Introduction to Property Management
Exam Questions
Course Introduction
Introduction to Property Management provides a foundational overview of the key principles and practices involved in managing residential and commercial real estate. This course covers topics such as leasing and marketing properties, tenant relations, property maintenance, finances and budgeting, legal responsibilities, and risk management. Students will develop an understanding of the roles and duties of property managers, ethical considerations, and current industry trends. Practical scenarios and case studies will also be used to help students apply theoretical knowledge to real-world property management situations.
Recommended Textbook
Real Estate Principles 11th Edition by Charles J. Jacobus
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Page 2
Chapter 1: Nature and Description of Real Estate
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Q1) The most important factor in determining whether an item has become a fixture is the
A) method of attachment.
B) agreement of the parties.
C) adaptability of the item.
D) original cost of the item.
Answer: B
Q2) Comparing sections and townships, a township is 6 square miles.
A)True
B)False
Answer: False
Q3) Buildings or other improvements do not need to be mentioned in the deed because they are considered to be part of the ____________________.
Answer: land
Q4) Tests of a fixture include all of the following EXCEPT
A) agreement of the parties.
B) adaptability of the object.
C) value of the item.
D) manner of attachment.
Answer: C
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Chapter 2: Rights and Interests in Land
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Q1) A property owner who suffers from a government's exercise of its _________________________ will not be compensated for her loss.
Answer: police powers
Q2) A woman who lived in a retirement home and had no relatives, told her friend that she wanted her to have all of her property after she died, however she never made a will. Upon her death, her estate would
A) pass to the friend, since that was her wish.
B) pass to the retirement home where she lived.
C) escheat to the state.
D) pass to an entity determined by the probate court.
Answer: C
Q3) The bundle of rights includes the right of escheat.
A)True
B)False
Answer: False
Q4) A leasehold estate, which may be ____________________ by either party at any time, is an estate from period to period.
Answer: terminated
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4
Chapter 3: Forms of Ownership
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Q1) With tenants in common, if nothing is said regarding the size of each co-owner's interest, the law presumes that all interests are equal.
A)True
B)False
Answer: True
Q2) Community property could include
A) property acquired by one spouse before marriage.
B) gifts made to one spouse or the other.
C) property inherited by one spouse or the other.
D) property acquired before marriage and maintained with community funds.
Answer: D
Q3) A joint venture is a partnership formed to carry out a ____________________ business venture.
Answer: single
Q4) The phrase "a poor man's will" has often been applied to A) severalty ownership.
B) joint tenancy.
C) tenancy in common.
D) tenancy in common.,
Answer: B
Page 5
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Chapter 4: Transferring Title
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Sample Questions
Q1) A special warranty deed places the least obligations on the grantor.
A)True
B)False
Q2) Title to real property will most likely transfer when the deed is A) delivered but not signed.
B) signed by the grantor but not delivered.
C) recorded but not delivered.
D) executed and recorded.
Q3) A legal process of acquiring additional property that is added to property already owned is called accession.
A)True
B)False
Q4) One can transfer title to real property by all of the following EXCEPT A) quitclaim deed.
B) deed to a minor.
C) alienation.
D) trust deed.
Q5) A forged deed could result in a valid conveyance of title. A)True
B)False
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Chapter 5: Recordation Abstracts and Title Insurance
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Q1) A request for a court-appointed hearing to determine the lawful ownership of a parcel of land is called a
A) cloudy title suit.
B) quiet title suit.
C) partition suit.
D) eminent domain suit.
Q2) A lender wanting title insurance coverage on a property it is taking as collateral would ask for
A) an owner's title policy.
B) a mortgagee's title policy.
C) a mortgagor's title policy.
D) a buyer's policy.
Q3) Deeds are recorded
A) to provide constructive notice of their existence.
B) because the law requires it.
C) to satisfy a lender.
D) to give actual notice.
Q4) ____________________ notice is knowledge that one has actually gained based on what one has seen, heard, read, or observed.
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Chapter 6: Contract Law
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Q1) If a contract is breached and the damaged party wants the contract carried out, he would sue for
A) specific performance.
B) money damages.
C) novation.
D) unilateral rescission.
Q2) A unilateral contract results when a promise is exchanged for a promise.
A)True
B)False
Q3) If a contract is considered voidable, it is valid until voided.
A)True
B)False
Q4) A minor change in the terms of a contract does not constitute a counteroffer.
A)True
B)False
Q5) Which of the following are considered to be legally competent?
A) Corporations
B) Persons of unsound mind
C) Minors
D) A 15 year old woman
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Chapter 7: Real Estate Sales Contracts
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Q1) If the buyer is unable to obtain financing on the terms outlined in the sales agreement, the seller will have to return the buyer's deposit.
