PSI 1
Which of the following statements BEST defines real property?
Land and its improvements and all included ownership rights
Residents of an area with wells that go dry during severe droughts arranged with the municipality to provide city water to each property. This work is MOST likely to be funded through a
special assessment
Which of the following events will terminate an agency relationship?
Bankruptcy of the principal
A homeowner hires a carpenter to build a back deck and then refuses to pay. The carpenter is entitled to take which of the following actions?
Place a mechanic's lien on the property
When applied to a real estate sales contract, the term "rescission" is MOST likely to indicate that the contract has been
Terminated
In the preparation of a competitive market analysis (CMA) or appraisal, which of the following situations is MOST likely to be interpreted as a stigmatizing property condition?
A history of a major crime on the site
According to the common law of agency, which of the following statements about the fiduciary obligation of confidentiality is CORRECT when an agent represents a principal in a real estate transaction?
It outlasts the termination of the agency relationship
A property deed indicates that The Eastermost boundary includes a 15 foot right away allowing owners farther from the main road The right to cross the property. The property across which The others are allowed to pass is known as a
Servient tenement
Which of the following terms identifies an element that is essential to creating a valid real estate sales contract?
legal purpose
A couple with a modest combined income and strong employment history is having difficulty qualifying for a conventional loan to purchase a home due to their income and limited cash. Which of the following sources of real estate funding is MOST likely to meet their needs?
seller financing
When preparing a competitive market analysis (CMA), an amenity worth $5,000 in a comparable property is BEST handled in which of the following ways?
It is subtracted from the comparable property's sales price
A CORRECT statement about mortgage insurance premiums charged for Federal Housing Authority (FHA) loans is that they
may be included in a total amount
A licensee acting as a buyer's broker is preparing an offer for a buyer, who asks the licensee if there are any tax benefits to arranging seller-financing instead of going to a conventional lender. Which of the following statements represents the licensee's BEST response to this question?
"Make your best offer and include a contingency allowing you to review your options with a tax accountant or tax attorney."
Which of the following types of buyer-broker agreements provides the licensee with the
GREATEST assurance of receiving compensation if the buyer purchases a property?
exclusive buyer agency
A property owner built a house on a 7,500 square foot lot several years prior to the enactment of new zoning that requires at least 20,000 square feet for residential properties in that area. A CORRECT statement about this situation is that the
property represents a nonconforming use and nothing must be done
A property owner on a private road objects to a new neighbor's choice in erecting a white vinyl fence, saying it is ugly and violates the traditional neighborhood balance of stone walls and hedges.
Under which of the following circumstances could the fence be prohibited and its removal required?
There is either a deed restriction or HOA in place that requires only natural fencing
Requirements governing which real estate transaction records must be kept and for how long are determined PRIMARILY by which of the following authorities?
State regulations and related rules
A homeowner without any liens the on property aranges for a loan that provides a series of small monthly payments to the owner rather than a single large payment that must be paid back in installments. This arrangement is BEST identified as which of the following types of loans?
reverse annuity/(reverse mortgage)
shortly after taking a property listing, The listing licensee is approached by a family member Who asks the licensee to prepare an offer at a significantly reduced price. under the common law of agency, the licensee MUST
disclose the family relationship with the potential buyer to the seller
A licensee showing some properties to a client-buyer only selects properties in areas where the owners are of the same general age, sex, and ethnic background as the client-buyer. According to federal Fair Housing law, this conduct would be an example of an illegal practice known as
steering
A residential property owner wants to buy a vacant lot next to the property to build a garage and small guest house. The lot has a recent appraisal of $10,000, but the property owner is prepared to pay more than that, if necessary, to be able to expand. Which of the following terms BEST identifies the amount the owner is willing to pay?
market price
Which of the following terms identifies a property owner who has entered into an agency relationship with a licensee?
principal
When a property's creditors are not fully repaid out of the proceeds of a foreclosure sale, they may make a foreclosed property owner personally liable for the balance due by bringing a legal action for a
deficiency judgment
A couple asks their buyer agent which way to take title so that a surviving spouse will inherit the other person's interest even without a will and the agent says, "Joint tenancy with the right of survivorship is the way you want to go." In this situation, the agent's response is BEST described as
illegal practice of law
As used in property management, the term "constructive eviction" is BEST understood to mean that a
tenant has left a property after a landlord has allowed it to become uninhabitable
In performing a direct sales comparison (market data) analysis, an appraiser would be MOST interested in data on
comparable properties
During an appraisal of a residential property, an appraiser estimates the cost of rebuilding the subject property so that it is identical to its current size and condition. This is an example of which of the following appraisal principles?
substitution
Which of the following statements BEST defines what is meant by the term "material defect"?
Any condition that may change a principal's mind about buying or selling
A buyer-broker agreement is MOST likely to create which of the following types of agency relationships ?
single
Which of the following government powers provides for the transfer of ownership of real property from an owner to the State in the event the property owner dies without a will or known heirs?
escheat
Which of the following statements BEST defines what a "time is of the essence" clause means in a real estate sales contract?
The contract is subject to cancellation if any time requirement is not met
A person who owns a house in severalty dies intestate. This person's spouse has also passed away, and one of their three children ran away from home and has not been heard from in over twenty years. Which of the following statements about the transfer of this property is CORRECT?
The missing child represents a cloud on the title for future property transfers
Which of the following situations BEST exemplifies an implied agency relationship?
A seller expresses an interest in finding a similar property in a neighboring town and the listing licensee brings the seller to see some in-house listings
Which of the following documents creates and identifies the extent of authority for a property manager acting on behalf of an owner?
Management agreement
The use of which of the following construction materials is specifically banned by federal law?
