The virginia property disclosure/disclaimer acts apply to all of the following situations, except:

Which of the Following is Personal Property?
1. Apartment Lease
2. Business Reputation
3. Tool Shed Attached to the Brick Foundation
4. Both 1 and 2

4. Both Apartment Lease and Business Reputation

A couple is buying a house with an odd shaped living room. The seller built a custom-made, freestanding bookcase to fit into the room. Absent an agreement, the bookcase is most likely:
1. A Fixture
2. The Buyer's Personal Property
3. A Replacement Fixture
4. The Seller's Personal Property

4. The Seller's Personal Property
-In determining whether an item is a fixture, consider: the method of the object's attachment, whether the object demonstrates adaptation to a unique feature, whether the parties have reached an agreement regarding the object, and the relationship of the parties. In this case, the object is not attached to the property in any permanent manner. Therefore, absent an agreement to the contrary, the bookcase is most likely to remain the seller's personal property.

Former personal property that automatically conveys is most likely to:
1. Occur only by agreement
2. Be a chattel
3. Be a trade fixture
4. Be a fixture

4. Be a fixture
- When personal property is affixed or attached to land, it can become real property that will convey with the land. This is known as a fixture. Trade fixtures are also personal property that can be attached to land. However, trade fixtures are installed by a tenant in connection with her trade or business and do not become real property unless they are not timely removed. Chattel is another name for personal property, which may not transfer with land. Choice one is incorrect because the word "only" is too restrictive.

Industrial property includes all of the following uses except:
1. Mines
2. Warehouses
3. Ranches
4. Vacant Lots

3. Ranches
- Industrial property includes mines, warehouses, plants, factories, utilities, and vacant land suitable for industrial development.

The force of water on land is known as:
1. Accretion
2. Riparian
3. Littoral
4. Annexation

1. Accretion

Accretion occurs when natural forces such as water cause land to move from one parcel to another. Riparian and littoral refer to intangible interests in the use of water.

A land description that reads "T4S, R3E" is most likely the:
1. Monument Method
2. Government Survey Method
3. Metes and Bounds Method
4. Recorded Plat Method

2. Government Survey Method

The rectangular, or government survey method uses range lines, which are north-south lines in a township. Townships are located by their distance north or south of the base line and east or west of the primary meridian. Government survey descriptions read: "Township 4 South, Range 3 East, or T4S, R3E".

Which of the following would be disclosed by a metes and bounds survey?
1. Easements
2. Marketability
3. Encroachments
4. Both 2 and 3

3. Encroachments

Easements would not be obvious and would have to be checked in the county records. Once this is checked, they are indicated on the plat that the surveyor prepares. Depreciation is not something the surveyor considers, nor is the marketability of the property. He is only concerned with the characteristics of the property itself.

An appurtenant easement may be terminated by:
1. Merger of the dominant and servient estates
2. Condemnation of the servient estate through eminent domain
3. Abandonment by the servient estate
4. All of the above

1. Merger of the dominant and servient estates.

An appurtenant easement could be terminated by merging both estates under one owner, where the owner of the dominant estate releases the easement on the servient estate or when the owner of the dominant estate does not use the easement for a period of time (determined by statute) with an intent to abandon. If the servient estate is acquired by a government through the right of eminent domain, the easement remains. Abandonment by the servient estate will not terminate an appurtenant easement--abandonment must be by the domain estate.

Mrs. Franklin is buying property from Mr. Akin. In order to get to the property, it is necessary to cross property owned by Mr. Travis. In the past, Mr. Travis has granted permission to Mr. Akin for this purpose. Mrs. Franklin wants to protect this privilege. What would best serve Mrs. Franklin's interests?
1. An easement in gross
2. A license
3. An appurtenant easement
4. Either 1 or 3

4. Either 1 or 3

Mrs. Franklin should ask for an easement from Mr. Travis. The easement could be an appurtenant easement or an easement in gross. Both would give Mrs. Franklin the RIGHT to cross the property. However, an appurtenant easement would transfer to other property owners and survive the death of either owner. An easement in gross would not serve Mrs. Franklin as well as an easement appurtenant because the easement in gross would not survive the death of Mr. Travis. A license would not serve Mrs. Franklin well because it is revocable at the will of Mr. Travis. Therefore, an easement appirtentant would BEST serve Mrs. Franklin under these circumstances.

Mr. & Mrs. Jones sold their home to a church, but retained the right to occupy the property as long as they lived. The interest of the church is that of a:
1. Remainder Estate
2. Life Estate
3. Reversion Estate
4. Trustee

Three people inherit unequal shares of a single piece of property. How could they hold ownership?
1. As tenants in severalty
2. As tenants in common
3. As joint tenants
4. As either 2 or 3

A condominium could be which of the following?
1. Multi-Story Building
2. Townhouse Community
3. Industrial Office Park
4. Any of the Above

Jean transfers fee simple interest in her property to her daughter Lisa, but reserves a life estate for herself. During Jean's lifetime, Lisa holds a:
1. A life interest pur autre vie
2. Remainder interest
3. A reversionary interest
4. A life estate

Which of the following is an example of tenancy sufferance?
1. A farmer who refuses to give up possession of property when his lease expires in order to harvest his growing crops.
2. A person who leases a store and renews her lease on a month to month basis.
3. A tenant who installed trade fixtures, but did not remove them when the lease expired.
4. A tenant that uses the premises in violation of her lease.

