Value placed upon property for property tax purposes by the tax assessor is known as:
• Estimated Value
• Actual Value
• Appraised Value
• Assessed Value
An assessed value is the dollar value assigned to a property to measure applicable taxes. Assessed valuation determines the value of a residence for tax purposes and takes comparable home sales and inspections into consideration.
Question courtesy of PrepAgent.com. Click here for more information on this great exam prep tool.
What type of lien arises as a result of a judgment, estate or inheritance taxes, a decedent’s debts, or federal taxes?
• Specific
• Voluntary
• Equitable
• General
The answer is general. Each creates a general lien—a claim against all the personal and real property of the debtor
A home mortgage loan closed on July 1 for $765,000 at 5.5% interest amortized over 25 years at $4,697.77 per month. Using a 360-day year, what would the principal amount be after the monthly payment was made August 1?
• $764,936.30
• $764,106.25
• $754,275.00
• $763,808.48
The answer is $763,808.48. Four steps:
(1) Find annual interest based on the interest rate and principal balance ($765,000 × 5.5% = $42,075).
(2) Find one month’s interest by dividing the annual interest by 12 ($42,075 ÷ 12 = $3,506.25).
(3) Find the amount of the first monthly payment remaining after paying interest ($4,697.77 – $3,506.25 = $1,191.52).
(4) Find the principal balance after paying $1,191.52 against the balance ($765,000 – $1,191.52 = $763,808.48).
Agent Vivian Rose was driving her client towards a property. In the car she realized he was of a particular religion, at which time she immediately did a U-turn and took him to a place that she believed people who practiced the same religion lived. This would be an example of:
• helping.
• redlining.
• steering.
• blockbusting.
Steering is the illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.
Question courtesy of PrepAgent.com. Click here for more information on this great exam prep tool.
A young man completes his real estate salesperson course on June 20, 2021. He then takes and passes the Virginia licensing exam on July 15, 2021. To avoid having to retake the exam, he must apply for his license by
• December 20, 2021.
• January 15, 2022.
• June 20, 2022.
• July 14, 2022.
The answer is July 14, 2022. An applicant has to apply for a license within one year of passing the Virginia licensing exam before being required to retake the exam.
The members of the REB are
• elected by the public.
• selected by the Virginia Association of REALTORS®.
• appointed by the governor.
• volunteers from real estate community.
The answer is appointed by the governor. The Real Estate Board (REB) is one of 19 boards that is part of the DPOR. It is composed of nine members—seven real estate practitioners and two citizens. Appointments are made for a term of four years.
A bilateral contract is one in which
• the promise of one party is given in exchange for the promise of the other party.
• only one of the parties is obligated to act.
• something is to be done by one party only.
• a restriction is placed in the contract by one party to limit the performance by the other.
The answer is the promise of one party is given in exchange for the promise of the other party. In a bilateral contract, both parties agree to do something and promises are exchanged. A unilateral contract is a one-sided agreement that does not obligate a second party.
A broker does not have to prove that she was the procuring cause in order to collect a commission if her seller sells the property without her help because she has
• an option listing.
• an open listing.
• an exclusive right to sell listing.
• an exclusive agency listing.
The answer is an exclusive right to sell listing. In an exclusive right to sell listing, the listing broker receives a commission no matter who sells the listed property during the term of the listing. Brokers may have to prove they were the procuring cause in some open listing and exclusive agency listing situations, but procuring cause is of no significance in exclusive right to sell listing situations.
If the Virginia Real Estate Board, after proper notice and hearing, determines that a licensee has committed a violation of the CRESPA law, the Board may assign a penalty of up to
• $1,000.
•$2,000.
• $5,000.
• $10,000.
The penalty that may be assigned against a licensee by the Real Estate Board (or any other appropriate licensing authority) for a violation of the CRESPA law is limited to $5,000.
A real estate professional shows properties listed for sale with her company to a prospective buyer. The buyer has refused buyer representation. The buyer is the real estate professional’s
• customer.
• client.
• principal.
• fiduciary.
The answer is customer. The third party or non-represented consumer for whom some level of service is provided is a customer and is entitled to fairness and honesty.
All of the following would be allowed under CRESPA to conduct a closing or settlement service EXCEPT
• an attorney.
• a title insurance company.
• a real estate salesperson.
• a real estate broker.
Persons with real estate salesperson’s licenses are not allowed to conduct settlements. CRESPA allows for attorneys, title insurance company agents, or real estate brokers to conduct real estate settlement.
In Virginia, a seller can be represented by any of these types of listing agreements EXCEPT
• open listing.
• exclusive agency listing.
• exclusive right-to-sell listing.
• net listing.
The answer is net listing. A net listing in which a broker keeps any amount over whatever return is requested by the seller is prohibited in Virginia.
Bob, a very busy real estate agent, is hiring an unlicensed assistant. Which of the following is true?
• He may hire an unlicensed assistant as either an employee or an independent contractor.
• He must hire an unlicensed assistant as an independent contractor.
• He must hire an unlicensed assistant as an employee.
• He is prohibited from hiring an unlicensed assistant unless he is a principal broker.
He may hire an unlicensed assistant as either an employee or an independent contractor.
A custom home containing 4,320 square feet was recently constructed on a $145,000 lot. Construction costs were $80.25 per square foot, and other fees and costs totaled $12,785. What was the total cost of
the property?
• $504,465
• $145,000
• $346,680
• $359,465
The answer is $504,465. 4,320 square feet × $80.25 per square foot = $346,680 cost per square foot;
$346,680 + $145,000 cost of lot + $12,785 other fees and costs = $504,465 total cost of property.
Alexander, a property manager, is offered a choice of three insurance policies with different deductibles. If Alexander selects the policy with the highest deductible, which risk management technique is being used?
