Residential Real Estate Test Bank
Course Introduction
This course provides an in-depth overview of the residential real estate industry, covering topics such as property valuation, financing options, home ownership, the buying and selling processes, legal and ethical considerations, and market analysis. Students will learn about the roles and responsibilities of real estate professionals, the documentation and procedures involved in residential transactions, and factors affecting property markets. Practical case studies and analysis will help students develop critical thinking and problem-solving skills essential for navigating the dynamic landscape of residential real estate.
Recommended Textbook
Real Estate Principles 11th Edition by Charles J. Jacobus
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26 Chapters
2079 Verified Questions
2079 Flashcards
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Page 2
Chapter 1: Nature and Description of Real Estate
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Sample Questions
Q1) "That land bounded by Elk Lake and the western boundary of Ware County running from the lake to the southern boundary of said county" might be considered too vague, imprecise and subject to change to be a valid legal description.
A)True
B)False
Answer: True
Q2) An easement for the adjacent property owner is appurtenant to real estate.
A)True
B)False
Answer: True
Q3) Comparing sections and townships, a township is 6 square miles.
A)True
B)False
Answer: False
Q4) All of the following are acceptable means of describing real property EXCEPT A) metes and bounds.
B) lot and block.
C) allodial method.
D) rectangular survey method.
Answer: C
Page 3
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Chapter 2: Rights and Interests in Land
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Sample Questions
Q1) The type of lien used by someone who does work or supplies materials for a home and has not been paid is called a mechanic's lien.
A)True
B)False
Answer: True
Q2) A property owner who holds fee simple title to land will have all of the following "sticks" in his bundle of rights EXCEPT the right to
A) occupy and use it.
B) restrict the use of it.
C) devise it.
D) violate building, health and safety codes.
Answer: D
Q3) Concerning the duration of deed restrictions, they ____________________ with the land.
Answer: run
Q4) A fee simple estate in real property may not be transferred with a bill of sale. A)True
B)False
Answer: True
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Chapter 3: Forms of Ownership
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Sample Questions
Q1) In nearly all states, if two or more persons are named as owners, and there is no indication as to how title was taken, they are presumed to be
Answer: tenants in common
Q2) Concurrent interests in real property must
A) be recorded.
B) include right of survivorship.
C) include equal interests.
D) include 2 or more people.
Answer: D
Q3) In several states, a land trust allows an owner to create a trust wherein he is both the trustor and the trustee.
A)True
B)False
Answer: False
Q4) The greatest advantage of sole ownership is flexibility.
A)True
B)False
Answer: True
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Chapter 4: Transferring Title
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Sample Questions
Q1) Through the unauthorized occupation of another person's land for a long enough period of time, it is possible to acquire ownership by
Q2) 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.
Q3) The person giving up ownership is called the grantee.
A)True
B)False
Q4) Real property that is willed is known as a ____________________ and the recipient is the ____________________.
Q5) A general warranty deed protects the grantee against future problems with the grantee's title that occurred before transfer.
A)True
B)False
Q6) The actual act of conveying ownership is known as a ____________________.
Q7) The "To have and to hold clause" is also known as the ____________________ clause.
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Chapter 5: Recordation Abstracts and Title Insurance
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Sample Questions
Q1) The recording of an instrument in the proper county provides the public with A) constructive notice.
B) final notice.
C) bona fide notice.
D) after-acquired notice.
Q2) An acknowledgement can be witnessed by a notary public
A) in person.
B) by mail.
C) by fax.
D) by proxy.
Q3) A(n)____________________ of ____________________ is a complete historical summary of all recorded documents affecting the title of a property.
Q4) Prior to enactment of the Statute of Frauds in 1677 a landowner gave notice to the world of his claim to ownership by visibly occupying the land.
A)True B)False
Q5) Almost all states use the tract indexing system.
A)True
B)False
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Chapter 6: Contract Law
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Sample Questions
Q1) The term "rescinded" in real estate means
A) rewritten.
B) rejected.
C) reworded.
D) canceled.
Q2) Under certain circumstances, the innocent party can unilaterally rescind a contract.
A)True
B)False
Q3) A mistake includes innocent misrepresentation, ignorance, inability, or poor judgment.
A)True
B)False
Q4) A lawsuit for _________________________ is an action in court by the innocent party to force the breaching party to carry out the remainder of the contract according to the precise terms, price and conditions agreed upon.
Q5) If a contract is made under duress, it would be void.