1. A farmer who refuses to give up possession of property when his lease expires in order to harvest his growing crops.

Jean transfers fee simple interest in her property to her daughter Lisa, but reserves a life estate for herself. During Jean's lifetime, Lisa holds a:
1. A life interest pur autre vie
2. Remainder interest
3. A reversionary interest
4. A life estate

Which of the following is an example of tenancy sufferance?
1. A farmer who refuses to give up possession of property when his lease expires in order to harvest his growing crops.
2. A person who leases a store and renews her lease on a month to month basis.
3. A tenant who installed trade fixtures, but did not remove them when the lease expired.
4. A tenant that uses the premises in violation of her lease.

1. A farmer who refuses to give up possession of property when his lease expires in order to harvest his growing crops.

Chuck, lives in a rural area and sells real estate only on a part time basis. He only goes into his broker's office twice a month because it is not near his home. Chuck obtains a valid contract for property he listed. What should Chuck do with the earnest money deposit supporting this contract?
1. Deposit it in his escrow account which he has established near his home
2. Mail it, special delivery, to his broker
3. Keep it with the contract until his next visit to the broker's office
4. Give it to the seller for safekeeping.

2. Mail it, special delivery, to his broker.

The earnest money deposit should be placed in an escrow account as soon as possible after contract ratification. As a salesperson, Chuck does not have an escrow account. He should get it to his broker as quickly as possible.

If an earnest money deposit is held by a broker in an interest bearing escrow account, what is the disposition of the interest earned?
1. It is, by regulation, credited to the buyer
2. It is always credited to the seller at closing
3. The broker may keep the interest
4. Escrow accounts cannot, by regulation, earn interest

3. The broker may keep the interest.

Interest earned on escrow account deposits may be kept by the broker so long as there is written disclosure and agreement by all parties.

A condensed history of the documents affecting real property is known as:
1. The chain of title
2. An abstract of title
3. An abstract of judgements
4. An affidavit of title

A court action to remove a cloud from the title is called an action or suit:
1. For specific performance
2. For title insurance
3. To quiet title
4. Of legal injunction

3. To quiet title.

A court action (suit) for the removal of a defect, cloud, or claim against the title of a property is called a suit to quiet title.

Which of the following is NOT true about title insurance?
1. The policy will include a list of exclusions
2. It serves many of the same functions as homeowner's insurance
3. It will insure the owner against losses arising from title defects
4. It will generally include exclusions for unrecorded easements

2. It serves many of the same functions as homeowners insurance.

A quitclaim deed may be used to:
1. Transfer ownership of a fee simple estate
2. Transfer interest in a life estate
3. Terminate an easement
4. Any of the above

4.Any of the above

A quitclaim deed CAN be used to transfer any interest in real property from one party to another. It is normally used for the transfer of an interest that is less than fee simple.

All of the following persons may act as escrow agents accept:
1. Brokers
2. Neutral third persons
3. Sales Persons
4. Attorneys

3. Neutral third persons

Brokers and attorneys can and do act as escrow agents. Both may be neutral third persons, which is the basic requirement for an escrow agent. However, most states do not allow sales persons to be escrow agents, although they may accept money and documents for escrow on behalf of their employing broker.

The covenant in a deed where the grantor guarantees that no one has any other interest in the property that will disturb the grantee's possession is known as:
1. The covenant of further assurances
2. The covenant against encumbrances
3. The covenant of quiet enjoyment
4. The covenant of seisin

3. The covenant of quiet enjoyment.

Further assurances means that the grantor will execute any other documents necessary to perfect the title. Encumbrances means that there are not outstanding debts, except those stated in the deed. Seisin means ownership.

Each closed real estate transaction requires a report to be filed with the IRS on for 1099. Required information includes the seller's name, social security number, and:
1. The buyer's name and SSN
2. The selling price of the property
3. The name of the mortgage lender
4. A legal description of the property

2. The selling price of the property.

The selling price is included on the 1099. This is the amount of income the seller received. At tax reporting time, this sale is subject to adjustments when calculating the actual tax due.

Which of the following best describes the process of taxing real estate according to its value:
1. Ad Valorem
2. Assessment
3. Appraisal
4. Special Assessment

A house sold for $109,000, with the buyer making 20% down payment. The grantor's tax is based on the:
1. Down payment
2. Loan Amount
3. Selling price
4. None of the above

4. None of the above.

The grantor's tax, also known as the transfer and/or recording tax, is based on the selling price of the property. It is customary in many jurisdictions for the grantor (seller) to pay the grantor's tax.

In many states buyers (vendees) commonly purchase property from sellers (vendors) under land installment contracts (contracts for deed). These contracts are used in certain respects as a method to finance the purchase of real estate.

If forfeiture occurs, the buyer loses rights in the property and the title reverts to the seller, unless a buyer corrects the breach and pays the seller's cost of serving notice of forfeiture.

Election of Remedies (Forfeiture)

If a vendor elects to forfeit, he may waive his right to foreclose his vendor's lien in equity to bring an action for future installments of the purchase price as they come due, bring an action for specific performance of the contract against the vendee, or to pursue any other remedy which relies upon the existence of the contract.

Petition in Bankruptcy--Automatic Stay

The filing of bankruptcy causes an automatic stay (stop) of all litigation against the debtor and all collection attempts by creditors (including mortgage lenders), until bankruptcy is granted or denied. A creditor has the option of requesting that the court lift the stay.

