National Real Estate Exam Test bank – 2026/2027 Academic Year – 600+ Complete Questions and Correct Answers | Verified Study Guide | Grade A

National Real Estate Exam Test bank – 2026/2027 Academic Year – 600+ Complete Questions and Correct Answers | Verified Study Guide | Grade A 2026 / 2027 Academic Year Q: A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called Answer a contract Q: Antitrust laws prohibit competing brokers from all of the following Answer 1. boycotting other brokers in the marketplace. 2. dividing the market to restrict competition. 3. agreeing to set sales commissions and management rates. Q: When a sewer line is installed down a rural road, the cost will probably be shared by Answer all current owners of real estate fronting on that road Q: State laws differ on whether a buyer is entitled to know about Answer a suicide that occurred in the house last year. Q: A lawsuit for inverse condemnation may be brought by Answer a homeowner Q: When is racial discrimination in the rental of rooms or apartments permitted? Answer Under no circumstances Q: The real estate broker who is listing a house for sale should personally verify Answer the number of square feet in the building Q: Real property can be converted to personal property by Answer Severance Q: Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The Answer prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE? Both contracts are valid The purpose of requiring an earnest money deposit in a real estate sales contract is to provide evidence of the buyer's intention to carry out the contract. Q: Although states make specific laws governing water rights and the rights in land that borders water, most states Answer generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with property. In others, all water rights are controlled by the state under the doctrine of prior appropriation Q: A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the monthly payments for these two loans? Answer (BE SURE TO USE THE AMORTIZATION TABLE.) $409.20. Q: A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to Answer demand immediate payment of the entire note Q: The FHA functions MOST like Answer an insurance company 1. They are used to buy down interest rate. 2. They are a function of the marketplace. 3. They are paid by either the buyer or the seller. discount points Q: When land is conveyed to a trustee, the trustee may Answer do whatever is permitted under the trust agreement Q: A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if Answer the owner withdraws the counteroffer before it is accepted. Q: While an agent is showing a listed property, the seller and the buyer enter into an oral agreement for the purchase of the home. If a dispute over the terms arises later, the agreement may be unenforceable because Answer the agreement does not comply with the Statute of Frauds Q: Earnest money should be deposited into a trust account Answer in a timely manner, according to state laws Q: A deed restriction is applicable to the activities of Answer all owners, present and future Q: An easement can be terminated by Answer prescription Q: Depreciation is calculated based on the Answer cost of the building only Q: Which of the following approaches MOST reliably estimates the sales price of a single family residence? Answer Market data Q: A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? Answer Seller Q: The escrow officer or closing agent MUST give information regarding the sales price and seller's social security number to Answer IRS Q: A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? Answer Agency coupled with an interest Q: If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what net income is needed each month? Answer $1,150 Q: Usury laws were enacted to protect the Answer borrower Q: At the time of listing, the seller tells the listing agent they are moving because the neighbor has loud parties every weekend. Answer The agent should tell potential buyers about the parties Q: When one of the parties to an agreement fails to perform one of its conditions, that contract is deemed to be Answer breached Q: Which of the following is NOT a consideration in the definition of market value? Answer Buyer and seller must agree to appraised value Q: One common method for controlling the problems created by conflict of interest in dual representation is Answer allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients. Q: Ownership of common stock in a corporation gives Answer an interest that is classified as personal property Answer Debit seller $300; credit buyer $300 Q: At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? Q: Too much leverage may result in Answer negative cash flow Q: A major reason for buying and owning a condominium rather than a detached single family home is that Answer a condominium tends to be more affordable Q: An adjustable rate loan should include all of the following elements Answer 1. margin 2. life-of-the-loan cap 3. index Answer 1. loan fees. 2 .the origination fee. Q: Regulation Z requires that the borrower be fully informed of all of the following 3. the annual percentage rate A couple signed a lease on an apartment for a period of 1 year. The lease does NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather than renew it. How much notice MUST they give to comply with the lease term? Answer No notice is required The relationship in which the agent is placed in the position of trust and confidence to the principal is known by the term Answer fiduciary A couple are moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city they would like to live in. What type of lease would BEST suit the couple's needs? Answer Month-to-month lease A broker says, while showing a rural property, "This property has the world's purest well water." This would be an example of Answer an expression of opinion, or puffing, which could lead to misrepresentation A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called Answer an option contract Errors and Omissions insurance covers the broker for Answer unintentional misrepresentations The land description T3N, R4W Principal Meridian refers to what method of property description? Rectangular survey. All of the following are methods to calculate the reproduction or replacement cost of a building EXCEPT straight-line method The buyer is assuming a mortgage presently on the property in the amount of $110,000. What is the adjustment made at closing? Credit buyer $110,000; debit seller $110,000 A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is an agent to the broker and a subagent to the principal. The amount of commission to be paid is agreed upon by the seller and agent on the contract. An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than $250,000 An odorless, radioactive gas that can cause cancer Radon The document used in a real estate sale that establishes the legal rights of the buyer and seller is the purchase contract A prospective seller asks a salesperson to recommend a listing price for a property. The salesperson should suggest a competitive market analysis to determine the property's value. Two lots of the same size are sold on a street. The lot on the corner sells for $20,000 more than the lot in the middle of the street. Which of the following characteristics MOST likely explains the price difference? Situs An agency relationship between a property owner and a property manager is usually created by management agreement . On January 15, a seller paid $960 in annual property tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360 day year and a 30-day month. $800 Which of the following is NOT usually prorated at closing Special tax assessments Which of the following is usually prorated at closing? 