California Real Estate Salesperson Practice Exam 1

California Real Estate Salesperson Practice Exam 1 1. Which of the following is considered real property? • land 2. Agent rates of commission on sales of real property are • negotiable between the principal and agent. 3. Which is the usual method for commercial property valuation? • capitalization rate 4. Which of the following does NOT warrant that the seller owns the property? • quitclaim deed 5. The 1968 Fair Housing Act as amended EXEMPTS which of the following? • rooms in owner-occupied residential units 6. Real property is NOT characterized by which of the following? • that which is movable by law 7. There are several methods to legally describe land in California for purposes of sale, lease, or financing. Which of the following methods is NOT legal? • county assessor’s parcel number 8. The U.S. Government Survey method uses which descriptors to identify property? • tiers, ranges, and townships 9. Public controls of real estate and its uses is a police power of the state derived from which source? • the U.S. Constitution 10. The exercise of littoral rights pertains to the use of • lake water. 11. The next section number located just south of Section 33 in T4N, R3E Humboldt Base Line and Meridian is • 4. 12. A monetary encumbrance on land is known as • a lien. 13. A deed of trust filed at the county recorder’s office is an example of which of the following? • a lien 14. The ownership “bundle of rights” includes • All of the above. (possession, enjoyment, exclusion) 15. Mineral rights in the land pertain to all of the following EXCEPT • Oil. is considered a “fungible” (meaning moving) 16. Ownership of personal property is transferred with which of the following? • the sales receipt 17. A custom-made bookcase in a bookstore is an example of personal property when it • is a trade fixture. 18. Covenants, conditions, and restrictions (CC&Rs) are • private. 19. Which of the following is an example of personal property (as opposed to real property)? • garden bench 20. A single individual who has never been married would most commonly hold title in real estate in which of the following? Severalty 21. The California Coastal Commission regulates California property boundaries located along the Pacific Ocean. Property boundaries are set by which of the following? • The mean high tide line 22. The presence of lead-based paint in homes or condominiums built before 1978 is: Required for both owner-occupied purchases and rental properties 23. The government reserves the right of eminent domain according to the 5th Amendment of the U.S. Constitution to take private land for public use. An example of the taking of property for public use would include which of the following? • A highway bypass 24. A property owner has a lake existing completely within the property boundaries. The property owner has what rights to the water in the lake? • Littoral rights 25. One acre of land is a common measurement in rural areas. An acre of land equals which of the following? • 43,560 square feet 26. Is a 50-gallon solar water heater, costing $2,000 and requiring hours for installation, considered a fixture and therefore real estate? • It depends on many factors, including the method of attachment. 27. Administration of the Subdivided Lands Act is the responsibility of which of the following? • The California Department of Real Estate 28. A couple purchases a home together one week before their marriage. They may not hold title to the property in which of the following? • Community property 29. A seller executes a grant deed to a buyer but does not record the document at the county recorder’s office. This real estate sale and property transfer is: • Legal. 30. A life estate interest in real property is in effect for the remainder of the: • C. life of a designated person • 31. Which of the following is not a basic type of promissory note used to evidence a debt? • A deed of trust 32. Which of the following financial terms is never expressed as a percentage? • The principal 33. Examples of negotiable instruments include all except which of the following? • United States savings bonds 34. A married man, James, buys a $300,000 condominium in Palm Springs. He secures a $250,000 fully amortized, 30-year loan from a mortgage broker. He pays the broker 1 point to reduce the interest rate to 2.654%. How much does James pay the broker? • $2,500 35. Margaret Byer (vendee) has no down payment and is unable to secure a loan to purchase a house and barn on five acres. Carol Rivera (vendor) agrees to finance Margaret’s purchase using a land contract with a 20-year term. When will Margaret acquire title to the property? • At such time as all the principal and interest are paid in full 36. The Truth in Lending Act (TILA) is a federal law as administered by the Federal Reserve (Regulation Z). It requires its lenders make certain disclosures to which of the following type(s) of borrowers? • Consumers only 37. CalVet home loans and private sales contracts (land contracts) have one thing in common. What is it? • Title transfers to the buyer once the entire loan principal and interest are paid. 38. There are three main types of lenders that finance real estate transactions. What kind of lender is fictional Donald Duck’s rich uncle, Scrooge