Real Estate Principles, Pilot Edition Quizzes

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1 Quiz 1 Chapters 1-4 Real Estate Principles, Pilot Edition Quizzes Instructions: Quizzes are open book. All answers are multiple choice. Answer key is located on page 20. Agency in real estate related transactions includes relationships between brokers and their: a. principals. b. agents. c. Both a. and b. d. A real estate broker is never an agent. An open listing only imposes standard of representation. a. a minimal efforts b. a best efforts c. a partial efforts d. There is no standard of representation in an open listing. A broker s agency can be created by either a written or agreement. a. oral c. coerced b. hold-harmless d. None of the above. The Agency Law Disclosure in one-to-four unit residential transactions must be attached to: a. purchase agreements. c. exchange arrangements. b. a seller s listing agreement. Should an agent fail to deliver the Agency Law Disclosure on a targeted transaction, he risks: a. payment of a $1,000 fine. c. jail time. b. the loss of his fee. The seller s signature is required on the Agency Law Disclosure to acknowledge the receipt of a copy: a. at the listing stage. c. Both a. and b. b. on presentation of a buyer s offer. d. Neither a. nor b. The agency relationship of brokers and their agents is required to be disclosed to all parties in a sale, called a: a. confirmation of agency. c. profit and loss statement. b. dual agency. d. balance sheet. The is an association of real estate licensees who agree to the pooling of listings and the sharing of fees. a. multiple listing service (MLS) c. state bar b. California Association of Realtors (CAR) d. Free Masons 1

2 Real Estate Principles, Pilot Edition A broker who fails to disclose his dual agency to a client at the moment it arises: a. has 90 days to disclose his dual agency. b. will lose his brokerage fee. c. incurs no liability for his client s money losses. d. will not be subjected to Department of Real Estate (DRE) disciplinary action. 10. The seller s broker has owed to all parties in the transaction, including the nonclient buyer, to disclose material facts about the listed property to all parties. a. a general nonfiduciary duty c. a general fiduciary duty b. a specific fiduciary duty d. no duty Quiz 2 Chapters 5-6 The California Legislature created the to oversee, regulate, administer and enforce the real estate law. a. Department of Consumer Affairs b. Department of Motor Vehicles c. Department of Real Estate (DRE) d. Department of Agriculture The chief officer of the Department of real estate (DRE) is the: a. Real Estate Commissioner. c. Governor of California. b. President of the United States d. Real Estate Solicitor. To be eligible for a broker or agent license, the applicant must: a. provide proof of legal presence in the U.S. b. complete the mandatory education. c. pass the qualifying exam. All real estate brokers and sales agents must complete at least of continuing education (CE) every four years to renew a license issued by the Department of Real Estate (DRE). a. 15-Hours c. 45-Hours b. 30-Hours d. 50-Hours A fictitious business name license, also known as a, will be granted to a broker who has complied with the filing requirements. a. MIA (missing in action) c. DOA (dead on arrival) b. DBA (doing business as) d. None of the above. A is the sale or lease of the operations and goodwill of an existing business enterprise or opportunity. a. business opportunity c. bulk sale b. business proposition d. short sale 2

3 The transfer of more than one-half the inventory of a business materials or goods to a person other than the business customers is called a: a. fire sale. c. strategic default. b. bulk sale. d. blockbuster. Mobilehomes have a unique legal status, being: a. real estate. c. Either a. and b. b. personal property. d. Neither a. nor b. The is available to individuals who have obtained a judgment against a licensee and are unable to recover the judgment from the licensee for losses caused while acting as an agent. a. Real Estate Recovery Fund c. Homeowner Relief Fund b. Broker Recovery Fund d. Borrower Education Fund 10. Mortgage loan brokers who make, arrange or receive fees for the origination of loans controlled by must become endorsed by the Department of Real Estate (DRE). a. the Truth-in-Lending Act (TILA) b. the Real Estate Settlement and Procedures Act (RESPA) c. the Real Estate Deputy d. None of the above. Quiz 3 Chapters 7-13 The Federal Fair Housing Act (FFHA) prohibits discrimination in the sale, rental and advertisement of: a. residential units. b. commercial properties. c. industrial properties. d. personal property. involves the restriction of a person seeking to buy or rent a dwelling in a community in a manner that perpetuates segregated housing patterns. a. Blockbusting c. Redlining b. Redeveloping d. Steering is the practice of a real estate agent who encourages homeowners to sell quickly by inducing fear that another race or class of people are moving into the neighborhood. a. Filibustering c. Blockbusting b. Gerrymandering d. Redlining California s Unruh Civil Rights Act specifically prohibits discrimination on behalf of: a. businesses. c. individuals. b. government institutions. d. educational institutions. 3

