RELE 1238 FINAL EXAM ANSWERS
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RELE 1238 Final Exam Answers
RELE 1238 Final Exam Answers
Question 1. Real estate appraising
- requires good negotiating and sales skills.
- requires advanced training and credential designations to ensure an adequate level of competence.
- is a fairly easy field to enter as a new associate.
- in the mortgage banking industry does not require a real estate license.
Question 2. Which of the following is NOT an example of government’s exercise of its police powers?
- rent controls
- building codes
- zoning laws
- restrictive covenants
Question 3. Typically, physical possession of the property is given to the buyer:
- upon signing of the sales contract.
- before close of escrow (settlement).
- the day of close of escrow (settlement).
- 30 days following close of escrow (settlement).
Question 4. The phrase “time is of the essence” in a sales contract means that:
- the time limits set by the contract must by faithfully observed or the contract is voidable.
- the parties are prohibited from giving each other an extension.
- the contract is void.
- the contract is a counteroffer.
Question 5. When property is sold by means of an installment contract:
- the seller delivers deed at closing.
- the buyer is NOT given the right to occupy the property until the contract terms have been fulfilled.
- the seller retains title.
- time is of the essence.
Question 6. A purchaser’s right to acquire legal title to real property under the terms of a valid agreement is known as:
- naked title.
- equitable title.
- specific performance.
- contract title.
Question 7. Tax – deferred real estate exchanges are possible only when:
- all properties are of equal value.
- no more than two properties are involved.
- properties are “like – kind”.
- there are no mortgages.
Question 8. Which of the following prohibits discrimination by lenders?
- Fair Housing Act
- Equal Credit Opportunity Act
- Real Estate Settlement Procedures Act
- Texas Real Estate License Act
Question 9. In order to convey title to real property, a deed must be signed by the:
- grantee and grantor.
Question 10. Deeds are usually acknowledged to:
- make them valid.
- provide constructive notice.
- make them enforceable.
- make them admissible to the public records.
Question 11. Once a person is aware of another’s rights or interest in property, that person is said to have:
- constructive notice.
- legal notice.
- inquiry notice.
- actual notice.
Question 12. Which of the following would not ordinarily be checked in searching a title to a parcel of land?
- judgment records
- lien records
- chattel mortgage records
- lis pendens index
Question 13. Protection against incomplete or defective records of the title to land can best be obtained by securing:
- an abstract of title.
- title insurance.
- an attorney’s opinion.
- a title searcher’s opinion.
Question 14. Marketable title to real estate is title which is:
- absolutely free of any possible defect.
- free of reasonable doubt as to ownership.
- issued by a court after completion of a quiet title action.
- free of all liens.
Question 15. A mortgagee’s policy of title insurance protects:
Question 16. Evidence of the amount and terms of a borrower’s debt to a lender is provided by means of a(n):
- promissory note.
- first mortgage.
Question 17. A borrower’s property serves as collateral while the borrower retains the rights of possession and use of it by the process of:
Question 18. Which of the following covenants ensures that the borrower will keep the property in good condition?
- covenants of forbearance
- covenant of hypothecation
- covenant against encumbrances
- covenant of good repair
Question 19. The lien priority of mortgages is determined by the:
- date of the mortgage instrument.
- date of the promissory note.
- language of the mortgage instrument.
- date of recordation.
Question 20. The lender is also called the:
Question 21. A loan wherein the principal is all repaid in one lump sum payment at the end of the loan’s life is known as a(n):
- straight or term loan.
- amortized loan.
- budget mortgage.
- balloon note.
Question 22. Clyde borrowed money to purchase a home under terms that required him to make monthly payments that included loan amortization plus prorated insurance premiums and annual real property tax payments. This loan is referred to as a:
- budget loan.
- package loan.
- blanket loan.
- chattel loan.
Question 23. As used in real estate finance, the term “point” means:
- one percent of the purchase price.
- the down payment expressed as a percentage of price.
- one percent of the loan amount.
- the borrower’s equity expressed as a percentage of value.
Question 24. If a contract is executed employing the Texas Veterans
Land Board, the purchase price of the land cannot exceed the lower of: 95% of purchase price, 95% of the appraised value, or:
Question 25. A first mortgage and equity loan together cannot exceed:
- any limit.
- 75% of value.
- 80% of value.
- 90% of value.
Question 26. The reason that a Graduated Payment Mortgage is called a Negative Amortization is because:
- the public perception of the Graduated Payment Mortgage is very Negative.
- the interest rate becomes negative during the life of the loan.
- when the interest paid is less than the amount due, the deficiency is added to the loan balance.
- the negative effect on the borrower’s credit when payment are late.
Question 27. When numerous properties are pledged against a single mortgage, the mortgage is called a:
- package mortgage.
- reverse mortgage.
- blanket mortgage.
- blended–rate mortgage.
Question 28. The type of financing in which the seller retains title to the property is called a:
- wraparound mortgage.
