Welcome! We have prepared for you 100 real estate questions that will help you study and prepare for your real estate exam. Please like this video and let's get started. Question 1. What is the status of a contract when all the terms have been fulfilled and the transaction has been closed? A. Fully executed B. Terminated C. Voidable D. Unenforceable The correct answer is... A. Fully executed When all the terms of a contract have been fulfilled and the transaction has been closed, the contract is considered to be fully executed. This means that both parties have performed their obligations under the contract and there are no further actions required. At this point, the contract has been completely executed and both parties are typically released from any further obligations under the agreement. Question 2. When an easement allows the use of a neighboring property which automatically transfers upon the sale of either dominant or servient property, it is called what type of easement? A. Easement by prescription B. Easement appurtenant C. Easement in gross D. Easement of utility The correct answer is B. Easement appurtenant. Appertinent means runs with the land. An easement appertinent is an easement allowing the use of a neighboring property which automatically transfers upon the sale of either dominant or servient property. Question 3. Linda purchased a fee simple interest for the private use of a residential property for one week every single year. What did Linda purchase? A. Shares in a cooperative building. B. A condominium. C. Common elements. D. Resort timeshare. The correct answer is D. Resort timeshare. Vacation timeshare resorts sell a fee-simple form of ownership to a buyer for the private and exclusive use of a unit for one week a year. There is title work at closing and the buyer is conveyed a deed. Question four. There are various ways to take ownership of real property. Which type of ownership includes the right of survivorship? A. Joint tenancy B. Tenants in common C. Tenancy by entirety D. Tenants in severalty The correct answer is... A. Joint tenancy Right of survivorship is a feature of joint tenancy. Upon the death of a joint tenant, their interest in the property passes on to the remaining joint tenants. Question 5. Surface rights, air rights, and subsurface rights are all rights that can be sold by a property owner while still retaining the property itself. These rights are known as A. Severable rights B. Literal rights C. Owner's rights D. Repairian rights The correct answer is A. Severable rights Surface rights, air rights, and subsurface rights can be sold separately and are called severable rights. Question 6. What is the highest form of land ownership which includes the full and complete bundle of property rights? A. Fee simple defeasible. B. Fee simple determinable. C. Fee simple condition subsequent. D. Fee simple absolute. The correct answer is... D, fee simple absolute. Fee simple absolute freehold estate is the highest level of property ownership, giving the owners the right of possession, control, exclusion, enjoyment, and disposition. Question 7. What type of ownership would allow two or more owners to have various unequal percentages of ownership? A, joint tenancy with rights of survivorship. B, joint tenancy. C, tenancy in common. D, tenancy in severalty. The correct answer is C, tenancy in common. Tenancy in common grants owners to have an equal, undivided interest in a property, but also allows for owners to have varying percentages of unequal ownership as well. Question 8. Tenancy in severalty is best described as A, two property owners. B, one property owner. C. More than two property owners. D. Property owned by a corporation. The correct answer is B. One property owner. Severing all other owners. When one single person is the sole owner of a property, it is known as tenancy in several T. Question 9. Which of the following is not one of the four land use controls? A. Police power B. Interstate C. Ascheat D. Eminent domain D. Eminent domain The correct answer is B. Interstate The four public land use controls in real estate are police power, escheat, eminent domain, and taxation. Question 10. What is the general purpose for cities to require building permits? A. Permit fees or income for the city. B. Control the amount of building allowed. C. To supersede deed restrictions. D. To require a minimum level of construction standards. The correct answer is... D. To require a minimum level of construction standards. The purpose of building permits are to ensure a minimum level of construction standards, which maintains the safety and well-being of the public. Question 11. Andy's Arcade has been in business in the same location for 15 years. The city recently rezoned the area, no longer allowing commercial usage. Soon after the rezoning, Andy's suffered a devastating fire and the arcade was a total loss. What will Andy need to obtain from the city in order to rebuild the arcade in the same location? A. Andy cannot rebuild in the same location. B. Andy will need to obtain a variance. C. Andy will only need a building permit. D. Andy must get approval from the EPA. The correct answer is... B. Andy will need to obtain a variance. A. Variance would allow the property owner to deviate from the regular zoning requirements set forth by the zoning board. Without a variance, all construction in the zoned area must be residential. Question 12. The City of Brownwood plans to build a new water treatment facility, but the land that is required is privately owned. Eminent domain allows the City to A. Take possession of the land with no compensation to the property owner. B. Do nothing. The City does not own the land and they cannot take it. C. Ask the property owner to donate the land. D. Take possession of the land against the owner's wishes, yet the owner must be compensated. The correct answer is... D. Take possession of the land against the owner's wishes, yet the owner must be compensated. Imminent domain allows the government to take