A brother and a sister own a rental house as joint tenants. The brother is nearly destitute and deeply in debt when he dies. Which of the following statements is TRUE?
B. The creditors can't attach the property at all
When the brother dies, the creditors can't attach his interest in the joint tenancy property because it has passed automatically to the sister by right of survivorship. The interest in the rental house is not a part of the brother's estate.
Maria offered to purchase Alexander's house for $135,000. After talking it over with his agent, Alexander signed the offer and returned it to Maria. At this point, what type of title does Maria have to the house?
C. Equitable
A buyer receives equitable title to the property once the sales contract has been signed
Several $100,000 homes were built in an exclussive subdivision where the existing homes had been selling for between $350,000 and $450,000. The result was that values throughout the neighborhood declined. Which appraisal principle explains this phenomenon?
D. Regression
The principle of regression holds that a valuable property in proximity to properties of lesser value will tend to be worth less because of its association with the less valuable properties.
Lyle is offered an option to buy his property. The prospective buyer included a $70,000 option money check with her contract. If lyle signs the option contract and the buyer decides not to exercise the option, does Lyle have to return the $70,000 to the buyer?
C. No, because it's standard practice for the seller to keep the option money even if the buyer doesn't exercise the option
An option is essentially a contract to make a contract, and the buyer's option money check purchases the right to keep the option open for a certain time. So even if the buyer doesn't exercise the option, the seller is entitled to keep the option money.
What is one way in which air rights and subsurface rights can differ?
A. Vertical vs. horizontal
Air rights are always vertical in nature (e.g., condos stacked on top of each other, or an airplane passing over the condo). Subsurface rights can be vertical (subjacent support, i.e., the right not to have abandoned mine subsidence under you property cause your house to collapse), or they can be horizontal (lateral support, i.e., the right not to have your downhill neighbor's reataining wall collapse and cause a landslide under you house).
Owner K has listed his single-family residence with a Broker. If he refuses a bona fide offer from the following buyers because of the characteristics specified, in which case would he be in violation of the Federal Fair Housing Act?
A. A buyer who will have a handicapped relative living with her
Handicap is a protected class under the Federal Fair Housing Act, but marital status and age are not. (Familial status refers to having a child living with you, not to being unmarried or divorced.)
Jill and Jule are joint tenants. Jills sells her interest in the property to Sam. What is the relationship between Julie and Sam with respect to the property?
B. they are tenants in common
The only possible way for Jill and Sam to hold title is as tenants in common, because joint tenants must take title in the same deed at the same time, and Jill and Sam didn't do that. Ownership in severalty is title held by one person.
If a VA loan is assumed and the original veteral borrower is release from liability, it is called a/an:
A. novation
A novation involves a release from liability. (If it were an assignment, by contrast, the vet would retain secondary liability.)
A contract states that an offer can be accepted within a specified time, for a specifed price. It contains specified terms, which may or may not include the right of assignment. In return for the payment of consideration, this kind of contract is known as a/an:
B. option
An option on real estate is a contract that creates a right to buy or lease property for a fixed price within set period of time. An option can be assigned unless it includes a cluase stating otherwise.
The capitalization rate used in the income approach to valuing rental property is the
B. rate of return the property generates
Capitalization is a method of appraising real property that involves converting the anticipated rate of net income from the propety into the present value.
Z failed to pay a contractor for labor and materials used in the repair of her home. This may result in a/an:
A. construction lien
A construction lien is a lien on property in favor of someone who provided labor or materials to improve it, but who has not been paid. Contruction liens are also called mechanic's liens.
When a transaction is finalized, the buyer and the seller are each entitled to a copy of the:
C. Settlement statements
Each is entitled to a copy of the settlement statement. The buyer is entitled to a final estimate of his closing costs, and the seller is entitled to a breakdown of her costs of sale, but neither is entitled to a copy of each other's cost breakdowns. Only the seller is entitled to a copy of the listing agreement.
All of the following would make an offer voidable EXCEPT the contract that
D. is missing an essential element
In one of the four contract essential elements (capacity, mutual, consent, lawful objective, and consideration) is totally missing, the contract is void, not just voidable.