Petition in Bankruptcy--Effect on Title

The filing of bankruptcy creates an estates that includes all of the debtor's interest in property (including real estate) as of the date of petition.
Title remains the property of the bankruptcy estate unless it is exempted by the debtor pursuant to the Bankruptcy Code, it is sold in accordance with the Bankruptcy Code, the court dismisses the bankruptcy, the property is abandoned by the bankruptcy trustee, the court allows a secured creditor to foreclose, or the title revests in the debtor pursuant to a confirmed plan of reorganization.

Abandonment of Property (Bankruptcy)

In Chapter 7, the court may abandon the property if it has no value to the estate (equity). Once abandoned, title reverts to the debtor.

Property Transfer in a Chapter 7 (Liquidation)

If the court authorizes the sale of the property, the deed is signed by the trustee. If the court has abandoned the property, and the property is sold or otherwise transferred, the deed is signed by the debtor.

Property Transfer under Chapter 11 (Business Reorganization)

If the court order authorizes the sale, or the confirmed plan of reorganization provides for the sale of the property, the "debtor in possession" will sign the deed.

The State of Order plans to condemn several pieces of property in the inner city to build a sports complex, displacing many poor families. The State of Order then plans to lease the assembled property to three private concerns who will operate the complex. Is this use of eminent domain consistent with the US Constitution?
1. Yes, but only if the lots are vacant
2. Yes, if just compensation is paid to the land-owners
3. No, because there is no public purpose
4. No, because condemned property cannot benefit private individuals

2. Yes, if just compensation is paid to the land-owners.

The state has the power to do this through its power of eminent domain. The construction of the sports complex could be considered a public good (taxes and employment). The supreme court has upheld the taking of property for private use, recognizing that some states may have legislation that prohibits taking property for private use.

The right of a city government to take title to private property for public improvements is subject to all of the following except:
1. The ownership interest held by the current owner
2. Public purpose
3. Economically profitable uses of the land by the owner
4. Both 1 and 3

4. Both 1 and 3

The exercise of eminent domain requires just compensation for and public use of the property taken. The ownership interest of the current owner and whether the use is economically viable is irrelevant.

The State decides to widen a highway. It will be necessary to use six feet of private property on each side. The State's power to take this property is derived from:
1. The police power
2. Zoning power
3. Condemnation proceedings
4. None of the above

4. None of the above

When the state takes property for the good of the public, it does so through the power of eminent domain. This is separate from police power. Like all government powers, eminent domain is derived from the constitution. The process through which the state takes property from one who refuses to give it up is a condemnation proceeding.

One of the principal reasons for zoning is to:
1. Restrict business activities
2. Effectively plan
3. Affect property values
4. Generate revenue through taxes

2. Effectively plan

Zoning is used by the city planner to implement a master plan.

An owner has been using a parcel of land for heavy industry since 1973. Subsequently, the property is zoned commercial, excluding industrial uses. The owner's continued industrial use of the property is a/an:
1. Violation of the existing zoning
2. Deviation from the master plan
3. Example of a zoning variance
4. An illegal non-conforming use

1. Violation of the existing zoning

Since it was created before the zoning was enacted, it may continue as a legal non-conforming use.

All of the following are examples of down zoning except:
1. From single family dwellings to multi-family apartments
2. From agricultural use to single family dwellings
3. from single family dwellings to a conservation area.
4. Both 1 and 2

4. Both 1 and 2

Down zoning occurs when the zoning regulations are changed from a higher, more active use, to a lower, less active use.

A property management contract is between the property manager and:
1. His or her employees
2. The owner of the property
3. The tenants
4. All of the above

2. The owner of the property

Property management agreements usually represent:
1. General agency
2. Special agency
3. Dual agency
4. Universal agency

To be a professional property manager of a large apartment complex, one would need to know about all of the following EXCEPT:
1. Property maintenance
2. Property insurance
3. Human relations
4. Appraisal techniques

4. Appraisal techniques

Appraisal techniques are the purview of the real estate appraiser.

In terms of management, PUDs most clearly resemble:
1. Leasing
2. Cooperative ownership
3. Condominium ownership
4. Time share ownership

3. Condominium ownership

Like a condo, PUDs have associations that manage the common areas and enforce the covenants, conditions, and restrictions of the development.

Paul property owner makes significant improvements to a lot he has been holding for seven years. Which of the following is most likely to be true regarding Paul's improvements?
1. Paul's land will increase in value
2. Paul's land will decrease in value
3. Paul is developing a subdivision
4. Either 1 or 2

To qualify for a tax-deferred exchange, properties MUST:
1. Have the same income
2. Have different incomes
3. Be of like kind
4. Have deeds in corporation names

A buyer and a seller enter into a valid sales contract. The buyer, for personal reasons, asks the seller to be released. The buyer locates another person to buy the property. The seller enters into a new sales contract with the other person and releases the first buyer. This is most likely an example of:
1. Assignment
2. Novation
3. Implied consent agreement
4. Redemption

2. Novation

A primary difference between assignment and novation is whether the original party remains liable to perform under the original contract. With novation, a new person agrees to substitute the original party and to relieve the original party of liability. Through novation, a new contract arises that replaces the old contract. With assignment, a new party agrees to receive the rights and responsibilities that the original party possessed, without relieving the original party of liability, Through assignment, the old contact remains intact and a new party is added.

A 19-year-old inherits property from his grandfather and immediately enters into a contract to sell it. Can he later refuse to sell the property?
1. Yes, because contracts with minors are void
2. Yes, because contracts with minors are voidable
3. Yes, because the contract is unenforceable
4. No, the contract is valid and binding on all parties

4. No, the contract is valid and binding

Liquidated damages from breach of a sales contract are usually available to the:
1. Buyer, in the event of a seller's default
2. Seller, in the event of the buyer's default
3. Broker, in the event of the buyer's default
4. Either buyer or seller where the other defaults

2. Seller, in the event of the buyer's default.

Deposit in escrow account often serves as liquidated damages.

