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Real Estate California 2017 EXAM 1

Terms in this set (150)

In which of the following is property distributed according to the Statute of Succession:
Tenants in Common - title held as tenancy in common may be willed. If a person dies intestate (without a will) the Statute of Succession would apply. Joint tenancy property passes immediately to the surviving tenants. Community property of a person who dies intestate, automatically vests in the surviving spouse.
Brokers Jones receives a 3% deposit from a buyer for the purchase of a house. He also receives appraisal and credit report fees for another client. In addition, he receives rent money on an apartment building which he manages for a client. With regard to these funds:
He can put everything in one trust account - it is legal for a broker to operate a property management company, a real estate sales office, and/or mortgage loan brokerage office. It is legal for him to place all trust funds received into one trust account as long as he keeps accurate records of beneficiary transactions.
The Real Estate Commissioner's Public Report on a California subdivision does not provide the buyer with:
Assurance that the properties are not offered for more than the fair market value - The Public Report states that the commissioner sees no signs of fraud. Trying to sell a property for more than the fair market value is not fraud.
A broker has been in the business for many years. He currently has 40 exclusive listings in his office. The broker dies and his daughter, who is also a broker, takes over for him. What should she do about the current listings?
She must attempt to renegotiate all of the listings - listings are personal service contracts and terminate with the death of either party. The listing agreement is between the seller and the broker. When the broker dies, the listing terminates. The new broker must attempt to renegotiate the listings with the sellers.
Reed sold his farm to Carr. A crop is ready for harvest on this farm. Reed intended to harvest the crop prior to the sale, while Carr expected to receive the crops as part of the purchase. The crops were never addressed in either the negotiations or the purchase agreement. Absent a friendly settlement, which outcome is most likely:
The crop will be considered real property and will go to Carr - this is a sale of an industrial farm. The crop is considered part of the real property and would transfer to the new owner.
A man died and his nephew inherited his property. For income tax purposes, which of the following would be the cost basis of the property for the nephew?
The fair market value of the property at the time of the uncle's death - when a person dies, the basis of his property is "stepped-up" to the fair market value at the time of death. Inheriting property is a transfer of ownership. The tax assessor will reassess the property whenever title transfers unless the present owners are simply changing the way in which they hold title.
A flood hazard exists when an area floods:
Twice in ten years
The value of improved land is:
The value of the land and improvements
Which of the following best describes a counter-offer?
Offeree becomes the offeror. - in an offer, the offeror is the buyer and the seller is the offeree. In a counter-offer the positions change.
A man bough a mobile home 2 months ago and moved it to a mobile home park. He then wanted to list it for sale. Which of the following is true?
The mobile home may be listed for sale. - since the owner owned the mobile home two months, it is used. An agent can take a listing on a mobile home as long as the mobile is "used"
Glen Johnson has worked as a journeyman in the general construction field for five years. He decides to start his own home improvement business. Under which of the following circumstances would he not need to be licensed, according to the State Contractor's License Law:
If the total cost of each of the projects he completes is under $500 - under California law, any business or individual who constructs or alters any building, highway, road, parking facility, excavation, or other structure in California must be licensed if the total cost of one of more contracts on the project is $500 or more
The purchasing power of a dollar is measured:
By reference to price indexes.
An unlicensed person could receive a finder's fee from a broker:
If the action constituted no more than an introduction of a potential buyer to the broker - A broker may pay a finder's to an unlicensed person for recommending the broker to the buyer or seller, providing the unlicensed person does nothing which would require a real state license
A real estate agent wrote up an offer for a buyer. The buyer was primarily interested in this particular home because it was located in a very good school district. The deposit receipt did not make the offer contingent upon the school district. The offer was accepted and escrow opened. During escrow, the buyer discovers the school district had just been changed and now the home is located in a poor school district. Which of the following is true:
Buyer is bound to the contract. - the school district was not a contingency in the contract. If the school district had been a contingency, the buyer would not have been obligated to continue with the purchase.
The person who is responsible for delivery of the Seller's Transfer Disclosure Statement to the buyer is a:
Buyer's agent. - the buyer's agent is responsible for delivery of the Seller's Transfer Disclosure Statement to the buyer. The seller's agent is responsible for having the seller fill out the disclosure statement.