• Avoiding risk
• Controlling risk
• Transferring risk
• Retaining risk
The answer is retaining risk. Retaining risk is making a decision the chance of an event occurring are too small to justify much expense. Avoid risk is the removal of risk, such as repair cracked sidewalks. Controlling risk is preparing before something occurs, such as putting CO monitors in all units. Transferring risk is shifting risk to another party, such as an insurance company.
The Virginia Housing Development Authority provides mortgage financing for new home-owners in Virginia. The funds used for these mortgage loans are derived from
• HUD grants.
• FHA or VA insurance programs.
• the sale of mortgage revenue bonds.
• Federal Reserve banks.
VHDA receives funds from the sale of mortgage revenue bonds. These bonds offer tax incentives for the purchaser of the bonds and provide funds that are used for the various types of VHDA financing. Although VHDA does cooperative loans in conjunction with FHA insurance and VA guarantee programs, the actual dollars used for the mortgage loans come from the bond sales.
The condominium documents that are required to be given to a prospective purchaser of a resale unit must be provided by the
• declarant.
• seller.
• seller’s real estate agent.
• buyer’s real estate agent.
The seller of the condominium unit is responsible for providing the required condominium documents to a prospective purchaser.
The residential property disclosure statement that contains notice to purchasers disclosing seller’s representations regarding the property is now found in
• the Code of Virginia.
• the REB rules and regulations.
• the REB website.
• the Virginia Administrative Code (VAC).
As of July 2011, the Residential Property Disclosure Statement is provided on the REB website in order to be sure that the most current form is used. The most recent Disclosure Statement is dated July 2016.
If a licensee is found in violation of the license law or rules and regulations, the REB may take any of the following disciplinary actions EXCEPT
• impose a prison sentence of no more than one year.
• levy fines.
• deny license renewal.
• suspend or revoke a license.
The answer is impose a prison sentence of no more than one year. The REB has no authority to impose a prison sentence. In some cases, the REB refers the matter to the Commonwealth attorney for further court action.
A real estate professional who is the agent of the buyer should do which of the following?
• Advise the buyer if the listing price of the seller’s house is unrealistic
• Disclose to the seller that the buyer is a member of a protected class
• Disclose to the seller the maximum price the buyer is willing to pay
• Present to the seller only offers that are acceptable
The answer is advise the buyer if the listing price of the seller’s house is unrealistic. As part of the fiduciary duties owed a principal, an agent for the buyer should disclose to the buyer if the property is overpriced.
The Virginia Residential Landlord Tenant Act (VRLTA) now applies to
• all leased properties in Virginia without exception.
• all leased properties in Virginia with some exceptions.
• all leased properties where owner has more than two rentals.
• both residential and commercial rental properties.
The answer is all leased properties in Virginia with some exceptions. Specific exemptions are listed in Article 1 of VRLTA in the recodified Title 55.1, Chapter 12 effective October 1, 2019.
Which of the following statements concerning the Real Estate Settlement Procedures Act (RESPA) is false?
• Real estate brokers may not split a commission with cooperating members of the multiple listing service.
• RESPA covers all sales of one-to-four family residences when the purchaser is obtaining a federally related mortgage loan to purchase the property.
• All persons obtaining a federally regulated new mortgage loan to purchase a single-family residence must receive a copy of the Home Loan Toolkit.
• A lender may not receive a referral fee for sending a seller to a specific title insurance company.
The Real Estate Settlement Procedures Act, or RESPA, was enacted by Congress to provide homebuyers and sellers with improved disclosures of settlement costs and to eliminate abusive practices in the real estate settlement process. While many kickbacks and referral fees are prohibited, RESPA does allow “payment pursuant to cooperative brokerage and referral arrangements”, like agreements between MLS members.
NOTE – This question asks “Which of the following statements… is false” which means it’s looking for a false answer, and it’s false that brokers may not split a commission with cooperating members of the MLS.
Answer courtesy of PrepAgent.com.
As of July 2009, an additional requirement for licensure is that all applicants must
• have a college degree.
• submit to fingerprinting.
• be at least 21 years old.
• achieve a grade of 90% or better on the required education course.
The answer is submit to fingerprinting. The applicant shall also disclose all misdemeanor convictions involving moral turpitude, sexual offense, drug distribution, or physical injury within five years of the date of application, plus any felony convictions during applicant’s lifetime.
In which type of contract is the promise of one party given in exchange for the promise of the other party?
• Restricted.
• Bilateral.
• Obligatory.
•Unilateral.
Bilateral Contract: A contract in which each party promises to perform an act in exchange for the other party’s promise to perform.
Unilateral Contract: A contract in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party.
A salesperson decides to leave one brokerage firm and work at another firm. She will need to
• file a Change of Brokerage form with the REB.
• give her license to her new broker.
• fill out the application for the change, obtain the new broker’s signature, and send with
appropriate fee to the REB.
• file a Termination of Brokerage form with the REB.
The answer is fill out the application for the change, obtain the new broker’s signature, and send with appropriate fee to the REB. The application for change of brokerage firm can also be done online today.
Which of the following BEST defines the law of agency?
• Rules of law that apply to the responsibilities of a person who acts as agent for another
• Selling of another’s property by a licensed brokerage company
• Principles that govern conduct in business
• Rules and regulations of the state’s licensing agency
The answer is rules of law that apply to the responsibilities of a person who acts as agent for another. In the law of agency, an agent is a person authorized to act on behalf of another.
“Beginning at the SE corner of the NE¼ of the section, then due west 5,280 feet more or less to the SW corner of the NW¼, then north along the west line of the section 2,640 feet, more or less, to the NW corner of said NW¼, then in a straight line to the point of beginning.” How many acres does this parcel contain?
