Real Estate Fundamentals Exam

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Modern Real Estate Practice in Pennsylvania 12th

Edition

Real Estate Fundamentals Exam

1. The phrase bundle of legal rights is properly included ina. the definition of real property.b. a legal description.

c. real estate transactions.d. leases for less than one year.

2. Land is considereda. indestructible.b. a depreciating asset.c. immune to the forces of supply and demand.d. subject to personal property rights.

3. An owner leases store space to a tenant to operate a restaurant. The tenant has installedovens, booths, counters, and other equipment. When would these items become real

property?a. Provided the items are permanently attached, they become real property at the

time of annexation.b. If the tenant defaults on a rental payment, the items become the real property of

the landlord if the default is not cured within 30 days.c. The items become real property as soon as the tenant receives permission to in-

stall them.d. The items do not become real property, and they remain the tenants personal

property.

4. A bill of sale is used to transfer ownership of

a. real property.b. fixtures.c. personal property.d. appurtenances.

5. Which is considered an indefeasible fee?a. Fee simple on conditionb. Fee simple determinablec. Fee simpled. Life estate pur autre vie

6. In Pennsylvania, mine subsidence refers toa. leasehold rightsb. air rightsc. surface rightsd. subsurface rights

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7. The owner of 50 acres of land with 500 feet of frontage on a desirable recreational lakewishes to subdivide the parcel into salable lots. She wants to retain control over the lakefrontage while allowing lot owners to have access to the lake. What type of access rightsshould she give prospective lot purchasers?a. An easement in gross

b. An appurtenant easementc. An easement by necessityd. A license

8. A man conveys ownership of his house to his mother and stipulates that upon her death,he will recapture ownership. The interest that the man has in the property is aa. remainder estate.b. curtesy estate.c. legal life estate.d. reversion estate.

9. Two partners bought a store building, taking title as joint tenants. One partner died tes-tate. The other partner now owns the storea. as a joint tenant with rights of survivorship.b. in severalty.c. as a tenant in common with his partners heirs.d. in trust.

10. A person who owns one unit in a multiunit structure together with a specified undividedinterest in the common elements owns aa. cooperative.b. share in a real estate investment trust.c. condominium.d. time-share interest.

11. Two people own a building as joint tenants with right of survivorship. One of the ownersdies intestate. The other now owns the buildinga. as a joint tenant with right of survivorship.b. in severalty.c. in absolute ownership under the law of descent.d. subject to the terms of the deceaseds will.

12. Which is characteristic of a metes-and-bounds legal description?a. Point of beginningb. Townshipsc. Lots and blocks mapd. Principal meridians

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13. All of the following are considered acceptable as legal identification of landEXCEPTa. reference to a plat filed in the country clerks office.b. street address.c. metes and bounds.d. government survey.

14. Which deed provides the greatest protection from the seller to the purchaser of a proper-ty?a. Special warranty deedb. Sheriffs deedc. Quitclaim deedd. General warranty deed

15. A mechanics lien is properly classified asa. an equitable lien.b. a voluntary lien.

c. a general lien.d. a specific lien.

16. After a borrower defaults on mortgage payments, a court orders real estate sold to satisfythe unpaid lien. This action is an example ofa. an encumbrance.b. an attachment.c. a seizure.d. a foreclosure.

17. A title search revealed several outstanding liens against a property. Which lien has high-est priority?a. An outstanding first mortgage lien dated and recorded one year agob. A real estate tax lien for the current yearc. A judgment lien rendered and recorded last monthd. A mechanics lien for work started two months before the mortgage was recorded

18. In general, how is lien priority determined?a. A mechanics lien is always first in priorityb. The date on which the lien was recorded determines priorityc. The date on which the debt was incurred determines priorityd. A brokers lien is automatically first in priority

19. Under the terms of a trust established by a will, the trustee is required to sell the real es-tate the trust holds. The deed that will be delivered at settlement of such a sale is aa. deed of release.b. warranty deed.c. trustees deed.d. trustors deed.

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20. The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyermay be certain thata. the seller owned the property.b. there are no encumbrances against the property.c. the buyer now owns the property subject to certain claims of the seller.

d. the seller has no further interest in the property.