Who pays the 1% FHA loan fee:
The borrower.
Which of the following types of sale requires a disclosure that the sales commission is negotiable?
1-4 unit residential property
Some real estate syndication's elect to form S-Corporations. What is the potential advantage of S-Corporations over traditional C-Corporations?
The gains and losses pass directly to the shareholders, thus avoiding the problem of double taxation
When a vendee is buying a home with a land sales contract, what should he do to protect his interests?
Record the land sales contract at the County Recorder's Office
Megan's Law is concerned with the:
Location of registered sex offenders
A project of improvement on real property has been completed and the owner has not filed a "notice of completion." How many days do claimants have to file a mechanic's lien?
90 days
Adams has an easement over Baker's property. Adams leaves town for 21 years. When he returns, does Adams still have the easement over Baker's property?
Yes, Adams still has the easement.
In an effort to obtain a listing, broker Johnson substantially overestimated the likely value of a prospective seller's property. Broker Johnson's actions are considered:
Illegal.
Mary listed her farm with broker Bob. In the listing Mary said she would not consider any offer with a down payment over 23%. Broker presented a full price, all cash offer which Mary turned down. Which of the following is true?
Mary can turn down the offer without liability, because this offer did not fully meet the terms of the listing.
If you plan on conducting activity in California as a "loan correspondent":
You are required to have a real estate broker license.
Sally Jones owns a property. She marries John Smith. She records a deed to her property as, "Sally Smith, a married woman." The consequences of this are:
Creates a cloud on the title.
A landlord sued a tenant for moving out without notice. Testimony in court revealed the tenant had informed the landlord of a broker water pipe and that the landlord failed to make the necessary repairs. The court would likely rule the:
Tenant can move out without notice.
If the current highest and best use of a property is expected to change, the current use is referred to as:
The interim use.
When a client requested a broker to do something, the broker refused because he knew that such an action would be fraud, in violation of the real estate law. What code contains the most of real estate law?
Business and Professions Code.
Per the Buyer's Inspection Advisory form the:
Purchase agreement obligates the seller to make the property available to the buyer for investigations.
According to the Residential Listing Agreement, a real estate broker is entitled to the commission if the property is sold during the listing period by the:
Seller; Listing Broker; Cooperating broker, if any.
Broker George was taken to court by a client who was suing the broker for fraud in a real estate transaction. The client was successful and was awarded damages in the civil suit. After the judgment has been handed down, the Real Estate Commissioner can immediately:
File an accusation and statement of issues and proceed against the broker.
Title may not be acquired through:
Prescription.
What appraisal license is required to appraise a strip mall valued at $1,000,000?
A certified general real estate appraiser.
Charles, who does not have a real estate license, asks his friend Mike to sell his house. Instead Mike buys the house for $190,000. Immediately after closing escrow, Mike sells the property for $250,000. Regarding this transaction:
Charles has no cause of action.
A commercial bank agreed to loan George $180,000 for a one year term, but required George to maintain a savings account of $18,000 at all time during the term of the loan. This provision is known as:
Compensating balance.
For the person who has qualified in an examination for a real estate license, the maximum time allowed to file the required application is:
One year from taking the test.
The phrase, "The amount or rate of real estate commissions is not fixed by law. They are set by each Broker individually and may be negotiable between the Seller and Broker," must appear in a listing contract for the sale of:
Residential.
Two buildings are leased on a long-term basis, one for a post office and the other for a hardware store. Using the capitalization approach to appraise the properties, the post office would demand:
A lower capitalization rate.
When an escrow is in progress and all the conditions have been satisfied, the escrow officer becomes:
The independent agent for reach of the parties to the escrow
A licensee cannot engage in any acts of fraud against a principal according to:
Civil code.
A state wants to build a publicly owned convention center to attract private development in its largest city. Can the state use eminent domain to acquire land?
Yes, if just compensation is paid to the owners of the land.
Which kind of relationship does the salesperson not have?
Attorney-client.
As part of listing a mobile home, the broker's advertisement says, "no money down with first and second seller financing available to qualified buyers". Which of the following is correct under the Truth-in-Lending Law (Regulation Z):
The phrase "no money downs" is too general to trigger additional financing disclosure requirements.
