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From: quiz@[Link]

To: faduran11@[Link]
Date: Monday, August 7, 2023 at 10:43 PM PDT

Your Results
Dear Frank Duran,
You scored: 11%
Your score suggests you have not properly prepared for the exam.
Please use the corrected exam provided below to check your answers and study further for the State Exam.
Corrected Exam
Correct answers appear in Bold. Incorrect answers selected by the student are crossed out.
State Exam Prep Book
Simulated Exam
1) Whether property functions as adequate security for a real estate loan depends on the:
a. value of the U.S. dollar.  
(You are correct.
To establish whether a property represents adequate security
b. value of the property.
for a loan, the value of the property needs to be determined by
an appraiser.)
c. consistency of the
 
borrower's income.
d. quantity of the borrower's
 
income.
2) Real estate licenses are issued for:
a. one year.  
b. two years.  
(You are correct.
c. four years. A real estate license needs to be renewed every four years by
completing 45 hours of continuing education.)
d. life.  
3) If a prior occupant died on the real estate more __________ than prior to a buyer's purchase,
the seller's agent has no affirmative duty to voluntarily disclose the death to the buyer.
a. six months  
b. one year  
(You are correct.
The time element for which a real estate agent has an
c. three years
affirmative duty to disclose a death on the property is three
years.)
d. five years  
4) The Real Estate Commissioner, under the Subdivided Lands Law, is initially concerned with
which court:
a. Small Claims.  
(The Subdivided Lands Law is controlled by the California
Bureau of Real Estate. Since this is a state entity, the process
b. Superior. of elimination excludes the Small Claims, Federal Supreme
and Appellate courts, leaving the Superior Court as initially
handling real estate disputes.)
c. Federal Supreme.  
d. State Appeals.  
5) A buyer and seller initial the liquidated damages clause in a real estate purchase agreement.
The buyer later defaults. The amount recoverable is:
a. given to the seller when
 
escrow opens.
b. limited to 3% of the selling
 
price.
(You are correct.
The amount recoverable under a liquidated damages
c. given to the seller after
provision in a purchase agreement is not always limited to
the default.
3%, only for one-to-four unit residential property. The only
answer that is true is C.)
d. used to pay any costs
incurred by the seller and then  
returned to the buyer.
6) A flood hazard report will note that flooding is frequent when it is described as:
a. a fifty year flood zone.  
b. a 100 year flood zone.  
c. occurring at least twice (Twice in ten years is the critical number for determining the
every ten years. frequency of floods.)
d. occurring no less than three
 
times every twenty years.
7) The Real Estate Commissioner is authorized to:
a. impose fines on any real
estate licensee who is
 
convicted of fraudulent
activities.
(You are correct.
The chief officer of the Department of Real Estate is the Real
b. promulgate rules and
Estate Commissioner. The Real Estate Commissioner's
regulations to enforce the
principal responsibility is to enforce all the real estate laws
California real estate laws.
pertaining to real estate practice, licensing and the
Subdivided Lands Act.)
c. issue non-resident real
estate licenses to states
which prohibit their residents  
from holding California real
estate licenses.
d. implement federal lending
legislation to encourage a  
healthy housing market.
8) Requirements for licensing as a real estate salesperson include all, except:
(You are correct.
a. ownership of property. Property ownership is not a requirement for obtaining a
Department of Real Estate DRE license.)
b. being eighteen years or
 
older.
c. being honest and truthful.  
d. getting fingerprinted.  
9) Which of the following is true?
a. An illegal contract can be
 
an enforceable contract.
b. A valid contract can be an(An oral contract for more than a year may be valid but
unenforceable contract. unenforceable.)
c. A void contract can be
 
enforced by one party only.
d. "Voidable" means "void
 
unless validated."
10) The appraisal process which allocates a percentage of a property's total value to the land and
a percentage to the improvements is known as:
a. the ratio of total value to
 
site value.
b. the allocation approach.  
(The appraisal process that allocates a percentage of a
property's total value to land and a percentage to the
c. Both a. and b.
improvements is known as the allocation method. It is the
ratio of total value to the site value.)
d. Neither a. nor b.  
11) A listing broker may not be:
a. the sole agent of the owner. 
(In no instance would the listing broker represent only the
b. the sole agent of the
buyer. A listing broker may either represent both the buyer
buyer.
and seller (as a dual agent), or just the seller.)
c. a dual agent.  
d. a loan broker.  
12) The fiduciary relationship between an agent and the principal is most similar to the fiduciary
relationship between a(n):
a. borrower and lender.  
b. vendor and vendee.  
(Fiduciary is a matter of utmost trust and loyalty. This is most
c. trustee and beneficiary. closely associated with the relationship between a trustee and
the beneficiary.)
d. property owner and tenant.  
13) A seller listed their house for sale with a broker for $700,000. The seller informed their broker
the property needed to be sold quickly. The broker showed the property to a buyer and told them
that the seller was desperate and would accept $600,000. Based on the broker's statement, the
buyer offered $600,000 for the seller's property. The seller accepted the offer. Concerning the
broker's actions, which of the following is true?
a. The broker interpreted the
seller's wishes and produced
a sale. Their ratification of the  
offer made the broker's
actions acceptable.
b. The broker's actions were
reasonable since the seller
 
accepted the offer and was
able to sell quickly.
c. The broker's actions were
proper because the seller
 
stated they wanted an
immediate sale.
d. The broker violated their (A broker cannot disclose a client's personal financial
fiduciary obligation to the information or acceptable price and terms other than what the
seller since they acted in listing states. In this question, the broker violated their
excess of their authority. fiduciary duty owed to the seller by exceeding their authority.)
14) The lowest closing costs other than the down payment are realized using a:
a. Federal Housing
Administration (FHA)-insured  
loan.
b. U.S. Department of
Veterans Affairs (VA)-  
guaranteed loan.
(You are correct.
Closing costs are charges related to the transaction that are
paid through escrow. The CalVet Home Loan is a land sales
c. CalVET Home Loan.
contract and is therefore different from each of the other
answer choices. There are no loan charges in this
arrangement and thus the escrow charges are lower.)
d. conventional loan.  
15) A real estate broker's advertisements need to include:
(Without the disclosure of the broker's name and license
a. the name of the broker
number, this type of advertisement is considered a prohibited
and license number.
"blind ad.")
b. a statement that the
advertiser is a broker or  
agent.
c. the address of the broker.  
d. the number of years the
 
broker has been licensed.
16) A public walkway within a condominium community:
a. needs to be at least five
 
feet wide.
b. must be made of concrete.  
(You are correct.
Can you visualize exceptions that would make answer
selections A and B incorrect? For instance, some walkways
may be narrower than five feet or made of asphalt. Answer
c. exists in a common area. choice D cannot be correct, as the homeowners' association
(HOA) within a condominium community is responsible for the
maintenance of common areas and facilities. Thus, C is the
best option as public walkways always exist in a common
area in an HOA community.)
d. is maintained by individual
 
owners.
17) Which will not terminate an agency relationship?
a. Mutual consent.  
b. Death of the agent or
 
principal.
(You are correct.
Estoppel is a legal theory under which a person is barred from
asserting or denying a fact because of the person's previous
c. Estoppel. acts or words. This would not terminate an agency
relationship.
All the other answer selections are valid ways to terminate an
agency relationship.)
d. Destruction of the property.  
18) In using the capitalization process, which of the following cannot be deducted to determine
the net income?
a. Electricity.  
b. Maintenance expense.  
c. Management.  
(You are correct.
d. Debt service. Just as finance is not a consideration in appraisal, the debt
service would also not apply.)
19) Dale bought a home for $300,000. Since then, the property appreciates 10% each year. What
is the value of Dale's property after three years?
a. 390000  
(You are correct.
The calculation requires adding 10% to the value after each
b. 399300
year: $300,000 + 30,000 = $330,000 (yr.1); $330,000 + $33,000 =
$363,000 (yr. 2); $363,000 + $36,300 = $399,300 (yr. 3).)
c. 330000  
d. 333100  
20) The authority of the broker to accept a good faith deposit from a buyer is provided for in the:
a. deposit receipt.  
b. escrow instructions.  
(You are correct.
Another question in this section also covers broker
c. listing agreement.
authorization. The authorization is
contained in the listing (employment) contract.)
d. lease agreement.  
21) If homes in an area represent the highest and best use of the land and are similar in
architectural design, which of the following principles of appraisal apply?
a. Anticipation.  
b. Contribution.  
(You are correct.
There are several principles to real estate value. The principle
of conformity holds that the maximum value is realized when
c. Conformity.
a reasonable degree of homogeneity of improvements is
present. Use conformity is desirable, creating and maintaining
higher values.)
d. Substitution.  
22) Real property that builds up along a riverbank is acquired through:
a. a quit claim deed.  
b. escheat.  
(You are correct.
Accession is an addition to property through human efforts or
by natural forces. For example, real property that builds up
along a riverbank refers to accession by a natural occurrence.
c. accession.
The other three answer selections are legal actions. While
accession allows for addition by both human and natural
forces, accretion is by natural forces only. As with this
question, you will not be required to decide between the two.)
d. a quiet title action.  
23) In order to form a binding agreement, an offer or counteroffer:
a. needs to be accepted in (Any changes to a contract voids the original contract. Thus,
its entirety and without in order to be binding, both principals need to agree to and
conditions. sign the contract without changes.)
b. needs to be accepted with
 
minor changes in conditions.
c. may be accepted with
minor changes if both parties
agree to address the  
conditionswithin 15 business
days.
d. must contain a provision
that specifies which state law  
controls the transaction.
24) The Real Estate Commissioner rescinds their approval of a subdivision by:
a. issuing an injunction.  
b. issuing a writ of prohibition.  
c. revoking the developer's
 
license.
d. issuing a desist and (To stop a development, the Real Estate Commissioner files a
refrain order. desist and refrain order against the developer.)
25) The Federal Reserve's (the Fed's) monetary tools include all of the following, except:
(You are correct.
This is an EXCEPT question. The Federal Reserve (Fed) does
not raise interest rates on government-insured mortgages as
a. raising interest rates on
part of its monetary policy. Government-insured mortgages
government-insured
are originated by lenders. The interest rate charged on these
mortgages.
loans is established in the marketplace between the lender
and the borrower. The alternative choices are all appropriate
monetary tools for the Fed.)
b. raising and lowering the
discount rates to member  
banks.
c. adjusting the reserve
 
requirements for banks.
d. buying and selling U.S.
 
