{"about":"Free national-portion real estate practice questions for the Agent Licenses Exam Quiz WordPress plugin. Same questions as the free exam at agentlicenses.com/real-estate-practice-exam/. Original content, bundled so the quiz makes no outside requests.","topics":[{"id":"I","name":"Real property, legal descriptions and land use"},{"id":"II","name":"Ownership, transfer and recording of title"},{"id":"III","name":"Property value and appraisal"},{"id":"IV","name":"Contracts and agency"},{"id":"V","name":"Real estate practice"},{"id":"VI","name":"Disclosures and environmental issues"},{"id":"VII","name":"Financing and settlement"},{"id":"VIII","name":"Real estate math"}],"count":80,"questions":[{"id":1,"topic":"I","q":"A buyer and seller sign a purchase agreement that says nothing about what stays with the house. Which item most likely transfers to the buyer as a fixture?","options":["A ceiling fan wired into the electrical box","A portable air conditioner set in a window","Area rugs laid on top of the hardwood floors","A freestanding refrigerator plugged into a wall outlet"],"answer":0,"why":"A fixture is personal property that has been attached to the real estate so that it becomes part of it. A wired-in ceiling fan is attached by the method of installation and is meant to stay. The refrigerator, rugs and portable air conditioner can be moved without removing anything that is part of the house, so they stay personal property."},{"id":2,"topic":"I","q":"A restaurant tenant bolts commercial ovens to the kitchen floor for use in its business. When the lease ends, the ovens are usually treated as:","options":["Emblements that pass to the next tenant","Fixtures that stay unless the tenant buys them from the landlord","The landlord's property, because they are attached to the building","Trade fixtures the tenant may remove before the lease ends"],"answer":3,"why":"Items a tenant installs for its trade or business are trade fixtures. They remain the tenant's personal property and may be removed by the end of the lease, as long as the tenant repairs damage caused by the removal. Trade fixtures left behind after the lease ends can become the landlord's property."},{"id":3,"topic":"I","q":"The seller agrees to leave the patio furniture and a riding mower with the house. Which document transfers ownership of those items?","options":["The deed, because the items are listed in the purchase agreement","A bill of sale","An assignment of lease","A quitclaim deed"],"answer":1,"why":"A deed conveys real property. Patio furniture and a mower are personal property, which is transferred with a bill of sale."},{"id":4,"topic":"I","q":"Two houses are nearly identical, but the one in a sought-after school district sells for much more than the other one a few miles away. Which economic characteristic of real property best explains the difference?","options":["Area preference (situs)","Permanence of investment","Indestructibility","Modification"],"answer":0,"why":"Area preference, also called situs, is the value people place on a particular location. Indestructibility is a physical characteristic, permanence of investment refers to how long improvements last, and modification refers to how improvements change the value of land."},{"id":5,"topic":"I","q":"A court can order a seller to go through with a sale (specific performance) because money alone is not seen as an adequate substitute for a particular parcel. Which physical characteristic of land supports this?","options":["Immobility","Scarcity","Non-homogeneity (uniqueness)","Indestructibility"],"answer":2,"why":"Because no two parcels are exactly alike, the law treats each one as unique, so a buyer can ask a court to order the sale rather than accept money damages. Scarcity is an economic characteristic, and immobility and indestructibility do not make one parcel different from another."},{"id":6,"topic":"I","q":"A legal description begins at a fixed point, follows a series of compass directions and distances around the parcel, and ends back at the starting point. Which method is this?","options":["Rectangular (government) survey system","Street address","Metes and bounds","Lot and block (recorded plat) system"],"answer":2,"why":"Metes are measurements and bounds are directions. A metes and bounds description must return to its point of beginning to close. A street address is not a legal description."},{"id":7,"topic":"I","q":"A developer records a subdivision map with the county. Later deeds describe each parcel as a numbered lot within a lettered block on that map. Which description method is being used?","options":["Rectangular (government) survey system","Lot and block (recorded plat) system","Assessor's parcel number","Metes and bounds"],"answer":1,"why":"The lot and block method refers to a plat map recorded in the public records. The deed only needs to name the lot, the block and the recorded plat. An assessor's parcel number identifies a parcel for tax purposes and is not a legal description."},{"id":8,"topic":"I","q":"In the rectangular survey system, a section contains 640 acres. How many acres are in the SE 1/4 of the NW 1/4 of a section?","options":["10 acres","40 acres","80 acres","160 acres"],"answer":1,"why":"Work from the end of the description back to the section. The NW 1/4 of a section is 640 ÷ 4 = 160 acres. The SE 1/4 of that quarter is 160 ÷ 4 = 40 acres."