A listing agreement will automatically terminate:
1. If the selling agent changes brokers
2. On the date specified in the listing agreement
3. If the owner abandons the property
4. All of the above

2. On the date specified in the listing agreement.

A broker can sell abandoned property. If a broker abandons the listing, then the seller would be justified in terminating the listing.

Broker Sam lists a house and sells it 2 months into the listing period. After closing, Sam tries to collect his commission but the seller refuses and correctly asserts that he is not obligated to pay. What type of listing did Sam have?
1. Exclusive agency listing
2. Open listing
3. Net listing
4. Exclusive right to sell listing

The buyer broker agreement that is most similar to the exclusive right to sell contract is:
1. Exclusive buyer agreement
2. Exclusive agency agreement
3. Open buyer agreement
4. Exclusive right to sell

1. Exclusive buyer agreement.

Buyer broker agreements could be:
1. Oral
2. Executory
3. Unassignable
4. All of the above

Vernon presents an offer to a seller with the provision that it must be accepted within 72 hours. Under which of the following circumstances would the offer terminate?
1. Vernon dies before the seller accepts the offer
2. The seller resubmits the offer with a minor change as to settlement date
3. the seller proposes to wait a week before acceptance
4. all of the above would terminate the offer

4. All of the above would terminate the offer.

A purchaser receives equitable title to real estate:
1. By closing on the property
2. By signing a valid sales contract on the property
3. By accepting the deed to the property
4. By receiving an estoppel certificate from the seller

2. By signing a valid sales contract on the property

Equitable title is conveyed to the buyer when the seller signs the offer to purchase, thereby creating a sales contract. After closing and accepting the deed, the buyer receives the title.

If a buyer defaults on a valid sales contract, the seller may have which of the following performance remedies?
1. Specific performance
2. Monetary damages
3. Liquidated damages
4. Both 1 and 2

4. Specific performance

It is the only performance remedy offered.

When a seller makes a counteroffer, which of the following statements is NOT true?
1. It is a partial acceptance of the original offer
2. The seller has obligated herself
3. The original offeror becomes the offeree in the counteroffer
4. It is a rejection of an earlier one

1. It is a partial acceptance of the original offer.

There is no such thing as partial acceptance.

Under the typical lease, landlords are legally obligated to provide tenants all of the following EXCEPT:
1. Safe and habitable premises
2. Quiet enjoyment of the premises
3. Possession of the premises
4. Use of the premises as the tenant and landlord negotiate.

4. Use of the premises as the tenant and landlord negotiate.

If a person has contracted for the opportunity to purchase property at a specified price, within a specific time, the person has:
1. A right of first refusal
2. An option
3. A sales contract
4. Both 1 and 2

2. An option

A person who contracts for the opportunity to buy a property within a specified period of time has an option contract. A right of first refusal is a contractual agreement for the right to purchase, but only after the owner offers the property for sale or entertains an offer from a third party.

Rescission and Cancellation Agreements

Contracts for rescission (cancellation agreement) operate to terminate a contract by mutual consent and without a breach, which returns contract parties to pre-contract positions.

Mutual Agreement (Rescission; Contracts)

Rescission requires the agreement (intent) of both parties to cancel the contract (or court order) without a breach.

State and Federal Law (Rescission; Contracts)

Under some state and Federal laws (condominium acts, TILA (Federal Truth in Lending Act)), purchasers have legislatively mandated rights to rescind a contract for any reason whatsoever for a limited time. The rescission periods, commonly referred to as "cooling off periods", usually run from 3 to 10 days from contracting.

Impossibility (Contract Defense)

Contract defense, where, if established, excuses a party from performing under an otherwise binding contract if the party can no longer legally perform as agreed (performance must be rendered literally impossible, as in destruction of a home by fire under a purchase agreement).

Which item returns the parties to their original position?
1. Novation
2. Subordination
3. Rescission
4. Discharge

3. Rescission

A rescission or cancellation agreement is an agreed upon remedy in a contract that allows parties to terminate under specified conditions. Rescission allows the parties to return to their original positions before contracting.

A general agency empowers the agent to:
1. Transact all matters of all types for the client
2. Transact the client's affairs in a certain business
3. Perform only specific acts for the client
4. Perform any legal act for the client

2. Transact the client's affairs in a certain business.

All of the following are examples of dual agency except:
1. Broker representing a buyer and seller with consent of both
2. Escrow Agents
3. Broker representing both buyer and seller without consent of either
4. Two salespeople represent a different buyer and seller for the same broker

4. Two salespeople represent a different buyer and seller for the same broker

Bill, a broker with XYZ realty, sells a property listed by Gene, an independent broker. In this transaction, what is the relationship between Bill and Gene?
1. Bill is the agent; Gene is the Principal
2. Bill is the trustee; Gene is the trustor
3. Bill is the subagent; Gene is the agent
4. Either 1 or 3 could be true

1. Bill is the agent, Gene is the principal.

Pay close attention to what the question asks--the status of the relationship between Gene and Bill, not the relationship between Gene, Bill, and the seller. Gene is Broker Bill's principal and broker Bill is his agent. Regarding the relationship between the two brokers and the seller, Gene is the agent of the seller and Bill is the subagent of the seller (Bill is NOT the subagent of Gene).

