1. Which type of insurance is used to insure against rent being stolen by an employee of a property management company?

(A) Rent loss insurance

(B) Surety bond

(C) Business interruption insurance

(D) Liability insurance

2. Which of the following is not a typical way that property management fees are set?

(A) Fixed fee

(B) Commission on new leases

(C) Percentage of gross income

(D) Percentage of operating costs

3. For what activity does a person generally not need a real estate license?

(A) Collecting rents as an employee of a building owner

(B) Representing people in the exchange of properties

(C) Selling properties on behalf of several owners

(D) Negotiating leases on behalf of several commercial building owners

4. Roof replacement is considered what type of expense in a building’s budget?

(A) Capital

(B) Operating

(C) Maintenance

(D) Fixed

5. Which of the following is true for an independent contractor working for a broker?

(A) The broker is required to pay the contractor’s Social Security taxes.

(B) The broker is required to withhold income taxes from the contractor’s commission checks.

(C) The broker must give workman’s compensation to the contractor.

(D) The broker is required to supervise the contractor.

6. The primary duty of a property manager is to

(A) ensure that income is generated by the building.

(B) maintain the building.

(C) protect the owner’s investment in the building.

(D) maximize income while maintaining the building’s value.

7. A real estate broker hired to represent someone who wants to sell his house is

(A) a special agent.

(B) a general agent.

(C) a universal agent.

(D) a representative agent.

8. Fiduciary responsibilities are always owed to

(A) the client.

(B) the customer.

(C) the buyer.

(D) the seller.

9. Fiduciary duties do not include

(A) care.

(B) control.

(C) accounting.

(D) confidentiality.

10. The client is always

(A) the seller.

(B) the buyer.

(C) the principal.

(D) the customer.

11. Which of the following would not end an agency relationship?

(A) The property was sold.

(B) The house was burned in a fire.

(C) The principal got married.

(D) The broker declared bankruptcy.

12. When does a seller’s agent earn a fee?

(A) She accomplishes what she was hired to do.

(B) She is the procuring cause.

(C) She finds a ready, willing, and able buyer.

(D) All of the above.

13. A homeowner refuses to sell his home to a family because of its race. The homeowner claims that because this is an owner-occupied home, he is exempt from all fair housing laws. The owner has violated

(A) the 1968 Fair Housing Act.

(B) the 1968 Fair Housing Act as amended in 1988.

(C) the 1866 Civil Rights Act.

(D) no law. He is correct.

14. A person who owns a 15-unit apartment building has established different security deposit amounts for different tenants based on their ethnic group and whether or not they have children. He has ten years of statistical research to back up the validity of this approach. Which of the following is true?

(A) What he is doing is illegal.

(B) What he is doing is legal under any circumstances.

(C) What he is doing would be illegal if he didn’t have the factual research to back it up.

(D) What he is doing would be legal only if the owner himself lives in the building.

15. A real estate agent attempts to generate listings by contacting people in a particular neighborhood and suggesting to them that their property values might be going down soon because a particular immigrant group is coming into the neighborhood. This practice is called

(A) soliciting.

(B) farming.

(C) prospecting.

(D) blockbusting.

16. A church group decides to build housing for its members only. The church does not permit African Americans to join its congregation. Which of the following is true?

(A) The housing can be restricted to members of the church.

(B) The housing cannot be restricted to members of the church.

(C) The housing can be restricted as long as they do not advertise or use a real estate agent.

(D) The housing could be restricted if the prohibition for joining the church was not against African Americans but against some other racial or ethnic group.

17. Complaints under the Civil Rights Act of 1866 are handled by

(A) HUD.

(B) federal courts.

(C) state courts.

(D) state human rights commissions.

18. A homeowner gives a listing to the real estate broker to sell his one-family house with the warning that he does not want to sell to non-Christians. What should the broker do?

(A) Take the listing, but ignore the homeowner’s wishes.

(B) Take the listing and follow the homeowner’s wishes because of the owner occupancy exception.