},{"id":9,"topic":"I","q":"A city passes a zoning ordinance that allows only single-family homes in a neighborhood. Which government power allows this?","options":["Escheat","Taxation","Eminent domain","Police power"],"answer":3,"why":"Police power is the government's power to regulate property to protect public health, safety and welfare. Zoning, building codes and subdivision rules all come from it. Eminent domain is the power to take property with just compensation, escheat passes property to the state when there are no heirs, and taxation is the power to tax."},{"id":10,"topic":"I","q":"A property owner dies without a will, and no heirs can be found. How does the property pass?","options":["To the mortgage lender by foreclosure","To the state by escheat","To the county by eminent domain","To the nearest neighbor by adverse possession"],"answer":1,"why":"Escheat passes property to the state when an owner dies without a will and without heirs. Eminent domain is a taking for public use with compensation, and adverse possession requires years of open, hostile use by someone else."},{"id":11,"topic":"I","q":"An owner's lot has no road access, but a recorded easement lets the owner cross the neighboring lot to reach the road. If the owner sells the landlocked lot, the easement:","options":["Passes only if the neighbor signs a new agreement","Becomes a license the neighbor may revoke","Ends, because it was personal to the original owner","Passes to the new owner along with the land"],"answer":3,"why":"An easement appurtenant benefits one parcel (the dominant estate) and burdens another (the servient estate). It is attached to the land and transfers automatically when either parcel is sold. A license is a personal, revocable permission and does not run with the land."},{"id":12,"topic":"II","q":"Three people own a building as joint tenants. One of them dies, and her will leaves her interest to her son. Who owns the building now?","options":["The two survivors and the son, as joint tenants","The two survivors and the son, as tenants in common","The son alone, once probate closes","The two surviving joint tenants"],"answer":3,"why":"Joint tenancy carries the right of survivorship. When a joint tenant dies, her interest passes to the surviving joint tenants automatically and cannot be left to anyone by will. The two survivors continue to own the building as joint tenants."},{"id":13,"topic":"II","q":"A deed conveys land to a town \"so long as it is used as a public park.\" Which estate does the town hold?","options":["Easement in gross","Life estate","Fee simple absolute","Fee simple determinable"],"answer":3,"why":"Words of duration such as \"so long as\" or \"while\" create a fee simple determinable. If the land stops being used as a park, ownership returns to the grantor or the grantor's heirs automatically. A fee simple absolute has no such condition."},{"id":14,"topic":"II","q":"An owner deeds a house to her brother for the rest of his life, with the house to go to her niece when the brother dies. What interest does the niece hold?","options":["A life estate pur autre vie","A leasehold estate","A remainder interest","A reversionary interest"],"answer":2,"why":"When a life estate ends and the property goes to a third party, that person holds a remainder. If the property returned to the original grantor instead, the grantor would hold a reversion. The brother holds the life estate."},{"id":15,"topic":"II","q":"A tenant's one-year lease expires, and the tenant stays in the unit without the landlord's consent and without paying rent. Which estate does the tenant hold?","options":["Estate for years","Periodic estate (estate from period to period)","Estate (tenancy) at sufferance","Estate at will"],"answer":2,"why":"A tenant who stays after the lease ends without the landlord's permission has the weakest possessory estate, a tenancy at sufferance. If the landlord accepted rent, the tenancy could become periodic. An estate at will exists with the consent of both parties."},{"id":16,"topic":"II","q":"A property has a recorded first mortgage, a later judgment lien and an unpaid real property tax bill. Which lien generally has first priority?","options":["The real property tax lien","The first mortgage, because it was recorded first","The judgment lien","Whichever creditor files for foreclosure first"],"answer":0,"why":"Liens are generally ranked by the order of recording, but real property tax liens and special assessment liens are given priority over other liens regardless of when they arose."},{"id":17,"topic":"II","q":"Which of these is required for a deed to be valid?","options":["The signature of the grantee","The signature of the grantor","A title insurance policy","Recording the deed in the county records"],"answer":1,"why":"A valid deed needs a competent grantor who signs it, an identifiable grantee, words of conveyance, a legal description, consideration, and delivery and acceptance. The grantee does not usually sign. Recording protects the grantee against later claims but is not needed for the deed to be valid between the parties."},{"id":18,"topic":"II","q":"Which type of deed gives the buyer the greatest protection?","options":["Bargain and sale deed","General warranty deed","Special warranty deed","Quitclaim deed"],"answer":1,"why":"In a general warranty deed the grantor warrants the title against defects arising at any time, including before the grantor owned it. A special warranty deed covers only the grantor's period of ownership, a bargain and sale deed implies ownership with no warranties, and a quitclaim deed carries no warranties at all."