Mr. Coronado has an easement granted by the government to extract mineral rights on a piece of property. Mr. Smith acquired the adjoining land and put up a fence which blocked Mr. Coronado's access. Regarding Smith's actions:
Mr. Coronado could sue for damages.
What should sellers do when they are uncertain whether the property is located within one of the designated natural hazard areas?
Hire a third-party professional who specializes in natural hazard disclosures to find out if in fact the property is located within one of the hazard zones.
A buyer gave the broker a deposit in connection with a purchase offer. The buyer changed his mind before the offer was accepted. What should the broker do with the deposit?
Give all back to the buyer.
A waiver would be best described as a:
Unilateral act that affects the position of both parties to a contract.
Waters which are below the ground but are not restricted to a bed or well-defined channel would be known as:
Percolating waters.
What is it called when one person is substituted for another in a contract?
Novation.
When a broker has a trust account, the name on the account must:
Name the brokers as the trustee.
Sam is the lessee in a lease for a unit "purchased" in a cooperative apartment building. Sam makes monthly rent payments under the lease which include his proportionate share of the mortgage payments, property taxes and insurance. Concerning this, which of the following is most correct?
Sam's equity could be lost if other lessees in the building default in their monthly payments under their leases.
How often does a broker have to reconcile Broker's Trust Account if he has daily deposits?
Monthly.
The disclosure statement required under the Truth-in-Lending Law will contain all of the following, except the:
Trade in value of the home.
Conditions affecting interest rates and the availability of loan funds vary over time. When would it be advantageous for a lender to waive a prepayment penalty clause contained in a promissory note:
In a tight money market where there is a lack of funds available for real estate loans.
For appraising purposes, when making adjustments in the direct comparison analysis:
Comparables are adjusted to the characteristics of the subject property.
A seller (or seller's agent) must give the buyer a separate "Natural Hazard Disclosure Statement" if the property lies within which of the following specified areas?
A special flood hazard area; A very high fire hazard severity zone; An earthquake fault zone.
When someone acquires property as the result of the intestate succession, he acquires the property through the direction of which of the following?
Probate Court.
What does the term "short rate" refer to?
Homeowner's insurance.
In July, Easton bought Rothchild's home through the listing broker, McGrew. In November, when the first rain came, the tile roof leaked badly in many places. Easton sued Rothchild and McGrew for the cost of the new roof. Testimony in court showed that Rothchild mentioned the need for a new roof to McGrew, but McGrew did not mention it to Easton because, "he had not asked about it". What would most likely occur?
Easton would be successful in his suit against Rothchild who would be entitled to recover damages from McGrew.
During a title search, the words "government patent" came up. These words refer to:
The transfer of land from the government to a private individual.
What is a commercial acre?
An acre minus space for streets and parking.
According to Real Estate Law, a broker may not:
Remain silent concerning material facts about a poverty which only he knows.
What type of background check does the Real Estate Commissioner and Appraisal Commissioner use?
Late child support payments.
Seller Smith hires broker Jones to list his home. Neither have actual knowledge that the property is located in a hazardous earthquake, flood, or fire area, and for that reason they decide they will not make the Natural Hazard disclosure. After the close of escrow they buyer checks with the county and finds out that a map exists that shows the property located within a particular hazard zone. Which of the following is correct?
Since the map was available from the county where the property was located, the seller and his agent will be considered to have knowledge of the fact that the property is in a hazardous area.
Lead based paint must be disclosed on the sale of a:
Single family residence.
Radon gas is considered an environmental hazard. Buyer's must be warned of the presence of such a hazard. An environmental engineer would probably test for the presence of such gas using a:
Spectrometer.
A lease that has been executed:
Would grant or convey any interest in land.
The seller of a property would be responsible for everyone's acts, except:
Selling broker.
Which of the following transactions would most likely produce the largest commission for a broker:
A tax-free exchange.
A buyer has made an offer and the seller accepted. The buyer decided not to buy. If seller and buyer agreed to let buyer out of the contract:
Buyer would get his deposit, but could be liable for expenses charged by third parties.