• 80
• 240
• 320
• 160
The answer is 160. This parcel of land has only three sides, so the formula for finding the area of a triangle (A = ½BH) is used:
½(5,280 ft × 2,640 ft) = ½(13,939,200 sq ft) = 6,969,600 sq ft and 6,969,600 sq ft ÷ 43,560 sq ft in an acre = 160 acres.
The purpose of Virginia real estate law is to
• provide uniformity of real estate practice.
• protect the public interest.
• encourage real estate practice.
• discipline real estate professionals.
Legislation is passed for the protection of the public. Uniformity of practice is prohibited by the Federal Trade Commission. The decision to practice real estate is made by each individual. Discipline is handled by the Real Estate Board.
A property owner contracted to have a swimming pool installed on her property. When the pool was completed, she refused to pay for the improvement, and the contractor filed a lien for nonpayment. This lien was MOST likely a
• general lien.
• special lien.
• voluntary lien.
• specific lien.
The answer is specific lien. The lien filed by the contractor would be a mechanic’s lien and would be a specific, involuntary lien on the property.
Three business days before the closing of a real estate loan transaction, a mortgage loan originator must provide the borrower with the Closing Disclosure (CD). This disclosure is in keeping with which of the following?
• Truth in Lending Act
• Fair Housing Act
• Tila/Respa Integrated Disclosure (TRID)
• Equal Credit Opportunity Act (ECOA)
TRID is the TILA/RESPA Integrated Disclosure Rule. TILA is the Truth in Lending Act and RESPA is the Real Estate Settlement Procedures Act. The Consumer Financial Protection Bureau (CFPB) modified both rules in its TRID final ruling, which consolidates several disclosures into a single Loan Estimate at the beginning of the home-buying process and a Closing Disclosure provided towards the end of the process.
Answer courtesy of PrepAgent.com.
A salesperson finds a buyer for a home he has listed. The buyer gives him an earnest money cashier’s check for $2,000. When a sales contract is ratified, the salesperson should
• keep the check until closing.
• deposit the check in his escrow account within three business banking days.
• deposit the check in his escrow account within five business banking days.
• immediately give it to his broker.
The answer is immediately give it to his broker. The broker is responsible to place the check in an escrow account within five business days.
A property owner contracted to have a swimming pool installed on her property. When the pool was completed, she refused to pay for the improvement, and the contractor filed a lien for nonpayment. This lien was MOST likely a
• general lien.
• special lien.
• voluntary lien.
• specific lien.
The answer is specific lien. The lien filed by the contractor would be a mechanic’s lien and would be a specific, involuntary lien on the property.
The types of agency relationship that are recognized under Virginia agency law include all of the following EXCEPT
• standard agent.
• limited service agent.
• independent contractor.
•designated agent.
An independent contractor is a representative, not an agent, and is the only type of non-agency relationship recognized by Virginia law.
The principal broker of a firm is a broker who is
• the owner of the firm.
• a senior member of the firm.
• responsible for the activities of the firm and all its licensees.
• selling her own property.
The principal broker is responsible for the activities of the firm and all of its licensees. The owner does not have to hold either a salesperson’s or broker’s license unless she is actively engaged in real estate practice.
A husband and wife who owner their home as tenants by the entireties obtain a divorce. At the time of the final divorce decree, the tenancy by entireties will
• extinguish and become a tenancy in common.
• continue until one of them dies.
• extinguish and become a tenancy at sufferance.
• become a life estate for one of the parties.
Virginia provides for a couple to take title to a property as tenants by the entireties. In the event of divorce where both parties retain an ownership interest in the property, the tenancy changes to that of tenants in common. Tenancy at sufferance refers to rental properties. A life estate is extinguished upon the death of the named part.
A real estate professional is a licensed real estate salesperson who has a written contract with his broker that specifies that he will not be treated as an employee. The real estate professional’s entire income is from sales commissions rather than an hourly wage. Based on these facts, the real estate professional will be treated by the IRS as
• a real estate assistant.
• an employee.
• a subagent.
• self-employed.
The answer is self-employed. The real estate professional meets the IRS’s three requirements to be treated as a qualified real estate agent, and thus self-employed, which are that the real estate professional (1) is a real estate licensee, (2) has a written agreement with the broker indicating the licensee will not be treated as an employee by broker contributions to Social Security or the withholding of income taxes, and (3) earns a substantial portion of income from the firm in commissions, not wages.
A salesperson has recently completed the education requirements and passed the state broker’s exam. In her first year of licensure she must complete
• 30 hours post-license training.
• 16 hours (8 required, 8 elective).
• 24 hours (8 required, 8 elective, 8 related to broker supervision and management).
• 30 hours (24 required, 8 broker supervision and management).
The answer is 30 hours post-license training. The two hours fair housing, three hours ethics, one hour each of legal updates including flood zone information, agency and contracts taken as part of the required 30 hours will count toward the required 16 hours for salesperson renewal. As of 2016 , additional continuing education credits completed in the six months prior to license renewal shall carryover into the next renewal period.
Oscar and Susan are next-door neighbors. Susan tells Oscar that he can store his camper in her yard for a few weeks until she needs the space. Susan did not charge Oscar rent for the use of her yard. Susan has given Oscar a(n) what?
• easement by necessity.
• estate in land.
• easement appurtenant.
• license.
Granting the use of property for a defined period for a specific purpose is almost always a form of licensing. Easements grant only access, not ownership, use or occupancy rights. Further, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks.
Courtesy of PrepAgent.com.
A document that protects against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called
• a chain of title.
• an abstract of title.
• a certificate of title.
• a title insurance policy.
The answer is 30 hours post-license training. The two hours fair housing, three hours ethics, one hour each of legal updates including flood zone information, agency and contracts taken as part of
the required 30 hours will count toward the required 16 hours for salesperson renewal. As of 2016 , additional continuing education credits completed in the six months prior to license renewal shall carryover into the next renewal period.
