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WorksheetsReal Estate Quiz 2
Total questions: 100
Worksheet time: 8hrs 2mins
All of the following are valid reasons for terminating a buyer representation agreement EXCEPT
purchase of a property.
death of the sales associate who worked with the buyer.
agreement of the parties.
death of the broker.
A buyer and a seller agree on a purchase price of $300,000 for a house. The contract contains a clause stating "Time is of the essence." Which statement is TRUE?
The closing must take place within a reasonable period before the stated date.
A "time is of the essence" clause is not binding on either party.
The closing date must be stated as a particular calendar date, and not simply as a formula, such as "two weeks after loan approval."
If the closing date passes and no closing takes place, the contract may be rescinded by the party who was ready to settle on the scheduled date.
A buyer signs a contract under which he is given the right to purchase a property for $130,000 anytime in the next six months. The buyer pays the current owner $500 at the time the contract is signed. Which of the following BEST describes this agreement?
Contingency
Option
Installment
Sales
An option to purchase binds which of the following parties?
Buyer only
Seller only
Both buyer and seller
Neither buyer nor seller
A buyer and a seller enter into a real estate sales contract. Under the contract's terms, the buyer will pay the seller $500 a month for 10 years. The seller will continue to hold legal title, while the buyer will live in the home and pay all real estate taxes, insurance premiums, and regular upkeep costs. What kind of contract have they entered into?
Option contract
Contract for mortgage
Unilateral contract
Land sales contract
The purchaser of real estate under an installment contract
generally pays no interest charge.
receives title immediately.
is not required to pay property taxes for the duration of the contract.
has only an equitable interest in the property's title.
Under the statute of frauds, all contracts for the sale of real estate must be
originated by a real estate professional.
on preprinted forms.
in writing to be enforceable.
accompanied by earnest money deposits.
Upon the receipt of an offer to purchase a property, the seller makes a counteroffer, the prospective buyer is
bound by the original offer.
not able to counter the counteroffer.
bound by whichever offer is lower.
relieved of the original offer.
A buyer makes an offer to purchase certain property listed with a real estate professional and leaves an escrow deposit with the real estate professional to show good faith. The real estate professional should
immediately apply the deposit to the listing expenses.
put the deposit in an account, as provided by state law.
give the deposit to the seller when the offer is presented.
put the deposit in the real estate professional's personal checking account.
While suffering from a mental illness that caused delusions, hallucinations, and loss of memory, a person signed a contract to purchase real estate. Which statement regarding the contract to purchase is TRUE?
The contract is voidable.
The contract is void.
The contract lacks consent.
The contract is fully valid and enforceable.
A real estate professional has found a buyer for a client's home. The buyer has indicated in writing a willingness to buy the property for $1,000 less than the asking price and has provided an earnest money check for $5,000. The seller is out of town for the weekend, and the real estate professional has been unable to inform the seller of the signed document. At this point, there is
a voidable contract.
an offer.
an executory agreement.
an implied contract.
A legally enforceable agreement under which both parties promise to do something for each other is called
an escrow agreement.
a legal pledge.
a bilateral contract.
an option agreement.
A person approaches an owner and says, "I'd like to buy your house." The owner says, "Sure," and they agree on a price. What kind of contract is this?
Implied
Unenforceable
Void
No contract
A contract is said to be bilateral if
one of the parties is a minor.
the contract has yet to be fully performed.
only one party to the agreement is bound to act.
both parties to the contract exchange binding promises.
During the period after a real estate sales contract is signed, but before title actually passes, the status of the contract is
voidable.
executory.
unilateral.
implied.
A contract for the sale of real estate that does not state the consideration and provides no basis on which the consideration could be determined is considered
voidable.
executory.
void.
enforceable.
A buyer and a seller sign a contract to purchase. The seller backs out, and the buyer sues for specific performance. What is the buyer seeking in this lawsuit?
Money damages
New contract
Decision of judgment
Transfer of the property
In a preprinted sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to
have both parties initial or sign in the margin near each change.
write a letter to each party listing the changes.
have each party write a letter to the other approving the changes.
redraw the entire contract.
A buyer makes an offer on a seller's house and the seller accepts. Both parties sign the sales contract. At this point, the buyer has what type of title to the property?