},{"id":19,"topic":"II","q":"Recording a deed in the public records gives:","options":["Title insurance coverage for the buyer","A guarantee that the title is free of defects","Actual notice to every neighbor","Constructive notice of the new owner's interest to everyone"],"answer":3,"why":"Recording gives constructive notice: the law treats everyone as knowing what is in the public records, whether or not they looked. Actual notice is what a person has really seen or been told. Recording does not prove the title is good or insure it."},{"id":20,"topic":"II","q":"Which is an example of involuntary alienation of title?","options":["A transfer through a foreclosure sale","A sale using a special warranty deed","A quitclaim deed signed to clear a cloud on title","A gift of the property to a child by deed"],"answer":0,"why":"Involuntary alienation transfers title without the owner's consent, as with foreclosure, eminent domain, escheat or adverse possession. Deeds signed by the owner, whether for a sale, a gift or to clear a cloud, are voluntary alienation."},{"id":21,"topic":"III","q":"How does market price differ from market value?","options":["Market price is the amount actually paid in a particular sale","Market price is the value set by the county assessor","Market price is the cost to rebuild the property today","Market price is the most probable price in an open market"],"answer":0,"why":"Market value is the most probable price a property should bring in a competitive, open market with typically motivated, informed parties. Market price is the price actually paid, which can differ when a sale is rushed, between relatives or otherwise not at arm's length."},{"id":22,"topic":"III","q":"For a property to have value, it must have demand, utility, scarcity and:","options":["Conformity","Transferability","Depreciation","Substitution"],"answer":1,"why":"The four characteristics of value are demand, utility, scarcity and transferability (DUST). Conformity and substitution are principles of value, and depreciation is a loss in value."},{"id":23,"topic":"III","q":"A buyer will not pay more for a house than the cost of buying an equally desirable house nearby. Which principle of value is this?","options":["Anticipation","Conformity","Contribution","Substitution"],"answer":3,"why":"The principle of substitution says the value of a property tends to be set by the cost of acquiring an equally desirable substitute. It is the basis of the sales comparison approach."},{"id":24,"topic":"III","q":"The largest and most expensive house in a neighborhood of much smaller homes tends to be worth less than it would be among similar homes. Which principle describes this?","options":["Plottage","Contribution","Regression","Progression"],"answer":2,"why":"Under regression, the value of a better property is pulled down by the lesser properties around it. Progression is the reverse: a modest home gains value from being near better ones. Plottage is the extra value created by combining parcels."},{"id":25,"topic":"III","q":"In which step of the appraisal process does the appraiser weigh the results of the different approaches to reach a single estimate of value?","options":["Reconciliation","Data collection","Defining the problem","Highest and best use analysis"],"answer":0,"why":"Reconciliation comes near the end of the process. The appraiser considers how reliable and relevant each approach is for this property and arrives at one opinion of value, which then goes into the report. It is not a simple average of the approaches."},{"id":26,"topic":"III","q":"Which federal law requires appraisals for federally related transactions to be done by state-licensed or state-certified appraisers?","options":["The Equal Credit Opportunity Act (ECOA)","The Truth in Lending Act (TILA)","The Real Estate Settlement Procedures Act (RESPA)","The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)"],"answer":3,"why":"Title XI of FIRREA, passed after the savings and loan crisis, set up the system of state appraiser licensing and certification and requires that appraisals for federally related transactions follow the Uniform Standards of Professional Appraisal Practice (USPAP). RESPA covers settlement costs, ECOA covers credit discrimination and TILA covers credit cost disclosure."},{"id":27,"topic":"III","q":"A comparable sold for $310,000. It has a pool, valued at $15,000, which the subject property does not have. The subject has an extra bathroom, valued at $8,000, which the comparable lacks. What is the adjusted sale price of the comparable?","options":["$287,000","$303,000","$317,000","$333,000"],"answer":1,"why":"Adjustments are always made to the comparable, never to the subject. Subtract the value of a feature the comparable has and the subject lacks, and add the value of a feature the subject has and the comparable lacks: $310,000 − $15,000 + $8,000 = $303,000."},{"id":28,"topic":"III","q":"For which property is the cost approach most useful?","options":["A church, which rarely sells and earns no rent","A vacant residential lot","A condominium in a large complex with frequent sales","A rented duplex in a neighborhood of rented duplexes"],"answer":0,"why":"The cost approach (land value plus the cost of the improvements, less depreciation) works best for new buildings and special-purpose properties such as churches, schools and public buildings, where comparable sales and rental income are scarce. Vacant land has no improvements to cost out."},{"id":29,"topic":"III","q":"A house has five bedrooms but only one bathroom. Buyers in the area expect more. Which kind of depreciation is this?","options":["External (economic) obsolescence","Functional obsolescence","Plottage","Physical deterioration"],"answer":1,"why":"Functional obsolescence is a loss of value from a design or layout that the market no longer wants, such as too few bathrooms or an outdated floor plan. External obsolescence comes from outside the property, like a new highway nearby, and physical deterioration is wear and tear."