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Terms in this set (102)
The Escrow Law is contained in the (Real Estate Law, Biz and Professions Code, Civil Code, California Financial Code):California Financial CodeIn which of the following years did the U.S. Supreme Court prohibit all racial discrimination in the sale/lease of real property (1968, 1964, 1959, 1955):The 1968 Civil Rights Act which provides broad protections to numerous classes of individuals in the U.S. against discriminatory activitiesThe U.S. Attorney General acts to enforce federal open housing laws whenever (state regulations are not properly upheld by state officials, a conspiracy exists to undermine federal open housing laws, a complaint filed involves more than 4 units, a complaint filed involves less than 4 units):A conspiracy exists to undermine federal open housing laws. Answer A is related to the state, not federal, and the other answers are too restrictiveIn May, 2018, Wayne leased a unit in his apartment complex to a tenant under a two-year lease. The tenant prepaid the last two months' rent when they entered into the lease. For federal income tax purposes, the prepaid rent is considered as income for Wayne (in May 2018, in May 2020, that is held "in trust" until it is due, only when it is used as current rent):In May 2018. Federal income is taxable when it is receivedA subdivider needs to give a copy of the final public report to a buyer and obtain a receipt from the buyer before entering into a binding contract. How long does the subdivider or their agent need to keep a copy of the receipt for the final public report (one year, three years, five years, eight years):3 years (this is the same record retention requirement that applies to all contracts and documents related to a real estate transaction held by a broker)A voidable contract remains binding upon the parties until the contract is (voided, rescinded, determined to be legal, unqualified):Rescinded. One principal has the option of completing the transaction or rescinding the contract due to a defect caused by the other principalWhen coercion or duress are applied to a party in a contract, the contract is (void, voidable, illegal, unenforceable):Voidable. Coercion or duress are valid reasons for rescinding a contract, so the contract is voidable at the discretion of the aggrieved partyThe effective date for a residential purchase agreement is the date (the deposit was given to the seller by the buyer, the contract was written, the buyer signed the contract, the seller's acceptance of the offer was properly communicated to the buyer):The effective date of the contract will be when the acceptance has been communicated to the buyerA contract for the sale of rural property requires a (rural mailing address, county assessor parcel number, legal description, reference to the size of the parcel):Legal description (as is required in all real estate sales contracts)Which of the following is not true in a sale-leaseback transaction (the seller stays in physical possession of the property, the seller guarantees the buyer's performance of the loan, the seller receives a capital contribution for their business, the seller becomes a tenant in the property):The seller does not guarantee the buyer's performance of the loan. The seller does receive a capital contribution for their business, as well as the other optionsWhich of the following is not an example of a void deed (a forged deed, a deed signed and delivered by a minor, a deed obtained through undue influence or threat, a deed materially altered without the grantor's consent):A deed obtained through undue influence or threat is a voidable deed. Void deeds include a forged deed, a deed signed and delivered by a minor, and a deed materially altered without the grantor's consentA property management agreement does not authorize a property manager to (locate tenants, enter into rental and lease agreements, collect rents, oversee costly repair projects):Property manages who oversee maintenance and repair projects costing $500 or more are subject to contractor licensing requirements issued by the California Department of Consumer Affairs Contractors State Licensing Board (CSLB)Consider a seller who carries back a note secured by a trust deed. If a loan broker takes on the duty of collection, state law requires them to (deliver a broker's loan statement to the note holder, post a bond, have written authorization from the holder of the note to service the loan, deposit the funds in a separate trust account):They can service a note so long as they have written authority from the holder of the note to do soA ___ is a statement made by a broker concerning a possible condition which has not yet occurred based on readily available facts (fact, opinion, guarantee, assurance):An opinion is a statement made by an agent concerning an event or condition which has not yet occurred based on readily available facts. When a statement is worded as an assurance that the event or condition will occur, the statement becomes a guaranteeA shoe factory is being built that will employ mostly women, and a broker who manages nearby properties says to direct ads to married women without children and charge more rent to certain minority groups. Are either of these practices in violation of fair housing laws (directing ads to married