4 Real Estate Principles, Pilot Edition Failure to provide the disabled with access to a newly constructed residential property with four or more units is considered: a. unlawful discrimination. c. filibustering. b. good business practice. d. None of the above. Anti-discrimination law is enforced by the: a. Department of Fair Employment and Housing. b. Fair Employment and Housing Commission. c. Department of Housing and Urban Development (HUD). d. Both a. and b. The federal rules that restrict discriminatory practices amongst lenders were created by the: a. Unruh Civil Rights Act. b. Federal Fair Housing Act (FFHA). c. American with Disabilities Act (ADA). d. Equal Credit Opportunity Act. Failing to provide financing in certain communities is called: a. redlining. c. panic selling. b. redevelopment. d. subordination. The requires lenders to compile and submit their home loan origination data to their respective supervisory agencies. a. Equal Credit Opportunity Act b. Home Mortgage Disclosure Act (HMDA) c. Home Affordable Modification Plan (HAMP) d. Federal Fair Housing Act (FFHA) 10. A broker should refuse to use phrases that indicate a preference in advertising, such as: a. black home. c. Jewish home. b. adult building. Quiz 4 Chapters Funds belonging to others which a broker and his agents handle when acting in a transaction are called: a. assets. c. bonds. b. trust funds. d. security deposits. A broker must regularly account to an owner on the status, expenditure and location of negotiable trust funds, called a(n): a. balance sheet. c. owner s statement. b. deposit receipt. d. amortization schedule. 4

5 In California, real estate cannot be sold: a. contingent upon the buyer obtaining financing. b. to finance the purchase of a replacement property. c. as-is. d. as disclosed. When a seller s broker relays information from the seller to the prospective buyer, the seller s broker: a. is shielded from liability for the information he provides. b. is to inform the buyer of the source of the information to avoid personal liability. c. need not disclose the source of the information. d. A seller s broker is barred from passing on information provided by his client. Brokers owe a fiduciary duty to the client to use in a continuous effort to meet the objective of the employment. a. due diligence c. moderate caution b. minimal effort d. None of the above. All records of an agent s activities on behalf of a buyer or seller during the listing period must be retained by the agent s broker for: a. one year. c. three years. b. two years. d. four years. The methods for gathering adverse facts about the property s fundamental characteristics include: a. advising the seller on risk avoidance procedures. b. conducting a visual inspection of the property. c. responding to inquiries by the prospective buyer. A seller of a one-to-four unit residential property must complete and deliver to a prospective buyer a statutory form called a: a. Transfer Disclosure Statement (TDS). b. Condition of Property Disclosure Statement. c. Both a. and b. d. Neither a. nor b. If the Transfer Disclosure Statement (TDS) is delivered to the buyer after he enters into a purchase agreement, the buyer may cancel the purchase agreement under a statutory: a. two-day right to cancel. c. three-day right to cancel. b. put option. d. Right of First Refusal. 5

6 Real Estate Principles, Pilot Edition 10. Any individual who holds himself out as being in the business of preparing a home inspection report on a one-to-four unit residential property is referred to as a(n): a. appraiser. c. handyman. b. home inspector. d. subcontractor. Quiz 5 Chapters Locations where a property might be subject to natural hazards include: a. very high fire hazard severity zones. b. potential flooding and inundation areas. c. seismic hazard zones. To unify and streamline the disclosure by a seller and his agent about natural hazards affecting a property, the California legislature created a statutory form called the: a. Transfer Disclosure Statement (TDS). b. Natural Hazard Disclosure Statement (NHD). c. Conflict of Interest Disclosure. d. Settlement Statement. The use of a(n) to prepare a Natural Hazard Disclosure Statement (NHD) relieves the seller s agent of any liability for errors not known to the agent to exist. a. accountant c. natural hazard expert b. escrow officer Any flood zone designated with the letter is a special flood hazard area and must be disclosed on the Natural Hazards Disclosure Statement (NHD). a. A or V c. A, B or C b. X or Y d. Z or 8 The Natural Hazard Disclosure Statement (NHD) requires the seller s agent to disclose to a prospective buyer whether they have knowledge the property: a. has a roof greater than three years old. b. is located in a fault zone. c. is located in a area with a high crime rate. d. has a pool. A statement by a structural pest control (SPC) company indicating the property is free of infestation in the visible and accessible areas is referred to as a: a. Certificate of Completion. c. Pest Elimination Voucher. b. Certificate of Occupancy. d. Pest Control Certification. 6

7 Environmental hazards located off the property, but which have an adverse effect on the use of the property, include: a. industrial zoning in the neighborhood of the property. b. military ordnance sites within one mile of the property. c. airport influence areas established by local airport land commissions. If they exist, environmental hazards are a(n) requiring upfront disclosure by the seller s agent. a. material fact c. incurable breach b. selling point d. ancillary fact The federal lead-based paint (LBP) disclosure form is required on all residential construction. a. pre-1978 c. pre-1995 b. post-1978 d. post A real estate agent has no affirmative duty to voluntarily disclose information to a potential buyer regarding a prior occupant whose death occurred on the real estate more than years prior to the purchase offer. a. one c. three b. two Quiz 6 Chapters Ownership of a unit in a condominium project includes compulsory membership in: a. the local trade union. c. Facebook. b. the homeowners association (HOA). d. the board of directors. A conflict of interest exists when: a. an agent has a positive or negative bias toward an opposing party in a transaction. b. the agent s bias might compromise his due diligence efforts. c. Both a. and b. d. Neither a. nor b. A broker risks of his license should he fail to disclose a known conflict of interest to his client. a. revocation b. extension c. renewal d. A broker need not disclose conflicts of interest. 1