McDuck? • A non-institutional lender 39. A deed of trust is: • A surety device 40. All licensed and registered mortgage loan originators (MLOs) in California may set their commissions: • In accordance with the California Business and Professions Code. 41. In California, mortgage loan brokers can be licensed by which of the following? D. all of the above (the Department of Business Oversight (DBO), the Department of Real Estate (DRE), the California Finance Lenders (CFL) 42. Which of the following is used in California that makes real property collateral for a promissory note? • A deed of trust 43. The greatest level of title insurance coverage is associated with which type of policy? • An American Land Title Association (ALTA) policy 44. California Proposition 13: • Allows for tax reassessment of real property for third-party sales. 45. The four unities of time, title, interest, and possession must be concurrent for parties to hold which of the following types of titles? • Joint tenancy 46. Who can act as an agent when the buying and selling parties have agreed to an escrow for handling the paperwork and funds in a real estate transaction? • A neutral third party 47. It is common for an escrow agent to prorate rents or property taxes as part of the escrow process. How many days is the basis of proration of monies? • 30 days in the month regardless of the number of calendar days 48. “RESPA” is an abbreviation for an important law relating to the sale of one to four unit residential dwellings. “RESPA” stands for: • The Real Estate Settlement Procedures Act. 49. Which of the following is NOT a method of transferring real estate title? • A handshake 50. Individual California taxpayers can expect to pay income taxes on monies received from: • Rental property. 51. Real estate commission for a property that is in probate is set by: • Superior Court of California order. 52. Which of the following requires probate taxes and court costs including attorney’s fees? • A holographic will 53. “Escheat” is the term that most closely relates to what process? • The state taking assets if there is no will and no heirs 54. The underlying premise for all real estate property valuation is: • Location. 55. The cost approach, also known as the replacement cost method, is most often used to value property for what purpose? • Property insurance replacement 56. Real Estate Appraisers are licensed by the: • California Bureau of Real Estate Appraisers (BREA). 57. The comparison approach (market data approach) is commonly used to value which of the following? • A residential tract home for sale in order to secure a home loan 58. When do licensed real estate agents perform appraisals for home sellers? • Never 59. In order for an appraisal report to comply with BREA guidelines, it must contain all of the following EXCEPT: • The compensation paid for the appraisal. 60. Commercial property is valued by: • The gross rents it generates. 61. The proverb “A bird in the hand is worth two in the bush” is most closely associated with which financial concept? • The time value of money 62. Simple interest as expressed in dollars earned on an investment can be calculated using which of the following formulas? • P*R=I 63. The Truth in Lending Act requires all consumer, home loan, and refinance loan interest rates be published as: • Annual percentage rate (APR). 64. California’s usury statute restricts the amount of interest that can be levied on any loan by a non-exempt lender to what annual interest rate? • Ten percent rate 65. A financial analysis of the future cash flows from an investment property can be found on: • A pro forma cash flow report. 66. What does “simple” mean in the term “simple interest?” • It does not take the time value of money into the equation. 67. An individual invests $1 million in a $4 million dollar bottling plant and secures a 10-year, triple-net lease from a beverage company. Annual gross rents are $500,000 per year. Using the payback method, how long will it take for the individual to get the invested money back? • Two years 68. A “seller’s market” occurs when prices for real estate rise due to: • An increasing demand for real estate purchase or rent. 69. Conventional lenders look carefully at loan to value (LTV) ratios when considering the security for a new owner-occupied home loan. Other matters being equal, which of the following ratios would make a loan on an owner-occupied residential dwelling most attractive? • 0.8:1 70. Jessica has a $250,000 30-year fully amortized loan at 4.25% secured by deed of trust. The loan was acquired to purchase her personal residence, where she has lived for 15 years. Jessica notices that interest rates on refinance loans have dropped to 2.85%. What should she do? • Consider refinancing the remaining principal balance with a 15-year fully amortized loan to reduce her monthly payments 71. The “4 C’s” of qualifying for a real estate loan include all of the following EXCEPT: • Character 72. Of the following institutional lenders, which has the greatest money available to lend for real estate–secured loans? • Life insurance companies 73. Government-backed loans such as the Federal Housing Administration (FHA), U.S. Department of Housing and Urban Affairs (HUD), and U.S. Veterans Affairs (VA): • Insure and guarantee loans.