California Real Estate Exam Prep Questions with answers, 100% rated A+

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California Real Estate Exam Prep Questions with answers, 100% rated A+ According to the Sherman Anti-Trust Act, if a real estate agency instructed all of the salespersons and associate brokers... that they were to set their commissions at 3%, and they all agree to do so, this would be - ✔✔Not a violation of the Sherman Anti-Trust Act In order to have a valid agency relationship, the commission agreement must be - ✔✔In writing If you are referring to "the principle" in real estate, you are referring to - ✔✔The part of the monthly payment that reduces the remaining balance of a mortgage In California, the knowledge and consent of both parties (the buyer and the seller) must be obtained prior to the sale in order for the broker or agent to - ✔✔Collect a commission from both parties "A pamphlet provided by the EPA entitled Protect Your Family From Lead In Your Home is to be given to tenants" would be a false statement regarding the - ✔✔Residential Lead-Based Paint Hazard Reduction Act Assessment bonds are used by the county to pay for what in a subdivision? - ✔✔Street lights, curbs, sewers, and other needs If a contract was valid upon its creation but has subsequently passed the statute of limitations, the contract is now considered - ✔✔Unenforceable Under what type of lease does the tenant pay a fixed rental amount and the landlord pays all of the operating expenses for the premises? - ✔✔Gross lease After reconciliation of a trust fund, it is found to have a greater balance than it should have. This is called a - ✔✔Trust fund overage In the case of a cash sale, why would a seller wish to transfer an existing fire insurance policy? - ✔✔Because they will not have to pay a short term cancellation rate If a person agrees to pay a certain sum for a service deed to be done on a property while the other person simply agrees to do the service if their schedule permits for it, this kind of contract would be called - ✔✔Unilateral In California, if a broker from another state refers a prospect to a broker in California, the commission may - ✔✔Be split with the out-of-state broker if desired Fees that are paid by the individual owners of condos or planned unit developments that are used to maintain the property and common areas are known as - ✔✔Common area assessments If you are given a formal written notice that a default has occurred, this is called - ✔✔A notice of default Water rights adopted based on riparian rights are generally in states - ✔✔With ample supply of water This is a law requiring lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs - ✔✔ECOA If a mortgage has an adjustable rate but has limitations on how much the mortgage rate may adjust over a six-month period, an annual period, and over the life of the loan, this would be called - ✔✔A cap Henry is the seller of his home, which was built in 1978. What booklet is Henry required to give a potential buyer? - ✔✔Lead Paint Information Which party is most likely to sue for specific performance in regards to the purchase of real estate? - ✔✔The buyer A vendor-vendee is a term that best describes the relationship between - ✔✔Purchase-and-sales A mortgage that can be taken over by the buyer when a home is sold, assuming the buyer qualifies, is called a(n) - ✔✔Assumable mortgage Under which law is it not permissible for a broker to only sell a property under the condition that the broker obtains the listing for future sales? - ✔✔Sherman Act The best definition of an appraiser is - ✔✔An individual qualified by education and experience to estimate the value of real and personal property A remainder is when - ✔✔There is a residue of the estate If a property is partially destroyed from fire, the type of insurance that would likely cover the damages is called - ✔✔Hazard insurance Which of these conditions creates a "seller's market"? - ✔✔The sudden influx of people to an area This is a loosely used term generally taken to mean a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved - ✔✔Pre-Approved If a person dies that owns this type of estate, the ownership of that person automatically terminates - ✔✔A life estate A situation in which an individual or organization is involved in several potentially competing interests, creating a risk that one interest might unduly influence another interest, is known as - ✔✔A conflict of interest In California, one way to terminate an appurtenant easement a person could - ✔✔Issue a decree in a quiet title action against the easement holder in favor of the servient tenement In California, as tenants-in-common, if one of the tenants obligates the other co-tenants for a lease of the whole property without their consent, the lease would legally be considered - ✔✔Invalid A person sees a home as they are walking their dog and they want to put an offer to purchase it even though it is not listed for sale. The person gives a real estate broker a check as a deposit for the home. As a broker, it is - ✔✔Acceptable to accept the check as an exclusive agent of the buyer If a property is being evaluated for tax purposes in regards to its value, this would be called - ✔✔An assessment The person to whom an interest in real property is conveyed is called the - ✔✔Grantee When the principal balance of a loan, bond, or other financial instrument becomes due and payable, this is called the date of - ✔✔Maturity Which of these is NOT an action that causes a real estate transaction to be considered "closed"? - ✔✔All of these When the