8 Real Estate Principles, Pilot Edition 10. A Department of Real Estate (DRE) licensee acting solely as a principal in a real estate transaction: a. need not disclose the existence of his license. b. must make a full disclosure of his status as a licensee. c. has created a conflict of interest. d. A DRE licensee cannot be a principal in a real estate transaction. The right of the government to take private property for public use is referred to as: a. theft. c. eminent domain. b. put option. d. None of the above. Real estate is characterized as: a. movable. c. Either a. or b. b. immovable. d. Neither a. nor b. The first component of real estate is land, which includes: a. soil. b. rocks. c. reasonable airspace above the earth. The right to remove minerals from another s real estate is called a(n): a. easement. c. security interest. b. profit a prendre. d. land grant. The intent to make an item a fixture can be determined by: a. duration of attachment. b. the age of the item. c. the manner of attachment, use and purpose of the item. d. the physical characteristics of the item, such as color. Real estate includes any incidental rights to the real estate which are not located on the real estate nor reflected on its title, called: a. appurtenant rights. c. real rights. b. leasehold interest. d. duty of care and maintenance. Quiz 7 Chapters A tenant holds a(n) in real estate for a fixed period of time. a. fee interest c. leasehold interest b. fee simple interest d. life estate interest In a, a landlord and tenant agree to successive rental periods of the same length, such as in a month-to-month tenancy. a. periodic tenancy c. tenancy-at-sufferance b. tenancy-at-will d. None of the above. 2

9 A(n) grants its holder a nonexclusive personal privilege to use property, but no right to occupy it to the exclusion of others. a. easement c. covenant b. license d. lease On expiration of a lease, a tenant who remains in possession of a property without an agreement or acceptance of rent by the landlord for the extended occupancy becomes a: a. holdover tenant. c. Both a. and b. b. tenant-at-sufferance. d. Neither a. nor b. The flexibility of a allows a landlord and tenant to terminate a month-tomonth tenancy by giving the appropriate notice to vacate to the other party. a. periodic tenancy c. tenancy at sufferance b. fixed-term tenancy d. tenancy at will Improvements that become part of the real estate include: a. built-ins. c. attached flooring. b. walls. On expiration of a lease, the passage of real estate fixtures from the tenant to landlord is a conveyance called: a. waste. c. sacrifice. b. tariff. d. reversion. A landlord may have to pay for the improvements made by a tenant if he does not post and record a(n): a. Notice of Nonresponsibility. c. unlawful detainer. b. Liability Waiver. refer to a landowner s incidental property right to withdraw water from an adjacent river for beneficial use on his riparian land. a. Appropriative rights c. Riparian rights b. Prescriptive rights d. Overlying rights 10. California established the to act as a referee for all disputes over water rights. a. Department of Real Estate (DRE) b. Department of Motor Vehicles (DMV) c. Federal Water Conservation Authority (FWCA) d. State Water Resources Control Board Quiz 8 Chapters A(n) is a written employment contract between a client and a licensed real estate broker. a. job application c. lease agreement b. listing agreement d. certificate of deposit 3

10 Real Estate Principles, Pilot Edition Agency duties carry with them the of loyalty and full disclosure owed by the broker (and his sales agents) to the client. a. fiduciary duties c. partial duties b. general duties d. subliminal duties Under a(n), a client can enter into listings with as many brokers as he wants without becoming obligated to pay more than one fee. a. exclusive agency listing c. open listing b. exclusive right-to-sell listing Under a(n), the broker does not earn a fee when the client, acting independently, accomplishes the objective of the employment himself. a. exclusive right-to-sell c. exclusive agency agreement b. exclusive right-to-buy d. None of the above. To best accomplish a level of financial certainty between a buyer s agent and the buyer, a buyer s agent must enter into a written employment agreement with a prospective buyer, called a: a. buyer s exclusive right-to-buy listing agreement. b. seller s listing agreement. c. fee sharing agreement. d. triple-net lease agreement. through the internet has sparked a relatively new approach agents are using to reach potential clients. a. Social networking c. cold calling b. Social engineering d. door knocking The primary document used to negotiate the transaction between a buyer and seller is a: a. listing agreement. c. purchase agreement. b. counteroffer. d. waiver. The of a property is the highest price on the date of valuation a willing seller and buyer would agree to, both having full knowledge of the property s various uses. a. fair market value c. replacement cost b. depreciation schedule d. None of the above. The third step in the appraisal process is applying the data collected using the appraisal method. a. capitalization approach c. comparative market approach b. cost approach d. Any of the above. 10. is a process employed to facilitate the closing of a transfer of real estate between two parties. a. Escrow c. Listing b. Appraisal d. Coercion 4