(C) Explain to the homeowner that he’s violating the federal fair housing laws and refuse the listing unless he removes the request.

(D) Take the listing, but only if the homeowner agrees to put the request in writing for the broker’s protection.

19. The First Bank of Main Street refuses to grant loans within a ten-block area of its offices because of declining property values. This practice is

(A) redlining and illegal.

(B) redlining and legal.

(C) redlining and usually illegal except where values are declining.

(D) legal in any other part of the town except in the immediate area of the bank.

20. A term used to describe land, improvements, and all the rights associated with ownership is

(A) land.

(B) personal property.

(C) real estate.

(D) real property.

21. A built-in microwave oven is an example of

(A) personal property.

(B) a fixture.

(C) a trade fixture.

(D) an attachment.

22. You want to donate a piece of land to a religious organization. The title will pass when they complete building a church on the property. The estate is

(A) fee simple.

(B) fee simple condition precedent.

(C) fee simple condition subsequent.

(D) fee simple determinable.

23. The estate that grants the most complete form of ownership is

(A) fee simple.

(B) fee simple condition precedent.

(C) fee simple condition subsequent.

(D) fee simple determinable.

24. An owner of a rental building is said to have what type of interest?

(A) Leasehold

(B) Leased fee

(C) Fee simple

(D) Fee on condition

25. Someone who has riparian rights on a navigable river owns

(A) nothing.

(B) to the centerline of the water.

(C) to the high water mark on the land.

(D) no water but to the centerline of the land under the water.

26. The term generally used to describe the rights a property owner gets when she buys a piece of property is

(A) fee simple rights.

(B) real estate rights.

(C) freehold rights.

(D) bundle of rights.

27. Unity of possession means that

(A) each owner has an undivided interest in the property.

(B) each owner took title at the same time.

(C) each owner took title with the same deed.

(D) each owner has the same interest in the property.

28. What form of ownership has no right of survivorship?

(A) Joint tenancy

(B) Tenancy in common

(C) Tenancy by the entirety

(D) All forms of ownership have a right of survivorship.

29. Joe, Sam, and Fred are joint tenants in a piece of property. Joe sells his interest to Bob. Bob now has what relationship to Sam and Fred?

(A) Joint tenant

(B) Tenant by the entirety

(C) Tenant in common

(D) Tenant in severalty

30. Condominium owners generally own their land as

(A) tenants by the entirety.

(B) tenants in severalty.

(C) joint tenants.

(D) tenants in common.

31. Which type of co-ownership requires the signature of all owners to sell the property interest?

(A) Tenancy in severalty

(B) Tenancy in common

(C) Joint tenancy

(D) Tenancy by the entirety

32. Who owns the apartment in a cooperative building?

(A) The individual apartment owner

(B) The corporation that owns the building

(C) The bank that financed the purchase

(D) The individual owner owns the apartment, but the corporation owns the common areas.

33. Which statement is true?

(A) All encumbrances are liens.

(B) All liens are encumbrances.

(C) All encumbrances are financial in nature.

(D) All financial claims against property are voluntary liens.

34. Homeowner Bob’s house has been foreclosed and sold. He has unpaid local real estate taxes from last year. He owes on the mortgage he took out five years ago. And he owes the plumber for work that was done two years ago. Who gets paid first?

(A) They each will receive a proportionate share.

(B) The bank

(C) The town

(D) The plumber

35. A judgment lien is placed against you after you lose a court case for an accident that occurred at your home. This means that the lien is placed against

(A) all your real property.

(B) the one piece of property where the accident happened.

(C) all your real and personal property.

(D) your salary only.

36. The electric company needs to put a permanent electric cable across your property to get to a nearby street. The company obtains

(A) an easement appurtenant.

(B) an easement in gross.

(C) an easement by necessity.

(D) an easement by prescription.

37. The city needs your property for a road widening, but you don’t want to sell it. The city probably will take it through its power of

(A) escheat.

(B) encroachment.

(C) prescriptive rights.

(D) eminent domain.

38. The study of population characteristics is called

(A) economic base study.

