156663553-Real-Estate-Fundamentals-Exam.pdf

Modern Real Estate Practice in Pennsylvania 12th EditionReal Estate Fundamentals Exam 1. The phrase “bundle of legal rights” is properly included in a. the definition of real property. b. a legal description. c. real estate transactions. d. leases for less than one year. 2. Land is considered a. indestructible. b. a depreciating asset. c. immune to the forces of supply and demand. d. subject to personal property rights. 3. An owner leases store space to a tenant to operate a restaurant. The tenant has installed ovens, booths, counters, and other equipment. When would these items become real property? a. Provided the items are permanently attached, they become real property at the time of annexation. b. If the tenant defaults on a rental payment, the items become the real property of the landlord if the default is not cured within 30 days. c. The items become real property as soon as the tenant receives permission to in- stall them. d. The items do not become real property, and they remain the tenant’s personal property. 4. A bill of sale is used to transfer ownership of a. real property. b. fixtures. c. personal property. d. appurtenances. 5. Which is considered an indefeasible fee? a. Fee simple on condition b. Fee simple determinable c. Fee simple d. Life estate pur autre vie 6. In Pennsylvania, mine subsidence refers to a. leasehold rights b. air rights c. surface rights d. subsurface rights ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 7. The owner of 50 acres of land with 500 feet of frontage on a desirable recreational lake wishes to subdivide the parcel into salable lots. She wants to retain control over the lake frontage while allowing lot owners to have access to the lake. What type of access rights should she give prospective lot purchasers? a. An easement in gross b. An appurtenant easement c. An easement by necessity d. A license 8. A man conveys ownership of his house to his mother and stipulates that upon her death, he will recapture ownership. The interest that the man has in the property is a a. remainder estate. b. curtesy estate. c. legal life estate. d. reversion estate. 9. Two partners bought a store building, taking title as joint tenants. One partner died tes- tate. The other partner now owns the store a. as a joint tenant with rights of survivorship. b. in severalty. c. as a tenant in common with his partner’s heirs. d. in trust. 10. A person who owns one unit in a multiunit structure together with a specified undivided interest in the common elements owns a a. cooperative. b. share in a real estate investment trust. c. condominium. d. time-share interest. 11. Two people own a building as joint tenants with right of survivorship. One of the owners dies intestate. The other now owns the building a. as a joint tenant with right of survivorship. b. in severalty. c. in absolute ownership under the law of descent. d. subject to the terms of the deceased’s will. 12. Which is characteristic of a metes-and-bounds legal description? a. Point of beginning b. Townships c. Lots and blocks map d. Principal meridians ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 13. All of the following are considered acceptable as legal identification of land EXCEPT a. reference to a plat filed in the country clerk’s office. b. street address. c. metes and bounds. d. government survey. 14. Which deed provides the greatest protection from the seller to the purchaser of a proper- ty? a. Special warranty deed b. Sheriff’s deed c. Quitclaim deed d. General warranty deed 15. A mechanic’s lien is properly classified as a. an equitable lien. b. a voluntary lien. c. a general lien. d. a specific lien. 16. After a borrower defaults on mortgage payments, a court orders real estate sold to satisfy the unpaid lien. This action is an example of a. an encumbrance. b. an attachment. c. a seizure. d. a foreclosure. 17. A title search revealed several outstanding liens against a property. Which lien has high- est priority? a. An outstanding first mortgage lien dated and recorded one year ago b. A real estate tax lien for the current year c. A judgment lien rendered and recorded last month d. A mechanic’s lien for work started two months before the mortgage was recorded 18. In general, how is lien priority determined? a. A mechanic’s lien is always first in priority b. The date on which the lien was recorded determines priority c. The date on which the debt was incurred determines priority d. A broker’s lien is automatically first in priority 19. Under the terms of a trust established by a will, the trustee is required to sell the real es- tate the trust holds. The deed that will be delivered at settlement of such a sale is a a. deed of release. b. warranty deed. c. trustee’s deed. d. trustor’s deed. ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 20. The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that a. the seller owned the property. b. there are no encumbrances against the property. c. the buyer now owns the property subject to certain claims of the seller. d. the seller has no further interest in the property. 