- land lease.
- contract for deed.
Question 29. A real estate practitioner can advertise which of the following terms and not trigger Regulation Z?
- 7% interest rate
- $498 monthly payments
- 90% financing
- low down payment
Question 30. Which of the following statements is true regarding real estate leases?
- All leases for real estate must be in writing to be enforceable.
- There are no TREC promulgated lease forms except the temporary lease forms.
- Only the landlord needs to sign a lease.
- A holdover tenant is exactly the same as a trespasser.
Question 31. With Regard to landlord–tenant Laws, which of the following statements is correct?
- In the event of non–payment of rent the landlord can place a lien on all tenant’s furniture.
- Habitable premises is rigidly defined for all properties.
- The landlord has an obligation to install security devices.
- The maximum occupancy limits prohibit more than two adults per bedroom.
Question 32. With regard to the adjustment phase of the appraisal, which of the following is true?
- The adjustment is made to the subject property.
- More weight is given to the comparable that has the most adjustments.
- Term and conditions of sale are not considered when making adjustments.
- The “Adjusted Market Price” is the dollar value of each comparable sale after it has gone through an adjustment process.
Question 33. If land under an apartment building is being appraised, the most likely method used would be the:
- front–foot basis.
- square foot basis.
- lot method.
- county appraisal district records.
Question 34. The most appropriate method used to appraise a public school building would be the:
- market comparison approach.
- income approach.
- cost approach.
- unit in place approach.
Question 35. In using the cost approach in an appraisal, a building is found to have faulty or outdated design. It would be subject to which type of depreciation?
- Functional obsolescence
- Economic obsolescence
- Physical deterioration
- Fictional depreciation
Question 36. If unavoidable circumstances cause a delay in closing, but it is important to close anyway, the parties may:
- perform a dry closing.
- close into escrow.
- perform an internet closing.
- disburse the funds and sign the deed later.
Question 37. A use of property that is not in agreement with present zoning laws
- may never be permitted in Texas.
- may be permitted under a “grandfather clause”.
- may be changed with 66% vote of the legislature.
- must escheat to the state.
Question 38. The effects of a proposed development on a community is determined by the preparation of:
- an environmental impact statement.
- deed restrictions.
- zoning laws and variances.
- a conditional–use permit.
Question 39. When considering a real estate investment, leverage implies that
- the property is priced below market.
- available financing will allow the buyer to acquire the property for a percent of the purchase price.
- the property can be purchased a portion at a time.
- there are more concessions to the buyer than to the seller.
Question 40. Having a strong background in land use, zoning, environmental issues, local land planning issues and politics is necessary for an individual dealing in which of the following investment types?
- Apartment buildings
- Office buildings
- Retail properties
Question 41. Real Estate Settlement Procedures Act
- prohibits payments outside of closing.
- allows any settlement fee up to a percentage of the purchase price.
- prohibits the seller from requiring that the buyer purchase insurance from a particular title company.
- does not apply to purchases using conventional financing.
Question 42. Which of the following is true regarding zoning?
- The right to zone comes from the government’s power of escheat.
- Zoning is based on the principal of use separation.
- Most zoning laws are imposed by the state or federal government.
- There is no provision for variation from existing zoning laws.
Question 43. In the absence of zoning, land use can be controlled by use of:
- Environmental Impact Statements.
- deed restrictions
- government powers of escheat.
- government of taxation
Question 44. With regard to real estate investment opportunities, which of the following is correct?
- Larger apartment buildings cost much more per unit to manage than smaller projects.
- The higher construction and operating costs of an office building reflect the amenities and services office users demand.
- Houses and condominiums are typically out of the financial reach of most investors.
- Land investments typically involve little risk.
Question 45. Which of the following is true regarding specializing in commercial leasing?
- A separate real estate license is required by TREC.
- Commercial leasing is almost identical to residential leasing.
- Once established as a commercial leasing agent there is little additional updating required.
- Much of commercial leasing is on – the – job
Question 46. The clause that gives the lender the right to call in the note if the mortgaged property is sold or otherwise conveyed by the borrower is known as the:
- subordination clause.
- alienation clause
- release clause.
- redemption clause.
Question 47. The value of the property above the total liens or mortgages is called:
- the equity.
- due on sale.
- the assessment.
- the loan–to–value ratio.
Question 48. The expenses that a lender incurs while processing a mortgage loan application are recovered from the borrower as:
- discount points.
- origination fees.
- mortgage insurance premium.
- private mortgage insurance.
Question 49. If a monthly principal and interest payment for a 30–year, 12% loan of $1,000 would be $10.29, what would the monthly payment be for a home purchased at $75,500 with an 80% loan on those terms?
Question 50. Regarding mortgage insurance, which of the following is true?
- PMI insures only the top 10–15% of the loan.
- FHA insures the entire loan.
- VA insures the entire loan.
- Is only available on conventional loans.