CA Broker Practice Exam.
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1. A candidate answers 150 of the questions correctly on the broker examination. Based on the examination's total question count and passing standard, does this candidate pass?
- A. No, because 150 correct out of 200 is exactly 75%, which meets the passing standard
- B. Yes, because 150 correct out of 200 equals 75%, which meets the passing standard
- C. No, because a candidate must answer all 200 questions correctly
- D. Yes, but only because partial credit is awarded
Show answer & explanation
Answer: B
With 200 total questions and a 75% passing standard, a candidate needs 150 correct answers (200 × 0.75 = 150). Answering exactly 150 correctly meets the standard, so the candidate passes.2. On the 200-question broker examination with a 75% passing standard, what is the greatest number of questions a candidate may answer incorrectly and still pass?
- A. 25 questions
- B. 40 questions
- C. 50 questions
- D. 60 questions
Show answer & explanation
Answer: C
A passing score requires 75% of 200 questions correct, which is 150. That leaves 200 minus 150, or 50 questions, that may be answered incorrectly while still passing.3. An examinee wants to know the maximum number of questions they can miss and still pass, based only on the exam's total question count and the passing percentage. Which statement correctly describes the reasoning?
- A. The maximum misses equal the total questions minus the number required by the passing percentage of the total
- B. The maximum misses equal exactly half of the total questions
- C. The maximum misses equal the passing percentage applied to the total questions
- D. The maximum misses cannot be derived from the total and the passing percentage alone
Show answer & explanation
Answer: A
The number of correct answers needed is the passing percentage of the total. The most an examinee can miss and still pass is therefore the total minus that required number — a value derivable purely by reasoning over the total-question and passing-percentage facts.4. A study-planning tool tells a candidate to allocate preparation time proportionally across the exam's items. If the candidate wants an estimate of how much of the exam a single correctly answered question represents, which statement is grounded in the exam blueprint?
- A. Each question represents a fixed share of the exam equal to one divided by the total number of questions on the exam
- B. Each question represents one percent of the exam regardless of the total
- C. Each question's share of the exam cannot be expressed relative to the total
- D. Each question represents the passing percentage of the exam
Show answer & explanation
Answer: A
Given the total number of questions on the exam, one question's share of the whole is one divided by that total. This follows by reasoning over the total-question fact without introducing any new number.5. In a fully amortized fixed-rate mortgage, how does the composition of a level monthly payment change from the first payment to the last?
- A. The interest portion increases each month while the principal portion decreases
- B. The interest portion decreases each month while the principal portion increases
- C. The principal and interest portions remain equal throughout the loan term
- D. The entire payment applies to principal until the balance is retired, then to interest
Show answer & explanation
Answer: B
In a fully amortized loan, each level payment first covers interest accrued on the outstanding balance, with the remainder reducing principal. As the balance falls, less interest accrues, so the interest share shrinks and the principal share grows over time. This is a conceptual property of amortization, requiring no specific rate or figure.6. What best describes the primary function of a promissory note in a real estate financing transaction?
- A. It pledges the real property as security for the debt
- B. It is the borrower's written promise to repay the debt
- C. It transfers legal title of the property to the lender
- D. It is the government's record of the recorded lien
Show answer & explanation
Answer: B
A promissory note is the borrower's written, signed promise to repay a specified debt. The instrument that pledges the property as security (the deed of trust or mortgage) is separate from the note that evidences the debt itself.7. What is the general purpose of a loan-to-value ratio when a lender evaluates a mortgage application?
- A. It measures the borrower's monthly income against total monthly debts
- B. It compares the loan amount to the appraised value or price of the property
- C. It sets the interest rate the borrower will be charged
- D. It determines the length of the amortization schedule
Show answer & explanation
Answer: B
The loan-to-value ratio expresses the loan amount as a proportion of the property's appraised value (or sale price, whichever is lower). A lower ratio means more borrower equity and less lender risk. The concept is defined qualitatively here without asserting any specific ratio.8. When registering to sit for the broker licensing examination, what is the examination fee that a candidate must pay?