government bonds.
26) If multiple lenders participate in the same loan but in different portions, the loan is a(n):
a. 80/20 mortgage.  
b. piggyback loan.  
(You are correct.
When multiple lenders participate in the same loan it is called
c. participation loan.
a participation loan. Note that a form of the word appears in
the question and the correct answer choice.)
d. apportioned loan.  
27) The Real Estate Settlement Procedures Act (RESPA) prohibited __________ in 1974.
(You are correct.
a. kickbacks. The Real Estate Settlement Procedures Act (RESPA) outlawed
kickbacks in 1974.)
b. subprime loans.  
c. adjustable rate mortgages
 
(ARMs)
d. piggyback loans  
28) A residence has a physical age of 20 years. When the appraiser notes the building has the
appearance of being only 10 years old, the appraiser is referring to:
 (You are correct.
a. effective age. Effective age refers to the 10 year old condition of the
property. Actual age is 20 years.)
b. economic life.  
c. actual age.  
d. progressive age.  
29) The Federal Housing Administration (FHA) loan fee can be paid by the:
a. Escrow officer.  
b. seller.  
c. buyer.  
(You are correct.
The Federal Housing Administration (FHA) loan fee can be
d. Either b. or c.
paid by either the buyer or the seller. Market conditions and
the agreement of the principals will dictate who pays.)
30) The license of an active salesperson working at a branch office is held at the:
a. Department of Real Estate
(DRE) headquarters in  
Sacramento
b. broker's primary place of (A salesperson's license hangs at their supervising broker's
business. primary place of business.)
c. branch office.  
d. salesperson's personal
 
residence.
31) A(n) __________ is a broker who simultaneously represents the best interest of opposing
parties in a transaction, e.g., both the buyer and the seller.
(You are correct.
The dual agent is a broker who concurrently represents both
a. dual agent.
principals in a single transaction, such as the buyer and
seller, lessee and lessor, or borrower and lender.)
b. secret agent.  
c. subagent.  
d. finder.  
32) Any suggestion by a licensee that the racial makeup of a neighborhood is changing to induce
panic selling is an example of:
(You are correct.
Blockbusting, also known as panic selling, is the prohibited
a. blockbusting. practice of inducing a person to offer a dwelling for sale by
creating fear over the changing demographics within the
neighborhood.)
b. steering.  
c. redlining.  
d. usury.  
33) A licensee who designates how title is to be vested without any discussion with their buyer
while filling out the purchase agreement may be guilty of:
a. giving legal advice.  
b. giving tax advice.  
c. potential discrimination
 
violations.
(You are correct.
The method used to vest title to a property has legal and tax
d. All of the above.
consequences. The act of deciding for the buyer may be
construed as being discriminatory as well.)
34) The Federal Fair Housing Act (FFHA) prohibits discrimination in the sale, rental and
advertisement of:
(Federal Fair Housing Act (FFHA) relates to residential
a. residential units. properties only, not commercial or industrial properties or raw
land.)
b. commercial properties.  
c. industrial properties.  
d. land used for the grazing of
 
livestock.
35) The gross rent multiplier (GRM) is calculated by dividing:
a. gross monthly rents by
 
market value.
b. gross monthly rents by
 
selling price.
c. net monthly rents by market
 
value.
(An appraiser can determine the value of a property by
d. sales price by gross
determining the gross rent multiplier
monthly rents.
(GRM). To find this figure, divide the value by the rent.)
36) Seller Sally lists her property with Agent Fred and receives an offer. Agent Fred convinces
Seller Sally to accept the offer by verbally promising her he will find her an ideal replacement
home before the close of escrow. Agent Fred is unable to find an acceptable replacement home
for Seller Sally before the close of escrow. Which of the following is most correct?
(Seller Sally may sue agent Fred in a civil suit for the false
a. Seller Sally can recover promise made by agent Fred. The alternative answer choices
damages against Agent all contain weaknesses which prevent them from being the
Fred in a civil lawsuit as a best answer selection. Cancelling the sale will create a
result of her reliance on his possible liability to the buyer who had no part in Fred's
false promise. promise. Criminal action for fraud is challenging and has little
benefit for Sally.)
b. Seller Sally has no legal
recourse against the Agent
 
Fred since the promise wasn't
in writing.
c. Seller Sally may cancel the
sale of her home without  
liability.
d. Seller Sally can bring a
criminal action against Agent  
Fred for fraud.
37) "Agency" includes relationships between licensed sales agents and their brokers as well as:
a. escrow officers and real
 
estate licensees.
b. lenders and the agents who
 
recommend them.
c. finders and the brokers (Finders and brokers, as well as brokers and the public, are
who employ them. capable of being in agency relationships.)
d. real estate licensees and
the Department of Real Estate  
(DRE).
38) The loan program that requires payment of mortgage insurance premiums (MIPs) and will
make loan payments for up to six months if the borrower becomes involuntarily unemployed is
called:
a. Veterans Administration
 
(VA).
b. Federal Housing
 
Administration (FHA).
c. California Department of
 
Veterans Affairs (CalVET).
d. California Housing (Only the California Housing Finance Agency (CalHFA) offers
Finance Agency (CalHFA). a loan program on these terms.)
39) Title insurance is the means by which the title insurance company __________ a person who
acquires an interest in real estate against a monetary loss caused by an encumbrance on title.
a. holds harmless  
b. reimburses  
c. indemnifies  
(Title insurance is a form of indemnity insurance by which a
title insurance company holds harmless a person who
acquires an interest in real estate against a monetary loss
d. All of the above. caused by an encumbrance on title that is not listed in the
policy and the insured was unaware of when the policy was
issued. The title insurance company then reimburses the
insured for a later claim.)
40) A statement disclosing the presence of various environmental hazards does not need to
reference which of the following substances?
a. Asbestos.  
b. Smoke detectors. (A smoke detector is not an environmental hazard.)
c. Radon gas.  
d. Lead-based paint.  
41) When representing their client to third persons in a sale, a licensed real estate broker is
operating under the law of:
a. real estate.  
(In the context of representing their client to third persons in a
sale, the law of agency exists for the purpose of clarifying the
b. agency.
conduct of an agent when dealing with a third-party for the
benefit of their client.)
c. power-of-attorney.  
d. licensure.  
42) A seller's broker needs to disclose:
a. the broker's acquisition of
any direct or indirect interest  
in the seller's property.
b. whether any person holding
a special relationship with the
 
broker will acquire an interest
in the seller's property.
(Relationships that may affect loyalty or fiduciary
c. Both a. and b. responsibilities need to be disclosed as they constitute a
conflict of interest.)
d. Neither a. nor b.  
43) Which of the following is regarded as real property?
a. Growing crops that have
 
been mortgaged.
b. Crops that have been sold
 
but have not been harvested.
c. Riparian rights. (Riparian rights go with the land and are appurtenant to it.)
d. Trade fixtures.  
44) A real estate broker generally acts from a position of trust for the seller or buyer. This is
described legally as a(n):
(This protected relationship between the client and the agent
a. fiduciary relationship. is called fiduciary. It is a position of trust that exists between
the agent and their client.)
b. ostensible alliance.  
c. dual agency.  
d. independent contractor
 
relationship.
45) A(n) __________ is a statement made by a broker concerning a possible condition which has
not yet occurred based on readily available facts.
a. fact  
(An opinion is a statement by an agent concerning an event or
condition which has not yet occurred based on readily
b. opinion available facts. When a statement is worded as an assurance
the events and conditions will occur, the statement reaches
the level of a guarantee.)
c. guarantee  
d. assurance  
46) An unlicensed assistant in a real estate office cannot:
a. sit at open houses
conducted by the broker's  
office.
b. type listings and sales
 
contracts for licensees.
c. hand out brochures.  
d. discuss the price and (This question provides a good source of information about
term of a transaction with a the activities that can be performed by unlicensed assistants
principal. that can be used in future questions on this topic.)
47) Which of the following will not terminate an escrow?
a. Agreement of the parties.  
(The broker is not a principal to the escrow and therefore has
no authority to cancel it. A mutual agreement between the
b. The broker's order to
parties or the failure of a contingency to occur will cancel the
terminate escrow.
escrow, as will the destruction of the property during the
escrow.)
c. One of the parties' inability
 
to meet a contingency.
d. The destruction of the
 
property during the escrow
48) A seller sues their broker for making a false promise when they entered into an oral listing
agreement. What is the likely outcome?
a. The Statutes of Frauds
protects the agent since the
 
listing contract wasn't in
writing.
b. The seller is at fault for  
allowing the agent to work
without a written contract.
c. Oral agreements cannot
demonstrate evidence of a  
false promise.
d. The agent is liable for any
damages as a result of the (A false promise imposes liability on a broker whether the
false promise regardless of promise was made in writing or orally. The alternative answer
the Statute of Frauds since selections fail primarily because the court will protect the
the agent breached their public rather than the agent.)
agency duty to the seller.
49) A seller entered into an oral listing agreement to sell real estate with a broker without a
followup written verification. The payment of a commission to the broker under these
circumstances is:
(The only issue regarding an oral listing is that it fails the
conditions of Statute of Frauds which requires the listing to
a. unenforceable.
be in writing to be enforceable. As such, the broker's fee is
unenforceable in a court action.)
b. enforceable.  
c. a violation of the
regulations of the Real Estate  
Commissioner.
d. regarded as contrary to
 