A)True
B)False
Q2) When a seller wishes to convey title by means of a statutory deed form, the salesperson
A) can advise the seller which deed form to use.
B) can advise seller to obtain the services of a lawyer.
C) can advise the buyer which tenancy to use.
D) can fill it out for the buyer.
Q3) The process of dividing ongoing expenses and income items as of the closing date is called
A) prorating.
B) "as is" basis.
C) closing.
D) arbitrating.
Q4) The process of dividing ongoing expenses and income items at closing is known as
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Chapter 8: Mortgage and Note
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Q1) When a clause in a mortgage allows the lender to proceed against a borrower's other assets if the foreclosure sale does not satisfy the debt, the result is called a
A) statutory redemption.
B) deficiency judgment.
C) equity of redemption.
D) foreclosure redemption.
Q2) If a foreclosed property has sold for less than the loan amount, the difference between the indebtedness and the sale price of the real estate at the foreclosure sale is called the
A) net price.
B) deficit.
C) net market value.
D) deficiency.
Q3) Strict foreclosure is a nonjudicial foreclosure without a judicial sale and usually without a statutory redemption period.
A)True
B)False
Q4) A(n)____________________ foreclosure does not go to court and is not heard by a judge.
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Chapter 9: Deed of Trust
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Sample Questions
Q1) When a property is financed by means of a deed of trust, to whom are the payments made?
A) Beneficiary
B) Trustor
C) Trustee
D) Grantee
Q2) A neutral third party would be found in
A) a regular mortgage.
B) an equitable mortgage.
C) a deed of trust.
D) a land sale contract.
Q3) When the debt is paid off the lender sends to the trustee the note, the deed of trust and a request for ____________________.
Q4) If the borrower defaults, the trustee has the right to sell the property and convey ownership to the purchaser with a ______________________________.
Q5) Under a deed of trust the borrower is known as the ____________________.
Q6) Under a deed of trust, the lender is known as the ____________________.
Q7) The trustee in a deed of trust is a neutral ____________________ party.
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Chapter 10: Lending Practices
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Sample Questions
Q1) A final loan payment that is larger than previous payments is called a
A) balloon payment.
B) budget payment.
C) terminal payment.
D) graduated payment.
Q2) After December 1, 1986, the FHA would no longer allow a ____________________ assumption of an FHA insured loan.
Q3) A purchaser took out a $50,000 new discount mortgage when he bought his home. The lender charged 2 discount points. On which amount will the mortgagor be paying interest the first month?
A) $49,000
B) $50,000
C) $51,000
D) $56,000
Q4) Usually, the borrower of a FHA loan is also responsible for the mortgage insurance premium.
A)True
B)False
Q5) The word point means 1% of the _________________________.
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Chapter 11: The Loan and the Consumer
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Q1) When making a mortgage loan application, borrowers are protected from discrimination based on marital status by the
A) Fair Credit Reporting Act.
B) Fair Housing laws.
C) Equal Credit Opportunity Act.
D) Real Estate Settlement Procedures Act.
Q2) If an applicant is purchasing a home as a(n)____________________, the lender will be more cautious because, during periods of high vacancy, the property may not generate enough income.
Q3) Generally, before a lender will approve a loan, the borrower must
A) have sufficient funds for the down payment.
B) sign a statement if the borrower intends to occupy the property.
C) both a and b. .
D) neither a nor b
Q4) Which of the following contains a trigger term under Regulation Z and requires further disclosure?
A) "Assumable VA loan"
B) "Buy for less than $600 a month"
C) "Cash price, only $79,500"
D) "Rent for only $499 per month"
Page 13
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Chapter 12: Sources of Financing
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Q1) Other lenders providing mortgage money might include
A) pension and trust funds.
B) credit unions.
C) commercial finance companies.
D) all of the above.
Q2) GNMA buys loans from primary market loan originators.
A)True
B)False
Q3) The primary market is typically divided into two markets: those markets regulated by the federal government and those not regulated by the federal government.
A)True
B)False
Q4) Lenders who could be described as investing a major portion of their assets in long-term real estate loans, preferring not to service their own loans, and favoring large commercial properties would be
A) commercial banks.
B) savings and loans.
C) mutual savings banks.
D) life insurance companies.
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Chapter 13: Types of Financing
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Q1) A blended-rate loan arrangement is designed to A) raise the rate of interest to the buyer.
B) lower the sales price of the property.
C) attract buyers who are discouraged by high interest rates.
D) pay off a loan sooner.
Q2) The interest rate of an adjustable rate mortgage may rise or fall based on the A) interest rate cap.
B) adjustment period.
C) index.
D) margin.
Q3) By far the most common adjustment period in an ARM is six months.