- A. $100
- B. $125
- C. $150
- D. $175
Show answer & explanation
Answer: C
The examination fee for the broker license is $150.9. A study group is calculating the maximum number of questions a candidate may answer incorrectly and still pass the broker examination. What is that maximum?
- A. 25 questions
- B. 40 questions
- C. 50 questions
- D. 75 questions
Show answer & explanation
Answer: C
The examination has 200 questions and requires 75% correct to pass, meaning 150 correct answers are needed (200 × 0.75). A candidate may therefore miss at most 200 − 150 = 50 questions and still pass.10. Which of the following statements accurately describes the format of the broker licensing examination?
- A. It consists of 200 multiple-choice questions
- B. It consists of 200 essay questions
- C. It consists of 100 true-or-false questions
- D. It consists of an oral interview followed by a written portion
Show answer & explanation
Answer: A
The broker examination is composed of 200 multiple-choice questions.11. A candidate scored 70% on the broker licensing examination. In relation to the required passing standard, what is the outcome?
- A. The candidate passes, because 70% exceeds the standard
- B. The candidate fails, because the standard requires 75%
- C. The candidate passes, because the standard is 60%
- D. The candidate's result cannot be determined from the score
Show answer & explanation
Answer: B
The passing standard for the broker examination is 75%. A score of 70% falls below this threshold, so the candidate does not pass.12. Two candidates each register and pay the broker examination fee. What is the combined total the two candidates pay in examination fees?
- A. $150
- B. $225
- C. $300
- D. $450
Show answer & explanation
Answer: C
Each broker examination fee is $150. For two candidates, the combined total is 2 × $150 = $300.13. Which of the following correctly pairs a feature of the broker examination with its official value?
- A. Number of questions: 150
- B. Passing score: 60 percent
- C. Examination fee: $150
- D. Number of questions: 250
Show answer & explanation
Answer: C
Per the official examinee information, the broker examination fee is $150. The examination contains 200 questions (not 150 or 250), and the passing score is 75% (not 60%), so only the fee pairing is correct.14. What is the stated examination fee for the broker examination according to the official examinee information?
- A. $60
- B. $100
- C. $150
- D. $200
Show answer & explanation
Answer: C
The official Department of Real Estate examinee information lists the broker examination fee as $150.15. A broker candidate answers 150 of the questions correctly on the examination. Assuming every question is scored equally, does this meet the stated passing standard?
- A. No, because 150 correct out of 200 is only 70%
- B. Yes, because 150 correct out of 200 is 75%, which meets the passing standard
- C. No, because a passing score requires 80%
- D. Yes, but only because partial credit applies
Show answer & explanation
Answer: B
The examination contains 200 questions and the passing standard is 75%. Since 150 of 200 equals 75%, a candidate answering 150 correctly exactly meets the passing standard.16. If a candidate must correctly answer 75% of the questions to pass, and the examination has 200 questions, what is the minimum number of questions that must be answered correctly?
- A. 120 questions
- B. 140 questions
- C. 150 questions
- D. 160 questions
Show answer & explanation
Answer: C
With 200 questions and a 75% passing standard, the minimum number of correct answers is 75% of 200, which equals 150 questions.17. A candidate answers 140 questions correctly on the 200-question broker examination. Relative to the stated passing standard, how many additional correct answers would have been needed to pass?
- A. 5 more
- B. 10 more
- C. 15 more
- D. 20 more
Show answer & explanation
Answer: B
Passing requires 75% of 200 questions, which is 150 correct answers. A candidate with 140 correct would need 10 additional correct answers to reach 150.18. A candidate answers exactly 150 of the exam's questions correctly. Given the total number of questions and the passing threshold, what is the result?
- A. The candidate fails, because 150 correct is below the required percentage
- B. The candidate passes, because 150 correct equals exactly the required percentage of the total
- C. The candidate fails, because the passing threshold cannot be computed from the total
- D. The candidate passes, because any score above half of the total is passing
Show answer & explanation
Answer: B
With 200 total questions and a 75% passing threshold, the number required equals 75% of 200. Reasoning over those two facts, 150 correct answers meets that threshold exactly, so the candidate passes.19. A candidate answers 140 questions correctly on the exam. Using only the total question count and the passing percentage, what is the outcome?
