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NATIONAL REAL ESTATE EXAM PREP QUESTIONS WITH CORRECT ANSWERS
"Customer - CORRECT ANSWER Any 3rd party w/ whom a licensee works"
"In-Company Transaction - CORRECT ANSWER Transaction in which the buyer and seller are both
represented by the same brokerage."
"Management-Level License - CORRECT ANSWER A licensee who is employed by or affiliated w/ a
brokerage who has supervisory responsibility over other licensees."
"Mailbox Rule - CORRECT ANSWER Acceptance that becomes effective as soon as it is sent in the
mail, unless the contract specified a certain means for delivery."
"Grantor is the - CORRECT ANSWER Owner"
"Grantee is the - CORRECT ANSWER Buyer"
"Optionor is the - CORRECT ANSWER Seller"
"Optionee is the - CORRECT ANSWER Buyer"
"Lessor is the - CORRECT ANSWER Landlord"
"Lessee is the - CORRECT ANSWER Tenant"
"Vendor is the - CORRECT ANSWER Seller"
"Vendee is the - CORRECT ANSWER Buyer"
"Mortgagor is the - CORRECT ANSWER Buyer"
"Mortgagee is the - CORRECT ANSWER Lender"
"Trustor is the - CORRECT ANSWER Buyer"
"Trustee is the - CORRECT ANSWER 3rd Party to the transaction"
"Annexation is - CORRECT ANSWER the act of bringing something or putting something on the land.
When determining annexation, value of the item is RARELY considered. The RELATIONSHIP if the parties is more important."
"Doctrine of Emblements - CORRECT ANSWER says that a TENANT farmer may return to pick the 1st
crop after the land has been sold."
"Fixtures - CORRECT ANSWER Man made attachments"
"Bundle of Rights - CORRECT ANSWER 1) Right of use
- Right of enjoyment
- Right of disposal"
"Riparian Rights - CORRECT ANSWER Rights of the landowner ADJACENT to a river
Remember "R" - riparian/river"
"Littoral Rights - CORRECT ANSWER rights of a landowner adjacent to a lake
Remember "L" - Littoral/Lake"
"Period to Period is a type of leasehold that: - CORRECT ANSWER Has no specific expiration but the
length is specified (like a month to month lease)"
"Joint Tenancy - CORRECT ANSWER 2 or more ownership holders own a fraction of UNDIVIDED
interest. Rights of survivorship apply."
"The types of deeds are: - CORRECT ANSWER 1) Warranty Deed
- Special (or limited) Warranty Deed
- Quitclaim Deed
- Special Purpose Deed
- Transfer on Death Deed."
"Warranty Deed - CORRECT ANSWER Offers the greatest protection that a deed can give."
"Special Warranty Deed (Limited warranty deed) - CORRECT ANSWER 1) Owner warrants only that
he has not done harm to the title
- Covers only the period of time when the sellers owner the property."
"Quitclaim Deed - CORRECT ANSWER The seller agrees to convey whatever interest, IF ANY, they
have in the property."
"Writ of Attachment - CORRECT ANSWER A document filed during a lawsuit that prevents a debtor
from conveying the property"
"Fixtures - CORRECT ANSWER items of personal property attached to real property that are not
removed by the seller"
"Trade Fixtures - CORRECT ANSWER Personal property used in a business and can be removed by the
lessee when the lease terminates."
"Appraisal - CORRECT ANSWER is an estimate or an opinion of value"
"Market Value - CORRECT ANSWER An estimate of probably price on the date of the appraisal."
"Market Price - CORRECT ANSWER What the property actually sells for"
"Redlining - CORRECT ANSWER Denying loans in certain areas due to race, religion, sex, familial
status, or a disability."
"The Civil Rights Act of 1866 Covers: - CORRECT ANSWER 1) Race
- Color
- Ancestry (it's the only act that covers this) It applies to all property (Real & Personal) There are no exceptions"
"The Federal Fair Housing Act Covers: - CORRECT ANSWER 1) Race
- Color
- Religion
- Sex
- National Origin
- Disability
- Familial Status It applies ONLY to housing & land for housing Exceptions:
- FSBO
- FSBO - 4 plex
- Religious Groups
- Private Clubs"
"The Federal Equal Credit Opportunity Act applies to: - CORRECT ANSWER 1) Race
- Color
- Religion
- Sex
- National Origin
- Age
- Marital Status
- Receipt of Public Assistance"
"A real estate broker is a - CORRECT ANSWER Special Agent"
"Dual Agent - CORRECT ANSWER One broker representing both the buyer & the seller in a single
transaction"
"A salesperson - CORRECT ANSWER is a subagent of the client, has no direct relationship to the
principal, is only responsible to the broker."
"Puffing - CORRECT ANSWER an opinion or exaggeration of the property's benefits."
