Introduction to Property Management Final
Exam
Course Introduction
Introduction to Property Management provides students with a comprehensive overview of the principles and practices involved in managing residential, commercial, and industrial real estate. The course covers essential topics such as leasing and tenant relations, property maintenance, financial reporting, legal and ethical responsibilities, and risk management. Students will gain fundamental knowledge of the landlord-tenant relationship, strategies for marketing properties, and an understanding of current industry trends. By the end of the course, students will be prepared to address common challenges faced by property managers and will possess a practical foundation for further study or entry-level positions in property management.
Recommended Textbook Real Estate Principles 11th Edition by Charles J. Jacobus
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Chapter 1: Nature and Description of Real Estate
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Q1) A cultivated crop, not yet harvested, should be carefully noted on a listing agreement because
A) appurtenances will not pass with the land.
B) the right to harvest belongs to the owner of the land.
C) emblements belong to the person who plants and cultivates them.
D) growing things are affixed to the soil.
Answer: C
Q2) Regarding real property,
A) mineral rights must run with the land.
B) air rights can be granted by deed.
C) annual crops are considered real property because they are attached to the land.
D) man made buildings are not part of the real property.
Answer: B
Q3) A residential tenant wants to build a bookcase next to the fireplace in his leased townhouse. The book case can be removed with prior permission of the
Answer: landlord
Q4) Timber on land becomes ____________________ property. Answer: personal
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Chapter 2: Rights and Interests in Land
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Q1) Which entity would be most likely to hold an easement in gross?
A) Adjacent property owner
B) A power company
C) A tenant at will
D) A corporation on the same road
Answer: B
Q2) An easement appurtenant passes with the title to the dominant estate.
A)True
B)False
Answer: True
Q3) By what action does the government take property for public use?
A) Condemnation
B) Adverse possession
C) Zoning
D) Public vote
Answer: A
Q4) A ____________________ mortgage lien could not result in the sale of a debtor's real property in order to gain funds for the satisfaction of a debt.
Answer: chattel
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Chapter 3: Forms of Ownership
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Q1) Subchapter S corporations are not popular as a method of organization for real estate brokers and developers.
A)True
B)False
Answer: False
Q2) The term "undivided interest" means
A) each co-owner has the right to use the entire property.
B) when one co-owner dies, the remaining co-owners acquire his interest.
C) the property has not previously been sold.
D) no co-owner can sell his interest.
Answer: A
Q3) A trust is an arrangement whereby title to real and/or personal property is transferred by its owner (the trustor)to a ____________________.
Answer: trustee
Q4) In regard to a partnership, ____________________ refers to the possibility that it may be difficult to sell one's partnership interest on short notice in order to raise cash.
Answer: illiquidity
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Chapter 4: Transferring Title
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Q1) That which gives the appearance of title, but is not in fact title is
A) cloud of title.
B) color of title.
C) burden of title.
D) unlawful.
Q2) A legal process of acquiring additional property that is added to property already owned is called accession.
A)True
B)False
Q3) The deed from that is considered to be the best for the buyer is the _________________________ deed.
Q4) If a person dies without leaving a last will and testament she is said to have died ____________________.
Q5) Elaine wants to leave her real estate to her nephew, Farquart, but desires the flexibility to change her mind in the future. She can accomplish this goal with a joint tenancy with her nephew.
A)True B)False
Q6) The actual act of conveying ownership is known as a ____________________.
Page 6
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Chapter 5: Recordation Abstracts and Title Insurance
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Q1) The Marketable Title Act, as presently used in the United States
A) cuts off inactive claims to rights or interests.
B) offers state-sponsored title insurance.
C) guarantees title insurance.
D) automatically renews title insurance.
Q2) Most states do not require that documents be acknowledged before being eligible for recording.
A)True
B)False
Q3) A deed, which is not recorded, is
A) void.
B) voidable.
C) unenforceable.
D) valid.
Q4) An acknowledgement can be witnessed by a notary public
A) in person.
B) by mail.
C) by fax.
D) by proxy.
Q5) A title defect is also known as a title ____________________.
Page 7
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Chapter 6: Contract Law
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Q1) A lease is an example of a
A) non-contractual agreement.
B) declaration of intent.
C) unilateral contract.
D) bilateral contract.
Q2) If a contract is made under duress, it would be void.
A)True
B)False
Q3) A contract entered into by a minor is
A) illegal.
B) voidable.
C) valid.
D) unenforceable.
Q4) A minor change in the terms of a contract does not constitute a counteroffer.
A)True
B)False
Q5) Under certain circumstances the ____________________ evidence rule permits oral evidence to complete an otherwise incomplete or ambiguous written contract.