1. Homeowners association fees. 2. Property taxes. 3. Transferred homeowner's insurance. In MOST states, foreclosed property is sold through public auction A commercial property lost value because a recently constructed highway moved traffic away from the property. This is an example of economic or external obsolescence A managing broker can be held responsible for all real estate activities of salespersons. What is the term used for the person or organization who acts as an intermediary for the purpose of obtaining Financing? Mortgage broker According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad 1. cash price or amount of the loan 2. amount of down payment required 3. number, amount, and frequency of payments In an exclusive right-to-sell listing, an owner lists the property for sale with how many brokers One A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should tell the seller to disclose the termite treatment on the property disclosure When a principal authorizes an agent to perform a particular act or transaction, it is an example of a special agency The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that he is no longer the listing agent If conditions for purchase are included in a deed and these conditions are violated, what is the penalty? Return of the property to the original owner Which is true of BOTH special assessments and ad valorem taxes Deliquent payment is grounds for sale of property Why was the Jones vs. Mayer decision of 1968 important? By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing An Environmental Impact Statement (EIS projects the impact on the environment of a proposed project. Which of the following BEST illustrates the concept and intent of a buffer zone? Garden apartments located between a single-family residential neighborhood and a shopping center. A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when the seller accepts the offer Which rule-of-thumb version is being offered to an investor who is told that a house renting for $900 a month should sell for about $90,000? GRM A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given constructive notice When a property owner uses his home as collateral for a loan and creates a lien in favor of the lender, title is held by the mortgagor The buyer wants to make the purchase offer contingent on a complex mortgage arrangement. The buyer's agent Who is drawing up the contract should suggest the buyer ask a lawyer to furnish the wording The practice of inducing panic selling in a neighborhood for financial gain is blockbusting. The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of impossibility of performance The sellers have agreed to give the buyer a carpet allowance to replace the family room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard for pad and installation. If the family room is 22'6"x 15', how much will it cost the sellers (to the nearest cent)? $935.63 The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, require the buyer to acknowledge disclosure of the presence of any known lead paint A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold goes the tenant have? Holdover tenancy How does a creditor who has obtained a judgment get satisfaction against a debtor who will not pay? Writ of execution Timeshare ownership programs MOST often use which of the following ownership forms? tenancy in common In every real estate transaction, a legal description of the real estate MUST appear in the transaction documents. What kind of legal description should be used in MOST transactions? the same one used in prior transfers of the parcel, verified by a surveyor A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? Conditional use permit or zoning varience An environmental impact statement typically describes the effects of a proposed project on factors such as public health and safety Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian and littoral rights are automatically conveyed with property, or all water rights are controlled by the state under the doctrine or prior appropriation. The doctrine of prior appropriation is MOST likely to be followed in states where water is scarce When more than one approach to value is applied to a property and different indications of value are produced, how should the final estimate of value be determined? Reconciliation When preparing a market data estimate of value, which of the following categories of adjustment is essential? 1. the date of sale of the comparables 2. the amount of square footage 3. the location of the property If all other factors are equal, in which location is a parking lot likely to bring the highest sales business district zoned for a six-story office building Parcels A, B, and C are located side by side and owned by three different owners. A is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A developer believes that if all three can be purchased, the larger parcel would be worth $85,000. By assembling these under one owner they would be worth $22,000 more than their individual values. This demonstrates which principle of value? plottage A loan which requires the borrower to pay interest only until the maturity date (or due date), and then pay the entire principal on the maturity date, is called a term loan The real estate licensee who accepts an undisclosed fee for referring a buyer to a specific title company may be in violation of RESPA Which of the following events would AUTOMATICALLY cancel a listing agreement? property owners death Another term for the owner of a property listed with your firm is the client A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31. This is called an option contract An agreement to purchase that has NOT yet closed is an executory contract An amount of money, agreed to in writing by buyer and seller, that will serve as full compensation if one party does not live up to a sales contract is called liquidated damages For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income? Mortgage loan interest, local property taxes, mortgage loan origination fees When someone has living heirs but dies without leaving a will, the estate is distributed according to the statue of descent The Civil Rights Act of 1866 prohibits any type of discrimination based on race An agent shows a home to a couple and mentions that it has a lovely fireplace in the living room. After buying the home, the buyers and agent discover that the brick fireplace is just a decorative fireplace and is not "wood burning." Which of the following would BEST protect the agent from financial loss? E&O coverage The sellers have agreed to give the buyers an allowance of $16.95 per square yard to retile the kitchen. If the kitchen is 10 feet x 14 feet, how much will it cost the sellers (to the nearest dollar)? $264 A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for taxes? Round to the nearest cent $225.00 The economic characteristics of land are scarcity, location, and durability A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor? A license Which of these Federal laws regulates the advertisement of a lender's credit terms (rates, payment, etc.)