A woman tells her sister that she would like to buy a piece of property that her sister has listed, but that she does not want her sister to tell the seller the status of their relationship. The sister listing the property should:
1. Tell the seller the prospective buyer is a relative
2. Let another person buy the property and turn the deed over to the sister
3. Sell the property without disclosing the relationship
4. Find another listing agent to avoid conflict of interest

1. Tell the seller the prospective buyer is a relative.

A buyers broker presented an offer for property listed by another broker. Proper agency disclosures have been made. Prior to offer and acceptance, the selling broker learns of a zoning change that will affect the value of the property. The selling broker tells his client and the offer is withdrawn. Which of the following statements is correct?
1. The selling broker has violated his fiduciary relationship with the seller
2. The selling broker has exercised due care and loyalty to his principal
3. The buyer may not withdraw his offer
4. Disclosure of this information violates state licensing regulations

2. The broker has a fiduciary duty to disclose material facts. The zoning change is material because it will significantly impact the value of the property. The broker upholds both the duties of loyalty and due care by avoiding a violation of law.

All of the following are fiduciary duties owed to a client, EXCEPT:
1. To use care in completing forms and contracts
2. To obey all client instructions
3. To be loyal to client
4. To be accountable for documents and funds

2. To obey all client instructions

Cannot obey illegal instructions. This is violating fiduciary duties.

An owner is listing his rental property with a broker. Based on past experience, the owner feels that females cause less damage and tells the broker that he only want to rent to females. What should be broker do?
1. Advise the owner this restriction is illegal
2. Follow the owner's instructions because of the basic principles of property management (to protect the client's interests)
3. Accept the listing and give preferential treatment to female applicants
4. Follow the owner's instruction because of the fiduciary relationship

1. Advise the owner this restriction is illegal.

Operation of Law (Terminating Agency Relationships)

The following situations can terminate agency by operation of law; mental incompetence of either party (no breach); death of either party (no breach; however the death of a salesperson will not terminate the agency agreement because it is with her broker); destruction or disposition of the subject of employment (no breach); bankruptcy of either party (may result in a breach); or expiration of time (no breach).

If a religious organization operates a hostel as a means of raising money to support the organization, which of the following statements is true? 1. They are exempt from the 1968 Fair Housing Laws 2. They may limit room rentals to members of the organization. 3. They are exempt from the religion portion of the Fair Housing Act. 4. They must make rooms available to all persons

4. They must make rooms available to all persons
Religious groups CAN be exempt to exclude other, but not when they are operating a commercial establishment such as a hotel.

90% of the units in an all elderly housing development are occupied by persons over age 55. A single mother with 2 small children wants to rent one of the units. According to the Fair Housing Law, as amended in 1988, which of the following is true? 1. The applicant can be denied a lease 2. The applicant's right to rent is protected by familial status 3. The landlord can deny rental because the applicant is a single mother which is contrary to the composition of the community 4. THe landlord can refuse to lease on the basis of marital status.

1. The applicant can be denied a lease. 

A broker would be in violation of the Federal Fair Housing Act for all of the following actions EXCEPT: 1. Refusing a listing on a 4-Unit apartment building, because it is owned and occupied by a minority couple 2. Accepting a listing with the intention of changing the racial-makeup of the neighborhood 3. Hiring salespeople, on the basis of sex, regardless of experience or qualifications 4. Refusing to show a couple from Germany property located in a neighborhood that is composed mostly of people from italy.

3. Hiring salespeople on the basis of sex, regardless of experience and qualifications.
Hiring people on the basis of sex is a gross violation of the law but NOT the fair housing law. Such practice is a violation of the Equal Employment Opportunity Act.

A salesperson took a listing on a property which had a crack in the foundation caused by water seepage. It was obvious that the owner had filled in and painted over the crack, although the owner advised the sales agent that the seepage problem had been corrected. If the salesperson shows the property without advising potential buyers of the seepage problem, the salesperson would be guilty of:
1. Fraud
2. Misrepresentation
3. Puffery
4. Nothing

An agent listed a property where a murder recently occurred. If the agent shows the property without advising potential buyers of the murders, the agent would be guilty of:
1. Fraud
2. Misrepresentation
3. Puffery
4. Nothing

A broker has an exclusive right-to-sell listing, but the owner finds a buyer and sells the property while the listing is still in force. The broker is entitled to:
1. A full commission
2. 50% of the commission
3. Reimbursement for out of the pocket expenses
4. No commission, because the owner sold the house himself.

When does the broker earn a commission?
1. When the listing is taken
2. When the purchaser signs the title insurance policy
3. When the closing is complete and the title passes
4. When the offer to purchase has been signed and accepted by the seller

4. When the offer to purchase has been signed and accepted by the seller.

Wally Wells, a licensed salesperson, obtained an open listing agreement with Client 1 on Parcel A, and an exclusive right to sell agreement with Client 2 on Parcel B. Both listings expire without an offer. Three days later, Clients 1 and 2 exchange Parcels A and B under a 1031 exchange. Wally will receive:
1. No commission so long as Wally was not the procuring cause
2. A split commission
3. One commission for the exclusive right-to-sell agreement
4. Two commissions because the exchange occurred 3 days after the listing expired.

