Exam (elaborations)
CE SHOP REAL ESTATE PRINCIPLES PRACTICE TEST
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CE SHOP REAL ESTATE PRINCIPLES PRACTICE TEST
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CE SHOP REAL ESTATE PRINCIPLESPRACTICE TEST
Julie has received notice that the house she is renting was sold in foreclosure. She has
a month-to-month lease, so how long does she have until her lease may be terminated?
- Answer -90 days
Amy acts like a salesperson and is supervised by a broker, but she holds her broker's
license. What is her job title? - Answer -Associate broker
Which one of the following statements about investors and tax depreciation is true? -
Answer -Investors can depreciate an appreciating asset.
Which of these contract-specific requirements for a lease prohibits minors from entering
into a lease agreement? - Answer -Legal capacity
Trudy loved her new neighbors. The investor couple bought every available house on
Trudy's block and was working hard to renovate them and increase their value. Trudy
decided that she'd sit back, relax, and let her property's value go up, too, thanks to
______. - Answer -Progression
Sheila's financing calls for the use of a promissory note. What's a promissory note? -
Answer -The borrower's promise to repay a certain sum of money to another party (the
lender or holder of the note) under specified terms
Which of the following lease agreements should be accompanied by an agency
disclosure? - Answer -15-month lease
What does EER stand for with regard to air conditioners? - Answer -Energy efficiency
ratio
EER stands for energy efficiency ratio and is calculated by dividing the unit's British
thermal units (BTUs) by the electricity needed to power the unit. The higher a unit's
EER, the more energy efficient it is.
Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing
debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for
,the total DTI ratio. What's the maximum housing payment she can afford? - Answer -
$1,152
The maximum house payment is the lesser of the amounts calculated using both ratios.
DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 =
$1,176. Phoebe's maximum payment is $1,152.
This is a loss of money or anything of value, due to failure to perform. - Answer -
Forfeiture
A common forfeiture in a real estate transaction occurs when the buyer defaults on
terms and forfeits the earnest money.
Which type of analysis starts with a visit to the property, a search on the MLS, and a
comparison of comparable sales, and hopefully ends in a listing for a real estate
licensee? - Answer -Comparative market analysis
This describes a CMA. These don't always end in listings, however.
When a buyer breaches the real estate sale contract, the seller may file a lawsuit for
compensatory damages. Which of the following best describes compensatory
damages? - Answer -Compensation for actual loss based on the contract's value.
Compensatory damages compensate a party for actual loss based on the contract's
value.
How can a foreclosure process be temporarily stalled? - Answer -By filing for Chapter 7
bankruptcy
Hal and Sara own a 212-acre farm. Their property is landlocked, but they have
permitted water rights to use the stream located six miles away for irrigation purposes.
What kind of water rights do they hold? - Answer -Prior appropriation
The doctrine of prior appropriation grants water rights based on need, not adjacency.
Hal and Sara likely live in the western part of the U.S. where many states subscribe to
this doctrine.
First-time home buyers who've had a Roth IRA account for at least five years may
withdraw an amount that equal to the contributions they've made to use as a down
payment. After that, how much more can they withdraw to help with a home purchase
without penalty? - Answer -Up to $10,000
How long after a notice of cessation or completion is filed can a contractor file a
mechanics lien? - Answer -Within 60 days
,Which of these is true about the assessed value of real estate? - Answer -It's the value
used to calculate the property taxes, and it's based on a percentage of the market
value.
Assessed value of a property is a percentage of the market value, and it's used to
calculate the amount of property tax the owner will pay.
Which of the following is the best definition of a township? - Answer -A 36-square-mile
square formed when using the rectangular survey system
The Siegels are purchasing a commercial investment property and plan to use straight-
line depreciation on their financial statements and tax calculations. Which of the
following would NOT be included in the Siegels' depreciation basis calculations? -
Answer -The loan origination and lender fees that they paid at closing
* The depreciable basis is made up of the sales price plus any acquisition costs, such
as title insurance, and capital improvements. Loan costs aren't included in the basis, but
something like electrical system upgrades are capital improvements.
What is the danger of a seismic hazard area? - Answer -Landslides or liquefaction
* A seismic hazard area is designated as such because of the potential for landslides or
liquefaction resulting from earthquake activity
What is the starting point for any land surveyor who has been asked to perform a
survey? - Answer -A review of existing historical records
How many parties does a mortgage involve? - Answer -Two: borrower and lender
* A mortgage involves two parties: the borrower and the lender. A trustee is only used
with a deed of trust.
Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they
sign, Jim is identified only as "the neighbor." Which statute or contract element does this
violate? - Answer -The statute of frauds
* The statute of frauds requires not only that a contract to convey real property be in
writing, but also that the contract identify the parties to the contract.
Loans for ______ purposes don't require TILA disclosure. - Answer -Business
One of these parties is likely to be held liable for an injury resulting from the condition of
the premises. Who is it? - Answer -A residential landlord promises to repair the exposed
wiring in the laundry room, but forgets—until someone is electrocuted.
* Residential landlords are obligated to repair defects that are reported to them.
, Generally, there are covenants between the borrower and the lender within a mortgage
document. Which of the following is a mortgage covenant? - Answer -Pay any charges
and assessments against the property.
* Covenants usually include paying charges and assessments against the property,
maintaining both the property and hazard insurance, and keeping the property in good
condition.
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-
up work and the current economy, the property value has skyrocketed. They decide to
sell it to get their equity out of it. After they list it, a woman comes forward, saying she is
an heir to the previous owner and lays claim to the property. Which general warranty
deed covenant protects Colleen and Judy? - Answer -The covenant of warranty
* The covenant of warranty assures that the grantor will warrant and defend the title
against the lawful claims of others.
Real estate licensees who want to uphold the Fair Housing Act should make a habit out
of which of the following actions? - Answer -Tell potential clients in their initial meeting
that they are committed to upholding fair housing laws.
* Telling potential clients up front is the best way to avoid finding yourself in a situation
where someone expects you to discriminate on her behalf. Promoting diversity is
another part of promoting fair housing, and while you're free to share your protected
status if you have one, it's not actually relevant.
Which of these is a type of gap financing that's used temporarily until the consumer can
obtain permanent financing? - Answer -Bridge loan
* A bridge loan is a temporary (usually 90-day) loan that provides funds in addition to an
existing loan until permanent financing can be obtained. It's often used by buyers
who've not yet sold their prior property.
At what level of government are budgeting, site plan review, and building codes
controlled? - Answer -Local
* It would be cumbersome to exert local control and planning from a state or federal
level.
Which of the following statements is true about the listing presentation? - Answer -You
should go into the presentation fully prepared with a comparative market analysis, listing
agreement, MLS listings of comparable properties, and your plan for marketing the
sellers' property.
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