Practice 1-20 Exam 1 Aug 24

Broker A accepted a deposit from Buyer B with an offer on a property, and promptly deposited the Buyer's check into his Trust Account. Seller rejected the offer and Buyer demanded the deposit back--immediately. Broker wrote check to buyer from the Trust Account, but later learned that buyer's original check had not cleared due to insufficient funds. Which of the following statements is correct?

• Broker violated Real Estate Law by refunding Buyer's deposit before receiving notice it had cleared.

• Broker has shortages in his Trust Account.

• Broker should have given Buyer a postdated check.

• All of the above.

Answer explanation

B/ Broker has shortage in his trust account. (Poor judgement by the broker.)

The resale of which of the following would not require a notice to the Department of Real Estate (DRE)?

• 2 units in a planned development

• 5 units in a condominium project

• 5 lots in a standard subdivision

• 5 units in a stock cooperative

Answer explanation

2 units in a planned development. (DRE requires a notice to be filed on the resale of 5 lots or more in a planned unit development (PUD).)

A real estate broker lends his own money to Buyer to aid in purchasing a home. The note is for $4,000, and will be secured by a trust deed on the purchased property. The note interest rate is 12% per year, with monthly payments of $40. Final payoff will be on the 48th monthly payment. Which of the following is true?

• Broker holds legal title to property

• Broker is in violation of usury

• Final payoff in the 48th month will be $4,040.

• Non of the above

Answer explanation

Final payoff in the 48th month will be $4,040. (Payments are "interest only" resulting in no principle reduction. The final month PLUS the $4,000 principle is due at that time.)

National Fair Housing Principles are founded on:

• First Amendment to the Constitution

• Unruh Act

• 13th amendment of the constitution.

• Rumford Act

Answer explanation

13th amendment of the constitution. (Title 8 of the civil rights act also provides fair housing on a national level.)

If notification of Default was filed on July 15 and publication of sale was started on October 15, the right of the Trustor after Oct. 15 is:

• pay the back payments and late charges and fees

• pay the back payments and late charges and fees, or pay the balance due, including all penalties and late charges.

• neither a nor b

• either a or b

Answer explanation

pay the back payments and late charges and fees, or pay the balance due, including all penalties and late charges. (the loan can be reinstated until five days before the auction.)

What is not required to be disclosed under the Truth-in-Lending Law?

• annual percentage rate (APR)

• length of loan

• monthly payment

• total finance charge in purchase of single family, owner occupied dwelling

Answer explanation

Total finance charge in purchase of single-family, owner-occupied dwelling. (Only the APR, length of loan, and monthly payments are required).

Over and above the strictly legal relationship, the real estate commissioner feels that the relationship between the salesperson and the client should be like that higher and more important relationship of:

• vendor to vendee

• broker to salesperson

• trustee to beneficiary

• attorney to client

Answer explanation

trustee to beneficiary. (trustee has a "fiduciary" relationship with the beneficiary.)

The expression "A Bundle of Rights" best describes:

• a lessee's rights to quiet and complete freedom of possession of the leased property.

• a vendee's rights in a Land Contract agreement

• rights or interest which an owner has in the thing he/she owns-the right to possess, use, encumber, dispose of, and to exclude

• non of the above describes a "Bundle of rights"

What landmark case of the US supreme court affected fair housing by prohibiting discrimination?

• shaffer v. beinhorn

• jones v. mayer

• weinhoff v. morgan

• non of the above

Answer explanation

Jones v. Mayer (after the Civil War) was the landmark case that helped create Title VIII of the Federal Civil Rights Act of 1968.

A broker obtained an exclusive listing to sell a piece of property. He spent much time, money, and energy. The seller refused to allow the broker to proceed under the agreement. The broker should:

• consider the seller's refusal a breach and sue for damages

• consider the seller's refusal a breach and claim the amount of commission as liquidated damages

• ignore the seller and proceed

• relieve seller of liability, and work on improving relationship so as to enable retaining future business