Larry owns and operates Larry's Gas Station. Recently, the city decided to rezone the area from commercial to residential use. Which of the following is true?
B. Larry can continue to operate the gas station as a nonconforming use
The gas station is a legal nonconforming use; however, the use cannot be enlarged, resumed after being discontinued, or rebuilt after being destroyed (by fire, for example).
In a disciplinary action, the Director of the Department of Licensing can do any of the following EXCEPT:
D. award damages to individuals defrauded by real estate licensees
The Director cannot award damanges to victims of real estate fraud. Many states have what is called a "recovery fraud" from which victims of real estate fraud can recover at least part of their losses. Washington doesn't have such remedy for the consumer, however.
Ginnie Mae (Government National Mortgage Association) and Fannie Mae (Federal National Mortgage Association):
A. help make up the secondary market for mortgage loans
Ginnie Mae and Fannie Mae are major players in the secondary market; Fannie Mae is privately held, although heavily supervised by the government.
A security that is required to be registered by federal law must be registered with the
C. Securities and Exchange Commission
Securities (such as shares in a corporation or REIT) are regulated by the federal government through the Securities and Exchange Commission.
A large property is located in an area zoned to allow businesses. A developer builds a subdivision and includees a restrictive covenant prohibiting offices. If an individual owner wants to open a real estate office, which is correct?
A. The owner can't open the office because of the restrictive covenant
The owner will not be able to open the office because the restrictive covenant prohibits it. If there is a conflict between a zoning ordinancy and a covenant, whichever is more restrictive will prevail.
R buys a home in the Island View subdivision. The subdivision's CC&Rs require all fences to be of natural cedar, but several property owners have painted their fences over the years. When R paints his fence, his neighbor sues for violation of the CC&Rs. The judge allows the painted fence to stay because:
D. the restriction has been abandoned
Because Island View homeowners were not enforcing the restriction before R painted his fence, the judge rules that the restriction has been abandoned.
When an escrow agent is completing a buyer's settlement statement how will she determine the amount of cash the buyer will need at closing?
C. Subtract the buyer's total credits from the buyer's total debits
The buyer's total debits are the total charges imposed on the buyer in the closing process. The buyer's total credits represent the amont paid into escrow by the buyer or on the buyer's behalf, such as the good faith deposit (earnest money) and the loan proceeds. The difference is the balance due form the buyer at closing.
A company that is organized as an LLC wants to engage in real estate transaction. Who must be licensed as a broker?
D. At least one partner, officer, or director
A broker's license may be issued to a business of the firm, such as a corporate officer or general partner, must be the designated broker. A designated broker must meet all the ordinary requirements for a broker's license. All other member of the firms acting as associate brokers or salespersons must be individually licensed.
A house with an apartment above the garage is sold on March 5, with the closing scheduled for March 20. The apartment rents for $600 per month, due on the first of the month. At the time of the sale the rent is current. The escrow agent is using a 360-day year, and the parties agree that the seller receives rent for the day of closing. Which of the following statements about proration of the current month's rent is CORRECT?
A. The seller owes the buyer $200
The seller owned the property for two-thirds of the month and is entitled to two-thirds of the rent. The balance of $200 belongs to the buyer.
Marci rents an apartment. She pays a fixed rent amount each month and her landlord pays all other expenses associated with the property. What type of lease do they have?
C. Gross lease
The lease described is a gross lease (also known as the flat or fixed lease)
Marian needs to rent out her basement to make ends meet. She doesn't place any ads for a tenant or ask for any help from a real estate agent-she merely asks some of her friends if they know of any potential tenants. She carefully screens all the proscpects, and decides to rent only to a religious, non-smoking, white female. On which babis is it illegal for her to discriminate?
D. Race
Marian falls under the "Mrs. Murphy" to the federal Fair Housing Act, but there is no such exemption from the Civil Rights Act of 1866, which prohibits discrimination based on race.
An owner whose property is landlocked would request that a court award him
C. an easement by necessity
When property is conveyed without access to a public street, an easement by necessity arises. A court will rule that the owner is entitled to cross neighboring land to reach the public street.
