National Real Estate CE Shop National
FINAL REAL ESTATE EXAM QUESTIONS
AND ANSWERS
Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in
order to pay the loan back and finally made her last payment this month. What happens
now? - Answer-Because the property deed was held by a third-party trustee instead of
the lender, the trustee grants a reconveyance deed to Olivia.
Warren signed a contract with the Samsons for the sale of property he didn't own. What
type of contract is this? - Answer-A party can't promise to do something impossible in a
contract. Doing so makes the contract void.
Which amendment to CERCLA says that "innocent landowners" aren't responsible for
clean-up of hazardous contamination? - Answer-The Superfund Amendments and
Reauthorization Act, or SARA, says that innocent landowners aren't responsible for
clean-up of hazardous contamination.
With the cost approach to value, what is the replacement cost? - Answer-The
replacement cost reflects the cost to build a functionally equivalent improvement, as
opposed to the reproduction cost, which is the cost to build an exact replica of the
subject, with the same materials and deficiencies.
Antje's clients closed on their property yesterday, but Antje still has some paperwork
that she needs to deliver to them as soon as possible. Under which fiduciary duty is
Antje acting? - Answer-The duty of accounting may continue even after the transaction
closes. The agent must account for any documents or money belonging to the client
until it is delivered to the appropriate party.
When real estate licensee Brian discovered that Arnold was using a 'Choose Your
Neighbor' letter to market a property without also listing the property in the MLS, in the
local paper, or even putting a for sale sign in the yard, what charge could he bring
against Arnold to the National Association of REALTORS®? - Answer-REALTOR®
Brian could charge Arnold with violating Article 10 of the Code of Ethics, which prohibits
REALTORS® from agreeing to discriminate against people belonging to a protected
class.
What is estate at sufferance? - Answer-Estate at sufferance is when a tenant remains
on the property after the lawful authority has expired (a holdover tenant), after which the
landlord may evict.
Which entity typically enforces the code restrictions and licensing and insurance
requirements for contractors, thereby enforcing the building code? - Answer-While
,builders and developers self-regulate to some degree, they're not responsible for
enforcing the building code. This is the local building department's responsibility.
Under which types of agency agreement may a buyer and agent operate? - Answer-
Open, exclusive right to represent, and exclusive agency
What is a survey? - Answer-A survey is used to create, verify, or correct a legal
description. It's a professional on-site measurement of the lot lines and dimensions of a
property.
Melisa's mother gave her house to Melisa, along with a signed copy of the deed
granting ownership to Melisa. Years later, Melisa decides to downsize by selling the
property. The title company shows that the property is still in Melisa's mother's name.
What does Melisa have to do to clear this up? - Answer-To preserve the chain of title,
Melisa needs to record the signed deed. Then future records will show an unbroken
chain of title.
Prior to the ______, there was no legal protection for women who endured sexual
harassment from landlords and sellers when they attempted to obtain housing. -
Answer-The Housing and Community Development Act of 1974 included gender or a
person's sex in the list of protected classes.
Which document is used to give a buyer an overview of the title history and information
about what is or isn't covered in an insurance policy? - Answer-Title insurance
companies issue a preliminary report with the current title history and any liens or
encumbrances. It outlines what the insurance company will or won't cover on its
forthcoming insurance policy if the title is found to be acceptable.
When is a lead disclosure required? - Answer-A lead disclosure is required for
residential properties built before 1978 because paint manufacturers used lead in paint
before it was banned that year.
Which of the following is a potential disadvantage for a buyer who enters into a lease
with an option to buy contract? - Answer-Depending upon the contract's terms, a
potential disadvantage for a buyer who enters into a lease with an option to buy is that
he could lose any funds credited to the purchase price if he breaches the terms of the
lease.
Joe gave land to a school, but still wanted to have some control over its use, so a deed
was prepared that gave the school title as long as the land is used for educational
purposes. What type of interest does the school have? - Answer-A fee simple
determinable has limitations as to what can or can't be done with a property. It uses
phrases such as "so long as," "while," or "during" to describe the required condition.
You represent the buyer in one transaction and the seller in a different transaction.
What type of agency relationship do you have with the buyer? - Answer-You have a
,buyer agency relationship with the buyer in one transaction and a seller agency
relationship with the seller in the other transaction.
