Kentucky Real Estate Mock Test 1
Questions And Answers Rated A+.
If a broker's branch office is 75 miles from his main office, the person managing this
branch office must: - correct answer. Have been licensed for 2 years averaging 20
hours per week in the business.
Which of the following is NOT true regarding a sale-leaseback? - correct answer.
The ownership of the property never transfers.
Dino owns property rights located on Lake Michigan where he docks his yacht. His
water rights are called: - correct answer. Littoral rights
Which of the following is NOT a duty of the real estate agent: - correct answer. To
accept offer on behalf a client.
After receiving recommendations from the KY Assoc of REALTOR, the governor
appoints: - correct answer. 5 commissioners, four of whom have had an active
license for the past 10 years.
A seller listed her property for $100,000 and told her agent not to present her with any
offer les than $99,000. 3 days later a buyer wanted to make a written offer of $95,000.
The agent... - correct answer. Must present the buyer's offer to the seller.
Which of the following would not be a disciplinary action of the KREC? - correct
answer. A jail term - KREC cannot send a licensee to jail.
Ann conveys a life estate to Paul based on the life of Troy. Paul has 2 children who live
with him and help him care for Troy. What is the status of the life estate if Paul
predeceases Troy? - correct answer. The property would revert to Paul's children,
so long as Troy was alive.
,A life estate pur autre vie means tha the life estate is based on a 3rd party- in this
instance, Paul or his heirs would have a life estate to the property o long as Troy was
alive.
Which of the following is NOT true regarding title insurance: - correct answer. The
mortgagee's policy is for the value of the property - it's for the loan balance and
decreases as each payment is made on the loan.
When a lender charges more interest than is legally allowed, it is known as - correct
answer. Usury
A buyer made an offer on a property which was accepted by the seller. Three days
before the closing, the title was found to be defective and the buyer negated the
contract. Under these circumstances the - correct answer. brokerage has earned a
commission because it found a ready, willing and able buyer
A leasehold estate that automatically renews for the original term is a/an - correct
answer. Periodic Tenancy
The seller accepted a signed offer. The earnest money must - correct answer. be
placed in the broker's escrow account within 3 business days
A tenant leased a commercial space for a dance studio. The tenant purchased and
installed mirrors on all the walls in the practice room. Which of the following statements
is NOT true in this situation: - correct answer. The mirror are legally classified as
fixtures;
the mirror are legally classified as TRADE FIXTURES, or the personal property of a
tenant that is installed for the use of business.
Which of the following would relieve the lessee of any obligation to make the rental
payments? - correct answer. Constructive eviction
Dr. Wilder bought a home for $125,000. She obtained a 90% mortgage at an interest
rate of 8% for 30 years. Other expenses included title insurance of $425, 2 discount
points, 1% origination fee, and attorney fees of $250. Taxes of $955 for the year have
been paid. If the closing takes place on June 23, how much money does Dr. Wilder
need to bring to the closing? (Use 360 days in a year and the seller is responsible for
the day of closing.) - correct answer. $17,248.20
Buyer Credits: $125,000 x 90% = $112,500 Loan
Buyer Debits:
$125,000 - Sale Price
$112,500 Loan x 8% = $9,000 Annual Interest
$9,000 ÷ 360 = $25 Daily Interest Rate
$25 x 8 days = $200 (Buyer would owe interest from June 23 - June 30.)
, $425 - Title Insurance
$112,500 x 2% = $2,250 Discount Points
$112,500 x 1% = $1,125 Origination Fee
$250 Attorney Fee
$955 ÷ 360 = $2.65 Daily Tax Rate
June 23 - December 30 = 188 days
$2.65 x 188 days = $498.20 Debit to buyer for taxes.
Total debits: $125,000 + $200 + 425 + 2,250 + 1,125 + 250 + 498.20 = $129,748.20
Total credits: $112,500
$129,748.20 - 112,500 = $17,248.20
A veteran's offer of $65,000 was accepted. She made a $3,000 down payment on the
property. The seller agreed to pay the 4 discount points and a 6% commission. If the
seller owned the property free and clear, the seller will net - correct answer. $58,620
Step 1 $65,000 - $3,000 = $62,000
Step 2 $62,000 x 4% = $2,480
Step 3 $65,000 x 6% = $3,900
Step 4 $65,000 - 2,480 - 3,900 = $58,620
Which of the following is NOT an executory, bilateral contract? - correct answer.
Open Listing
An open listing is an executory contract, meaning there are duties and obligations to
perform, but it is a unilateral contract because only one party is obligated to perform.
(The seller is obligated to pay if the brokerage brings a ready willing and able buyer.
The brokerage has no duties to perform.)
Which of the following terms is associated with a security that is being sold across state
lines? - correct answer. Interstate
The percentage lease agreement provides for the following terms: a monthly rent of
$500 and 5% of the annual gross sales of the lease over $300,000. The total rent paid
at the end of the year was $12,250. What was the gross volume of business for the
year? - correct answer. $425,000
$500 x 12 = $6,000
$12,250 - 6,000 = $6,250
$6,260 ÷ 5% = $125,000
$300,000 + 125,000 = $425,000
A borrower purchased mortgagee's title insurance on a property. After the final payment
was made on the mortgage, a title defect was found. The borrower would have recourse
through the - correct answer. previous owner if a general warranty deed was
transferred at the closing.
