CLIFF BOOK - TEST 3

Question 0

In the government survey system, when, because of natural features, a lot less than a quarter section was created, it was referred to as a(n):

(A) odd lott; (B) survey lot; (C) substandard lot; (D) government lot

Answer 0

(D) government lot

These lots were numbered and called government lots.

Question 1

A husband owns a rental building that he acquired before he got married. During the course of the marriage, he sells the building and buys another building. The new building he has acquired is considered:

(A) separate property; (B) community property; (C) partial community property; (D) joint property.

Answer 1

(A) separate property

Given the facts of the question and absent any other information, this is separate property.

Question 2

Which of the following is not true when holding title to real property in co-ownership as tenancy in partnership?

(A) The partners’ interest in rents or profits must be equal; (B) The entire property is vulnerable for the debts of the partnership; (C) Upon the death of a partner, his interest goes to the surviving partner(s); (D) A partner’s right in the real property would be subject to community property rules.

Answer 2

(D) A partner’s right in the real property would be subject to community property rules

Tenancy in partnership requires equal, undivided interests in the real property. The real property in its entirety is made available to satisfy a partnership debt. Upon the death of one of the partners, the real property held by the partnership can pass to the surviving partner(s). What is not true is that the partnership interest in the real property would be subject to community property rules. Here is a subtle line of distinction. Real property held in tenancy in partnership does not become community property upon the demise of one of the partners. However, the partnership itself may be subject to community property regulation.

Question 3

Design professionals such as architects

(A) are specifically prohibited from seeking a mechanic’s lien; (B) are specifically permitted to seek a mechanic’s lien; (C) may see a mechanic’s lien only on a construction project that has been completed; (D) are permitted to seek a mechanic’s lien without prior notice of default.

Answer 3

(B) are specifically permitted to seek a mechanic’s lien

The work may be planned or completed and notice of default must be provided.

Question 4

Deed restrictions are also known as:

(A) enhanced zoning; (B) special permit provisions; (C) variances; (D) private contract restrictions.

Answer 4

(A) enhanced zoning

This terminology emphasizes the fact that a buyer voluntarily agrees to these restrictions when he purchase the property.

Question 5

A limited partner’s liability in a real estate investment is:

(A) the same as a general partner’s; (B) limited to the amount of the investment; (C) limited as long as he assumes some of the responsibilities for management; (D) limited to the limited partner’s proportionate share of the overall partnership’s liability.

Answer 5

(B) limited to the amount of the investment

The principle protection of a limited partnership is the limitation of liability to the partner’s investment. This protection may be lost if the limited partner participates in the management of the company.

Question 6

In a trust ownership situation, title is held by the trustee on behalf of the:

(A) trustor; (B) grantee; (C) beneficiary; (D) grantor.

Answer 6

(C) beneficiary

The terms grantor and grantee are not usually used in association with a trust ownership situation.

Question 7

Which of the following is not actually a legal form of property ownership of real estate investment?

(A) limited liability company; (B) limited partnership; (C) S corporation; (D) syndicate.

Answer 7

(D) syndicate

The term syndicate is descriptive of a group of people pooling their funds to invest, but it is not a specific form of ownership or investment.

Question 8

An open listing is an:

(A) express unilateral contract; (B) express bilateral contract; (C) implied unilateral contract; (D) implied bilateral contract.

Answer 8

(A) express unilateral contract

In an open listing, a seller agrees (express) to pay a fee if the broker finds a buyer. The seller is under obligation to pay (unilateral) only if the broker finds a buyer. The broker is under no obligation to market the property or attempt to find a buyer.

Question 9

Cooperating brokers represent:

(A) the buyer; (B) the seller; (C) both the buyer and the seller; (D) whomever they have an agency agreement with.

Answer 9

(D) whomever they have an agency agreement with

Cooperating brokers work with other brokers, but they work for whoever hires them.

Question 10

Pocket listings are:

(A) illegal; (B) unethical; (C) not a problem; (D) governed by the multiple listing service rules.

Answer 10

(D) governed by the multiple listing service rules

Although most MLS organizations do not permit pocket listings, they are not inherently illegal or unethical.

Question 11

Buyer’s brokers may be paid by:

(A) only buyers; (B) only sellers; (C) either buyers or sellers; (D) cooperating brokers.

Answer 11

(C) either buyers or sellers

Remember that fiduciary duty may be given to the buyer, while the commission may be paid by either the buyer or the seller.