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Chapter 7: Real Estate Sales Contracts
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Q1) A _________________________ allows the tenant to buy the property at a preset price for a given period of time.
Q2) After the seller has accepted an offer, the sales agent should deliver a copy of the agreement first of all to the lender.
A)True
B)False
Q3) If the vendee is in default, the vendor
A) cannot pursue the right of foreclosure.
B) is in title.
C) no longer has equitable title.
D) retains color of title.
Q4) A land sales contract passes
A) the right to destroy the property.
B) equitable title.
C) legal title.
D) no interest whatsoever.
Q5) The federal government has authorized electronic signatures and documents. A)True B)False
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Chapter 8: Mortgage and Note
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Q1) In a promissory note, the term "principal" refers to the borrower.
A)True
B)False
Q2) Mogan and David buy a furnished house. They assume and agree to the existing mortgage. They will need a note and mortgage.
A)True
B)False
Q3) Provisions for the defeat of a mortgage are found in the defeasance clause.
A)True
B)False
Q4) A borrower wants provisions written into his mortgage whereby the lender will remove a portion of the property from the mortgage upon partial repayment of the loan. The borrower would ask for an alienation clause.
A)True
B)False
Q5) Strict foreclosure is a nonjudicial foreclosure without a judicial sale and usually without a statutory redemption period.
A)True
B)False
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Chapter 9: Deed of Trust
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Q1) Upon payment of the debt secured by a deed of trust, the A) trustor issues a deed for reconveyance.
B) grant deed is issued to the trustee.
C) trustee issues a release deed for reconveyance.
D) trustor now has equitable title.
Q2) In the automatic form of trusteeship, the trustee is named in the deed of trust but is not personally notified of the appointment.
A)True
B)False
Q3) The instrument which conveys naked title to a trustee is the A) notice of default.
B) reconveyance deed.
C) guardian's deed.
D) trust deed.
Q4) When a debt secured by a deed of trust is paid off, naked legal title reverts to the borrower from the A) mortgagee.
B) trustor.
C) beneficiary.
D) trustee.
Page 11
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Chapter 10: Lending Practices
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Q1) If a monthly principal and interest payment for a 30-year, 12% loan of $1,000 would be $10.29 what would the monthly payment be for a home purchased at $75,500 with an 80% loan on those terms?
A) $10.29
B) $621.52
C) $755.90
D) $776.90
Q2) Usually, the borrower of a FHA loan is also responsible for the A) mortgage insurance premium.
B) funding fees.
C) private mortgage insurance.
D) estoppel certificate.
Q3) A conventional mortgage is neither insured nor guaranteed by the government. A)True
B)False
Q4) In the event of default and subsequent foreclosure, a VA borrower is responsible for making good any losses suffered.
A)True
B)False
Q5) The word point means 1% of the _________________________.
Page 12
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Chapter 11: The Loan and the Consumer
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Q1) "Buy for less than $600 a month" contains a trigger term under Regulation Z and requires further disclosure.
A)True
B)False
Q2) Regulation Z requires a lender to disclose
A) interest charges expressed as dollars and percent.
B) dollar amount of any finance charge.
C) APR as a dollar amount.
D) all charges only as a percent.
Q3) With regard to truth in lending laws, which of the following is legally permissible to advertise, without further explanation?
A) Only $1,000 down payment
B) Less than $500 per month
C) 11% interest loan
D) APR 10% assumable
Q4) Regulation Z deals with annual percentage rates.
A)True
B)False
Q5) ____________________ loans have risk-based pricing and rates are not quoted.
Page 13
Q6) A borrower has a limited right of ____________________ in a credit transaction.
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Chapter 12: Sources of Financing
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Sample Questions
Q1) Mortgage companies tend to lend their own money and retain the loans in their portfolio.
A)True
B)False
Q2) Mortgage ____________________ do not lend their own money but simply put lender and borrower together.
Q3) The basic role of the GNMA is to
A) resupply capital to primary lenders by guaranteeing repayment of pools of mortgage loans.
B) insure loans made by primary government lenders.
C) sell mortgage pools to money market funds.
D) facilitate the resale of mortgage loans by marketing participation certificates.
Q4) From whom would a borrower obtain a VA or FHA loan?
A) Approved mortgage lender
B) VA or FHA
C) Insurance companies
D) Sale of bonds
Q5) Both fiat money and real savings represent ____________________ labor and materials.
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Chapter 13: Types of Financing
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Q1) A mortgage secured by two or more properties is called a ____________________ mortgage.
Q2) For a successful wraparound, it is necessary to have an existing mortgage with A) a below-market interest rate.
B) a due-on-sale clause.