},{"id":30,"topic":"III","q":"In the income approach, value is estimated by:","options":["Dividing gross income by a capitalization rate","Dividing net operating income by a capitalization rate","Multiplying net operating income by the capitalization rate","Multiplying gross rent by the capitalization rate"],"answer":1,"why":"The basic income formula is value = net operating income ÷ capitalization rate. Net operating income is effective gross income minus operating expenses (debt service is not an operating expense). A gross rent or gross income multiplier is a separate, simpler method that uses gross income."},{"id":31,"topic":"III","q":"How does a comparative market analysis (CMA) prepared by a licensee differ from an appraisal?","options":["It must follow the appraisal standards in USPAP","It can be prepared only by a certified appraiser","It is a licensee's opinion of price, not an appraisal","It relies only on the cost approach to value"],"answer":2,"why":"A CMA compares recent sales, active listings and expired listings to help a seller choose a list price or a buyer decide on an offer. It is not an appraisal and is not done under USPAP. A lender making a federally related loan needs an appraisal by a licensed or certified appraiser."},{"id":32,"topic":"IV","q":"A seller tells several brokers, \"I will pay a commission to whichever of you brings me a buyer at my price.\" None of the brokers promises to do anything. What kind of contract is this?","options":["Implied","Executed","Unilateral","Bilateral"],"answer":2,"why":"In a unilateral contract only one party makes a promise, and the other party is free to act or not. Here the seller promises to pay if a broker performs, but no broker is obligated to try. This is how an open listing works. In a bilateral contract, both sides exchange promises."},{"id":33,"topic":"IV","q":"A 17-year-old signs an agreement to buy a condominium. The contract is:","options":["Voidable by the minor","Valid and binding on both parties","Void from the start","Voidable by the seller"],"answer":0,"why":"Under the general rule, a contract with a minor is voidable by the minor: the minor can cancel (disaffirm) it, while the adult party generally cannot cancel it on that ground. A void contract has no legal effect at all. State law sets the details."},{"id":34,"topic":"IV","q":"Which statement about consideration in a real estate contract is true?","options":["Consideration must be paid in cash","A promise to do something can be valid consideration","Consideration is needed only in a lease","Consideration must equal the market value of the property"],"answer":1,"why":"Consideration is anything of value that each party gives the other, and a promise to act or not act counts. It does not have to be money, and under the general rule it does not have to equal market value. A purchase agreement is usually an exchange of promises: the buyer promises to pay and the seller promises to convey."},{"id":35,"topic":"IV","q":"A buyer makes an offer to buy a house. When does the offer become a binding contract?","options":["When the buyer's earnest money check clears","When the deed is recorded","When the listing agent receives the offer","When the seller's acceptance is communicated to the buyer"],"answer":3,"why":"A contract needs an offer and an acceptance that matches its terms, and the acceptance must be communicated back to the person who made the offer. Until then, the buyer can usually withdraw the offer. Earnest money is not required for a contract to exist, and recording happens at closing."},{"id":36,"topic":"IV","q":"The buyer and seller have signed a purchase agreement, but the closing has not happened yet. The contract is:","options":["Executory","Void","Executed","Unilateral"],"answer":0,"why":"An executory contract still has obligations left to perform. Once both parties have fully performed, as at closing, it becomes executed."},{"id":37,"topic":"IV","q":"Which of these makes a contract void, rather than voidable?","options":["Its purpose is illegal","One party relied on a misrepresentation","One party signed under duress","One party is a minor"],"answer":0,"why":"A contract for an illegal purpose was never valid and cannot be enforced by anyone, so it is void. Contracts with a minor, or signed under duress or because of misrepresentation, are voidable: they are valid until the protected party chooses to cancel them."},{"id":38,"topic":"IV","q":"Under the statute of frauds, a contract for the sale of real estate generally must be:","options":["Witnessed by two licensees, to be enforceable","In writing and signed, to be enforceable","Recorded, to be valid","Notarized, to be valid"],"answer":1,"why":"The statute of frauds requires contracts for the sale of real estate to be in writing and signed by the party against whom enforcement is sought. An oral agreement to sell land generally cannot be enforced in court. Notarizing and recording are not what the statute requires."},{"id":39,"topic":"IV","q":"A buyer offers $400,000 for a house. The seller signs the offer but changes the closing date before sending it back. Legally, the seller has:","options":["Rejected the offer and made a counteroffer","Created a binding contract with a new closing date","Accepted the offer, since the price is unchanged","Accepted the offer subject to the buyer's approval, which keeps the original offer open"],"answer":0,"why":"Any change to the terms of an offer is a rejection of it and a new offer, called a counteroffer. The original offer ends, and there is no contract unless the buyer accepts the counteroffer."