A)True
B)False
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Chapter 7: Real Estate Sales Contracts
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Sample Questions
Q1) "Time is of the essence" means that the time limits set by the contract must be faithfully observed or the contract is voidable by the defaulting party.
A)True
B)False
Q2) In most residential purchase agreements, the purchaser has the right to withdraw from the purchase without forfeiture of the earnest money if he cannot obtain necessary financing.
A)True
B)False
Q3) The legal grace period in an option to purchase real estate is how long?
A) 72 hours
B) 5 days
C) 30 days
D) There is no grace period
Q4) 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
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Chapter 8: Mortgage and Note
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Sample Questions
Q1) The right of the mortgagor to reclaim his property upon payment in full of the obligation is
A) reconveyance.
B) redemption.
C) recapture.
D) right of deficiency.
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) When a lender voluntarily takes a lower position than he would normally be entitled to the process is known as ____________________.
Q4) Which is an example of pledged property?
A) Estoppel
B) Covenant
C) Dedication deed
D) Real estate given as security
Q5) The covenant of _________________________ requires the borrower to keep the mortgaged property in good condition.
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Chapter 9: Deed of Trust
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Sample Questions
Q1) A deed of trust can never be foreclosed judicially.
A)True
B)False
Q2) When a loan is secured by deed of trust, the promissory note is held by the A) beneficiary.
B) trustor.
C) trustee.
D) grantee.
Q3) The borrower under a deed of trust is called the A) trustor.
B) beneficiary.
C) trustee.
D) grantor.
Q4) The trustee of a deed of trust
A) may be the beneficiary.
B) may bid at the foreclosure sale.
C) has naked title.
D) always knows of his appointment.
Q5) After the expenses of the sale are paid in a foreclosure sale, the ____________________ is paid.
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Chapter 10: Lending Practices
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Sample Questions
Q1) A borrower can expect to pay a mortgage insurance premium for A) an FHA insured loan.
B) an 80% conventional loan.
C) a graduated payment loan.
D) an accelerated payment loan.
Q2) A loan progress chart is used in connection with A) partially amortized loans.
B) term loans.
C) index loans.
D) straight loans.
Q3) The word point means 1% of the _________________________.
Q4) On a $64,000 home, which of the following would require the largest cash down payment?
A) FHA-insured loan
B) 80% loan-to-value conventional loan
C) 90% loan-to-value conventional
D) 100% DVA loan
Q5) Under section 203(b), the FHA lends to the secondary market.
A)True
B)False
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Chapter 11: The Loan and the Consumer
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Sample Questions
Q1) When borrowing money to buy a home, the borrower has the right of rescission.
A)True
B)False
Q2) 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
Q3) Truth in lending laws were created primarily to protect A) consumers.
B) lenders.
C) beneficiaries.
D) mortgagees.
Q4) A lender can legally discriminate in loan terms based on the applicant's A) religion.
B) marital status.
C) race or skin color.
D) intention to occupy (or not occupy) the mortgaged property.
Q5) ____________________ loans have risk-based pricing and rates are not quoted.
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Chapter 12: Sources of Financing
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Sample Questions
Q1) Farmer Mac was created to provide a secondary market for farm loans.
A)True
B)False
Q2) Usury laws are established by the federal statutes.
A)True
B)False
Q3) Municipal bonds that provide a source of mortgage money for home buyers pay interest that is tax-free from federal income taxes.
A)True
B)False
Q4) Most mortgage brokers generally
A) lend their own funds.
B) use money provided by other investors.
C) service the loans they make.
D) only make loans on large properties.
Q5) Other lenders providing mortgage money might include
A) pension and trust funds.
B) credit unions.
C) commercial finance companies.
D) all of the above.
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Chapter 13: Types of Financing
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Sample Questions
Q1) The phrase "taking back paper" applies to
A) a cash sale.
B) conventional loans.
C) VA loans.
D) seller financing.
Q2) The first step toward mortgage loans with adjustable interest rates came in the late 1800s.
A)True
B)False
Q3) Each of the following statements about open-end mortgage clauses is true EXCEPT A) using an open-end clause, the new amount borrowed is added to the mortgage balance.
B) they are used in government loans like DVA and FHA.
C) they are used in conventional mortgages.
D) funds borrowed using an open-end clause are reamortized over the remaining like of the mortgage.
Q4) A ____________________ mortgage encompasses existing mortgages and is subordinate to them.