A buyer took delivery of the deed to his new house but did not record the deed or take possession of the property. Under these circumstances,
• the buyer’s interest is not fully protected against third parties.
• the transfer of the property from the seller is ineffective.
• the deed is invalid after 90 days.
• the deed is invalid after six months.
The answer is the buyer’s interest is not fully protected against third parties. Constructive notice to the public of interest in a parcel of real estate is served when the deed is recorded and physical possession of the property is taken. Without this, an owner’s interests could be jeopardized.
A young college graduate is thinking about getting a real estate license. His plan is to affiliate with a broker and use the marketing skills of his unlicensed spouse to expand his practice. The unlicensed spouse will be able to
• show properties when the agent is available.
• assist one of the agent’s buyers in filling out a contract.
• show properties when the agent is not available.
• design and mail brochures for the agent.
The answer is design and mail brochures for the agent. Allowable activities for both licensees and
unlicensed assistants are specifically listed in 18VAC135-20-165.
Who enforces the Truth-in-Lending Act?
• Federal Trade Commission
• Real Estate Settlement Procedures Act
• Secretary of State
• Real Estate Commissioner
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices, such as coercive monopoly. It enforces and regulates over 70 laws, including the Truth-in-Lending Act. The FTC shares this authority with the Consumer Financial Protection Bureau (which is not an answer here, but could also be correct). Answer courtesy of PrepAgent.com.
The duties of a supervising broker are spelled out in 18 VAC 135-20-165 and include all of the following EXCEPT
• be available to review and approve all documents.
• have available training and written procedures and policies.
• maintain regular office hours in the brokerage office.
• ensure that all affiliated licensees have an active, current license.
The answer is maintain regular office hours in the brokerage office. The emphasis on the responsibility of supervising brokers has shifted from regular office hours to an availability for reviewing documents and training affiliated licensees. The requirement to ensure that all agents have an active, current license is as of 2016.
Which of the following is a voluntary alienation of the property?
• Adverse possession
• Condemnation
• Foreclosure
• Owner sale
The answer is owner sale. Voluntary alienation is the legal term for the voluntary transfer of title, such as when the owner sells the property.
A buyer is settling on her new home on September 15. The taxes will e prorated between the buyer and the sellers. The taxes due for September 15 will be
• charged to the purchaser.
• charges to the sellers.
• equally split between the buyer and the sellers.
• forgiven for the day of settlement.
In Virginia, the purchaser is considered to own the property as of the day of settlement. In many other states, sellers are considered to own the property through the day of settlement.
If a licensee is found to be guilty of unauthorized practice of law, she may also be subject to further penalty from the
• Real Estate Board.
• Virginia General Assembly.
• attorney general.
• Virginia State Bar.
If a licensee is found to be guilty of unauthorized practice of law, the Virginia State Bar may also assign a penalty. Violation of the CRESPA regulations would be cause for penalty by the Real Estate Board.
A home seller hired agent Melissa to find a buyer for her house. After fully understanding the implications and ramifications of the contract, the seller and agent Melissa signed an exclusive agency listing contract. The home seller had been talking to her sister about buying the house long before she met agent agent Melissa and, after the home seller had signed the listing agreement, the seller’s sister bought the house. Agent Melissa is legally entitled to:
• reimbursement of her expenses.
• no commission.
• one-half of the commission.
• the entire commission.
An Exclusive Agency listing is a contract where the seller agrees to pay the listing agent a commission if the property in question sells through the agent. However, if the owner sells it themselves the agent receives no commission.
In Virginia, a property may be sold to satisfy a real estate tax lien
• as soon as the lien is filed.
• one year after the lien is filed.
• three years after the lien is filed.
• three years from the date due with 30 day’s notice to the owner.
The property may not be sold until three years have passed from the time the taxes were due. The law also requires that 30 days’ notice be given to the owner of the property who then has the opportunity to redeem by paying all back taxes plus late charges.
If an owner takes his property off the market for a definite period in exchange for some consideration but grants an individual the right to purchase the property within that period for a stated price, this is called
• an option.
• a contract of sale.
• a right of first refusal.
• an installment agreement.
The answer is an option. An option is granted when an owner (optionor) gives the potential purchaser (optionee) the right to purchase the property at a fixed price within a certain period of time.
The Virginia Residential Landlord Tenant Act (VRLTA) now applies to any landlord who has
• two rental properties.
• more than two rental properties.
• four rental properties.
• ten rental properties.
The answer is more than two rental properties. The trigger number for VRLTA was formerly four rental properties in urban areas and a total of 10 statewide. In 2016, legislation clarified that, in order to determine whether an owner of single-family residences is subject to the VRLTA, the owner only needs to count the number of properties owned in Virginia. One residence + two rental properties = VRLTA.
Which of the following parcels of land is the smallest?
• Two sections
• Two square miles
• 1,280 acres
• 5% of a township
The answer is 5% of a township. 5% of a township is 1,152 acres. A township is 36 sections of 640 acres each, so the total acreage in a township is 36 × 640 or 23,040 acres, and 23,040 acres × 0.05 = 1,152 acres. Two sections (two square miles) are 1,280 acres (640 × 2 = 1,280).
In transferring title in Virginia, a buyer is usually expected to pay all of the following taxes and fees EXCEPT
• the grantor tax.
• the recordation tax.
• the transfer fee.
• the clerk’s fee for deed of trust.
The grantor tax is paid by the seller, the grantor of the deed. The various recording taxes and fees for all new documents are paid by the purchaser.
If the borrower paid $189.06 interest last month on a $27,500 loan, what is the interest rate?