C) an above market interest rate.
D) an alienation clause.
Q3) For the borrower there are no disadvantages to an ARM loan.
A)True
B)False
Q4) A loan where items classed as personal property are included with the real estate is called a(n)____________________ mortgage.
Q5) The first step toward mortgage loans with adjustable interest rates came in the late 1800s.
A)True
B)False
Q6) The index stays constant over the life of the loan but the margin will vary.
A)True
B)False
Q7) The interest rate on an ARM is tied to a(n)____________________ rate.
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Chapter 14: Taxes and Assessments
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Q1) Taxes become a lien
A) in advance.
B) only when delinquent.
C) in arrears.
D) when an assessment appeal is filed.
Q2) The sale of an appreciated property structured to spread out the payment of income taxes on the gain is called a(n)____________________ sale.
Q3) The amount of property taxes an owner pays is determined by the services provided by the city or county.
A)True
B)False
Q4) Local government programs and services are financed primarily through A) property taxes.
B) federal income taxes.
C) state income taxes.
D) state sales taxes.
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) The deposit of documents and funds with a ____________________ third party plus instructions as to how to conduct the closing is called an escrow closing.
Q2) A couple buys a house complete with furnishings. They assume and agree to pay the existing mortgage. All of the following documents should be used in closing EXCEPT A) note and mortgage.
B) assumption papers.
C) bill of sale.
D) closing instructions.
Q3) Among the items to be prorated at a settlement or escrow closing taxes and rents.
A)True
B)False
Q4) Under the provisions of RESPA payments outside closing are prohibited. A)True B)False
Q5) During a "dry closing" the deed is disbursed to the buyer. A)True
B)False
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Chapter 16: Real Estate Leases
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Q1) A lease under which the amount of rent is based upon the tenant's sales volume is known as
A) a percentage lease.
B) a gratuity lease.
C) an escalation lease.
D) usury.
Q2) A lease contract that calls for rent increases that keep abreast with changes in property taxes and utility costs contains a participation clause.
A)True
B)False
Q3) A residential apartment tenant would be expected to pay the landlord for A) normal wear and tear.
B) damage to the apartment caused by the tenant.
C) any change in the apartment.
D) sun-faded carpet.
Q4) To ____________________ means to transfer only a portion of the rights under a lease.
Q5) The amount of rent that the tenant must pay the landlord for the use of the premises is called the ____________________ rent.
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Chapter 17: Real Estate Appraisal
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Q1) Loss of value of a structure because it is in a deteriorating neighborhood would be called economic obsolescence.
A)True
B)False
Q2) Which of the following operating expense ratios indicate one dollar of total operating expenses for every two dollars of effective gross income?
A) 33.3%
B) 50%
C) 200%
D) 25%
Q3) From the viewpoint of a qualified appraiser, the value of the subject property is most affected by its highest and best use.
A)True
B)False
Q4) The conversion of future income into present value is known as hypothecation.
A)True
B)False
Q5) ____________________ obsolescence is he loss of value due to external forces or events.
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Chapter 18: Licensing Laws and Professional Affiliation
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Q1) A recovery fund is a state-operated fund that can be tapped to pay real estate brokers who have claims against other brokers.
A)True
B)False
Q2) A ____________________ is a person or legal entity license to act independently in conducting a real estate brokerage business.
Q3) A real estate broker differs from a real estate salesperson under the law in that the A) broker is liable for the acts of the salesperson.
B) salesperson may take a listing with him when he changes brokers.
C) law recognizes no differences.
D) salesperson is responsible for the acts of the broker.
Q4) A typical broker-salesperson employment contract should include all of the following EXCEPT
A) sales commission splits and earned bonuses.
B) services to be supplied by the broker.
C) tax withholding requirements.
D) employment status.
Q5) To temporarily make ineffective is to ____________________.
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Chapter 19: The Principal-Broker Relationship: Employment
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Q1) A salesperson worked for broker Barbara when they agreed to take a note from a seller for a deferred commission. The salesperson left the first broker and now works for another broker. When the note is paid, the salesperson is entitled to receive the commission directly from Barbara because she was working for her at the time she earned the commission.
A)True B)False
Q2) Most brokers are reluctant to accept net listings even when they are permitted to do so.
A)True B)False
Q3) A licensed real estate salesperson can accept a commission from more than one broker
A) if both brokers are fully informed in writing.
B) when brokers are cooperating through the multiple listing service.
C) at no time.
D) if the salesperson was the procuring cause in each transaction.
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.
Page 22
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Chapter 20: The Principal-Broker Relationship: Agency
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Q1) Agents who fail to investigate the cause of an apparent underlying defect in a property they are selling may be found liable for ____________________ damages.