? Regulation Z Which of the following may be considered prima facie evidence of discrimination by a broker? Failure to display the equal housing opportunity poster at the broker's place of business An agency relationship based on a formal agreement between the parties, either written or verbal, is express agency An agency relationship based on the actions of the parties is implied agency An agent has a fiduciary relationship with the client or principle The type of agency that exists between the real estate agent and his client is usually special agency In Louisiana, the law states that, unless there is a written agreement to the contrary, the agent represents the person he is with Representing two principals to a transaction without the knowledge and consent of both is undisclosed dual agency What is grounds for termination of an agency relationship 1. mutual agreement 2. destruction or condemnation of the property 3. death or incapacity of either party An agency relationship in which the agent is given an interest in the subject of the agency, such as the property being sold is called agency coupled with an interest An example of price fixing would be two brokers agreeing to set the same fee structure. An agent representing both the buyer and seller in a transaction with the written consent a disclosed dual agent. An agent for a seller must disclose his agency relationship to the buyer when? at the first substantive contact The person who is represented by the licensee is the principle A vendor wants to give you, the agent, a gift for services. What should you do? Tell your broker Once a seller accepts a ready, willing, and able buyer, the agent is entitled to a commission because of the principle of procuring cause A buyer makes an offer on a house. Before the listing agent has had a chance to present the offer to the seller, a better offer comes in. What should the agent do with the first offer present it along with the second offer When an agent should have known that a statement about a material fact was false, this is called: negligent misrepresentation There are three basic types of buyer agency agreements. In which type is the agent guaranteed a commission regardless of who sells the property? exclusive buyer agency The intentional misrepresentation of a material fact is: fraud Which of the following is NOT required to have a real estate license? 1. anyone selling his own property 2. attorneys selling property as part of their professional duties for a client. 3. appraisers, trustees, and escrow clerks When the commission is shared between the listing broker and the selling broker, this is known as: broker cooperation If an agent is working as an independent contractor for the broker: the agent is responsible for paying his own Social Security and income taxes A hidden structural defect that would not be discovered by ordinary inspection latent defect Which of the following is an agent required to disclose to a potential buyer? the property contains asbestos insulation An owner agrees to pay a commission if his property is sold but doesn't want to sign a listing agreement. What type of agency is this? Express Which of the following is NOT a valid reason for terminating an agency relationship The seller decides he would rather sell the house himself Which duty is easiest to perform as a dual agent? disclosure The agent owes only honesty and truthfulness to the customer A salesperson working with a co-operating broker has a fiduciary relationship to all EXCEPT: the buyer The agent who is appointed by the broker to represent a particular client is known as the designated agent A protection clauses in a listing allows for payment of the commission if the buyer was secured by the broker even if the sale takes place after the expiration of the contract An express contract must be written or spoken If a contract is not legal and is not binding on either party it is said to be void A contract in which only one party is obligated is called a unilateral contract. True or False Novation allows the substitution of one party to the contract with a new party, or the replacement of a new obligation for an old one True A type of fraud that is committed with no intent to harm, mislead or misrepresent is: constructive fraud The substitution of one party to the contract for another party, or the replacement of a new obligation for an old one is called novation The Statute of Frauds states that 1. real estate contracts must be in writing if they are to be enforceable by the courts. 2. real estate contracts must include the date, description of property, terms of payment and signature of the party incurring the debt of obligation Under certain conditions, one party may cancel or terminate a contract. This is known as rescision In the other 49 states a contract must be accompanied by consideration When there is an intent to deceive such as lying or intentionally withholding pertinent information, this is known as actual fraud. Errors regarding the facts of a contract are called mistake of fact. The concept that one may lose his legal rights if he inexcusably fails to exercise them within a reasonable time is known as laches This clause insures that the broker will receive a commission if his client buys the house within a certain time period after the listing agreement has expired. Protection Clause In which type of listing contract does the seller retain the right to employ as many brokers as he wants to try to sell his property, but is only obligated to pay a commission to the one who actually finds a buyer? open listing Which type of listing is the best one to ensure the broker a commission? exclusive right to sell listing True or False A lease is both a contract and a conveyance. True Another term for earnest money is liquidated damages A type of owner financing in which the seller retains the title to the property until the final payment is made is called 1. installment sale. 2. contract for deed. 3. In Louisiana, bond for deed. A listing which is illegal in some states, and allows the broker to keep all proceeds