Question 12

Broker A takes a listing to sell a house. Broker B brings a buyer to see the house and prepares an offer on behalf of the buyer. What do we know for certain about Broker B?

(A) She is a subagent of Broker A; (B) She is a buyer’s broker representing the buyer; (C) She is a cooperating broker; (D) She is a dual agent representing both seller and buyer.

Answer 12

(C) She is a cooperating broker

All we know for sure is that she is a cooperating broker, because cooperating brokers may be sellers’ or buyers’ agents and less likely dual agents.

Question 13

The method for estimating reproduction or replacement cost that is most useful as a check on the other appraisal methods is the:

(A) historic cost index method; (B) quantity survey method; (C) unit-in-place method; (D) square foot method.

Answer 13

(A) historic cost index method

The historic cost index method, which uses a factor to account for increase in construction costs is most useful as a check on one of the other methods.

Question 14

The estimated cost to build a 200-year-old house using modern materials and construction methods is called its:

(A) replacement cost; (B) reproduction cost; (C) rebuilding cost; (D) current cost.

Answer 14

(A) replacement cost

Choice B is wrong. Choices C and D may be semantically correct, but because the testers are interested in the licensee knowing the appropriate terms, the best choice is A.

Question 15

An oversupply of condominiums built in a retirement area is often the result of not paying attention to the principle of:

(A) competition; (B) regression; (C) highest and best use; (D) contribution.

Answer 15

(A) competition

Builders will often follow the success of other builders in an area (competition) until there is an oversupply of the space or dwelling units.

Question 16

Value can best be described as:

(A) value in use; (B) assessed value; (C) market value; (D) value in exchange.

Answer 16

(D) value in exchange

This question is tricky because market value is what appraisers are estimating MOST of the time – but not ALL the time. The value of something in exchange for something else is a more basic definition of value and, therefore, correct all the time.

Question 17

A real estate broker discusses a buyer’s mortgage needs with her, advising her of the types of loans available for her particular circumstances and suggesting a lender who might accommodate her needs. The agent even enters the buyer’s information into a computerized system to help the lender provide the type of financing needed. Which of the following is true regarding payment of a fee by the lender to the real estate broker?

(A)this fee would be a kickback and is illegal; (B) the fee could be paid; (C) the fee could be paid, but only if the broker were also an employee of the lender; (D) The fee could only be paid if the loan actually went through.

Answer 17

B) the fee could be paid

Given the circumstances where the broker actually provided some loan services to the buyer, a fee from the lender is legal.

Question 18

Due to an increase in his home’s value, a homeowner refinances his home for an amount larger than the original mortgage. After a few years, his financial situation changes and he can no longer make his mortgage payments. Due to a downturn in the marketplace, the foreclosure sale of the house does not cover the amount of the mortgage. His lender can:

(A) do nothing because of the anti-deficiency law; (B) sue for a deficiency judgement; (C) do nothing unless the lender applied for a judicial foreclosure; (D) do nothing unless it was a mortgage loan rather than a trust deed stituation.

Answer 18

(B) sue for a deficiency judgement

The real choice here involves understanding the anti-deficiency law, which would allow a deficiency judgement in this case.

Question 19

Fuel oil left in the tank at the time of closing is best described as:

(A) credit to the seller; (B) debit to the seller; (C) credit to the buyer; (D) proration.

Answer 19

(A) credit to the seller

Because the oil was already paid for and will be purchased by the buyer, the seller is given a credit. Proration is the action of apportioning these costs.

Question 20

The premium for the title insurance insuring the lender is generally paid by:

(A) buyer; (B) seller; (C) lender; (D) FHA.

Answer 20

(A) buyer

Because the buyer is the borrower, he usually pays for the lender’s policy.

Question 21

For purposes of taxation, assuming a property transfer is not recorded, how many days after the transfer in ownership does the new owner have to file the change in property ownership statement with the recorder or the assessor?

(A) 15; (B) 30; (C) 45; (D) 60.

Answer 21

(C) 45

This time frame is statutory.

Question 22

An exemption to the federal Fair Housing Act of 1968 is provided to:

(A) no one; (B) religious organizations providing housing to its members; (C) subdivisions of fewer than ten houses; (D) owner-occupied apartment houses of fewer than eight units.

Answer 22

(B) religious organizations providing housing to its members

This exception is permitted if the religious organization does not discriminate in its membership policies.

