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YOU CANNOT DOWNLOAD THE GUIDES. WE HELP COUNTLESS CUSTOMERS PASS THE REAL ESTATE STATE EXAM. All these Guides and Answers are to help pass your Sales Associate ( Pre-License ) Course Exam and your State Real Estate Sales Associate Exam for the state of California. Are you ready to pass the Sales Associate (Pre-License) Principles Course Exam? We know how frustrating memorizing all the information to pass the exam can be. We have helped countless people pass the exam with our question and answer pages. SAVING YOU DAYS, WEEKS AND MONTHS OF STUDYING! examples: California Principles Real Estate › FINAL TEST 3 (100-example questions) (correct answers with will be revealed with correct subscription) Tip: to find a certain word or key term, press at the same time, the buttons: ( Ctrl and F ) on Windows computers (Command and F ) on Mac computer to bring up the in-page search box 1 out 100 Sacramento artist S.C. Heet has transferred a portion of her property, via a grant deed, to Cameron Dulle. However, this deed did not set forth in writing the two primary warranties Cameron should have on the property: first, that S. C. has not already transferred the title to another person; and, second, that the estate is free of any encumbrances, other than what has been disclosed to the grantor. Which of the following is true of this situation? A- Cameron must file a quiet the title lawsuit in order to alter the transfer to include these warranties. B- Cameron must accept the situation as is, unless he can convince S.C. to alter the transfer willingly. C- Because this transfer has occurred with a grant deed, the two necessary warranties, as explained, are implied in the deed. However, under the Statute of Limitations, contracts must be in writing to be enforceable; so Cameron’s coverage in this situation will not stand up in court. D- Under a grant deed, the two warranties — that S. C. has not already transferred the title to another person, and that the estate is free of any encumbrances, other than which has been disclosed — are implied within the grant. These implied warranties do not need to be stated in the deed, but are still present. 2 out of 100 The regulations regarding both advertising and doing real estate business over the Internet have been set forth in: A- The NAR Code of Ethics. B- The Commission’s Regulations. C- ARELLO regulations. D- The Federal Fair Housing Administration. 3 OUT OF 100 Any false or misleading advertising, whether on the Internet or via any other medium, can result in which of the following type of penalties? A- Civil. B- Administrative. C- Criminal. D- Any of the above. 4 OUT OF 100 San Diego broker Cal Abrams has avoided the technological trend of the past 20 years. Finally, he’s jumped online and realized what the buzz is about: He can potentially reach MILLIONS of customers just by running one little advertisement! When he talks to his salespeople, they tell him it’s not as easy as that. In California, there are regulations to follow. He’s ashamed to admit it, but since he was never interested in the Internet or “that new Web thing,” he’s not paid much attention to these regulations, and in fact, he had forgotten all about them until his salespeople reminded him. What must Cal do if he wants to advertise on the Internet? A- He must first send the advertisement to the California BRE for approval, and then use it once it’s approved. B- Cal must file the Approval of Electronic Advertisement Form (AEAF), along with the appropriate filing fee, for the CalBRE’s approval. Once the approval is received, the advertising may begin. If the AEAF is not approved, he may submit a new advertisement within 30 days without paying an additional fee. C- Cal must be sure to indicate his licensed status on his advertisements. D- None of the Above 5 OUT OF 100 The account that holds all the money collected from license and exam fees, and is used for the operating expenses of the CalBRE, is known as: A- The Real Estate Education Fund. B- The Real Estate General Fund. C- The Real Estate Recovery Fund. D- The Real Estate Operations Fund. 6 OUT OF 100 Two years after Elicia Jolie moves into her first home, a cozy two-bedroom near Lake Tahoe, she decides to buy all new kitchen appliances. Her brother, Jake Jolie, is the owner of JJ’s Appliances and More, and he gets her some great deals on beautiful stainless-steel floor models. The appliances themselves are free-standing and movable, with the exception of the built-in microwave over her new stove. She has new cabinets built around the appliances to accent the new look. When it comes time for Elicia to move, which of the following will be considered her personal property, which she may move with her? A- All the appliances, the cabinets, and the microwave. B- Only the unattached appliances that are free-standing. C- Only the unattached appliances that are freestanding, plus the microwave. D- None of the appliances, the microwave, or the cabinets. 