Name: ______________________ Score: ____________

Date: _____________

Real Estate Practice Exam 1

1. Mortgage ownership is transferred from one individual to another by executing:

A. an assignment of mortgage.

B. an option contract.

C. an estoppel certificate.

D. a lis pendens.

Answer: A. The answer is an assignment of mortgage. The process of transferring ownership of a

mortgage from one individual to another is accomplished by executing an assignment of mortgage.

2. You have just learned that the nearby airport has obtained government approvals to redirect the
flight path of planes over your subdivision. The effect on your subdivision is called:

A. physical deterioration.

B. environmental obsolescence.

C. external obsolescence.

D. functional obsolescence.

Answer: C. The answer is external obsolescence. External obsolescence results from a loss in value due
to influences originating outside the boundaries of the property.

3. When the estimate of value is adjusted because of an outdated kitchen, it is called:

A. curable physical deterioration.

B. external obsolescence.

C. functional obsolescence.

D. incurable physical deterioration.

Name: ______________________ Score: ____________
Date: _____________

Answer: C. The answer is functional obsolescence. Anything that is inferior due to operational
inadequacies, poor design, or changing tastes and preferences is classified as functional obsolescence.

4. When ownership of a mortgage is transferred from one company or individual to another, it is

called

A. an assumption

B. an assignment

C. an assessment

D. all of the above

Answer: B. When ownership of a mortgage is transferred (assigned) from one company or individual to
another, it is called an assignment.

5. When a security deposit or advance rent is required by a landlord, the landlord

may:

A. post a surety bond in the total amount of security deposits/advance rents or $50,000, whichever is
less, and pay the tenant 5% per year simple interest.

B. place the funds in a broker's operating account.

C. commingle such funds with personal funds and pay the tenant 75% of any interest earned.

D. deposit such funds in a separate interest-bearing account and pay the tenant at least 50% of the
annualized average interest.

Answer: A. The answer is post a surety bond in the total amount of security deposits/ad-vance rents or
$50,000, whichever is less, and pay the tenant 5% per year simple interest. The landlord is obligated to
account for security deposits and advance rents in one of three ways. One of the three methods is to
post a surety bond with the clerk of the circuit court in the total amount of the security deposits and
advance rents or $50,000, whichever is less, and pay the tenant 5% per year simple interest. If a licensed
broker performs property management services for a landlord, the broker must place security deposits
and advance rents into an escrow account.
Name: ______________________ Score: ____________
Date: _____________

6. Which statement is TRUE regarding listing agreements?:

A. Procuring cause disputes between licensees are typically settled in small claims court.

B. If required to effect a sale, the commission is earned only if the buyer closes on the property.

C. The sales associate earns the commission.

D. An exclusive-agency listing provides for the broker to earn a commission no matter who is the
procuring cause.

Answer: B. The answer is if required to effect a sale, the commission is earned only

if the buyer closes on the property. If required to effect a sale, the buyer must close

on the property for the broker to earn a commission.

7. The act of refusing to make mortgage loans or stating different mortgage

terms or conditions based on racial groups is called:

A. redlining.

B. overwriting.

C. blockbusting.

D. steering.

Answer: A. The answer is redlining. Denying loans or insurance coverage or other

restrictive practices by a lending institution or insurer that represents different

terms or conditions for homes in certain neighborhoods is known as redlining.

8. A properly executed contract that has as its purpose an illegal objective is:

A. valid but not enforceable.

B. legal but depends on voluntary performance.

C. void.
Name: ______________________ Score: ____________
Date: _____________

D. valid and enforceable.

Answer: C. The answer is void. To be enforceable, a contract must have a lawful purpose; one that is not
prohibited by law or contrary to public policy.

9. A property owner builds a bridge across a stream he owns, but the footing on the other side
extends onto his neighbor's property. The legal term for this action is:

A. subrogation of space.

B. easement.

C. implied easement.

D. encroachment.

Answer: D. The answer is encroachment. An encroachment is the unauthorized use of another's

property. It is an infringement or intrusion on property without the owner's consent.

10. The DBPR is empowered to demand information from and issue subpoenas to:

A. DBPR licensees only.

B. anyone thought to possess information relevant to the case at hand.

C. real estate licensees only.

D. anyone, provided the information relates to a case already before the FREC.

Answer: B. The answer is anyone thought to possess information relevant to the case at hand. The DBPR
is empowered to administer oaths, take depositions, and examine respondents, witnesses, and
plaintiffs. It also can issue subpoenas to any- one thought to possess information relevant to the case.