John negotiated an option contract with Margaret, wherein Margaret had three months to purchase John's property. In the second month, Margaret found another buyer. Margaret can propbably transfer her right to purchase the property to another buyer because of the right of:
B. assignment
Margaret may assign the option contract to another buyer (unless there is a clause in the contract prohibiting assignment).
An option contract to buy property that has been exercise becomes a/an:
B. executory bilateral contract
Once the optionee agrees to complete the purchase (exercises the option to buy), the agreement becomes bilateral and both parties are obligated to perform
Purchase and sale agreements typically contain many clauses. All of the following would likely be included in the contract EXCEPT:
C. the type of listing contract used by the parties, and the date it expires
The type of lsting agreement used by the seller and his agent is never included in the purchase and sale agreement; it has no bearing on the agreement between the buyer and the seller.
A tenant is a shopping mall agrees to pay part of the property taxes and maintenance costs, in addition to the fixed monthly rent. This type of lease is a:
A. net lease
In a net lease, the tenant pays a base rent plus a share of the operating expenses, such as property taxes, insurance, and maintenance.
A home was purchased and then later resold by a third party relocation company. Which type of deed would they use in order to make no assurance about defects that may have existed before they obtained title?
A. Special warranty deed
A special warranty deed makes no assurance about title defects that may have existed before the grantor obtained title, only those that arose during the grantor's ownership.
Which of the following problems is covered by a standard policy of title insurance?
B. Forged quitclaim deed
A standard policy of title insurance protects against latent title defects (such as forged deeds), but not against problems that would only be discovered by an inspection of the property (such as encroachments and adverse possessors). No title policy protects against the government's power of eminent domain.
Under the 1988 amendments to the Federal Fair Housing Act, which of the following individuals qualifies on the basis of his or her age to live in housing that is exempt from the prohibition against excluding children?
A. A 56-year-old executive with nine years remaining until retirement
Children can be excluded from properties intended for older persons if at least 80% of the units are occupied by at least one person who is 55 year old or older.
In return for receiving some palm-reading session, an individual negotiates the sale of another person's mobile home along with the leasing of the land on which the mobile home is situated. Which of the following statements is true? The individual:
B. must have a real estate license
A real estate license is required in order to negotiate the saleof another person's mobile home in connection with the purchase, sale, exchange, rental, or lease of the land on which the mobile home is (or will be) located.
A property is listed for $208,950. The broker finds an interested buyer who wants to offer $183,000, which is well below what the broker knows the seller will accept. What should the broker do?
A. Write the offer and submit it to the seller as is
B. Write the offer but recommend the seller not to accept it
B. Refuse to write the offer because, as agent for the seller, the broker is authorized to reject unacceptable offers.
A. Write the offer and submit it to the seller as is
The broker is obligated to present all offers immediately. It is the seller who decides to accept or reject an offer
Which of the following would NOT be grounds for disciplinary action against a licensee?
A. An agent gives a copy of the sales agreement to the purchaser when it has been signed only by the offeror
Giving a copy of the sales agreement to the purchaser when it has been signed only by the offeror (who is the purchaser) is something the agent MUST do, so obviously that would not be a license law violation.
The period during which improved property will yield a return that is attributable to the improvements, over and above the land itself, is called its
B. economic life
That period during which the improvements contributes to the productivity of the property is called its economic life or its useful life.
R conveys title to land to K by means of a special warranty deed. To ensure that the deed conveys all of the property, it must include:
A. an adequate description of the land
The land must be adequately described so that its boundaries can be identified if the validity of the deed is challenged in court.
When a lender forecloses on a life estate, what kind of title does the lender acquire?
D. Life estate
The lender can't get any more from the borrower than the borrower has, which in this case is a life estate.
An individual must have a real estate icense in order to do which of the following?
D. Cold call for new listings on behalf of a broker
Soliciting listings is any form requires a license.
Who may be required to submit fingerprint identification with a license application?
D. Anyone convicted of a crime within the ten years preceding the application
Anyone convicted of a crime within
A salesperson may accept compensation for the services he provides in agiven transaction from
A. the salesperson's broker only
A salesperson may accept compensation only from his own broker.