7 OUT OF 100 Under WHICH of the following circumstances could a homeowner take his microwave with him when he moves? A- If it is unattached, because it would still be considered the current homeowner’s personal property. B- If it is so dictated in the contract and all parties agree to this in writing. C- Under any circumstance. D- Either A or B. 8 OUT OF 100 Examinees and twin brothers George and Grover Gripenstein would argue over the color of the sky on a sunny day. Surprisingly, they’ve both chosen to pursue a career in real estate and have completed their respective pre-license educational requirements. They decide to study for the exam together, but this causes more disagreements. Their current argument is over the characteristics of land. Which of the following is correct? A- George’s statement that land has five economic characteristics, which are demand, utility, situs, uniqueness, and transferability. B- Grover’s insistence that land has three physical characteristics, which are utility, situs, and transferability. C- George’s insistence that there are five economic characteristics of land, and they are demand, situs, scarcity, transferability, and utility. D- Both A and B, because the five characteristics the brothers named are considered BOTH economic and/or physical characteristics. The terms “economic” and “physical,” in this situation, mean the same thing. 9 OUT OF 100 California residents Kate and Jennifer decide to make a “deal”: Kate will sell Jennifer her new Dell laptop for $600, a steal since she paid over $1,000 for it. They both feel they’ve gotten a great deal. Does this agreement need to be in writing, under California law? A- Yes, because under California law, an agreement for the sale of personal property must be in writing if the amount or value of the property exceeds $200.00. B- Yes, because under California law, an agreement for the sale of personal property must be in writing if the amount or value of the property exceeds $500.00. C- No, because this is personal property, and written agreements are not required for personal property sales. D- No, because the value of this computer was under $2,000.00. California law ONLY requires that an agreement for the sale of personal property with a price or value of more than $2,000.00 be in writing. 10 OUT OF 100 Under Section 761 of the California Civil Code, enacted in 1872, estates in real property are classified, with respect to duration, into which of the following categories: A- 1. Estates of inheritance or perpetual estates; 2. Estates for life; or 3. Estates for years. B- 1. Estates of inheritance or perpetual estates; 2. Estates for life; 3. Estates for years; or 4. Estates at will. C- 1. Freehold estates; 2. Leasehold Estates; and 3. Less-than-freehold estates. D- 1. Fee Simple Estate; 2. Fee Defeasible Estate; 3. Life Estate; and 4. Fee Tail Estate. 11 OUT OF 100 Which of the following is NOT a type of water rights? A- Riparian rights, which relate to rivers. B- Littoral rights, which relate to seashores and beaches. C- Alluvial plain, which relate to delta areas along rivers. D- Doctrine of Prior Appropriation, which relate to irrigation and “first in time equals first in rights” theory. 12 OUT OF 100 Captain Canguro’s father was a teetotaler to the nth degree; so Canguro was not surprised when his father said he would sell Canguro one of the three properties he owned, provided that Canguro followed the condition set forth in the contract, stating that “no alcohol can be served on the premises at any time.” Canguro agreed with this provision and the sale was made. Which of the following statements is most accurate regarding this situation? A- This type of provision is not legal and therefore the sale is voidable by Captain Canguro. B- Captain Canguro holds the estate in fee simple defeasible. C- Captain Canguro has a less-than-freehold interest in the property. D- Captain Canguro holds the estate Pur Autre Vie, or for the life of another, which means that while he has possessory and some ownership rights, the seller (his father, in this case) may still dictate some of the activities that occur on the property. 13 OUT OF 100 San Bernardino seller Craig Watkins has just signed a contract to sell his home of 13 years to buyer Ivedale Bosch, who has recently moved to California from Montana. The contract has met all the necessary requirements, and all inspections and other mandates have gone along as expected and as agreed to until one week before closing, when Craig decides to back out. However, he understands that he could face legal action by Ivy; so he offers to sell her another house he owns and has rented out for the past few years, in lieu of the San Bernardino one promised. The second home is worth $15,000 more than the originally contracted one, and has an extra bedroom. However, Ivy isn’t interested, because she wants to be close to her elderly mother, who lives in a San Bernardino retirement complex. Craig refuses to complete the sale on the original home. Which of the following statements is true of this situation? A- Ivy may sue Craig for specific performance, because no two properties are exactly the same and he hasn’t fulfilled his end of the contractual agreement. B- Craig has the right to refuse to sell to Ivy within up to 3 business days prior to the closing date for the sale. No penalties are to be paid from either party to the other. C- Craig has the right to refuse to sell to Ivy within up to 3 business days prior to the closing date for the sale. Any charges incurred by Ivy in the contractual process must be refunded to her by Craig within 24 hours after the original time set for closing. D- Craig cannot force Ivy to accept his offer of the other property. However, under California Civil Code, if the seller in this type of situation (Craig) offers the prospective buyer a home of equal or greater value, with an equal or greater number of bedrooms and square footage, the buyer may not bring legal action against that seller. 