women without children, charging certain groups higher rent, both, neither):Any effort made by a property manager to single out one demographic group is a violation of fair housing laws (note, read the question thoroughly, this is a broker who is advertising homes!)If a dispute arises during escrow between the buyer and seller preventing the close of escrow, the escrow agent may (cancel the escrow, file an interpleader action, arbitrate the dispute, use their discretion to resolve the issue):File an interpleader action. This asks the courts for judicial resolution. The escrow agent is a neutral agent and therefore cannot make decisions for the parties, and have no authority to cancel the escrow or arbitrate on behalf of the principalsIf the state acquires title to an owner's property by escheat, how long must it wait before disposing it (no holding period is required, one year, five years, seven years)?No holding period is requiredRental housing loans can be insured or guaranteed through (FHA, CalVet, CalHFA, ALTA):Of the options, only the FHA will insure rental property loans (note it is rental housing!). Both CalVet and CalHFA require owner occupancyRental income - operating expenses - debt service - income tax payments equals (gross operating income, net operating income, net spendable income, returrn of investment):Net spendable income (after all the expenses of an income producing property have been paid)Which of the following is not an encumbrance (a lease, a homestead, a mechanic's lien, a mortgage):A homestead declaration protects a portion of the owner's equity in the property from seizure from creditors, so it is not an encumbrance (since an encumbrance reduces an owner's rights or equity)A ___ belongs to an individual and is their personal right (easement in gross, appurtenant easement, easement running with the land, encroachment):Easement in gross, since it is held by an individual/company, and does not run with the property (it is personal property, not real property like appurtenant easements)Which of the following is not a true statement about easements (an easement is owned by the dominant tenement, an easement in gross is a right in another's land created for the benefit of adjacent land, an owner cannot have an easement over their own land, an easement limits the use of the land by the owner):An easement in gross is not for the benefit of an adjacent property, but is rather usually held by a utility company (which is not necessarily adjacent to the property and rarely is)The parallel wooden beams used to support ceiling loads and floors in home construction are called (studs, rafters, joists, headers):Joists are horizontal wooden beams which support floors and ceilingsHeadersFraming above windows and doorsStudsVertical framing elementsRaftersDiagonal framing beams reaching to the roof beamAn appurtenant easement granted to a neighboring property owner fails to state the term of the easement. How long does the easement last (perpetuity, 99 years, the lifetime of the dominant tenement, 55 years):When no termination date or length of time is stated, an easement exists in perpetuityIt is essential that every party in a real estate transaction receives a full and complete disclosure of who is representing whom because of (the federal law of agency, the mandate from private real estate associations, the doctrine of imputed notice, the good neighor principle):The doctrine of imputed notice, which requires the full and complete disclosure of who is representing whom. Agency is not federal law, so it cannot be answer AFailure to provide the Agency Law Disclosure form (exposes the agent to criminal penalties, puts the agent's fee at risk of loss, exposes the agent to license penalties, forfeits the agent's license):Puts the agent's fee at risk of loss. The client may refuse to pay the commission if it is not provided in a targeted transaction. There is no license or criminal penalties for an agent not providing the Agency Law Disclosure and confirmationThe simplest method of estimating the replacement cost of an improvement is the (quantity survey method, index method, unit-in-place method, comparative method):The replacement cost of a property can most easily be determined under the comparative method, which uses a private costing service that provides generic pricing for property types based on quality and regional differences. Unit-in-place and quantity are more detailed and precise, and the index method is used for historic appraisalsSurplus utility is an example of (substitution, contribution, functional obsolescence, economic obsolescence):Functional obsolescence, which is created by items on a property that may be outdated or overimprovedThe first thing an appraiser does when appraising vacant land is determine (the fertility of the soil under the property, zoning laws which affect the use of the property, comparable sales prices of other vacant land, the highest and best use of the land):The first thing an appraiser does when appraising vacant land is to determine the highest and best use of the subject property, which then informs the appraiser on what properties are comparableWhich of the following is not required when a trust deed is paid in full (the trustor's signature, the trustee's signature, a deed of reconveyance, both a and b):There is no need for a signature