1. No commission so long as Wally was not the procuring cause.

Antitrust Laws are intended to protect the public from all of the following EXCEPT:
1. Blockbusting
2. Price Fixing
3. Tying Arrangement
4. Price Discrimination

In the process of taking a listing, a salesperson notices water stains on the ceiling of one of the rooms. What should the salesperson do?
1. Nothing because it is not a latent defect
2. Nothing because the stain is old
3. Ask the owner if there is a leak
4. Decline to list the property

3. Ask the owner if there is a leak.

Which of the following is NOT a latent defect?
1. Seasonal flooding in the basement
2. Worn Carpeting
3. A faulty, but working, heating system
4. A foundation crack covered with paneling

Broker A shows a house with a faulty roof. When he finds out about the roof should he tell the buyer/customer?
1. Yes, it is an agency responsibility
2. Yes, it is a material fact
3. Only if he is a dual agent
4. Only if he has the seller's permission

2. Yes, it is a material fact.

Broker Johnson has listed the property of Cheever and sells it to Brevard for $75,000. Before closing, Johnson discovers that the property has a serious structural defect. What should Johnson do?
1. Tell Cheever only because he is Cheever's agent
2. Tell Brevards only to satisfy his fiduciary duty
3. Tell no one if the sales contract has already been executed
4. Tell both Cheever and Brevard to avoid liability

4. Tell both Cheever and Brevard to avoid liability.

A budget mortgage payment (PITI) would not normally include:
1. A payment toward the principal of the loan
2. A payment toward the interest of the loan
3. 1/12 of the annual real property taxes
4. 1/12 of the annual life insurance premium

4. 1/12 of the annual life insurance premium.

The difference between the value of the property an its debt is:
1. Ownership
2. Equity
3. Collateral
4. Novation

A lender advertises 80% LTV conventional loans. 80% is based on the:
1. Appraised value
2. Selling price
3. Buyer's income
4. Either 1 or 2

A mortgage which includes both real and personal property is a:
1. Blanket mortgage
2. Open mortgage
3. Chattel mortgage
4. Package mortgage

A loan with constant payments, where increasing amounts are credited to the principal and decreasing amounts are charged for interest is called:
1. A variable constant loan
2. A variable loan
3. A straight loan
4. An amortized loan

The type of loan a person would most likely receive from a commercial bank is:
1. 1st mortgage on his or her home
2. 2nd mortgage on his or her home
3. short-term commercial loan
4. all of the above

3. Short-term commercial loan.

Which of the following is an investor in the secondary mortgage market?
1. VA
2. FHA
3. HUD
4. FNMA

S&Ls primarily make:
1. Government-backed loans
2. Commercial loans
3. Conventional loans
4. Both 1 and 2

3. Conventional Loans

The majority of S&L loans are conventional loans originated for residential dwellings of one to four units.

The FHA's involvement with real estate is comparable to which of the following?
1. an insurance company
2. a savings and loan
3. a secondary mortgage market warehouse
4. a mortgage broker

The maximum amount of a VA Guaranteed Loan is:
1. Nationally uniform
2. Determined by lenders
3. Set by the VA
4. Established regionally

2. Determined by lenders

The amount of a guarantee is determined by the VA, but the amount of the loan is determined by the lender. That is, a lender is always free to lend more money than the VA will guarantee.

A clause in a mortgage to prevent a buyer from assuming an existing loan is called the:
1. Condemnation Clause
2. Defeaseance Clause
3. Alienation Clause
4. Acceleration Clause

The promissory note accompanying a mortgage could create:
1. A personal obligation
2. A two-way obligation
3. A three-way obligation
4. None of the above

What is the biggest disadvantage to a lender when it forecloses on a mortgage?
1. It will not be able to collect from second trust holders
2. It cannot recover enough money to satisfy the existing debt
3. It is difficult to sell a foreclosed property
4. The lender could assume the role of the property manager

4. The lender could assume the role of the property manager.

The bank does not want your house, they want your money. If they foreclose, they may become (if no one outbids them) responsible for upkeep, maintenance and managing property, which is not their primary business.

The Real Estate Settlement Procedures Act (RESPA) requires lending institutions to provide a good faith estimate of closing costs:
1. When the loan application is submitted
2. Within 3 days of loan application
3. Within 3 days of closing
4, Within 10 days of loan application

2. Within 3 days of loan application.

Under Truth in Lending requirements, the mortgagee:
1. Is regulated as to how much interest he may charge
2. Must provide an accurate amortization schedule
3. Must advise the borrower the total amount of interest that will be paid, if the loan is paid at the scheduled maturity date
4. Must allow the loan to be assumed

3. Must advise the borrower the total amount of interest that will be paid, if the loan is paid at the scheduled maturity date.
The lender is not required to disclose the cost of obtaining credit. Usury laws, not TILA, limit the amount of interest the lender may charge. While TILA requires a lender to give the buyer the total interest to be paid, it does not require that the lender provide an amortization schedule, which is a breakdown of each payment into the amount paid to principal and interest.

RESPA does not apply to which of the following:
1. The sale of residential property with 100% seller assisted financing
2. A residential condominium unit
3. The sale of a townhouse in a new development of more than 25 units
4. A single family dwelling

1. The sale of residential property with 100% seller assisted financing.

Applies only to Federally regulated loans.

Dick and Jane build a home at a cost of $250,000 in a neighborhood where the other properties are valued around $125,000. Which appraisal principle most likely describes the value of Dick and Jane's home in relation to others?
1. Plottage and assemblage
2. Progression and regression
3. Increasing and decreasing returns
4. Supply and demand

2. Progression and Regression

A buyer looked at four similar houses for sale in the same neighborhood. The buyer purchased the house with the lowest asking price. This decision is an example of:
1. Highest and best use
2. Contribution
3. Supply and demand
4. Substitution

In the capitalization approach, the appraiser considers all of the following except:
1. Price of the property
2. Rate of return on the investment
3. Rate of return of investment
4, The estimated future net income

1. Price of the property

Uses the cap rate which reflects both the rate of return ON and the return OF the investment. The price of the property is not a factor.