14 OUT OF 100 In California, property is generally owned in one of six distinct forms of ownership. Which of the following is NOT one of these six forms? A- Severalty B- Tenancy in Partnership C- Community Property D- Life Estate. 15 OUT OF 100 In which of the following capacities does the Commissioner serve in California? A- As the chairperson of State Department of Justice B- As the chief executive of the Bureau of Real Estate. C- The Commissioner serves as both the chairperson of the State Department of Justice, and the chief executive of the Bureau of Real Estate. D- The Commissioner serves in neither of these capacities. Instead, the Commissioner strictly serves in an advisory position over the real estate industry. 16 OUT OF 100 When Jim, Jill, and Jeri take ownership to a Bakersfield home, they hold their ownership concurrently. Jim has the greatest proportion, with 45%, while Jill holds 30% and Jeri the last 25%. They each have the right to individually possess, will, or sell their interest. This is known as: A- Community property with the right of survivorship. B- Tenancy in Severalty. C- Tenancy in Common. D- Joint Tenancy. 17 OUT OF 100 When two or more people have identical interests in the whole property, with the same rights of possession and the right of survivorship this form of ownership is considered: A- Community Property. B- Tenancy in Severalty. C- Tenancy in Common. D- Joint Tenancy. 18 OUT OF 100 The legal process of making an instrument or legal document an official part of the records of a county, once it has been acknowledged, there by giving constructive notice of the exsistence and content of these instruments to the public, is known as: A- Acknowledgement B- Recording C- Actual Notice D- Encumbering 19 out of 100 Johnson Bailey and Kailey Clark’s corporation, Bailey-Clark Financial, is branching out into the field of escrow handling. They know the corporation must be licensed by the State of California. There are a total of 5 officers, trustees, and other employees who will have access to the money or negotiable securities in the possession of the corporate license, and have furnished a bond of indemnification against loss. Has the corporation fulfilled all necessary licensing requirements to work in escrow handling? A- No, they must also make sure that all monies deposited in escrow be placed in a trust account that is exempt from execution or attachment. B- No, they must also be able to show that the company is financially solvent. C- No, they must also meet the requirements in Answers A and B. In addition, the corporation must furnish a surety bond in the amount of $25,000.00, or more, based upon yearly average trust fund obligations. D- Yes, the corporation has filled all necessary obligations to be licensed. 20 OUT OF 100 If ABC Title Insurance Company wants to get in the business of handling escrows what licenses would it have to obtain? A- A title company does not need to obtain a special license to handle escrows. B- A title company is not permitted to handle escrows in any capacity. C- If the title company has been in business for a minimum of 5 years, it may handle escrows without a special license. D- If the title company has been in business for a minimum of 10 years, with annual audits for review by the State of California, it does not need to be specially licensed to handle escrows in California. 21 out of 100 By California statute, a joint tenancy may be created in which of the following ways? A- By transfer from a sole owner to himself or herself and others as joint tenants. B- By transfer from tenants in common to themselves or to themselves, or any of them, and others as joint tenants. C- By transfer from joint tenants to themselves, or any of them, and others as joint tenants. D- Any of the above. 22 OUT OF 100 What is the real estate regulatory body in California? A- The California Association of REALTORS B- California Bureau of Real Estate C- ARELLO D- The National Association of REALTORs or NAR 23 OUT OF 100 Long Beach salesperson Eric Janey is providing sellers Julie and Zach Roberts with the necessary disclosures they must be given upon the sale of real property. Which of the following is NOT a disclosure that is given upon the sale of real property? A- Mold Disclosure. B- Illegal Controlled Substances. C- Natural Hazards Disclosure. D- The Radon Detection Test Disclosure. 24 OUT OF 100 Co-authors and sisters, Mary and Perry Corrigan, have just written their fourth bestseller, even though Mary lives on the East Coast, while Perry resides in Calistoga. When the home next door to Perry is sold, Perry buys it and then gift deeds it to her sister so that they can live side-by-side for the several months of the year they spend writing together. In this situation, what consideration is necessary for this deed to be considered valid and legal? A- Love and affection is the only consideration necessary. B- Love and affection is necessary, but the consideration must also include something (another real property, an automobile, or monetary payment) that is worth at least 10% of the value of the property. C- An agreement that Perry actually “owns” the property, and as such, may take it back without giving notice or a reason. D- Both A and C. 25 OUT OF 100 What percentage of the California Real Estate General Fund is set aside to go into the Real Estate Education and Research Fund? A- 5% B- 8% C- 10% D- 12% 26 OUT OF 100 Which of the following are not really deeds? A- Gift Deeds. B- Grant Deeds. C- Reconveyance Deeds. D- Tax Deeds 27 OUT OF 100 Which of the following statements about the county fiscal year in California is factual? A- The county fiscal year begins on January 1 and ends on December 31. B- The county fiscal year begins on June 1, and ends on May 31. C- The county fiscal year begins on July 1, and ends on June 30. D- The country fiscal year begins on October 1 and ends on September 30. 