possession of privately owned land for use by the public, even at the objection of the owner, as long as the property owner receives compensation. Question 13. Mr. Thompson passed away. He had no heirs and left no will or instructions as to whom he wanted to leave his property to. In this situation, his property will revert back to the state under the doctrine of A. Testate B. Ascheat C. Intestate D. Eminent domain. The correct answer is B. Ascheat. Ascheat is a term used when a person dies with no heirs or will in place and the property they own reverts back to state government ownership. Question 14. Agent Brooke is preparing for a listing appointment and has gathered information to prepare a report of recent market data for the seller to review. The report agents reconciled to obtain a reasonable list price for a property based on current listings, recent sales, and expires would be called A. Comparable Marketing Analytics, CMA B. Broker Price Opinion, BPO C. Comparative Market Analysis, CMA D. Agent Market Analysis, AMA The correct answer is... C. Comparative Market Analysis, CMA The report agents reconciled to obtain a reasonable list price for a property based on current listings, recent sales, and expires is called a Comparative Market Analysis, CMA. Question 15. Paul owns an older residential property in an area now zoned for commercial use. Paul decides to renovate the home into a laundromat. The change in the property's functionality for Paul's financial gain is an example of what? A. Highest and best use B. Substitution C. Assemblage D. Conformity The correct answer is A. Highest and best use The transition of the residential property to an income-producing business is an example of the property being put to its highest and best use. Question 16. John's tire store is being built across the street from Big Bob's Tires. What appraisal principle describes this situation? A. Substitution B. Plottage C. Competition D. Progression The correct answer is C. Competition The appraisal principle of competition states that two similar businesses attract more customers when within close proximity than they would separately. Question 17. Buyer Sam purchased a run-down residential home in a neighborhood with many nice, well-kept properties. Sam intends to renovate the home and resell it for a profit. Considering the nicer homes in the neighborhood help raise his property value, what appraisal principle is Sam leveraging? A. Regression B, progression. C, assemblage. D, substitution. The correct answer is B, progression. Progression is the appraisal principle that a dilapidated property will gain value when the surrounding properties are well kept. Nicer homes surrounding a property that is run down will only raise the subject property's value. Question 18. During the appraisal process, the appraiser will never adjust the price of the A. Appraisal B. Comps C. Subject Property D. Land The correct answer is C. Subject Property During the appraisal process, the appraiser always adjusts the value of the comparables accordingly, but never the value of the subject property. Question 19. While working on an appraisal report, appraiser Jake finds that the comparable property is superior to the subject property with more amenities. How will Jake make adjustments to arrive at a value of the subject property? A. Subtract value from comparable. B. Add value to subject. C. Subtract value from subject. D. Add value to comparable. The correct answer is... A. Subtract value from comparable. When an appraiser finds that a comparable property is of better quality or has more features than the subject, they will subtract value from the comparable. The idea is that the price a comparable home sold for with more features needs to be adjusted down to find the probable price the subject property will sell for without those features. Question 20. The beautiful town of Big Bear is experiencing a fast influx of new residents. There are few homes on the market and no new construction developments in the works. What will this do to the price of the existing homes in the area? A. The prices will decline over time. B. The prices will remain stable. C. The prices will decline swiftly. D. The prices will increase. The correct answer is D. The prices will increase. The principle of supply and demand control property values. An influx of new residents in an area with limited housing drives property values up. Question 21. Homeowner Paul is selling his home without a real estate agent. He places an advertisement stating, Owner financing 3% down payment. Is Paul's advertisement in violation of the Truth in Lending Act? A. Yes, when a down payment is listed, there must be a price listed also. B. No, property owners are not regulated by TRIL advertising requirements. C. Yes, all the terms of the owner financing are not disclosed. D. Yes, the ad contains trigger terms. The correct answer is... B. No, property owners are not regulated by TRIL advertising requirements. The Truth in Lending Act and Regulation Z regulates the terms used in lending advertisements by lenders. Property owners are exempt from the advertising requirements when selling their property. Question 22. Which one of the following loan types does not require a down payment? A. VA loan B. Conventional loan C. Bridge loan D. FHA loan The correct answer is... A. VA loan. Loans backed by the Department of Veterans Affairs are offered to qualifying veterans and do not require the veterans to pay a down payment. Question 23. Discount points are a way lenders are able to charge prepaid interest in order to lower the interest rate over the life of the loan. What is the cost of the discount points based on? A. The down payment required. B. The appraised property value. C. The loan amount. D. The sales price. The correct answer is... C. The loan amount. Discount points charged on all loan types are figured as a percentage of the loan amount. One discount point is equal to 1% of the loan amount. Question 24. FHA loans require that borrowers provide