• 8%
• 7%
• 7¾%
• 8¼%
The answer is 8¼%. $189.06 monthly interest × 12 months = $2,268.72 annual interest; $2,268.72 annual interest ÷ $27,500 loan amount = 0.08249 or 8¼% interest rate.
Although title insurance insures for the entire chain of title on a property, in Virginia the title search usually consists of an unbroken chain of title for a period of
• 40 years.
• 60 years.
• 80 years.
• 100 years.
Generally, a title search goes back for a period of 60 years prior to the current transaction. Title insurance covers the entire life of the property.
All of the following are used for legal descriptions of property in Virginia EXCEPT
• a government survey system.
• metes and bounds based on natural monuments.
• metes and bounds based on artificial monuments.
• lot and block.
The government survey system is not used in Virginia. Virginia accepts metes-and-bounds descriptions based on natural or artificial monuments and landmarks, adjacent boundaries, or lines of existing tracts. In most urban areas, the lot and block system prevails.
In the application for a broker’s license, actively engaged is defined as performing real estate activities for an average of
• 20 hours per week.
• 30 hours per week.
• 40 hours per week.
• 40 hours per month.
In order to qualify for a broker’s license, a salesperson must have been actively engaged for an average of 40 hours per week as of January, 1999,
The purpose of Virginia real estate law is to
• provide uniformity of real estate practice.
• protect the public interest.
• encourage real estate practice.
• discipline real estate professionals.
Legislation is passed for the protection of the public. Uniformity of practice is prohibited by the Federal Trade commission. The decision to practice real estate is made by each individual. Discipline is handled by the Real Estate Board.
The rights of the owner of property located along the banks of a river are called:
• riparian rights.
• prior appropriation rights.
• hereditament.
• littoral rights.
Riparian rights apply to properties adjacent to flowing bodies of water like rivers and streams. Riparian rights govern the use and accessibility of the water. Littoral rights concern properties abutting an ocean, sea, or lake rather than a river or stream. Littoral rights are usually concerned with the use and enjoyment of the shore. An easy way to remember these is that riparian rights have to do with water that is moving in a direction, and littoral rights have to do with water that does not have a direction.
A landlord asks for two months’ security deposit on all rentals and requires all tenants to pay the cost of renter’s and damage insurance. If the premiums total $100 per year per unit and all units rent for $995 per month, what is the maximum the landlord can receive as a security deposit?
• $1,790
• $1,890
• $1,990
• $2,090
The landlord can require that the tenant pay the cost of premiums for both renter’s insurance and damage insurance. In the case of renter’s and damage insurance, the cost of premiums is not considered a security deposit but rather rent. The landlord cannot require that the tenant pay both security deposit and premiums if the amount exceeds two-month’s rent. If premiums are paid before the tenancy, the total of all payments for security deposits and renter’s as well as damage insurance must not exceed two-month’s rent.
In this case, 2 x 995 = 1,990. However, If the tenant is paying $100 for the cost of insurance premiums before tenancy, the most the landlord can receive as a security deposit is $1,890.
A landlord could safely decline renting to
• a wheelchair-bound person wishing to live on the top floor of a three-story walkup.
• a handicapped person requiring major modifications at the landlord’s expense.
• an ex-drug user currently in a rehab program.
• a blind veteran with no guide dog.
The answer is a handicapped person requiring major modifications at the landlord’s expense. Reasonable modifications must be allowed but at the tenant’s expense and may be required to be restored to present condition at termination of the lease.
Under an exclusive agency listing, a broker advertises a home for sale. The owner finds a buyer and sells the home prior to the expiration of the listing. The broker is entitled to:
• nothing.
• the full commission.
• half of the commission.
• expenses only.
Since the listing was an Exclusive Agency Listing, the seller may find their own buyer without paying a commission. This is different than an Exclusive Right-to-Sell Listing, in which the listing broker is guaranteed a commission regardless of who procures the buyer.
The Bates family purchased the largest and most expensive house in a new subdivision. Three years later, when they were ready to move, they discovered that the value of their home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an example of the principle of:
• substitution.
• diminishing return.
• regression.
• change.
The principle of regression is the reason people are cautioned against owning the most expensive house in the neighborhood. It’s an observation of the fact that lower priced homes (and commercial buildings) have a much greater downward pull on the value of higher-end properties. In this case, the less expensive homes in the neighborhood would have increased additionally in value because they were next to the Bates home, while the Bates home would have increased less in value because it was next to lower-end properties.
A landlord will be in violation of the Virginia Fair Housing Law if he refuses to rent his two-bedroom apartment for any of the following reasons EXCEPT
• the couple applying are from Nigeria.
• the couple has two small children.
• the applicant is 65 years old.
• the applicants do not have adequate income.
The answer is the applicants do not have adequate income. Refusing a rental applicant on the basis of inadequate income is allowed.
If an alleged fair housing discriminatory act has taken place, the injured party must file a complaint with
the REB within
• three months.
• six months.
• nine months.
• one year.
The answer is one year. An injured party has one year to file a complaint with the REB if an alleged fair housing discriminatory act has taken place.
The law that requires real estate contracts to be in writing to be enforceable is
• the law of descent and distribution.
• the parol evidence rule.
• the statute of limitations.
• the statute of frauds.
The answer is the statute of frauds. The statute of frauds requires real estate contracts to be in writing to be enforceable. An oral contract, although unenforceable, can still be valid between the parties if they fulfill its terms.
What is an “executed contract”?
• A contract that is dead in the water.
• A contract that has been terminated by both the listing agent and the home owner.
• A contract in which all parties have fulfilled their promises and performed the contract.
• A contract terminated by either party.
An executed contract is one in which all parties have fulfilled their promises in the original contract, and thus performed the contract.
A month-to-month lease is considered a(n):
• estate at sufferance.
• periodic tenancy.
• life estate.
• estate for years.