21. A single person owned a parcel of land. Subsequent to the owner’s death, the probate court determined the distribution of the land in accordance with the state’s statutes. This person a. died testate. b. died intestate. c. was the devisee. d. was the grantee. 22. A grantor does not wish to be responsible for defects in the title that arise from previous owners but will guarantee the title for the time the grantor had ownership. What type of deed would the grantor convey? a. Bargain and sale deed b. Quitclaim deed c. Reconveyance deed d. Special warranty deed 23. Which is acceptable evidence of marketable title? a. Trust deed b. Warranty deed c. Title insurance policy d. Affidavit 24. Generally, if some defect in the title to real property is found by the preliminary title search, the effect on a sales contract is that a. the contract is immediately void. b. a new contract must be written. c. the buyer has a reasonable time to find another property. d. the seller has a reasonable time to correct the defect. 25. A deed that has covenants of quiet enjoyment and further assurances is a a. warranty deed. b. special warranty deed. c. trust deed. d. bargain and sale deed. ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 26. The fee charged by a mortgage broker to arrange a loan is a. a prepayment penalty. b. an advance interest payment. c. a loan origination fee. d. a prepayment of mortgage insurance. 27. The clause in a trust deed or mortgage that permits the lender to declare the entire unpaid balance immediately due and payable upon default is the a. judgment clause. b. escalator clause. c. forfeiture clause. d. acceleration clause. 28. A property sold for $230,000. The buyer put 10 percent of the purchase price in an es- crow account and promised to bring another 10 percent in cash to the closing. The buyer obtained an 80 percent loan-to-value (LTV) loan for the balance of the purchase price. The lender charged two discount points on the loan. Including the earnest money deposit, how much cash did the buyer need to cover the expenses of the down payment and the discount points? a. $3,680 b. $25,070 c. $49,680 d. $184,000 29. In absence of an agreement to the contrary, the mortgage having priority will be the one a. for the highest amount. b. recorded first. c. signed first. d. that is a construction loan. 30. What type of mortgage loan requires equal payments for 30 years, at which time both the principal and the interest will be fully satisfied? a. Straight loan b. Adjustable-rate mortgage c. Fully amortized loan d. Straight-line amortized loan 31. A lender is concerned that interest rates will rise in the future. What clause can the lender include in the note to prevent the loan from being assumed with the current low interest? a. Deficiency b. Defeasance c. Acceleration d. Alienation ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 32. The sellers decided that they did not wish to sell after they entered into a contract with buyers, who really want this particular home. What option is available to the buyers? a. Suit for specific damages b. Suit for specific performance c. Suit for breach of contract d. No option is available 33. Who may file a lien against real property for payment of services rendered? a. Residential salesperson for loss of commission when the buyer used another li- censee b. Residential broker for advertising costs when the seller cancelled the listing be- fore the property was sold c. Commercial broker for payment of services rendered d. Commercial salesperson licensee for commission payment when the broker re- fused to share the listing commission 34. When a subdivision was developed, a deed restriction covering all the properties set aside the back six feet of each parcel as a combination green belt area and bicycle path. A property owner has converted the back one-half of his yard, including this set-aside space, into an organic garden. What, if anything, can be done to enforce the deed restric- tion? a. Nothing, because individual homeowners have no authority in this matter b. Go to court in an attempt to obtain injunctive relief c. Contact the municipality for relief d. File a nuisance suit with the town’s planning commission 35. What is the official value of real estate used for tax purposes? a. Market price b. Assessed value c. Appraised value d. Asking price 36. A tire company has a manufacturing plant located in an area that has just been rezoned for residential use. The company is allowed to continue operating the plant under the new zoning classification. However, if the plant is destroyed by fire or other hazard, the tire company MOST likely a. could rebuild the plant in that neighborhood by applying for a zoning variance. b. would be forbidden to rebuild the plant in that neighborhood under any circums- tances. c. could construct another plant by obtaining the consent of the residents then living in the neighborhood. d. could construct another plant without the residents’ consent as long as the home- owners’ association approves it. ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 37. Under an existing ordinance, no signs that extend more than three feet above the highest point of a roof may be placed on any building. An owner wants to erect a nine-foot-high revolving sign on the roof of his store. In order to do this legally, the owner must get a a. deed to the air rights. b. variance. c. nonconforming use permit. d. court order. 