protection to the lender in case of loan default. What must the borrower pay for to provide this protection to the lender? A. Credit life insurance. B. Homeowner's insurance. C. Private Mortgage Insurance D. Title Insurance The correct answer is C. Private Mortgage Insurance. FHA borrowers are charged a fee at closing and a monthly fee figured into their payment for Private Mortgage Insurance, PMI, which protects the lender in case of loan default. Question 25. Fair housing regulations apply not only to real estate agents but also lenders. When a lender denies a mortgage application solely based on the racial demographics of the neighborhood the property is located in, the lender is guilty of A. Steering B. Redlining C. Mortgage fraud D. Panic selling The correct answer is B. Redlining Redlining is the term used when lenders deny loans based on the racial demographics of the neighborhood. Lenders are to base credit decisions on the borrower's creditworthiness. Redlining is a violation of the Fair Housing Act. Question 26. Terry received a conventional 30-year loan to purchase his home. Thanks to some large extra payments, Terry will have his home paid for in only 17 years. Which of the following loan terms could charge Terry an extra fee for paying off the home so soon? A. Interest Fee B. Escalation Clause C. Subordination Clause D. Pre-payment Penalty The correct answer is D. Pre-payment Penalty Some conventional loans include a pre-payment penalty clause, which allows a lender to charge the borrower additional fees if the loan is paid off early. Pre-payment penalties are not allowed on government loans, such as FHA and VA. Question 27. Mark is not able to make his entire mortgage payment on time each month and has fallen behind on payments. Because of his failure to pay, his lender, ABC Home Loans, sent him notice that they are calling for the remaining mortgage balance to be paid in full in one lump sum immediately. This is an example of an A. Judicial foreclosure B, subordination clause. C, acceleration clause. D, escalation clause. The correct answer is C, acceleration clause. An acceleration clause allows the lender to call for the note to be paid in full in one lump sum immediately when a borrower falls behind in payments. Question 28. Some loans are structured where the lender places a portion of each payment the borrower makes into a special account to pay the property taxes at the end of each year. What is the account called? A. Escrow Account B. Mortgage Account C. Interest Account D. Savings Account The correct answer is... A. Escrow Account In order to ensure that there are no tax liens placed on the collateral property, the lender places a portion of each payment the borrower makes into an escrow account. Question 29. Which of the following loan types would have the highest down payment? A. Rural Development Loan B. Conventional Loan C. VA Loan D. FHA Loan The correct answer is... B. Conventional Loan Conventional loans require the borrower to pay a higher down payment than government loans. Rural development and VA loans require no down payment. FHA loans many times only require 3 to 5 percent down, while conventional loans can be 10 to 20 percent or more depending on circumstances. Question 30. Mortgages that are escrowed break down the monthly payment four ways. Each payment pays a portion towards PITI, which stands for A, principal investment taxes insurance. B, payment interest taxes investment. C, principal interest taxes insurance. D, prepayment insurance taxes investment. The correct answer is C, principal interest taxes insurance. PITI stands for Principal Interest Taxes Insurance. In an escrowed mortgage, each monthly payment is broken down, and a portion of each payment is paid to these four areas. This practice protects the lender's collateral from tax liens or uninsured losses. Question 31. Agent Anna has a home listed for sale and shows the home to the Quinns, whom she does not have a buyer's agency agreement with. The quins are A, clients, B, fiduciaries, C, principals, D, customers. The correct answer is D, customers. Customers'agents work with, not for. Customers are the third parties an agent may deal with in the course of a transaction while representing a principal. Question 32. What duty requires a licensee to follow the principal's orders and requests as long as they are not unethical or illegal? A. Obedience B. Accountability C. Disclosure D. Honesty The correct answer is... A. Obedience Question The duty of obedience requires the agent to obey the wishes of the principal as long as they are not unethical or illegal. Question 33. Melissa went on a listing appointment and the sellers were asking legal questions. Questions she felt certain she knew the answers to. What should Melissa do? A. Suggest they seek legal counsel. B. Answer the questions. C. Tell them she will find out and get back to them. D. Tell them she doesn't know for sure. The correct answer is... A. Suggest they seek legal counsel. An agent can never give legal advice without a license to do so, nor deter customers or clients from seeking legal counsel. Question 34. Agent Terry convinces an owner to list his property way under market value. Terry sells the property to his brother Mark without disclosing the relationship to the buyer in writing. Mark turns around and sells the property for a profit to split with Terry. This is an example of A. Wholesaling B. Creative agency C. Stealing D. Self-dealing The correct answer is D. Self-dealing Self-dealing is an intentional misrepresentation of an agent's relationship and interest in a transaction. Question 35. Agent Paula found a buyer for her listing. The seller accepted the buyer's offer and both parties received copies of the contract documents. The seller decides one week prior to closing they no longer want to sell the home. What could happen? A. Paula's broker owes her a commission. B. The buyer owes Paula commission. C. Paula did not earn a commission. D. The seller owes Paula commission. The correct