Q5) 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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Sample Questions
Q1) The assessed value of all lands and buildings are made available for public inspection in what is known as the ____________________ rolls.
Q2) All of the following benefit from property taxes EXCEPT
A) school budget.
B) municipal stadium.
C) public libraries.
D) parks.
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) What is the most correct meaning of the term "ad valorem"?
A) Appraised value
B) Property tax
C) According to the value
D) And wife
Q5) Taxes on real property are levied on an ad valorem basis.
A)True
B)False
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Chapter 15: Title Closing and Escrow
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Sample Questions
Q1) In an escrow closing, funds are disbursed when all escrow papers have been signed and the buyer brings in the money.
A)True B)False
Q2) The escrow agent is always selected by the real estate broker.
A)True B)False
Q3) A buyer's walk-through is conducted for the purpose of A) appraising the property in order to get a loan on it.
B) inspecting the property for major structural defects.
C) meeting the seller and obtaining the keys to the property.
D) making a final inspection just prior to closing.
Q4) The person placed in charge of an escrow is called an escrow ____________________.
Q5) When a home is sold and a new loan by an institutional lender is required, the typical time between purchase contract signing and settlement will most likely be from 1 to 29 days.
A)True B)False
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Chapter 16: Real Estate Leases
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Sample Questions
Q1) 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.
Q2) A valid lease must contain
A) an option.
B) the signatures of at least three parties.
C) a clean-up deposit.
D) a property description.
Q3) A broker leasing property for a seller for a fee is a trustee.
A)True
B)False
Q4) The amount of rent that the tenant must pay the landlord for the use of the premises is called the ____________________ rent.
Q5) A lease where the tenant pays a fixed rent and the landlord pays all property taxes is a ____________________ lease.
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Page 18
Chapter 17: Real Estate Appraisal
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Sample Questions
Q1) The conversion of future income into present value is known as hypothecation.
A)True
B)False
Q2) In valuing a fire station, an appraiser would most likely emphasize the A) market approach.
B) cost approach.
C) income approach.
D) capitalization approach.
Q3) The process of combining two or more parcels of land into one larger parcel is called ____________________.
Q4) The best definition of fair market value is the A) value as determined by a fee appraisal.
B) highest price a seller can get for his property.
C) tax assessed value.
D) price a willing buyer will pay and a willing seller will accept, given a reasonable amount of time to effect the sale.
Q5) In the market approach, houses with similar physical features and amenities that have sold recently under market value conditions are called ____________________.
Q6) The property to be appraised is known as the ____________________ property.
Page 19
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Chapter 18: Licensing Laws and Professional Affiliation
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Q1) Continuing education requirements exist for the purpose of requiring licensees to stay up-to-date in their field.
A)True
B)False
Q2) The party holding a franchise such as a franchised brokerage office is called a ____________________.
Q3) A person who sells real estate for others
A) must be licensed in order to collect compensation.
B) need not be licensed if no compensation is involved.
C) both a and b.
D) neither a nor b.
Q4) The basic intent for real estate license laws and regulations was to
A) help brokers settle their disputes.
B) protect the public.
C) protect the broker
D) control the real estate market.
Q5) To temporarily make ineffective is to ____________________.
Q6) A(n)____________________ contractor is one who contracts to do work according to their own methods and is responsible to his employer only for the results of that work.
Page 20
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Chapter 19: The Principal-Broker Relationship: Employment
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Q1) The problem with net listings is that
A) the seller is assured of receiving the net amount he specifies.
B) the broker receives a higher than average commission.
C) the broker does not have to submit the offer to the seller if the offer is too low.
D) there could be a conflict of interest if dealing with an inexperienced seller.
Q2) A listing agreement authorizes the broker to
A) find a buyer.
B) sell the property.
C) convey the property.
D) hypothecate the property.
Q3) A properly signed multiple listing agreement is the property of the multiple listing service.
A)True B)False
Q4) Most brokers are reluctant to accept net listings even when they are permitted to do so.
A)True
B)False
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Chapter 20: The Principal-Broker Relationship: Agency
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Sample Questions
Q1) The listing salesperson was told by a prospective buyer to present an offer of $150,000 with the promise that he would increase it to $152,000 if the seller rejected $150,000. The salesperson must
A) present the offer and disclose the promise to increase the offer.
B) keep the confidence of his buyer while presenting the $150,000 offer.
C) refuse to present the offer.
D) tell her broker of the verbal part of the offer.
