Exam (elaborations)
CE SHOP REAL ESTATE PRINCIPLES PRACTICE TEST
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CE SHOP REAL ESTATE PRINCIPLES PRACTICE TEST
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CE SHOP REAL ESTATE PRINCIPLESPRACTICE TEST WITH COMPLETE
SOLUTION
hJulie has received notice that the house she is renting was sold in foreclosure. She has a month-to-
month lease, so how long does she have until her lease may be terminated? - 90 days
Amy acts like a salesperson and is supervised by a broker, but she holds her broker's license. What is her
job title? - Associate broker
Which one of the following statements about investors and tax depreciation is true? - Investors can
depreciate an appreciating asset.
Which of these contract-specific requirements for a lease prohibits minors from entering into a lease
agreement? - Legal capacity
Trudy loved her new neighbors. The investor couple bought every available house on Trudy's block and
was working hard to renovate them and increase their value. Trudy decided that she'd sit back, relax,
and let her property's value go up, too, thanks to ______. - Progression
Sheila's financing calls for the use of a promissory note. What's a promissory note? - The borrower's
promise to repay a certain sum of money to another party (the lender or holder of the note) under
specified terms
Which of the following lease agreements should be accompanied by an agency disclosure? - 15-month
lease
What does EER stand for with regard to air conditioners? - Energy efficiency ratio
EER stands for energy efficiency ratio and is calculated by dividing the unit's British thermal units (BTUs)
by the electricity needed to power the unit. The higher a unit's EER, the more energy efficient it is.
Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The
lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the
maximum housing payment she can afford? - $1,152
The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36
= $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is
$1,152.
This is a loss of money or anything of value, due to failure to perform. - Forfeiture
,A common forfeiture in a real estate transaction occurs when the buyer defaults on terms and forfeits
the earnest money.
Which type of analysis starts with a visit to the property, a search on the MLS, and a comparison of
comparable sales, and hopefully ends in a listing for a real estate licensee? - Comparative market analysis
This describes a CMA. These don't always end in listings, however.
When a buyer breaches the real estate sale contract, the seller may file a lawsuit for compensatory
damages. Which of the following best describes compensatory damages? - Compensation for actual loss
based on the contract's value.
Compensatory damages compensate a party for actual loss based on the contract's value.
How can a foreclosure process be temporarily stalled? - By filing for Chapter 7 bankruptcy
Hal and Sara own a 212-acre farm. Their property is landlocked, but they have permitted water rights to
use the stream located six miles away for irrigation purposes. What kind of water rights do they hold? -
Prior appropriation
The doctrine of prior appropriation grants water rights based on need, not adjacency. Hal and Sara likely
live in the western part of the U.S. where many states subscribe to this doctrine.
First-time home buyers who've had a Roth IRA account for at least five years may withdraw an amount
that equal to the contributions they've made to use as a down payment. After that, how much more can
they withdraw to help with a home purchase without penalty? - Up to $10,000
How long after a notice of cessation or completion is filed can a contractor file a mechanics lien? - Within
60 days
Which of these is true about the assessed value of real estate? - It's the value used to calculate the
property taxes, and it's based on a percentage of the market value.
Assessed value of a property is a percentage of the market value, and it's used to calculate the amount
of property tax the owner will pay.
Which of the following is the best definition of a township? - A 36-square-mile square formed when
using the rectangular survey system
The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation
on their financial statements and tax calculations. Which of the following would NOT be included in the
Siegels' depreciation basis calculations? - The loan origination and lender fees that they paid at closing
,* The depreciable basis is made up of the sales price plus any acquisition costs, such as title insurance,
and capital improvements. Loan costs aren't included in the basis, but something like electrical system
upgrades are capital improvements.
What is the danger of a seismic hazard area? - Landslides or liquefaction
* A seismic hazard area is designated as such because of the potential for landslides or liquefaction
resulting from earthquake activity
What is the starting point for any land surveyor who has been asked to perform a survey? - A review of
existing historical records
How many parties does a mortgage involve? - Two: borrower and lender
* A mortgage involves two parties: the borrower and the lender. A trustee is only used with a deed of
trust.
Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they sign, Jim is
identified only as "the neighbor." Which statute or contract element does this violate? - The statute of
frauds
* The statute of frauds requires not only that a contract to convey real property be in writing, but also
that the contract identify the parties to the contract.
Loans for ______ purposes don't require TILA disclosure. - Business
One of these parties is likely to be held liable for an injury resulting from the condition of the premises.
Who is it? - A residential landlord promises to repair the exposed wiring in the laundry room, but
forgets—until someone is electrocuted.
* Residential landlords are obligated to repair defects that are reported to them.
Generally, there are covenants between the borrower and the lender within a mortgage document.
Which of the following is a mortgage covenant? - Pay any charges and assessments against the property.
* Covenants usually include paying charges and assessments against the property, maintaining both the
property and hazard insurance, and keeping the property in good condition.
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the
current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it.
After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to
, the property. Which general warranty deed covenant protects Colleen and Judy? - The covenant of
warranty
* The covenant of warranty assures that the grantor will warrant and defend the title against the lawful
claims of others.
Real hestate hlicensees hwho hwant hto huphold hthe hFair hHousing hAct hshould hmake ha hhabit hout hof
hwhich hof hthe hfollowing hactions? h- hTell hpotential hclients hin htheir hinitial hmeeting hthat hthey hare
hcommitted hto hupholding hfair hhousing hlaws.
* hTelling hpotential hclients hup hfront his hthe hbest hway hto havoid hfinding hyourself hin ha hsituation hwhere
hsomeone hexpects hyou hto hdiscriminate hon hher hbehalf. hPromoting hdiversity his hanother hpart hof
hpromoting hfair hhousing, hand hwhile hyou're hfree hto hshare hyour hprotected hstatus hif hyou hhave hone,
hit's hnot hactually hrelevant.
Which hof hthese his ha htype hof hgap hfinancing hthat's hused htemporarily huntil hthe hconsumer hcan hobtain
hpermanent hfinancing? h- hBridge hloan
* hA hbridge hloan his ha htemporary h(usually h90-day) hloan hthat hprovides hfunds hin haddition hto han
hexisting hloan huntil hpermanent hfinancing hcan hbe hobtained. hIt's hoften hused hby hbuyers hwho've hnot
hyet hsold htheir hprior hproperty.
At hwhat hlevel hof hgovernment hare hbudgeting, hsite hplan hreview, hand hbuilding hcodes hcontrolled? h-
hLocal
* hIt hwould hbe hcumbersome hto hexert hlocal hcontrol hand hplanning hfrom ha hstate hor hfederal hlevel.
Which hof hthe hfollowing hstatements his htrue habout hthe hlisting hpresentation? h- hYou hshould hgo hinto
hthe hpresentation hfully hprepared hwith ha hcomparative hmarket hanalysis, hlisting hagreement, hMLS
hlistings hof hcomparable hproperties, hand hyour hplan hfor hmarketing hthe hsellers' hproperty.
* hIn ha hlisting hpresentation, hyou hshould hdemonstrate hyour hoverall hability hto hsell hthe hproperty
hthrough hyour hknowledge hof hthe hlocal hmarket h(using hthe hCMA hand hMLS hdata), has hwell has hyour
hmarketing hplan. hThe hlisting hagreement his hthere hto hseal hthe hdeal.
Which hof hthese hmight hbring ha hcharge hof hillegal hsteering hagainst ha hlicensee? h- hWhen hworking hwith
hsingle hfemale hclients, hCassandra his hcareful hto hpromote hproperties hin hneighborhoods hshe hconsiders
hsafe.
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