Rockwell Exam Real Estate Classes WA Final Exam 1
1. A buyer purchases a rental home b. bill of sale
that is fully furnished. The docu-
ment used to transfer title to the Deeds transfer title to real estate, a bill
furniture is: of sale is generally needed to transfer
a. quitclaim deed title to personal property.
b. bill of sale
c. special warranty deed
d. general warranty deed
2. Ben receives a life estate in a prop- A. Fee Simple Estate
erty, with his nephew Will desig-
nated as the remainderman. When The interest that passes to a desig-
Ben dies, what kind of interest nated person upon the death of a life
does Will receive? tenant (or other measuring life) is a
A. Fee Simple Estate fee simple estate. Will has a remainder
B. Life Estate interest only up until the moment Ben
C. Remainder Interest dies. Once Ben is dead, Will's interest
D. Reversionary Interest immediately becomes a fee simple in-
terest.
3. A buyer accepts a general warran- D. Yes, there is a covenant providing
ty deed from a seller, believing that marketable title
the seller is the sole owner of the
property. The buyer later finds out The general warranty deed contains a
that the seller is only a co-owner. covenant of the right to convey, mean-
Has a covenant in the general war- ing that the grantor either has title to
ranty deed been violated? the interest or is an agent of the owner
A. No, the only covenant in a gen- with the authority to transfer the inter-
eral warranty deed promises that est.
the previous owner didn't encum-
ber the property
B. No, the principle of caveat emp-
tor controls matters concerning a
deed
C. Yes, there is a covenant provid-
ing equitable title
D. Yes, there is a covenant provid-
ing marketable title
, Rockwell Exam Real Estate Classes WA Final Exam 1
4. A plaintiff files a lawsuit involving D. Lis Pendens
a property and also files a sepa-
rate document intended to provide A Lis Pendens is a recorded notice
notice of the lawsuit. This recorded stating that there is a lawsuit pending
notice of a pending legal action is that may affect title to the defendant's
called a/ an: real estate and that could bind the pur-
A. Abstract of judgement chaser of the property.
B. Petition for alienation
C. Writ of execution
D. Lis Pendens
5. A movie theater was built ten D. Will be allowed to continue since it
years ago. If the neighborhood is was built before the new zoning law
now zoned entirely residential, the went into effect
movie theater:
A. will have to be torn down The movie theater is an example of
B. must be remodeled to better a nonconforming use, which predated
conform to the neighborhood's in- a zoning change. Nonconforming uses
tended use are generally allowed to continue, al-
C. will be allowed to continue if the though they may not be enlarged, or
owner obtains a conditional use resumed if they are stopped.
permit
D. will be allowed to continue since
it was built before the new zoning
law went into effect
6. In a bilateral contract: C. two parties have exchanged promis-
A. a duty wil be performed by only es, and both parties are obligated to
one party perform
B. one party can restrict the perfor-
mance of another party In a bilateral contract, two parties have
C. two parties have exchanged exchanged promises and both parties
promises, and both parties are ob- are obligated to perform. (Bi=two way)
ligated to perform
D. all parties have fully performed
their duties
7. Gerald engages a licensee to list D. Special Agent
his property and find a buyer for
, Rockwell Exam Real Estate Classes WA Final Exam 1
it. In this context, the licensee is When a licensee represents a seller
acting as a: in a single transaction, and is autho-
A. General agent rized to perform typical duties associ-
B. power of attorney ated with listing a property, she acts as
C. property manager a special agent.
D. special agent
8. A licensee located what seems like B. No, because there was no ready,
a ready, willing, and able buyer. willing, and able buyer
However, the deal falls through at
closing because the buyer cant The most important rule of determining
obtain necessary financing. At the whether a seller is obligated to pay a
same time, though, a seller turns commission is whether a ready, will-
out to be unable to provide mar- ing, and able buyer was found dur-
ketable title. Does the seller still ing the listing period. This would take
owe a commission to the listing precedence over the seller's failure to
agent in this case? provide marketable title. A buyer who
A. No, because the sale didn't does not have financial ability to com-
close plete the purchase does not qualify as
B. No, because there was no ready, "able."
willing, and able buyer
C. Yes, because the licensee saw
the transaction through the clos-
ing date
D. Yes, because the seller has
an absolute duty to provide mar-
ketable title at closing
9. Legally, how much earnest money D. No earnest money is required
must be submitted with a valid pur-
chase and sale agreement? While almost all buyers will include an
A. 1% of the purchase price earnest money deposit along with the
B. 3% of the purchase price purchase and sale agreement, that is
C. 5% of the purchase price, but because of tradition. There is no con-
the amount over 3% cannot be re- tractual or legal requirement of a par-
tained as liquidated damages ticular amount, or any earnest money
D. No earnest money is required at all.
10.10.
, Rockwell Exam Real Estate Classes WA Final Exam 1
A mortgage often includes a D. Alienation clause (due-on-sale
clause requiring the lender's con- clause)
sent before another borrower may
assume the mortgage. This clause an Alienation clause prevents assump-
is called a/ an: tion without the lender's consent by
A. power of sale clause stipulating that the loan balance is due
B. subordination clause and payable in full if the property is
C. defeasance clause sold.
D. alienation clause (due-on-sale
clause)
11. A buyer is unfamiliar with the con- A. No, discount points are used to in-
cept of discount points and asks crease the yield for lenders who will
a licensee to explain. The licensee sell the loans on the secondary mar-
responds " Discount points are ket.
used to replace funds that are be-
ing held by the Federal Reserve, Discount points are paid to a lender in
so that more funds are available to order to increase the lender's upfront
lend." Is that description correct? yield on a loan. Typically, the lender
A. No, discount points are used to will compensate for this by charging a
increase yield for lenders who will below-market interest rate.
sell the loans on the secondary
market
B. No, discount points are used to
pay brokers' commissions
C. Yes, banks hold discount points
in escrow until sufficient funds
have been accumulated to make
more loans
D. Yes, discount points lower inter-
est rates, which make loans more
affordable for everyone
12. A small house is situated n a larger B. It will increase, in anticipation of the
lot in a mixed-use neighborhood. changing uses.
The city decides that the area will,
in the future, be zoned commer- Under the principle of anticipation, a
cial. What will most likely happen property's value is based on expecta-
to the property's value? tions of what will happen to the prop-