11 Quiz 9 Chapters An agreed boundary which remains in place for more than years is binding on subsequent owners even if the recorded legal description is different. a. two c. four b. three d. five Written or oral agreements on a boundary s location are called since they are not implied. a. void agreements c. uncertain agreements b. express agreements d. probable agreements The agreed-boundary doctrine can be used to: a. make a lot line adjustment. c. set a boundary. b. convey property. d. Both a. and b. The location of the common property lines might be represented by an improvement which acts as a demarcation of the property line, called a: a. spite fence. c. implied boundary. b. common boundary improvement. d. None of the above. A(n) is an interference with another s possession of real estate. a. nuisance c. encroachment b. trespass A is any wrongful and unauthorized entry onto real estate in the possession of another. a. trespass c. transient possession b. forcible detainer d. right of way Examples of trespass resulting from indirect entry include: a. depositing dirt or debris on another s property. b. diverting a river or surface waters across another s property. c. leaving toxic waste on another s property. A nuisance is anything which: a. is injurious to health. c. obstructs the use of property. b. is offensive to the senses. The illegal sale of a controlled substance is considered a(n): a. nuisance per se. c. unlawful detainer. b. trespass. d. Both a. and b. A is a nuisance which affects an entire segment of the population. a. private nuisance c. public nuisance b. continuing nuisance d. temporary nuisance 5

12 Real Estate Principles, Pilot Edition Quiz 10 Chapters The property which benefits from an easement is referred to as the: a. servient tenement. c. dominant tenement. b. diminutive tenement. A(n) belongs to an individual and is his personal right. a. easement in gross c. easement running with the land b. appurtenant easement d. encroachment easements restrict an owner s ability to maintain or construct any improvements which interfere with a neighbor s solar energy system. a. Light c. View b. Air d. Solar If a property is landlocked, the owner of the property may be able to acquire a(n): a. easement by necessity. c. easement by grant. b. partial easement. d. prescriptive easement. An easement is terminated by if the easement holder places an excessive burden on the property encumbered by the easement. a. abandonment c. forfeiture b. merger d. prescription A(n) is a recorded restriction which requires a property to be used for a specific purpose. a. negative covenant b. Declaration of Covenants, Conditions and Restrictions (CC&Rs) c. covenant which does not run with the land d. affirmative covenant A valid deed must: a. be in writing and identify the grantor and the grantee. b. contain a granting clause and describe the real estate involved. c. be signed by the grantor and accepted by the grantee. An executed oral agreement for the transfer of real estate ownership will be enforced under the doctrine of: a. specific performance. c. Both a. and b. b. estoppel. d. Neither a. nor b. To establish title by adverse possession, an occupant must show: a. his occupancy is inconsistent and hostile with the owner s title. b. his possession is based on a claim of right or color of title. c. he has paid all taxes previously unpaid and assessed against the property during his occupancy. 6

13 10. At the time of signing the deed, a capable grantor must: a. possess his civil rights. b. be of sound mind. c. be an adult at least 18 years of age. Quiz 11 Chapters For delivery of a deed to occur, the grantor must and the grantee must. a. intend to convey title; accept the deed as immediately effective b. physically hand the deed to the grantee; record the deed with the county c. place the deed in the mail; plan to accept the deed on certain conditions d. intend to convey partial title; record the deed with the county While not containing the word grant, most quitclaim deeds out of custom use the word(s): a. release. c. quitclaim. b. remise. A(n) is a written statement which presents an accurate, factual representation of title to the property being acquired, encumbered or leased. a. preliminary title report c. abstract of title b. property profile d. None of the above. Title insurance is the means by which a title insurance company a person who acquires an interest in real estate against a monetary loss caused by an encumbrance on title. a. holds harmless c. indemnifies b. reimburses Most losses due to the reduction in the value of real estate below the title insurance policy limits arise out of an encumbrance on title, including: a. restrictions on use. c. pendency of condemnation. b. easements. title insurance policies insure both the record title and observable on-site activities which affect title. a. California Land Title Association (CLTA) c. Both a. and b. b. American Land Title Association (ALTA) d. None of the above. After incurring a loss or damage, the insured must provide the title company with a proofof-loss statement within days. a. 15 c. 90 b. 30 d. 120 All property acquired jointly by a married couple during the marriage, no matter how vested, is presumed to be: a. community property. c. public property. b. separate property. d. None of the above. 7

14 Real Estate Principles, Pilot Edition Lis pendens means: a. Notice of Pending Action. c. Both a. and b. b. Notice of Litigation. d. Neither a. nor b. 10. is an example of a lawsuit affecting title or possession of real estate. a. Judicial foreclosure of a trust deed lien by a lender b. Termination or establishment of an easement between neighboring property owners c. Divorce proceedings involving real estate Quiz 12 Chapters A(n) is the dollar amount of the equity in a homeowner s dwelling that the homeowner qualifies to hold which has priority on title over most judgment liens and some government liens. a. overriding lien c. interest deduction b. homestead A homeowner qualifies for the homestead exemption as the head of a household by providing support for a spouse, dependent children or in-laws. a. $75,000 c. $150,000 b. $100,000 d. $175,000 A(n) determines the priorities of the creditor s lien and the recorded homestead on title. a. escrow account c. eminent domain action b. quiet title action d. declaration of homestead Notes are categorized by the method for repayment of the debt, such as: a. straight notes. c. Both a. and b. b. installment notes. d. Neither a. nor b. Under a(n), no periodic payments of principal are scheduled; the entire amount of principal is paid in one lump sum. a. adjustable rate note (ARM) c. installment note b. all-inclusive trust deed note (AITD) d. straight note call for periodic adjustments to the interest rate, the amount of scheduled payments and the principal amount (when a negative amortization is involved). a. All-inclusive trust deeds (AITDs) b. Adjustable rate notes (ARMs) c. Fixed-rate notes (FRMs) 8