},{"id":40,"topic":"IV","q":"A purchase agreement says that if the buyer defaults, the seller keeps the earnest money as the seller's only remedy. This clause provides for:","options":["Compensatory damages","Specific performance","Punitive damages","Liquidated damages"],"answer":3,"why":"Liquidated damages are an amount the parties agree on in advance as full compensation for a breach. Compensatory damages must be proven in court, punitive damages are meant to punish, and specific performance is a court order to carry out the contract."},{"id":41,"topic":"IV","q":"Under a typical listing agreement, the listing broker is what kind of agent of the seller?","options":["A special agent","A universal agent","A subagent of the buyer","A general agent"],"answer":0,"why":"A special agent is authorized to do one specific task, here to find a buyer and help with the sale. A listing broker usually cannot sign contracts or bind the seller. A general agent handles a range of matters for the principal, and a universal agent can do anything the principal could legally do."},{"id":42,"topic":"IV","q":"A broker represents both the buyer and the seller in the same transaction. This is:","options":["Dual agency, which needs both parties' informed consent where allowed","Subagency, which covers only the buyer","A universal agency","Single agency, which needs no special disclosure"],"answer":0,"why":"When one licensee or brokerage represents both sides of one transaction, it is dual agency. Because loyalty to one side conflicts with loyalty to the other, states that allow dual agency require informed consent from both parties, and some states do not allow it at all."},{"id":43,"topic":"IV","q":"A seller signs a listing agreement with a sales agent who works for ABC Realty. The agency relationship is between the seller and:","options":["The buyer who later makes an offer","The sales agent personally","ABC Realty, the agent's broker","The multiple listing service"],"answer":2,"why":"A listing belongs to the broker, not to the individual salesperson. The salesperson acts on the broker's behalf. If the salesperson leaves the firm, the listing normally stays with the broker."},{"id":44,"topic":"IV","q":"Which event ends a listing agreement automatically?","options":["The death of the sales agent who took the listing","The death of the seller","The seller lowering the asking price","The listing agent moving to another office of the same brokerage"],"answer":1,"why":"An agency ends by operation of law when the principal or the broker dies, becomes incompetent or goes bankrupt, or when the property is destroyed or condemned. Because the listing belongs to the broker, the death or departure of the individual sales agent does not end it."},{"id":45,"topic":"IV","q":"A seller tells the listing agent privately that she would accept $20,000 less than the list price. The agent mentions this to a buyer to keep the deal moving. Which duty did the agent breach?","options":["The duty of disclosure owed to the buyer","The duty of accounting","No duty, because the information helped close the sale","The duty of confidentiality owed to the seller"],"answer":3,"why":"An agent owes the client fiduciary duties of obedience, loyalty, disclosure, confidentiality, accounting and reasonable care. Revealing the lowest price the seller will take, without the seller's permission, breaks confidentiality and loyalty."},{"id":46,"topic":"IV","q":"A listing agent knows the basement floods every spring. The seller tells the agent not to mention it to anyone. What should the agent do?","options":["Suggest that buyers get an inspection and say nothing more","Mention the flooding only if a buyer asks about it directly","Stay silent, because the agent owes the seller obedience","Disclose the flooding to buyers, even against the seller's wishes"],"answer":3,"why":"The duty of obedience covers only lawful instructions. A licensee must not conceal a known material defect, and doing so exposes both the seller and the agent to claims of fraud or misrepresentation. If the seller insists, the agent should withdraw from the listing."},{"id":47,"topic":"IV","q":"A broker deposits a buyer's earnest money check into the brokerage's operating account, which also pays the office rent. This is:","options":["Steering","Commingling","Conversion","Blockbusting"],"answer":1,"why":"Mixing client or customer funds with the broker's own money is commingling, even if none of it is spent. Conversion is using those funds for the broker's own purposes. Earnest money belongs in a separate trust or escrow account."},{"id":48,"topic":"V","q":"Buyers ask their agent whether they should take title as joint tenants or tenants in common for estate planning reasons. What should the agent do?","options":["Advise joint tenancy, because it avoids probate","Recommend that they ask an attorney","Draft a short agreement setting out each buyer's share","Tell them it makes no difference"],"answer":1,"why":"Choosing how to hold title has legal and tax effects. Giving that advice or drafting legal documents is the unauthorized practice of law. The agent can explain the general forms of ownership but should refer the buyers to an attorney."