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Quiz Session - Attempts With Random Questions

California Real Estate Exam Questions

Page 3 of 25

41.

When someone buys a condominium, they gain ownership in what?

  • Common areas and the airspace in their condominium unit 

  • The land directly beneath their unit

  • A non-profit cooperative association 

  • Common areas and a share of the land beneath all units

Correct answer: Common areas and the airspace in their condominium unit 

A condominium is a residential building that is divided into individually owned units. Condominium owners have a fee-simple interest in the airspace contained by their unit and share a tenancy-in-common interest in common areas like a parking garage or pool.

42.

Which type of deed warrants against title defects or encumbrances only if they occurred during the grantor's period of ownership?

  • Special warranty deed

  • Gift deed

  • Tax deed

  • General deed

Correct answer: Special warranty deed

A special warranty deed pertains only to title issues that occurred during the grantor's period of ownership, not to any title issues from previous title holders.

A gift deed has no consideration. A tax deed is issued to the purchaser of a property offered for public sale due to nonpayment of taxes. A general warranty deed is a deed in which the grantor conveys real property that guarantees the title and quiet possession against the unlawful claims of third parties.

43.

A due-on-sale clause requires which of the following?

  • The loan to be immediately repaid when the real estate is sold

  • Half the purchase price to be paid when the property is sold

  • The seller to finance the buyer's mortgage

  • The loan to be repaid within five years

Correct answer: The loan to be immediately repaid when the real estate is sold

A due-on-sale clause grants the lender the right to demand full mortgage payment upon the sale of the property. This prevents a buyer from assuming the mortgage without the lender's approval.

44.

Which of the following characterizes a trust deed?

  • It is not a deed

  • It is available to shelter income from taxes

  • It is granted out of "love and affection"

  • It is granted to the purchaser in a foreclosure sale

Correct answer: It is not a deed

A trust deed is not a deed. A trust deed, or deed of trust, is an instrument used to finance the purchase of real property. It is often used interchangeably with "mortgage," but in California, most residential real estate loans are technically trust deeds, not mortgages.

45.

Fatima and Ronnie, a married couple, wish to deed a house that they own as community property. To transfer their house, the deed must be signed by whom?

  • Both spouses

  • The husband only

  • Either spouse

  • Whoever is the primary breadwinner 

Correct answer: Both spouses

For a house owned as community property to be transferred, both spouses (Fatima and Ronnie, in this case) must sign the deed.

California is a community property state. This means that all property acquired by the spouses during a marriage becomes "community property" and is shared equally. There are some exceptions for separate property, such as property acquired prior to the marriage.

46.

An owner is planning to build on a newly purchased property. A deed restriction says that the maximum allowable height is 20 feet, but zoning laws state that improvements up to 60 feet are allowed.

What is the tallest building the owner can legally construct?

  • 20 feet

  • 60 feet

  • 80 feet

  • 40 feet

Correct answer: 20 feet

The tallest building the owner can legally construct is 20 feet because that is the most restrictive height limit. Deed restrictions take precedence over zoning ordinances if they are more restrictive. 

If there is a conflict between limitations on the development of a property, the most restrictive limit applies.

47.

All federally related appraisals must be performed by which persons?

  • State-certified appraisers

  • Appraisers who once worked for a federal entity

  • Appraisers who have completed post-graduate education

  • Appraisers who have undergone an international training program

Correct answer: State-certified appraisers

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) was passed in 1989 as a result of the savings and loan crisis. Title XI of FIRREA requires all federally related appraisals to be performed by state-certified appraisers, not federally certified appraisers.

48.

If a broker provides notary services for an individual signing a grant deed in California, what must the broker/notary's sequential journal include?

  • Right thumbprint of the person signing the deed

  • Social security number of the person signing the deed

  • Current address of the person signing the deed

  • Driver's license number of the person signing the deed

Correct answer: Right thumbprint of the person signing the deed

A broker may provide notary services as a convenience to clients. When acting as a notary, brokers must have the parties to a deed add their right thumbprints to the notary's journal. This also applies to quitclaim deeds and trust deeds.

49.

The Government National Mortgage Association (Ginnie Mae) purchases which of the following?

  • None of these

  • Cal-Vet loans

  • Profitable loans

  • Balloon-payment loans

Correct answer: None of these

Ginnie Mae does not purchase mortgages; it guarantees mortgages. By guaranteeing pools of FHA and VA loans, Ginnie Mae gives investors confidence to invest in securities backed by FHA and VA loans. This, in turn, promotes affordable home ownership.

50.

A Certified Residential Real Estate Appraiser license requires how many hours of appraisal-related education?

  • 200 hours

  • 1,000 hours

  • 100 hours

  • 50 hours

Correct answer: 200 hours

A Certified Residential Real Estate Appraiser license requires 200 hours of appraisal-related education. A bachelor's degree (or higher) is also required.

51.

A first-time violation of California's Fair Employment and Housing Act can result in a fine of up to how much?