21. A single person owned a parcel of land. Subsequent to the owners death, the probatecourt determined the distribution of the land in accordance with the states statutes. Thispersona. died testate.b. died intestate.c. was the devisee.d. was the grantee.

22. A grantor does not wish to be responsible for defects in the title that arise from previous

owners but will guarantee the title for the time the grantor had ownership. What type ofdeed would the grantor convey?a. Bargain and sale deedb. Quitclaim deedc. Reconveyance deedd. Special warranty deed

23. Which is acceptable evidence of marketable title?a. Trust deedb. Warranty deedc. Title insurance policyd. Affidavit

24. Generally, if some defect in the title to real property is found by the preliminary titlesearch, the effect on a sales contract is thata. the contract is immediately void.b. a new contract must be written.c. the buyer has a reasonable time to find another property.d. the seller has a reasonable time to correct the defect.

25. A deed that has covenants of quiet enjoyment and further assurances is aa. warranty deed.b. special warranty deed.c. trust deed.d. bargain and sale deed.

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26. The fee charged by a mortgage broker to arrange a loan isa. a prepayment penalty.b. an advance interest payment.c. a loan origination fee.d. a prepayment of mortgage insurance.

27. The clause in a trust deed or mortgage that permits the lender to declare the entire unpaidbalance immediately due and payable upon default is thea. judgment clause.b. escalator clause.c. forfeiture clause.d. acceleration clause.

28. A property sold for $230,000. The buyer put 10 percent of the purchase price in an es-crow account and promised to bring another 10 percent in cash to the closing. The buyerobtained an 80 percent loan-to-value (LTV) loan for the balance of the purchase price.

The lender charged two discount points on the loan. Including the earnest money deposit,how much cash did the buyer need to cover the expenses of the down payment and thediscount points?a. $3,680b. $25,070c. $49,680d. $184,000

29. In absence of an agreement to the contrary, the mortgage having priority will be the onea. for the highest amount.b. recorded first.c. signed first.d. that is a construction loan.

30. What type of mortgage loan requires equal payments for 30 years, at which time both theprincipal and the interest will be fully satisfied?a. Straight loanb. Adjustable-rate mortgagec. Fully amortized loand. Straight-line amortized loan

31. A lender is concerned that interest rates will rise in the future. What clause can the lenderinclude in the note to prevent the loan from being assumed with the current low interest?a. Deficiencyb. Defeasancec. Accelerationd. Alienation

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32. The sellers decided that they did not wish to sell after they entered into a contract withbuyers, who really want this particular home. What option is available to the buyers?a. Suit for specific damagesb. Suit for specific performancec. Suit for breach of contract

d. No option is available

33. Who may file a lien against real property for payment of services rendered?a. Residential salesperson for loss of commission when the buyer used another li-

censeeb. Residential broker for advertising costs when the seller cancelled the listing be-

fore the property was soldc. Commercial broker for payment of services renderedd. Commercial salesperson licensee for commission payment when the broker re-

fused to share the listing commission

34. When a subdivision was developed, a deed restriction covering all the properties set asidethe back six feet of each parcel as a combination green belt area and bicycle path. Aproperty owner has converted the back one-half of his yard, including this set-asidespace, into an organic garden. What, if anything, can be done to enforce the deed restric-tion?a. Nothing, because individual homeowners have no authority in this matterb. Go to court in an attempt to obtain injunctive reliefc. Contact the municipality for reliefd. File a nuisance suit with the towns planning commission

35. What is the official value of real estate used for tax purposes?a. Market priceb. Assessed valuec. Appraised valued. Asking price

36. A tire company has a manufacturing plant located in an area that has just been rezonedfor residential use. The company is allowed to continue operating the plant under the newzoning classification. However, if the plant is destroyed by fire or other hazard, the tirecompanyMOSTlikelya. could rebuild the plant in that neighborhood by applying for a zoning variance.b. would be forbidden to rebuild the plant in that neighborhood under any circums-

tances.c. could construct another plant by obtaining the consent of the residents then living

in the neighborhood.d. could construct another plant without the residents consent as long as the home-

owners association approves it.

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37. Under an existing ordinance, no signs that extend more than three feet above the highestpoint of a roof may be placed on any building. An owner wants to erect a nine-foot-highrevolving sign on the roof of his store. In order to do this legally, the owner must get aa. deed to the air rights.b. variance.

c. nonconforming use permit.d. court order.