},{"id":49,"topic":"V","q":"An agent who sells houses is asked to list a large farm with irrigation water rights, a type of property the agent has never handled. What is the best course?","options":["Take the listing alone, since any licensee may sell any property","Take the listing but avoid mentioning the water rights","Price the farm by the square footage of the house","Bring in an experienced licensee or refer the listing"],"answer":3,"why":"Licensees are expected to practice within their competence. When a property is outside the agent's experience, the agent should bring in someone with the right expertise, with the client's knowledge, or refer the business."},{"id":50,"topic":"V","q":"Under which type of listing does the broker earn a commission no matter who sells the property, including the owner?","options":["Open listing","Net listing","Exclusive agency listing","Exclusive right-to-sell listing"],"answer":3,"why":"An exclusive right-to-sell listing pays the listing broker if the property sells during the term, whoever finds the buyer. Under an exclusive agency listing, the owner can sell it without owing a commission, and an open listing pays only the broker who produces the buyer."},{"id":51,"topic":"V","q":"Why are net listings discouraged, and banned in some states?","options":["They set up a conflict between the broker's interest and the seller's","They always pay the broker less than a percentage listing","They prevent the property from being marketed","They cannot be put in writing"],"answer":0,"why":"In a net listing, the seller names the amount they want and the broker keeps everything above it. The broker gains from a low net figure, which works against the seller's interest and invites abuse."},{"id":52,"topic":"V","q":"An owner hires a property manager to lease units, collect rents, hire contractors and handle the building's day-to-day operations. The property manager is usually:","options":["Not an agent, because no sale is involved","A special agent of the tenants","A general agent of the owner","A universal agent of the owner"],"answer":2,"why":"A property manager has broad, ongoing authority to handle many matters for the owner, which makes the manager a general agent. The manager's fiduciary duties run to the owner, not the tenants."},{"id":53,"topic":"V","q":"An agent shows buyers of one race homes only in neighborhoods where most residents share their race. Which illegal practice is this?","options":["Redlining","Steering","Blockbusting","Puffing"],"answer":1,"why":"Steering is directing buyers or renters toward or away from areas because of a protected class. Blockbusting is urging owners to sell by claiming people of a protected class are moving in, and redlining is a lender refusing to lend in certain areas."},{"id":54,"topic":"V","q":"Which of these is a protected class under the federal Fair Housing Act?","options":["Occupation","Familial status","Marital status","Age"],"answer":1,"why":"The federal Fair Housing Act protects race, color, religion, national origin, sex, handicap (disability) and familial status. Familial status covers households with children under 18 and pregnant women. Marital status and age are protected in credit by the Equal Credit Opportunity Act, and some states add more classes."},{"id":55,"topic":"V","q":"Which rental ad wording raises a fair housing problem?","options":["\"Ideal for a couple with no children\"","\"Three bedrooms near two parks\"","\"Walk to the bus line\"","\"Large fenced backyard\""],"answer":0,"why":"Ads may describe the property but not the kind of people wanted. A preference against children is discrimination by familial status, unless the property qualifies as housing for older persons. The other ads describe the property and its location."},{"id":56,"topic":"V","q":"Two competing brokerages agree that both will charge sellers the same commission rate. This is:","options":["A group boycott, which is legal between small firms","Price fixing, a violation of antitrust law","Normal business practice","Market allocation, which is legal if put in writing"],"answer":1,"why":"Under the Sherman Antitrust Act, competitors may not agree on prices, including commission rates. Each brokerage must set its own fees independently. Market allocation and group boycotts are also antitrust violations."},{"id":57,"topic":"V","q":"Which insurance protects a licensee against claims arising from mistakes in professional services, such as a missed disclosure?","options":["Private mortgage insurance","General liability insurance","Title insurance","Errors and omissions (E&O) insurance"],"answer":3,"why":"Errors and omissions insurance covers claims of negligence in professional work. General liability insurance covers bodily injury and property damage, such as a visitor slipping in the office. Title insurance protects against title defects, and PMI protects a lender."},{"id":58,"topic":"VI","q":"The federal lead-based paint disclosure rule applies to most housing built before:","options":["1960","1978","1986","1992"],"answer":1,"why":"Residential lead-based paint was banned in 1978, so the federal disclosure rule covers most housing built before 1978. The rule itself comes from the Residential Lead-Based Paint Hazard Reduction Act of 1992."},{"id":59,"topic":"VI","q":"Before a buyer is bound by a contract to buy a house built before 1978, the seller must, among other things:","options":["Disclose lead only if a child under six will live there","Remove all lead-based paint before closing","Give the buyer a 10-day opportunity to test for lead, which the buyer may waive","Pay for a lead inspection by a certified inspector"],"answer":2,"why":"For pre-1978 housing, the seller must disclose known lead-based paint and hazards, provide available reports, give the buyer the EPA pamphlet, include the lead warning in the contract and offer a 10-day opportunity (or another agreed period) to have the home tested. The buyer can waive the test. The rule does not require removal."