Q2) A salesperson received an earnest money check from a buyer on the listing of a co-op broker. What should the salesperson do with the check?
A) Deposit it into his client trust account
B) Sign it and pass it on to the seller
C) Get it signed by the buyer and the seller and turn it over to his broker
D) Hold the check until the contract has been signed by all parties
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
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Page 22
Chapter 21: Fair Housing, Ada, Equal Credit, and Community Reinvestment
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Sample Questions
Q1) The Equal Credit Opportunity Act was originally passed to provide for equal credit for borrowers by making it unlawful to discriminate against an applicant for credit based on sex or marital status.
A)True
B)False
Q2) The Fair Housing Law of 1968 applies to single family and multi-family housing.
A)True
B)False
Q3) The CRA statement should contain all of the following EXCEPT
A) a map of the lender's definition of its community.
B) a list of credit services it offers.
C) a copy of the public notice in its lobby.
D) the names of all lending institutions in the area.
Q4) Blockbusting is the illegal practice of inducing ____________________ selling in a neighborhood for financial gain.
Q5) The federal Fair Housing Law is officially known a Title VIII of the Civil Rights Act of 1968, as amended.
A)True
B)False
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Chapter 22: Condominiums, Cooperatives, Puds, and Timeshares
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Sample Questions
Q1) Ownership of the interior space of your home and garage and an undivided interest in the building structures, common areas, and land area of the entire project describes a cooperative.
A)True
B)False
Q2) The governing body of a cooperative is called a board of directors.
A)True
B)False
Q3) The governing body of a cooperative is called a
A) cooperation.
B) board of directors.
C) cooperator.
D) cooperative commission.
Q4) If a condominium unit owner defaults on his mortgage, what effect will this default have on the other unit owners in the same condominium project?
A) It will create a lien on the other units as well.
B) They must make his payments to protect themselves.
C) It will create a lien on his condominium unit.
D) They will be foreclosed.
24
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Chapter 23: Property Insurance
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Sample Questions
Q1) Lenders on real estate mortgages may require that the borrower provide
A) a replacement cost policy on the full amount of the loan.
B) insurance in an amount equal to the purchase price of the property.
C) inflation guard coverage.
D) content coverage.
Q2) An endorsement, also called a rider or attachment, is an agreement by the insurer to modify a basic policy.
A)True
B)False
Q3) Actual cash value is the new price minus accumulated depreciation and is, in effect, "new for old".
A)True
B)False
Q4) Actual ____________________ value s the new price minus accumulated depreciation and is, in effect, "old for old".
Q5) A landlord policy combines property damage, liability, medical payments, and loss of ____________________.
Q6) An endorsement that periodically increase insurance coverage is known as ____________________ guard.
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Chapter 24: Land-Use Control
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Sample Questions
Q1) The authority of government to control land use is derived from the right of A) escheat.
B) eminent domain.
C) property taxation.
D) police power.
Q2) When there is a space specified along each property line in a neighborhood within which no building may be erected, it is called
A) a sidewalk.
B) a commercial lot.
C) a setback.
D) an offset.
Q3) A licensed agent must be aware of local zoning ordinances for all of the following reasons EXCEPT
A) zoning requirements are material facts.
B) licensees must report zoning violations to the proper authorities.
C) the agent must inform his principal of the effects of zoning on his property.
D) the law of agency requires knowledge and competence regarding permitted uses of listed property.
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26
Chapter 25: Real Estate and the Economy
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Q1) The Federal Reserve Board, through the Federal Reserve Banks, has the ability, through ____________________ policy, to create and destroy money.
Q2) Federal tax treatment of expenses and profits from real estate investments has little effect on what a person will pay for a property.
A)True
B)False
Q3) Inflation brought on by increased effort necessary to produce the same quantity of a good or service is known as
A) demand-pull inflation.
B) real-cost inflation.
C) cost-push inflation.
D) monetary inflation.
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) If vacancies and collection losses, property taxes, expenses of operation and loan service are deducted from the gross income, you have
A) internal rate of return.
B) taxable income.
C) net spendable income.
D) net worth.
Q2) In a general partnership
A) each partner has limited financial liability.
B) each partner pays individual taxes on his or her share of the partnership's earnings.
C) the right of survivorship exists.
D) individual shares are not taxed.
Q3) If an investor wanted to put leverage to its best advantage, he would purchase property by investing all of his own cash and borrowing as little as he can.
A)True
B)False
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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