documents have been signed by all parties When the closing documents have been signed by the broker When the buyer signs all the sales contracts Even if a person has a low credit worthiness, the Fair Housing Law requires - ✔✔None of these That the lender make a good faith attempt to obtain a loan That the lender reconfigure the loan requirements to fit the individual None of these That the lender make the loan anyway at a higher interest rate If Betty lists her property with Jerry, a licensed real estate agent, and signs a written agreement that states Jerry is the only one entitled to the listing for a specific period of time, she has given Jerry a(n) - ✔✔Exclusive listing Which of these would have the most percentage of their funds invested in real estate mortgages? - ✔✔Savings and loan associations A branch manager who is authorized to conduct business on behalf of a company is usually - ✔✔A general agent If a home is located in a federally designated flood area, the type of insurance that is required is called - ✔✔Flood insurance If Nila has a mortgage that is considered a "balloon mortgage", Nila is required to - ✔✔Pay the remaining principle balance at a specific point in time If a real estate agent is acting as an agent to all principal parties to a transaction, he/she is entitled to earn a commission from each party. Before this can happen, what must be procured? - ✔✔An exchange agreement In regards to closing costs, they can be - ✔✔Both Non-recurring and pre-paids When describing the activity of primary mortgage lenders selling mortgages to investors such as pension funds and insurance companies, you would be describing - ✔✔The secondary mortgage market The interest rate banks charge to their preferred customers is called - ✔✔The prime rate In California, the tax imposed on equipment located on the premises at the time of a business opportunity sale would be classified as - ✔✔Sales tax The main source of revenue for most local governments is - ✔✔Property taxes Ginnie Mae is owned by - ✔✔The government James was able to have his building permit issued without issue even though there was this violated restriction - ✔✔Deed The party that accepts the endorsed note from the original payee without knowledge of any defects is known as - ✔✔Holder in due course Freddie Mac and Fannie Mae have loan limits on anything over - ✔✔$417,000 The property that will be pledged as collateral for a loan is known as - ✔✔Security When referring to the "back" or "bottom" ratio, it includes - ✔✔Housing costs as well as all other monthly debt When a broker obtains a new contract, it is considered what until fully performed? - ✔✔Executory If a person was to take out a loan against their 401(k) plan as the source of their down payment for a property, this would be - ✔✔Acceptable A clause that states a lender may demand the loan amount plus accrued interest in the event of a sale is called - ✔✔Alienation If a loan that has a loan to value ratio of more than 80%, this is required - ✔✔Mortgage insurance Encumbrances against properties in a particular area that are benefited by improvements are also called - ✔✔Special Assessment Liens An appraisal process that is a method of establishing the value of income type properties is called - ✔✔Capitalization One of the ways a broker can avoid being accused of price fixing, the broker should avoid - ✔✔Discussing pricing strategy with a competitor The Federal National Mortgage Association is also known as - ✔✔Fannie Mae An oral agreement to lease a house for 2 years for a monthly lease rate of $1250 comes under - ✔✔The Statute of Frauds When a veteran is looked at and proven to be eligible for a VA loan, the document that is given to them from the Department of Veteran's Affairs is called - ✔✔Certificate of Eligibility If a property is in probate, the real estate commission for the property is set by - ✔✔The individual court district If a homeowner refinances the mortgage on the property at a higher amount than the current loan balance for personal use, this is called - ✔✔Cash out refinance A decline in the value of property and an accounting term showing the declining monetary value of an asset is called - ✔✔Depreciation When a real estate agent is viewing the report on the title of a property from the public records, or an abstract of the title, the agent is viewing - ✔✔An examination of title A grant deed - ✔✔Conveys all after-acquired interests in the title If a loan has a loan-to-value percentage in excess of 80%, what is required? - ✔✔Private mortgage insurance The Government National Mortgage Association, that provides funds for government loans like FHA and VA, is also known as - ✔✔Ginnie Mae Under California law, if a partnership were to take title to real property by the name of a third party as a trustee for the partnership, this would be considered - ✔✔Legal When a real estate developer obtains a loan for building a new housing tract and the lender gives part of the funds to the developer and agrees to release the rest of the funds as each home is built, this is called which type of financing - ✔✔Obligatory If a loan is in a subordinate lien position to the first loan on a property, this is called - ✔✔A second mortgage If there is an easement appurtenant, there must also be - ✔✔A dominant tenement What happens if the principal is incapacitated or suffers death according to the laws of agency? - ✔✔The agency is terminated Terry has not paid any rent on the property that she leases for a long period of time. She no longer intends on paying any future payments. The lawful expulsion of Terry