(B) demographics.

(C) infrastructure study.

(D) feasibility study.

39. Which of the following is not necessary for a valid deed?

(A) Signature of grantor

(B) Signature of grantee

(C) Description

(D) Granting clause

40. On what date does a deed become valid?

(A) Signing date

(B) Delivery and acceptance date

(C) Recording date

(D) Mortgage approval date

41. The one requirement that is not technically necessary for a deed to be valid but, in most cases, is required for recordation is

(A) signature of grantee.

(B) consideration.

(C) granting clause.

(D) acknowledgment.

42. The type of property descriptions that use directions and distances is called

(A) metes and bounds.

(B) rectangular survey.

(C) government survey.

(D) plat map.

43. If the section you’re buying is bound by section 16 on the north, section 22 on the east, section 20 on the west, and section 28 on the south, what section are you buying?

(A) 21

(B) 15

(C) 27

(D) 29

44. Elevations are measured from

(A) a benchmark.

(B) a monument.

(C) a meridian.

(D) a datum.

45. A developer wants to give the new streets in the subdivision she just built to the city. She does this by

(A) dedication.

(B) grant.

(C) avulsion.

(D) sale.

46. Which of the following is not a form of involuntary alienation?

(A) Adverse possession

(B) Avulsion

(C) Grant

(D) Eminent domain

47. You and your brother own a campground together. You and he have very different ideas about how to run it. Neither of you wants to buy the other out, but you can no longer operate the campground together. To resolve the problem, you file a suit for

(A) adverse possession.

(B) a grant.

(C) partition.

(D) prescriptive rights.

48. The process by which a will is processed is called

(A) surrogacy.

(B) a trust.

(C) execution.

(D) probate.

49. The government is giving lands away in Alaska. It does so by

(A) public sale.

(B) public grant.

(C) public possessory interest.

(D) escheat.

50. Actual title may be granted in an adverse possession situation after a successful suit

(A) for adverse possession.

(B) for partition.

(C) to quiet title.

(D) for prescriptive rights.

51. The rule that real estate contracts must be in writing is a function of

(A) contract law.

(B) the statute of contracts.

(C) RESPA.

(D) the statute of frauds.

52. As a real estate agent, you bring a buyer to a house being sold by the owner. The owner is aware that you are a real estate agent and eventually sells the house to the buyer you brought. Even though you never actually talked about it, you expect a commission because you feel you have

(A) an express contract.

(B) an implied contract.

(C) a unilateral contract.

(D) an executed contract.

53. Joey, a 17-year-old, is big for his age. Because he wants to begin his real estate investment career, he signs a contract to buy a house a few weeks before his 18th birthday. After he turns 18, he decides he doesn’t want to buy the house. He can probably get out of the contract because it is

(A) void.

(B) voidable.

(C) implied.

(D) unenforceable.

54. Which of the following is an element unique to a real estate sales contract?

(A) Consideration

(B) Description of property

(C) Legally competent parties

(D) Mutual agreement

55. Joe lists his house for sale at $300,000. Alice offers Joe $200,000. Joe counteroffers with $280,000. Alice offers Joe $205,000. Joe gets mad and raises his counteroffer to Alice back up to $300,000. Can he do this?

(A) Yes.

(B) No.

(C) Yes, but he owes a commission on the $280,000.

(D) Yes, but only if he counteroffers within 24 hours.

56. Jim finds a piece of property on which to build a shopping center. It’s going to take about a year to get the necessary permits, and there’s no guarantee that he’ll get permission to build. Meanwhile, he doesn’t want to lose the property to another buyer. His best bet is to sign

(A) a contract of sale.

(B) an option agreement.

(C) an easement.

(D) an executory contract.

57. Harry’s House of Hats can no longer pay its landlord, Jim. Nancy’s House of Shoes agrees to take over the space and executes a new lease with Jim. This situation is

(A) a sublease.

(B) an assignment.

(C) a novation.

(D) a graduated lease.