28 OUT OF 100 The newest employee at Edwards Escrow Co., Adam Riley, is handling the escrow paperwork for the sellers and the buyers on an Anaheim property sale. When Adam goes to figure out the prorations for the month of February, for which some of the expenses have already been paid by the sellers, Adam cannot remember what number to use to figure out the proration. Which of the following should he use? A- 28 days (or 29, if it’s a leap year), since that is the actual number of days in February, the month for which the prorations are being calculated. B- 30 days, which escrow companies use as their base month in figuring out prorations. C- 31 days, which escrow companies use as their base month in figuring out prorations. D- 52, because there are 52 weeks in every year, and all escrow companies in California are required to use this base figure in proration calculations. 29 OUT OF 100 Escrow cannot be terminated in which of the following ways? A- By the completion of escrow. B- Because of the death of one of the principals. C- By mutual agreement. D- By a court or interpleader action. 30 OUT OF 100 When grantor, Emilie Richards, delivers the deed to the Cloverdale property to the grantee, Jane Curless, she drives it over to Curless’s current residence, where they read through the grant together. There is a condition included in the grant, but it is straightforward and agreeable to both. This type of delivery is known as: A- Manual delivery. B- Conditional delivery. C- Delivery through recording. D- Delivery through mutual acceptance. 31 out of 100 Kathy Bates has just moved into a condominium complex of 60 units. The complex has a swimming pool, and a management company takes care of the upkeep of the outside of the property. The monthly cost for pool maintenance, grass cutting, tree trimming, private street maintenance, and the newly-updated clubhouse is currently $400.00 a month. Each year, the cost of such services increases, as do the costs for necessary repairs as the buildings get older. This year, new roofs are in order for all of the buildings. The condominium association, which is made up of the owners of the property, decides that, in order to cover the increase in costs, and to replace the roofs on the property, they must pass a(n): A- Ad valorem tax. B- Special assessment. C- General real estate tax. D- Any of the above. 32 OUT OF 100 Pauline Chasse has just signed a lease agreement with landlord, Wayne Godbrey to rent a house he owns in Delano. The lease states definite beginning (January 1, 2016) and ending (October 30, 2016) dates, and sets forth the rent amount and due dates and all additional property and personal information required in such a lease. Wayne hands a copy to Pauline, but she notices that he has not signed it. When she comments about this to him, he tells her that signatures are not necessary since the lease is for less than a year. Which of the following is true of this situation? A- Wayne is correct. Under the Statute of Frauds in California, leases of less than one year are not even required to be in writing, and therefore, signatures are not required. B- Leases of less than one year are not required to be in writing. However, if a lease IS in writing, then it must be signed by the lessor (in this case, Wayne). C- Leases of less than one year are not required to be in writing; but if there is a written lease, then it must be signed by both the lessee and lessor. D- Because the property being leased is located in Northern California, a lease agreement is required to be both written and signed by the lessor if the lease period is for 6 months or more. Therefore, Wayne was incorrect and he must sign the lease. If he does NOT sign the lease, then it will remain valid, but will not be court-enforced, should Pauline default on any of the related provisions. 33 OUT OF 100 The type of estate that has a definite beginning and ending date is known as what? A- Estate at will B- Estate from year to year C- Life estate D- Estate for years 34 OUT OF 100 The right of the state to enact and enforce laws for the order, safety, health, morals, and general welfare of the public is known as: A- Eminent domain. B- Conversion. C- Subversion. D- Police power. 35 OUT OF 100 Which of the following is not a way of creating agency in California? A- By agreement. B- By ratification. C- By mutual action. D- By estoppel. 36 OUT OF 100 When potential customers, Grace and Leo Adams sit down with real estate broker, Sam Slama, they tell him they’ve just begun interviewing brokers before they sign with one to help them buy their first home. He assures them he understands, and that he will answer their questions to the best of his abilities. When they ask what his commission rate is, he responds, “It’s seven percent, just like all the other guys in town, as you’ll find. We all charge the same; so it makes for a fair deal for our wonderful customers.” Leo thinks the guy sounds great, but Grace is a bit suspicious of his uber-charm. Which of the following is true of this situation? A- Grace is right: Sam is too good to be true. Commissions are negotiable, not set by law. B- Grace has a good head on her shoulders. Sam is more than overly slick; he’s a law-breaker. It is a violation of