would be by means of - ✔✔Eviction In California, the vendee cannot be prohibited from - ✔✔Recording a contract If either a negative covenant or an affirmative covenant is breached, the remedies are either - ✔✔Monetary or injunctive relief When all the papers are drawn up correctly and everything is ready for the final steps to close the escrow, which typically includes recording the deed, the escrow is called - ✔✔Complete When two or more persons agree to act and the agreed upon action has the effect of restraining trade, this is called - ✔✔An anti-trust conspiracy A contract that has been performed except for one of the elements listed is called - ✔✔Executory This conveys title to the lender when the borrower is in default and wants to avoid foreclosure - ✔✔A "deed in lieu of foreclosure" Sometimes contingencies are included in a real estate contract. One normal contingency that occurs in many real estate contracts is - ✔✔The purchaser is able to obtain a satisfactory home inspection In government surveys of land, why is metes-and-bounds used? - ✔✔To determine outlines of a certain area Retaining a property while at the same time using it as collateral to secure a loan is called - ✔✔Hypothecation If a mortgage note was executed and a new loan was established on the same property at a higher interest rate, the prepayment penalty could be - ✔✔Waived due to recouping losses through a higher interest rate When a survey is completed on a property, the final product will be a - ✔✔Drawing or map showing the precise legal boundaries of the property, the location of improvements, easements, rights of way, encroachments, and other physical features If agent Jerry obtains a listing from a person selling their house and begins to aggressively market the property stating that the property is for sale by owner and the first person to contact him will be at the top of the list of buyers, this would be considered - ✔✔Misrepresentation The time during which the lender has guaranteed a certain rate is called - ✔✔The lock-in period Homeowner's associations typically enforce - ✔✔CC&Rs A "firm commitment" is best defined as - ✔✔An agreement by a lender to make a loan to a specific borrower on a specific property An agreement by a lender to make a loan to a specific borrower on a specific property - ✔✔The government A non-conforming loan is a loan in the amount over - ✔✔$417,000 The amount of a mortgage that a "point" represents is - ✔✔1% In California, the uniform zoning symbol for an agricultural property would be - ✔✔(None of these) M R-2 A One of the jobs of a property manager is - ✔✔Maintaining the property while managing finances Jim is a mortgagor. Jim is required to pay for mortgage insurance to either the FHA or to a PMI company. The amount that Jim has to pay is called the - ✔✔Mortgage insurance premium Of the government loans that are guaranteed or insured, which organizations insure or guarantee loans? - ✔✔(All of these) FHA Department of Veteran's Affairs Rural Housing Service In order to form a valid contract, which is not necessary - ✔✔Performance It is to the trustor's advantage to include a - ✔✔Subordination clause The seller delivers the deed to the property and the buyer pays the purchase price in the step known as - ✔✔Closing If Jonas is a person who is licensed in his state who negotiates and transacts the sale of real property, Jonas is - ✔✔A real estate agent One of the three broad categories of real property is - ✔✔Things affixed to the land A value created according to a government formula intended to reflect the true annual cost of borrowing expressed as a percentage is called the - ✔✔Annual percentage rate In California, one way to clear a cloud on a title is to - ✔✔Institute a quiet action title A contract for deed is best described as when - ✔✔Property purchased on an installment plan If a party was discriminated against, they could - ✔✔Bring private action through a state or federal court If a tenant has been defiantly not paying the required rent to the landlord, the landlord has the right to - ✔✔Bring court action Inverse condemnation is an action brought by - ✔✔Property owners The FHA uses what to pay lenders, within the limits, resulting from foreclosure? - ✔✔Mutual Mortgage Insurance If a married couple acquires property during their marriage, the property is considered to be - ✔✔Both Jointly owned and community property If an agent is to get the commission for a long term lease, the commission would be paid out - ✔✔Each month over the life of the lease Liabilities, including long-term and short-term debt and any amounts owed to others, is best known as a person's - ✔✔Financial obligations An easement is an example of - ✔✔A non-possessory right The main functions of a title company are to - ✔✔Examine and insure titles to real estate In order to legally deprive a borrower who is in default of his or her interest in the mortgaged property, the legal process that would be initiated is called a(n) - ✔✔Foreclosure In California, even a restriction that is beneficial to the grantee is still considered - ✔✔An encumbrance If a purchase contract for a property has no acceleration clause and no provisions in the contract prohibiting a resale or an assignment, the borrower could potentially - ✔✔Sell or assign interest in the property without penalty, but will still be secondarily liable for some terms of the contract unless the seller's approval was obtained When are MILS most often used? - ✔✔In the assessment of property taxes If Mr. Barry is applying for a loan that is not an FHA or VA loan, the type of loan