A brother and a sister own property as joint tenants. The brother, without the sister's knowledge or consent, encumbers his interest by borrowing $10,000. Before making any payments on the loan, the brother dies. The sister now owns the property:
In severalty and without liability for the brother's debt.
A buyer signed a waiver relating to the delivery of the settlement disclosure statement required by the Real Estate Settlement Procedures Act (RESPA). As a result, a settlement statement must be delivered to him:
As soon as practical after escrow.
Which of the following requires a real estate agent to do a physical inspection of the home and report the results of said inspection?
Real Estate Transfer Disclosure Statement.
You are preparing a competitive market analysis on a vacant lot that you hope to list for sale. Which of the following approaches to value will be used in the development of the estimated value:
Sales comparison approach.
Buyer Abel has presented an offer on a home and the seller has accepted. During the escrow period, Abel wants to begin making repairs on the property. The proper way to arrange this is:
For the buyer and the seller to execute an amendment to the escrow instructions.
A broker listed an owner's home and later received an offer from another licensee that met all of the listing terms and conditions. After considering the offer, the owner informed the broker that the owner no longer wished to sell, and asked to be released from the listing agreement immediately. Which of the following is true about the broker's position in this situation?
The broker may succeed in collecting an earned commission from the owner.
The fees charged for property management are usually:
A flat fee and percentage of the gross rents.
An agency relationship can be created by:
Written agreement; The implied acts of the principal and agent; Oral agreement.
The court case "Easton v. Strassburger" held that the seller and agent must disclose to the buyer all facts materially affecting the value or desirability of the property. This decision led to the passage of the:
Seller Transfer Disclosure Law.
Ramey leased his real property to Kaiser. Kaiser leased the property to Duncan with Ramey's consent. If Kaiser dies, which of the following statements would be correct?
Duncan's leasehold is still valid.
The Equal Credit Opportunity Act, which was enacted in 1974, was created to:
Forbid discrimination based on sex and marital status in the extension of credit.
A real estate licensee applies for a license renewal, but the BRE does a background check and finds out that the licensee is delinquent in his child support payments. Which of the following is correct?
He will be given a temporary 150-day license, but if he still hasn't paid his child support in 150 days, his license will be suspended.
An agent is representing the seller of a home. The seller said the house was in good condition, with no problems. The Seller's Transfer Disclosure Statement reflected this statement. The broker knew of no problems with the home. One week later a buyer's agent presents an offer. The seller agrees to all terms and signs the purchase agreement. The seller then whispers to his agent, "I cannot believed they just bought my house and paid full price, considering the house has cracked slab!" The seller's agent decides not to disclose this to anyone and go through with the transaction. The conduct of the seller's agent was:
Illegal.
The city planning commission recently changed the zoning for a neighborhood from C-1 to R-1. This change can be best described as:
Down zoning.
Partition action refers to:
Court action to break up joint tenants.
An environmental Engineer is testing water to determine if it is drinkable. Assuming the engineer determines that the water is drinkable, it would be called:
Potable water.
The real estate law provides which of the following penalties for a person acting as a real estate broker or salesperson without a license?
A fine up to $20,000 and/or imprisonment up to six months.
In describing the relationship between the seller and a salesperson employed by the listing broker, the salesperson is considered:
An agent of the seller.
While acting as an agent for the buyer, Smith finds a suitable property for the buyer. The seller doesn't have an agent, so Smith becomes the seller's agent too. However, Smith does not disclose this fact to both parties. What would happen?
The seller would sue Smith; The buyer will rightfully refuse to pay a commission; The contract can be legally rescinded.
A property is owned by two persons in joint tenancy. Which of the following actions could destroy the joint tenancy?
Foreclosure against one of the parties to the joint tenancy.
When real property is the security for a loan, Truth-in-Lending will most affect:
A second mortgage to buy a home from the bank.
The disclosure requirement that is concerned with special flood area, dam failure, high fire severity, wild land forest fire, earthquake fault zone, and seismic hazard zones is the:
Natural Hazard Disclosure Statement
It is important for a landlord to obtain all the necessary information on a rental application to allow the landlord to make a decision about renting to a particular person or to more than one person. A landlord thinks it is important to know whether or not a couple is married. Is it legal for the landlord to inquire whether or not a couple is married on the rental application?