11. A legal document conveying title to a property is called a/an

A. sales contract
Name: ______________________ Score: ____________
Date: _____________

B. option to purchase

C. deed

D. contract for deed

Answer: C. A deed is a legal document conveying title to property.

12. A point is

A. the part of the pen you sign a contract with

B. a score in a basketball game

C. the reason for telling the story

D. 1% of the amount of the mortgage

Answer: D. A point is 1% of the amount of the mortgage.

13. A government loan that is not a VA loan would be a/an

A. FHA mortgage

B. FDA mortgage

C. This type loan does not exist

D. ARM mortgage

Answer: A. A mortgage which is insured by the Federal Housing Administration

(FHA) and is the other type of government loan besides a VA loan is an FHA mort-

gage.

14. . The term acknowledgment refers to:

Name: ______________________ Score: ____________
Date: _____________

A. a signer’s formal declaration before an authorized official that the signer is executing the instrument
as a free act and deed.

B. public acknowledgment of true ownership by giving actual notice.

C. the stamp indicating delivery to the clerk of the court.

D. the act of recording a legal document.

Answer: A. The answer is a signer’s formal declaration before an authorized official that the signer is
executing the instrument as a free act and deed. Acknowledgment is the formal declaration before a
notary public by the grantor that the grantor’s signing is a free act.

15. Two buyers purchased a three-story building and took title as legal joint tenants. One died testate.
The surviving owner now owns the building:

A. as a tenant by the entirety.

B. in severalty.

C. subject to the terms of the deceased owner's will.

D. in absolute ownership under the law of descent.

Answer: B. The answer is in severalty. As joint tenants die, their shares are divided

among the surviving tenants until only one owner is left. The sole survivor then has

a fee simple estate in severalty.

16. If a legally sufficient complaint has been filed, investigated, and found valid, the next step in the
complaint process is:

A. final order issuance.

B. probable cause determination.

C. an informal proceeding.

D. a formal hearing.
Name: ______________________ Score: ____________
Date: _____________

Answer: B. The answer is probable cause determination. Once a case has been investigated and found
valid, the Probable Cause Panel determines whether probable cause exists.

17. Besides husband-and-wife ownership, the MOST frequently used form of co-ownership of
property is:

A. tenancy in common.

B. joint tenancy.

C. tenancy by the entirety.

D. tenancy at will.

Answer: A. The answer is tenancy in common. A tenancy in common is the most frequently used form of
co-ownership, except for husband-and-wife ownership

18. On June 20, after several weeks of litigation, a landlord obtained a final judgment to evict a
tenant. At 9:00 am on June 21, a writ of possession was delivered to the sheriff requesting immediate
service of the writ. At 2:00 pm that same day, the sheriff was stopped from evicting the tenant by the
tenant's attorney. What grounds did the tenant's attorney have for stopping the eviction?:

A. The tenant must be given copies of the final judgment and writ of possession prior to eviction.

B. The landlord had not given the tenant three days' notice that there was to be a physical eviction.

C. The tenant had not been served the writ of possession.

D. The sheriff must give the tenant 24 hours' notice to surrender the premises before physical eviction
can begin.

Answer: D. The answer is the sheriff must give the tenant 24 hours' notice to sur-

render the premises before physical eviction can begin. After entry of judgment in

favor of the landlord, the clerk of the court issues a writ to the sheriff to put the

landlord in possession after a 24-hour notice has been posted on the premises.
Name: ______________________ Score: ____________
Date: _____________

19. During a lunch meeting, three brokers discuss how to increase their businesses. They decide that
broker A will work exclusively northeast of downtown, broker B will work exclusively northwest of
downtown, and broker C will work exclusively south of downtown. This is a:

A. violation of the statute of frauds.

B. violation of antitrust laws called market allocation.

C. common, acceptable practice among brokers.

D. violation of antitrust laws called price-fixing.

Answer: B. The answer is violation of antitrust laws called market allocation. Antitrust laws prohibit
brokers from splitting up market areas so they do not compete with each other. This illegal activity is
known as market allocation.

20. A person’s financial obligations are known as his

A. payments

B. assets

C. liabilities

D. credit risks

Answer: C. A person’s financial obligations are called liabilities and include long- term and short-term
debt and any other amounts owed to others.