Which of the following statements are true regarding the Cost Approach method of estimating value?
1. Replacement costs denote property that is replaced by another with similar utility
2. Reproduction costs denote property that is replaced by another that is identical to the first
3. Using the cost approach tends to set the upper limits of value
4. All of the above

Which appraisal approach is best suited to appraising vacant land?
1. Cost
2. Income
3. Market data
4. Residual

Real estate salespeople often prepare a CMA for a seller when making listing presentations. Which appraisal principle is CMA primarily based on?
1. The principle of conformity
2. The principle of contribution
3. The principle of substitution
4. The principle of highest and best use

3. The principle of substitution

Appraiser Licensing and Certification

States issue appraiser licenses. Licensed appraisers may also be certified if the state follows minimum federal standards.

Murphy is going to buy 2 parcels of land. One piece of land contains 3.5 acres and a second is one half square miles in area. If the price is $2,000 per acre, what would Murphy have to pay for both parcels?
1. $628,540
2. $7,000
3. $777,560
4. $647,000

A developer owns four parcels of land. He plans to sell one parcel for construction of an office building. The building plans will require 2 acres which will include the actual building, landscaping, and parking. Which of the following is the smallest parcel that would accommodate this construction?
1. Parcel A: 83 ft x 950 ft
2. Parcel B: 102 ft x 840 ft
3. Parcel C: 120 ft x 860 ft.
4. Parcel D: 140 ft. x 900 ft.

3. Parcel C: 120 ft x 860 ft.

A house sells for $54,000 and is assessed at $39,400. Annual taxes are calculated at $.92 per 100 and are paid every 6 months. What is the semi-annual tax bill?
1. $496.80
2. $363.40
3. $248.40
4. $181.24

4. $181.24

Assessed Value $39,400 x .0092 = $362.48 annual taxes / 2

Taxes are $2,100 per year. The tax rate is $3.00 per 100. The assessed value of the property is 40% of the estimated market value. What is the market value of the property?
1. $70,000
2. $90,000
3. $157,000
4. $175,000

4. 175,000

Start with $2,100 (taxes) / ($3.00 (rate) x $100) = $70,000 / .40

Which of the following formulas is used to determine annual real estate taxes?
1. Sales price multiplied by the tax rate.
2. Assessed value multiplied by the tax rate
3. Appraised value multiplied by the tax rate
4. Market value multiplied by the tax rate

2. Assessed value multiplied by the tax rate

Harry the homeowner purchases a new home, financed with a conventional, amortized loan, for $67,000. The interest rate on the loan is 8% payable over 30 years. Harry's first monthly payment is $500. What is the loan balance after Harry's first payment?
1. $60,000
2. $65,088
3. $66,946.67
4. $64,557

Jimmie the Gent is interested in property valued at $450,000. Jimmie will qualify for a $375,000 loan. However, Jimmie refuses to purchase if his LTV would fall under 80%. Is Jimmie likely to purchase the property?
1. Yes, the LTV is within  Jimmie's range
2. No, unless Jimmie qualifies for another $2,000
3. Yes, so long as Jimmie qualifies for another $10,000
4. No, unless Jimmie qualified for another $10,000

1. Yes, the LTV is within Jimmie's range.

An agent was to receive 5% commission on a piece of property that listed for $30,000. How much commission would her receive if the owner reduced the selling price by 15%.
1. $1,380
2. $1,500
3. $1,275
4. $4,500

Real estate taxes for the calendar year are actually paid on June 30 of each year. If the annual property taxes are $2850 and a property sells and closes on April 15, what is the settlement sheet entry for the proration of taxes?
1. Credit to buyer $752.50
2. Debit to buyer $752.50
3. Debit to seller $1,462.50
4. Credit to seller $1,827.50

1. Credit to buyer $752.50

Taxes have not been paid yet, so the buyer will be owed money.

A developer has 25 acres which he plans to sub-divide into 1/2 acre building lots. Of the total tract, he must dedicate five percent for streets and 15% for recreation and open space. Each lot will sell for $19,560. What is the developer's potential income?
1. $978,000
2. $789,375
3. $782,400
4. 391,200

The current value of Pete and Martha's home minus the lot is $125,000. What did Pete and Martha originally pay assuming the home depreciated 6% per year for the past 10 years?
1. $310,560
2. $312,500
3. $376,655
4. $355,000

2. $312,500

10 years of depreciation x .06 = .60

1-.60=.40

125,000/.40

Sara is purchasing a new home. How much down payment must she make if she agrees to pay $80,000 for a house and wants to make a mortgage down payment of 25%?
1. $30,000
2. $20,000
3. $15,000
4. $25,000

The Virginia Fair Housing Law is more restrictive than the Federal Law in that it provides protection for the elderly. Elderly, in VA, is defined as any natural person:
1. 65 years of age or older
2. 62 years of age or older
3. 55 years of age or older
4. 50 years of age or older

3. 55 years of age or older

Lisa is a licensed salesperson and selling her own townhouse. She advertises her townhouse as a FSBO as follows: "Beautiful 3 bedroom townhouse. Excellent assumption. Single females only. Call 123-4567 for details. Owner is licensed." Which of the following is not true:
1. Lisa, acting as the owner of the property, is exempt from VA Fair Housing Laws
2. Lisa has disclosed her license status as required by board regulations
3. Fair housing laws do not apply to marital status
4. This ad violates fair housing laws on the basis of sexual discrimination

