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Quiz Session - Attempts With Random Questions

California Real Estate Exam Questions

Page 9 of 25

161.

What is the difference between curable and incurable functional obsolescence?

  • The remediation of incurable functional obsolescence is cost-prohibitive

  • The remediation of curable functional obsolescence is cost-prohibitive

  • The remediation of incurable functional obsolescence is cost-effective

  • The remediation of curable functional obsolescence is always unknown

Correct answer: The remediation of incurable functional obsolescence is cost-prohibitive

Functional obsolescence occurs when the improvements on a parcel of land are no longer suitable or desirable for modern use. An example might be a closed office plan in a city where open office plans have become the norm. 

If the obsolescence is curable, it would be worth the cost of fixing the obsolescence. If the obsolescence is incurable, the cost of fixing the obsolescence would exceed that resulting cure's contribution to property value.

162.

Community property is usually defined as which of the following?

  • Property owned by spouses

  • Property owned by a non-profit

  • Property owned by a community center

  • Property owned by a city government

Correct answer: Property owned by spouses

Community property is a form of ownership defined as property owned by spouses. Community property generally consists of all property acquired by both spouses or either during a valid marriage, other than separate property acquired prior to the marriage, by gift, or as an individual heir or devisee of a deceased. Property purchased with proceeds from the sale of separate property is also separate property. 

163.

Which of the following defines desire, one of the four elements of value?

  • How badly does the consumer want the item?

  • Is the item available to retailers?

  • How much of the item is available to consumers?

  • Can the consumer afford to pay for the item?

Correct answer: How badly does the consumer want the item?

Value is established by the interplay of these four factors:

  • Desire: How badly does the consumer want the item?
  • Utility: Is the item effective at doing its job?
  • Scarcity: How much of the item is available to consumers?
  • Affordability: Can the consumer afford to pay for the item?

164.

What establishes the requirement that purchase agreements must be in writing?

  • California Statute of Frauds

  • California Bureau of Examiners

  • California Board of Licenses

  • Federal Board of Frauds

Correct answer: California Statute of Frauds

The Statute of Frauds outlines which contracts are required to be in writing and which may be considered valid even if not in writing. In the case of a residential purchase agreement for real estate, the Statute of Frauds says that the agreement must be in writing to be valid.

165.

A developer includes deed restrictions in the deeds for all the properties within a subdivision. The deed restrictions can dictate all except which of the following?

  • The race of future owners

  • Appearance of fences

  • Owner's use of the property

  • Style of architecture

Correct answer: The race of future owners

Making stipulations with regard to an owner's race is illegal and would make a deed restriction void. Deed restrictions are commonly used to create an aesthetic standard for a subdivision in terms of architecture, fencing, paint colors, etc.

166.

A deed must have all except which of the following elements to be valid?

  • Inspection

  • Adequate property description

  • Documentation in writing

  • Identification of all parties involved

Correct answer: Inspection

A deed is a written instrument that, when properly executed and delivered, conveys a title to real property from one person (grantor) to another (grantee). A deed does not need an inspection to be valid.

A valid deed must:

  • Be in writing
  • Identify a grantor and grantee, both of whom must have legal capacity
  • Contain an adequate property description
  • Contain a granting clause
  • Be signed by the grantor

167.

Which arrangement indicates that a property belongs to only one spouse as opposed to both spouses?

  • Separate property

  • Community property

  • Joint property

  • Non-value property

Correct answer: Separate property

Separate property is owned by a married person in their own right outside of the community interest, including property acquired by the spouse (1) before marriage, (2) by gift or inheritance, (3) from rents and profits on separate property, or (4) with the proceeds from other separate property.

168.

A tenant does not vacate a property at the end of a lease, going against the property owner's wishes. What has occurred? 

  • Tenancy at sufferance

  • Tenancy at will

  • Tenancy on demand

  • Fee upon condition

Correct answer: Tenancy at sufferance

A tenancy at sufferance occurs when the person renting a property wrongfully remains in the property after the expiration of the term. The landlord may pursue eviction as a remedy.

169.

For a deed to be valid, what must it have?

  • Properly described parties

  • Escape clause

  • A judge's signature

  • Seal

Correct answer: Properly described parties

A deed is a written instrument that, when properly executed and delivered, conveys title to real property from one person (grantor) to another (grantee). For a deed to be valid, it must have properly described parties.

When properly executed, delivered, and accepted, a deed transfers title to real property from one person (the grantor) to another person (the grantee). The transfer may be voluntary or involuntary by an act of law, such as a foreclosure sale. For a deed to be valid, all of these elements must be present:

  • It must be in writing.
  • The parties must be properly described.
  • The parties must be competent to convey and capable of receiving the grant of the property (i.e., legal capacity).
  • The property conveyed must be described so as to distinguish it from other parcels of real property.
  • There must be a granting clause (also known as an action clause).
  • The deed must be signed by the grantor.

170.

Which of the following is true regarding a package mortgage?

  • Personal property and real estate are used as collateral

  • It is secured only for improvements

  • It is made for no more than one piece of property at a time

  • It is always used for new construction

Correct answer: Personal property and real estate are used as collateral 

A package mortgage is used in home financing to cover real property, improvements, and movable equipment/appliances. This could be used in a scenario where a home is sold along with all of its furniture, and the furniture and the home are used to collateralize the loan.