Equitable
Voidable
Escrow
Contract
The sales contract says the buyer will purchase only if an attorney approves the sale by the following Saturday. The attorney's approval is a
contingency.
reservation.
warranty.
consideration.
The buyers purchased a residence for $395,000, making a down payment of $79,000 and obtaining a loan for the balance. The loan is
nonconforming loan
package mortgage
balloon note
purchase money mortgage
A buyer purchased a new residence from a builder for $350,000. They made a down payment of $30,000 and obtained a $320,000 mortgage loan. The builder of the house paid the lender 3% of the loan balance for the first year and 2% for the second year. This represented a total savings for the buyer of $16,000. What type of mortgage arrangement is this?
Open-end
Package
Blanket
Buydown
Which of the following is NOT a participant in the secondary mortgage market?
Fannie Mae
Ginnie Mae
Credit union
Freddie Mac
One of the federal laws requiring disclosure to a loan applicant who is rejected for a loan on the basis of a credit report is
the Real Estate Settlement Procedures Act.
the Community Reinvestment Act.
the Fair Credit Reporting Act.
the Truth in Lending Act.
If buyers seek a mortgage on a single-family house, they would be LEAST likely to obtain the mortgage from
a mutual savings bank.
a life insurance company.
a credit union.
a commercial bank.
The conservatorship of Fannie Mae and Freddie Mac is the responsibility of
the Federal Housing Finance Agency.
the Federal Housing Authority.
the Office of the Comptroller of the Currency.
the Federal Reserve System.
What is the source of the rules that govern the use of real estate advertising in all media, if they include mortgage financing terms?
Equal Credit Opportunity Act
Fair Lending Act
Regulation Z of the Truth in Lending Act
Community Reinvestment Act
A developer can provide a loan that covers the cost of real estate and provides for the release of individual lots on each parcel when certain payments are made on the loan. This type of loan arrangement is called
the purchase money loan.
the blanket loan.
the package loan.
the wraparound loan.
Funds for FHA-insured loans are usually provided by
the FHA.
the Federal Reserve.
approved lenders.
the seller.
The provisions of Regulation Z require all of the following to be disclosed to a residential buyer EXCEPT
discount points.
brokerage commissions.
a loan origination fee.
the loan interest rate.
What is the position of home equity line of credit (HELOC) in relation to the original lien?
Equal
Junior
First in priority
No relationship
Which of the following allows a mortgagee to proceed to a foreclosure sale without going to court first?
Waiver of redemption right
Power of sale
Alienation clause
Possession rights
The mortgagee foreclosed on a property after the borrower defaulted on the loan payments. The unpaid balance of the loan at the time of the foreclosure sale was $140,000, but at the foreclosure sale, the house sold for only $129,000. If permitted by state law, what must the lender do to recover the $11,000 the borrower still owes?
Sue for damages
Sue for specific performance
Seek a judgment by default
Seek a deficiency judgment
Discount points on a mortgage are computed as a percentage of
the selling price
the closing costs
the down payment
In one state, a lender holds a lien on real property offered as collateral for a loan. The real property retains both legal and equitable title to the borrower. If the borrower defaults on the loan, the lender must go through formal foreclosure proceedings to recover the debt. This state can be BEST characterized as what kind of state?
Lien theory
Mortgage theory
Intermediate theory
Title theory
In one state, a mortgagee holds legal title to property offered as collateral for a loan, and the mortgagor retains the rights of possession and use. If the borrower defaults and the lender is entitled to immediate possession and rents. This state can be BEST characterized as what kind of state?
Lien theory
Mortgage theory
Intermediate theory
Title theory
A homebuyer has a mortgage that provides for increasing payments over the life of the loan so that it can be paid off earlier than would be the case with a regular amortized loan. The homebuyer has
A junior lien may become first in priority if the original lender agrees to execute
a deed of trust
a subordination agreement
a second mortgage agreement
a call clause
A buyer purchased a home under an agreement that made the buyer personally obligated to continue making payments under the seller's existing mortgage. If the buyer defaults and the court sale of the property does not satisfy the debt, the buyer will be liable for making up the difference. The buyer has
purchased the home subject to the seller's mortgage
assumed the seller's mortgage
benefited from the alienation clause in the seller's mortgage
benefited from the defeasance clause in the seller's mortgage
A charge of three discount points on a $120,000 loan equals
$450.