A)True
B)False
Q4) The index stays constant over the life of the loan but the margin will vary.
A)True
B)False
Q5) With a purchase made by an installment contract or land contract title immediately passes to the purchaser.
A)True
B)False
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Chapter 14: Taxes and Assessments
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Q1) When local budgets along with a list of sources from which the money will be derived, is enacted into law, it is called the ____________________ process.
Q2) Plottage is likely to have which of the following results?
A) Raising the tax bill
B) Raising the tax rate
C) Accelerating the lien date
D) Lowering the tax bill
Q3) The property tax rate may be expressed as a mill rate, dollars per thousand or dollars per hundred.
A)True
B)False
Q4) All of the following benefit from property taxes EXCEPT A) school budget.
B) municipal stadium.
C) public libraries.
D) parks.
Q5) If the property taxes are not paid, the property is sold at a public auction.
A)True
B)False
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Chapter 15: Title Closing and Escrow
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Q1) A seller received $81,000 at the close of escrow after paying $1,750 in closing costs and a 6% brokerage fee. What was the sales price of the house?
A) $82,750
B) $87,480
C) $89,230
D) $88,032
Q2) Details that must be handled between the time a purchase contract is signed and the closing typically include
A) title search.
B) deed preparation.
C) loan arrangements.
D) all of the above.
Q3) A settlement statement, also called a ____________________ statement, is given to the buyer and seller to summarize the financial aspects of their transaction.
Q4) A(n)____________________ statement is a statement by an owner or lienholder as to the balance due on an existing lien against the property.
Q5) The person placed in charge of an escrow is called an escrow
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Chapter 16: Real Estate Leases
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Q1) A ____________________ eviction is one whereby a landlord evicts a tenant because of a complaint made by the tenant.
Q2) A tenant seeking both flexibility for himself and commitment from the landlord would request a
A) participation clause.
B) month-to-month lease.
C) long-term lease.
D) lease with options to renew.
Q3) A lessee is in possession of a valid lease when a buyer agrees to assume a veteran's loan and close a sale subject to the lease. The earnest money contract is signed before the lease is due to expire. The lease can
A) be terminated immediately.
B) be changed by the new buyer.
C) not be terminated by the buyer.
D) be terminated at close of escrow.
Q4) A right of possession for a fixed term that allows for automatic renewals for additional terms is called a periodic tenancy.
A)True
B)False
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Chapter 17: Real Estate Appraisal
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Q1) A residential lot purchased 3 years ago for $10,000 has doubled in value. The house on the lot cost $40,000 and it increased $20,000 in value. If the house and lot are sold at market value today, how much profit will be realized?
A) $30,000
B) $40,000
C) 33 1/3%
D) 100%
Q2) A popular market comparison method that is used when a property produces income is the gross rent ____________________, or GRM.
Q3) The average assessed value of three comparable homes is likely to be the highest in value.
A)True
B)False
Q4) The American Institute of Real Estate Appraisers issues the A) GRI designation.
B) MAI designation.
C) CPM designation.
D) MIA designation.
Q5) The property to be appraised is known as the ____________________ property.
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Chapter 18: Licensing Laws and Professional Affiliation
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Q1) Who, of the following would be required to have a real estate license?
A) A secretary who answers the phone in a real estate office
B) An attorney who specializes in real estate law
C) An escrow officer
D) A person who solicits buyers and sellers for a broker
Q2) A duly qualified person who has passed the real estate license exam and joined a brokerage firm is most properly referred to as a licensee.
A)True
B)False
Q3) A real estate listing is a contract between
A) the owner and the listing broker.
B) the owner, the broker, and the listing salesperson.
C) the owner and the listing salesperson.
D) the broker and the listing salesperson.
Q4) When the property being sold is an investment contract in real estate rather than real estate itself, the broker may be required to have a securities license in addition to a real estate license.
A)True
B)False
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Chapter 19: The Principal-Broker Relationship: Employment
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Q1) When one broker lists a property, another broker sells it, and they split the commission between them, it is called
A) broker competition.
B) broker cooperation.
C) a pocket listing.
D) a mutual listing.
Q2) Most brokers are reluctant to accept net listings even when they are permitted to do so.
A)True
B)False
Q3) In whose name does a salesperson take a listing?
A) His broker's
B) His own name
C) The seller's
D) The Real Estate Commission
Q4) A listing agreement is a(n)____________________ contract between a property owner and a real estate broker.
Q5) A flat-fee broker is an example of a ____________________ broker.
Q6) A buyer's broker would use an exclusive right to ____________________ listing agreement.
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Chapter 20: The Principal-Broker Relationship: Agency
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Q1) Fiduciary responsibilities of an agent to the principal include faithful performance, loyalty, and provision of legal advice.