from the trustor (borrower) when the loan is paid in fullThe interest rate on a FHA-insured loan is set by (Fannie Mae, FHA, Ginnie Mae, negotiation between the lender and borrower):The FHA only insures loans, they do not originate them. The loan is made with a lender and FHA provides insurance to the lender in the event that the borrower defaults. As with other loans, the interest rate is negotiated between the lender and the borrowerWhich of these is not a method by which an individual may take title to real property (deed, prescription, escheat, intestate succession):Individuals can never acquire property by escheat. Only the state government canEscrow can legally prepare or do which of the following activities (act as a mediator when there is a dispute between buyer and seller, draft escrow instructions and the grant deed, decide when escrow will close without consent of the parties, structure a wraparound trust deed)?They can draft escrow instructions and the grant deed. They are neutral agents, and therefore cannot make decisions for the principals or act as a mediatorAn escrow officer may do which of the following when real property is being escrowed (settle a disagreement regarding the escrow instructions between buyer and seller, accept written instructions from the seller and buyer to change the price and terms without broker approval, cancel the escrow if the buyer doesn't perform in a timely manner, recommend ammended escrow instructions which contain a blank to be filled in after signing):Accept written instructions from seller and buyer. If instructions are written and signed by both principals, the escrow officer does not need broker approvalWhich of the following is not legally proper for a licensee to do (puffing, enter into a pocket listing with seller approval, show a property only when its flaw is not obvious, keep a client's secret that a roof leaks):Keep a client's secret about a roof leak. Material facts must be disclosed, and legal concealment is not legally proper. Puffing is not illegal unless it reaches the level of fact in the mind of the buyer. Answer b was acceptable because it was at the seller's request, and C is permissable as long as the defect is disclosed in the TDSA real estate broker may legally negotiate the sale of any (new mobile home, registered mobile home, mobile home that is 32 ft in length or longer, mobile home situated in a mobile home park):Registered mobile home. New mobile homes can only be sold by licensed agents when they are attached to the land, making it real propertyOn Jan 1st, 1987, which of the following real estate disclosure laws went into effect (Agency Law Disclosure, Seller Financing Disclosure, TDS, RESPA):The TDS became effective Jan 1, 1987Which of the following needs to be in writing to be enforceable under the Statute of Frauds (a lease with a one year term, a lease listing agreement with a one year term, a partnership agreement, a contract which is to be performed greater than one year after being entered into):A contract which is to be performed greater than one year after being entered into when involving the sale of real estateUnder the Statute of Limitations, a buyer needs to bring a lawsuit for breach of written contract against a seller within (six months, 3 years, 4 years, 5 years):The Statute of Limitations allows a buyer 4 years to bring suit for a breach of written contract against a sellerA seller accepts a written offer to purchase their property. Later, the seller refuses to perform to complete the transaction. Under the Statute of Limitations, the buyer needs to file a civil action due to the seller's breach of a written contract within (one year from the seller's breach, one year from when the buyer signs, four years from the seller's breach, four years from when the buyer signs):Four years from the seller's breach (note that this problem would have given clues to help with the previous one)Broker Francis shows multiple houses he is listing to Buyer Marc and Sally Taylor, who are married. While Buyer Marc is away, Broker Francis shows a different house to Sally and she submits an offer with a deposit. The purchase offer is submitted from (Sally, Marc and Sally, Marc Taylor as head of household, none of the above since the offer is invalid since a married person cannot make an offer individually):Since only Sally is available to sign, the offer cannot be on behalf of her and her husband. Note that if the offer is accepted, the husband can be added to the title during escrowSyndi owns a 50 unit apartment building managed by Scott, a licensed real estate broker. Angela lives in the building and has been designated as the resident property manager. Who has the ultimate responsibility for the inspection and maintenance of the building (Angela, Syndi, Scott, all parties are equally responsible)?The owner is ultimately responsible for the inspections and maintenance, even if they employ a broker and property managerA tenant leases a unit in an apartment complex. The owner later sells the building to a new owner. The new owner (may force an immediate payoff of the lease, may increase the security deposit, may raise the rent, needs to honor the existing lease contract):An existing lease must be honored when a building is purchased by a new ownerMay a broker's transaction records be kept electronically (no, yes