- A. Pass — 140 correct exceeds the required number
- B. Pass — 140 correct equals the required number
- C. Fail — 140 correct is below the number required by the passing percentage
- D. Cannot be determined from the information given
Show answer & explanation
Answer: C
The number of correct answers needed equals the passing percentage applied to the total question count. Reasoning over those two facts, 140 correct falls short of that required number, so the candidate fails.20. Two applicants each intend to sit for the broker examination. Ignoring any other costs, what is their combined exam-fee expenditure for both sittings?
- A. $150
- B. $225
- C. $300
- D. $450
Show answer & explanation
Answer: C
Each broker exam sitting costs the stated broker fee. Reasoning over that single fee, two sittings cost twice that amount, which totals $300.21. A candidate scores exactly at the passing threshold on the exam. Which of the following best characterizes that result?
- A. The candidate fails, because meeting the threshold exactly is treated as below passing
- B. The candidate passes, because the passing percentage is the minimum share of questions that must be answered correctly
- C. The candidate's result is indeterminate at exactly the threshold
- D. The candidate passes only if they also paid the broker fee twice
Show answer & explanation
Answer: B
The passing standard is defined as answering the stated percentage of the questions correctly. Reasoning over that fact, a candidate who meets that percentage exactly satisfies the minimum required to pass.22. A borrower obtains a loan secured by a deed of trust. Which parties are associated with a deed of trust?
- A. Only a mortgagor and a mortgagee
- B. A trustor, a trustee, and a beneficiary
- C. A grantor and a grantee only
- D. A vendor and a vendee only
Show answer & explanation
Answer: B
A deed of trust involves three parties: the trustor (borrower), the trustee (a neutral third party who holds bare or naked title as security), and the beneficiary (the lender). This three-party structure distinguishes it from a two-party mortgage.23. In the context of mortgage lending, what does an acceleration clause allow a lender to do?
- A. Increase the interest rate at fixed intervals regardless of default
- B. Demand immediate payment of the entire remaining balance upon a specified default
- C. Extend the loan term automatically if the borrower misses a payment
- D. Reduce the monthly payment during periods of financial hardship
Show answer & explanation
Answer: B
An acceleration clause gives the lender the right to declare the entire unpaid balance immediately due and payable upon a triggering event such as default. It accelerates what would otherwise be a schedule of future installments into a single obligation.24. How does the secondary mortgage market primarily differ from the primary mortgage market?
- A. The secondary market originates new loans directly to homebuyers
- B. The secondary market buys and sells existing loans, providing liquidity to originating lenders
- C. The secondary market only handles government-issued grants, not loans
- D. The secondary market sets the appraised value of financed properties
Show answer & explanation
Answer: B
The primary market is where lenders originate loans directly with borrowers. The secondary market is where those existing loans are bought and sold among investors, replenishing lenders' funds so they can make additional loans. This distinction is conceptual and involves no specific figures.25. A broker represents a seller under a listing agreement limited to that single property sale, with no other authority to act for the seller. Which category of agency does this describe?
- A. General agent
- B. Special agent
- C. Universal agent
- D. Ostensible agent
Show answer & explanation
Answer: B
A special agent has limited authority for a single transaction, whereas a general agent, such as a property manager, may bind the principal across a range of matters.26. A buyer breaches a signed purchase agreement for a single-family home by refusing to close. The seller wants a court to force the buyer to complete the purchase rather than simply awarding money damages. Which remedy is the seller seeking?
- A. Liquidated damages
- B. Rescission
- C. Specific performance
- D. Novation
Show answer & explanation
Answer: C
Specific performance compels conveyance because land is deemed unique, which is why a seller may ask a court to force completion of the purchase rather than accept money damages alone.27. A homeowner conveys a parcel by deed that names the parties, includes a legal description and granting clause, and is signed by the grantor, delivered, and accepted, but the deed includes no warranties of title whatsoever. Which type of deed was most likely used?