answer is... D. The seller owes Paula commission. When an agent brings a ready, willing, and able buyer and a seller accepts the buyer's offer, the agent has essentially earned their commission. The seller is to pay the agent if the contract is terminated due to the seller's default. Question 36. Larry listed his home for sale with an agent. The property was exposed to an open and free market, and after a reasonable time, the property sold to a buyer unrelated to Larry. This type of sale would be considered a fair market value. B, sale under duress. C, arm's length transaction. D, none of the above. The correct answer is C, arm's length transaction. A. Property exposed to an open and free market and sold, after a reasonable period of time, to unrelated parties, which both acted in their own self-interest, is considered an arm's-length transaction. Question 37. How is real estate defined? A. Land and all items within the improvements. B. Land including water, air, and improvements. C. Property sold between buyers and sellers. D. Commercial property but not residential. The correct answer is B. Land including water, air, and improvements. Real estate is defined as land, water, air, and improvements attached to the land. Question 38. A fence that extends onto the land of another from a neighboring property is called an A. Encumbrance B. Easement C. Encroachment Question D as cheat. The correct answer is... C. Encroachment Encroachment occurs when an improvement or fixture intrudes upon an adjoining property. Question 39. Marvin owns an easement to use the driveway of his neighbor Bob. Marvin's property is considered the... A. Servient Estate B. Life Estate C. Dominant Estate D. Freehold Estate The correct answer is... C. Dominant estate. The property that benefits from an easement to another parcel is called the dominant estate. Question 40. Which of the following best describes the economic characteristics of land? A. Demand, utility, scarcity, transferability, sitis. B. Scarcity, sitis, immobility, utility, demand. C, CITUS, transferability, demand, immobility. D, indestructibility, demand, non-hom... D, indestructibility, demand, non-homogeneous, CITUS. The correct answer is... A, demand, utility, scarcity, transferability, CITUS. The five economic characteristics of land are demand, utility, scarcity, transferability, situs. The lack of any of these characteristics reduces the land's utility and value. Question 41. Kevin is leasing a storefront to open a pizza parlor. Any items he attaches to the property which he will use to conduct his business would be A. Property of the property owner, B. Trade fixtures, C. Chattel. D. Real property. The correct answer is B. Trade fixtures. Items and equipment used to conduct business, such as pizza ovens, walk-in coolers, and salad bars, are considered trade fixtures and property of the tenant. Question 42. What is the accumulation of land caused by the natural flow of water called? A. Erosion. B. Accretion. C. Evulsion. D. Alluvion. The correct answer is B. Accretion. Accretion is the accumulation of soil that collects over time due to the natural water flow. Question 43. Donnie leaves his home to his third wife Trish with the clause that after her passing, the home goes to his first son Logan. What type of interest does Logan have in the property? A. Life tenant estate. B. Life estate. C. Remainder Man D. Leasehold The correct answer is... C. Remainder Man A. Remainder Man is a third-party interest in a property that will revert to them at the time a life tenant passes away. Question 44. New agent Matt is listing a home for sale, which was built in 1965. What disclosure should Matt have of the seller complete due to the age of the home? A. Lead-based paint disclosure B. Mold disclosure C. Radon disclosure D. Asbestos disclosure The correct answer is A. Lead-based paint disclosure Properties constructed prior to 1978 fall under the federal requirement to provide buyers with a lead-based paint disclosure. Question 45 Part of Agent Connie's listing packet includes a form for the seller to complete that covers the components of the home for sale and the seller's knowledge of the condition of such items. This form is referred to as A. Home Inspection Report, B. Seller's Condition Report, C. Listing Amendment, D. Seller's Disclosure. The correct answer is D. Seller's Disclosure. The seller's disclosure form lets the seller convey knowledge they have regarding their property to a potential buyer. This is where a seller can list any updates made or repairs needed to the best of their knowledge. Question 46. Mary and Mark are buying their first home, which was built just three years ago. After touring the property, which seems to be in good repair, they waive their right to a home inspection, not anticipating any issues. After closing and moving in, they find that some of the ductwork in the crawl space has fallen and is no longer attached, causing all the air to be released under the home. They are upset that the seller did not mention the issue, and when asked, the seller states they had no idea that had happened. Is the seller at fault for not disclosing this issue to the buyers? A. Yes, the seller should disclose all issues. B. No, the seller had no knowledge of the issue. C. Yes, the seller must provide a home inspection report. D. Yes, the seller should pay for the repairs. The correct answer is... B. No, the seller had no knowledge of the issue. A seller's disclosure is not a warranty or guarantee that the home is free of issues. The seller can only disclose what they are aware of. The buyer has the responsibility of doing their due diligence in order to discover any unknown issues outside of those disclosed. Question 47. Leslie is showing her listing to some prospective buyer customers. Leslie grew up just down the road and knows this property was once used as a dump site many years ago. Does Leslie have to make the prospective buyers aware of this information since they are customers and not clients? A. No, the seller