Who is generally responsible for the earnest money deposit?
C. The firm to which the check is made payable
The firm or individual to whom the check is made payable has a responsibility to see that the money is deposited in a trust account on behalf of the buyer; this is usually the selling broker.
Unlicensed staff member in a real estate office can do which of the following withouth obtaining a real estate license?
D. Anything that is not covered by Washington real estate license law
They may do anything that is not covered by Washington real esate license law; for instance, placing lockboxes on listed properties or providing accounting services for the employing broker
When may an unlicensed attorney in fact, while acting on behalf of her principal engage in an activity that would otherwise require a real estate license?
A. When acting without compensation
An attorney in fact is not required to have a real estate license, as long as she is acting without compensation.
In Washington, an agency relationship with a buyer is created when a licensee:
D. first undertakes to provide brokerage services to the client
Under Washington law, an agency relationship is formed when a licensee performs real estate brokerage services for a buyer, unless there is a written agreement to the contrary.
A salesperson is under investigation by the Department of Licensing. The broker is responsible for all of the following EXCEPT:
A. responding to a subpoena where the broker's name isn't listed
A broker would not need to respond to a subpoena where the broker is not specifically named
At what minimum point must an inactive licensee take a 30 clock hour course in order to reactivate her license
D. Three years
A licensee must take a 30 clock-hour continuing education course in order to reactivate a license that has been inactive for more than three years
Which of the following statement is FALSE?
D. An inactive licensee is not subject to disciplinary action
Even though an inactive licensee cannont engage in real estate activities, he is still subject to disciplinary action (including license suspension or revocation) for violations of the license law.
An appraiser determines the most probable price that a buyer would be willing to pay for a property. This type of value is known as:
B. objective/fair market
This describes the property's market value, an objective measure
L owns the six-unit apartment building in which he lives. L is an attorney. When a tenant moves out, he advertises the unit this way: "For Rent: Vacant apartment on very busy street. No children or pets." According to the Federal Fair Housing Act, as amended in 1988, is this legal?
C. No, because landlords cannot declare residential units to be unavailable to families with children unless the property meets the specific legal requirements of housing for older persons.
A homeowner can deduct which of the following from her income taxs?
B. Points she paid when she obtained the loan
A taxpayer can deduct points she paid when she obtained a loan to finance the property
J receives a deed from K for some raw land in the country. Less than a year later, W files a lawsuit against J, claiming that she, not K, was the true owner of the property at the time of the conveyance. W's lawsuit is called a:
B. quiet title action
A quiet action is a lawsuit to determine who has title to a piece of real propery
A property owner's financial advisor, on learning that his client's apartment complex is no longer profitable, advises the client to change the apartments into condominiums. The process of changing apartments to condominiums is called:
D. conversion
A borrower is negotiating a GI (aka, VA) loan. The appraiser will issue a certificate of:
C. reasonable value
A certificate of reasonable value is a VA appraisal
An agency relationship formed through a buyer agency agreement or listing agreement is a/an:
B. special agency
A real estate agent is usually a special agent. A special agent has limited authority to do a specific thing or conduct a specific transaction
All of the following are requirements under general agency law for creating an agency, EXCEPT:
A. a written document
Under general agency law, an agency relationship may be created either orally or in writing. This means that an agent could not escape the responsibilities and liabilitities of an agency relationship by claiming that the agreement was not in writing.
As a result of a licese disciplinary hearing, the Director revokes a broker's license. Which of the following statements is true?
B. The Director must prepare a certified copy of the hearing transcript at the licensee's expense
Upon request, the Director must prepare a certified copy of the hearing transcript at the expense of the licensee, which will then be used during the appeals process. The disciplinary measure takes effect immediately upon receipt by the licensee. The bond amount is $500, not $5,000
Client trust funds must be placed in an interest-bearing trust account in all of the following cases EXCEPT:
A. for property management accounts
Property management trust accounts don't have to be interest-bearing, nor are they subject to the pooled interest-bearing account requirements that apply to other real estate trust funds.