that Mr. Barry is applying for is called a - ✔✔Conventional loan What is the function of the FHA in regards to loans? - ✔✔The FHA insures loans When calculating a gross monthly rent multiplier, this is done by - ✔✔Dividing the fair market value of the property by the gross monthly rental income If Nick is solely a principal in a real estate transaction, but is also a licensee, and he does not disclose that he is a real estate license holder, this would be - ✔✔Acceptable How many sections are in a township? - ✔✔36 An application form used to apply for a mortgage contains information about a borrower's - ✔✔(All of these) Assets and debts Income Savings A title plant is a duplicate set of title records maintained at title insurance companies for use in - ✔✔Title searches When a corporation holds title to land, under whose or what name holds the title? - ✔✔The charter Shelley v. Kraemer is the Supreme Court case that held - ✔✔Private racially based restrictive covenants are invalid under the Fourteenth Amendment When the VA guarantees a residential mortgage to an eligible veteran, what does the guarantee protect against? - ✔✔Loss In California, if a seller agrees to sell the property to a particular buyer and the buyer and seller record a contract of sale, this would mean that the seller cannot sell to anyone else. What consequence does this have? - ✔✔It creates a "cloud" on the title The nominal interest rate is - ✔✔The rate of interest specified in the note When a person purchases hazard insurance for their property, it covers - ✔✔Physical damage to a property from fire, wind, vandalism, or other hazards Real property should have a higher rate of return than bonds or first trust deeds because of - ✔✔(All of these) The added care required The higher denominations it comes in The added time to market What relationship to the broker's client is a salesperson? - ✔✔A subagent A property manager that resides on a property would likely - ✔✔(All of these) Show vacant units to prospective tenants Collect Rents Perform maintenance on the property In California, Heather is a real estate agent trying to sell a house for George. George specifically told her he does not want to even hear about any offers less than $440,000. Later, Heather receives an offer on the property for $400,000. What should Heather do? - ✔✔Present the offer A rate that is guaranteed by the lender for a certain period of time is referred to as - ✔✔A lock-in The noting in the registrar's office of the details of a properly executed legal document, such as deed, mortgage note, satisfaction of mortgage, or extension of mortgage, thereby making it a part of the public record is called a - ✔✔Recording If a person who works for a private corporation wants to participate in an employer-sponsored investment plan that allows them to set aside tax-deferred income for retirement or emergency purposes, they would enroll in a - ✔✔401(k) plan In regards to a lease option - ✔✔Each month's rent may consist of the rent and an additional amount with can be applied toward the down payment The best definition of a foreclosure is - ✔✔The legal process by which a borrower in default under a mortgage is deprived of their interest in the mortgaged property If George has an 85% interest in a property while Ernie has a 15% interest in the same property, which right is equal? - ✔✔Possession The surface of the earth and the material beneath the surface of the earth is part of the - ✔✔Real property The two types of government home loans are - ✔✔FHA and VA If Betty has a mortgage and it becomes in default, the lender can demand payment by means of a clause in the contract called a(n) - ✔✔Acceleration clause If land is utilized in a range of ways in balanced proportions, this can potentially - ✔✔Increase land value An easement is defined as - ✔✔The legal right to pass over your neighbors land An agent that obviously and falsely represents is known as - ✔✔Fraudulent Misrepresentation If you are looking at the "note rate", you are looking at - ✔✔The interest rate stated on a mortgage note How many acres are in a township? - ✔✔23,040 In order to make a withdrawal from the broker's trust account, in addition to authorization from the broker, an employee must be - ✔✔Bonded If there is a contract that is enforceable at the option of one party but not at the option of the other, this type of contract is - ✔✔Voidable A real estate agent that has been selling properties under a broker for the last year but is NOT associated with the National Association of Realtors is considered to be a(n) __________________ but not a _____________________ - ✔✔Agent, Realtor Vendee is also known as - ✔✔Buyer The payment change date is - ✔✔The date when a new monthly payment amount takes effect on an adjustable-rate mortgage or graduated-payment mortgage If Mary really wants to purchase John's house, and tells John's agent that she is willing to pay $560,000 for it instead of the list price of $540,000, John's agent should - ✔✔Tell John. As John's agent, there is a duty of notice due to John and no confidentiality due to Mary Asbestos is associated with this type of ailment - ✔✔Mesothelioma Cash or something that is easily turned into cash is called a - ✔✔Liquid asset When a property value is determined by the highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept, this would be termed as - ✔✔Fair Market Value If a contract includes promises by two parties to do something, the contract is - ✔✔Bilateral What does a planned development consist of? [Show More]

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