is responsible for disclosures. B. No, they are not clients. C. Yes, the agent must disclose. D. No, buyers are responsible for inspections. The correct answer is... C. Yes, the agent must disclose. Agents owe clients and customers alike the disclosure of any possible environmental hazards. Question 48. Johnny's home is under contract and the prospective buyers had a home inspection. The inspection noted some roof issues which Johnny was not previously aware of. The buyers provided Johnny with a copy of the inspection and an inspection notice terminating the sales contract. What should Johnny do going forward? A. Drop the price drastically. B. Update the seller's disclosure to include the roof issues. C. Make any future buyers aware of the roof issues if they ask. D. He must repair the roof prior to sale. The correct answer is... B. Update the seller's disclosure to include the roof issues. A seller must disclose any issues with the property or repairs needed which they are aware of. Once the home inspection revealed a roof repair is needed, the seller's disclosure should be updated to reflect the newfound knowledge prior to new prospective buyers receiving the disclosure. Question 49. Disclosure law specifics vary by state. However, in which type of transaction would the seller's property disclosure generally not be required? A. Residential arms length transaction. B. Triplex purchase. C. Residential foreclosure. D. Mobile home purchase. The correct answer is C. Residential foreclosure. A foreclosure sale is exempt from the seller's disclosure requirements due to the seller being the lender with little to no knowledge of the property's specifics. Question 50. A listing agreement in writing creates which form of agency? A. Negligent agency. B. Implied agency. C. Express agency. D. Ostensible agency. The correct answer is C. Express agency. A written listing agreement creates an expressed agency. The agency relationship is expressed in writing. Question 51. In compliance with fair housing regulations, any deed restriction or covenant that would prohibit the conveyance of the property to a member of a protected class is A. Legal. B. Is not legal, considered void and unenforceable. C. Will stand in court. D. Valid. The correct answer is... B. Is not legal, considered void and unenforceable. In compliance with fair housing regulations, any deed restriction or covenant that would prohibit the conveyance of the property to members of a protected class is not legal, considered void, and unenforceable. Question 52. Listing broker Doug took a buyer to see Drew's home. The buyer says he wants to think it over and two weeks later, the listing agreement with Doug expires. Upon expiration of the listing agreement, Drew lists the property with listing agent LaDawn from another brokerage. A few days after that, the buyer that Doug introduced to the home knocks on Drew's door and wants to make an offer to purchase the home. When the home sells to this buyer, who gets the commission instance? A. Doug. He has a protection clause in the listing agreement. B. The seller is not required to pay either agent. C. Doug. He introduced the buyer to the property. D. LaDawn, Doug is no longer entitled to commission because the protection clause is void once the property is listed with another agent. The correct answer is D. LaDawn, Doug is no longer entitled to commission because the protection clause is void once the property is listed with another agent. A protection clause can entitle an agent to commission after the listing agreement has expired during a pre-specified time frame, but only if the home is not relisted with another agent, which voids the remaining protection clause term. Question 53. A contract between two parties both giving a promise for a promise is called a a. Unilateral contract b. Bilateral contract c. Special agreement D. Collusion. The correct answer is B. Bilateral contract. A contract between two parties that make promises to each other to perform is called a bilateral contract. Question 54. Shane is offering an open listing on his home to all local brokers. Shane is offered to pay a 3% commission to the broker that brings him a ready, willing, and able buyer. What type of contract did Shane offer? A, bilateral contract. B, unenforceable contract. C, void contract. D, unilateral contract. The correct answer is D, unilateral contract. A. Unilateral contract is when only one party agrees to perform under certain circumstances. Question 55. To B. Enforceable real estate contracts must be in writing according to the A. Real Estate Commission B. Statute of Frauds C. Federal Real Estate Act D. Sherman Antitrust Act The correct answer is B. Statute of Frauds Statute of Fraud states to be enforceable real estate contracts and the transfer of property must be in writing. Question 56. All parties entering into a real estate contract must be doing so on their own free will and not under duress. Which of the following is not a requirement to enter into a real estate contract? A. Parties must be U.S. citizens. B. Parties must have proper authority. C. Parties must be mentally competent. D. Parties must be of legal age. The correct answer is... A. Parties must be U.S. citizens. All parties to a contract must be of legal age, mentally competent, and have proper authority to enter into a valid contract. All parties to the contract do not have to be U.S. citizens. Question 57. A valid contract must contain valuable consideration, which means... A. No personal property items. B. Cash only. C. Something clearly offered for something else in exchange. D. None of the above. The correct answer is... C. Something clearly offered for something else in exchange. A valid contract must contain a two-party exchange of valuable consideration and performance. Question 58. In order for a contract to convey ownership in a property transaction, the contract must include A. Surface rights B. A legal description C. Rights of survivorship D. The full bundle of rights The correct answer is B. A