$3,600.
$4,500.
$116,400.
A prospective buyer needs to borrow money to buy a house. The buyer applies for and obtains a real estate loan from a mortgage company. Then the buyer signs a note and a mortgage. In this example, the buyer is called
the mortgagor.
the mortgagee.
the vendor.
the beneficiary.
A prospective buyer needs to borrow money to buy a house. The buyer applies for and obtains a real estate loan from a mortgage company. Then the buyer signs a note and a mortgage. In this example, the mortgage company is
the mortgagor.
the mortgagee.
the vendor.
the beneficiary.
The borrower under a deed of trust is known as
the trustor.
the trustee.
the beneficiary.
the vendor.
A loan in which the borrower makes only interest payments is called
a fixed-rate loan.
an adjustable-rate mortgage.
a straight loan.
a reverse mortgage.
What type of law limits the interest rate that is allowed to be charged?
Trustee law
A usury law
The statute of frauds
Contract law
After a foreclosure sale, the borrower who has defaulted on the loan may seek to pay off the mortgage debt plus any accrued interest and costs under what right?
Equitable redemption
Defeasance
Usury
Statutory redemption
Which clause would give a lender the right to have all future installments become due upon default?
Escalation
Defeasance
Alienation
Acceleration
What document is available to the mortgagor when the mortgage debt is completely repaid?
Satisfaction of mortgage
Defeasance certificate
Deed of trust
Mortgagee estoppel
Who is entitled to a reverse mortgage?
A homeowner age 62 or older
The owner of an unencumbered home
A homeowner who cannot qualify for a regular loan
An investor who rents a home only to senior citizens
A loan that provides for the full payment of the principal over the life of the loan is
a reverse mortgage
an indexed loan
an amortized loan
a balloon payment
All the following clauses in a loan agreement enable the lender to demand that the entire remaining debt be paid immediately EXCEPT
a due-on-sale clause.
a defeasance clause.
an acceleration clause.
an alienation clause.
If a seller collected rent of $900 from the buyer, payable in advance, on August 1, which statement is TRUE if the closing on the house is October 15, if a 30-day rent is an expense to the seller? (Use a 30-day month)
The seller owes the buyer $900.
The buyer owes the seller $900.
The seller owes the buyer $450.
The buyer owes the seller $450.
Security deposits should be listed on a closing statement as a credit to
the buyer.
the seller.
the lender.
the real estate professional.
A building was purchased for $850,000, with 10% down and a loan for the balance. If the lender charged the buyer two discount points, how much cash did the buyer need at closing if the buyer incurred no other costs?
A. $177,000
B. $85,000
C. $102,000
D. $100,300
Which charge noted on the Closing Disclosure must be the same or less than the charge noted on the Loan Estimate form?
Cost of settlement services when the lender selects the provider
Lender charges for taking and underwriting the loan
Cost of settlement services when the borrower selects the provider from the list provided by the lender
Cost of homeowner's insurance
At closing, the listing agent's commission is usually shown as
a credit to the seller.
a credit to the buyer.
a debit to the seller.
a debit to the buyer.
At the closing of a real estate transaction, the person performing the settlement gives the buyer a credit for certain accrued items. These items were bills relating to the property that had already been paid by the seller. All of the following are examples of such bills, except
bills relating to the property that the buyer must pay.
all of the seller's real estate bills.
all of the buyer's real estate bills.
all of the items prepaid by the seller.
The purpose of the Real Estate Settlement Procedures Act (RESPA) is to
make sure buyers do not borrow more than they can repay.
make real estate professionals more responsible to buyers' needs.
help buyers know how much money it is required.
ensure that buyers know all settlement costs that will be charged to them.
The document that provides the borrower with general information about settlement costs, RESPA provisions, and what happens at settlement is
What You Should Know About RESPA.
Your Home Loan Toolkit.
the Closing Disclosure form.
the Loan Estimate form.
Under the TILA-RESPA Integrated Disclosure Rule (TRID), a RESPA Integrated Disclosure (RID) lender must extend the closing if the annual percentage rate (APR) has changed more than 0.125% before closing. How many days after the change?