- A. General warranty deed
- B. Quitclaim deed
- C. Special warranty deed
- D. Bargain and sale deed
Show answer & explanation
Answer: B
A quitclaim deed carries no warranties and conveys only whatever interest the grantor may have, which distinguishes it from a general warranty deed, where the grantor warrants title against all defects.28. Which estate in land is described as the highest and most complete form of ownership, freely inheritable and freely transferable?
- A. Life estate
- B. Leasehold estate
- C. Fee simple absolute
- D. Easement appurtenant
Show answer & explanation
Answer: C
The fee simple absolute is the highest and most complete form of ownership, freely inheritable and transferable, unlike a life estate, which ends at the measuring life, or a leasehold, which is merely a possessory interest.29. A grant conveys a home 'to my brother for life, then to my daughter.' Upon the brother's death, who holds title to the home?
- A. The grantor, automatically, by reversion
- B. The brother's heirs, through probate
- C. The daughter, as the named remainderman
- D. The state, by escheat
Show answer & explanation
Answer: C
A life estate lasts for the duration of a named person's life, after which title passes to a remainderman or reverts to the grantor; because a remainderman (the daughter) was named, title passes to her, not back to the grantor.30. A buyer records her deed in the public land records immediately after closing. What is the primary legal effect of that recording?
- A. It cures any pre-existing defects in the chain of title
- B. It gives constructive notice to the world and establishes priority
- C. It guarantees the title is marketable
- D. It automatically removes any recorded easements
Show answer & explanation
Answer: B
Recording the deed in the public land records gives constructive notice to the world and establishes priority; it does not cure title defects or guarantee marketability.31. A property owner falls behind on both a mortgage payment and a property tax bill, and the property is later sold in a foreclosure with insufficient proceeds to satisfy every lien. Which lien is generally paid first, regardless of recording date?
- A. The mortgage, because it was recorded first
- B. The property tax lien
- C. Whichever lien has the largest balance
- D. The mortgage, because home loans always have top priority
Show answer & explanation
Answer: B
Property tax liens and special assessments generally take priority over all other liens regardless of when they were recorded, so the tax lien is paid before the mortgage.32. Two neighboring lots are configured so that the owner of Lot 1 has the right to cross Lot 2 to reach a public road, and this right was created to benefit Lot 1 specifically. If Lot 1 is sold, what happens to this right?
- A. It terminates automatically because easements cannot be transferred
- B. It continues to benefit Lot 1 because it runs with the land
- C. It must be renegotiated with the new owner of Lot 2
- D. It converts into a personal license held only by the original owner
Show answer & explanation
Answer: B
An easement appurtenant benefits an adjoining dominant tenement (Lot 1), burdens the servient tenement (Lot 2), and runs with the land, so it passes automatically to a new owner of Lot 1.33. A seller wants to convey a property with the strongest possible protection to the buyer, including warranties against title defects arising at any point in history, even before the seller owned the property. Which deed type provides this level of protection?
- A. Quitclaim deed
- B. General warranty deed
- C. Sheriff's deed
- D. Deed in lieu of foreclosure
Show answer & explanation
Answer: B
A general warranty deed offers the greatest protection because the grantor warrants title against all defects arising at any time, unlike a quitclaim deed, which offers no warranties at all.34. For a deed to be effective in transferring title, which of the following combinations of requirements must all be satisfied?
- A. Notarization, recording, and a survey
- B. A legal description, a granting clause, and signature, delivery, and acceptance by the grantor
- C. Payment in full and a title insurance policy
- D. An appraisal and lender approval
Show answer & explanation
Answer: B
A deed must be in writing, name the parties, contain a legal description, include a granting clause, and be signed by the grantor and delivered and accepted to be effective; notarization, recording, appraisals, and title insurance are not listed among these core requirements.35. An owner grants a neighbor the right to cross a strip of the owner's land to reach a lake, and this right is tied to and benefits the neighbor's adjoining parcel. Which parcel is the 'servient tenement' in this arrangement?