public policy.
50) By dividing the net operating income (NOI) generated by an income-producing property by
price paid or offered for a property, a buyer can determine the:
(Dividing the net operating income (NOI) by the sales price
a. capitalization rate (cap
yields the capitalization rate (cap rate). The gross rent
rate).
multiplier (GRM) uses the gross rent in the calculation.)
b. net spendable income.  
c. gross rent multiplier (GRM).  
d. capital basis.  
51) Most junior loans are originated by:
(Junior loans typically are originated by private sources -
a. private sources. most often the seller of the property who extends carryback
financing to the buyer.)
b. commercial banks.  
c. savings and loans
 
associations.
d. insurance companies.  
52) A buyer purchased a home without being informed the house was on a septic tank system.
The buyer has the right to:
(If the Real Estate Commissioner feels the need to retract
approval of a subdivision, they issue a desist and refrain
order. There are two laws that relate to subdivisions: the
a. rescind the contract. Subdivision Map Act, which is handled locally through the
Planning Department, and the Subdivided Lands Law, which is
handled by the Department of Real Estate (DRE).
)
b. have the broker disbarred.  
c. sue the escrow company
 
for malfeasance.
d. report the seller to the
Department of Real Estate  
(DRE) for failure to disclose.
53) The placement of a house upon the lot is referred to as its:
a. preference.  
b. zoning classification.  
(The placement of a house on its lot is called its orientation.
This is also used to describe a direction such as "oriented
c. orientation.
toward the southern exposure." Other than location, the
alternative answer selections can be easily eliminated.)
d. location.  
54) Most real estate records need to be kept for a period of three years, commencing from the
date that a property is first listed or the date:
a. the agent meets a client.  
b. the sale occurs.  
(Record keeping commences from when the listing was
c. escrow closes. signed or when the sale was complete, i.e., the close of
escrow.)
d. the buyer's first property tax
 
bill is due.
55) A husband nominates his wife to manage his will. Thus, she will function as an:
(The term for manager of a will is executor. As the wife is
a. executrix. managing the will, the correct answer is the feminine form of
this word: executrix.)
b. administratrix.  
c. administrator.  
d. executor.  
56) A real estate broker acts from a position of trust for the seller or buyer they have been
contracted to represent. This relationship is legally described as a(n):
a. attorney-in-fact.  
b. ostensible agent.  
(The name of the agency relationship between the broker and
c. fiduciary relationship.
the client is called fiduciary.)
d. independent contractor
 
relationship.
57) The commission of a leasing agent is generally based upon a percentage of:
a. the total operating costs
 
incurred running the property.
b. the cash paid by a lessee
at the time of signing the  
lease.
c. the total rent collected by
(A leasing agent generally receives a percentage of the total
the lessor over the term of
lease payment over the term of the lease as their fee.)
the lease.
d. the prevailing commission
rates commanded by similar  
brokers.
58) Although title to an income-producing property held by co-owners for profit is vested in the
names of all the co-owners, it is collectively called a(n):
a. trust  
b. sole ownership  
 (An investment property owned by several people is
c. partnership
described as a partnership.)
d. fiduciary  
59) Recording a deed provides:
a. actual notice.  
(Recording a deed provides constructive notice of the
ownership of a property. Constructive notice is also that
which is observable by visual inspection. Answer selection A.
b. constructive notice.
actual notice has a similar premise but requires personal
delivery, which is not stated in the question and thus is not
the best answer. The other answer selections do not exist.)
c. contingent notice.  
d. personal notice.  
60) Which of these does not have a specific dollar value?
a. An attachment.  
b. A judgment.  
c. A mechanic's lien.  
(This is a NOT question. An easement has no specific value.
d. An easement. The alternative answer selections are all court-related and
have concrete dollar values.)
61) A dual agency is required to be disclosed to each client:
a. after escrow closes.  
(Dual agency requires an immediate disclosure as soon as it
occurs. This is a question that may be asked in various forms.
b. the moment the conflict Certainly answer choice A. after escrow closes and D. any
arises. time prior to the close of escrow are inappropriate. C. before
the parties meet makes little sense since the principals rarely
meet.)
c. before the parties met.  
d. any time prior to the close
 
of escrow.
62) An individual who has been delegated agency duties by an agent of the client, but is not
employed by the client, is referred to as a(n):
a. multiple listing partner.  
(Subagency is a delegated position in which the broker has
b. subagent. been given agent responsibilities by the agent of the seller,
but is not employed by the seller.)
c. subcontractor.  
d. tandem agent.  
63) Under the provisions of the federal Fair Housing Law, aggrieved persons who have been
discriminated against in their acquisition of housing may file a:
a. civil action in federal courts.  
b. civil action in state or local
 
courts.
c. complaint with the
Department of Housing and  
Urban Development (HUD).
(When a member of a protected group has been discriminated
against, they have numerous remedies, including filing a civil
d. Any of the above.
action in state and federal courts, and filing a complaint with
HUD.)
64) A commercial development consisting of a single line of store-fronts constructed along a busy
thoroughfare is described as a(n):
a. neighborhood center.  
b. small mall.  
(A single line of stores can be seen as a strip commercial
building. A neighborhood center includes a supermarket and
c. strip commercial
possibly another anchor such as a drug store, but is not
building.
necessarily organized in a line. A small mall and big box store
are similarly not organized in a line.)
d. big box store.  
65) Which of the following would be a fiduciary duty of the agent of the buyer:
(Answer choices B and C are wrong since they work against
a. acting with the utmost
the concept of the client as the decision maker. Answer
care, integrity, loyalty and
selection D is clearly wrong as it is improper to reveal
honesty when dealing with
confidential pricing information to the opposing party. Only A
the buyer.
meets the requirement of fiduciary duties.)
b. steering the buyer to
 
'appropriate' neighborhoods.
c. telling the buyer which
 
lender to use.
d. Communicating to the
seller the maximum price the  
buyer will be willing to pay.
66) An appraiser uses a site analysis to determine the:
a. highest and best use of a (The purpose of a site analysis is to determine the highest and
property. best use of a property.)
b. appropriate zoning
 
designation for a property.
c. type of soil under an
 
improved property.
d. comparable values of
 
similar properties.
67) A property owner dies testate, leaving a spouse and three children. The owner's estate is
distributed:
a. to their heirs by right of
 
reversion.
b. one-half to their spouse
and one-half divided among  
the three children.
c. equally among the heirs.  
d. in accordance with their (To die testate is to die with a will. The terms of the will dictate
will. how the inheritance is divided.)
68) The property which benefits from an easement is referred to as the:
a. servient tenement.  
b. diminutive tenement.  
(A dominant tenement benefits from an easement; a servient
c. dominant tenement.
tenement suffers from an easement.)
d. domicile tenement.  
69) An agency relationship created by an exclusive listing is classified as a(n):
a. implied agency.  
b. ostensible agency.  
 (An express agency can be oral or written, but in either case is
stated and mutually agreed to. An implied or ostensible
c. express agency.
agency is not stated orally or in writing. Therefore, a listing,
whether open or exclusive, is an express agency.)
d. agency by necessity.  
70) An unlawful detainer (UD) action is instigated by:
a. a grantor.  
b. a trustee.  
(An unlawful detainer (UD) action is the court procedure to
force a tenant to vacate the rental space they do not have the
c. a lessor. right to possess. A lessor (landlord) is the aggrieved person
who initiates this process against an individual who holds no
right to occupy a property, such as a holdover tenant.)
d. a real estate broker.  
71) A valid agency requires a(n):
a. written agreement.  
b. express agreement.  
c. attorney-in-fact.  
(A valid agency doesn't require any of these. It can be
d. None of these.
triggered by the actions of the principal or agent.)
72) The instrument used to transfer title to personal property is the:
a. quit claim deed.  
b. bill of sale. (A bill of sale is used to transfer personal property.)
c. security agreement.  
d. chattel deed.  
73) The charging by a private lender of more than the maximum amount of interest allowed by
law is known as:
a. unearned increment.  
b. leverage.  
(Usury is the term that describes an interest rate that exceeds
c. usury.
the legal limit.)
d. onerous.  
74) Balancing a bank statement with a client's account is known as:
a. auditing.  
(As with a personal checking account, reconciliation refers to
b. reconciliation. a broker balancing a bank statement with the account ledger.
Accounts are generally reconciled on a monthly basis.)
c. statement adjustment.  
d. commingling.  
75) Failure to provide the Agency Law Disclosure in targeted transactions:
a. puts the agent's fee at (The failure to disclose the agency relationship at the earliest
risk of loss. available opportunity puts the agent's fee at risk.)
b. renders the transaction
 
invalid.
c. affects only the listing half
 
of a commission.
d. affects only the
salesperson's share of the  
commission.
76) Heather made an offer to purchase real property. The seller accepted the offer but Heather
died before this acceptance was communicated to her by the seller's agent. Based on these facts,
which of the following is true?
a. Notification of the seller's
acceptance to the
administrator or executor of
 