the Sherman Anti-trust Law to price-fix in this way. C- While he may sound too good to be true, Slick Sam hasn’t broken any laws, or lied. He’s just trying to gain their trust in the hopes of earning their business, and there’s no crime in that. D- Both A and B. 37 OUT OF 100 Jeff Kase and his wife, Caren, have spent two months looking at apartments in Los Angeles. But every apartment they’ve seen has been too expensive, or too tiny, or too rodent-infested. When Jeff is driving home from work one day, he sees a “For Rent” sign in front of an apartment complex in a nice neighborhood. He uses his cell to call the number on the sign, and the landlord happens to live upstairs, and can show Jeff the apartment immediately. The good news is, Jeff loves it and the landlord says he can hold it with a deposit until Jeff’s wife can see it. The bad news is that Caren is out of town until the next evening, so that’s the earliest she can see it. The landlord tells Jeff that, unfortunately, the lease agreements for all his properties specify that lease deposits are “nonrefundable.” Which of the following statements is true of this situation? A- It is the choice of the property owner/landlord regarding whether a lease deposit is refundable or not; so this is within the landlord’s authority. B- It is illegal for rental security deposits in California to be labeled as “nonrefundable,” under any circumstances. C- The regulations vary regarding furnished and unfurnished apartments in California: If the apartment is furnished, then the landlord has the right to keep the deposit and mark it as nonrefundable. If the apartment is unfurnished, the deposit may be refunded at the landlord’s discretion. D- In California, prospective tenants have a 48-hour period in which they may back out of a lease agreement and receive their FULL deposit returned. They must receive this deposit in the same form in which it was given (check, cash, or as a credit to their credit card) at the time of the cancellation. 38 OUT OF 100 In 2013, Jack and Shirley Wright moved from Riverside, in Southern California, up to Santa Clara, in Northern California, when Jack’s company opened a new branch office there. They decided to rent for a while so they could get to know the area before buying a home. Three weeks ago, they finally found and put a contract on a lovely 3-bedroom ranch, and the sellers accepted the first offer. They took that as a good sign, but now it’s only 5 days until the close of escrow and they still haven’t signed the escrow papers yet. In fact, they aren’t due to sign the escrow papers until the day before the actual close of escrow. The Wrights are under the impression that something is wrong, because when they sold their last home, the escrow instructions had to be signed by both parties to the transaction immediately after they all signed the purchase agreement–about 60 days ahead of the actual close of escrow date. Which of the following is true of this situation? A- Their current agent has violated his fiduciary duties to them because he is mishandling their finances, and putting off handling the escrow until the last minute, thereby risking their new home and monies. B- Their agent in Riverside was simply being cautious by handling the escrow so early in the game, because in California, escrow signing generally takes place in the last 2 weeks prior to the actual close of escrow. C- The escrow practices in Southern California differ from those in Northern California. In Southern California, the escrow instructions are signed by the buyer and seller shortly after they’ve signed the purchase agreement, just after the start of escrow, which is about 60 days prior to the actual close of escrow. In Northern California, the escrow instructions are usually not signed until one or two days just before the close of escrow. D- As of December 2014, the escrow practices have been changed from what they were in 2013 (when the Wrights sold their previous home), to stipulate that the escrow signing date and location are to be determined by both the buyer and the seller, as well as to the broker who is in charge of handling the escrow proceedings. Therefore, there is no specific regulation that sets forth the date or time for such proceedings. However, their agent was negligent in not explaining this to them, as well as not asking for their input into the signing date. 39 OUT OF 100 Which of the following statements is NOT accurate about the California Disclosure Regarding Real Estate Agency Relationship Form? A- It must be signed before the seller signs any listing agreement with the agent, or, in the case of the buyer, before that buyer signs the purchase contract. B- This form is required for leases of residential property for more than one year and for the sale of a mobile home, IF the mobile home is offered for sale or sold through a real estate agent. C- California law does NOT require that all real estate agents provide a written disclosure to the buyer OR the seller. D- California law requires that all real estate agents provide a written disclosure to the buyer AND the seller, regardless of which party to the transaction the agent represents. 