Real Estate Law and Ethics
Textbook Exam Questions
Course Introduction
This course examines the foundational legal principles and ethical considerations involved in real estate transactions, development, and management. Students will explore topics such as property rights, contracts, agency relationships, zoning laws, mortgages, landlord-tenant law, and dispute resolution. Emphasis is placed on understanding both statutory and case law as it relates to real estate, as well as professional standards of conduct and ethical frameworks relevant to real estate professionals. By the end of the course, students will be equipped to identify legal issues, assess ethical dilemmas, and apply best practices within the real estate industry.
Recommended Textbook
California Real Estate Principles 9th Edition by
Dennis J. McKenzie
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15 Chapters
624 Verified Questions
624 Flashcards
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Chapter 1: Introduction to Real Estate
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45 Flashcards
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Sample Questions
Q1) Personal property differs from real property in many aspects and is legally known as:
A) chose
B) chattel
C) freehold
D) both (a) and (b) are correct
Answer: D
Q2) A residential tenant may expect the landlord to make necessary repairs to keep the dwelling habitable. If the landlord does not, the tenant may make needed repairs and offset the rent up to:
A) a $700 maximum
B) one month's rent
C) reasonable cost
D) $1,000 maximum
Answer: B
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Chapter 2: Part I: Legal Description, Method of Acquiring
Title , and Deeds
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) Title held as "Elva L. Vargas, an unmarried woman" is an example of:
A) joint tenancy
B) tenancy in common
C) estate in remainder
D) ownership in severalty
Answer: D
Q2) Shelves in a retail store are an example of:
A) real estate
B) encumbrances
C) trade fixtures
D) real property
Answer: C
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Chapter 3: Encumbrances, Liens, and Homesteads
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40 Flashcards
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Sample Questions
Q1) Which of these statements would be correct concerning a covenant and a condition in a deed?
A) the penalty for violation of a covenant is more severe than that for violation of a condition
B) the penalty for violation of a condition is always money damages
C) neither (a) nor (b)
D) both (a) and (b)
Answer: C
Q2) A township contains
A) 36 acres
B) 640 acres
C) 36 square miles
D) 160 acres
Answer: C
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Page 5
Chapter 4: Real Estate Agency
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) The broker of a real estate office wanted to deposit funds from a recently opened transaction. He had his trust account, business account, and personal account all at the same bank. Inadvertently, he made out the deposit slip to deposit the client's funds into his personal account.
A) This was an innocent mistake. He can just redeposit the money into his trust account before the close of escrow.
B) The broker should call and immediately transfer the funds into his trust account.
C) The broker doesn't have to worry unless the DRE audits his account.
D) the broker is guilty of commingling funds.
Q2) Salesperson Schmidt works for Broker Hassan. On May 1, Schmidt takes a listing on Home X for 90 days. Twenty days later, Salesperson Schmidt transfers her license and becomes a salesperson for Broker Meeks. As of May 21, the listing on Home X belongs to:
A) Broker Hassan
B) Salesperson Schmidt
C) Broker Meeks
D) no one, as this cancels the agency with the seller
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Chapter 5: Real Estate Contracts and Mandated
Disclosures
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Sample Questions
Q1) What is a contract called whereby the seller agrees to pay a commission and the broker agrees to use diligence in finding a buyer?
A) bilateral executory contract
B) unilateral executory contract
C) bilateral executed contract
D) unilateral executed contract
Q2) Real estate agencies can be created several ways. The most common method is:
A) agreement
B) estoppel
C) ratification
D) implication
Q3) A real estate agent may legally refuse to show property available for sale to a person of a minority race if the:
A) agent feels the home was not suited for the people
B) owners were out of town and had left instructions the home was not to be shown to anyone during their absence
C) owners had given specific instructions against showing the home to minority buyers
D) agent felt the buyers would not like the location
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Chapter 6: Practical Real Estate Mathematics
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40 Flashcards
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Sample Questions
Q1) A duplex rents for $700 per unit per month. Expenses and vacancies run 30% of gross rents. With a capitalization rate of 6%, what is the value?
A) $196,000
B) $110,000
C) $168,000
D) $174,500
Q2) A person purchased an undeveloped piece of land on a country road. The land contains a quarter of a quarter of a quarter of a section and the front bordering the road is 435 ft. Approximately how deep is the parcel?
A) 2500 ft.
B) 4000 ft.
C) 1000 ft.
D) 835 ft.
Q3) What is the rate of interest on a note for $3,600, due in 180 days, if the total interest to be paid is $400?
A) 25%
B) 33%
C) 22%
D) 11%
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Chapter 7: Introduction to Real Estate Finance
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) In an ARM loan, the distance between the borrower's rate and the index is called the:
A) cap
B) adjustment
C) margin
D) teaser
Q2) An enforceable due-on-sale clause is correctly called a/an:
A) acceleration clause
B) alienation clause
C) wrap around clause
D) prepay clause
Q3) $300,000 loan at 8% payable $2,000 per month is what type of note?
A) installment
B) straight
C) wraparound
D) amortized
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9
Chapter 8: Part I: Real Estate Lenders
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40 Flashcards
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Sample Questions
Q1) Which program has the seller deed title to the government?