171.

What does a release clause in a blanket mortgage indicate?

  • The developer can sell a particular parcel while maintaining a mortgage on the rest of the property

  • The developer can stop making payments on parcels that don't sell

  • The interest rate will fluctuate over the life of the loan

  • The interest rate is slightly different for each parcel in the subdivision

Correct answer: The developer can sell a particular parcel while maintaining a mortgage on the rest of the property 

A blanket mortgage (or blanket deed of trust) covers multiple parcels in a subdivision. Usually, these loans have a “release clause,” which allows the developer to sell a particular parcel and repay the corresponding portion of the loan while maintaining the loan on the rest of the subdivision.

172.

If a lessor in California collects a security deposit and retains any of the deposit in bad faith, which of the following may occur?

  • The lessor could be charged with a statutory penalty of twice the deposit

  • Nothing, as all security deposits are retained by the lessor

  • Nothing, as the lessor uses security deposits to cover property damages

  • None of these choices

Correct answer: The lessor could be charged with a statutory penalty of twice the deposit

If a lessor (landlord) in California collects a security deposit and retains any portion of it in bad faith, they could be charged with a statutory penalty of twice the amount of the deposit. The landlord's tenant may be awarded damages by a court (see California Civil Code Section 1950.5).

173.

For an agent to work on behalf of both a buyer and a seller, which of the following must happen?

  • There must be written consent from both the buyer and the seller

  • There must be written consent from the seller

  • There must be written consent from the buyer

  • There must be written approval from the agency

Correct answer: There must be written consent from both the buyer and the seller

In the case of dual agency, the agent must have written consent from the buyer and the seller stating that they are aware of and agree to the arrangement. There is an inherent conflict of interest associated with dual agency, so this situation should be handled carefully.

174.

An alienation clause does which of the following?

  • Prevents the borrower from reselling the property without paying the lender

  • Prohibits the borrower from making changes to the property that would violate immigration traditions

  • Prevents the borrower from making an offer on a nearby property 

  • Allows a seller to refuse to sell to a particular buyer if the seller finds the buyer offensive

Correct answer: Prevents the borrower from reselling the property without paying the lender

An alienation clause in a contract gives the lender certain rights in the event of a sale or other transfer of mortgaged property. It is also known as a due-on-sale clause or call clause. Requiring the full and immediate repayment of the loan is called acceleration.

175.

The interest rates of variable-rate mortgages fluctuate depending on what?

  • An index

  • State law

  • International law

  • Internal Revenue Service

Correct answer: An index

An adjustable-rate mortgage (ARM, also known as a variable-rate mortgage) has an interest rate that varies based on a certain index, usually the US Treasury rate or LIBOR, which means the London Interbank Offered Rate. There are limits to how much a borrower's interest rate can change over a certain period.

176.

How many hours of continuing education must a salesperson complete before they can renew their license?

  • 45

  • 25

  • 100

  • 105

Correct answer: 45

All license-renewal applicants must prove compliance with the continuing education (CE) requirements. The required 45 hours include 18 hours of six three-hour courses:

  • Trust Fund Handling
  • Fair Housing
  • Risk Management
  • Ethics
  • Agency
  • Management and Supervision

The remaining hours can be earned with continuing education courses in Consumer Service or Consumer Protection.

177.

Which of the following is not required in a valid purchase agreement?

  • The name of the contractor who built the property

  • A legal description

  • The sales price

  • The amount of earnest money to be provided by the buyer

Correct answer: The name of the contractor who built the property

The name of the contractor who built the property does not need to be included in the purchase agreement. 

The C.A.R. Residential Purchase Agreement (C.A.R. Form RPA-CA) outlines what information is necessary to include in a purchase agreement. Among other things, a legal description, the sales price, and the amount of earnest money provided by the buyer must all be included.

178.

Which of the following is not a type of common interest development (CID)?

  • Hotels

  • All of these

  • Timeshares

  • Condominiums

Correct answer: Hotels

Common interest developments are residential real estate developments that consist of many private dwellings as well as common areas for the use of all. There are four basic types:

  • Condominiums
  • Stock cooperatives
  • Community apartment projects
  • Planned developments

A hotel is not really considered a permanent dwelling and is not a type of common interest development.

179.

A condominium owner holds a fee simple interest in which of the following?

  • The airspace between their walls

  • A small portion of their neighbors' personal property

  • An HOA

  • A stockholding corporation

Correct answer: The airspace between their walls

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 with regard to common areas like a parking garage or pool.

180.

If a seller does not want their property listed on the multiple listing service, which form does the broker need to use with the seller?

  • C.A.R. form SEL

  • C.A.R. form ESP

  • C.A.R. form RLSTNE

  • C.A.R. form ADA

Correct answer: C.A.R. form SEL

Sellers might not always want their property listed on the multiple listing service. This might be the case with an expensive luxury property where the owners are concerned with privacy (i.e., they don't want the public to know who lives there, the contents of their home, and what they've listed their home for). In this case, the listing agent would quietly share the home in their network and attempt to procure a buyer.

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