40 OUT OF 100 San Luis Obispo broker Gail Hayden is finally doing some long-overdue office cleaning. She comes across records dated all the way back to 8 years ago. Which of the following applies to this situation? A- She can destroy them, since the law in California states that all brokers’ records must only be kept for a period of 3 years. B- She can destroy them, since the law in California states that all brokers’ records must only be kept for a period of 5 years. C- She must still keep them, because the law in California requires that brokers’ records be kept for a minimum of 8 years. D- She must still keep them for another couple of years, because the California law requires that all brokers’ records be maintained for a minimum of 10 years. 41 OUT OF 100 In California, which of the following is considered the same as cash when provided in business transactions? A- A check. B- A promissory note. C- A post-dated check. D- All of the above. 42 OUT OF 100 Each of the following actions, except for one, is considered subversion. Which of these answers is not a form of subversion? A- Reproducing exam material without authorization. B- Bringing a calculator into the examination room. C- Using paid examinees for the purpose of reconstructing an examination. D- Buying exam material. 43 OUT OF 100 Both the federal and California governments have the right to take private property for a necessary use, IF they pay the owner “just compensation” for doing so. In addition to the payment of just compensation, if the government takes a property in this way, which of the following rules apply? A- The property must be for the public good or use. B- The owner must have due process in court. C- The property must be taken to be used for the public good or use, and the owner must have due process in court. D- No other regulations apply; this is a government-given right of the government to take a property, and the owner only need to be paid the appropriate compensation to fulfill the requirements. 44 OUT OF 100 Which of the following is not considered one of the five economic characteristics of land? A- The more demand for a particular property, the more valuable the property. B- Each parcel of land has its own nonhomogeneous characteristics. No two properties are the same. C- When loans are available and rates are low, real estate is easily transferable from seller to buyer. D- Location, or situs, is the most important economic characteristic of all. 45 OUT OF 100 Which of these private properties might be exempt from the governmental use of Eminent Domain? A- A home with a chronological age of 30 years or greater. B- A property worth in excess of $1 million. C- A home with a chronological age of 50 years or greater. D- No private property is exempt from this government power. 46 OUT OF 100 Which of the following statements is most accurate? A- In California, escrow is only used in real estate transactions. B- Escrow is known as a small and short-lived trust arrangement. C- The Escrow Act is found in the California Business and Professions Code. D- All of the above. 47 OUT OF 100 Which of the following statements is NOT applicable to the Transfer Disclosure Statement, set forth under Civil Code Section 1102.3? A- It identifies items of value on the property and whether these items are operational. B- It applies to residential dwelling of 1-4 dwellings. C- It must be given to the prospective buyer 7 days after the deposit receipt is signed. D- It ask seller to identify any structural or material defects. 48 OUT OF 100 After receiving the seller’s transfer disclosure statement, buyer Clark Rivers is not satisfied that ALL has been revealed. He’s heard rumors that a previous tenant died of AIDS inside the very home he would like to buy. Clark demands to know if this is true, since it was not mentioned on the disclosure statement. Which of the following is the appropriate legal response the broker must give to Clark’s query? A- “Yes, this is true. A previous tenant, who lived and died here two years ago, did have AIDS.” B- “I’m sorry, but the Transfer Disclosure Statement covers all material facts that must be disclosed, and a person having AIDS is NOT a material fact, whether or not it would be applicable in this situation.” C- “I’m sorry, but I am not permitted to answer this question, as it could be a potential civil rights violation, under the Federal and State fair housing laws.” D- Both B and C. 49 OUT OF 100 Which of the following statements is true regarding security instruments used in California? A- Mortgages are rare in California, because they tend to favor the borrower over the lender. B- Mortgages are the most common financing instrument used in California, because they tend to favor the lender over the borrower. C- Most lenders in California insist on mortgages as security in the borrower’s property. D- Both B and C. 50 OUT OF 100 When Chloe Armstrong pays off the 30-year conventional loan on her Oceanside home in less than 20 years, she is thrilled. However, she is not nearly as happy when she reads the fine print on the contract, which permits her lender to charge her EXTRA interest just for paying off the loan early. This is known as: A- Subrogation. B- A prepayment penalty. C- A subordination clause. D- An acceleration clause. 51 OUT OF 100 On Kyle Thomason’s $400,000.00 loan, the lender charges a 2-point service charge. In this situation, how much will Kyle have to pay for this service charge at closing, and how would such a charge appear on the statement? A- $800.00, as a debit to the buyer. B- $8,000.00 as a credit to the buyer. C- $8,000.00 as a debit to the buyer. D- $80,000.00 debit to the buyer. 