California Real Estate UPDATED Exam
Questions and CORRECT Answers
Abandonment - CORRECT ANSWER- Giving up possession or ownership of property by
nonuse, usually accompanied by some affirmative act, such as removing one's belongings
from apartment
ingress and egress (right of) - CORRECT ANSWER- The permission to enter upon and exit
from property. A form of easement. Often related to Streams
Abstract of Judgement - CORRECT ANSWER- Document stipulating the outcome of a legal
action, which can be filed in any county where the judgement debtor has property.
Abstract of Title - CORRECT ANSWER- A summary or digest of all recorded transfers,
conveyances, legal proceedings, and any other facts relied on as evidence of title to show
continuity of ownership and indicate any possible impairments to title
Acceleration Clause - CORRECT ANSWER- A provision in a real estate financing
instrument that allows the lender to declare the remaining indebtedness due and payable on
the happening of certain conditions, such as the sale of the property or the borrower's default
in payment
Acceptance - CORRECT ANSWER- Indication by the person to whom an offer is made (the
offeree) of agreement to the terms of the offer. If the offer requires a writing, the acceptance
must also be in writing.
Accession - CORRECT ANSWER- The process of manufactured or natural improvement or
addition to property.
Accounting - CORRECT ANSWER- The obligation to account for all money or property
belonging to the principal
Accretion - CORRECT ANSWER- Accession by natural forces, e.g., alluvium.
,Acknowledgement - CORRECT ANSWER- A formal declaration made before an authorized
person by a person who has executed a written instrument, stating that the execution of the
instrument is the person's own act
Acquisition Cost - CORRECT ANSWER- For FHA-insured loans, the price to procure
property, including purchase price and all nonrecurring closing costs, including discount
points, FHA application fee, service charge and credit report, FHA appraisal, escrow,
document preparation, title insurance, termite inspection, reconveyance, and recording fees
Acre - CORRECT ANSWER- A measure of land equal to 43,560 square feet, 160 Rods,
4,840 Square yards, or a tract about 208.71 feet square
Action for Declaratory Relief - CORRECT ANSWER- Legal proceeding brought to
determine the respective rights of the parties before a controversy arises
Action to a Quiet Title - CORRECT ANSWER- A court proceeding brought to establish title
to real property
Actual Age - CORRECT ANSWER- The number of years since completion of a building;
also called historical or chronological age
Actual Authority - CORRECT ANSWER- The authority an agent has because it is specified
in the agency agreement, or that the agent believes he or she has because of an unintentional
or a careless act of principal
Actual Fraud - CORRECT ANSWER- A deliberate misrepresentation or a representation
made in reckless disregard of its truth or falsity; the suppression of truth; a promise made
without the intention to perform it; or any other act intended to deceive.
Adjustable Rate Mortgage (ARM) - CORRECT ANSWER- Finance instrument whose
interest rate will vary according to the change in an identified index or rate, such as the 11th
District Cost of Funds.
Adjustable Rate Note - CORRECT ANSWER- Promissory note that serves as evidence of a
debt that carries an interest rate that will vary according to the change in an identified index
or rate, such as the 11th District Cost of Funds.
,Adjusted Cost Basis - CORRECT ANSWER- Purchase price of property plus cost of
specified improvements, less any depreciation deductions taken on the property
Adjusted Gross Income - CORRECT ANSWER- Income from all sources less deductions for
taxes, depreciation, and other allowable deductions
Administrator - CORRECT ANSWER- The personal representative of the estate appointed by
the probate court.
Ad Valorem - CORRECT ANSWER- A Latin phrase meaning "according to value"; used to
describe a tax charged in relation to the value of the property taxed
Adverse Possession - CORRECT ANSWER- A method of acquiring original title to property
by occupying the property against the interest of the true owner and fulfilling other statutory
requirements
Affirmative Fraud - CORRECT ANSWER- A deliberate statement of a material fact that the
speaker knows to be false and on which the speaker intends another person to rely to his or
her detriment.
After acquired title - CORRECT ANSWER- If title is acquired by a grantor only after a
conveyance to a grantee, the deed to the grantee becomes effective at the time the grantor
actually receives title.
Agency - CORRECT ANSWER- The relationship between a principal and an agent of the
principal that arises out of a contract, whether express or implied, written or oral, by which
the agent is employed by the principal to do certain acts dealing with a third party
Agency Confirmation Form - CORRECT ANSWER- Written statement required for a
residential transaction involving property of one to four residential units, in the wording
required by the California Civil Code, and signed by the property seller as well as the listing
agent and selling agent (if different from the listing agent), that indicates the seller's
understanding of the relationship of the seller to the listing and selling in the transaction.
, Agency Disclosure Form - CORRECT ANSWER- Written statement required for a
residential transaction involving property of one to four residential units, using the wording
required by the California Civil Code, and signed by both buyer and seller in a transaction,
that explains the various relationships of those involved in a residential property sale
Agent - CORRECT ANSWER- One who acts for and with authority from another person,
called the principal: a special agent is appointed to carry out a particular act or transaction,
and any other agent is a general agent
Air Rights - CORRECT ANSWER- The real property right to the reasonable use of the
airspace above the surface of the land
Alienation - CORRECT ANSWER- The transferring of property to another; an involuntary
transfer of title
Alluvion - CORRECT ANSWER- Alluvium; the increase of soil along the bank of a body of
water by natural forces.
Amortized Loan - CORRECT ANSWER- The payment of a financial obligation in
installments; recovery over a period of time of cost or value. A loan has negative amortization
when the loan payments do not cover all of the interest due, which then is added to the
remaining loan balance.
Anchor Bolts - CORRECT ANSWER- Bolts that fasten the sill plate of a wood-frame house
to the house's foundation, required in California since 1931 for all new construction as an
earthquake safety measure.
Annual Percentage Rate (APR) - CORRECT ANSWER- The relative cost of credit as
determined in accordance with Regulation Z of the Board of Governors of the Federal
Reserve System for implementing the Federal Truth in Lending Act.
Anticipation, Principle of - CORRECT ANSWER- Expectation that property will offer future
benefits, which tends to increase present value
Apparent Authority - CORRECT ANSWER- Authority to act as an agent that someone
appears to have but does not actually have, which will place no obligation on the party the
agent claims to represent if that party is in no way responsible for the representation.