A)True
B)False
Q2) A listing agent is bound by his fiduciary relationship to be loyal to the seller. With regards to working with a buyer, the listing salesperson must disclose hidden defects to the buyer.
A)True
B)False
Q3) If, in showing a property, the salesperson said, "In my opinion, this house is absolutely the greatest in the world," the salesperson
A) could lose his license for fraud.
B) is guilty of misrepresentation.
C) is puffing.
D) is guilty of redlining.
Q4) The placing of funds belonging to others in a broker's personal bank account constitutes ____________________.
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Chapter 21: Fair Housing, Ada, Equal Credit, and Community Reinvestment
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Q1) A church that operates housing for the elderly may not restrict occupancy to members of the church even if membership in the church is open to all persons.
A)True
B)False
Q2) A minority is always described as a member of the smallest group of people.
A)True
B)False
Q3) The Community Reinvestment Act sets dollar amounts that lenders must set aside for lending in their community.
A)True
B)False
Q4) According to the 1968 Fair Housing Law, the Equal Housing Opportunity logo should appear in all of the following EXCEPT
A) real estate brokerages.
B) real estate classified newspaper advertising.
C) model home sale sites.
D) mortgage lenders' offices.
Q5) A protected class is a class of people that by law are protected from
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Chapter 22: Condominiums, Cooperatives, Puds, and Timeshares
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Q1) Traditionally, the resale of cooperative shares has been financed by means of second mortgages on the seller's unit.
A)True
B)False
Q2) The purchaser of a timeshare week who wants to receive a deed to that specific week would buy a
A) leasehold timeshare.
B) right-to-use timeshare.
C) fee simple timeshare.
D) model timeshare.
Q3) In a planned unit development, a developer would be likely to dedicate to the public all of the following EXCEPT
A) streets.
B) roads.
C) parks.
D) common elements.
Q4) The regulations by which anyone purchasing a unit in the condominium must abide are known as ____________________, conditions, and Restrictions.
Page 24
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Chapter 23: Property Insurance
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Q1) Among the following, who does NOT hold an insurable interest?
A) A property owner.
B) The listing broker.
C) A mortgage lender.
D) The tenant.
Q2) The inflation guard endorsements are available and automatically increase property damage coverage by
A) 1.5%
B) 2%
C) 2.5%
D) all of the above.
Q3) Policies that cover a large number of named perils are known as ____________________ form policies (HO-2).
Q4) A homeowner's insurance policy will NOT protect against which of the following?
A) Public liability directly connected with the insured property.
B) Damage to household goods contained in the insured premises.
C) Flood damage to the insured premises.
D) Theft of personal property.
Q5) If one rents rather than owns, they would choose the ____________________ form (HO-4).
25
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Chapter 24: Land-Use Control
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Q1) Which of the following is usually a private decision and unaffected by zoning regulations?
A) Setback requirements
B) Nonconforming uses
C) Variances
D) House color
Q2) To prepare a master plan a city or regional planning commission is usually created.
A)True
B)False
Q3) When a property owner obtains permission to open a small business in a residential neighborhood, it is an example of
A) nonconforming use.
B) grandfathering.
C) down zoning.
D) spot zoning.
Q4) Building codes may be enacted by local governments or at the state level of government.
A)True
B)False
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Chapter 25: Real Estate and the Economy
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Q1) ____________________ inflation results from increasing the money supply faster than increases in goods and services to buy.
Q2) When the supply and demand relationship in a market is unbalanced because of excess supply, it is to the advantage of A) buyers.
B) sellers.
C) sellers of services only.
D) buyers of services only.
Q3) Monetary inflation can be controlled by keeping the growth in the monetary supply parallel to the growth in productivity.
A)True
B)False
Q4) The Federal Reserve Board's objectives for the American economy include high employment, stable prices, and steady growth in productive capacity.
A)True
B)False
Q5) Higher prices due to buyers bidding against each other causes ____________________ inflation.
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Chapter 26: Investing in Real Estate
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Q1) An owner is using straight-line depreciation over a 27 1/2 year period on a $65,000 rental unit. If the improvements are worth $55,000, what is the depreciation in the first year?
A) $2,000.00
B) $2,181.81
C) $2,363.63
D) $4,363.63
Q2) To be considered a good investment, when a property which generates a negative cash flow is sold,
A) there must be a substantial increase in property value.
B) there need be little increase in property value.
C) the investor is best off if the property has decreased in value.
D) there must be a substantial down payment.
Q3) A woman owns an $86,000 house on which she pays $329 per month interest. If she is in a 28% tax bracket, how much less tax will she have to pay per year because she owns it?
A) $131.60
B) $653.49
C) $1,105.44
D) $2,763.60
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