  • $10,000

  • $2,000

  • $150,000

  • $500,000

Correct answer: $10,000

Fines up to $10,000 have been given for first-time violations. For a third violation within seven years, fines of up to $50,000 have been given.

Anyone involved in real estate should make a thorough study of fair housing laws (both federal and California laws) to avoid any violations.

52.

Which statement is true regarding holographic wills?

  • A holographic will is completely written, dated, and signed in the testator's own handwriting

  • A holographic will is formally written in the presence of 10 or more witnesses

  • A holographic will is prepared by an attorney

  • A holographic will is written in the format that was authorized by statute

Correct answer: A holographic will is completely written, dated, and signed in the testator's own handwriting

A holographic will is one entirely written, dated, and signed in the testator’s own handwriting. No witnesses or attorneys are necessary to create a valid holographic will.

53.

Mike Z is a musical artist from one of the poorest neighborhoods in Los Angeles. His first full-length album goes platinum, and he is catapulted to stardom overnight. After a year of explosive album sales and relentless touring, he is worth millions of dollars. He decides he wants to live in a grand, luxurious house but also wants to stay true to his roots. He ends up building a gigantic mansion in the middle of his home neighborhood. The opulent mansion is surrounded by dilapidated, crumbling homes. 

Mike Z's mansion is an example of which real estate value principle?

  • Principle of regression

  • Principle of retribution

  • Principle of contribution

  • Principle of balance

Correct answer: Principle of regression

The principle of regression indicates that the worth of a greater-valued object is reduced by association with many lesser-valued objects of the same type. An opulent mansion in the middle of a poor neighborhood is a prime example of the principle of regression.

54.

Amortization refers to which of the following?

  • Paying off the principal and interest on a debt with equal payments until the debt is repaid

  • Paying off only the interest and never paying the principal

  • Paying off the principal and interest quickly, with a balloon payment to be made at the end of the loan

  • None of these

Correct answer: Paying off the principal and interest on a debt with equal payments until the debt is repaid

In a fully amortized loan, principal and interest are combined into fixed monthly payments; at the end of the loan term, the principal balance is zero.

Though monthly payments are fixed, the ratio of principal to interest varies with each monthly payment. Interest payments are determined by applying the interest rate to the principal balance. As the principal is paid, the interest payment owed will decrease, and more of each monthly payment is put toward the principal to make up the difference.

At the start of a loan, payments are mostly interest. At the end of the loan, payments are mostly principal, but the total amount of the monthly payment never changes.

55.

What is the first step of originating a real estate loan?

  • The application

  • Loan processing

  • Underwriting analysis

  • Loan approval

Correct answer: The application

Originating a new loan begins when a prospective borrower completes a loan application and submits it to a lender. This is followed by underwriting, loan approval, funding, and closing.

56.

Brian is a single, unmarried individual. His preference for being alone has left him with a lot of time to read about investing, and he has done incredibly well in the stock market. He decides to reward himself with a gigantic mansion in San Francisco. 

Which term reflects Brian's ownership of this property?

  • Severalty

  • Joint ownership

  • Unity

  • Succession

Correct answer: Severalty

Sole ownership of real property by a single individual or entity is called "ownership in severalty," which is confusing because "severalty" contains the word "several." Because of the counterintuitive definition of this word, commit its meaning to memory.  

57.

Which of the following is not a reason to perform an appraisal?

  • Approval for a credit card

  • Loan approval

  • Tax assessment

  • Investment valuation

Correct answer: Approval for a credit card

Appraisals are not needed for loans that are unsecured; therefore, they are not needed for credit cards (a form of unsecured debt).

An appraisal is an estimate of value. Appraisals of real estate are necessary to get approved for a loan and determine what is owed in property tax. They are also useful to real estate investors in their decision-making process.

58.

Under RESPA, which of the following is illegal?

  • Requiring buyers to buy title insurance from a particular title insurance company

  • Requiring buyers to purchase home insurance before closing

  • Requiring buyers to obtain a termite inspection before closing

  • Having attorneys present at the closing

Correct answer: Requiring buyers to buy title insurance from a particular title insurance company

In accordance with RESPA, sellers and real estate agents cannot require a buyer to purchase title insurance from a particular title insurance company.

59.

Based on the doctrine of respondeat superior, who may impose disciplinary sanctions against a supervising broker in California?

  • DRE

  • NAR

  • Governor

  • HUD

Correct answer: DRE

The doctrine of respondeat superior provides the basis for holding a broker liable for negligent acts by their salespeople or broker associates. In California, the DRE may impose disciplinary sanctions upon a supervising broker whose salespeople or broker associates commit an offense.

60.

VA loans are backed by which of the following?

  • Department of Veterans Affairs

  • Department of Vocational Affairs

  • Veterans Advocacy Group

  • Federal Housing Administration

Correct answer: Department of Veterans Affairs

VA-guaranteed loans are backed by the Department of Veterans Affairs. The VA does not actually lend money but guarantees loans made by VA-approved lenders. 

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