but the broker has to provide hard copies to the DRE upon request, yes but the broker needs to also keep hard copy backups, no, but the broker needs to retain all the signed original paper documents for a min of 3 years):Electronic copies are legal provided that the broker may deliver hard copies to the DRE upon requestA licensee who designates how title is to be vested without any discussion with their buyer while filling out the purchase agreement may be guilty of (giving legal advice, giving tax advice, potential discrimination violations, all of the above):All of the above. It has legal and tax consequences and may be construed as discriminatory as wellA lender who finances 100% of a property without government guarantees depends on what to function as security for the loan (monetary policy, deflationary pressures, appreciation of the value of the property, the borrower's good intentions):Requires property appreciation to overcome the risk of loan default (this type of no down payment loan is very rare)Condominium ownership is least applicable to (industrial properties, residential properties, commercial properties, properties built prior to 1978):Properties built prior to 1978. It has no relation to when a property was built, and condominiums can be created in industrial/commercial/residential buildingsWhich of the following is not required for obtaining an easement by prescription (payment of taxes and assessments for 5 years, a confrontation with the owner, open and notorious use for 5 years, both a and b)Both a and b. A is required for adverse possession, b is not required for adverse possession or easements by prescription. Open and notorious use for 5 years is all that is required for an easement by prescriptionAn easement over real property can be terminated by (a deed issued from the servient tenement, revocation by the servient tenement, a release signed by the servient tenement, a release signed by the dominant tenement):An easement is terminated by the release of the dominant tenement (the party that benefits)Upon moving into the home he had just purchased, Lewis discovered his neighbor's garage encroached four feet over onto his property. lf a friendly settlement cannot be negotiated, Lewis may sue (the escrow company, the title company, the seller's agent for failure to disclose the encroachment, the neighbor since the encroachment is a trespass):The neighbor since the encroachment is a trespass. Ifa settlement cannot be reached, the owner is to sue the neighbor. The seller's agent is only liable if they knew or ought to have known that the encroachment existedThe real estate Agency Disclosure Law became effective on Jan 1st (1968, 1978, 1988, 1998):Jan 1, 1988In the appraisal of a residential property, when is the cost approach most appropriate (for a new property, for a property constructed 15 years ago, for a property constructed over 30 years ago, for an income-producing multi family property):New properties are most appropriate due to the challenge of calculated accrued depreciation on older propertiesThe appraisal method used most often to value raw land or sites is the (land development method, land residual method, subdivision method, comparative method):The comparative method is the most common appraisal method for valuing raw land or sites. The subdivision method and land development method are the same, both of which are used for valuing a large parcel intended for subdivisions. The land residual method is only used when the property is improved by a buildingA buyer purchasing a property with FHA-insured financing normally does each of the following, except (apply to the mortgage lender, apply directly through the FHA, choose an FHA-approved property, pay MIPs):Homebuyers do not apply directly to the FHA, because the FHA insures mortgages, but does not fund themPaul, a salesperson, presents an offer from their minority buyer to the seller for the exact listing amount and on the same terms. Unknown to Paul, his broker later brings the seller a less advantageous offer from a Caucasian buyer. The seller rejects both offers. Soon after, the seller's Caucasian neighbor hires Paul and submits an offer to the seller at the listing price, stating they want to keep the neighborhood white. Who is NOT in violation of fair housing laws (Paul, Paul's broker, the first Caucasian buyer, the seller):The first Caucasian buyer made a valid offer without consideration of neighborhood demographics. A broker or agent or seller who discriminates against an individual is acting illegallyCertified copies of inspection reports filed with the Structural Pest Control Board within the preceding 2 years may be requested and obtained by the (seller, buyer, broker/escrow officer, any person):Anyone has a right to a copy of the pest control reports filed within the previous 2 yearsA Uniform Commcercial Code Financing Statement (UCC-1) is removed from record by (filing a termination statement, notice of abandonment, a notice of adjudication, a reconveyance deed):It is used to put the public on notice of a lien created by a security agreement on personal property. It is removed from record by filing a termination statement with the secretary of stateWho is responsible for giving a pest control report to the buyer (the pest control company, the escrow company, the seller or their broker, the