15 Graduated payment (GPM) provisions are in great demand when interest rates or home prices: a. rise quickly. b. decrease quickly. c. decrease slowly. d. stay constant. California s usury law limits the interest rate on non-exempt real estate loans to the greater of 10% or the discount rate charged by the Federal Reserve Bank of San Francisco, plus: a. 5% c. 20% b. 10% d. 25% In periods when short-term interest rates have peaked or are in decline, it is often advantageous for buyers to finance purchases by using a(n): a. fixed rate mortgage (FRM). c. stolen funds. b. adjustable rate mortgage (ARM). d. None of the above. 10. An owner of real estate who wants to pay off principal on a debt before it is due may be levied an additional charge by the lender, called a(n): a. grace period. c. prepayment penalty. b. balloon payment. d. late fee. Quiz 13 Chapters A complete late charge provision must include: a. the span of any grace period following the due date before a payment becomes delinquent. b. the amount of the late charge. c. a requirement for notice from the trust deed holder to impose the late charge and make a demand for its payment. The reasonable amount of monetary losses collectible as a late charge include: a. the lost use of the principal and interest portion of the delinquent payment. b. the actual out-of-pocket expenses incurred in a reasonable collection effort. c. Both a. and b. d. Neither a. nor b. The late charge amount on a private lender loan which is not made or arranged by a broker and is secured by an owner-occupied single family residence (SFR) is limited to of the delinquent principal and interest installment. a. 6% c. 8% b. 7% d. 9% 9

16 Real Estate Principles, Pilot Edition A(n) is any final payment on a note which is an amount greater than twice the amount of any one of the six regularly scheduled preceding payments. a. late charge c. usury limit b. balloon payment Notice of a final/balloon payment must be given to the buyer or current owner before its due date. a. 30 days c. 90 days b. 60 days d. None of the above. The is the preferential method used to impose a lien on real estate. a. promissory note c. due-on clause b. trust deed d. Notice of Nonresponsibility The is the person entitled to the performance of the promised activity referenced in the trust deed, usually the repayment of debt evidenced by a note. a. borrower c. beneficiary b. trustor d. common agent Removing the trust deed from the title to the property on ending the debt relationship between the owner and the creditor is accomplished by: a. foreclosure by issuance of a trustee s deed. b. full repayment by reconveyance. c. mutual agreement by a deed-in-lieu of foreclosure. The occurrence of an event which triggers due-on enforcement automatically allows the lender to call the loan, also known as: a. waiver by consent. c. recasting. b. acceleration. d. subordination. 10. The due-on clause is triggered not only by a transfer using a standard grant deed, but by any conveyance of equitable ownership of real estate, such as a(n): a. land sales contract. c. all-inclusive trust deed (AITD). b. lease option sale. Quiz 14 Chapters On the sale of a parcel of real estate, existing financing encumbering the property may be taken over by a buyer under a: a. formal assumption between the lender and the buyer. b. subject-to assumption between the seller and the buyer. c. a subject-to transfer of ownership without an assumption agreement of any type. 10

17 A seller is not liable for a deficiency on the foreclosure of a(n) since it is a nonrecourse debt. a. purchase-money debt b. home equity line of credit c. cash-out refinance When the lender enters into an agreement with both the buyer and seller for the buyer s assumption of the loan and a release of the seller s liability, this is known as a: a. substitution of liability. c. Both a. and b. b. novation. d. Neither a. nor b. involves the seller carrying back a note for the unpaid portion of the price remaining after deducting the down payment and the amount of the loan the buyer is assuming. a. Seller financing c. A credit sale b. An installment sale The tax impact a carryback seller will receive on his carryback financing is category income, regardless of whether the property sold was in another income category. a. portfolio c. earned b. passive d. None of the above. A buyer can obtain a conventional loan from: a. portfolio lenders. c. warehousing lenders. b. institutional lenders. Portions of the loan application will need to be verified by the lender with supplemental documents, such as: a. recent bank statements. b. an appraisal report to establish the value of the property serving as security. c. a credit report to establish the buyer s liabilities and propensity to repay the loan. The prepared by the buyer supplies the lender with necessary information about the buyer and the property securing the loan and triggers the loan packaging process. a. listing agreement b. escrow instructions c. Uniform Residential Loan Application d. appraisal report 11