"Fraud - CORRECT ANSWER Intentional misrepresentation of facts"
"Violations of the Sherman Antitrust Act include - CORRECT ANSWER 1) Price Fixing
- Allocation of the market"
"Exclusive Right to Sell Listing - CORRECT ANSWER 1) Only one broker is authorized to sell
- the broker receives a commission no matter who finds the buyer"
"Exclusive Agency Listing - CORRECT ANSWER 1) Only one broker is authorized to sell
- If the owner finds a buyer, no commission is owed" "Which one of the following is NOT real property? 1 Wall to wall carpeting installed over plywood subfloor 2 Built-in dishwasher 3 drapes
4 sump pump - CORRECT ANSWER Answer: 3, Drapes"
"If a spouse owns a parcel of land separately, the spouse is said to own it: 1 As a joint tenant 2 As a tenant in common 3 As a tenant by the entireties
3 a property management company
4 a friend selling a neighbor's lot for $1,000 - CORRECT ANSWER Answer: 1, an attorney selling real
estate in an estate" "The responsibility for recording a deed lies with the: 1 grantor 2 grantee 3 county
4 state - CORRECT ANSWER Answer: 2, the grantee"
“Unilateral Contract - CORRECT ANSWER Contract containing ONE promise given in exchange for
completing an act. NO obligation to act."
"Bilateral Contract - CORRECT ANSWER Contract containing TWO promises. Example: A listing
agreement is a bilateral contract"
"Client/Principal - CORRECT ANSWER A person who has entered into an agency relationship w/ a
licensee & with whom there is a written contract"
"Statute of Frauds requires the following: - CORRECT ANSWER 1) Certain contracts be in writing to
be enforceable, 2) All real estate contracts for the sale of LAND & ALL LEASES for more than one year, options for more than 6 months, must be in writing & signed by all parties."
"Novation - CORRECT ANSWER Substituting a new obligation for an old one. Also, a transfer of rights
and/or duties under contract."
"If the original party to an agreement is replaced due to novation, are they liable? - CORRECT
ANSWER No"
"Regulation Z dictates - CORRECT ANSWER Disclosure Requirements in Credit Transactions,
including the disclosure of the Annual Percentage Rate (APR)"
"Regulation Z applies to: - CORRECT ANSWER ALL REAL ESTATE credit transactions except for
commercial loans. For non-real estate transactions, it covers up to $25,000."
"The Cooling Off Period is a condition of: - CORRECT ANSWER Regulation Z. It gives the customer the
right to rescind the transaction for up to 3 business days following the transaction for liens placed on a principal residence."
"RESPA stands for - CORRECT ANSWER Real Estate Settlement Procedures Act"
"RESPA requirements include: - CORRECT ANSWER 1) Lenders must give borrowers a good faith
estimate of closing costs.
- Lenders must give borrowers a HUD booklet describing closing costs, settlement procedures & borrowers rights.
- Closing agent must prepare a HUD stmt detailing how much was paid to what companies for what services
- Borrower must be given right to inspect HUD stmt 1 day before close.
- Lenders & other parties must give full disclosure of all business relationships.
- Lender must disclose to borrower if the loan is likely to be sold to another investor."
"RESPA prohibits: - CORRECT ANSWER 1) Kickbacks & fees for services not performed in connection
w/ the closing
- It limits the amount of escrow reserves a lender can hold
- The sale may not be on the condition on the use of a certain title co or escrow co. chosen by the seller."
"Appurtenances are rights that go along with real estate and include: - CORRECT ANSWER Air Rights,
Water Rights, & Mineral rights to name a few."
"Fee Simple (also called Fee Absolute) - CORRECT ANSWER The best interest in real estate
recognized by law; it represents the most complete ownership."
"Life Estate - CORRECT ANSWER The estate CANNOT be passed on to the life estate holder's heirs."
"Pur Autre Vie - CORRECT ANSWER A life estate that is dependent up the life of another."
"Estate for Years is a type of leasehold that: - CORRECT ANSWER Has a specific expiration date or
specific term."
"Elements necessary to a valid deed: - CORRECT ANSWER 1) signed & acknowledged by grantor
- Lists marital status of the grantor
- Use words of conveyance - also called a granting clause
- Names & addresses of grantees
- Acknowledged by Grantor in front of Notary Public
- Signed in front of two witnesses (in most states)
- Legal description
- Delivery & acceptance of deed"
"Easement Appurtenant - CORRECT ANSWER Runs with the land."
"Easement by Necessity - CORRECT ANSWER Created when no other access to land exists...right of
ingress & egress"
"Easement by Prescription - CORRECT ANSWER Created through continual use over a certain period
of time. It must be continual, visible, & w/o approval. Example - a private road becomes public."
"The 3 approaches to value are: - CORRECT ANSWER 1) Market Data Approach (single family homes)
