lists her property with XYZ Realty and agrees to pay a commission rate of 6%. The MLS provides that a listing brokerage will split commissions at a 50-50 rate with the selling brokerage. Suzy a licensee for ABC Realty, finds a buyer and the property sells for $300,000. If Suzy is entitled to a 50/50 split with her brokerage, how much commission will she receive?

$4,500

In an option:

the option agreement must clearly state all the terms and conditions of the sale

A licensee can reveal confidential information about his principal:

under court order or subpoena

A lease is most likely to be a net lease if it requires the tenant to pay:

property taxes

Through careful management, a property manager increases an apartment building's monthly income of $3,000 by an additional $500/month. Assuming a cap rate of 8%, what is the increase in the building's value?

$75,000

A home inspection revealed that black mold is present in a home. What should the buyer's agent tell the buyer?

To seek expert advice

A seller wants to net $60,000 from a transaction, but will have to pay off a mortgage and other fees, at a total cost of $181,800. The seller will also need to pay a 7% commission. What will the property need to sell for?

$260,000

A buyer asks the buyer's agent to write an offer on terms that don't match the listing agreement. The buyer's agent refuses to write the offer and then, in writing, unilaterally terminates the agency relationship with the buyer. Which is true?

Buyer's agent is permitted to unilaterally terminate the agency relationship

Closing is set for August 1. The seller has already paid the property taxes for the year, totaling $6,000. How much of that amount is the buyer's responsibility?

$2,500

The IRS issues rules that determine when a real estate agent is an employee and when he is an independent contractor. Which of the following statements on that topic is FALSE?

The brokerage may require an independent contractor to have a cell phone

A tenant has already paid his $1,200 rent for the month for a single-family property. The property's owner sells it to a new buyer, with closing occurring on the 15th of June. The parties decide the seller is entitled to rent for the closing date. On the settlement statement, the prorated rent will appear as a:

$600 debit for the seller and a $600 credit for the buyer

Mineral rights associated with real property are always:

separable and divisible

John, Kevin, and Lyle own a property as tenants in common, but only Kevin and Lyle live on the property. John would like to see the property for redevelopment, but Kevin and Lyle refuse. What is John's best option?

Obtain a court order to sell the property

W, age 17, enters into an installment contract to purchase a five-year-old car from S, an adult. From a legal point of view, the contract is:

voidable by W only

A purchase and sale agreement is for $150,000, with 80% financing, closing in 30 days with possession at closing, and a rent provision for possession after closing. This is an example of a/an:

contract with contingencies

An investor wants to invest $250,000 in the development of a shopping mall by taking out a loan secured by a residential property that he owns. Will the Truth in Lending Act apply to this transaction?

No, because this is a commercial transaction

While preparing a competitive market analysis, an agent finds four comparables to choose from. Comparable 1 sold for $180,000 13 months ago under normal conditions. Comparable 2 sold for $190,000 14 months ago under normal conditions. Comparable 3 sold for $175,000 10 months ago as a foreclosure. Comparable 4 sold for $180,000 16 months ago as a foreclosure. The agent should use:

None, because they are all older than nine months

An investor rents a property to a tenant. For tax purposes, depreciation on this property is based on:

price, plus capital improvements, minus land value

Property management for residential property is different from property management for commercial property, in that a manager would be more concerned about:

future space needs of a commercial tenant than of a residential tenant

When part of the land is removed, but generally the boundaries of a property stay the same, it is known as:

avulsion

An apartment building is right where a new city park is going to be built. The city condemns it. Can the city terminate the leases of the building's tenants?

Yes, if notice is provided to the tenants, and they receive relocation assistance

An offer is dated June 4. The offer is accepted on June 7. The buyers are approved for a loan and satisfy the financing contingency on June 9. The transaction closes on June 28. The date of the contract is:

June 7

A couple with children would like to buy a house that was built in 1950. The home was recently remodeled, with completely new paint and plumbing. In this situation, what does the agent always have to do?

Make sure the buyers receive a pamphlet on lead-based paint

A buyer's purchase and sale agreement contained a financing contingency. The buyers applied for a loan with a local lender, who verbally informed them that their loan application was denied. The buyer's agents should:

tell the buyers about their right to receive the denial in writing

A former mansion has been divided into three apartments. The best approach to finding the property's value is:

income

A residential property manager should inform prospective tenants about:

the planned removal of a swimming pool

A rural lot runs 500 feet east/west along its northern boundary, and 600 feet east/west along its southern boundary. Its eastern boundary runs 200 feet due north/south, while its western boundary runs 224 feet in a diagonal northeast/southwest direction. The cost of the land is $6 per square foot. What is the cost of this lot?

$660,000

What information does an appraiser need in order to calculate a capitalization rate?

Value and net income

To avoid tenant problems, a landlord is best off using a standardized lease form that includes:

specific rules and regulations

Rudiger purchases a home for $200,000, and receives an 80% loan from his bank. He has to pay three discount points to receive the loan. He is also responsible for a 1% origination fee and a $300 appraisal. The seller paid a 6% commission to the listing brokerage. What is the amount of the discount points that he paid?

$4,800

A buyer purchases a rental home that is fully furnished. The document used to transfer title to the furniture is a:

bill of sale

Ben receives a life estate in a property, with his nephew Will designated as the remainderman. When Ben dies, what kind of interest does Will receive?

fee simple estate

A movie theater was built ten years ago. If the neighborhood is now zoned entirely residential, the movie theater:

will be allowed to continue since it was built before the new zoning law went into effect

In a bilateral contract

two parties have exchanged promises, and both parties are obligated to perform

Gerald engages a licensee to list his property and find a buyer for it. In this context, the licensee is acting as a:

special agent

A licensee locates what seems like a ready, willing, and able buyer. However, the deal falls through at closing because the buyer can't obtain necessary financing. At the same time, though, the seller turns out to be unable to provide marketable title. Does the seller still owe a commission to the listing agent in this case?

No, because there was no ready, willing, and able buyer

A mortgage often includes a clause requiring the lender's consent before another borrower may assume the mortgage. This clause is called a/an:

alienation clause (due-on sale clause)

A small house is situated on a large lot in a mixed-use neighborhood. The city decides that the area will, in the future, be zoned commercial. What will most likely happen to the property's value?

It will increase, in anticipation of the changing uses