of the sale in excess of a net amount is called net listing. A listing contract may be terminated if both parties agree Ordering a meal in a restaurant and being expected to pay for it would be an example of what type of contract? implied A contract in which the owner gives a purchaser the right to purchase within a specified time period is called an option A buyer submits an offer to purchase accompanied by earnest money in the amount of $1000. The seller accepts, but later changes his mind. What happens to the earnest money? The seller must return the $1000 plus a like amount (that is, $2000 total) to the buyer In what type of listing does the seller hire one broker but retains the right to sell the property himself without paying a commission to the broker? exclusive agency listing A sales contract in which either party can sue to have the sale completed should the other party default on the contract is called specific performance contract Conditions that must be met before a sales contract is fully enforceable are called contingencies True or False The Purchase Agreement is the basis for the closing statement. True A Bill of Sale is used for: personal property. What type of interest, if any, does a purchaser have in a property he has contracted to buy, but the sale has not yet been executed? equitable title The term that means that the contract must be performed within the time limit specified Time is of the essence In the closing statement, new loan proceeds are listed as credit to the buyer A contract is signed for the purchase of a house, but before the sale is closed the seller dies. The heirs do not wish to sell. The buyer can sue for specific performance Another term for "offer and acceptance" is: meeting of the minds. A contract that is signed by a 16 year old is voidable Which of the following is an example of a unilateral contract? option A contract is signed between buyer and seller. The contract would become impossible to perform if the house burns down A purchase money mortgage is used in owner financing If a property is sold for an illegal purpose, that contract is void When one party has substantially performed the terms of the contract, but has not completed every detail exactly as the contract states, this is known as substantial performance A buyer purchases a property "as is". The seller and the broker both knew that the house had bad wiring but did not tell the buyer. Which of the following statements is true? Selling "as is" does not relieve the seller or the agent of the duty to disclose material defects An example of a service contract is listing agreement A contract for the sale of a property which does not state the consideration to be paid and is not signed by the parties would be void When does a listing contract terminate? upon expiration of the contract date. A broker in listing a house, wanted an exclusive right to sell the property for 90 days. The seller wanted to retain the right to sell the property himself. What type of listing would be best? exclusive agency Procuring cause would not be required in order for a broker to receive a commission in a exclusive right to sell listing A buyer becomes obligated when the agent presents him with the accepted contract A purchase agreement is signed for the purchase of a $400,000 house. A deposit of $10,000 is given to the broker and put in his escrow account. A month later, the buyer and seller agree not to go through with the sale. Which of the following should the agent do? The broker must return the deposit to the buyer. A contract signed under duress is voidable True or False Handicap status does NOT include illegal drug users. True Refusing to make loans or issue insurance policies in certain areas is known as redlining Is a person who is recovered from mental illness protected by the handicap status? Yes. True or False A pregnant woman would be protected under the familial status class True Legislation that was specifically designed to provide for a national policy of fair housing was the: Fair Housing Act of 1968. True or False Appraisers are not bound by the fair housing laws. False What are the 7 protected classes? race, color, religion, national origin, sex, familial status, handicapped Panic selling for financial gain by insinuating that a minority group is moving into a neighborhood is known as blockbusting. What is the penalty for a second fair housing offense within the past 5 years? $27,500 What act prohibits discrimination on the basis of race, color, nationality, sex, marital status or age in the granting of credit? Equal Credit Opportunity Act What is the penalty for a first offense fair housing violation? $11,000 A violation of the Fair Housing Law is misdemeanor To protect himself from Fair Housing suits, an agent should keep accurate records of what property he shows to whom. Who may be exempt from the Fair Housing Act of 1968? unlicensed owners If a complaint is filed against a property manager for discrimination, the complaint is filed with HUD A housing complex with 80% of the units occupied by a person 55 or older would be exempt from renting to which protected class? familial status Which group is not protected by fair housing laws? illegal drug users A handicapped tenant may make reversible changes to a structure if he does so at his own expense Is a person with a mental illness who is completely cured covered by the Civil Rights Act of 1968? yes, because the law covers anyone who is currently mentally ill or recovered. If HUD issues a charge following an investigation of a discrimination complaint, either the complaint or the respondent would have how many days to choose the option to have HUD, through its ALJ, hear the case or have a jury trial? 20 The new 1988 Federal Fair Housing Act went into effect: March 12, 1989 Real property consists of 1. land 2. improvements 3. plants, trees and crops The four economic characteristics of land are scarcity, modification, fixity of investment, and situs The four physical characteristics of land are permanence, immobility, complexity, and uniqueness True or False Riparian rights only apply when more than one property adjoins the same body of water. True Underground water sources such as springs, geysers, and underground streams are known as: Percolating waters True or False An owner may sell or lease his air rights to another person. True Water rights that apply to ocean front and lake front property (lapping water) are Littoral True or False Land is permanent, immobile, complex and unique. True Water rights that apply to land adjacent to running water are called: Riparian Do mineral rights transfer when the property is sold? Yes, unless specifically retained in the contract. Land ownership extends From the center of the earth and above the earth to infinity. The five categories of real property are residential, agricultural, industrial, commercial, and special purpose An item of personal property which has been permanently attached to real property such as