No, this would be considered discrimination
A buyer has entered into an agreement with more than one buyer's agent at the same time buy owes compensation only if she uses the services of a buyer's broker. This arrangement is known as an:
Open agreement.
To create an agency relationship, there must be:
The right of the principal to control the actions of the agent
A real estate broker wrote-up an offer for his buyers. The offer was made contingent upon the approval of the buyer's uncle, since he was financing the transaction, The buyers informed the broker that the uncle was currently in Europe and they were unsure when he would return. The broker replied that the uncles' being out of the country would be "no problem." The broker then presented the offer to the seller without disclosing that the buyer's uncle was out of the country. Seller then accepted the offer. Under these circumstances, the broker's conduct was:
Unlawful.
Which of the following would be an example of functional obsolescence:
A one-car garage
The Truth-in-Lending law requires the disclosure to the borrower of each of the following except:
The maximum interest rate allowed by law
During an escrow, if an unresolved dispute should arise between the seller and buyer preventing the close of escrow, the escrow holder may legally:
File an interpleader action in court.
Under the Truth-in-Lending Regulations, the phrase, "An extension of credit in connection with which a security interest in real property is, or will be, retained or acquired" means:
An open-end credit transaction; A closed-end credit transaction; A real property loan transaction
Which of the following deals with public access to buildings?
Americans with Disabilities Act
In appraising a shopping center, an appraiser would most likely give the greatest weight to:
The income approach
When the transfer of title and transfer of possession happen at different times, what document should the agent have both the buyer and the seller sign?
An interim occupancy agreement.
Joint tenancy and tenancy in common both share the unity of:
Equal rights of possession
The disclosure statement which is required under the Truth-in-Lending Act would include:
A list of the items that are included in the finance charge; A description of the security interest held by the lender; The annual percentage rate
Property is in escrow and will close in 2 days. The seller's agent finds out that buyers are paying more today for similar properties. The agent:
Disclose to the seller and suggest he ask for more money.
Under the Subdivision Map Act; a parcel map is required for two or four parcels. A tentative map is required for five or more parcels. With which of the following agencies are these maps initially filed?
Local government.
Wong bought a vacant lot for $17,424. He wants to sell the lot and make a 40% profit after paying a 10% commission. What must he sell the lot for?
$27, 104
What is the difference between the Real Estate Transfer Disclosure Statement and the Natural Hazard Disclosure statement?
The seller is responsible to check the map and make the natural hazard disclosure if necessary, on the other hand, the seller is only responsible to give know facts on the TDS
The California court case which held that the seller and agent must disclosure to the buyer all facts materially affection the value or desirability of the property is named:
Easton v. Strassburger.
The requirement of the seller to provide a "Natural Hazard Disclosure Statement" to the buyer covers:
Most residential property.
When does a lender fund the balance of a construction loan?
When the period to file a mechanic's lien has expired.
If a broker intentionally withholds a material fact, the broker would be guilty of:
Fraud; Misrepresentation; A misdemeanor
A brokers has a listing on a house for $168,000. Mr. and Mrs. Lee make an offer of $165,000 with a contingency in the offer. The seller accepted the offer but denied the contingency. The seller received another offer at the same prices. What would you advise the Lee's to do?
If they really want the house, they will have to drop the contingency. If they think the contingency is too important to drop, they should let the house go.
When leasing a commercial property that is merely a "shell" space, the landlord often agrees to spend a specific amount for a qualified tenant. This amount is properly designated as:
A tenant improvement allowance.
When an owner acquires land which includes riparian rights appurtenant thereto, such riparian rights:
Concern the use of moving water such as a stream within the watershed.
Market value is determined by:
Value paid.
When the letters HVAC appears in a commercial or industrial lease, it normally refers to:
Heating, Ventilating, and Air Conditioning
A licensee has to take a 45 hour continuing education course which includes:
Ethics and Fair Housing; Agency, Risk Management and Trust Fund Handling; 18 hours of Consumer Protection
A less-than-freehold estate is a:
Lease.
A homeowner need $9,000 to pay for his sons college education. A loan broker arranged a home equity loan for $9,600. The broker must provide the borrower with which of the following:
A broker loan disclosure statement.