Q2) When an agent's authority arises from custom in the industry, it is identified as A) implied authority.
B) ostensible authority.
C) customary authority.
D) conventional authority.
Q3) Two sellers lead a buyer to believe that broker Charlotte is their agent without notifying Charlotte of the fact. This is an example of express agency.
A)True
B)False
Q4) When a listing is taken, the seller would be referred to as A) the customer.
B) a fiduciary.
C) the client.
D) the agent.
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23
Chapter
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Q1) The 1968 Fair Housing Law does not apply to an individual renting his only house without using a broker.
A)True B)False
Q2) Blockbusting is the illegal practice of inducing ____________________ selling in a neighborhood for financial gain.
Q3) All of the following are true of the ADA, enacted on July 26, 1992, EXCEPT
A) it provides access requirements and prohibits discrimination against disabled people. B) it affects the real estate brokerage industry in that the licensees need to determine compliance.
C) it requires modifications to procedures so that disabled individuals are not excluded from regular programs.
D) it requires alterations to the property, no matter what that cost will be.
Q4) Violations of fair housing laws may involve fines up to $100,000 in addition to civil damages, potential injunctions, reasonable attorney's fees and costs.
A)True B)False
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Chapter 22: Condominiums, Cooperatives, Puds, and Timeshares
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Q1) Condominiums developments are restricted to A) residential dwelling units.
B) multiple-unit buildings.
C) both a and b.
D) neither a nor b.
Q2) In a condominium, the authority to raise homeowner fees (association dues)rests with the management company.
A)True
B)False
Q3) The regulations by which anyone purchasing a unit in the condominium must abide are known as ____________________, conditions, and Restrictions.
Q4) Under the right-to-use plan of timesharing, the purchaser holds title to real property.
A)True
B)False
Q5) An example of a limited common element could be an assigned ____________________ stall.
Q6) Compared to new construction, a condominium ____________________ is often simpler, faster, and more profitable to the developer.
Page 25
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Chapter 23: Property Insurance
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Q1) ____________________ liability, also called public liability, is the financial responsibility one has toward others as a result of one's actions or failure to take action.
Q2) When a property is mortgaged to a lending institution, the lender will usually require the owner to provide
A) fire and extended coverage on structures.
B) personal property coverage.
C) medical payment coverage.
D) liability coverage.
Q3) To cover personal property and any additions or alterations to the unit not insured by the association's policy, a condominium unit owner's form (HO-6)is available.
A)True
B)False
Q4) There are no exclusions in an all-risks policy.
A)True
B)False
Q5) If one rents rather than owns, they would choose the ____________________ form (HO-4).
Q6) ____________________ insurance is the foundation of property damage policies.
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Chapter 24: Land-Use Control
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Q1) A use of property that is not in agreement with present zoning laws is called a nonconforming use.
A)True
B)False
Q2) When land that was previously zoned for higher-density use is rezoned for lower-density uses, it is called
A) spot zoning.
B) buffer zoning.
C) conditional use.
D) down zoning.
Q3) An improvement that is inconsistent with current zoning regulations is considered a _________________________ use.
Q4) When an existing structure does not conform with a new zoning law, it is "grandfathered-in" as a nonconforming use.
A)True
B)False
Q5) A government-issued document that states a structure meets local zoning and building code requirements and is ready for use is called a Certificate of
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Chapter 25: Real Estate and the Economy
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Q1) A dramatic increase in the birth rate will have an immediate effect on the demand for housing but will have no long-range effect.
A)True
B)False
Q2) The tourist industry in Florida or oil wells on Alaska's North Slope would be examples of base industries.
A)True B)False
Q3) Real estate values are affected by the federal government's A) tax rules.
B) laws.
C) deficits.
D) all of the above.
Q4) The advent of the secondary mortgage market
A) made available previously untapped sources of money for real estate mortgage loans.
B) contributed to real estate speculation and inflation in the late 1970s.
C) both a and b.
D) neither a nor b.
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Chapter 26: Investing in Real Estate
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Q1) In a limited partnership, the limited partners cannot lose more than the amount they have invested.
A)True
B)False
Q2) An investment property was purchased in 2008 for $180,000. The land accounted for 30% of this value. If figured on a 30-year life, what was the book value of this property after one year of straight-line depreciation?
A) $54,000
B) $121,800
C) $126,000
D) $175,800
Q3) When the benefits of borrowing money for investing exceeds the costs of borrowing, you have
A) negative leverage.
B) positive leverage.
C) usury.
D) capitalization rate.
Q4) If an investor has to dip into cash reserves to keep a property going, the property has a ____________________ cash flow.
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