a light fixture or a bathtub is known as a Fixture Another name for fructus industriales is Emblements The rights associated with ownership of real property are called the "Bundle of Rights" Anything man-made that is added to the land such as homes, buildings, fences or sidewalks is known as improvements Farm crops are called: emblements A type of ownership which extends for an indefinite length of time and includes some or all of the rights contained in the Bundle of Rights is called a freehold estate A qualification in a fee simple estate which prevents the new owner from performing some action or activity is known as a condition subsequent The person who will own the property after the death of a life estate owner is called remainderman The most complete form of ownership which lasts forever and may be passed on to one's heirs is called: fee simple or fee simple absolute There are two general types of life estates. They are conventional and legal Dissolving a joint tenancy is done through a legal action known as: a partition suit A type of co-ownership in which all owners must acquire their interest at the same time, hold an equal share, and has the right of survivorship is called joint tenancy The simplest form of co-ownership in which each owner holds title to a specific share of the property but it is said to be "undivided" is called: tenancy in common Ownership by two or more people is known as co-ownership A type of freehold estate which exists until the death of a certain specified person is life estate A clause in a deed that provides for the property to revert to the original owner if conditions of ownership are not met is called a: reverter clause True or False Because of the right of survivor-ship, joint tenancy is sometimes called "a poor man's will". True Tenancy by the entirety is ownership by a husband and wife A stockholder's use of a unit in a co-operative is secured by: a proprietary lease Highrise developments which combine offices, stores, theaters, and apartments, and other facilities in a single building are called Mixed Unit Developments (MUD's) A form of ownership involving several owners holding fee simple title to individual units in a property and common ownership in the property's common grounds is called condominium A development where different land uses are combined in one area, for example, housing, recreation and businesses in one development is called a Planned Unit Development (PUD) A business which is held by one person and is not incorporated is a sole proprietorship True or False A corporation is considered a legal entity. True Which type of business ownership has the disadvantage of being subject to double taxation? Corporation A type of ownership in which the owner owns shares of stock rather than real property is called co-operative In which type of partnership is each partner responsible for the debts up to the limits of his own private resources? general partnership True or False In community property, any property acquired outside the marriage, such as an inheritance, is called separate property. True True or False A corporation is managed by a board of directors. True Ownership by a husband and wife in which the husband and wife each have separate, equal ownership in anything acquired by the marriage is called community property Three owners own a property as joint tenants. One of the owners sells his interest to a fourth party. The fourth party is a tenant in common Two investors buy a building as joint tenants. One of the investors dies. Which of the following is true as to ownership of the building? The remaining investor owns the building in severalty A determinable fee estate is ownership with conditions Two investors own an apartment building as joint tenants. One man dies leaving his entire estate to his two children. Which of the following best describes what will happen as to ownership of the apartment building? The children do not inherit the apartment building. Ownership along non-navigable riparian waterways is to the midpoint A free-standing china cabinet built to fit into a corner of a dining room would be considered personal property Ownership along navigable riparian waterways is to the water's edge A property owner owns land near a waterway with no access to the water. He obtains permission from the state to use the waterway under the doctrine of prior appropriation. How does he obtain access to the waterway? he must negotiate an easement with the owner of the waterfront property. Mr. Baker and Mr. Adams are partners in a business which sells golf balls. Mr. Baker owns 60% of the business and Mr. Adams holds 40%. Who must sign in order to sell the business? both Tenancy by the entirety is most similar to joint tenancy A man conveys his interest in a pharmaceutical company to his ailing sister's son with the condition that the income from the company be used for his sister's medical care. Which of the following is true? The man is the trustee with his sister as the beneficiary A tenant was renting a property for use as a beauty shop. When she moved out of the property she failed to remove the chairs that she used for her business. The chairs, although trade fixtures, are now the property of the owner. Under what principle does the landowner acquire the trade annexation A man owns a life estate dependent on his own life. He leases the property for 3 years and dies one year later. Which is true concerning the lease? The lease is no longer valid Ownership of real estate by a corporation would be in severalty Which of the following would not transfer with the sale of a house at closing? emblements Two investors can own an investment property in unequal shares as tenants in common Which estate is ALWAYS inheritable? fee simple A husband and wife own their home as tenants in the entireties. The wife dies and names their two children to inherit her interest in the home. Which of the following statements is true? The children have no ownership in the home What type of real estate investment has no real property ownership? cooperative Possession, interest, time and title (or PITT) are associated with what type of ownership? joint tenancy Which of the following statements would be true of both joint tenancy and tenancy by the entirety? They both have the right of survivorship A man is a co-owner with three others of a warehouse. The man dies and his interest in the warehouse is inherited by his heirs. The man's interest in the warehouse was as a: tenant in common A general warranty deed contains how many covenants? Five True or False The right of disposition gives an owner the right to sell, will, lease, or give away his property rights True A developer may transfer ownership of the streets and parks in a subdivision through a public dedication When the government gives land to a private party it is called a public grant. When a private party gives land to the government it is known as a public dedication A type of deed that guarantees more than the