58. A landlord does not keep a building in good repair, including not fixing a broken boiler in the middle of winter. The tenants want to move out and go to court to prove

(A) constructive eviction.

(B) actual eviction.

(C) invalid possession.

(D) lease violation.

59. Georgia’s House of Mirrors agrees to pay its landlord a flat rental fee plus a portion of its gross sales each month. This situation is best described as

(A) a gross lease.

(B) a net lease.

(C) a percentage lease.

(D) a proprietary lease.

60. A person in a cooperative apartment gets what kind of lease?

(A) Gross lease

(B) Net lease

(C) Ground lease

(D) Proprietary lease

61. Alice refuses to move out of her apartment after her lease expires. The landlord refuses to accept the rent she offers to pay. This is

(A) an estate at will.

(B) an estate at sufferance.

(C) an estate for years.

(D) a periodic estate.

62. A typical commercial lease is

(A) a tenancy for years.

(B) a tenancy at will.

(C) a tenancy at sufferance.

(D) a periodic tenancy.

63. The agency primarily responsible for dealing with environmental issues is

(A) CERCLA.

(B) HUD.

(C) LUST.

(D) EPA.

64. Under CERCLA, liability is considered to be

(A) joint and several.

(B) joint and strict.

(C) strict and several.

(D) joint, strict, and several.

65. The possibility of claiming innocence of responsibility for prior hazardous waste dumping on land you bought was made available by

(A) SARA.

(B) CERCLA.

(C) OSHA.

(D) HMTA.

66. Which phase of environmental assessment would confirm the presence of hazardous material?

(A) 1

(B) 2

(C) 3

(D) 4

67. You get sick every day at work but the symptoms disappear on your drive home. You may have

(A) building related illness.

(B) sick building syndrome.

(C) asbestosis.

(D) building radon illness.

68. Which program requires registering various types of underground storage tanks?

(A) LUST

(B) OSHA

(C) SARA

(D) CERCLA

69. An appraisal is

(A) an estimate of value.

(B) a calculation of value.

(C) an educated guess of value.

(D) an analysis of value.

70. The most important reason that location is such an important factor in the value of real estate is its

(A) neighborhood compatibility.

(B) amenities and services.

(C) safety.

(D) immobility.

71. In the sales comparison approach, if a comparable is better than the subject, what do you do?

(A) Make a positive adjustment to the subject.

(B) Make a negative adjustment to the subject.

(C) Make a negative adjustment to the comparable.

(D) Make a positive adjustment to the comparable.

72. Which of the following is not a type of depreciation used in the cost approach?

(A) Functional obsolescence

(B) Physical deterioration

(C) Straight line deterioration

(D) External obsolescence

73. You buy the smallest house in a neighborhood of larger, more expensive homes. What economic principle will most likely affect the value of your house?

(A) Regression

(B) Progression

(C) Increasing returns

(D) Opportunity costs

74. The gross rent multiplier is a factor that relates

(A) expenses to net income.

(B) net income to value.

(C) rent to value.

(D) expenses to value.

75. Effective gross income is potential gross income minus

(A) operating expenses.

(B) debt service.

(C) vacancy and collection loss.

(D) vacancy and collection loss, and operating expenses.

76. Al borrows money from the First Bank of Main Street. He is

(A) the mortgagor.

(B) the mortgagee.

(C) the lien holder.

(D) the note holder.

77. The Annual Percentage Rate could not be described as

(A) points plus interest rate.

(B) the actual interest rate.

(C) the discount rate.

(D) the yield.

78. Equity is best defined as

(A) the down payment.

(B) the amount owed on the mortgage.

(C) the difference between the value and the debt attributable to the property.

(D) the amount of cash taken out after the house is sold.

79. The VA requires what in order to secure a loan?

(A) LTV

(B) CRV

(C) PMI

(D) FSA

80. Which of the following is not a part of the secondary mortgage market?

(A) Fannie Mae

(B) Ginnie Mae

(C) Freddie Mae

(D) Farmer Mac

81. A single word to describe a loan where nothing is left to pay at the end of the term is

(A) a term loan.