legal description In order for a contract to convey ownership in a property, the contract must include a legal description that describes the property so that its geographic location is identifiable. Question 59. Which of the following is not a requirement for a contract to be valid and enforceable? A. Competent parties B. Authority C. Notarization D. Valuable consideration The correct answer is... C. Notarization. The required components of a valid contract include competent parties, legal purpose, voluntary good faith, mutual consent, and valuable consideration. Question 60. In a real estate transaction, when someone is forced into a contract by intimidation or some other type of coercion, it is called A. Bullying B. Duress C. Stress Question D, strong arming. The correct answer is B, duress. When someone is forced into a contract by intimidation or some other type of coercion, this is known as acting under duress. Question 61. A contract that does not have all the necessary elements of a contract is... A. Valid B. Void C. Enforceable by insinuation D. Legally binding The correct answer is... The correct answer is... B, void. A contract that does not have all the necessary elements of a contract is void and unenforceable by either party. Question 62. Leanne entered into a contract that called for $1,000 in monetary damages if the contract was breached. The $1,000 in the contract is referred to as... A, retainer fee. B, breach fine. C, liquidated damages. D, Lispendin. The correct answer is C, liquidated damages. When a contract calls for a specified amount of monetary compensation, earnest money, to be paid to one party of the contract upon a breach of contract, this is referred to as liquidated damages. Question 63. After the offer and acceptance, when the terms of the contract are in the process of being completed and prior to closing, the contract is said to be A. Executory, B. Amended, C. Rescinded, D. Les Pendon. The correct answer is A. Executory. When the terms of a contract are in the process of being completed, the contract is said to be executory. Question 64. Eric rents an apartment at only 17 years old. The lease agreement contract is voidable because Eric is not of legal age to enter a contract, but who has the ability to void the agreement? A. The landlord B. Eric C. A lawyer D. No one The correct answer is... B. Eric. A contract with a minor under the age of 18 is missing the element of competency and is avoidable. However, as long as the minor performs the terms of the agreement as promised, the minor is the only one that is able to void the contract. Question 65. Sharon made an offer on her dream home, and to show the seller she was a serious buyer, she offered a sum of money to be held in escrow that she will forfeit if she does not fulfill her end of the deal. What is the sum of money to be held in escrow as a good faith deposit called? A. Pre-funding deposit B. Broker deposit C. Earnest money D. Purchase promise deposit The correct answer is C. Earnest money. A contract can include earnest money to be held in escrow as a good faith deposit, which is applied toward the purchase price at closing. Question 66. Once all terms of a contract have been fulfilled and the transaction has closed, the contract status is said to be fully A. Rescinded B. Executed C. Insured D. Amended The correct answer is B. Executed Once all terms of a contract have been fulfilled and the transaction closed, the contract is fully executed. Question 67. John signs a six-month lease on an apartment beginning January 1st and ending June 30th. His lease does not automatically renew and no notice is required on his part to vacate on the expiration date. What type of lease did John sign? A. Estate at will. B. Estate from period to period. C. Estate for months. D. Estate for years. The correct answer is D. Estate for years. An estate for years is a lease for a fixed period of time, rather than month to month, that does not automatically renew and requires no notice to terminate at the end of the term. Question 68. What duty does an agent acting as a property manager owe a property owner? A. Principal duties. B. Fiduciary Duties C. Legal Duties D. Regulatory Duties The correct answer is B. Fiduciary Duties. A property management agreement creates a general agency between the property owner and the licensee. Therefore, a property manager owes the property owner fiduciary duties. The fiduciary duty requires the agent to act in the property owner's best interest. Question 69. A property management contract should include all of the following except A. Signatures of the property owner and licensee B. Duration of the agreement C. Signature of the tenant D. Management fee The correct answer is C. Signature of the tenant. The property management agreement is an employment contract between the property owner and the agent licensee. A tenant will sign a lease, but not the property management agreement. Question 70. Sally wants to transfer the title of her property to her granddaughter. Which of the following are ways to voluntarily transfer title to a property? A. Sales contract, will, Sison. B. Will, grant, deed. C. Title certificate as cheat deed. D. As cheat will grant. The correct answer is B. Will grant deed. Title to property can be voluntarily transferred by a will, grant, or deed. Question 71. When someone passes away with a valid will in place, it is referred to as A. Testate. B. Intestate C. Ascheat D. Appartenant The correct answer is... A. Testate Testate is the term for passing away with a valid will in place. Question 72. A title search revealed a lien on a property which creates a cloud on the title. How may the landowner go about resolving this title issue? A. By requesting a chain of title. B. By letting the lien expire. C. Writing a letter to the judge asking that it be dismissed. D. Paying the debt and filing a stratification of judgment. The correct answer is D. Paying the debt and filing a stratification of judgment. A. A lien may be terminated by paying the