Heather's estate compels her
estate to perform and close
escrow.
b. The death of Heather (Had the buyer's death occurred after communication of the
constitutes a revocation of acceptance of the offer by the seller's agent, her estate would
the offer. have been responsible to complete the escrow.)
c. The offer and acceptance
constitute an enforceable
 
contract, even if Heather was
not aware of the acceptance.
d. The accepted offer is
binding on the administrator's
estate since the deed was not  
delivered before Heather's
death.
77) A tenant moves in and pays one month's rent prior to receiving a written copy of a verbally
agreed-on two-year lease. The tenant in this scenario has a(n):
a. tenancy at sufferance.  
(Due to the fact the tenant moved in and began paying rent,
b. periodic tenancy. these activities signifying periodic tenancy take precedence
over the verbal lease agreement.)
c. estate for years.  
d. estate at will.  
78) Any individual may contact the Real Estate Commissioner to:
a. determine commission
 
rates allowable by law.
b. negotiate a settlement
 
dispute between principals.
(Any individual may contact the Real Estate Commissioner to
report potential fraud by a licensee. The Commissioner is
c. report fraud by a real empowered to investigate and discipline licensees for
estate licensee. inappropriate behavior. However, the Commissioner does not
have the authority to determine commission rates or negotiate
a settlement between principals.)
d. determine the zoning
regulations which pertain to  
their property.
79) An agent views a roof from the front. The roof slopes on all four sides to the eaves. What kind
of roof is the agent observing?
a. Gambrel roof.  
b. Gable roof.  
c. Mansard roof.  
d. Hip roof. (A roof with four sides is called hip. A two-sided roof is gable.)
80) When comparing the economic life and the physical life of an improvement:
(A building will become economically undesirable long before
a. economic life is shorter.
it is physically unusable.)
b. economic life is the same
 
as the physical life.
c. economic life is longer.  
d. physical life is shorter.  
81) Which type of title insurance policy insures against all title risks?
a. American Land Title
 
Association (ALTA).
b. Extended coverage policy.  
c. California Land Title
 
Association (CLTA).
d. No title policy covers all (No title insurance policy can insure against all risk.
risks. Exceptions are included in all policies of title insurance.)
82) If a salesperson withholds a new listing from the MLS in an attempt to sell it themselves, it is
called:
a. attempting a secret profit.  
b. conversion.  
(A pocket listing is the withholding of a listing from the
multiple listing service (MLS) for the agent's personal gain.
c. a pocket listing.
This violates the fiduciary duty owed to the client since it
limits the property's exposure on the market.)
d. an illegal withholding.  
83) To calculate replacement cost, compute the cost to replace:
a. an equally desirable
(A replacement property is to produce a similar level of utility
property with the same
and be as desirable as the subject property.)
utility value.
b. the identical structure using
 
the original materials.
c. the identical structure using
 
modern materials.
d. the most economical
structure having the same  
utility value.
84) Which of the following is true concerning an option?
a. No consideration is
 
necessary to create an option.
b. An option is void if the
 
consideration is inadequate.
c. An option is valid so long (The amount of consideration is not relevant. However, the
as consideration is actually consideration itself needs to be delivered to create a valid and
delivered. enforceable option.)
d. None of the above.  
85) All of the following items contained in a closing statement are generally prorated, except:
a. property insurance.  
b. property taxes and
 
assessments.
c. impounds.  
(Delinquent interest is a seller expense and not prorated for
d. delinquent interest.
the buyer.)
86) The general purpose of local building codes is to assure:
a. the most efficient utilization
 
of skilled labor.
b. compliance with regulatory
 
agencies.
c. compliance with (Local building codes are not concerned with labor, regulation
minimum construction or cost effectiveness.)
requirements.
d. cost effectiveness in
building through uniformity of  
building standards.
87) An appraiser was hired by Whitney to appraise DuPont's property. With whom does the
appraiser discuss their findings?
(An appraiser can ethically share the contents with an
a. Whitney. appraisal report with the client or anyone named by the client,
a peer review committee and a court of law.)
b. DuPont.  
c. Any lender interested in the
 
property.
d. Mr. DuPont's attorney.  
88) Which of the following is of least interest to an appraiser?
a. Value in exchange.  
b. The original cost of the (This is a LEAST question. The original cost of a property has
property. no significance in an appraisal to determine its current value.)
c. The objective value of the
 
property.
d. The sales price received for
 
comparable properties.
89) All of the following statements are true concerning an in-house sale, except:
a. the listing broker can buy
 
the property themselves.
b. the listing broker can act as
 
an agent for the seller only.
c. the listing broker can act as
 
a dual agent.
(This is an EXCEPT question. For an in-house sale, the listing
d. the listing broker can act
broker cannot represent only the buyer. An in-house sale
as an agent for the buyer
refers to one in which the broker or their salespersons are
only.
working with the seller and the buyer.)
90) Which of the following is an example of a trust fund violation?
a. Holding a deposit check
uncashed prior to acceptance  
at the direction of the buyer.
b. Holding a deposit check
uncashed after acceptance at  
the direction of the seller.
(This question concerns the person that has authority to act
c. Holding a deposit check
regarding deposits. Only the principals can decide the proper
uncashed at your own
handling of the check. Answer selection D, while a violation of
discretion.
disclosure law, is not a trust fund and accounting violation.)
d. Failing to disclose a
material defect to a buyer
 
which negatively affects the
value of a property.
91) Based on recent comparable sales, an agent's opinion of a property's fair market value (FMV)
is referred to as a(n):
a. broker price opinion (The broker's price opinion (BPO) is based on comparable
(BPO). sales only.)
b. comp.  
c. appraisal.  
d. home inspection report.  
92) A real estate salesperson's license has been suspended because money was paid out of the
Recovery Account. Their license will not be reinstated:
a. until they pay the person
any amount not paid by the  
Recovery Account.
b. until they pay the Recovery
Account for half of the money,  
plus interest.
c. ever, as a suspended
license may never be  
reinstated.
(As this is civil action, the answer selection C is inappropriate.
d. until they repay the
Only the full restitution of the funds paid from the Recovery
Recovery Account for all
Fund allows for the reinstatement of the salesperson's
money paid, plus interest.
license.)
93) The owner of a residential property found guilty of discrimination in violation of the Rumford
Act may be required to:
a. sell or rent the property to
 
the aggrieved person.
b. find a similar property to
rent to the aggrieved person if  
one is available.
c. pay a civil penalty of
 
$10,000.
(The California Rumford Act may carry potential penalties for
discrimination violations, including being forced to sell or
d. Any of the above
lease the property to the aggrieved person, locating a similar
property for them or civil penalties up to $10,000.)
94) Commission splits between a broker and a salesperson are determined by:
a. an implied contract.  
b. an express contract.  
c. local custom.  
(A salesperson has a written contract with their broker that
specifies what the commission split will be. The commission
split is not set by law but through negotiations between the
d. a written contract.
agent and employing broker. Answer selection B. an express
agreement is applicable in some cases, but may be either
written or verbal and is thus not the best answer.)
95) Harold wills the family estate to his son Patrick on the condition Patrick marry before title will
be transferred. This is an example of a:
a. covenant.  
b. restriction.  
(A condition precedent is a provision in an agreement calling
c. condition precedent. for the occurrence of an event or performance of an act before
title is transferred.)
d. condition subsequent.  
96) When a dual agency relationship is established in a targeted sales transaction, the broker and
their agents may not pass on any information from one party to the other relating to:
a. the price the buyer may be
 
willing to pay.
b. the terms of payment the
seller may be willing to  
accept.
c. confidential financial
 
information of the parties.
(Under a dual agency, the agent may not express any
information from one party to the other regarding the price the
d. All of the above. buyer may be willing to pay, the terms of payment the seller
may be willing to accept, or confidential financial information
of either party.)
97) A(n) _______ represents both the buyer and the seller.
a. finder's agent  
(When representing both principals in the same transaction,
b. dual agent
the agent is acting as a dual agent.)
c. free agent  
d. subagent  
98) Which of the following entity does not buy loans in the secondary mortgage market?
a. Freddie Mac.  
b. Ginnie Mae.  
c. Fannie Mae.  
(The Federal Housing Administration (FHA) is neither the
d. Federal Housing lender nor purchaser of loans on the secondary mortgage
Administration (FHA). market. The FHA acts as an insurer of the loan which is
originated by a lender or mortgage company.)
99) The designation "CPM" stands for:
a. Common Area Property
 
Management.
b. Corrective Property
 
Maintenance.
c. Chartered Professional
 
Manager.
("CPM," meaning Certified Property Manager, is a designation
d. Certified Property that property managers earn after sufficient education and
Manager. experience. It is not required for providing property
management services.)
100) A prohibition against a "For Sale" sign in a residential neighborhood:
a. is permitted, provided it
applies to everyone in the  
neighborhood equally.
b. violates the Fifth
 
Amendment.
(Prohibiting the display of "For Sale" signs is a violation of the
First Amendment freedom of speech right and prohibits the
c. violates the First
free flow of truthful commercial information. A homeowners'
Amendment.
association (HOA) may impose reasonable rules about the
posting of a For Sale sign, though cannot prohibit it.)
d. violates the Fourteenth
 
Amendment.
101) The maturity date of a construction loan begins from:
(The date on the note establishes the beginning of the
a. the date of the note.
maturity process.)
b. the date construction
 
begins.
c. the date of the first
 
disbursement.
d. the date escrow is formally
 
closed.
102) A prospective buyer gave their broker a personal check for $1,000 payable to the seller
along with an offer to buy the property. The buyer told the broker the check was not to be cashed
until the end of the month. Which of the following is correct?
a. The broker is to refuse to
 
accept the check.
b. The broker is to accept the
check, but deposit into their  
trust account within 24 hours.
c. The broker needs to deliver
the check either to the seller  
or escrow upon acceptance.
d. The broker may hold the (Proper disclosure practice requires that the seller be aware of
check, but needs to tell the the nature and condition of the deposit. The seller's
seller it is being held acceptance of the offer, in part, is an acceptance of the
uncashed before the seller condition of the deposit. This is a material fact regarding the
accepts the offer. offer.)
103) Agency relationships may not be created by:
(Agency requires agreement of the parties. A volunteer action
a. voluntary offer by the
by the agent without the corresponding consent of the
agent.
principal is insufficient.)
b. implied contract.  
c. ratification.  
d. necessity or emergency.  
104) An individual who is not employed by the client, but has been delegated agency duties by an
agent of the client, is referred to as a(n):
a. subcontractor.  
b. subaccount.  
(A subagent is delegated agency duties by an agent of the
c. subagent.
client.)
d. tandem agent  
105) Which of the following positions requires the most advanced knowledge of accounting
procedures?
(Escrow officers are most similar to accountants in the nature
of their assignment in a transaction. Appraisal work is more
a. An escrow officer.
analytical and brokerage practice is more concerned with
selling, people and relationships.)
b. A real estate salesperson.  
c. A real estate broker.  
d. An appraiser.  
106) Before a new home can be occupied:
a. all construction loans need
 