38. A method of sealing off disintegrating asbestos is calleda. capping.b. encapsulation.c. containment.d. contamination closure.

39. In regulations regarding lead-based paint, the Department of Housing and Urban Devel-opment (HUD) requires that

a. homeowners test for its presence.b. paint must be removed from surfaces before selling.c. known paint hazards must be disclosed.d. only HUD-licensed contractors may deal with its removal.

40. The condemnation of private property for public use is allowed under the states right ofa. police power.b. escheat.c. eminent domain.d. confiscation.

41. The Real Estate Commission conducts its activities toa. satisfy the legislature.b. protect the public interest.c. safeguard all real estate licensees.d. assist the commissioner of Professional and Occupational Affairs.

42. The Commission has the authority toa. conduct licensing examinations.b. issue licenses.c. appoint commissioners.d. promulgate rules and regulations.

43. The Commission has authority to take disciplinary action againsta. licensed auctioneers.b. campground membership salespeople.c. attorneys-in-fact.d. landlords.

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44. What action can the Commission take if a salesperson advertises a property for sale with-out the owners permission?a. Award the owner damages from the Recovery Fundb. Assess the salesperson a criminal penalty of $500c. Suspend the salespersons license

d. Tell the owner to file a complaint with a local real estate board

45. How many years of active licensure, if any, are required for a salesperson licensee toqualify for a brokers license?a. At least three years of active licensureb. At least two years and age 21 upon applicationc. Five years of active licensured. No specific number of years of active licensure, but the broker applicant must be

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46. A broker is responsible for which activity?

a. Attending closingsb. Conducting title searchesc. Training builder-owner salespersonsd. Business that is conducted in branch offices

47. To be eligible for a salespersons license, an individual must do all of the followingEXCEPTa. be at least 18 years of age.b. obtain 60 hours of education.c. be a high school graduate.d. pass an examination.

48. If a residential tenant rents a property from a landlord for three years, the maximumamount of security deposit the landlord may require from the tenant in the third year isa. two months of original rent.b. two months of the current rent.c. one month of original rent.d. one month of the current rent.

49. Which is TRUEabout a salespersons license?a. The broker must display the license in the office where the salesperson works.b. The license is issued to the salesperson and can be taken to any broker of the sa-

lespersons choice.c. The broker must display the license in the brokers main office.d. The salesperson cannot use the license until completion of the brokers training

program.

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50. A broker can be subject to disciplinary action if a salesperson is found guilty of miscon-ducta. when the Commission files a complaint against the broker.b. even if the broker was not aware of the salespersons action and had a policy

against the actions the salesperson took.

c. if the broker directed the illegal course of action.d. only if the salesperson is licensed.

51. When a property is advertised for sale by a salesperson, what information must be in-cluded in the ad?a. Phone number of the salespersonb. Business name of the brokerc. Address of the brokerd. Name of the salesperson

52. Who must first obtain a real estate license before conducting real estate activities?

a. An attorney-in-fact who is assisting in the liquidation of a decedents estateb. Owners who are renting their own propertyc. Individual renting a neighbors home while the neighbor is working overseasd. Employees of a public utility acting in the ordinary course of utility-related busi-

ness

53. A brokers license will expire at the end of May. Which is TRUEas of June 1?a. If the broker has been in business for more than 25 years, the broker can renew

the license as of June 1 without taking continuing education courses.b. The license will be inactive, and the broker must cease practice on June 1 if the

broker fails to renew it.c. The broker can continue to practice for 60 days after June 1 before renewing the

license.d. The broker can renew the license as of June 1 and complete the continuing educa-

tion courses within the following two years.

54. To obtain a salesperson license, a person musta. complete 30 hours of instruction.b. be at least 21 years of age.c. complete not less than 30 days of on-site training.d. pass an examination.

55. The purpose of the Recovery Fund is to enablea. people to receive payment of uncollected judgments against licensees.b. sellers to recover money when buyers default on sales agreements.c. licensees to recover commissions that their brokers have failed to pay.d. sellers to recover escrow money that brokers have handled improperly.

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Real Estate Fundamentals Exam