(B) a balloon loan.

(C) a variable loan.

(D) an amortized loan.

82. Mom and Dad help you buy a house by lending you some money. They don’t want any payments right away but tell you that when you sell, if you make a profit, they’ll take a portion of the profit as payment of the loan. You have

(A) a growing equity mortgage.

(B) an open-end mortgage.

(C) a shared equity mortgage.

(D) a reverse annuity mortgage.

83. The rate that is used to adjust taxes among several towns in the same county is called

(A) the equalization rate.

(B) the capitalization rate.

(C) the mill rate.

(D) the assessment rate.

84. A town’s property tax rate is typically determined by

(A) dividing the total assessed value of taxable property by the town budget.

(B) dividing the town budget by the total assessed value of taxable property.

(C) multiplying the total assessed value of taxable property by the town’s budget.

(D) dividing the total assessed value of taxable property by the assessment ratio.

85. The right to redeem foreclosed property by paying the taxes after a tax sale is called

(A) equitable right of redemption.

(B) statutory right of redemption.

(C) in rem right of redemption.

(D) post foreclosure right of redemption.

86. A combination REIT can invest in

(A) mortgages and bonds.

(B) equity real estate investments and bonds.

(C) mortgages and stocks.

(D) equity real estate investments and mortgages.

87. The tax deferred in a real estate exchange is tax on

(A) income.

(B) capital gains.

(C) corporate profits.

(D) net operating income.

88. Another term for depreciation is

(A) recapture.

(B) capital loss.

(C) adjusted basis.

(D) cost recovery.

89. All other things being equal, which of the following is worth more in tax savings?

(A) Deduction

(B) Credit

(C) Adjusted basis

(D) Capital gains

90. A building whose expenses are higher than its income is described as having

(A) positive cash flow.

(B) negative cash flow.

(C) negative amortization.

(D) excessive depreciation.

91. In general, in a real estate investment, the higher the risk,

(A) the higher the expected return.

(B) the lower the expected return.

(C) the greater likelihood that the return remains unchanged.

(D) the harder a property is to manage.

92. A seller wants to net $200,000 after she pays the real estate agent a 6 percent commission. What must the house sell for?

(A) $200,000

(B) $206,000

(C) $212,000

(D) $212,765

93. A buyer wants to know the size of a square piece of property that measures 264 feet by 264 feet. What do you tell him?

(A) 1 acre

(B) 1.3 acres

(C) 1.6 acres

(D) 2 acres

94. A peaked roof barn is used to store hay. The width of the barn is 40 feet. The height of the ridge beam above the second floor is 15 feet, and the barn is 60 feet long. If hay is stored only in the upper peaked roof portion of the barn, how much hay can be stored?

(A) 36,000 cubic feet

(B) 24,000 cubic feet

(C) 18,000 cubic feet

(D) 6,000 cubic feet

95. Five hundred houses were sold in your county this year. Four hundred were sold last year. What percentage of more houses were sold this year than last year?

(A) 100 percent

(B) 50 percent

(C) 25 percent

(D) 20 percent

96. If the cost recovery period on a property is 25 years, at what percentage does the property depreciate each year?

(A) 25 percent

(B) 10 percent

(C) 5 percent

(D) 4 percent

97. If the annual gross rent on a building is $20,000 and the gross rent multiplier for this type of building is 16, what is the estimated value of the building?

(A) $320,000

(B) $150,375

(C) $125,000

(D) $118,750

98. How much interest do you owe for the first year on an amortized mortgage loan of $250,000 at a 7 percent interest rate?

(A) $1,458

(B) $1,750

(C) $14,580

(D) $17,500

99. A property is assessed at $42,000. The mill rate is 22. What are the taxes on the property?

(A) $9,240

(B) $924

(C) $1,900

(D) $190

100. You bought a house for $200,000, which is 80 percent of what you sell it for six years later. At what price did you sell the house?

(A) $160,000

(B) $240,000

(C) $250,000

(D) $260,000