existing debt, receiving a satisfaction of judgment, and filing the documentation with the court. Question 73. Liens on a title may be voluntary or involuntary. Which of the following is an example of a voluntary lien? A. Mortgage B. Judgment C. Child Support Lien D. Tax Lien The correct answer is... A. Mortgage Question A mortgage places a lien on the property which is voluntary in nature and not force placed by the courts. Question 74. Donnie's neighbor Paul has an easement across Donnie's property to get to his own. The easement is recorded and transfers with the land if either Donnie or Paul sell their property. When an easement is on a title, it is an example of an A. Encroachment B. Estoppel C. Encumbrance D. Equitable title. The correct answer is C. Incumbrance. An encumbrance is a limitation placed on a title such as a lien, lease, or easement. Such encumbrance is important to identify as it may affect the value and or utility of the property. Question 75. Escrow agent Emily will use what legal instrument to transfer real property from the seller to the buyer on closing day? A. Title certificate. B, deed. C, bill of sale. D, settlement statement. The correct answer is B, deed. A deed is the legal instrument used at closing to transfer real property from the seller to the buyer. Question 76. What type of title bears the most protection for the property owner? A, quick claim deed. B, sheriff's deed. C, warranty deed. D. Beneficiary Deed. The correct answer is C. Warranty Deed. A warranty deed provides the most protection for a property owner and includes the guarantee of size and encumbrances, right to quiet enjoyment, further assurance, and warranty forever. Question 77. On closing day, who signs the deed to transfer the property from seller to buyer? A. The buyer. B. The seller. C. The buyer and seller D. The seller and escrow agent The correct answer is B. The seller Only the seller or grantor is required to execute the deed to convey property to the buyer. No other parties are required to sign the deed at closing. Question 78. When agents get together and have a discussion regarding setting a fixed commission rate so that they are all charging the same rate, this conversation violates what act? A. Homestead Act B. Fair Housing Act C. ADA Act D. Sherman Antitrust Act. The correct answer is D. Sherman Antitrust Act. This activity among agents constitutes price fixing. Price fixing is a violation of the Sherman Antitrust Act. Question 79. What duty requires an agent to place the client's best interest above all others? A. Honesty B. Loyalty C. Respect D. Obedience The correct answer is B. Loyalty The agent's duty of loyalty requires the agent to put the client's best interest above all others. Question 80. Steve tells listing agent Shelley his basement leaks, but only when it rains hard for long periods of time, so no need to mention it to buyers. He insists it's really no big deal. Which of the following is true? A. Shelley must be obedient and not mention it. B. Shelley should trust her client. It's no big deal. C. Shelley cannot withhold known material facts. D. Shelley should only mention it if the buyer asks. The correct answer is C. Shelley cannot withhold known material facts. Not disclosing a material fact would be illegal, and the agent does not have to obey the seller in this situation. Question 81. If an agent is accused of puffing, what does that mean? A. Fraud B. Lies C. Misrepresentation D. Exaggeration The correct answer is D. Exaggeration Puffing can be an exaggeration that does not fit the description of misrepresentation. For example, this home has the most gorgeous view of any home anywhere. Exaggerated opinion, but not a misrepresentation of a material fact. Question 82. Describing the property would be acceptable in advertising. However, describing the type of buyer desired would be considered... A. Descriptive advertising. B. Discriminatory. C. Target marketing. D. Effective advertising. The correct answer is... B. Discriminatory. In advertising, describing the property would be acceptable. Describing the type of buyer desired would be considered discriminatory and a violation of fair housing laws. Question 83. Betsy is working with buyers under a written buyer's agency agreement. The buyers decide they want to purchase a home that Betsy has listed. If Betsy does not obtain permission in writing from all parties to represent both parties, she would create a single agency. B, dual agency. C, specific agency. D, undisclosed dual agency. The correct answer is D, undisclosed dual agency. All parties to a contract must agree in writing to the dual agency. Undisclosed dual agency is created by representing both parties in a transaction without disclosing the relationship to all parties. Question 84. Ben listed his home with Agent Carey. He told her he wanted a minimum of $225,000 and anything over and above that amount she could keep as commission. This type of compensation arrangement is called a. A. Net listing B. Reverse listing C. Normal listing D. Exclusive agency listing The correct answer is. A. Net listing While not actually a listing type, net listings occur when a seller sets a minimum net proceeds amount and the agent may keep any amount over that as commission, making it a commission agreement rather than a listing type. Net listings which are illegal in most states. Question 85. Davis is a subagent of listing agent Luke. Who does Davis work for? A. Buyer B. Seller C. Buyer and Seller Question D, Luke. The correct answer is... B. Cellar A subagent of the listing agent works for the seller. Question 86. Only showing homes in a certain part of town to people of a certain nationality is called... A. Panic selling B. Redlining C. Blockbusting D. Steering The correct answer is... D. Steering Only showing homes in a certain part of town to people of a certain nationality is called steering and a violation of fair housing laws. Question 87. A Hispanic man called a landlord regarding a home for rent online. The landlord tells him