to be paid off.
b. a certificate of occupancy
(A certificate of occupancy issued by the building department
must be issued by the local
is proof of habitability.)
building department.
c. a notice of completion
needs to be recorded by the  
owner.
d. offsite improvements need
 
to be complete.
107) When an appraiser attempts to establish the value of a commercial building, what type of
property is least affected by changing economic conditions?
(This is a LEAST question. A medical building is the least
impacted by changed economic conditions. The tenants of a
medical building are generally under long-term leases where
a. A medical building. no rent is charged based on the volume of receipts, as occurs
under a percentage lease. Alternatively, automobile sales
decline and fast food restaurants may see a rise in volume
during recession.)
b. A videogame outlet.  
c. An automobile dealership.  
d. Fast-food franchise.  
108) An appraiser notices an abandoned auto salvage yard on the adjoining lot of a property they
are appraising. The appraiser should recommend which of the following?
(The nature of the adjoining auto salvage auto yard will lead
the appraiser to recommend a toxic waste study. An auto
a. A toxic waste study. salvage yard has the potential of emitting hazardous wastes
into the neighboring property being appraised, and thus a
toxic waste study is advisable.)
b. A zoning change for the
 
property being appraised.
c. A geological study of the
surrounding area by a civil  
engineer.
d. A land survey.  
109) One year after the expiration of their real estate license, the licensee wishes to renew their
license. Which of the following statements is not correct?
(Real estate licensees are granted a two-year grace period
during which their license is suspended and they cannot
a. They need to retake the conduct real estate-related activities. If they choose to renew
state license examination. their license during this time, they will need to complete the
state-mandated continuing education and pay a higher late
renewal fee.)
b. They are required to fulfill
the continuing education (CE)  
requirements.
c. The late renewal fee is
higher than the on-time  
renewal fee.
d. They have a two-year grace
period in which to renew their  
license.
110) Which of these is not a method by which an individual may take title to real property?
a. Deed.  
b. Prescription.  
(This is a NOT question. Individuals cannot acquire property
c. Escheat.
by escheat, which is possible only by the state government.)
d. Intestate succession.  
111) A listing broker enters into negotiations to sell an office building to a limited partnership in
which the broker is a limited partner. The broker does not disclose their interest in the limited
partnership to the seller. Before closing, the seller discovers the broker's interest and refuses to
sell. What is the likely outcome of a civil suit to collect a commission?
a. The case is transferred to
the Real Estate  
Commissioner.
b. The case is sent to criminal
 
court.
(The failure to disclose the fact that the broker is also a
partner in the partnership buying the property allows the
c. No commission would be seller to withdraw from the sale with no obligation to pay the
due to the broker. brokerage commission. This scenario presents a conflict of
interest that needs to be disclosed by the broker at the
moment the conflict arises.)
d. The broker would likely be
 
awarded their full commission.
112) Gale is the beneficiary of a $1,500,000 deed of trust on a single family home. Frank, the
trustor, made $200,000 in payments before going into default. At the trustee's sale, the property
sold for $1,000,000, resulting in a $300,000 deficiency. In California, a deficiency judgment
cannot be obtained:
a. if the security is a purchase
 
money trust deed.
b. if foreclosed through a
 
trustee's sale.
c. if the fair market value
(FMV) of the property
 
exceeds the amount due on
the trust deed.
(In order to receive a deficiency judgment, a mortgage holder
d. Any of the above. must use the judicial foreclosure option rather than a trustee's
sale.)
113) What kind of tax is an ad valorem tax?
a. Income tax.  
b. Use tax.  
c. Real estate tax. (Ad valorum is the tax assessor's valuation for real estate.)
d. Value added.  
114) Mutual consent is typically evidenced by:
(Mutual consent implies both parties have agreed to the
a. offer and acceptance. contract. Thus, one party has made an offer and the other has
accepted.)
b. fraud.  
c. duress.  
d. agreement over some
 
contingencies.
115) All of the following transactions require compliance with the agency law, except:
a. The sale of a single (Agency law is activated when a transaction involves an agent
family residence sold working on behalf of a principal. Therefore, answer selection
independently by the owner. A does not apply as no agents are involved.)
b. Upon the entry into a three-  
year lease arranged by a
broker on a residential
property.
c. On the sale of a five-unit
residential building that is sold  
by a licensed broker.
d. Both b. and c.  
116) An offer to purchase real property was signed by a prospective buyer on November 12 and
submitted to the seller. The terms of the offer allow five days for acceptance by the seller. Due to
a medical emergency in the seller's family, the seller did not accept the offer until November 20.
Which of the following statements is true?
(Based on the facts in the question, the best answer choice is
that the buyer can demand the return of their deposit when
a. The buyer may demand a
the seller fails to communicate their acceptance in the stated
return of their deposit.
time. Until the buyer has been informed of the seller's
acceptance, they may rescind their offer.)
b. The buyer is required to
continue with the purchase
 
since they did not withdraw
their offer prior to acceptance.
c. The buyer is in breach of
the contract if they refuse to  
continue with the purchase.
d. If the buyer does not
complete the purchase as
agreed, the seller and the  
broker are each entitled to
one-half of the deposit.
117) The terms "index," "triple net" and "flat" are used to describe:
a. linkages.  
(All of these terms relate to leases as they describe how rent
b. leases.
is to be calculated and charged.)
c. rural land use.  
d. freehold estates.  
118) A property in probate is appraised at $960,000. At auction, the highest bid is $900,000. For
the court to consider any other offer, it would have to be at least:
a. 900001  
(A probate court will only consider a subsequent bid that is
raised by an amount equal to 10% of the first $10,000 ($1,000),
plus 5% on the balance. Here, the accepted offer was
b. 945500 $900,000. Added to this is $1,000 (10% of the first $10,000)
plus $44,500 (5% of $890,000 - the balance of the original bid
minus the $10,000). The minimum overbid is thus $945,500
(the original $900,000 bid plus $45,500).)
c. 1008000  
d. 945000  
119) Any exclusive right to sell listing needs to contain a(n):
(An exclusive right to sell listing is required to have a
a. definite termination date. specified termination date that is agreed to by the
participants.)
b. commission rate below the
 
state maximum.
c. definite listing price.  
d. authorization to accept a
 
deposit from a buyer.
120) The __________ is the primary enforcer of anti-discrimination law in California.
a. Department of Housing and
 
Urban Development (HUD)
(The Department of Fair Employment and Housing is the
b. Department of Fair California state agency primarily responsible for enforcement
Employment and Housing of anti-discrimination law. The United States Department of
Housing and Urban Development (HUD) is the federal agency.)
c. Labor Commission.  
d. Department of Business
 
Oversight (DBO)
121) Under no circumstances may a real estate broker misrepresent a material fact to a buyer. If
they do, the broker faces:
a. disciplinary action by the
Department of Real Estate  
(DRE).
b. criminal action.  
c. civil action.  
(A material fact is one that affects the value and desirability of
a property. As such, the failure to disclose is a significant
breach of the broker's fiduciary duty to their client. If the
d. Any of the above.
failure to disclose rises to the level of fraud or deceit, the
broker may be subject to civil or criminal penalties depending
on the nature of the misconduct.)
122) Which of the following is least likely to be a benefit of using Federal Housing Administration
(FHA)-insured financing?
a. A low down payment.  
b. Minimum property
 
requirements.
c. A long loan term which
yields lower monthly  
payments.
(The benefits of a federal housing administration (FHA)-
d. Title does not transfer
insured loan includes a lower down payment requirement,
until the loan is fully repaid.
lower monthly payments, and minimum building standards.)
123) A negative declaration issued for an environmental impact report (EIR):
(A negative declaration in the environmental impact report
a. indicates no negative
(EIR) indicates there are no negative effects of a proposed
influence of the
development to the environment. The EIR makes no historical
development on the
or future judgment about the developer. It is issued after the
surrounding environment.
final environmental study is complete.)
b. shows whether the
developer had a previous
 
record of poorly designed
subdivisions.
c. is a positive statement
made by the government in  
favor of the developer.
d. is typically issued by a
governmental authority after  
an initial review period.
124) An easement may be acquired by prescription in a manner similar to acquisition of land by:
a. escheat.  
b. eminant domain.  
(The answer selection that is most similar to acquisition of an
easement by prescription is adverse possession as both
c. adverse possession.
involve the adverse use of a property. None of the other
answer selections relate to this premise.)
d. testate transfer.  
125) When appraising a building which operates as a restaurant, an appraiser likely uses the:
a. market data approach.  
b. replacement cost approach. 
c. reproduction cost approach. 
(Appraising income-generating commercial property generally
d. income approach. requires placing the greatest emphasis on the income
approach.)
126) Which of the following is an example of an implied covenant under a lease?
a. Possession.  
b. Nuisance.  
(The promise of quiet enjoyment is an implied covenant the
c. Quiet enjoyment.
lessor makes to the lessee. A covenant is a promise.)
d. Rental amount.  
127) The creation of an agency requires:
a. express agreement.  
b. considerastion.  
c. subornation.  
(None of these conditions are required to create an agency
d. None of the above. relationship. An ostensible or implicit agency has none of
these conditions.)
128) When a lease is for a period greater than one year, the contract does not require:
(This is a NOT question. A lease does not require the
signature of the owner, only the tenant. Regardless of the
a. signatures of both the length of time, a lease needs to have a termination date
owner and tenant. (unlike a rental agreement) and a description of the property.
Further, the lease needs to be in writing to be enforceable if it
is for a term greater than one year.)
b. that the lease agreement
 