18 Real Estate Principles, Pilot Edition A Real Estate Settlement Procedures Act (RESPA)-controlled lender must provide a buyer with: a. a good faith estimate of all loan related charges. b. Department of Housing and Urban Development (HUD) published Special Information Booklet. c. HUD-1 or HUD-1A Closing Statement. 10. A buyer s is his ability to make loan payments, as evaluated by his debt-toincome ratio. a. willingness b. capacity c. loan-to-value ratio (LTV) d. None of the above. Quiz 15 Chapters The insures loans with high loan-to-value ratios (LTV) that are made with less demanding cash down payment requirements than loans originated by conventional lenders. a. Federal Housing Administration (FHA) c. MGIC Investment Corp. b. Truth-in-Lending Act d. None of the above. The most commonly used Federal Housing Administration (FHA) Owner-occupied, Oneto-Four Family Home Mortgage Insurance Program is the: a. Section 22 c. Section 203(b). b. Section 223(e). d. Section 25 The minimum down payment requirement of a Federal Housing Administration (FHA) loan is: a. 5% c. 4% b. 5% d. 5% Some lenders and private mortgage insurance (PMI) carriers offer a program in which the lender pays the mortgage insurance premium. a. Guaranteed Payment Mortgage Plan (GPMP) b. Lender-Assist Mortgage Insurance (LAMI) c. Lender-Paid Mortgage Insurance (LPMI) d. Premium-Paid Mortgage Insurance (PPMI) To qualify for private mortgage insurance (PMI), a buyer must: a. be a natural person, not a corporation, partnership or limited liability company. b. take title as the vested owner of the property. c. Both a. and b. d. Neither a. nor b. 12

19 10. A buyer will be required to submit for review by a private mortgage insurer. a. a copy of the loan application b. a credit report current within 90 days and covering a minimum of two years c. an appraisal of the real estate to be purchased The amount of interest a private, non-exempt lender can charge is regulated by statute and the California Constitution, collectively called: a. usury laws. c. private mortgage insurance. b. Fair Housing Laws. d. loan sharking. The most common penalty suffered by a non-exempt private lender in violation of usury laws is: a. a five year jail sentence. b. the forfeiture of all interest for the loan. c. the forfeiture of all principal remaining due. d. a $100,000 fine. Anti-deficiency non-recourse rules no longer apply to carryback debt when the debt becomes secured by real estate other than the real estate sold, called: a. exhaustion of the security. c. substitution of the security. b. elimination of the security. d. None of the above. A letter of credit is unenforceable if: a. it is issued to a trust deed beneficiary to cover a future default on the obligation. b. the obligation is secured by a purchase money trust deed on owner-occupied, one-tofour unit residential property. c. Both a. and b. d. Neither a. nor b. Quiz 16 Chapters The authorizes the beneficiary to instruct the trustee appointed under the trust deed to initiate a non-judicial trustee s foreclosure to sell a property. a. right of redemption c. power-of-sale provision b. right of reinstatement d. put option. An owner can by paying all sums due under the note and trust deed and reimbursing the lender s costs of foreclosure, prior to completion of the trustee s sale. a. redeem property in foreclosure c. initiate foreclosure b. subordinate the lender s interest d. None of the above. When an owner s activities cause waste to a property which decrease the value of the lender s security, this is referred to as: a. impairment. c. due-on enforcement. b. acceleration. d. None of the above. 13

20 Real Estate Principles, Pilot Edition 10. A trust deed holder can foreclose on a property which serves as the security for a note, by: a. judicial foreclosure under mortgage law. b. nonjudicial foreclosure under the power-of-sale provision in the trust deed. c. Both a. and b. d. Neither a. nor b. Lienholders or buyers who acquire an owner s interest in a property by deed prior to a judicial foreclosure sale are called: a. successors-in-interest. c. owners by default. b. highest bidders. d. equitable owners. A deficiency judgment is awarded to a lender based on the unencumbered full cash value of the secured property, a value which is set consistent with current market conditions on the date of the foreclosure sale, referred to as: a. fair market value (FMV). c. fair rental amount. b. fair value hearing. d. None of the above. Within after recording the Notice of Default (NOD), the trustee is required to send a copy of the NOD by registered or certified mail to holders of a recorded interest in the secured property. a. one week c. one year b. one month d. two years At least the date selected by a trustee to hold a trustee s sale, the trustee must send two copies of the notice of trustee s sale (NOTS) to each party the trustee previously sent a notice of default (NOD). a. 20 calendar days before c. three months before b. 6 business days before d. 30 calendar days before Each bid made at a trustee s sale is a(n) to purchase the property. However, any subsequent bid cancels a prior bid. a. irrevocable offer; higher b. irrevocable offer; lower c. revocable offer; higher d. revocable offer; lower A trustee s sale is considered final and complete: a. when a beneficiary makes a bid. b. when the trustee hands the highest bidder a trustee s deed. c. on the trustee s acceptance of the last and highest bid. d. when the lender signs the certificate of sale. 14