Lead-based paint
According to the statute of frauds, in order for real estate sales contracts to be enforceable in court they MUST be
in writing
If the advertising statements below about why to chose one real estate firm over another were accurate, which one would represent a violation of the Sherman Antitrust Act?
"With buyer-broker commission rates the same all over this country, we simply give you more
"bang for the buck'!"
The provisions of the Americans with Disabilities Act (ADA) are MOST likely to apply to owners of which of the following types of property?
Multiplex movie theaters
Which of the following ownership interests applies to parties who own real property as tenants in common
The ownership interests may be conveyed separately
Which of the following situations BEST characterizes a property suffering from external (economic) obsolescence?
A car dealership is located downwind of a new hog farm.
Which of the following types of leases provides for the tenant to pay a base rent and some of the property expenses, such as utilities, maintenance, and taxes?
net
A listing licensee discovers the listed property has a history of faulty plumbing that has never been adequately corrected. The licensee's responsibility regarding this information is that the licensee MUST
discuss it with the seller and disclose it to prospective buyers
The type of legal description that refers to a point of beginning, may refer to monuments, and uses distances and directions to come back to the point of beginning is
metes and bounds
A developer approaches a municipality with a plan to purchase an available lot in a growing neighborhood if they will allow it to be used for a combination laundry and convenience store.
Which of the following characteristics of value is MOST apparent in this developer's plan?
Utility
The Sherman Antitrust Act specifically prohibits which of the following activities in the course of a real estate transaction?
Price-fixing
At the time it is signed by all required parties, what type of a contract is a real estate option contract?
Unilateral
A prospective buyer and an agent prepare an offer. The seller reviews the offer and accepts it with the added provision that the earnest money will be forfeited by the buyer if the buyer backs out for any reason. Which of the following statements about this situation is CORRECT?
The seller has legally rejected the original offer and replaced it with a counteroffer
Which of the following interests in real property does a prospective buyer receive once an offer to purchase becomes a binding offer?
Equitable title
A licensee takes an "as-is" listing on a residential property downhill from an abandoned industrial site. The licensee finds a buyer for the property who discovers after closing that residual industrial waste has been leaching into the house's water supply for several years. In this situation, which of the following parties is MOST likely to have liability for the expense of correcting this problem?
The industrial property owner, the former and the current residence owners, and the licensee
When a deed or a lien is placed in the public records in order to make them available to anyone searching the records, this is known as
providing constructive notice
The terms riparian, accession, and littoral refer to which of the following property rights?
water
Which of the following terms identifies the ownership of real property that is complete and has no restrictions on its use or transfer?
Fee simple
Which of the following general property conditions is MOST likely to be categorized as material?
A cracked foundation
Under federal Fair Housing Act requirements, a property manager of a residential multi-unit property may legally refuse to approve which of the following situations?
Renting a unit in a property exclusively occupied by persons over sixty-five to a single parent with an infant child
According to the common law of agency, a licensee has which of the following obligations to an individual that prefers to remain a customer rather than become a client?
Honesty and fair dealing
The name of the colorless, odorless gas often found in residential properties that represents an environmental health hazard associated with promoting lung cancer is
radon
Which of the following appraisal methods would be the MOST appropriate one to use in the valuation of a twenty-year-old post office?
cost
Access ramps to government buildings, grab-bars in public rest rooms, and a row of pay phones with several placed lower than the others are examples of compliance with which of the following federal laws?
Americans with Disabilities Act
A CORRECT statement about compensation arrangements in real estate agency employment contracts is that they are
established by negotiation between the seller and the agent
A lender is MOST likely to require a borrower to pay for private mortgage insurance in which of the following situations?
The loan amount is for 90% of the property's value
The BEST statement about the relationship between a property mortgage and a promissory note is that the mortgage
creates a property lien as security for the note, which gives the details of both the amount of the debt and the terms of repayment
A lead-based paint disclosure notice MUST be included with a
sales contract for a residential property built before 1978
Which of the following situations BEST exemplifies what is meant by "conversion of funds"?
Using client funds as a source for temporary personal loans
Which of the following statements BEST defines what is meant by "appraised value"?
An estimate of value
Property managers are often granted a wide range of job-related authority to act on behalf of their principal. This is known as which of the following types of agency?
General
Which of the following statements made in a property advertisement is MOST likely to be characterized as puffing?
"Best view of the mountains in town!"
A property owner lists a residence and specifically avoids telling the listing licensee about a leaking roof. The licensee notices water stains in a closet ceiling, but considers them old and never discusses them with either the owner or the buyer. The property is sold without disclosing this condition and the buyer sues for damages based on material misrepresentation. Do the seller and/or the licensee have any liability? Why or why not?
The seller and the licensee are both liable because it is reasonable that the licensee should have discovered this condition
Which of the following types of listing agreements allows a seller to contract with multiple licensees and only compensate the one that produces the buyer?
Open
Which of the following documents is used to transfer ownership of personal property that is included in the sale of real estate?
A bill of sale
The Truth in Lending Act is a part of which of the following federal laws?
Consumer Credit Protection Act
A property owner who is selling a commercial building at a considerable profit wants to legally avoid paying capital gains on the sale for as long as possible. The seller is MOST likely to achieve this objective by
reinvesting the money according to the terms of a 1031 exchange
A newly licensed real estate licensee has entered into an independent contractor agreement with a firm's primary broker to work as a salesperson. Under this type of relationship, the firm is MOST likely to be responsible for paying which of the following licensee expenses?
Office space rent and telephone charges
When acting in a fiduciary capacity for a seller in a real estate transaction, a licensee MUST
be loyal to the seller's interests