quitclaim but less than the special warranty deed is the bargain and sale deed What type of deed is the best one for the grantee? general warranty deed What type of deed provides the LEAST protection for the grantee? quitclaim deed A written instrument by which title to real property is formally transferred from one party to another is a deed What signatures are required on a deed or conveyance? The grantor only True or False A general warranty deed absolutely guarantees good title regardless of flaws of title, unrecorded claims, undisclosed encumbrances, or fraud False In which type of deed does the grantor guarantee the title only during the time that he actually owned the property? special warranty deed The party conveying title is known as the grantor Administrator's deed, executor's deed, and sheriff's deed are all what type of deed? Specialty Deed The covenant in a general warranty deed that ensures the owner with full possession of the title is Seizen True or False The Habendum Clause specifies the type of estate being transferred True The government exercises its right of eminent domain through a court action known as condemnation The acquisition of title to property by possession of the property for a statutory number of years is called adverse possession Which clause in a deed contains the actual words of conveyance? granting clause Eminent Domain, Escheat, and Adverse Possession are what kind of transfer? Involuntary When a testator dies his will must go through a court proceeding called probate An addition to an existing will is called a: codicil A will that is written by the testator and in his own handwriting, dated and signed by him is known as a holographic will A person who is appointed by the court to carry out the terms of a will is a/an: administrator A will which is prepared by an attorney, witnessed and signed is known as a statutory will A person who inherits property in a will is known as a: legatee If one of the owners in a joint tenancy or tenancy in common wishes to force the sale of the property, he does so through: partition suit When an owner dies without leaving a will and without heirs, his property reverts to the state. The term for this is: escheat A person who dies leaving a will is said to have died testate. A person dying without a will is said to have died intestate Which clause in the deed identifies the grantor and the grantee, often including their addresses? vesting clause The husband's interest in his wife's estate is called curtesy A will usually names a person to carry out the instructions of the will. This person is called the executor First hand information regarding a property is known as actual notice The gradual increase in the size of a property as the result of some natural process is called accretion. The land deposited by this process is called alluvion Acquiring property through natural or artificial causes, or acts of God is a type of involuntary transfer which is called accession Filing documents in the public records at the court house is considered to be what type of notice? constructive A brief summary of all recorded instruments which have affected the title to a property is called a/an abstract of title Recording a transfer of property in the public records at the court house is known as constructive notice When a title company has made a payment to settle a claim covered by a policy, the title company then has a right to any remedy or damages available to the insured. This is called subrogation True or False A quitclaim deed is sometimes used to clear title defects. True A statement saying that a person signing the document has done so of his own free will and that he is the person whose signature appears on the document is a/an acknowledgment True or False Information about a property that is hand delivered to an interested party would be considered as giving actual notice. True An insurance policy which protects the lender for the amount of the loan as to problems with the title to the property is called a mortgagee's policy True or False An Attorney's Opinion is based on the Abstract of Title. True The gradual exposure of land behind a receding waterline is called reliction True or False The method by which improvements or personal property become real property is through attachment. True Title insurance generally covers defects that are in the public records A continuous linking of owners stretching back to the first owner or the original land grant is called a/an chain of title Mortgagee title policies protect against _________ loss? lenders A person occupies a property which he does not own for the prescribed number of years as set by state law with no objection from any other party. He can claim ownership of the property through adverse possession A summary report of what was found in the public records when the title search is done, beginning with the original owner and giving a chronological list of all recorded instruments including liens and encumbrances is a abstract of title A deed must be signed by the grantor A Bargain and Sale Deed with Covenant is equivalent to a special warranty deed The method by which personal property becomes real property is attachment The power of the government to enact and enforce laws to protect the health, safety, morals and welfare of the general public is called police powers True or False An owner may appeal to the Zoning Review Board for a variance which exempts the owner from a particular zoning ordinance. True Areas which separate areas of diverse zoning classifications are called buffer zones True or False The state's authority to enact and enforce police powers is passed on to the municipalities through enabling acts. True A change in zoning from a high density use to a lower density use, for example, from residential to agricultural is known as downzoning A claim or burden on a property which limits one's use or rights in the property is called a/an: encumbrance The distance from streets or sidewalks that buildings can be erected is known as: setback A building which was built before a zoning ordinance was enacted, but is allowed to continue until the building is torn down or its use is change, is called a non-conforming use True or False Zoning ordinances are used to enforce the Master Plan for a city's development. True The power of the government to seize owner-less land is called: Escheat A monetary claim upon the property of another, which uses the property itself as security for payment of a debt is a lien Two types of property taxes are ad valorem taxes and: special assessments A type of seller financing used in connection with a Purchase Money Mortgage is a: vendor's lien A mechanic's lien for an unpaid swimming pool would be an example of a: Involuntary specific lien The priority of liens with regard to who is paid first in a foreclosure is Property taxes, mechanic's liens, all other mortgages by date recorded Mortgages, mechanic, judgments are what type of lien? Private An agreement