Question 23

A home having to scraggly bushes and a lightning-damaged tree is advertised by the broker as having beautiful landscaping. The broker is most likely guilty of:

(A) misrepresenting and could lose his license; (B) puffing and will not lose his license; (C) exaggeration and will probably have to pay for additional landscaping; (D) nothing.

Answer 23

(B) puffing and will not lose his license

Because anyone looking at the property could readily determine for himself what the condition of the landscaping is, the broker is likely guilty of puffing or exaggerating but would not be liable for paying for new landscaping.

Question 24

If a real estate license is revoked, how long must the licensee wait to reapply for a license?

(A) five years; (B) three years; (C) one year; (D) six months.

Answer 24

(C) one year

One year is the minimum time.

Question 25

Illegal immigrants may:

(A) not obtain a real estate license; (B) obtain a real estate license with no restrictions; (C) obtain a conditional real estate license; (D) obtain a temporary, 150-day real estate license.

Answer 25

(A) not obtain a real estate license

According to the Personal Responsibility and Work Opportunity Act of 1998, proof of legal presence in the United States must be presented to obtain or renew a real estate license.

Question 26

The prepaid rental listing service license requires a surety bond of:

(A) $10,000; (B) $5,000; (C) $3,000; (D) $1,000.

Answer 26

(A) $10,000

This is statutory.

Question 27

Which of the following activities would not require a real estate license?

(A) selling homes for another person; (B) brokering mortgages; (C) selling your own commercial property; (D) managing several single-family home rentals for another person.

Answer 27

(C) selling your own commercial property

You never need a license to sell your own property.

Question 28

A one-family home is sold “as is” by a homeowner. Which of the following disclosures will not be required?

(A) agency disclosure; (B) lead-paint disclosure; (C) property condition transfer disclosure statement; (D) natural hazard disclosure statement.

Answer 28

(A) agency disclosure

Agency disclosure is not needed if someone is selling their own property.

Question 29

How many members other than the commissioner are on the California Real Estate Advisory Commission?

(A) five; (B) seven; (C) nine; (D) ten.

Answer 29

(D) ten

This is statutory.

Question 30

The public report for a condominium will include:

(A) interest to be acquired by the purchaser; (B) negative environmental issues; (C) limitations on the use of the property; (D) all of the above.

Answer 30

(D) all of the above

This is statutory.

Question 31

A broker brings a buyer to a home that has been advertised as for sale by owner, discusses various sales-related matters with the owner, and offers the owner advice that the owner accepts. The sale goes through. Because nothing was ever put in writing between the broker and the owner, what type of agreement did the broker have with the owner?

(A) implied, unilateral, valid; (B) implied, bilateral, invalid; (C) expressed, bilateral, valid; (D) implied, unilateral, invalid.

Answer 31

(D) implied, unilateral, invalid

The agreement was implied because of the actions of the broker and the seller. Most listing agreements are unilateral. All real estate estate sales listing agreements must be in writing; therefore this agreement is invalid.

Question 32

A buyer’s broker is representing two buyers for the same house. This is:

(A) a possible dual agency; (B) never acceptable; (C) permitted if both agree; (D) both A and C.

Answer 32

(D) both A and C

The buyer-broker agreement should obtain the permission of the buyer to do this, or else a dual agency situation may arise.

Question 33

Rent payment in arrears means:

(A) on the first day of each month; (B) on the last day of each month; (C) at the end of the lease term; (D) on any agreed-upon date.

Answer 33

(C) at the end of the lease term

Arrears means “after.”

Question 34

Tenant A subleases his apartment to Tenant B. Tenant A’s interest is called a(n):

(A) assignment; (B) novation; (C) subleased fee; (D) sandwich lease.

Answer 34

(D) sandwich lease

This is definitional.

Question 35

Which of the following is not a reason that a mobile home park tenancy may be terminated by the landlord?

(A) non-payment of rent and utilities; (B) change of use of the park; (C) change in the number of occupants of the mobile home; (D) failure to comply with reasonable park rules.

Answer 35

(C) change in the number of occupants of the mobile home

This is statutory.

Question 36

In a lease option, a portion of the rent:

(A) must always be applied to the purchase price; (B) may be applied to the purchase price; (C) cannot be applied to the purchase price; (D) is usually applied to pay for the option.

Answer 36

(B) may be applied to the purchase price

Whether or not a portion of the rent is applied to the purchase price is negotiable.