Prep Course Pre Exam Flashcards Preview

CA Real Estate > Prep Course Pre Exam > Flashcards

Flashcards in Prep Course Pre Exam Deck (53)
Loading flashcards...
31

Which of the following is MOST frequently employed to assure title to real property for a grantee?
A) Certificate of title
B) Warranty deed
C) Title insurance
D) Recordation of trust deed

C) Title insurance
The best protection for assuring title to real property is offered by means of a title insurance policy that insures against both "of" record and "off" record risk.

32

Robert Smith signed an offer and gave the broker his personal check made payable to an escrow company as a deposit. He stipulated that the broker was to hold the check until the seller accepted his offer. The listing agreement specified that any deposit money must be in the form of a cashier's check made payable to the seller. Under these circumstances, the broker should
A) hold the check but do not reveal to the seller that the check has been accepted until the seller accepts the offer.
B) submit the offer and hold the check.
C) submit the offer and deposit the check in escrow.
D) refuse to accept a deposit that does not conform to the precise terms of the listing.

B) submit the offer and hold the check.
Real estate law permits a broker to hold the check when ordered to do so by a principal. Because the broker was not authorized by the seller to accept a personal check, the acceptance of such a check makes the broker the agent of the buyer for the amount of the check.

33

Land value is estimated whenever possible on the basis of
A) purchase price plus the cost of making on-site and off-site improvements.
B) original cost plus the expense of making it usable.
C) size, location, and utility.
D) sale prices of comparable sites.

D) sale prices of comparable sites.
Comparable sales data for estimating the value of land would be used "whenever possible"—that is, when an adequate number of recent sales in a given area have taken place to allow for comparisons.

34

In setting up a release schedule under a blanket encumbrance, the beneficiary will usually require a disproportionate amount of money to release a particular lot
A) to have better security on the remaining lots.
B) to protect the investment as individual lots are sold.
C) because the best lots usually sell first.
D) all of these.

D) all of these.

35

Which of the following words placed in a promissory note would commit all the borrowers for payment?
A) Individually
B) Jointly and severally
C) Individually and severally
D) Jointly

B) Jointly and severally
Jointly means the creditor can look to all the signers as a group; severally means the creditor can look to any one signer for the entire amount due. Co-signers on a note are jointly and severally liable.

36

A broker advertises in the paper that if a seller lists a property with the broker, the broker will credit the seller with $50 toward the commission to be paid. The advertisement also states that if a prospective buyer brings a copy of the advertisement to the broker, the buyer will be credited $50 in escrow to be applied to the purchase price of the property. Is the broker subject to discipline by the real estate commissioner with regard to this advertisement?
A) The broker can credit the buyer but not the seller.
B) The broker can credit the seller but cannot credit the buyer.
C) The broker may pay the $50 to the seller and to the buyer.
D) The broker would be disciplined because the promises made to the seller and the buyer in the advertisement constitute payments to unlicensed persons.

C) The broker may pay the $50 to the seller and to the buyer.
The answer is the broker may pay the $50 to the seller and to the buyer. Neither of these promises by the broker are a violation of law or regulations. Neither the seller nor the buyer would be acting as an agent for another in this transaction, so no real estate license would be required of either. The courts have also ruled that disclosed payments by the broker to either the seller or the buyer would not be a violation of RESPA.

37

Market price is the price

that a property actually brings in the open market.

38

The minimum amount of time that a broker must keep signed copies of listings, deposit receipts, and other documents pertaining to real estate transactions is

three years.

39

Which of the following is NOT essential for the creation of an agency relationship?
A) Lawful object
B) Capacity of the parties
C) Fiduciary relationship
D) Payment of consideration

D) Payment of consideration

40

Police power is a governmental right and might result in

zoning standards.
The government's police power is the basis for zoning ordinances. The taking of private property is based on the government's rights of eminent domain. Judgments result from the power of the judicial branch of government. Deed restrictions are private restrictions.

41

Under the Truth in Lending Act, the three-day right of rescission begins with which of the following events, if they occurred on different days in the sequence stated?
A) The date the disclosure statement is delivered
B) The date the funds are disbursed
C) The date the loan application is made
D) The date the note is signed

D) The date the note is signed
The three-day right of rescission that applies to some loans under the federal Truth in Lending Act begins with the delivery of the disclosure statement or the signing of the promissory note, whichever occurs later.

42

The buyer and the seller sign escrow instructions that the broker takes to the escrow agent. The escrow agent discovers discrepancies between the escrow instructions and the purchase contract. Which of the following is TRUE?
A) The escrow instructions generally prevail because it is the most recent document.
B) The escrow agent and the broker must resolve the conflict.
C) The purchase contract must be redrafted to agree with the escrow instructions.
D) The purchase contract prevails because it is the original document.