},{"id":60,"topic":"VI","q":"Which hazard is a colorless, odorless radioactive gas that comes from the natural breakdown of uranium in soil and enters homes through foundation cracks?","options":["Formaldehyde","Asbestos","Carbon monoxide","Radon"],"answer":3,"why":"Radon forms naturally in soil and rock and can build up in basements and lower floors. Testing is simple and mitigation systems vent it outside. Carbon monoxide is also colorless and odorless, but it comes from burning fuel, not from soil."},{"id":61,"topic":"VI","q":"An inspector finds asbestos insulation on the basement pipes, still intact and in good condition. Which is generally the safest approach?","options":["Sand it smooth and paint over it","Clean it with a household vacuum","Leave it undisturbed or have it sealed (encapsulated)","Have the owner tear it out right away"],"answer":2,"why":"Asbestos is dangerous when its fibers become airborne. Intact material is often best left alone or sealed. Removal, if needed, should be done by trained abatement contractors, because tearing, sanding or vacuuming it releases fibers."},{"id":62,"topic":"VI","q":"Under the federal Superfund law (CERCLA), liability for cleaning up a contaminated property:","options":["Ends when the property is sold","Is limited to the price the owner paid for the property","Can fall on a current owner who did not cause the contamination","Falls only on the party that caused the contamination"],"answer":2,"why":"CERCLA liability is strict, joint and several, and retroactive. Current and past owners and operators can be held responsible for the full cost of cleanup even if they did not cause the problem. This is why buyers of commercial property order environmental site assessments."},{"id":63,"topic":"VI","q":"A seller knows the roof leaks and paints over the water stains on the ceiling before listing the house. This is:","options":["Concealment of a known latent defect","A patent defect the buyer should notice","Puffing","Acceptable, because buyers are responsible for finding defects"],"answer":0,"why":"A latent defect is one that ordinary inspection would not reveal. Hiding a known defect is active concealment and can be fraud, allowing the buyer to cancel the contract or sue for damages. A patent defect is one that is plainly visible."},{"id":64,"topic":"VI","q":"An agent tells a buyer, \"This is the most charming kitchen in town.\" This statement is:","options":["A required disclosure of a material fact","Negligent misrepresentation","Puffing","Fraud"],"answer":2,"why":"Puffing is an exaggerated statement of opinion that a reasonable buyer would not rely on as fact, so it is generally not treated as misrepresentation. Stating a false fact, such as \"the roof is new\" when it is not, is misrepresentation."},{"id":65,"topic":"VI","q":"A house is listed \"as is.\" What does that mean for disclosure?","options":["No disclosure duty for the seller at all","No right for the buyer to inspect","No repairs by the seller, but known defects still cannot be hidden","No disclosure duty for the listing agent"],"answer":2,"why":"An \"as is\" sale tells the buyer the seller will not repair the property. It does not permit the seller or the agent to hide known material defects or make false statements, and it does not take away the buyer's right to inspect."},{"id":66,"topic":"VI","q":"A lender asks for a Phase I environmental site assessment on a commercial property. A Phase I assessment is:","options":["Soil and groundwater sampling","A radon test of the building","A records review and site visit, without sampling","Cleanup of the contamination"],"answer":2,"why":"A Phase I assessment looks for signs of possible contamination through records, interviews and a site visit. If it finds concerns, a Phase II assessment takes soil, water or material samples. A buyer who completes proper due diligence may be able to use it to defend against CERCLA liability."},{"id":67,"topic":"VII","q":"Which mortgage clause lets the lender demand payment of the full loan balance if the borrower sells the property?","options":["Defeasance clause","Prepayment penalty clause","Alienation (due-on-sale) clause","Subordination clause"],"answer":2,"why":"An alienation or due-on-sale clause prevents a buyer from simply taking over the loan without the lender's approval. A defeasance clause requires the lender to release the lien once the loan is paid, and a subordination clause lets a later lien take priority."},{"id":68,"topic":"VII","q":"What is the main role of Fannie Mae and Freddie Mac in the mortgage market?","options":["They buy mortgages from lenders in the secondary market","They guarantee VA loans","They insure FHA loans","They make loans directly to homebuyers"],"answer":0,"why":"Fannie Mae and Freddie Mac buy conforming loans from lenders, which gives lenders money to make more loans. The primary market is where lenders make loans to borrowers. FHA insures FHA loans, and the Department of Veterans Affairs guarantees VA loans."},{"id":69,"topic":"VII","q":"On a conventional loan, private mortgage insurance (PMI) is usually required when:","options":["The borrower is a veteran","The loan-to-value ratio is below 80%","The loan is insured by FHA","The down payment is under 20% (loan-to-value above 80%)"],"answer":3,"why":"Lenders usually require PMI on conventional loans with less than 20% equity, which protects the lender if the borrower defaults. FHA loans carry their own mortgage insurance premium (MIP), not PMI, and VA loans do not use PMI."