the property is already rented. His white friend then called the landlord to inquire about the property, and he arranged an appointment to show him the home. This is discrimination based on a race. B. Familial status C. Income D. Religion The correct answer is... A. Race The landlord has discriminated based on race. Question 88. Landry owns a duplex and personally occupies one of the units. He has one unit for rent and refuses to rent it to anyone with small children because kids are loud. If he refuses applicants with children, has he committed a violation or any discriminatory acts? A. Yes, he can be fined. B. Yes, he has to rent to anyone. C. Yes, he has discriminated based on familial status. D. No, he is exempt from fair housing regulations because he owns a dwelling with four or less units and personally occupies one of the units. The correct answer is... D. No, he is exempt from fair housing regulations because he owns a dwelling with four or less units and personally occupies one of the units. The Fair Housing Act allows a landlord that owns a dwelling with four or less units and personally occupies one of the units to be exempt as long as the property owner does not use an agent to lease the property and makes no discriminatory advertisements. Question 89. The Fair Housing Act pertains to certain groups as protected classes. Which of the following is not a protected class under fair housing? A. Felons B. Elderly C. Handicapped D. Single mothers The correct answer is... A. Felons Felons are not a protected class under federal fair housing regulations. Question 90. Broker Ben has E&O insurance and is selling an investment property that he owns. He has made a few false statements and misrepresentations, but he really needs to sell the property fast. What would happen if someone were to sue him for his false statement? A. E&O insurance will not cover negligence of a broker selling property he owns. B. The E&O insurance will defend him but charge him double premium. C. The E&O insurance only covers agents in commercial transactions. D. The E&O insurance would cover him. The correct answer is... A. E&O insurance will not cover negligence of a broker selling property he owns. Errors and omissions insurance does not cover intentional acts. E&O insurance will not cover negligence of a broker selling property he owns. Question 91. Karen recently sold a home for 6% commission. If her commission was $20,700, how much did the property sell for? A. $340,000 B. $342,000 C. $345,000 D. $348,000 The correct answer is... C. $345,000 $20,700 divided by 0.06 equals $345,000. Question 92. How many square feet does one acre contain? A. 43,560 B. 45,630 C. 46,350 D. 40,560 The correct answer is... A. 43,560. One acre of land contains 43,560 square feet. This is a figure that you must know going into the licensing exam. Question 93. Seller Gary needs to net $15,000 on the sale of his home. His loan payoff is $160,000, his closing costs are $5,500, and commission is 7%. What is the lowest offer Gary can accept? A. $196,084 B. $167,685 B. $167,685 C, $194,086. D, $167,865. The correct answer is C, $194,086. $15,160,5500 equals $180,500. 180,500 divided by 0.93%, seller's portion after commission, equals $194,086. Question 94. Agent Amanda just closed on a home that sold for $525,000. Her commission rate was 5% with a 50-50 co-broker with the selling broker and a 60% split with her broker. How much did Amanda receive? A, $13,125. B, $7,875. C, $7,578. D, $15,750. The correct answer is B, $7,875. $525,000 times 5% equals $26,250. $26,250 split 50-50 equals $13,125. $13,125 times 60% equals $7,875. Question 95. A new roof costs $7,500 and the economic life of the roof is 30 years. Using the straight-line depreciation method, what would the value of the roof be after 5 years? A, $1,250. B, $5,500. C, $6,250. D, $1,500. The correct answer is C, $6,250. $7,500 divided by 30 years equals $250. $250 times 5 years equals $1,250 total depreciation. $7,500 minus $1,250 equals $6,250 value. Question 96. Kevin purchased a property that is currently valued at $150,000 and expected to appreciate 5% a year for the next 5 years. What will the value be in 5 years? A, $191,442. B, $173,643. C, $182,325. D, $201,014. The correct answer is A, $191,442. $150,000 is 100% of the current value. To add 5%, it is expressed as 1.05 equals 105%. $150,000 times 1.05 times 1.05 times 1.05 times 1.05 times 1.05 equals $191,442. Question 97. Callie made an offer on a home and is under contract for $250,000. She obtained a loan of $225,000 and the home appraised at $255,000. What is the loan-to-value ratio? 9. A. 98% B. 88% C. 92% D. 90% The correct answer is... D. 90% $225,000 divided by $250,000 equals 0.9, 90%. Since the appraised value is greater than the contract price, the appraisal amount is irrelevant in this scenario. The lender lends based on the contract price or the appraised value, whichever is less. Question 98. Seller Jared owes property taxes on closing day since taxes are paid in arrears. The taxes are $1,300. What is the seller's share of taxes if closing is April 10th using the 365-day method and the seller owns the day of closing? A. $356 B. $352 C. $359 D, $469. The correct answer is A, $356. $1,300 divided by 365 equals $3.56. 100 days times $3.56 equals $356. Seller share of taxes. Question 99. How many acres are in a lot that measures 250 by 325? A, 1.66. B, 1.52. C, 1.86. D, 1.89. The correct answer is C, 1.86. 250 times 325 equals 81,250 square feet. 81,250 divided by 43,560 square feet in an acre equals 1.86 acres. Question 100. Sharon purchased a home for $100,000 with a 6% annual interest rate. Her payments are $800 per month. How much of her first payment will go to principal? A, $600. B, $300. C, $500. D, $800. The correct answer is B, $300. $100,000 loan times 6% interest equals $6,000. $6,000 divided by 12 months equals $500 monthly interest. $800 minus $500 equals $300 towards principal. Don't forget to share this video with your friends and subscribe for more practice tests.