What does the Federal Trade Commission consider to be an unfair ad? - Answer-Any
ad or business practice that causes or is likely to cause injury is considered an unfair
ad, according to the FTC's Unfairness Policy Statement.
As part of the sales contract, Garth, the seller, was supposed to provide a copy of the
seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is
this? - Answer-A voidable contract can be cancelled by one or more parties because it's
missing an essential element. In this situation, Melanie, the buyer, has the right to
cancel the contract and have her earnest money refunded.
How are principal meridians and baselines used in the rectangular government survey
system? - Answer-Each legal description in this system originates at the intersection of
a principal meridian and a baseline.
When the lender gathers all kinds of information about the borrower's assets, debts,
income, employment history, and pulls their credit report, the buyer is
___________________. - Answer-This is all part of the application process.
In which of the following situations would the state be able to use its power of escheat?
- Answer-Escheat occurs when a property owner dies without a will in place, and no
heirs or creditors can be found.
Which of these situations might be addressed by limitations or a subject to clause in the
deed Jane is using to convey property to Moira? - Answer-A great example of deed
limitations is the restrictions that may be placed on a property by an owners association.
A subject to clause may refer to an easement held by a neighboring property to get to a
road or water source.
Hannah wasn't able to get the financing to open her boutique, so her mother came on
as a silent partner and provided additional cash. Hannah and her mother have an
agreement that states Hannah's mother can't be held financially or legally liable if there
are any problems with the store. What type of contract clause is this? - Answer-
Indemnifying one of the contract parties releases that party from all liability or loss.
Drew and Hank were camping at Hank's riverfront cabin. Hank told Drew that he so
rarely used the cabin that he was thinking of selling it. Drew said that he'd buy it from
Hank for $80,000, and Hank agreed that was a fair price. It's two months later, and
Hank is upset that Drew now says he won't buy it. Why isn't this contract enforceable? -
Answer-The statute of frauds requires that real estate contracts be in writing. Drew's
offer was oral, and thus didn't create an enforceable contract.
, Local authorities lack police power over which of the following? - Answer-Local
authorities have police power over budgeting, zoning, and subdivision development, but
they lack police power over federal government construction projects.
Darren and Natalie are first-time buyers who have decided to purchase a newly built
townhouse. Their agent Jenner tells them that they're required to purchase a third-party
home warranty. Which of the following conditions must be true? - Answer-All loans that
are either FHA-insured or VA-guaranteed require a home warranty to protect both the
buyer and the home's value.
What are the two types of physical depreciation? - Answer-Two types of physical
depreciation are curable and incurable depreciation.
Travis has made the final payment on his loan according to the loan terms. What must
the note holder do to acknowledge that the debt has been repaid? - Answer-When the
note has been paid off, the holder must sign the note, mark it as paid in full, and return it
to the maker. The satisfaction of mortgage is recorded with the county land office,
removing the associated lien from the property.
What factors affect an adjustable rate mortgage? - Answer-Rate, index, and margin
Casey signed a contract form offering a purchase price of $309,000 on Karen's home,
and gave his agent a $5,000 earnest money deposit. Karen's out of town, though, and
her agent can't reach her. At this point what does Casey have? - Answer-Until the terms
are negotiated and the contract signed by both parties, acceptance hasn't occurred and
the sales contract is considered an offer.
Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for
Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the
status of the listing agreement? - Answer-Because the broker has become
incapacitated, the listing agreement terminates by force of law.
Which task is NOT the responsibility of an escrow officer? - Answer-The escrow officer
is responsible for distributing the earnest money as outlined by the parties or the courts
in case of dispute but doesn't have the authority to determine how it should be
distributed.
Physical characteristics of land include its immobility, indestructibility, and ______. -
Answer-Nonhomogeneity is a unique characteristic of land. Even within a single
subdivision, two identically sized parcels will have their own unique characteristics:
views, access, proximity to other amenities, etc.
Which of the following is the price a lender believes the property will bring at a
foreclosure sale? - Answer-Lenders won't lend on what they can't recoup. Therefore, a
loan will be based on what a lender would hope to recoup, should a foreclosure sale be
necessary.