that changes the priority of liens is a/an subordination agreement A property tax that is imposed only on a specific segment of the community to pay for improvements for that segment is called a special assessment A lien which attaches only to the property explicitly stated in the lien is a specific lien True or False Assessed value is a percentage of market value. True A recorded notice of impending litigation against a property is called lis pendens A mechanic's lien must be filed within how many days after completion of the work? 60 True or False Mechanic's liens do NOT take priority over other mortgages. False True or False If a seller defaults on a sales contract, the buyer could place a vendee's lien on the property to recover his deposit. True A type of easement always involving at least two tracts of land and involving ingress and egress is called a/an easement appurtenant The right to use a portion of the land of another for a specific purpose is a/an easement True or False Restrictive conditions place limitations on the use of a property and are used in determinable or qualified fee estates. True The person benefiting from an easement appurtenant is called the dominant estate Subdivision restrictions are also known as: restrictive covenants True or False An encroachment constitutes actual notice. True An agreement granting the short term use of a property and which is revocable at any time is called a/an license True or False A license can be inherited. False True or False A levee would be an example of a legal servitude. True A type of easement in which one land owner has access across his neighbor's land would be a/an: easement appurtenant An easement granted for a utility, pipeline, railroad, or water line would most likely be a/an easement in gross There are two types of deed restrictions. They are restrictive covenants and restrictive conditions The unauthorized use or occupation of another's property is called a/an: encroachment If the owner of the servient estate buys the land which is the dominant estate, what happens to the easement? It is terminated If there is a conflict between zoning ordinances and restrictive covenants, which one takes precedence? the most restrictive one If a property is downzoned and there is an decrease in value because of the downzoning, is the owner eligible for compensation from the city? no What changes the priority of liens? subordination agreement A special assessment has been levied for a subdivision to improve the drainage system in the subdivision. Which homeowner can expect to pay the largest tax, if taxed as front footage? The largest corner lots CCR stands for: covenants, conditions, and restrictions An appurtenant easement that arises when an owner has no access to the street except across his neighbor's land is called: easement by necessity The state's authority to enact and enforce police powers is passed on the the municipalities through: enabling acts An easement appurtenant involves at least two tracts of land The period for redemption of property sold for taxes in Louisiana is a minimum of 3 years Real property may be encumbered by conditions or restrictions that are written into the deed. These encumbrances are often called: CCR An unpaid swimming pool lien placed by the installer would be an example of involuntary specific lien Which is the LEAST acceptable form of property description? street address A township has a theoretical area of 36 square miles What is the BEST feature of the metes and bounds method of describing land? It can be used to describe land of any shape. The distance between township lines is 6 miles Townships are created by range lines and township lines Every fourth township line serves as a correction line A description that reads "Lot 5, Block B, Wildwood Heights" would be which type of description? lot, block and tract A section is one square mile and 640 acres How many sections are in a township? 36 The symbol T3NR2E would be used in a rectangular survey description Given a description: "the SW ¼ of the NE ¼ of the SE ¼ of Section 16". Which quarter of Section 16 is this land in? the southeast Meridians and range lines both run parallel to each other and north-south How many square feet are there in an acre? 43,560 How many acres are there in a section? 640 If a property is in a good location we say it has positive situs An estimate of value which is NOT a formal appraisal but uses the same principles and many of the same methods as the sales comparison approach is a competitive market analysis or CMA The most probable price in terms of money which a property should bring in a competitive and open market is: market value True or False Transferability refers to the ability to transfer the title from the seller to the buyer. True The desire to purchase along with the ability is called demand The principle that states that the value of an inferior property is increased by being near a better property, and the value of the better property is decreased by being near an inferior property, is called Progression and regression True or False Generally, the greater the supply, the lower the demand. True The theory that there is one particular use for each property that will bring the highest value, is called highest and best use The principle of value that is the basis for subdivision restrictions is conformity The additional value between two similar income properties that is due to the land or the location is called surplus productivity The process of determining the worth of something is called: valuation The single most important thing in determining the value of a property is situs Things that are near a property and affect the value of the property are called externalities The value that one particular component of a structure contributes to the total value is contribution The four factors of production are: capital, management, labor, and land The principle of value that is the basis for the Income Approach to value is anticipation The form in which a residential appraisal is usually done is called the: checksheet If two lots are combined resulting in an increase in the value of the lots, this is called: plottage increment True or False Commercial appraisals are usually written as a narrative report. True True or False Reproduction cost is usually much higher than replacement cost. True The method of arriving at a value by calculating the cost to build an exact replica of the building is called reproduction cost The method of arriving at a value by estimating the cost to build a similar structure at today's prices is: replacement cost True or False You can not use the Cost Approach to appraise land. True When two or more lots are combined to form one larger parcel, this is called: assemblage Which of the following methods of estimating cost is the most accurate and the most time consuming? quantity survey method When an appraiser uses more than one of the approaches to value on a single property, the process by