Which of the following would be considered real property (ad valorem) taxes?
D. taxes on a house and its land
The term ad valorem is Latin for "according to value." sometimes real property taxes are referred to as ad valorem taxes, because the amount tax that a property owner must pay is based on the value of her real property, which includes both the house and the land it's on.
B purchase a small commercial property, and he finances it with a 65% loan. The lender charges 9.25% annual interest and three discount points. The discount points:
A. increase the lender's yield
Discount points are a percentage of the principal amount of a loan, collected by the lender at the time the loan is originated, to give the lender an additional yield
The interest rate on Mike's loan can fluctuate, causing a periodic adjustment in the montly principal and interest payment. Mike's loan is most likely:
A. adjustable-rate
An adjustable-rate mortgage (ARM) ties the interest rate (an, therefore, the size of the monthly payment) to the fluctuations in a chosen index
To qualify as an associate broker, an applicant must:
C. meet the same qualifications as a real estate broker
An associate broker is a licensed broker who works for another broker. Therefore, an associate broker must meet the same qualifications as any real estate broker.
Trust funds received by a licensee in a real estate transaction must be deposited in a trust account no later than:
B. the first business day after receipt
Each of the following applies to appurtenances, EXCEPT:
A. reversion
Appurtenances are the rights, privileges, and improvements that are legally attached to the land. Reversion refers to a future interest in land (an estate in reversion) or to a landlord's interest at the conclusion of a lease.
R owns three pieces of real estate in King County. If a judgement is entered against her in King Count, it will creat a lien against:
B. all three properties
As a general involuntary lien, a judgment lien attaches to all property owned by the debtor in the county where the judgement was entered.
When the Director handles a complaint against a licensee for violation of any aspect of the license law, which of the following courses of action is available to the Director? The Director can:
D. seek an injunction in the superior court in the county where the licensee resides
The Director may not revoke a license prior to a hearing.
Which of the following would NOT result in the termination of an easement appurtenant?
A. Grantor of easement dies
Once the easement is in place, it is permanent, The death of the easement grantor will not affect it.
Which of the following is a requirement for obtaining a broker's license?
C. The applicant must have two years of full-time real estate sales experience over the last five years
Under which of the following circumstances would a listing be terminated?
B. Seller dies
According to agency law, if either the principal (in this case the seller) or the agent dies, the agency is terminated. (The agent here is the broker, not the salesperson.)
An unlicensed employee in a property management office:
A. can show rental property
B. can give advice to prospective customers
C. can quote rental terms to prospects if those terms have already been published
D. cannot perfom any property management functions unless she is specifically exempted from licensing requirement
which of the following would MOST LIKELY happen in a land contract?
C. The vendor retains the title to the property until the final payment is made
The vendor (seller) retains title to the property until the final payment is made. The vendee (buyer) receives possession and equitable title while making installment payments. The vendee is also usually responsible for property taxes, repairs, and upkeep during the contract.
In order to avoid inadvertent dual agency, a real estate agent must make an agency disclosure:
C. to both the buyer and the seller
The agent must disclose her agency status to each party before that party signs the offer (the purchase and sale agreement)
In the course of business, a broker earns property management fees that are to be paid out of the trust account. The fees must be taken out of the account:
A. monthly
If salesperson D works out of a home office, for how long is she required to maintain records of closed transactions?
A. Salesperson are not required to maintain records of closed transactions.
Real estate brokers must maintain records of closed transactions for at least three years. The broker is responsible for the custody and accuracy of the required records, and they should be kept at a main office or branch office.
The standard type of agency between a broker and a seller is:
D. special
An agent with limited authority to do a specific thing or conduct a specific transaction is a special agent. A broker's authority is usually limited, such as finding a buyer or a tenant for a property owner.
The following are all goals of the Washington Real Estate Research Center except:
C. writing real estate exam questions
The Real Estate Research Center does not write real estate exam questions; this is the job of the Real Estate Commission
Which of the following would NOT be a way for state or local government to regulate to take control of privately owned property?
