California Real Estate Exam - Test 4 Questions and
Answers With Complete Solution
1. A real property security endorsement is valid for:
a. as long as the broker's license is valid, and it needs no further endorsement.
b. multiples of 4 years.
c. one year.
d. the term of the broker's license to which the endorsement is affixed.
d. the term of the broker's license to which the endorsement is affixed.
2. A conventional loan would differ from an FHA loan in that the conventional
loan would have:
a. lower monthly payments.
b. lower interest rates.
c. lower down payment requirements.
d. lower loan-to-value ratio.
d. lower loan-to-value ratio.
FHA typically will loan a greater percentage of value to the borrower than a conventional
lender, requiring a smaller down payment. The conventional lender does not have the
"insurance" against loss that the FHA lender has and, therefore, is taking greater risks
and must receive more down payment (equity) from the buyer/borrower.
3. A buyer has purchased a residence for $100,000 utilizing VA entitlement to
finance the entire purchase price. The interest rate = 12%; combined monthly
payments for 30 years will accumulate to be $370,300. What will be the initial
month's principal payment?
a. $128.61
b. $78.61
c. $28.61
d. $0.00
c. $28.61
Monthly (P+I) = $370,300 ÷ (30 x 12) = $1,028.61
Initial month interest = $100,000 x 12% ÷ 12 = $1,000
Therefore, initial month principal amount = $1,028.61- $1,000 = $28.61.
4. A property was leased to a lessee for a two-year period, with monthly lease
payments to be $800. The lessor collected the first and last month payments. This
agreement would most likely not include which of the following statements?
a. Escalator clause
b. Compliance with local laws
,c. Condemnation provisions
d. Third-party liability clause
a. Escalator clause
A signed agreement whereby the lease amount is specifically set (for a short period of
time) would
probably not include an escalator clause.
5. In a single-family dwelling, the extended (spread out) part of the bottom of the
exterior of the foundation is called the:
a. base.
b. footing.
c. foundation.
d. pier.
b. footing.
Base of foundation wall, pier, or column.
6. All of the following would cause economic obsolescence, except:
a. improperly placed improvements.
b. old fashioned kitchens.
c. unfavorable zoning changes.
d. industries moving out of the neighborhood.
b. old fashioned kitchens.
Old fashioned kitchens represent a form of functional obsolescence. The other three
items are caused by
factors outside the property. Therefore, they are forms of economic obsolescence.
7. One way to jointly hold title to real property is "joint tenancy." Another way
would be:
a. tenancy in common.
b. community property.
c. tenancy in partnership.
d. all of the above.
d. all of the above.
8. The owner of a large apartment complex was considering adding another
swimming pool. An appraiser hired to do a study for the owner would use what
basic principle of appraising to determine the feasibility of adding the pool?
a. Substitution
b. Competition
c. Contribution
d. Appreciation
, c. Contribution
Would the addition of the pool contribute to the rent schedule?
9. A tenant is justified in abandoning a lease property if the landlord
demonstrates constructive eviction. Which of the following acts would be
considered constructive eviction?
a. The property has been shown to another party that has entered into
negotiations with the landlord.
b. The landlord has failed to make needed repairs and maintain the property in
the agreed
manner.
c. The landlord has altered the building to an extent that is no longer usable for
its original purpose.
d. All of the above.
d. All of the above.
All define constructive eviction.
10. Considering the "Interstate Land Sales Full Disclosure Act," which of the
following is NOT true?
a. Controls subdivisions of 25 (or more) lots, unimproved at the time of sale.
b. Developer must register subdivision with Office of Inter-Land Sales
Registration (OILSR), and provide copy of
"property report" to purchaser or lessee.
c. Any contract to purchase or lease may be revoked by purchaser or lessee
within 7 days of signing the contract.
d. Violations are punishable by fines up to $50, imprisonment of up to 5 weeks, or
both.
d. Violations are punishable by fines up to $50, imprisonment of up to 5 weeks, or both.
Fines up to $5,000; imprisonment up to 5 yrs., or both.
11. A valid lease need NOT contain:
a. amount of payment.
b. description of property.
c. names of parties to lease and terms of lease.
d. stipulated transfer fee.
d. stipulated transfer fee.
There is NO transfer fee involved with leasing.