52 OUT OF 100 Ollie and Molly Overton have just taken out a 30-year straight term loan on their new “starter home” in Bellflower. This means that: A- They will make payments of interest only, with the principal due on the loan due date in 30 years. B- They will make payments of principal only, with the accumulated interest due on the loan due date in 30 years. C- They will make payments of interest and principal on an equal basis until the final payment, which will be larger than the rest, is made at the end of the loan term. D- They will make regular payments of principal and interest, and the entire loan will be paid off by the end of the term. 53 OUT OF 100 When new college graduate Sami Hensen goes to visit her Great-Aunt Gertrude, she is surprised when the older relative tells her she is soon leaving on a cruise with friends. Sami cannot imagine how her great-aunt can afford such luxury, while living in a nice house in a peaceful neighborhood, and wonders if her aunt’s mental capacities are failing her. At her gentle inquiry about the costs, her Great-Aunt Gertrude laughs away her concern, telling her that she has been receiving monthly checks out of the equity she has in the home. Now Sami really thinks her old aunt is off her rocker! If Great-Aunt Gertrude is correct, which of the following statements is true of this situation? A- Gertrude has a Package Mortgage, which is commonly used in situations of people who are “house rich, cash poor.” This type of loan is common for senior citizens. B- Gertrude has a Wraparound Mortgage, which provides for extra cash-in-hand. C- Gertrude has a fully-amortized loan, so she receives a monthly dividend. D- Gertrude has a Reverse Annuity Mortgage, which is a loan that must be repaid upon the owner’s death, if she moves elsewhere, or upon the sale of the property. 54 out of 100 Newlyweds Andrew and Kimmie Briggs enjoy sparring over the details of life. They squabble good-naturedly over a game of Scrabble, the pronunciation of French words, and now, over the type of home loan they’re getting on their first home. They know it’s FHA, but neither is sure WHAT the FHA has to do with the loan. An FHA loan means: A- The money is loaned by the Federal Housing Administration. B- The money is insured by the Federal Housing Administration. C- The money is guaranteed by the Federal Housing Administration. D- The Federal Housing Administration builds homes and loans money. 55 OUT OF 100 Barney Dinesh has served two years of active duty for the United States Army in the Middle East. He is still on active duty, though he is now stationed stateside in California. He and his new wife, Alma, have found a home they both love, and their agent tells them about the Cal-Vet loan, saying that he believes Barney would qualify for this. What are the main requirements for such a loan, and does Barney (from the information given here) seem to qualify for the Cal-Vet program? A- The Cal-Vet loan requires that the veteran have served a minimum of 120 days’ active duty; provide an affidavit if on active duty (or an honorable discharge if not active); and a $500.00 deposit. Provided Barney can procure this affidavit, and the deposit money, it appears that he would qualify. B- The Cal-Vet loan program requires that the veteran have served a minimum of 120 days’ active duty; provide Statement of Service if on active duty (or an honorable discharge if he is no longer active); and be willing to buy a California home or farm. Based on the information provided herein, Barney should qualify for the program. C- The Cal-Vet loan program requires that the veteran have served a minimum of 90 days’ active duty; provide Statement of Service if on active duty (or an honorable discharge if he is no longer active); and be willing to buy a California home or farm. Barney would appear to qualify, based on the given information. D- The Cal-Vet loan requires four essentials: (1) The veteran must have served a minimum of 30 days’ active duty; (2) The veteran must provide a Statement of Service if on active duty (or an honorable discharge if he is no longer active); (3) The veteran must be willing to buy a California home or farm; and (4) Most importantly, the veteran must meet the requirements for a Veterans Administration (VA) loan before he can be approved for a Cal-Vet loan before he can be approved for a Cal-Vet loan (This doesn’t mean he is going to take out a VA loan, but merely that he meets the federal VA standards). There is not enough information given in the question to determine whether or not he’d meet the federal VA qualifications; so the second part of this question cannot be answered. 56 out of 100 A full summary of all consecutive grants, conveyances, wills, records, and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status, but NOT including encroachments and forgeries, is known as a(n): A- Chain of title. B- Disintermediation. C- Abstract and opinion. D- Quitclaim deed. 57 OUT OF 100 California real estate lenders are divided into 3 major categories. Which of the following is NOT one of these categories? A- Institutional lenders. B- Non-institutional lenders. C- Depository institutions. D- Government-backed programs. 