A) VA
B) Cal-Vet
C) FHA
D) FNMA
Q2) For gross income purposes, most lenders want the borrower to have at least a:
A) 1 year work history
B) 2 year work history
C) 3 year work history
D) 4 year work history
Q3) A mortgage broker negotiated a loan for $10,000, secured by a second trust deed to be paid in 30 monthly payments. The maximum commission the broker is permitted to charge is:
A) $195
B) $390
C) $700
D) $1,000
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Chapter 9: Real Estate Appraisal
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40 Flashcards
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Sample Questions
Q1) With a gross monthly multiplier of 150, a duplex that rents one unit for $575 per month and the other for $625 should have an estimated value of:
A) $173,000
B) $176,000
C) $180,000
D) $197,000
Q2) The market (sales comparison) approach to value is most important for determining the value of:
A) special purpose properties
B) commercial property
C) existing residential homes
D) income-producing property
Q3) A secondary mortgage market is where:
A) existing lenders sell to other lenders and investors
B) a seller carries a junior trust deed
C) the supply of funds available for real estate loans is decreased
D) the Federal Reserve tightens mortgage interest rates
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11
Chapter 10: The Role of Escrow and Title Insurance Companies
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Sample Questions
Q1) Sales price $295,000, buyer puts on new 80% loan and pays 1% loan fee, $45 tax service fee, $400 tax prorations, $175 structural pest control inspection fee, $20 credit report, $20 recording fees, $910 hazard insurance fee, and a $600 escrow fee. How much will the buyer need to close escrow?
A) $4,530
B) $37,740
C) $63,530
D) $68,360
Q2) The appraisal principle that states that the value of a property is dynamic, not static:
A) principle of supply and demand
B) principle of highest and best use
C) principle of substitution
D) principle of change
Q3) The market approach would be given the most weight if appraising a:
A) new home
B) new apartment
C) five-year-old home
D) special purpose property
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Chapter 11: Landlord and Tenant Relations
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40 Flashcards
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Sample Questions
Q1) An estate for years (tenancy for a fixed term) is for what period of time?
A) A year
B) A week
C) A day
D) All of the above
Q2) Which of the following is not exempt from the escrow licensing law?
A) trust companies
B) escrow companies
C) title insurance companies
D) real estate brokers when acting as an agent in the transaction
Q3) A landlord signs a 3-year binding residential lease with a tenant. Six months later, the landlord wishes the tenant to move so the landlord's father can occupy the apartment. The tenant will be forced to move after the landlord serves a:
A) 3-day notice
B) 30-day notice
C) 60-day notice
D) the tenant cannot be forced to move
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Chapter 12: Land-Use Planning, Subdivisions, Fair Housing, and
Other Public Controls
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Sample Questions
Q1) The first step in urban planning is to:
A) begin a comprehensive plan
B) formulate the community goals
C) implement the general plan
D) provide long range goals
Q2) A tenant may not be evicted in retaliation for using the rental offset for
A) one year
B) six months
C) 90 days
D) none of the above
Q3) Redlining in California is illegal because of the:
A) Fair Housing Act
B) Rumford Act
C) Unruh Act
D) Housing Financial Discrimination (Holden) Act
Q4) The maximum security deposit for an unfurnished apartment is:
A) one month's rent
B) two months' rent
C) three months' rent
D) four months' rent
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Chapter 13: Introduction to Taxation
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Sample Questions
Q1) Which law prohibits lenders from "redlining"?
A) Fair Housing Act
B) Rumford Act
C) Unruh Act
D) Housing Financial Discrimination (Holden) Act
Q2) Property owners can appeal the size of their property tax bill to an assessments appeals commission, or in some areas to the:
A) local board of equalization
B) franchise tax board
C) board of supervisors
D) franchise property tax agency
Q3) The second installment of real property taxes is delinquent if not paid by:
A) November 1
B) December 10
C) February 1
D) April 10
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Page 15
Chapter 14: Single-Family Homes and Mobile Homes
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Sample Questions
Q1) A new modular home from the factory can be sold by:
A) the developer
B) a real estate licensee
C) the Department of Veterans Affairs
D) none of the above
Q2) A real estate license can be suspended if an agent knowingly acts as the sales broker for a:
A) vacant lot zoned for mobile homes
B) stolen mobile home
C) mobile home in a mobile home park
D) mobile home with a government certified foundation
Q3) Which of the following regarding mobile homes is true?
A) interest rates on loans are usually lower than on conventional homes
B) they usually depreciate more rapidly than a conventional home
C) they cannot be financed using FHA, VA, or Cal-Vet programs
D) in most cities, they are allowed to be placed in any residential area
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Chapter 15: A Career in Real Estate
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Sample Questions
Q1) The trade name Realtist designates a member of the:
A) National Association of Realtors
B) Consolidated Brokers of America
C) National Association of Real Estate Professionals
D) National Association of Real Estate Brokers
Q2) In California, the majority of the laws that regulate the real estate industry originate from:
A) Commissioner's Code of Ethics
B) legislation passed by the California Legislature
C) the Treaty of Guadalupe Hidalgo
D) the Business and Professions Code
Q3) Which of the following is a license issued by the California Real Estate Commissioner?
A) corporate real estate license
B) appraisal license
C) escrow license
D) two of the above are correct
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