©THEBRIGHT EXAM STUDY SOLUTIONS 8/26/2024 11:32 AM
CE SHOP REAL ESTATE PRINCIPLES
PRACTICE TEST Questions And Correct
Answers
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.
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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
, ©THEBRIGHT EXAM STUDY SOLUTIONS 8/26/2024 11:32 AM
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.
, ©THEBRIGHT EXAM STUDY SOLUTIONS 8/26/2024 11:32 AM
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