be in writing.
c. a specific termination date.  
d. a description of the rental
 
and its location.
129) Which of the following is an example of a subdivision?
(A subdivision consists of five or more units, with the
a. Six row houses.
exception of timeshares which are twelve or more.)
b. A triplex converted to
 
condos.
c. A condo converted to six
 
timeshare properties.
d. Eight timeshare properties.  
130) On a zoning map, "M" generally indicates:
a. multiple use.  
b. multi-unit.  
c. manufacturing. (M = manufacturing, C = commercial, R = residential.)
d. mobile homes.  
131) When the vendee under a land sales contract makes payments which include an impound
for taxes:
(When a vendee under a land sales contract makes payments
which include an impound for taxes, the monies need to be
held in a trust account. Answer selections A and C are similar,
a. the vendor needs to hold although C allows the funds to be kept anywhere so long as
the monies in a trust they are not converted, which is not correct. Answer selection
account. D is unreasonable since most sellers under a land sales
contract will not be licensed, and thus the Department of Real
Estate (DRE) is not involved. Choice B suggests conversion is
acceptable, which is not correct.)
b. the vendor can use the
monies for other uses so long
 
as they pay the taxes when
due.
c. the vendor can keep the
monies anywhere so long as  
they don't convert the funds.
d. the vendor cannot hold the
impounds unless they are
 
licensed with the Department
of Real Estate (DRE).
132) To be valid, restrictions in a grant deed need to:
(Restrictions, such as conditions, covenants and restrictions
a. be contained in a deed or (CC&Rs) for a subdivision need to be recorded as a statement
a written agreement. on the deed or as a reference to another recorded document
such as the subdivision restrictions.)
b. be less restrictive than
 
existing zoning requirements.
c. run with the land.  
d. be posted on a sign in a
conspicuous spot on the  
property.
133) Freddie, an unlicensed employee of a real estate broker, hands out door hangers and makes
telephone solicitations seeking buyers and sellers. Under the real estate law, these activities are:
a. unethical for the broker who
employs Freddie as an  
unlicensed employee.
b. commonly accepted
behavior in the brokerage  
community.
c. unlawful for Freddie.  
d. unlawful for both Freddie (An employing broker is liable for any wrongful act conducted
and his employing broker. by their employee.)
134) If there is no specific closing date named in the escrow instructions, escrow is to close:
(An escrow is to close within a reasonable time. In some
instances this may be shorter than 30 days or longer than 90,
a. within a reasonable and thus there is no specific time period prescribed. A
period of time. prudent person is able to adjust the closing of escrow in
accordance with a specific type of property, location or market
condition.)
b. within 30 days.  
c. within 60 days.  
d. within 90 days.  
135) All of the following statements are true concerning an in-house sale, except:
a. the listing broker can buy
 
the property themselves.
b. the listing broker can act as
 
an agent for the seller only.
(This is an EXCEPT question. An in-house sale is one where
c. the listing broker can act
the listing is sold by an agent within the same firm. Since the
as an agent for the buyer
listing broker represents the seller, the only condition that
only.
cannot occur is for the broker to represent only the buyer.)
d. the listing broker can act as
 
a dual agent.
136) A deed restriction prohibits a subdivision from using a residential property as a business. A
buyer interested in purchasing a property in the subdivision tells their broker they intend to use
one room of their house as a dog grooming service. Can the buyer do so?
a. Yes, so long as none of the
 
neighbor notice.
b. Yes, if the homeowners'
association (HOA) grants  
them explicit permission.
c. Yes, so long as they only
groom dogs from within the  
subdivision.
d. No, the deed restriction
(A deed restriction against commercial use is valid. Therefore,
prohibits the use of a
the answer is no, the buyer cannot use the property for
residential property to
business purposes.)
conduct business.
137) Broker Wallace represented a young man in the sale of his home. After purchase terms had
been agreed to and the grant deed had been signed and delivered into escrow, the title company
discovered the seller was not yet 18 years old and was not emancipated. The grant deed is:
a. illegal.  
b. voidable.  
(Since the grantor was under the age of 18 and therefore not
legally capable, the deed is void.
c. void. Another question in this simulated exam mentions that
capable parties are an essential
element to the formation of a valid contract.)
d. valid.  
138) The loan-to-value ratio (LTV) is best described as:
a. the ratio of the loan to the
 
sales price.
(The loan-to-value ratio (LTV) reflects the mortgage balance as
b. the ratio of the loan to the a percentage of the mortgaged property's fair market value
appraised value of the (FMV). Lenders will loan against the sales price or the value of
property. the property as determined by an appraisal, whichever is
lower.)
c. the loan as a percent of
 
assessed value.
d. the loan as a percent of
 
interest.
139) A listing agreement in which a seller agrees to pay a broker a commission if they produce a
"ready, willing, and able" buyer and agree to use due diligence in procuring a buyer is an example
of a(n):
(Bilateral refers to a promise to perform made by one party in
a. bilateral executory exchange for a promise to perform made by another party.
contract. Executory means the promised activities will be performed by
both parties in the future.)
b. unilateral executory
 
contract.
c. unilateral executed
 
contract.
d. bilateral executed contract.  
140) In May, 2018, Wayne leased a unit in his apartment complex to a tenant under a two-year
lease. The tenant prepaid the last two months' rent when they entered into the lease. For federal
income tax purposes, the prepaid rent is considered as income for Wayne:
a. in May, 2018. (Rental income is taxable when received.)
b. in May, 2020.  
c. that is "held in trust" until it
 
is due.
d. only when it is used as
 
current rent.
141) Which of the following is not a part of the cost approach appraisal method?
a. Unit-in-place.  
(Capitalization is an income approach method. Unit-in-place is
a sub-element of construction. The index method is for
b. Capitalization. historic cost valuations. Quantity survey is the most detailed
method used by sub-contractors when making bids on
projects.)
c. Quantity survey.  
d. Index method.  
142) Implied warranties are not included in a:
(The quitclaim deed is the exception here. There are no
a. quitclaim deed.
guarantees or warranties with a quitclaim deed.)
b. warranty deed.  
c. gift deed.  
d. grant deed.  
143) Demand has no effect on value unless there is also:
a. a need for the thing in
 
demand.
b. an adequate supply of the
 
thing in demand.
c. a scarcity of the thing in
 
demand.
d. purchasing power which
enables the ability to buy (Demand requires the ability to pay, called purchasing power.)
the thing in demand.
144) Property manager duties do not include:
a. collecting rents.  
b. showing vacant units.  
c. arranging repairs  
d. preparing depreciation (This is a NOT question. Answer choice D. preparing
schedules for owners. depreciation schedules for owners is more appropriate for an
 accountant and does not fall under the employment duties of
a property manager.)
145) Appurtenant rights include the right of _________ across adjoining properties.
a. ingress.  
b. egress.  
(Appurtenant rights include the ability to access property. The
c. Both a. and b. legal terminology for this is ingress and egress (enter and
exit).)
d. Neither a. nor b.  
146) A loan broker arranged a home equity loan for $9,600. The broker must provide the borrower
with which of the following?
(A lender who originates a home equity line of credit (HELOC)
a. Mortgage loan disclosure
is required to deliver a copy of the mortgage loan disclosure
statement.
statement to the borrower.)
b. Regulation Z disclosure
 
statement.
c. Loan balance statement.  
d. Broker closing statement.  
147) When a broker deposits their own personal or business funds in a client trust fund account,
that act is referred to as:
a. subrogation.  
b. subordination.  
c. conversion.  
(The mixing of monies is commingling, as demonstrated here.
d. commingling. In order for this to be conversion, the broker would have to be
using client funds for personal purposes.)
148) An easement may be created for what length of time?
a. Perpetuity.  
b. An agreed-to period of time. 
c. The lifetime of a person.  
(There is no limit to the length of time granted for an
d. Any of the above. easement. An easement can be limited to an agreed-to period
of time, or exist for perpetuity.)
149) A listing broker may not be:
a. the sole agent of the owner. 
(The listing broker, also known as a seller's broker, would
naturally represent the seller. They could also represent the
b. the sole agent of the
buyer and therefore be a dual agent. They could never
buyer.
represent
solely the buyer.)
c. a sole agent of the seller.  
d. a dual agent.  
150) The unit of comparison when appraising land is:
a. cost per square foot.  
b. cost per front foot.  
c. cost per acre.  
(The unit of comparison when appraising land depends on the
size and use of the subject parcel. Other than rural properties,
land is generally priced by the square foot. Parcels with a
d. Any of the above.
specific frontage, such as a beach, golf course or property for
commercial usage, may have the highest and best value
based on the front foot comparison.)
151) In estimating the value of Fran's single family residence (SFR), the appraiser uses the same
gross rent multiplier (GRM) that has been computed for comparable properties in the same
neighborhood. The comparable properties generate a rental amount of $3,000 per month and
were recently sold for an average of $450,000. The owner's property currently generates $3,200
per month in rent. The estimated value of the subject property is:
a. 450000  
(To use the gross rent multiplier (GRM) method of the income
approach, you need to first determine the value of the
multiplier by using the figures for the comparable property. As
the rent increases, so will the property's value when the same
b. 480000 multiplier is used. In this example, solve by using the
comparable rent and sales price: $3000 x GRM = $450,000.
Thus, $450,000/$3,000 = 150 (GRM). Then, apply the GRM to
the subject property using the subject property rent: $3,200 X
150 (GRM) = $480,000 (value).)
c. 510000  
d. 540000  
152) A(n) _________ occurs when a broker provides services to both a buyer and a seller in a
transaction without disclosure, and is unaware the buyer and seller both consider them their
agent.
a. deniable agency  
b. intuitive agency  
(An ostensible agency occurs when both principals believe
the agent represents them, but the relationship has not been
c. ostensible agency
formally disclosed. Answer choices A and B may be
eliminated as nonexistent terminology.)
d. agency confirmation  
153) Condominium ownership is least applicable to:
a. industrial properties.  
b. residential properties.  
c. commercial properties.  
(Condominium is a form of ownership, not a building style or
purpose. It has no relation to when a property was built. A
condominium is an estate in real property in which an owner
d. properties built prior to
holds an undivided interest in common in a portion of real
1978.
property, coupled with a separate interest in their individual
space. One can create condominiums in industrial and
commercial buildings, as well as residential properties.)
154) A lessee rents an apartment from May 1st to July 1st of the same year. The lessee's tenancy
is thus classified as a(n):
a. periodic tenancy.  
b. estate at sufferance.  
c. estate at will.  
(The estate for years need not be an extended period of time
d. estate for years. or even a full year. However, it must be for a specific period of
time, as occurs under a lease.)
155) When land is subject to an easement, it is said to be:
a. encroached upon.  
(The word encumbrance may imply a debt. However, it may
b. encumbered. also be another type of burden, such as a lease or an
easement.)
c. an estate at sufferance.  
d. restricted.  
156) A real estate broker who obtains documents in a transaction containing an electronic
signature is required to do all of the following, except:
a. create a paper copy of the
 