A periodic tenancy is a lease that continues from period to period until one of the parties gives notice of termination. A periodic tenancy has no definite termination date.
Arron and Ben are joint tenants. Ben sells his interest to George. What is the relationship of Arron and George?
• They are tenants in common.
• They are joint tenants.
• There is no relationship because Ben cannot sell to George.
• Arron owns a two-thirds interest and George owns a one-third interest.
The answer is they are tenants in common. When joint tenants sell their interest in the jointly held property, the unities of time and title are destroyed. The new owner, George, becomes a tenant in common with Arron.
Within a few weeks of buying their home, the James family learned that the roof leaked during heavy rains. When the house was listed with ABC Real Estate Company, the seller had told the their ABC broker that the roof leaked. ABC Real Estate Company claims the James family did not ask about the roof. What actions can be taken in this situation?
• the buyer cannot do anything because this fact should have been discovered during home inspection
• the buyer can sue the broker for non-disclosure
• the buyer cannot sue the broker under the license law
• the buyer cannot sue the seller under the license law
Disclosure IS required by license law, thus the James family can sue the broker for nondisclosure. The broker is required by law to disclose any fact that would materially affect the buyer’s decision to make an offer, such as a leaky roof.
A condominium community has a swimming pool, tennis courts, and a biking trail. These facilities are MOST likely owned by
• the condominium board.
• the corporation in which the unit owners hold stock.
• the unit owners in the form of percentage undivided interests.
• the unit owners in the form of proportional divided interests.
The answer is the unit owners in the form of percentage undivided interests. Common areas, including amenities such as swimming, biking, and tennis areas, are owned by the unit owners in undivided percentage interests as tenants in common.
A man owned two acres of land. He sold one acre to a neighbor and reserved for himself an appurtenant easement over his neighbor’s land for ingress and egress. The man’s land
• is the servient tenement.
• is the dominant tenement.
• can be cleared of the easement when the man sells the withheld acre to a third party.
• is subject to an easement in gross.
The answer is is the dominant tenement. The man’s parcel benefits from the easement and is the dominant tenement. The neighbor’s tract, over which the easement runs, is the servient tenement.
In order for a deed to be valid,
• the signature of the grantee must be witnessed.
• the deed must be recorded.
• the grantee must sign the deed.
• the grantor must be legally competent.
The answer is the grantor must be legally competent. Competency of the grantor is one of the requirements for a valid deed. The grantor must be of lawful age and sound mind. Witnessing the grantee’s signature is never needed as the grantee does not sign the deed and recording a deed is not required for validity of the deed.
If an appraiser were appraising a residence built in 1910 using the cost replacement approach, which of the following would be used:
•Original cost of materials in 1910
•Cost of living index which increased from 95 to 128
•Today’s cost of reproduction less depreciation
•Cost of living index of 1910
Cost approach is the process of estimating the value of a property by adding to the estimated land value the appraiser’s estimate of the replacement cost of the building, less depreciation. The replacement cost of improvements is the cost to replace an improvement with another improvement having the same utility. Therefore when conducting an appraisal for 1910 home, the current cost to reproduce the home would probably be a factor of the utmost importance and relevance.
A right or privilege tied to real property, although not necessarily part of the property, is called a(n)
• emblement.
• trade fixture
• appurtenance.
• deed
An appurtenance is a right or privilege association with a property, although not necessarily a part of it. An emblement or trade fixture is a tangible item on the property. The deed is a document that transfers title.
A landlord has a house for rent and placed the following ad on the supermarket bulletin board: “SF house for rent, $2,200 per month, no children, no smokers, no old folks.” If the landlord is found guilty of discrimination, he could be fined
• $25,000.
• $50,000.
• $75,000.
• $100,000.
The answer is $100,000. The maximum amount would be $100,000 for two violations at $50,000 each; both familial status and the elderly are protected.
A landlord is also a licensee and has had a fair housing complaint filed against her. Her hearing will be held before
• the nine-member REB.
• the 11-member FHB.
• the VRLTA Board.
• a combined session of both the FHB and REB.
The answer is the nine-member REB. All complaints filed against licensees are heard by the REB.
ADA standards must be met in all of the following EXCEPT
• the entry lobby to a condominium.
• the common area swimming pool.
• the second floor residence in a building without an elevator.
• the real estate sales office.
The answer is the second floor residence in a building without an elevator. ADA standards are only required for the first floor in buildings without an elevator.
A young handicapped woman needs the skills of her service spider monkey. With rent of $1,550, her landlord can charge a pet deposit of
• $55.
• $310.
• $1,550.
• none of these.
The answer is none of these. A service animal is not considered to be a pet; no pet deposit may be charged.
A man leases a store space to open a restaurant. He installs ovens, booths, counters, and other equipment. When would these items become real property?
• At lease expiration, if the man does not remove them
• After they are installed
• After the man defaults on his rental payments
• After the lease takes effect
The answer is at lease expiration, if the man does not remove them. Trade fixtures are personal property, but if they are not removed by the tenant, they become part of the real property.
Assuming that the listing broker and the selling broker in a transaction split their commission equally, what was the sales price of the property if the commission rate was 6.5% and the listing broker received $12,593.50?
• $139,900
• $387,492
• $256,200
• $193,746
The answer is $387,492. Two steps: (1) Find the entire commission by doubling listing broker’s half (2 ×$12,953.50 = $25,907). (2) Find the sales price by dividing the entire commission by the brokerage rate ($25,907 ÷ 6.5% = $387,492).
When grantors do NOT wish to convey certain property rights, they
• must note the exceptions in a separate document.
• may not do so because the deed conveys the entire premises.
• may note the exceptions in the deed of conveyance.
• must convey the entire premises and have the grantee reconvey the rights to be retained by the
grantor.
