Glossary of California Real Estate Exam Practice (Multiple Choice)

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A broker selling a property on which he holds an option should notify the purchaser that he is acting as:
a) an optionor
b) a mortgagor
c) a beneficiary
d) a principal
d) A Principal
As used in real estate practices, the land of a riparian owner borders on:
a) a river
b) a stream
c) a watercourse
d) any of the above
d) Any of the above
A quitclaim deed conveys only the present right, title and interest of the:
a) grantor
b) servient tenement
c) grantee
d) property
d) Property
If a $54,600 investment in real estate generates gross annual earnings of 15%, the gross monthly return most nearly is:
a) $819
b) $705
c) $685
d) $637
a) $819
You are a California real estate broker. A prospect is referred to you by an out-of state broker and a sale is consummated by you. You want to split your commission with the cooperating broker. Under the California Real Estate Law:
a) you may pay a
a) You may pay a commission to a broker of another state
A loan to be completely repaid, principal and interest, by a series of regular equal installment payments is a:
a) straight loan
b) balloon payment loan
c) fully amortized loan
d) variable rate mortgage loan
c) Fully amortized loan
In a legal sales contract, the seller is often referred to as the:
a) divisor
b) donor
c) vendor
d) trustor
c) Vendor
Community property is property owned by:
a) the municipality
b) husband and wife
c) churches
d) the community
b) Husband and wife
A person holding title to real property in severalty would most likely have:
a) a life estate
b) an estate for years
c) ownership in common with others
d) sole ownership
d) Sole ownership
Copies of all listings, deposit receipts, cancelled checks, and trust records must be retained by a licensed real estate broker for:
a) one year
b) two years
c) three years
d) five years
c) Three years
A "loss of value from any cause" is a common definition of:
a) economic obsolescence
b) depreciation
c) principle of contribution
d) adverse leverage
b) Depreciation
Of the following, which is the most important reason for a broker to maintain a trust fund account in addition to a regular business account?
a) to provide a means of control over the destiny of transactions being negotiated
b) it is easier fro
d) The consequence which could occur should legal action be taken against the broker
Economic obscolecence could result from each of the following except:
a) new zoning laws
b) a city's leading industry moving out
c) misplacement of improvements
d) an outdated kitchen
d) An outdated kitchen
A subordination clause in a trust deed may:
a) permit the obligation to be paid off ahead of schedule
b) prohibit the trustor from making an additional loan against the property before the trust deed is paid off
c) allow for periodic reneg
d) give priority to liens subsequently recorded against the property
An interest in real property may be acquired by either prescription or by adverse possession. The interest resulting from prescription is:
a) the right to use another's land
b) a possessory title
c) an equitable interest
d) a private
a) The right to use another's land
Generally, the taking of private land by governmental bodies for public use is governed by due process of law and is accomplished through:
a) exercise of the police power
b) eminent domain
c) reverter
d) escheat
b) Eminent domain
Capitalization is a process whereby an appraiser:
a) converts income into capital value
b) determines depreciation reserves
c) establishes cost of capital investment
d) finds gross income of equity capital
a) Converts income into capital value
The position of trust assumed by the broker as an agent for a principal is described most accurately as:
a) gratuitous relationship
b) a trustor relationship
c) a fiduciary relationship
d) an employment relationship
c) A fiduciary relationship
We call the instrument used to remove the lien of a trust deed from record a:
a) satisfaction
b) release
c) deed of reconveyance
d) certificate of redemption
c) Deed of reconveyance
The type of mortgage loan which permits borrowing additional funds at a later date is called:
a) an equitable mortgage
b) junior mortgage
c) open-end mortgage
d) equitable mortgage
c) Open-end mortgage
Tax delinquent real property not redeemed by the owner during the five-year statutory redemption period is deeded to the:
a) city
b) county
c) state
d) school district
c) State
In a typical percentage lease, rent is calculated as a percentage of:
a) assets of the lessee's business
b) net sales of the lessee's business
c) gross sales of the lessee's business
d) net taxable income of the lessee's business
c) Gross sales of the lessee's business
The instrument used to secure a loan on personal property is called a:
a) bill of sale
b) trust deed
c) security agreement
d) bill of exchange
b) Trust deed
Under the Federal Truth-in-Lending Law, two of the most critical facts which must be disclosed to buyers or borrowers are:
a) duration of the contract and discount rate
b) finance charge and annual percentage rate
c) carrying charge and ad
b) Finance charge and advertising expense
When a loan is fully amortized by equal monthly payments of principal and interest, the amount applied to principal:
a) and interest remains constant
b) decreases while the interest payment increases
c) increases while the interest payment
c) Increases while the interest payment decreases
Joint ownership of real property by two or more persons, each of whom has an undivided interest (not necessarily equal) without right of survivorship, is:
a) a tenancy in partnership
b) a tenancy by entireties
c) a tenancy in common
c) A tenancy in common
Which of the following is a lien?
a) an easement
b) a zoning restriction
c) an attachment
d) all of the above are liens
c) An attachment
Governmental land use planning and zoning are important examples of:
a) exercise of eminent domain
b) use of police power
c) deed restrictions
d) encumbrances
a) Exercise of eminent domain
Judgment liens differ from mechanics’ liens in that:
(a) mechanics’ liens are created by statute
(b) mechanics’ liens could take priority earlier than the date they are recorded
(c) judgment liens are voluntary liens
(d) judgment liens a

(a) mechanics’ liens are created by statute

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