which he combines the results from each is called: reconciliation A type of depreciation that results from outdated design or technology is called functional depreciation True or False Land is never depreciated True If your property is located next to a toxic waste dump, you might expect to have which of the following types of depreciation? external depreciation The period of time over which a property is considered to be useful is the: economic life. An investor's rate of return on his investment is called the: capitalization rate The Income Approach is based on the principle of anticipation The annual gross income minus all operating expenses for the year is the net annual income How old a property property "looks", that is, the age based on what condition the property is in is called: effective age A type of depreciation that results from normal wear and tear and is always physical depreciation True or False Incurable depreciation is a loss in value because of things that would cost more to repair than the resulting increase in value. True If the cost of repairs is greater than the resulting increase in value, then we say the depreciation is incurable Which method of determining value is generally the best one and the most used? Sales Comparison True or False The Sales Comparison Approach is not normally used for properties not sold on the open market such as churches. True The type of depreciation which is NEVER curable is called external The principle which states that the difference in value between two similar properties is attributed to the location of the land is surplus productivity When depreciating a property you would normally depreciate the building only The four determinants of value are demand, utility scarcity, transferability When appraising a special purpose building such as a school or church, the appraiser would most likely have to use which approach to value? Cost The gross adjustment is an indication of: how good a comparable is. The process by which the value is derived when using two different approaches to value is called reconciliation When appraising an older house for which there are no comparables to be found, what method would you most likely use? replacement cost Capitalization is the process by which annual net income is used to determine value An additional time period in which the borrower can pay a debt and redeem his property is called equitable right of redemption The document which contains the promise to repay along with specific conditions and stipulations is a promissory note Under the Lien Theory, title is said to ___________________ to the lender hypothecate Under the Title Theory, who is the legal owner of the mortgaged property? the lender The borrower, or person making the loan is the mortgagor The person who lends the money is the mortgagee if a promissory note is not secured by a mortgage, it is called a/an unsecured note A clause in a promissory note which provides for a penalty if the debt is paid off early is called a/an prepayment clause Under the Lien Theory, the borrower holds legal title to the pledged property and the lender holds a lien against the property. A clause in a promissory note that gives the lender the right to demand payment in full of the entire unpaid debt if the borrower defaults is called a/an acceleration clause What's The practice of charging more interest than is legally allowable? usury The property which is pledged in the loan instrument is called the collateral When the debt is paid, the mortgage is said to be defeated The clause which provides for removal of the mortgage when the debt is paid is the defeasance clause The clause in a mortgage that states that the mortgagor has good and clear title to the property and has the right to convey it is the warranty of title clause The action which cancels the note when the full debt is paid and defeats any interest the mortgagee has had in the collateral property is called satisfaction of judgment A covenant is the same as a promise A clause which makes the mortgage non-assumable (assumable means that a buyer can assume or take over the seller's mortgage) is a/an: alienation clause A clause which is found in certain types of mortgages that gives permission for another, subsequent lender to assume the rights of a first mortgage lien is called a subordination clause The trust deed conveys what type of title to the third party? Bare or naked title True or False In a Trust Deed, the lender is the beneficiary. True The Trust Deed differs from a mortgage in that it involves____________ parties 3 True or False The clause of reconveyance in a Trust Deed is analogous to the defeasance clause in a mortgage True A clause which may be included giving the lender the right to increase the rate of interest during the length of the mortgage is a/an escalation clause The clause in a mortgage which pledges the collateral property to the mortgage is called the granting clause The letters PITI stand for principal, interest, taxes, and insurance The right of a title company to receive any damages available to the insured when the title company has made a payment to settle a claim covered by a policy is called subrogation In a Trust Deed, the borrower is known as the trustor The instrument which transfers the title back to the original owner once the trust deed is paid off is called a/an deed of reconveyance The clause in a trust deed that allows the trustee to sell the property and repay the beneficiary in case of default is called the power of sale clause In which type of owner financing does the buyer receive title at the time of sale? Purchase Money Mortgage Under which type of foreclosure is the lender required to refund to the borrower any profit realized on the sale of the foreclosed property? foreclosure by sale During the period of time after the borrower defaults and before the foreclosure sale, the borrower, or another lien holder, can redeem the property by paying the debt. This is called equitable redemption The quickest process for foreclosure is executory process Any conventional loan that is greater than 80% is required to have private mortgage insurance True or False The lender usually uses a ratio of 2 1/2 to 1 in verifying the ability to repay the loan. True The two general categories of loans are conventional and government backed In some states there is an additional period of redemption after the foreclosure sale. This is called statutory redemption True or False In order to get a deficiency judgment there must be an appraisal before the sale True In some states, if the lender is unable to recover his full interest in the foreclosed property, he may seek a __________ ___________, which allows the lender to attach and seize the borrower deficiency judgment The term used to describe the relationship between the amount of the downpayment and the amount of the loan is called the loan to value ratio The selling price of a property would be listed how on the closing statement? debit to the