The answer is may note the exceptions in the deed of conveyance. If the grantors convey less than their complete interest, the wording in the granting clause must indicate this limitation. Mineral rights, water rights, and easements are frequently retained by grantors.
Office buildings and retail space are examples of
•commercial real estate.
•special use real estate.
•residential property.
•industrial property.
Office buildings and retail space are examples of commercial real estate. Special use property includes churches and dormitories; industrial property includes warehouses and factories.
The appraisal approach most likely to be used in valuing a public library building would be
•the cost approach.
•residual method.
•market data analysis.
•income approach.
The cost approach of appraisal is most often used for buildings where actual income or comparative commercial value are unavailable, such as schools and libraries.
Which of the following is the BEST way to ensure that there are no encroachments and verify the boundaries of a parcel of land?
• Get a spot survey
• Write a legal description
• Find the monuments
• Verify the benchmarks
The answer is get a spot survey. A spot survey shows the location of all improvements on a property and whether they extend over the property lines.
The federal law requiring unrestricted access to public accommodations is the:
• Public Accommodations Act
• Real Estate Settlement Procedures Act.
• Americans with Disabilities Act.
• Fair Housing Act.
The Americans with Disabilities Act gives civil rights protection to individuals with disabilities, similar to those provided to individuals on the basis of race, color, sex, national origin, age, and religion. It guarantees equal opportunity for individuals with disabilities in public accommodations, employment, transportation, state and local government services, and telecommunications services.
A fair housing violation case was forwarded to the attorney general. The court may now do any of the following EXCEPT
• award preventive relief to the complainant.
• assess a penalty of up to $50,000 on the defendant if this is a first violation.
• sentence the defendant to up to five years in jail.
• award the prevailing party reasonable attorney’s fees and costs.
An independent contractor is a representative, not an agent, and is the only type of non-agency relationship recognized by Virginia law.
The types of agency relationship that are recognized under Virginia agency law include all of the following EXCEPT
• standard agent.
• limited service agent.
• independent contractor.
• designated agent.
The answer is sentence the defendant to up to five years in jail.
Which of the following is NOT a test to identify a fixture?
• Intent of the parties
• Method of attachment of the item
• Size of the item
• Adaptation of the item to the real estate
The answer is size of the item. The overall test to identify a fixture is intent, which is determined by method of attachment, adaptation, or agreement.
A father conveyed the family home to his daughter by will as a pur autre vie estate for the life of her mother. If the daughter should die before the mother, who gains possession of the property?
• Remainderman
• Mother
• Father’s other children
• Daughter’s heirs
The answer is daughter’s heirs. A life estate based on the lifetime of a person other than the life tenant is called an estate pur autre vie. The daughter is the life tenant, but the measuring life is the mother’s. The daughter’s heirs will inherit the daughter’s life estate, but it will end when the mother dies.
A farmer owns the W½ of the NW¼ of the NW¼ of a section. The adjoining property can be purchased for $2,300 per acre. Owning all of the NW¼ of the section would cost the farmer
• $600,000.
• $322,000.
• $120,000.
• $480,000.
The answer is $322,000. If a person wishes to own the entire quarter (160 acres) of a 640-acre section in which that person already owns 20 acres (½ × ¼ × ¼ = 1/32 and 640 × 1/32 = 20), then the portion of the section still to be acquired is 140 acres (160 acres – 20 = 140). At a cost per acre of $2,300, the adjoining property will cost $322,000 (140 × $2,300 = $322,000).
Because a couple no longer needs their large house, they decide to sell it and move into a cooperative apartment building. In a cooperative, they will
• own their individual apartment.
• become shareholders in a corporation.
• own the common elements.
• receive a 20-year lease to their apartment.
The answer is become shareholders in a corporation. In a cooperative, a corporation holds title to the land and building and offers shares of stock.
A woman conveys a life estate to her grandson and stipulates that upon her death the estate will pass to her son-in-law. The son-in-law has
• a reversionary interest.
• an estate for years.
• a remainder interest.
• a legal life estate.
The answer is a remainder interest. When a life estate ends, it is replaced by a fee simple estate. The future interest the woman’s son-in-law has in the fee simple estate that will convey to him when the life estate ends is called a remainder interest.
A trust that is established after the death of the owner is called
• a testamentary trust.
• a trust by will.
• a beneficial trust.
• a living trust.
The answer is a testamentary trust. A trust established by will after the owner’s death is called a testamentary trust, as opposed to a trust created by agreement during the owner’s lifetime, which is called a living trust.
Jamal and Tina bought a store building and took title as joint tenants. Tina died testate. Jamal now owns the store
• as a joint tenant with rights of survivorship.
• in severalty.
• as a tenant in common with the dead woman’s heirs.
• in trust.
The answer is in severalty. Joint tenancy includes the right to survivorship, to the property passing to the other owner(s) upon the death of one tenant. In this case, Jamal and Tina took title as joint tenants, meaning that upon one’s death, there is only one owner who owns the property in severalty. In a tenancy in common, the owners own an undivided fractional interest in the property and that interest is passed on according to the owner’s will, to heirs, or to a trust.
A woman owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which of the following types of access rights would provide the greatest protection for a prospective lot purchaser?
• Appurtenant easement
• Easement in gross
• Easement by necessity
• License
The answer is appurtenant easement. An appurtenant easement is annexed to the ownership of one parcel and allows the owner use of the neighbor’s land. The easement transfers with the title and so provides the greatest protection for a prospective purchaser.
What is the principal difference between an estate for years and an estate from period to period?
• An estate for years cannot be terminated.
• An estate from period to period must be in writing.
• An estate from period to period has no expiration date.
• An estate for years is a life estate.