21 Quiz 17 Chapters If the interest qualifies as a(n) from income, interest which has accrued and been paid on a loan can be written off. a. deduction c. Either a. or b. b. expense d. Neither a. nor b. Points paid to a lender to originate a loan are considered: a. prepaid interest. c. impound payments. b. nominal interest. Loan costs incurred by a lender and paid by an owner on any type of real estate to originate a purchase or improvement loan are by the owner. a. deducted c. expensed b. capitalized d. none of these To qualify home improvement loans for interest deductions, the new improvements must be substantial. Improvements are substantial if they: a. add to the property s market value. b. prolong the property s useful life. c. adapt the property to residential use. Interest paid on any portion of a loan balance which exceeds the fair market value (FMV) of a residence: a. is deductible. c. is not deductible. b. can be applied to satisfy a debt. d. None of the above. Numerous advantages are available to sellers of who couple the sale with the purchase of a replacement property. a like-kind properties c divergent homes b similar properties d. None of the above. Tenant negotiations that can be performed by unlicensed agents on behalf of a broker who has been retained to manage an apartment building include: a. accepting signed lease and rental agreements from tenants. b. showing rental units and facilities to prospective tenants. c. accepting rents and security deposits. An oral fee agreement between a broker and client is unenforceable unless there is a writing referencing the fee agreement which is signed by the: a. notary. c. leasing agent. b. client. d. user. 15

22 Real Estate Principles, Pilot Edition A(n) sets the leasing agent in competition with the owner and other brokers to be the first to locate a tenant and become entitled to collect a fee. a. open listing c. exclusive authorization to sell b. safety clause d. right-to-collect clause 10. A(n) clause protects the broker should the owner cancel the employment without cause and remove the property from the rental market before the listing expires. a. right-to-collect c. exclusive agency b. termination-of-agency d. safety Quiz 18 Chapters A(n) runs for an indefinite period of time since it automatically renews monthly, and on the same terms, until modified or terminated by notice. a. fixed-term lease c. tenancy-at-sufferance b. month-to-month rental agreement d. None of the above. A lease terminates at the end of its fixed term without further notice by either the landlord or the tenant, called: a. renewal of the lease. c. expiration of the lease. b. redemption of the lease. d. early termination. To avoid disputes over who is responsible for any damage to the premises, the residential landlord and tenant should complete and sign a(n) before the tenant is given possession. a. Notice of Nonresponsibility c. right of first refusal b. open listing d. condition of premises addendum A lease agreement conveying a term of occupancy exceeding must be written to be enforceable, a requirement of the statute of frauds. a. six months c. one year b. ninety days d. None of the above. A(n) provision assures application of California rules of law should a dispute arise with a tenant regarding the lease. a. attorney fee c. choice-of-law b. heirs, assigns and successors d. None of the above. The maximum advance payment that can be charged for a tenant with a pet in an unfurnished residential unit is equal to: a. two months rent. c. three months rent. b. the first and last months rent. d. four months rent. If no repairs are made, the residential landlord must refund the security deposit, less reasonable deductions, within days after a tenant vacates. a. 7 c. 21 b. 10 d

23 Tenant screening fees are limited to: a. the out-of-pocket cost for gathering the information. b. the cost of the landlord s time spent obtaining the information and processing an application to rent. c. Both a. and b. d. Neither a. nor b. When one month s rent is collected in advance from a residential tenant, the security deposit is limited to an amount equal to: a. two months rent for a furnished unit. b. three months rent for a furnished unit. c. Both a. and b. d. Neither a. nor b. 10. A landlord under a month-to-month rental agreement can increase the rent or shift repair and maintenance obligations to the tenant by serving a(n): a. unlawful detainer (UD) action. b. 60-Day Notice to Pay Rent or Quit. c. 30-Day Notice of Change in Rental Terms. d. 30-Day Notice to Vacate. Quiz 19 Chapters When a tenant does not timely pay rent, the landlord may serve the tenant with a written notice demanding the tenant pay all amounts due or vacate the premises, called a: a. 30-Day Notice to Vacate. b. 3-Day Notice to Pay Rent or Quit. c. 3-Day Notice of Change in Rental Terms. d. None of the above. A tenant who commits a(n) is served with a 3-Day Notice to Quit. a. minor breach c. nonmonetary breach b. incurable breach d. statutory breach A(n) is a set time period following the due date during which rent may be paid without incurring a late charge. a. grace period c. pre-termination inspection b. security deposit d. non-smoking addendum The 3-Day Notice to Perform or Quit requires the tenant to: a. perform under the breached lease provision. b. vacate the premises. c. Either a. or b. d. Neither a. nor b. 17