A) The escrow instructions generally prevail because it is the most recent document.
A subsequent document (such as escrow instructions) will prevail over an earlier document (the purchase contract).

43

Smith signed an offer to buy Brown's property and gave the offer to the broker. The broker took the offer to Brown, who signed Smith's offer, giving an unqualified acceptance of it. Before the broker could deliver the accepted offer to Smith, Smith died of a heart attack. Which of the following is TRUE?
A) The offer is void because the deed could not be delivered to Smith.
B) Smith's death worked a revocation of the offer.
C) Delivery of the offer to the administrator binds Smith's heirs.
D) The offer and unqualified acceptance constitute a valid contract.

B) Smith's death worked a revocation of the offer.
The answer is Smith's death worked a revocation of the offer. Death of the offeror, before the communication of the acceptance, revokes the offer.

44

A contract signed under duress would be
A) voidable.
B) unenforceable.
C) void.
D) illegal.

A) voidable.
When the mutual consent to a contract is induced by fraud, duress, menace, or undue influence, the contract is voidable at the option of the wronged party. Although such a contract is unenforceable against that wronged party, the contract is not totally unenforceable because it is enforceable against the other party. Therefore, voidable is the best answer.

45

Before the purchaser is advised of the seller's acceptance of an offer, the purchaser can withdraw the offer
A) provided the offer is not irrevocable.
B) provided the offeree has breached the offer.
C) provided the offer is breached by the seller.
D) for any reason.

D) for any reason.
An offer may be withdrawn (revoked) by the offeror anytime before communication of the acceptance by the offeree, regardless of the offeror's reason.

46

An appraiser wants to appraise a property using comparable sale prices of similar homes. Adjustments for the difference between the home and the comparables will be made by adjusting the
A) subject property to the comparables.
B) comparables to the normal.
C) subject property to the normal.
D) comparables to the subject property.

D) comparables to the subject property.
In the comparison approach, an appraiser adjusts the comparable properties to the subject property in order to compensate for the differences.

47

A developer who requested backfill would be using it
A) for garden landscaping.
B) for driveways.
C) for roadways.
D) to replace earth excavated from foundation walls.

D) to replace earth excavated from foundation walls.
Backfill is used in construction to replace earth excavated from a hole or from around a structure.

48

Functional obsolescence is a decrease in value because of
A) wear and tear.
B) being outdated.
C) decline in neighborhood.
D) adverse zoning.

B) being outdated.
Functional obsolescence results from inherent defects and are not due to physical wear and tear or from external influences.

49

A broker refers all clients and customers to West Hills Title Insurance Company. The title company gives the broker a $10 fee for each referral. This practice is
A) forbidden.
B) acceptable if the seller is paying for the policy and agrees to the referral fee.
C) permissible.
D) acceptable if both the buyer and the seller are aware that broker is receiving a fee and agree with the fee.

A) forbidden.
RESPA forbids kickbacks, referral fees, or any other unearned fees. Referral fees between real estate brokers are permissible, but referral fees between real estate licensees and settlement service providers are not.

50

Which criterion would NOT be used to determine net income for an income property?
A) Vacancies
B) Maintenance costs
C) Mortgage interest
D) Management fees

B) Maintenance costs
When determining net income in the income approach to appraisal, mortgage interest is a personal expense of the owner, not an operating expense of the property.

51

A selling agent who is the exclusive agent for the buyer can do all of these EXCEPT
A) submit the buyer's offer to the seller and the seller's agent with the seller's approval.
B) act as the seller's agent because the seller is paying the commission.
C) withhold negative information about the buyer.
D) personally submit the buyer's offer to the seller.

B) act as the seller's agent because the seller is paying the commission.
An agent who is an exclusive agent for the buyer cannot also act as the seller's agent. If the buyer and the seller have knowledge and give consent, then the dual agency can exist.

52

Which of the following would an appraiser use to appraise a residence built in 1910?
A) Today's cost of reproduction
B) Cost-of-living index that increased from 95 to 128
C) Original cost of materials in 1910
D) Cost-of-living index of 1910

A) Today's cost of reproduction
The appraiser is interested in today's cost (less depreciation, of course) and value. The appraiser is not concerned about the original cost or the cost-of-living index in 1910.

53

Which of the following decided the amount of commission received from the sale of property of a deceased person?
A) Administrator or executor of the estate
B) Real Estate Commissioner
C) Real estate board
D) Court order

D) Court order
The probate court usually must approve the sale, as well as the amount of the commission.