},{"id":70,"topic":"VII","q":"Under the TILA-RESPA Integrated Disclosure (TRID) rule, the borrower must receive the Closing Disclosure at least how long before closing on the loan?","options":["10 calendar days","Three business days","30 days","24 hours"],"answer":1,"why":"The Closing Disclosure must reach the borrower at least three business days before consummation, so there is time to compare it with the Loan Estimate. The Loan Estimate itself is due within three business days after the loan application. The Consumer Financial Protection Bureau issued the TRID rule."},{"id":71,"topic":"VII","q":"A title company offers a real estate agent a fee for each buyer the agent refers to it. Under RESPA, this fee is:","options":["Allowed if the agent is a buyer's agent","Prohibited, as a kickback for a referral","Allowed if it is shown on the Closing Disclosure","Allowed if the buyer agrees in writing"],"answer":1,"why":"Section 8 of RESPA bans fees, kickbacks and anything of value given for referring settlement business in a federally related mortgage loan. Disclosure or consent does not make a referral fee legal. Payment for services actually performed is allowed."},{"id":72,"topic":"VII","q":"On a closing statement, how is the buyer's earnest money deposit shown?","options":["As a credit to the seller","As a debit to the seller","As a credit to the buyer","As a debit to the buyer"],"answer":2,"why":"The buyer has already paid the earnest money, so it counts toward what the buyer owes and is entered as a credit to the buyer. It does not appear on the seller's side because it is part of the purchase price the seller is already credited with."},{"id":73,"topic":"VII","q":"Property taxes in a county are paid in arrears. The seller has not yet paid this year's taxes at the time of closing. How is the seller's share for the part of the year the seller owned the property shown?","options":["As a debit to the seller and a credit to the buyer","As a debit to both parties","It is not shown, because the bill has not been issued","As a credit to the seller and a debit to the buyer"],"answer":0,"why":"Taxes paid in arrears are paid after the period they cover. The buyer will pay the whole bill later, including the part for the time the seller owned the home, so the seller is debited for that share and the buyer is credited the same amount."},{"id":74,"topic":"VIII","q":"A rectangular lot measures 330 feet by 660 feet. How many acres is it? (One acre is 43,560 square feet.)","options":["2.5 acres","4.5 acres","5 acres","50 acres"],"answer":2,"why":"Area = 330 × 660 = 217,800 square feet. Acres = 217,800 ÷ 43,560 = 5."},{"id":75,"topic":"VIII","q":"A small apartment building has potential gross income of $120,000 a year. Vacancy and collection loss is 5%, and operating expenses are $42,000 a year. Using a 7.5% capitalization rate, what is the estimated value?","options":["$5,400","$960,000","$1,040,000","$1,520,000"],"answer":1,"why":"Effective gross income = $120,000 − (5% × $120,000) = $114,000. Net operating income = $114,000 − $42,000 = $72,000. Value = $72,000 ÷ 0.075 = $960,000. Skipping the vacancy loss gives $1,040,000, a common mistake."},{"id":76,"topic":"VIII","q":"A house sells for $425,000. The total commission is 5.5%, split equally between the listing and buying brokerages. The listing agent receives 60% of the listing brokerage's share. How much does the listing agent earn?","options":["$4,675.00","$7,012.50","$11,687.50","$14,025.00"],"answer":1,"why":"Total commission = $425,000 × 0.055 = $23,375. Listing brokerage share = $23,375 ÷ 2 = $11,687.50. Listing agent = $11,687.50 × 0.60 = $7,012.50."},{"id":77,"topic":"VIII","q":"A buyer takes out a $320,000 loan at 6.5% annual interest. How much interest is due for the first month?","options":["$1,600.00","$1,733.33","$2,080.00","$20,800.00"],"answer":1,"why":"Annual interest = $320,000 × 0.065 = $20,800. First month's interest = $20,800 ÷ 12 = $1,733.33."},{"id":78,"topic":"VIII","q":"The seller paid this year's property taxes of $3,650 in advance for the calendar year (January 1 to December 31). The sale closes on April 30 of a non-leap year, and the seller owns the day of closing. Using a 365-day year, how much is the seller credited at closing?","options":["$1,200","$2,440","$2,450","$3,650"],"answer":2,"why":"Daily tax = $3,650 ÷ 365 = $10. The seller owns January (31), February (28), March (31) and April (30) = 120 days. The buyer owns the remaining 365 − 120 = 245 days. Because the seller prepaid the whole year, the seller is credited the buyer's share: 245 × $10 = $2,450."},{"id":79,"topic":"VIII","q":"An investor buys a property for $250,000 and sells it five years later for $310,000. What is the total percentage gain on the purchase price?","options":["4.8%","19.35%","24%","60%"],"answer":2,"why":"Gain = $310,000 − $250,000 = $60,000. Percentage gain = $60,000 ÷ $250,000 = 0.24, or 24%. Dividing by the sale price instead ($60,000 ÷ $310,000) gives 19.35%, which is the wrong base."},{"id":80,"topic":"VIII","q":"A retail tenant has a percentage lease: base rent of $3,000 a month plus 4% of annual gross sales above $500,000. Gross sales this year were $680,000. What is the total rent for the year?","options":["$7,200","$10,200","$43,200","$63,200"],"answer":2,"why":"Base rent = $3,000 × 12 = $36,000. Sales above the threshold = $680,000 − $500,000 = $180,000. Percentage rent = $180,000 × 0.04 = $7,200. Total = $36,000 + $7,200 = $43,200."}]}