buyer's broker):The seller (and their broker) is ultimately responsible for delivering all disclosures, including pest control reports, to the buyerCompany dollarThe money which remains for the broker after the salesperson is paid their split of the commissionIf apartments are converted to condominiums, an existing tenant needs to be given a period of ___ to either buy the condo or vacate (30 days from public report issuance, 90 days from public report issuance, six months from public report issuance, 6 months after notice of intent):90 days from public report issuanceAll of the following provide constructive notice, except (telephone poles across a property, knowledge of an unrecorded deed to a stranger, a recorded deed to a stranger, a stranger in possession of a property):Knowledge of an unrecorded deed to a stranger does not constitute constructive notice. Constructive notice is either a recorded document or anything that is clearly observable (such as telephone lines or a stranger in possession)Recording a deed provides (actual notice, constructive notice, contingent notice, personal notice):Constructive notice. Actual notice has a similar premise but requires delivery, which is not stated in the questionWhat is not essential to the creation of an agency relationship (consent of principal, competency of principal, a written agreement confirming the agency relationship, a fiduciary relationship that exists prior to creating the agency)?A written agreement is not requiredWhen the Federal Reserve raises the discount rate charged to its member banks, this raises interest rates and (increases the supply of money in circulation, encourages mortgage borrowing, reduces the supply of money in circulation, promotes an increase in the home ownership rate):Higher discount rate = higher interest rate = reduced supply of money in circulationThe commission of a leasing agent is generally based upon a percentage of (the total operating costs incurred running the property, the cash paid by the lessee at the time of signing the lease, the total rent collected by the lessor over the terms of the lease, the prevailing commission rates commanded by similar brokers):A leasing agent generally receives a percentage of the total lease payment over the term of the lease as their feeThe ___ is the primary enforcer of anti-discrimination law in California (Department of Housing and Urban Development (HUD), Department of Fair Employment and Housing, Labor Commission, Department of Biz Oversight (DBO)):The Department of Fair Employment and Housing is primarily responsible for enforcement of anti-discrimination law. The HUD is a federal agencyWhich of the following is least likely to appear as a debit on the buyer's closing statement (proration of property taxes, interest on a loan assumed by the buyer, discount points for a new FHA-insured loan, homeowner's insurance premiums):Interest on an assumed loan will be a credit, since the loan interest is paid in arrears, so the buyer will be credited for however many days there were between the due date of the previous payment and the close of escrow. All others will likely be debitsWhich of the following is not a dangerous gas (carbon dioxide, carbon monoxide, formaldehyde, radon):Carbon dioxideMr. and Mrs. Hartford are denied a home loan due to a credit report which contained incorrect negative information. They sent corrective documentation into the credit reporting agency which issued the report. If the credit reporting agency fails to correct the credit report, the Hartfords may file a court action and seek (attorney's fees, actual and punitive damages, court costs, all of the above):The party may request attorney fees and court costs, as well as actual and punitive damagesFannie Mae is active in ___ by securitizing mortgages into mortgage-backed securities (primary mortgage market, secondary mortgage market, CalVet financing, low income housing):Fannie Mae owns and sells mortgages in the secondary mortgage marketOne year after the expiration of their real estate license, the licensee wishes to renew their license. Which of the following statements is not correct (they need to retake the state licensing exam, they are required to fulfill the continuing education requirements, the late renewal fee is higher than the on-time renewal fee, they have a two year grace period in which to renew):They do not need to retake the state licensing examBuyer Martin agreed in writing to purchase Seller William's property for $365,000. The offer was conditioned on Buyer Martin being able to obtain a U.S. Department of Veterans Affairs (VA)-guaranteed loan for the purchase price secured by the subject property. Of the following, which best represents Buyer Martin's option under this purchase transaction (If the 365000 VA-guaranteed loan is not obtainable, the buyer may renegiate the PA on terms mutually agreed to by buyer and seller, if the Certificate of Reasonable Value is less than 365k, buyer is entitled to cancel, if the CRV is 350k, the buyer may complete the purchase by making an additional 15k down payment, all of the above)?All of the above, the purchaser under a VA-guaranteed loan has the option to cancel for a variety of reasons, including a low appraisal. The buyer may also choose to purchase the property by paying the difference between the appraised value and the