D. Ad valorem taxation
Ad valorem taxation is property taxation. While the tax burdens the owner's title, the government doesn't take control of the land. Option B, C, and D are ways the governement can regulate or acquire private property.
In which of the type of mortgages below does the borrower pay principal and interest at regular intervals until the debt is satisfied?
C. Amortized
This is a definition of amortization.
A homeowner can deduct which of the following from her income tax?
B. Points she paid when she obtained the loan
RESPA requires
C. that disclosre be made of all closing costs prior to the closing, in the form of a good faith estimate of closing cost
The goal of RESPA is to disclose all closing costs to borrowers before closing.
A property owner's financial advisor, or learning that his client's apartment complex is no longer profitable, advises the client to change the apartments into condominiums. The process of changing apartmens into condominium is called:
A. Conversion
M is interested in selling a parcel of land that measures 110' x 297'. Similar property recently sold for $20,000 per acre. What is M likely to get for his land?
C. $15,000
110' x 297' = 32,670 square feet. Divide 32,670 by 43,560 (the number of square feet in an acre) to get .75 acres. Multiply .75 acres by $20,000 to get $15,000.
A borrower is negotiating a GI (aka, VA) loan. The appraiser will issue a certificate of :
B. reasonable value
A certificate of reasonable value is a VA appraisal.
Which of the following is true regarding a seller's agent:
A. She must comply with the seller's intructions, as long as they are legal
Agency duties require the seller's agent to follow the selle's intructions, as long as the seller isn't asking the agent to do something illegal.
An agency relationship formed through a buyer agency agreement or listing agreement is a/an:
C. special agency
A real estate agent is usually a special agent. A special agent has limited authority to do a specific thing or conduct a specific transaction
All of the following are requirements under general agency law for creating an agency, EXCEPT:
D. a writted document
Under general agency law, an agency relationship may be created either orally or in writing. This means that an agent could not escape the responsibilities and liabilities of an agency relationship by claiming that the agreement was not in writing.
As a result of a license disciplinary hearing, the Director revokes a broker's license which of the following statements is true?
C. The Director must prepare a certified copy of the hearing transcript at the licensee's expense
Upon requrest, the Director must prepare a certified copy of the hearing transcript at the expense of the licensee, which will then be used during the appeals process. The disciplinary measure takes effect immediately upon receipt by the licensee. The bond amount is $500 not $5,000.
The Truth in Leding Act Regulation Z covers:
D. home mortgage loans made to an individual
The Truth in Lending Act applies to consumer loans that are for $25,000 or less, or are secured by real property. It does not apply to commercial or industrial loans, or loans in excess of $25,000 that are not secured by real property.
Each of the following applies to appurtenances, EXCEPT:
B. reversion
Appurtenances are the rights, privileges, and improvements that are legally attached to the land. Reversion refers to a future interest in land (an estate in reversion) or to a landlord's interest at the conclusion of a lease.
The purpose of collateralizing a note with a deed of trust is to protect the:
B. lender
Either a deed of trust or a mortgage secures a real estate debt by enabling the lender (the beneficiary) to foreclose in the event of borrower default.
When the Director handles a complaint against a licensee for violation of any aspect of the license law, which of the following courses of action is available to the Director? The Director can:
D. seek an injunction in the superior court in the county where the licensee resides
The Director can file an action in superior coiurt in the county where the licensee resides. The Director may not revoke a license prior to a hearing.
Which of the following is a requirement for obtaining a broker's license?
B. The applicant must have two years of full-time real estate experience over the last five years
An unlicensed employee in a property management office
B. cannot perform any property management functions unless she is specifically exempted from the licensing requirement
In order to avoid inadvertent dual agency, a real estate agent must make a agency disclosure:
C. to both the buyer and the seller
The following are all goals of the Washington Real Estate Research Center except:
B. writing real estate exam questions
The Real Estate Research Center does not write real estate questions; this is the job of the Real Estate Commission.
Which of the following would not be a way for state or local government to regulate or take control of privately owned property?
D. Ad valorem taxation
Ad valorem is property taxation. While the tax burdens the owner's title, the government doesn't take control of the land. Option B, C, and D are ways the government can regulate or acquire private property.