12. If an appraiser wishes to measure the extent of accrued depreciation, he
would rely upon which one of the following methods of calculation?
a. Cubic foot
b. Square foot
Answers With Complete Solution
1. A real property security endorsement is valid for:
a. as long as the broker's license is valid, and it needs no further endorsement.
b. multiples of 4 years.
c. one year.
d. the term of the broker's license to which the endorsement is affixed.
d. the term of the broker's license to which the endorsement is affixed.
2. A conventional loan would differ from an FHA loan in that the conventional
loan would have:
a. lower monthly payments.
b. lower interest rates.
c. lower down payment requirements.
d. lower loan-to-value ratio.
d. lower loan-to-value ratio.
FHA typically will loan a greater percentage of value to the borrower than a conventional
lender, requiring a smaller down payment. The conventional lender does not have the
"insurance" against loss that the FHA lender has and, therefore, is taking greater risks
and must receive more down payment (equity) from the buyer/borrower.
3. A buyer has purchased a residence for $100,000 utilizing VA entitlement to
finance the entire purchase price. The interest rate = 12%; combined monthly
payments for 30 years will accumulate to be $370,300. What will be the initial
month's principal payment?
a. $128.61
b. $78.61
c. $28.61
d. $0.00
c. $28.61
Monthly (P+I) = $370,300 ÷ (30 x 12) = $1,028.61
Initial month interest = $100,000 x 12% ÷ 12 = $1,000
Therefore, initial month principal amount = $1,028.61- $1,000 = $28.61.
4. A property was leased to a lessee for a two-year period, with monthly lease
payments to be $800. The lessor collected the first and last month payments. This
agreement would most likely not include which of the following statements?
a. Escalator clause
b. Compliance with local laws
,c. Condemnation provisions
d. Third-party liability clause
a. Escalator clause
A signed agreement whereby the lease amount is specifically set (for a short period of
time) would
probably not include an escalator clause.
5. In a single-family dwelling, the extended (spread out) part of the bottom of the
exterior of the foundation is called the:
a. base.
b. footing.
c. foundation.
d. pier.
b. footing.
Base of foundation wall, pier, or column.
6. All of the following would cause economic obsolescence, except:
a. improperly placed improvements.
b. old fashioned kitchens.
c. unfavorable zoning changes.
d. industries moving out of the neighborhood.
b. old fashioned kitchens.
Old fashioned kitchens represent a form of functional obsolescence. The other three
items are caused by
factors outside the property. Therefore, they are forms of economic obsolescence.
7. One way to jointly hold title to real property is "joint tenancy." Another way
would be:
a. tenancy in common.
b. community property.
c. tenancy in partnership.
d. all of the above.
d. all of the above.
8. The owner of a large apartment complex was considering adding another
swimming pool. An appraiser hired to do a study for the owner would use what
basic principle of appraising to determine the feasibility of adding the pool?
a. Substitution
b. Competition
c. Contribution
d. Appreciation
, c. Contribution
Would the addition of the pool contribute to the rent schedule?
9. A tenant is justified in abandoning a lease property if the landlord
demonstrates constructive eviction. Which of the following acts would be
considered constructive eviction?
a. The property has been shown to another party that has entered into
negotiations with the landlord.
b. The landlord has failed to make needed repairs and maintain the property in
the agreed
manner.
c. The landlord has altered the building to an extent that is no longer usable for
its original purpose.
d. All of the above.
d. All of the above.
All define constructive eviction.
10. Considering the "Interstate Land Sales Full Disclosure Act," which of the
following is NOT true?
a. Controls subdivisions of 25 (or more) lots, unimproved at the time of sale.
b. Developer must register subdivision with Office of Inter-Land Sales
Registration (OILSR), and provide copy of
"property report" to purchaser or lessee.
c. Any contract to purchase or lease may be revoked by purchaser or lessee
within 7 days of signing the contract.
d. Violations are punishable by fines up to $50, imprisonment of up to 5 weeks, or
both.
d. Violations are punishable by fines up to $50, imprisonment of up to 5 weeks, or both.
Fines up to $5,000; imprisonment up to 5 yrs., or both.
11. A valid lease need NOT contain:
a. amount of payment.
b. description of property.
c. names of parties to lease and terms of lease.
d. stipulated transfer fee.
d. stipulated transfer fee.
There is NO transfer fee involved with leasing.
12. If an appraiser wishes to measure the extent of accrued depreciation, he
would rely upon which one of the following methods of calculation?
a. Cubic foot
b. Square foot