38. A method of sealing off disintegrating asbestos is called a. capping. b. encapsulation. c. containment. d. contamination closure. 39. In regulations regarding lead-based paint, the Department of Housing and Urban Devel- opment (HUD) requires that a. homeowners test for its presence. b. paint must be removed from surfaces before selling. c. known paint hazards must be disclosed. d. only HUD-licensed contractors may deal with its removal. 40. The condemnation of private property for public use is allowed under the state’s right of a. police power. b. escheat. c. eminent domain. d. confiscation. 41. The Real Estate Commission conducts its activities to a. satisfy the legislature. b. protect the public interest. c. safeguard all real estate licensees. d. assist the commissioner of Professional and Occupational Affairs. 42. The Commission has the authority to a. conduct licensing examinations. b. issue licenses. c. appoint commissioners. d. promulgate rules and regulations. 43. The Commission has authority to take disciplinary action against a. licensed auctioneers. b. campground membership salespeople. c. attorneys-in-fact. d. landlords. ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 44. What action can the Commission take if a salesperson advertises a property for sale with- out the owner’s permission? a. Award the owner damages from the Recovery Fund b. Assess the salesperson a criminal penalty of $500 c. Suspend the salesperson’s license d. Tell the owner to file a complaint with a local real estate board 45. How many years of active licensure, if any, are required for a salesperson licensee to qualify for a broker’s license? a. At least three years of active licensure b. At least two years and age 21 upon application c. Five years of active licensure d. No specific number of years of active licensure, but the broker applicant must be 21 46. A broker is responsible for which activity? a. Attending closings b. Conducting title searches c. Training builder-owner salespersons d. Business that is conducted in branch offices 47. To be eligible for a salesperson’s license, an individual must do all of the following EXCEPT a. be at least 18 years of age. b. obtain 60 hours of education. c. be a high school graduate. d. pass an examination. 48. If a residential tenant rents a property from a landlord for three years, the maximum amount of security deposit the landlord may require from the tenant in the third year is a. two months of original rent. b. two months of the current rent. c. one month of original rent. d. one month of the current rent. 49. Which is TRUE about a salesperson’s license? a. The broker must display the license in the office where the salesperson works. b. The license is issued to the salesperson and can be taken to any broker of the sa- lesperson’s choice. c. The broker must display the license in the broker’s main office. d. The salesperson cannot use the license until completion of the broker’s training program. ©2012 Kaplan Inc. Modern Real Estate Practice in Pennsylvania 12th Edition 50. A broker can be subject to disciplinary action if a salesperson is found guilty of miscon- duct a. when the Commission files a complaint against the broker. b. even if the broker was not aware of the salesperson’s action and had a policy against the actions the salesperson took. c. if the broker directed the illegal course of action. d. only if the salesperson is licensed. 51. When a property is advertised for sale by a salesperson, what information must be in- cluded in the ad? a. Phone number of the salesperson b. Business name of the broker c. Address of the broker d. Name of the salesperson 52. Who must first obtain a real estate license before conducting real estate activities? a. An attorney-in-fact who is assisting in the liquidation of a decedent’s estate b. Owners who are renting their own property c. Individual renting a neighbor’s home while the neighbor is working overseas d. Employees of a public utility acting in the ordinary course of utility-related busi- ness 53. A broker’s license will expire at the end of May. Which is TRUE as of June 1? a. If the broker has been in business for more than 25 years, the broker can renew the license as of June 1 without taking continuing education courses. b. The license will be inactive, and the broker must cease practice on June 1 if the broker fails to renew it. c. The broker can continue to practice for 60 days after June 1 before renewing the license. d. The broker can renew the license as of June 1 and complete the continuing educa- tion courses within the following two years. 54. To obtain a salesperson license, a person must a. complete 30 hours of instruction. b. be at least 21 years of age. c. complete not less than 30 days of on-site training. d. pass an examination. 55. The purpose of the Recovery Fund is to enable a. people to receive payment of uncollected judgments against licensees. b. sellers to recover money when buyers default on sales agreements. c. licensees to recover commissions that their brokers have failed to pay. d. sellers to recover escrow money that brokers have handled improperly. ©2012 Kaplan Inc.