A landlord and a tenant entered into a two year lease on commercial retail space. Three months into the lease, the tenant realized he was unable to continue paying rent and asked the landlord to release him from the lease. The landlord agreed. This would be considered a:
Surrender
Only an escrow closing statement, due and unpaid taxes are listed as:
Either a debit or credit to the buyer or seller depending on the situation
A "negative declaration" in a discussion of environmental impact means that the proposed subdivision:
Will have an insignificant effect upon the environment and the developer will not have to pay for a full environmental impact report.
All of the following are factors considered when determining whether an item of personal property has become real property, except:
Length of time it has been there.
Roberto owns an apartment building and wants to exchange his property in a 1031 tax deferred exchange in order to defer paying taxes in the year of his exchange. He could exchange his apartment building for:
A more valuable apartment building, exchanging loans and paying money to the other property to equalize the values.
When it is necessary to amend a Real Property Transfer Disclosure Statement, the buyer, upon receipt of the amendment, has a right to:
Rescind the offer to purchase.
A four-bedroom house with a one-car garage would be an example of:
Functional Obsolescence.
Jose is an unlicensed employee of a real estate broker. He was hired to hand out door hangers and fliers in the neighborhood near the office and to make sales solicitation telephone calls to potential sellers and buyers. This is:
Unlawful for both the broker and the unlicensed assistant.
Which of the following best identifies the three steps or phrases involved in building a single family home dwelling?
Land acquisition.
Richard owned a vacant lot free and clear. He decided to build a home on the lot. On May 1, lumber was delivered to the lot at a cost of $8,000. On May 2, a first trust deed $150,000 was recorded against the property to finance the construction. On September 15, painters started work on the property with their bill totaling $3,000. The project was completed and Joe did not pay the bills for the lumber and the painting. Two mechanics liens were filed for $8,000 and $3,000. The property went into foreclosure and sold for $150,000. Ignoring the expenses of sale, approximately how much did the lender on the first trust deed receive as a result of the sale?
$139,000
Who is required to provide the Natural Hazard Disclosure to the buyer?
The seller or seller's agent.
Which of the following is not deducted from gross income to determine annual net income when using the capitalization approach to appraisal to appraise an income producing property?
Cost of Capital.
There is a line of stores along a major transportation route. This would best be described as a:
Strip commercial development
Which of the following represents the minimum time period for an exclusive right to sell listing on real property?
Whatever time period is agreed to by seller and broker.
Which of the following is true regarding the depreciation of land under federal income tax law?
Land cannot be depreciated.
The owner of a parcel of land granted an easement to the local telephone company to erect telephone poles across his land. This would create an:
Encumberance.
When a buyer initially purchases a home with Cal Vet financing, the buyer receives:
Contract of Sale
Of the following, which type of title insurance policy would cover all risks:
None of the above, no title policy covers all risks
A man bought a small apartment building. He put a down payment and financed the balance with a loan. One year later the apartment was appraised and showed a 300% increase on his down payment. His is an example of:
Leverage.
The definition of a mobile home park is:
Two or more lost offered for rent or lease as mobile home sites.
How many acres are contained in a parcel of land measuring 1/2 mile by 1/2 mile?
160 acres.
The Gonzales family wanted to purchase a property and wanted to assume the seller's VA loan, "subject to." Which of the following is correct?
The seller will remain liable for the loan.
A developer of a new subdivision project placed a restriction in the CC&R's prohibiting any owner from the placement of a "For Sale" sign on their property until the subdivider had sold all of the houses in the project. Regarding this restriction:
It is unenforceable because it infringes on the owner's right of alienation.
Under which type of listing might a broker get no commission even though he finds a buyer and handles the entire transaction?
A net listing.
The clause in a purchase agreement which allows the buyer to release the deposit to the seller in the event of a default is called:
Liquidated damages clause.
McAllister and Ramirez own adjacent parcels of real property. McAllister tells Ramirez "You may cross my property whenever you want until I tell you to stop." What type of interest does Ramirez have in McAllister's property?
A license.
What does a conventional loan offer that would be considered as a benefit over the VA loan?
Lower interest.
A lender would most likely not enforce the "Due On Sale Clause" in a promissory note under which of the following circumstances?
When a new loan could be made at a higher interest rate.
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