Two business days
Three business days
Four business days
Five business days
Which statement is TRUE of real estate closings in most states?
Closings are generally conducted by real estate professionals.
The buyer usually receives the rent for the day of closing.
The buyer must reimburse the seller for any evidence provided by the seller.
The seller usually pays the expenses for the day of closing.
All encumbrances and liens shown on the report of title, other than those waived or agreed to by the purchaser and listed on the contract, must be removed so that the title can be delivered free and clear. The removal of such encumbrances is typically the duty of
the buyer.
the seller.
the real estate professional.
the title company.
Legal title ALWAYS passes from the seller to the buyer
on the date of execution of the deed.
when the closing statement has been signed.
when the deed is placed in escrow.
when the deed is delivered and accepted.
Which item would a lender generally require at the closing?
Title insurance commitment
Market value appraisal
Application
Credit report
A buyer purchases a home in an area where closings are traditionally conducted in escrow. Which item would a buyer deposit with the escrow agent before the closing date?
Deed to the property
Title evidence
Estoppel certificate
Cash needed to complete the purchase
The Closing Disclosure must be used to illustrate all settlement charges for
every real estate transaction.
transactions financed by VA and FHA loans only.
residential transactions financed by federally related mortgage loans.
all transactions involving commercial property.
A mortgage reduction certificate is executed by
an abstract company.
an attorney.
a lending institution.
a grantor.
At closing, the principal amount of a purchaser's new mortgage loan is
a credit to the seller.
a credit to the buyer.
a debit to the seller.
a debit to the buyer.
At closing, the earnest money left on deposit with a real estate broker is
a credit to the seller.
a credit to the buyer.
a debit to the seller.
a debit to the buyer.
The annual real estate taxes on a property amount to $18,000. The seller has paid the taxes in advance for the calendar year. If the closing is set for June 15, which statement is TRUE?
Credit the seller $8,250; debit the buyer $9,750.
Credit the seller $18,000; debit the buyer $8,250.
Credit the buyer $9,750; debit the seller $9,750.
Credit the seller $9,750; debit the buyer $9,750.
If a lender agrees to make a loan based on an 80% LTV, what is the amount of the loan if the property appraises for $114,500 and the sales price is $116,000?
$91,300
$91,600
$83,200
$92,900
The document that sets forth the maximum loan guarantee to which a veteran is entitled is
the funding statement
the certificate of eligibility
the certificate of reasonable value
the certificate of discharge
The law that requires lenders to find ways to help meet the housing needs of those of low and moderate incomes is
the Dodd-Frank Act
the Equal Credit Opportunity Act
the Community Reinvestment Act
the Real Estate Settlement Procedures Act
Which of the following statutes that all advertising that references mortgage financing terms contain certain disclosures?
Equal Credit Opportunity Act
Fair Housing Act
Community Reinvestment Act
Truth in Lending Act (Regulation Z)
Programs to help families purchase or operate family farms are provided by
Ginnie Mae
the Farm Service Agency
Fannie Mae
the Federal Housing Finance Agency
Which lien affects all real and personal property of a debtor?
Specific
Voluntary
Involuntary
General
Prior liens refers to which of the following?
Order in which a debtor assumes responsibility for payment of obligations
Order in which liens will be paid if property is sold to satisfy a debt
Placed liens are filed for record
Fact that specific liens have greater priority than general liens
A lien on real estate made to secure payment for a specific municipal improvement project is which of the following?
Mechanic's lien
Special assessment lien
Ad valorem
Utility lien
Which of the following is classified as a general lien?
Mechanic's lien
Bail bond
Judgment
Real estate taxes
Which lien usually would be given highest priority in disbursing funds from a foreclosure sale?
Mortgage dated last year
Real estate taxes due
Mechanic's lien for work started before the mortgage was made
Judgment rendered the day before foreclosure
A specific parcel of real estate has a market value of $160,000 and is assessed for tax purposes at 75% of market value. The tax rate for the county in which the property is located is 40 mills. The tax bill will be
$4,600.
$5,000.
$5,200.
$4,800.
Which tax targets homeowners in particular?
Personal property tax
Franchise tax
Real property tax
Luxury tax
A mechanic's lien claim arises when a contractor has performed work or provided material to improve a parcel of real estate on the owner's order and the work has not been paid for. Such a contractor has a right to
tear out the work.
record a notice of the lien.
record a notice of the lien and file a court suit within the time required by state law.
have personal property of the owner sold to satisfy the lien.
