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Rockwell Exam Real Estate Classes WA Final Exam 1 Graded A+
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Rockwell Exam Real Estate Classes WA Final Exam 1 Graded A+
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Rockwell Exam Real Estate Classes WAFinal Exam 1 Graded A+
A $4,500 earnest money check bounces because of insufficient funds. The first thing
the broker should do is:
A. notify escrow to charge this amount, plus the bounced check fee, to the buyer
B. notify the borrower
C. notify the principals
D. write a personal check for $4,500 to cover the shortage - ANSWER-C. notify the
principals
Both principals (the buyer and the seller) are parties to the escrow instructions. The
broker should notify both of them so they can decide how they want to proceed.
A buyer accepts a general warranty deed from a seller, believing that the seller is the
sole owner of the property. The buyer later finds out that the seller is only a co-owner.
Has a covenant in the general warranty deed been violated?
A. No, the only covenant in a general warranty deed promises that the previous owner
didn't encumber the property
B. No, the principle of caveat emptor controls matters concerning a deed
C. Yes, there is a covenant providing equitable title
D. Yes, there is a covenant providing marketable title - ANSWER-D. Yes, there is a
covenant providing marketable title
The general warranty deed contains a covenant of the right to convey, meaning that the
grantor either has title to the interest or is an agent of the owner with the authority to
transfer the interest.
A buyer and a seller enter into a purchase and sale agreement. The agreement
provides that closing must take place by September 30. A clause states that a party's
failure to be ready by a date specified in the contract will constitute a breach of the
contract. What is the name of this clause?
A. A habendum clause
B. A contingency clause
C. A time of the essence clause
D. A closing clause - ANSWER-C. A time is of the essence clause
A contract clause that makes failure to meet a stated deadline a material breach of the
contract is called a "time is of the essence" clause. A time is of the essence clause does
not have to be a stand-alone provision; it may be part of another provision.
,A buyer enters into a buyer agency agreement with a real estate licensee to negotiate
the purchase of a particular FSBO property. The buyer then enters into purchase and
sale agreement, but the property he agreed to buy is subsequently condemned. Which
of the following is true?
A. The agency is terminated
B. They can immediately look for another property
C. The agent may sue the buyer for damages, if any were incurred
D. This creates a dual agency - ANSWER-A. The agency is terminated
An agency is terminated by operation of law based on the extinction of the subject
matter, such as the condemnation of the subject property. The buyer and agent can
look for another property, but would need to form another agency relationship first.
Practically speaking, that's not very difficult (especially in states where an agency
relationship can be formed simply by beginning to provide brokerage services to
someone).
A buyer is planning to purchase a property where he can operate a small mechanic's
shop out of his home. He eventually finds a property he likes, and tells the listing agent
his plans. However, after closing he finds out that there are deed restrictions that
prevent him from operating such a business from his home. Which of the following is
true?
A. Since the agent knew the buyer's intended use, the agent should have investigated
whether it was feasible or informed the buyer that he or his agent should investigate it
B. The agent represented the seller and did not have a duty of loyalty to the buyer
C. The seller always has to disclose the zoning on the property
D. The real estate agent was the one responsible for investigating deed restrictions -
ANSWER-A. Since the agent knew the buyer's intended use, the agent should have
investgated whether it was feasible or informed the buyer that he or his agent should
investigate it
The seller's agent does not owe a duty of loyalty to the buyer, so he is not required to
investigate anythingon the buyer's behalf. However, this duty of honesty and good faith
would likely compel him to at least recommend to the buyer that he or his agent should
investigate the matter further. The listing agent should know that zoning or deed
restrictions would prevent most residential properties from being used for a mechanic's
shop, the issue is a material fact and not advising the buyer to look into it could lead to a
lawsuit.
A buyer is unfamiliar with the concept of discount points and asks a licensee to explain.
The licensee responds " Discount points are used to replace funds that are being held
by the Federal Reserve, so that more funds are available to lend." Is that description
correct?
A. No, discount points are used to increase yield for lenders who will sell the loans on
the secondary market
,B. No, discount points are used to pay brokers' commissions
C. Yes, banks hold discount points in escrow until sufficient funds have been
accumulated to make more loans
D. Yes, discount points lower interest rates, which make loans more affordable for
everyone - ANSWER-A. No, discount points are used to increase the yield for lenders
who will sell the loans on the secondary market.
Discount points are paid to a lender in order to increase the lender's upfront yield on a
loan. Typically, the lender will compensate for this by charging a below-market interest
rate.
A buyer purchases a rental home that is fully furnished. The document used to transfer
title to the furniture is:
a. quitclaim deed
b. bill of sale
c. special warranty deed
d. general warranty deed - ANSWER-b. bill of sale
Deeds transfer title to real estate, a bill of sale is generally needed to transfer title to
personal property.
A buyer who is concerned with whether a property's soil is suitable for construction of a
septic system would, as part of the inspection process, order a/an:
A. absorption test
B. geological inspection
C. percolation test
D. toxic waste report - ANSWER-C. percolation test
A percolation test, which measures the soil's capacity to absorb water, is usually
performed to determine whether a property is suitable for a septic system that will meet
applicable health standards.
A buyer would be protected from risk of loss due to a failed heating system through:
A. an agency disclosure statement
B. a home protection plan
C. mortgage insurance
D. title insurance - ANSWER-B. a home protection plan
A home protection plan is a short-term warranty that a home buyer may purchase at
closing. The buyer will be reimbursed to expenses related to the failure of covered
systems or appliances, usually only during the first few years of ownership.
A buyer's agent has reportedly seen sales collapse at the last minute because the
buyers weren't able to obtain financing. How could he best limit this in the future?
, A. Qualify all prospects himself
B. Refer buyers to a specific lender
C.Require prospects to be apprioved first
D. Show lower-priced properties - ANSWER-C. Require prospects to be approved first
Getting preapproved for a loan before beginning the house hunting process is now
standard procedure.
A contract signed by a person who was intoxicated at the time of the signature would
be:
A. valid
B. void
C. voidable by the intoxicated party
D. voidable by the other non-intoxicated party - ANSWER-C. voidable by the intoxicated
party
A contract signed by a person who is temporarily incompetent (through intoxication, for
instance) may be voidable, if the person takes action to rescind the contract within a
reasonable time after regaining competency.
A corn field with a depth of 900 feet and a frontage of 484 feet is bisected by an access
road, leaving two triangular lots. If the land sells for $2,000 per acre, how much is each
lot worth?
A. $2,000
B. $10,000
C. $20,000
D. $100,000 - ANSWER-B. $10,000
Each lot is worth $10,000. One way to solve this problem is to find the area of one of the
triangular lots. Use the triangle area formula, Area = 1/2 base x height (900 feet x 484
feet = 217,800 square feet). Convert this to acreage (217,800 square feet / 43,560
square feet per acre = 5 acres), and then multiply by the cost per acre (5 acres x $2,000
= $10,000). Alternatively, you can use the rectangular area formula (Area = Length x
Width) to find the area of the entire corn field (900 feet x 484 feet = 435,600 square
feet), divide to convert the square footage to acreage ( 435,600 square feet / 43,560
square feet per acre = 10 acres), multiply by the cost (10 acres x $2,000 = $20,000),
and divide by 2 to find the cost of one of the lots ($20, = $10,000).
A deed that is not signed by the seller is still considered valid as long as it:
A. is executed by a competent relative of the seller
B. is delivered to the buyer
C. contains is covenant of seisin
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