sales price as a cash down paymentThe Federal Reserve's monetary tools include all the following, except (raising interest rates on gov-insured mortgages, raising the lowering discount rates to member banks, adjusting the reserve requirements for banks, buying and selling U.S. gov bonds):The Federal Reserve does not raise interest rates on gov-insured mortgages as part of its monetary policy. Gov-insured mortgages are originated by lenders, and the interest rate charged is established by the lender and borrowerWhich of the following is least likely to be a benefit of using FHA-insured financing (a low down payment, minimum property requirements, a long loan term which yields lower monthly payments, title does not transfer until the loan is fully repaid):Benefits include a lower down payment, lower monthly payments, and mimimum building standards. It is unlikely that title does not transfer until the loan is fully repaid, and that isn't a benefit to the buyer anywaysWhich of the following statements is true concerning typical escrow procedure (once escrow has closed, the escrow agency changes from a dual agency to a separate agency for each principal, the escrow officer may be an advocate for the best interests of both principals, once the escrow officer is in possession of a binding contract between buyer and seller it is said to be a "complete escrow", the escrow officer can be an advisor to both the buyer and the seller):Escrow closing changes the escrow agency from dual agents to separate, single agentsAppraising a multi million dollar home in Beverly Hills requires a (Certified Residential License, Residential License, Certified General License, either a or c):Appraising residential properties over 1 million requires a certified license, either residential or generalThe GRM is calculated by dividing the (asking price of a residence by the adjusted gross rent, listing price of a neighboring property by its operating expenses, cost of property amentities by value of raw land, sales price by gross monthly income):Sales price divided by gross monthly income (the monthly or annual rent may be used)The max potential income an income-producing property is capable of generating is known as (gross operating income, gross scheduled income, net operating income, net spendable income)The maximum potential income an income-producing property is capable of generating is the gross scheduled income. Gross is always greater than net. Gross operating income is the income minus vacancy and credit lossesWhen ordinary repairs are made to the broken equipment in a building, such repairs are appropriately classified as (deferred maintenance, preventative maintence, corrective maintenance, property upgrades):Corrective maintenance is done when equipment in an income-producing property is brokenDeferred maintenancePostponement of curable repairs; leads to further deteriorationPreventative maintenanceMaintenance performed in advance of something breakingA window on hinges is most likely a (double hung window, casement window, bay window, dormer window):Casement windows, which have a crank that swings the window out on its hingesDouble hung windowsWindows with an upper and lower pane, which can be raised and lowered to openBay windowsMultiple panes of glass, project out from the wallDormer windowsHave a separate roof, commonly seen projecting from a gable or gambrel roofSally grants an easement over her land to Bill so he can access his land. The easement is recorded. Bill then buys Sally's land and later sells it to Martha without disclosing the existence of the easement. Bill ceases to use the easement for a period greater than five years. When Bill later attempts to use the easement, Martha objects. What is the outcome of this scenario (the easement was lost when Bill purchased Sally's land, the easement was lost by five years nonuse, Martha must allow Billy access to his property, Bill may occupy the property under the theory of adverse possession)?An easement is terminated when parcels are combined under one ownershipWhich of the following transactions is exempt from the use of the Agency Law Disclosure (the sale of an industrial building, the sale of agricultural land, the sale of a property with 5+ residential units, upon the entry into a two year lease of a residence):Agency Law Disclosure is required on the sale of any type of real estate, but is not required for leases, so dThe Closing Disclosure published by the Consumer Financial Protection Bureau summarizes the final mortgage terms and details for the buyer. It needs to be delivered to the buyer (one week prior to the closing of the transaction, 3 biz days after buyer submits a loan application, at least 3 biz days before the buyer closes on a mortgage, on the day of settlement):The Closing Disclosure replaces the Truth-in-Lending Disclosure and the HUD-1 Settlement Statement under the TILA-RESPA Integrated Disclosure (TRID) rules. It has to be delivered at least 3 biz days before the buyer closes on a mortgageMost of California real estate laws originally come from (Napoleonic Law, Mexican Law, Spanish Civil Law, English Common Law):English Common Law. All real property rights held under Spanish Civil Law were resolved through federal courts after California was acquired by the U.S. in 1848
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