documents.
b. create a copy of the
documents using electronic  
image storage media.
(Under the Uniform Electronic Transactions Act, a real estate
c. retain a copy of the broker who obtains documents involved in a transaction that
documents on a USB drive contain an electronic signature is required to retain a copy of
in possession of the broker these documents in the form of a paper copy, electronic
at all times. duplicate, and by retaining copies at a location other than the
broker's place of business.)
d. retain a copy of the
documents at a location other
 
than the broker's place of
business.
157) A gross lease is least likely to be found in:
a. condo rentals.  
b. vacation properties.  
c. motels.  
(This is a LEAST LIKELY question. A gross lease refers to the
form of rental payment. Under a gross lease, the landlord
retains the responsibility for payment of all costs of care and
maintenance. Only the retail property may be the exception
d. retail spaces.
because it is a business and typically subject to a net lease,
which requires the tenant to pay all maintenance and
operating costs. The property types given in the alternative
answer selections use gross leases.)
158) A published advertisement by a real estate broker needs to include:
(This advertising requirement question relates to what is
a. their Department of Real called a "blind ad." Today, a broker is required to state their
Estate (DRE) license DRE license number on any marketing material and points of
number. contact with the public.
)
b. the physical address of
 
their office.
c. the fax number associated
 
with the broker's office.
d. reference to any negative
actions taken against the  
broker's license.
159) A residential neighborhood suffers economic obsolescence from which of the following?
a. Functional inadequacies.  
(Economic obsolescence occurs off the property. In this
b. Airplanes landing at a question, the existence of airplanes landing at a local airport
nearby local airport. refers to a neighborhood effect. All the other answer
selections refer to conditions which exist on the property.)
c. Physical wear and tear.  
d. Obsolete heating and
 
cooling systems.
160) Agency disclosure is handled in the following sequential steps:
a. disclose, confirm, elect.  
b. confirm, elect, disclose.  
c. disclose, elect, disclose.  
(The agency relationship options are first disclosed. Then the
d. disclose, elect, confirm. agent elects what the relationship will be and finally confirms
that choice with all participants involved in the transaction.)
161) Economic rent is rent:
a. received for similar space
(Another name for economic rent is market rent. Given that
in an open market free of
information, answer choice A seems more obvious. Also, note
duress or otherwise
the length of the answer and the degree of detail used in the
affected by external
answer, which is also an indication that it is likely correct.)
conditions.
b. the property would produce
 
in a perfect market.
c. necessary to produce a
reasonable return on  
investment.
d. allowed by government
controls, such as federal
 
monetary policy or local rent
control ordinances.
162) A window on hinges is most likely a:
a. double-hung window.  
(Casement windows have a crank that swings the window out
on its hinges. Double-hung windows have an upper and lower
pane, which can be raised and lowered to open. Bay windows
b. casement window.
have multiple panes of glass and project out from the wall.
Dormer windows have a separate roof and are commonly seen
as projecting from a gable or gambrel roof.)
c. bay window.  
d. dormer window.  
163) When the Federal Reserve (the Fed) increases the reserve requirements, referred to as tight
money policy, it will:
a. result in more construction
 
starts.
b. increase the supply of
funds available for making  
real estate loans.
c. reduce deflationary
 
pressures.
(The tightening of money allows less money to be available
d. decrease loan activity.
for lending, resulting in a decrease of loan activity.)
164) The ultimate test to determine the functional utility of a property is the:
a. property's maintenance
 
costs.
(Marketability is the ultimate test. Functional utility relates
primarily to the usefulness of a property based on the needs
b. property's marketability.
of the occupant - elements which are integral to the
marketability of a property.)
c. building codes controlling
 
the property's use.
d. zoning laws where the
 
property is located.
165) Which of the following is a cost associated with home ownership:
a. amenity value.  
b. loss in value as a result of
 
adverse zoning.
c. loss of interest on (The owner's equity invested into a property cannot earn
owner's equity. interest as it does when deposited in the bank.)
d. improvement appreciation.  
166) A broker has a listing on a property which grants them an option to purchase the property. If
the broker arranges a later sale of the property with a buyer, then exercises the option and resells
the property at a profit without disclosing to the seller the second transaction with the buyer, the
broker has:
(When a broker exercises an option to buy they hold during
the listing period in order to resell the property to an existing
a. received an improper
buyer, the broker violates their fiduciary responsibility to their
secret profit.
client. In this circumstance, the broker has received an
improper secret profit.)
b. committed a federal crime.  
c. acted as a dual agent
 
without proper disclosure.
d. performed a smart
 
business practice.
167) Which of the following statement regarding capitalization rates is least correct?
a. Lowering the cap rate
increases the value of the  
property.
b. Increasing the cap rate
lowers the value of the  
property.
c. Increasing the risk of loss
 
increases the cap rate.
(The capitalization rate (cap rate) is the annual rate of return
produced by the operations of an income property. The cap
d. Decreasing the risk of rate is calculated by dividing the net operating income (NOI)
loss increases the cap rate. by the price asked or offered for income property. Thus, the
value moves in the opposite direction of the rate, and a higher
risk is rewarded by a higher return.)
168) An agent needs to disclose a conflict of interest to the affected parties when a principal or
service provider in the transaction is the agent's:
a. relative or relative of a
 
fellow employee.
b. employee or fellow
 
employee.
c. brother or sister.  
(All relationships that create a potential conflict need to be
d. Any of the above.
disclosed.)
169) The appraised value of a building is $800,000 but costs $1,200,000 to replace. This
difference is an example of:
a. supply and demand.  
b. anticipation.  
 (The difference between cost and value is described as
c. accrued depreciation. depreciation. Accumulated depreciation over time is called
accrued depreciation.)
d. remainder depreciation.  
170) Under the Real Estate Law, a real estate salesperson is:
a. an independent contractor.  
(This question requires us to accept a dichotomy unique to
real estate. A salesperson is an employee and agent of the
b. an employee of the
broker for the purposes of the Real Estate Law. However, they
broker.
are generally classified as an independent contractor for tax
purposes.)
c. an employee of the seller.  
d. self-employed.  
171) In a §1031 exchange, a person is most likely to be taxed for a gain when:
a. giving cash boot.  
b. trading up.  
(Trading down suggests either cash or another form of
balancing compensation was received. The taxable gain
c. trading down.
occurs when anything other than like-kind real estate is
received on the exchange.)
d. trading residential
apartments for commercial  
property.
172) Which of the following zoning designations is suitable for land used as the site of multi-
family residential developments?
a. I-3.  
b. R-1.  
(Residential use zoning is labeled with an R. Multiple units will
c. R-4. have a number following the R other than 1, the precise
number determined by each city or county.)
d. MU-4.  
173) When a married person dies intestate leaving a spouse and two children, their separate
property is delivered:
a. equally among the children.  
b. only to the current spouse.  
(To die intestate means to pass away without a will. If a
c. one-third to the spouse
property owner dies intestate, the probate court will award the
and two-thirds to the
estate to the spouse and any children once all creditors have
children.
been paid.)
d. by escheat to the state.  
174) A person who is not among the protected groups under the Americans with Disabilities Act
(ADA) and can therefore be refused a rental is a(n):
a. alcoholic.  
b. pregnant women.  
(Only a drug addict is not a protected class under the
c. drug addict.
Americans with Disabilities Act (ADA).)
d. blind individual with a guide
 
dog.
175) Under the Federal Truth-in-Lending Act (TILA), the cost of credit is expressed as:
a. a maximum percentage
 
rate.
b. an annual percentage (Financing costs are stated as an annual percentage rate
rate. (APR).)
c. a minimum percentage
 
rate.
d. the annual interest rate.  
176) Which of the following is the most important reason for a broker to maintain a trust fund
account separate from the business account?
a. To impress clients.  
b. To satisfy Department of
 