24 Real Estate Principles, Pilot Edition Before an unlawful use of a property justifies service of a notice to quit, the use must: a. impair the landlord s continued receipt of rent. b. threaten the physical safety of the property. c. stigmatize the premises. Waste occurs when a tenant: a. vacates and quits the premises. b. neglects the premises and impairs its value by failing to maintain it as agreed. c. subleases the premises to a subtenant without the landlord s consent. It a tenant has resided in residential property for one year or more, the landlord is required to give the residential tenant a: a. 30-day Notice to Vacate c. 90-day Notice to Vacate b. 60-day Notice to Vacate d. None of the above. A landlord breaches the when he fails to comply with building and housing code standards that materially affect health and safety. a. implied warranty of habitability c. implied duty of fair dealing b. unspoken gentlemen s agreement d. None of the above. A residential dwelling is uninhabitable if it is not properly maintained or does not substantially comply with building codes, including: a. heating facilities. c. plumbing and gas facilities. b. electrical lighting. 10. When criminal activity is due to known prior criminal activity, the landlord has a duty to take reasonable measures to prevent harm to persons on the property from future similar criminal activities. a. remotely possible c. reasonably foreseeable b. absolutely impossible d. unlikely Quiz 20 Chapters Construction of residential and nonresidential buildings is primarily regulated by the state of California through: a. conditions, covenants and restrictions (CC&Rs). b. building codes. c. the Department of Real Estate (DRE) d. the Department of Motor Vehicles (DMV) A(n) is anyone who offers or agrees to construct, alter, repair, improve or demolish any building, road, project, development or improvement. a. appraiser c. real estate agent b. escrow officer d. contractor 18

25 The placement of a house upon the lot is referred to as its: a. preference. c. orientation. b. zoning classification. d. location. The federal assigns a rating to each home determined by an energy specialist called a Home Energy Rater. a. Home Energy Score c. Both a. and b. b. mortgage insurance premium d. Neither a. nor b. The establishes the conditions for approval of a subdivision map, and provides the planning commission the authority to regulate the design and physical improvements to be installed in a common interest development (CID). a. Subdivided Lands Act c. local surveyor b. Subdivision Map Act d. general contractor Contractors and subcontractors have a constitutionally protected right to file a(n) against property they have improved should they not be paid for labor and materials. a. lis pendens c. unlawful detainer b. Notice of Nonresponsibility d. mechanic s lien After completion of construction, a(n) is to be recorded within 15 days. a. Notice of Completion c. conditional notice of cessation b. Notice of Nonresponsibility d. None of the above. A landlord who has actual knowledge a tenant is making improvements must record and post a(n) to avoid the attachment of the mechanic s lien to the fee interest held by the landlord. a. Notice of Nonresponsibility c. contractor s lien b. Notice to Vacate Demand for all types of real estate: a. falls as the number of local jobs increases. b. rises as the number of local jobs increases. c. rises as the number of local jobs decreases. d. None of the above. 10. Few would question the severity of the Great Recession, which officially started December 2007 and ended: a. August 200 c. August 200 b. July 201 d. July

26 Real Estate Principles, Pilot Edition Answer References For Print Version The following are the answers to the quizzes for Real Estate Principles, Pilot Edition and the page numbers in the printed material where they are located. Quiz 1 C 4 B 4 A 5 D 12 B 13 C 13 A 15 A 19 B A 24 Quiz 2 C 26 A 26 D 28 C 35 B 41 A 42 B 43 C 43 A B 44 Quiz 3 A 58 D 60 C 60 A 63 A 64 D 70 D 73 A 76 B D 84 Quiz 4 B 89 C 92 C 98 B 100 A 103 C 106 D 108 C 113 C B 120 Quiz 5 D 126 B 126 C 130 A 133 B 135 D 139 D 144 A 144 A C 153 Quiz 6 B 155 C 162 A 163 A 166 C 173 B 176 D 177 B 178 C A 182 Quiz 7 C 186 A 187 B 188 C 192 A 193 D 198 D 201 A 201 C D 206 Quiz 8 B 209 A 210 C 212 C 213 A 219 A 223 C 225 A 232 D A 241 Quiz 9 D 253 B 253 C 255 B 257 D 260 A 265 D 266 D 269 A C 272 Quiz 10 C 275 A 276 D 277 A 281 C 283 D 285 D 292 C 292 D D 294 Quiz 11 A 299 D 305 C 310 D 312 D 312 B 314 C 323 A 329 C D 336 Quiz 12 B 339 B 341 B 346 C 350 D 352 B 352 A 352 A 354 B C 361 Quiz 13 D 368 C 368 A 371 B 375 C 376 B 379 C 383 D 384 B D 391 Quiz 14 D 395 A 397 C 400 D 401 A 402 D 408 D 412 C 415 D B 426 Quiz 15 A 429 C 430 B 432 C 440 C 443 D 444 A 445 B 449 C C

27 Answer References Continued For Print Version The following are the answers to the quizzes for Real Estate Principles, Pilot Edition and the page numbers in the printed material where they are located. Quiz 16 C 459 A 462 A 465 C 468 A 472 A 473 B 482 A 486 A C 487 Quiz 17 C 491 A 494 B 495 D 498 C 499 A 501 D 506 B 510 A B 512 Quiz 18 B 518 C 518 D 521 C 526 C 534 C 541 C 545 C 550 B C 553 Quiz 19 B 559 B 560 A 561 C 564 D 568 B 569 B 573 A 580 D C 586 Quiz 20 B 591 D 592 C 595 A 596 B 600 D 603 A 606 A 608 B C