The answer is estate from period to period has no expiration date. An estate from period to period, or periodic tenancy, does not have a specific expiration date as it automatically renews until notice is given by the tenant or landlord. An estate (tenancy) for years has specific beginning and ending dates. Neither estate is a life estate. Each can be terminated. Both an estate for years and an estate from period to period must be in writing to be enforceable.
Which of the following is an NOT an example of a legal life estate?
• Dower
• Curtesy
• Homestead
• Remainder
The answer is remainder. Legal life estates are dower, curtesy, and homestead.
An appraiser estimated the replacement cost new of a building at $560,000. The building has an estimated economic life of 40 years and an estimated remaining life of 30 years. What is the current value of the building?
• $420,000
• $140,000
• $392,000
• $560,000
The answer is $420,000.
30 years remaining life ÷ 40 years economic life = 75%; $560,000 replacement cost × 75% = $420,000 current value.
The term improvements, when referring to real estate, includes
• shrubbery.
• trees.
• lawns.
• sidewalks.
The answer is sidewalks. An improvement is an artificial thing attached to the land. A sidewalk is a man-made addition.
A woman held fee simple title to a vacant lot adjacent to a business. She was persuaded to make the lot available to the business. She had her attorney prepare a deed that conveyed ownership of the lot to the business “so long as it is used for commercial purposes.” After the completion of the gift, the business will own
• a life estate.
• a tenancy for years.
• a periodic tenancy.
• a determinable fee estate.
The answer is a determinable fee estate. The words “so long as” create a fee simple determinable that limits use of the property for commercial purposes. The former owner retains the possibility of reverter.
A prospective homebuyer with four children asks about a listing in an area of predominately single and married couples without children. What should the broker say to this prospect?
• “I’ll be pleased to show you houses in any area that you’re interested in.”
• “I’d be happy to show you homes in other areas where there are more children.”
• “The residents here have expressed a desire to keep the area quiet and without children.”
• “You wouldn’t want to live in this area because the neighbors don’t like children and may be
disrespectful to your family.”
The answer is “I’ll be pleased to show you houses in any area that you’re interested in.” The broker must not channel home seekers toward or away from particular neighborhoods based on familial status. This practice is called steering.
A suburban home with four bedrooms and only one bathroom suffers from what condition?
• Curable physical deterioration
• Incurable physical deterioration
• External obsolescence
• Functional obsolescence
The answer is functional obsolescence. Because a four-bedroom home would be expected to have more than one bathroom, a home that does not suffers from functional obsolescence; it is lacking in the usual amenities of properties of its size.
Tina buys a cat and keeps it in her apartment, even though her apartment lease includes a clause that prohibits tenants from owning a pet. She does not remove the cat even after the landlord gives her a written reminder of the lease agreement and insists that she remove the pet from the apartment. Tina refuses, saying that the cat is very small and will cause no damage to the apartment. The landlord decides to remove Tina due to the breach of the lease agreement. The legal process to remove the tenant is known as
• actual eviction.
• eminent domain.
• constructive eviction.
• partial eviction.
The answer is actual eviction. A tenant’s breach of a lease can result in a court action known as actual or judicial eviction. Constructive eviction occurs when a tenant abandons a property because the landlord has breached the lease. Eminent domain is the government’s power to take land for public
use.
Fair housing laws allow exceptions for all of the following EXCEPT
• private clubs.
• religious organizations.
• retirement communities.
• racial discrimination.
The answer is racial discrimination. The case of Jones v. Mayer in 1968 upheld the Civil Rights Act of 1866 and prohibits racial discrimination without exception. Private clubs, religious organizations, and retirement communities are not exempt from fair housing laws’ prohibitions against housing
discrimination based on race.
To assign a contract for the sale of real estate means to
• record the contract with the county recorder’s office.
• permit another broker to act as agent for the principal.
• transfer one’s rights under the contract.
• allow the seller and the buyer to exchange positions.
The answer is transfer one’s rights under the contract. In an assignment, rights are assigned to a third party, but the original party remains primarily liable unless specifically released.
A home mortgage loan closed on July 1 for $765,000 at 5.5% interest amortized over 25 years at $4,697.77 per month. Using a 360-day year, what would the principal amount be after the monthly payment was made August 1?
• $764,936.30
• $764,106.25
• $754,275.00
• $763,808.48
The answer is $763,808.48.
Four steps:
(1) Find annual interest based on the interest rate and principal balance ($765,000 × 5.5% = $42,075).
(2) Find one month’s interest by dividing the annual interest by 12 ($42,075 ÷ 12 = $3,506.25).
(3) Find the amount of the first monthly payment remaining after paying interest ($4,697.77 – $3,506.25 = $1,191.52).
(4) Find the principal balance after paying $1,191.52 against the balance ($765,000 – $1,191.52 = $763,808.48).
Rights or privileges that are connected with real property are
• improvements.
• appurtenances.
• not conveyed with the real estate.
• restricted to air and water rights.
The answer is appurtenances. Appurtenances are rights or privileges associated with the property and generally convey with the sale.
Frances lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan covering the entire property. Like the other residents, Frances owns stock in the corporation and has a lease on his apartment. This type of ownership is called a(n):
• time-share.
• condominium.
• planned unit development.
• cooperative.
The answer is cooperative. Although often confused, a condominium owner holds title to his individual unit. A co-op owner, on the other hand, is technically a renter. It’s her stock in the corporation holding title to the property that gives her the right to lease the unit as well as sell that right to another.
A person owned a parcel of land. Subsequent to the owner’s death, the probate court determined the distribution of the land in accordance with the state’s statutes. This process is called
• escheat.
• condemnation.
• adverse possession.
• probate.
The answer is probate. Probate is a formal judicious process whose purpose is to see that the assets are distributed correctly. Probate courts distribute assets according to statute only when no other reasonable alternative, such as a valid will, exists.