Real Estate (DRE) auditors.
(A broker is to maintain a trust fund account separate from
their business account to avoid commingling and converting
c. To avoid the commingling
funds. Here, both answer selections B and D are reasonable
and converting the funds.
alternatives, although they are not the most precise and best
option available.)
d. For ease of accounting.  
177) Which of the following may also be called an estate of inheritance?
(An estate of inheritance is ownership. Fee simple refers to
current ownership. A fee estate grants an indefinite, exclusive
a. Fee simple.
and absolute ownership interest in a parcel of real estate and
is the largest bundle of rights to be held in real estate.)
b. Remainder interest.  
c. Condition subsequent.  
d. Future life estate.  
178) A fully amortized loan has equal monthly payments. The portion of the payment applied to
principal:
a. goes down each month.  
(With a fully amortized mortgage, the interest expense is
subtracted from the payment first. As a portion of principal is
b. goes up each month. paid each month, the loan balance is reduced and therefore
the interest portion of the payment goes down. This in turn
causes the principal portion to rise.)
c. remains unchanged.  
d. goes up by equal amounts
 
each month.
179) A seller's broker sold a property to a buyer. Four months later, when the first rains of the
season began, the buyer discovered significant roof leaks. The buyer sued both the seller and the
broker for the cost of repairs. The seller sued the broker in the same action since the seller had
informed the broker numerous times that the building needed a new roof. The broker's testimony
in court revealed the broker was aware of the leaky roof but had not mentioned it to the buyer
since the issue of the leaking roof was not mentioned by the buyer. What is the most likely result
of the court action?
a. On the basis of the
principle of caveat emptor, the
buyer is not entitled to recover  
from either the broker or the
seller.
b. The buyer may recover
from the broker, but the seller  
would not be liable.
c. The buyer may recover  
from the seller, but the broker
would not be liable.
(The lack of disclosure between the broker and the buyer
causes the broker to be the responsible party. Therefore, the
d. The buyer may recover buyer may recover from both the seller and the broker.
from both the seller and the Further, the seller may also recover from the broker since the
broker. Further, the seller broker was informed of the leaky roof by the seller and did not
would recover in the suit disclose it to the buyer. In actual practice, the seller would
against the broker. have disclosed the leaky roof in the Transfer Disclosure
Statement (TDS).
the leaky roof in the Transfer Disclosure Statement (TDS).)
180) A person who owns an undivided interest in a parcel of real property together with a
separate interest in communal space has an interest in a(n):
a. subdivision.  
(Condominium ownership combines an undivided interest in
b. condominium project. the actual condo unit, plus a proportionate interest in the
common areas.)
c. commune.  
d. corporation  
181) In order to be enforceable, a land sales contract needs to:
(Under the Statute of Frauds, a real estate contract, such as a
a. be in writing. land sales contract or listing, needs to be written to be
enforceable.)
b. include a mediation clause.  
c. state the appropriate
 
vesting for the vendee.
d. have a term no greater than
 
10 years.
182) All of the following provide constructive notice, except:
a. telephone poles across a
 
property.
(This is an EXCEPT question. Knowledge of an unrecorded
deed to a stranger does not constitute constructive notice.
b. knowledge of an Constructive notice is either a recorded document or anything
unrecorded deed to a that is clearly observable by inspecting the property, including
stranger. the existence of a physical feature such as telephone poles
(as may be used to indicate the general location of property
lines, for example) or a stranger in possession.)
c. a recorded deed to a
 
stranger.
d. a stranger in possession of
 
a property.
183) To calculate a capitalization rate (cap rate), the appraiser uses which of the following
methods:
a. market comparison.  
b. band of investment.  
c. summation.  
d. Any of the above. (Any of these can be applied.)
184) Syndi owns a 50 unit apartment building managed by Scott, a licensed real estate broker.
Angela lives in the building and has been designated as the resident property manager. Who has
the ultimate responsibility for the inspection and maintenance of the building?
a. Angela.  
 (The owner of an apartment building is ultimately responsible
b. Syndi. for inspections and maintenance of the building, even if they
employ a property manager and resident manager.)
c. Scott.  
d. All parties are equally
 
resbonsible.
185) Under which one of the following listing contracts must an owner pay a commission,
regardless of who sells the property?
a. An exclusive agency listing.  
(An exclusive right to sell listing agreement guarantees a
b. An exclusive right to sell
commission will be paid to the
listing.
broker regardless who sells it.)
c. A net listing.  
d. An open listing.  
186) Earthquake fault zones need to be disclosed to prospective buyers of certain properties in
California. Typically, earthquake fault zones are:
a. 0.25 miles wide. (Earthquake fault zones are a quarter of a mile wide.)
b. 0.5 miles wide.  
c. 1 mile wide.  
d. 2.5 miles wide.  
187) A broker presents an offer to purchase real property made by a minority buyer. The seller
rejects the offer due to the buyer's race. Here, the broker may:
a. explain to the seller that
their refusal is a violation of
the Fair Housing Act of 1968,  
and that they are open to civil
and criminal penalties.
b. advise the buyer of their
right to file a complaint with
the Department of Housing  
and Urban Development
(HUD).
c. sue the seller for their
 
commission.
(If a seller rejects a submitted offer due to the buyer's race, all
of the answer selections apply. The broker owes their client
seller a fiduciary duty to advise them of the risks inherent in
violating fair housing laws. Further, the broker owes a general
d. All of the above. duty to the buyer to advise them of their rights under the law.
Finally, the broker may sue the seller for the earned
commission having brought a valid offer to the seller. As a
matter of practice, the broker will want to be on record as
being opposed to the seller's discriminatory actions.)
188) The Real Estate Commissioner is primarily concerned with financial arrangements in a
subdivision. If the Commissioner wishes to rescind approval of a subdivision, they would:
a. ask the sheriff to arrest the
 
subdivider for fraud.
b. issue an injunction against
future sales of parcels in the  
subdivision.
c. issue a desist and refrain (If the Real Estate Commissioner feels the need to retract
order. approval of a subdivision, they issue a desist and refrain
 order. There are two laws that relate to subdivisions: the
Subdivision Map Act, which is handled locally through the
Planning Department, and the Subdivided Lands Law, which is
handled by the Department of Real Estate (DRE).
)
d. suspend the developer's
 
license.
189) A seller accepts a written offer to purchase their property. Later, the seller refuses to perform
to complete the transaction. Under the Statute of Limitations, the buyer needs to file a civil action
due to the seller's breach of a written contract within:
a. one year from the seller's
 
breach.
b. one year from when the
 
buyer signs.
c. four years from the (The Statute of Limitations allows a buyer four years to bring
seller's breach. suit against the seller for failure to perform and close escrow.)
d. four years from when the
 
buyer signs.
190) For a buyer's broker to have the ability to negotiate their fee, the buyer's broker needs to
enter into an employment agreement with their buyer, called a(n):
(A buyer's listing is the appropriate contract for the purpose
a. buyer's listing.
of negotiating fees as the buyer's broker.)
b. affiliated business
 
arrangement.
c. cooperating broker
 
arrangement.
d. controlled business
 
arrangement.
191) Surplus utility is an example of:
a. substitution.  
b. contribution.  
(Surplus utility is an example of functional obsolescence.
Functional obsolescence is created by items on the property
c. functional obsolescence. that are either outdated or over-improved. Economic
obsolescence refers to conditions off the property. The other
alternative choices are principles of value.)
d. economic obsolescence.  
192) A real estate agent may represent all principals in a transaction if:
a. they have obtained the
consent of all parties to this  
dual agency relationship.
b. they have informed all
principals that they are the  
agent for each principal.
c. they are collecting a
commission from each
 
principal with the knowledge
of the other party.
(In order to properly be a dual agent, the dual agency status
d. All of the above. needs to be disclosed as soon as possible and all parties
must consent.)
193) Accretion results in the acquisition of title to real estate by which of the following methods?
a. Eminent domain.  
(Accretion is the acquisition of property through natural
b. Acquisition through
causes such as a change in a watercourse. This terminology
natural causes.
is related to riparian rights.)
c. Transfer through a valid will
 
or intestate succession.
d. Acquisition of title by
 
adverse possession.
194) The Natural Hazard Disclosure Statement (NHD) requires the seller's agent to disclose to a
prospective buyer whether they have knowledge the property:
a. has a roof more than three
 
years old.
(The Natural Hazard Disclosure Statement (NHD) is a
disclosure of natural hazards, such as a fault zone - not
b. is located in a fault zone.
manmade, environmental hazards. All three alternative answer
selections are manmade.)
c. is located in an area with a
 
high crime rate.
d. has an outdoor pool.  
195) Why do brokers establish client trust fund accounts?
a. To convert client funds for
 
company use.
b. In order to impress clients.  
c. To earn interest on client
 
money.
(Trust accounts are designed to separate client monies from
d. To separate the client's
brokerage business funds. Commingling, the mixing of client
money from broker's
monies with other funds, is the act most frequently disciplined
money.
by the Department of Real Estate (DRE).)
196) The total security deposit allowable for an unfurnished residential unit may not exceed:
a. one month's rent.  
(Two months' rent is the maximum security deposit allowable
b. two months' rent.
for unfurnished residential rentals.)
c. three months' rent.  
d. 1000  
197) Writing “without recourse" on the back of a check creates a(n):
("Qualified" suggests the endorser meant to set certain
a. qualified endorsement. restrictions on the check. In this instance, if the check is not
honored, the endorser is not liable.)
b. blank endorsement.  
c. restrictive endorsement.  
d. open endorsement.  
198) The four essential elements of an enforceable contract are:
(Only answer choice A fulfills all the requirements of an
a. competency, mutual
enforceable contract. Not all contracts are written. However,
consent, lawful object,
all contracts require consideration, mutual consent and
consideration.
legally competent participants.)
b. express, consideration,
 
mutuality, lawful object.
c. mutuality, written,
competent parties, lawful  
object.
d. communication, written,
competent parties, lawful  
object.
199) Use of the Natural Hazard Disclosure (NHD) statement is required by sellers on:
a. court-ordered transfers or
sales and transfers to or by  
governmental entities.
b. transfers between co-
owners and transfers to  
relatives or spouses.
c. Both a. and b.  
(Sellers in certain transactions do not need to use the
d. Neither a. nor b. statutory Natural Hazard Disclosure (NHD) statement to make
their property disclosures.)
200) Marc purchased an apartment building for $2,000,000. The list price was $2,500,000. Marc
put $500,000 down and acquired a new first trust deed for the difference. Marc's cost basis for
income tax purposes is:
a. 500000  
b. 1500000  
(Cost basis is the cost incurred to acquire and improve
property and is used primarily for tax reporting and recovery
c. 2000000
of capital. Loans have no effect on a property's cost basis,
and neither does a seller's list price.)
d. 2500000