58 OUT OF 100 A contract in which the vendor (seller) agrees to convey the title to the real property after the vendee (buyer) has met certain named conditions, and which does not require conveyance within one year, is ordinarily used in the case of a buyer who can only make a small down payment and monthly installments. This type of contract, because it holds disadvantages for both the seller and the buyer, is no longer a popular financing instrument in California. This is known as a(n): A- Mortgage. B- Installment land contract, also known as an installment sales contract. C- Open-end mortgage. D- Secondary mortgage market loan, such as Fannie Mae, Ginnie Mae, or Freddie Mac. 59 OUT OF 100 Lancaster salesperson Jamie Dafe has begun to branch out into mortgage brokering. She continues to show homes to clients, but hasn’t been actively seeking out new listings. Instead, she acts as a loan broker by buying, selling, or exchanging loans. Which of the following statements applies to Jamie’s current situation? A- Jamie may not act as a loan broker unless she is properly licensed as one, under the Mortgage Loan Broker Law, set forth under the California Business and Professions Code, Article 7. B- Jamie may act as a loan broker without receiving any special license, other than her active California real estate broker’s license, as long as she follows the stipulations set forth under the Mortgage Loan Broker Law, under Article 7 of the California Business and Professions Code. C- In California, a licensed real estate broker MAY assist the buyer in filling out the loan application for a financial institution, but may NOT arrange for financing for the buyer, or broker loans herself. In Jamie’s situation, she is acting out of the realm of her real estate broker’s license, and can face monetary damages and/or prison time for violating the California Financial Code AND the California Business and Professions Code, Article 5. D- In California, anyone who wishes to sell, buy, or exchange loans, must meet two requirements: (1) The person must be licensed as a real estate salesperson or broker in California; and (2) The person must first obtain a Commissioner’s Permit to Broker Loans. Jamie needs to fulfill this second requirement before she may legally broker loans in California, under Article 5 of the California Business and Professions Code, which is known as the Mortgage Loan Broker Law. 60 OUT OF 100 Credit union president Bill Bradley has just refused a loan for 25-year-old LaDawna Kingston, an African-American woman and, in his opinion, the very definition of a “religious zealot.” Bill refused the loan based on her credit rating and lack of job stability. When LaDawna learns of his refusal, she tells him she’s calling an attorney, because she’s been discriminated against. Which of the following statements is true in this situation? A- Bill could be in big trouble, since it is illegal for a real estate licensee to discriminate against a person seeking a loan based on racial, religious, or economic reasons. B- Bill could be in big trouble, since it is illegal for a real estate licensee to discriminate against a person who is of any “protected class,” even if that person does not meet the financial loan qualifications that every applicant must face. C- Bill could face serious penalties if LaDawna files suit against him. It is illegal for a real estate licensee to decline financing to a person of another race, even though that person does not meet the financial loan qualifications set forth for every applicant. D- As long as Bill refused the financing based solely on economic reasons (lack of job stability, poor credit rating, income, or net worth), he has acted lawfully and will not face any disciplinary action. 61 OUT OF 100 Real estate syndication is accomplished through three phases. Which of the following answers correctly names these steps in their proper chronological order? A- (1) Origination; (2) Operation; (3) Liquidation. B- (1) Outlay; (2) Operation; (3) Completion. C- (1) Outline; (2) Origination; (3) Completion. D- (1) Origination; (2) Investment; (3) Liquidation. 62 OUT OF 100 The type of company that sells securities specializing in real estate ventures, and requires a minimum of 100 investors, is known as: A- A real estate syndicate. B- A real estate investment syndicate. C- A real estate investment trust. D- An equity trust. 63 OUT OF 100 Stockton broker Dustin Giles has been asked by super-cautious sellers Frank and Carole Bellacera to find out the comparable sales for a seller’s property, since that seller isn’t sure at which price to list his property. When he gives the information to them, they insist this is NOT what they want. Their lender needs the actual value upon which that lender will determine the loan amount. Someone is confused here, but which someone? A- The Bellaceras are confused, since what they originally described was an appraisal, which Dustin provided. What their LENDER actually needed to establish the loan amount was a competitive market analysis, or CMA. B- The Bellaceras mislead Dustin because what they originally described was a CMA, or Competitive Market Analysis, which real estate licensees perform often in order to help sellers arrive at a listing price for their home. However, what the lender needs is an appraisal, which would establish the market value. An appraisal must only be performed by an independent licensed fee appraiser. C- Dustin should have known from the start to perform an appraisal, which is used to estimate value — both for the listing price AND for the loan value, since these two amounts are going to be very close, dollar-wise. D- The Bellaceras didn’t really know what they were talking about, but Dustin SHOULD HAVE recognized it, and didn’t. What they requested originally was a CMA, or competitive market analysis, which Dustin is NOT legally authorized to perform unless he is licensed, under the California Business and Professions Code as a Competitive Market Analyst. 64 OUT OF 100 One appraisal principle of value is based on the concept that the more (description exceeds maximum possible length)