What is the annual real estate tax on a property valued at $135,000 and assessed for tax purposes at $47,250, with an equalization factor of 125%, when the tax rate is 25 mills?
$945
$1,181
$1,477
$1,418
Which of the following is a voluntary, specific lien?
IRS tax lien
Mechanic's lien
Mortgage lien
Seller's lien
A buyer purchased a parcel of real estate. Title has passed, but to date the buyer has not paid the purchase price in full, as originally agreed. If the seller wants to force payment, which remedy is the seller entitled to seek?
Attachment
Mechanic's lien
Lis pendens
Judgment
A broker sold a property that was owned by a bank. The bank acquired it through foreclosure, and the broker received a 6.5% commission. The broker gave the listing sales associate $3,575, which was 30% of the firm's commission. What was the selling price of the property?
$55,000
$95,775
$152,580
$183,333
A seller hired a broker under the terms of an open listing agreement. While that agreement was still in effect, the seller—without informing the first broker—hired another broker from a separate firm under an exclusive right-to-sell listing for the same property. If the first broker produces a buyer for the property whose offer the seller accepts, the seller must pay full commission to
A. only the first broker.
B. only the second broker.
C. both brokers.
D. neither broker.
A buyer signed an agreement with a broker to compensate the broker even if the buyer purchases the property from a relative. This is called
A. an open buyer representation agreement.
B. an exclusive agency buyer representation agreement.
C. an exclusive buyer representation agreement.
D. an invalid agreement.
A property listing taken by a real estate sales associate is technically an employment agreement between the seller and
the broker.
the local multiple listing service.
the sales associate.
the sales associate and broker together.
Which of the following is a similarity between an exclusive agency listing and an exclusive right-to-sell listing?
Under each, the seller retains the right to sell the real estate without the broker's help and without paying the broker a commission.
Under each, the seller authorizes only one particular sales associate to show the property.
Both types of listings give the responsibility of representing the seller to one broker only.
Both types of listings are open listings.
The listing agreement on a residential property states that it expires on May 2. Which event would terminate the listing before that date?
The agreement is renewed before May 2.
The owner becomes ill on April 29.
On April 15, the owner and agent cancel the agreement.
The house is destroyed by fire on May 3.
A seller listed a property with a broker under an exclusive agency listing agreement. If the seller finds a buyer, the seller will owe the broker
no commission.
the full commission.
a partial commission.
only reimbursement for the broker's costs.
A broker sold a residence for $485,000 and received $26,675 as a commission in accordance with the terms of the listing agreement. What was the broker's commission rate?
5%
5.5%
6%
6.5%
Under a brokerage agreement with a property owner, the broker is entitled to sell the property for any price, as long as the seller receives $85,000. The broker may keep any amount over $85,000 as a commission. This type of listing might be illegal and is called
an exclusive right-to-sell listing.
an exclusive agency listing.
an open listing.
a net listing.
Which of the following is a similarity between an open listing and an exclusive agency listing?
Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure.
Each grants a commission to any broker who procures a buyer for the seller's property.
Under each, the broker earns a commission regardless of who sells the property, as long as it is sold within the listing period.
Each grants the exclusive right to sell to whatever broker produces a buyer for the seller's property.
The final decision on a property's asking price should be made by
the seller's broker.
the appraised value.
the seller.
the seller's attorney.
Which statement is TRUE of a listing agreement?
It is an employment contract for the professional services of the broker.
It obligates the seller to transfer the property if the broker procures a ready, willing, and able buyer.
It obligates the broker to work diligently for both the seller and the buyer.
It automatically binds the owner, the broker, and the MLS to its agreed provisions.
A real estate broker acting as the agent of the seller must:
promote and safeguard the seller's best interests.
can disclose the seller's minimum price.
should present to the seller only the highest offer for the property.
can accept an offer on behalf of the seller.
A broker is permitted to represent both the seller and the buyer in the same transaction when:
the principals are not aware of such action.
the broker is a subagent rather than the agent of the seller.
commissions are collected from both parties.
both parties have been informed and agree in writing to the dual representation.