1. Lisa, acting as the owner of the property, is exempt from VA Fair Housing Laws

Virginia property disclosure/disclaimer acts apply to all of the following except:
1. Property sales
2. Property options
3. Installment sales
4. Leases

When a tenant legally terminates a lease, the VA Landlord/Tenant Act requires that the owner return any security deposit to the tenant within:
1. 3 days
2. 15 days
3. 30 days
4. 45 days

A condo owner resells his unit. After settlement it is discovered that the CCRs had been revised during the executory period of the contract. Who was responsible for advising the buyer of the changes?
1. Buyer's attorney
2. Buyer should have been aware of the changes
3. Seller
4. Unit owners association

The developer of a time-share shall transfer fee simple interest of the property to the owners' association when what percentage of the project is sold?
1. 90%
2. 80%
3. 75%
4. 50%

When a condo is sold by a person other than the declarant, the seller must provide the buyer with certain information and disclosures. Which of the following statements regarding this requirement are INCORRECT?
1. The seller must provide a copy of the condo by-laws and CCRs.
2. The buyer shall receive a copy of a financial statement for the most current fiscal year and a projected estimate of capital expenditures for the next two years.
3. The unit owners association can charge the seller a maximum of $50.00 for the preparation of these documents.
4. The association must certify that any improvements made to the condo unit and the common elements do not violate local zoning ordiances.

3. The unit owners association can charge the seller a max of $50.00 for the preparation of these documents.

The real estate license of any person may be revoked by which of the following:
1. Attorney General of the Commonwealth of VA
2. Virginia Association of Realtors
3. Real Estate Board
4. Both 1 and 3

3. Real Estate Board

Only the Board can revoke real estate licenses. If court action was brought against a licensee, the Attorney General may request that the Board revoke one's real estate license, but only the board may actually revoke it.

The Real Estate Board has authority to administer all of the following laws Except:
1. Condominium Act
2. Land Tort Reform Act
3. Real Estate License Law
4. VA Fair Housing Act

Which of the following persons must be licensed when selling real property for others?
1. A trustee, appointed by a court
2. A receiver in a bankruptcy proceeding
3. An executor of a will
4. an appriaser

In addition to obtaining a VA Real Estate License, a nonresident must do which of the following in order to sell real estate in VA?
1. Post a surety bond
2. Move to VA
3. Work for a licensed VA broker
4. Get permission of his out-of-state broker, if the person is licensed in another jurisdiction

3. Work for a licensed VA broker

The Board takes disciplinary action against a licensed salesperson. Under what circumstances would the agent's employing broker be subject to disciplinary action by the Board?
1. If the broker knew or should have known of the agents actions
2. If the agent's actions were outside of the authority granted by the employing broker
3. Only if the salesperson is an employee of the broker, not an independent contractor
4. The broker is automatically responsible for all actions of any person affiliated with his or her firm.

1. If the broker knew or should have known of the agent's actions

Ben and Jerry are communicating for the first time via instant messages. Ben is a licensee and Jerry is interested in locating a property in Ben's area. Ben suggests he may be able to help. Which of the following disclosures must Ben make?
1. Ben must disclose his first name and complete address
2. Ben must disclose his username
3. Ben must disclose his email address
4. Ben is not required to make any disclosures because instant messages are not advertisements

1. Ben must disclose his first name and full address.

Gene, an independent broker, lists a property. Susan, also an independent broker, sells the property. Gene agrees to split the commission with Susan, but advises neither the seller nor the buyer of the agreement. According to VA regulations:
1. Susan is guilty of accepting money from someone other than her employing broker
2. The seller must be informed of any such payment prior to the listing agreement
3. Neither Susan nor Gene is in violation of the law
4. Gene is guilty of paying valuable consideration to another party, thereby creating dual agency

2. The seller must be informed of any such payment prior to the listing agreement

A sales agent obtains a listing and advertises the property as follows: "Spacious 3 bdrm., ideal loc., near schools, shops and trains. Seller anxious to move. Deal direct w/agent and save. Call Paula after 5 at 123-4567." Why is this ad in violation of Board regulations?
1. The price is not mentioned
2. The broker's name is missing
3. There is no address
4. Financing options are not shown.

3. The broker's name is missing

If a broker repays the amount awarded to an aggrieved consumer from the TRF with interest, which of the following is true?
1. His or her license must be reinstated
2. The Real Estate Board could withhold issuance of a new license, forever
3. He or she must wait for at least 30 days to reapply for a license
4. He or she could be reinstated as a salesperson, but NOT as a broker for a period of 2 years.

2. The Real Estate Board could withhold issuance of a new license forever

Once revoked, a licensee can reapply for a license after she repays the fund plus interest. Board can refuse issuance to a person who has EVER had license revoked or suspended.

Which of the following persons may file a claim and collect from the Virginia Transaction Recovery Fund?
1. A broker or a salesperson that has been defrauded in a real estate transaction
2. A consumer that has been defrauded in a real estate transaction
3. A real estate developer that has been defrauded in a real estate transaction
4. All of the above

2. A consumer that has been defrauded in a real estate transaction.

Basically anyone involved in the real estate industry cannot collect from the fund.

What is the Virginia property Disclosure Act?

What do you have to disclose in Virginia?

Who has duties under the Virginia Residential property Disclosure Act?

Which transfers of property are exempt from a disclosure report?