- A. The neighbor's parcel, because it benefits from the right
- B. The owner's parcel, because it is burdened by the right
- C. Neither parcel, since easements only affect public land
- D. Both parcels equally
Show answer & explanation
Answer: B
An easement appurtenant benefits an adjoining dominant tenement and burdens the servient tenement; here, the owner's land that must be crossed is the servient tenement, while the neighbor's benefiting parcel is the dominant tenement.36. A deed was signed by a grantor who was a minor at the time of the transaction. How would this deed most accurately be classified under contract-validity principles?
- A. Void, because it never legally existed
- B. Voidable, because the minor may disaffirm it
- C. Unenforceable, because it was never in writing
- D. Fully valid and permanent regardless of the grantor's age
Show answer & explanation
Answer: B
A contract that a party may disaffirm, such as one signed by a minor, is voidable, which is distinct from a void contract (missing a required element) or an unenforceable one (valid but barred from court enforcement, such as an unwritten land-sale agreement).37. A seller and a buyer are negotiating the sale of a home. Before the buyer communicates acceptance of the seller's written offer, the seller decides to withdraw it. Under contract law principles, may the seller do this?
- A. No, because a written offer becomes irrevocable once it is delivered to the buyer
- B. Yes, because an offer may be revoked any time before acceptance is communicated
- C. No, because the buyer's reliance on the offer makes it binding
- D. Yes, but only if the seller pays the buyer's expenses incurred in reliance on the offer
Show answer & explanation
Answer: B
An offer may be revoked at any time before the other party communicates acceptance, so the seller's withdrawal is effective and no contract has yet formed.38. A buyer submits a written offer to purchase a property at a stated price. The seller responds by signing the offer but changing the closing date to a date the buyer never proposed. What is the legal effect of the seller's response?
- A. It is a valid acceptance because the price term was unchanged
- B. It is a counteroffer that rejects and extinguishes the buyer's original offer
- C. It is enforceable as a modification of the original offer without further action
- D. It has no legal effect because closing dates cannot be altered after an offer is signed
Show answer & explanation
Answer: B
Acceptance must be unqualified; because the seller made a material change to a term, the response operates as a counteroffer that rejects and extinguishes the buyer's original offer.39. Which combination of elements must be present for a real estate purchase agreement to be legally valid?
- A. Mutual assent, consideration, legally competent parties, and a lawful object
- B. A licensed broker's signature, consideration, and a recorded deed
- C. Mutual assent, a title insurance policy, and a lawful object
- D. Consideration, an appraisal, and legally competent parties
Show answer & explanation
Answer: A
A valid real estate contract requires four essential elements: mutual assent (offer and acceptance), consideration, legally competent parties, and a lawful object.40. A landlord and tenant orally agree to a five-year lease and shake hands, but nothing is ever signed. Which legal concept most directly explains why this lease cannot be enforced in court?
- A. The parol evidence rule
- B. The Statute of Frauds requirement that leases longer than one year be in writing and signed by the party to be charged
- C. The doctrine of specific performance
- D. The rule against commingling of funds
Show answer & explanation
Answer: B
The Statute of Frauds requires that leases longer than one year be in writing and signed by the party to be charged in order to be enforceable, so an oral five-year lease is unenforceable.41. A 16-year-old signs a contract to purchase a parcel of vacant land. Which term best describes the status of this contract?
- A. Void, because minors can never be parties to a contract
- B. Unenforceable, because land contracts require a licensed attorney
- C. Voidable, because the minor may choose to disaffirm it
- D. Valid and binding on both parties regardless of age
Show answer & explanation
Answer: C
A contract that a party may disaffirm, such as one signed by a minor, is voidable rather than void or unenforceable.42. A purchase agreement provides that the buyer's obligation to close is dependent on the buyer obtaining loan approval and the property passing a satisfactory inspection. What are these provisions called?
- A. Liquidated damages clauses
- B. Contingencies
- C. Acceleration clauses
- D. Granting clauses
Show answer & explanation
Answer: B
Contingencies are conditions that must be satisfied before a party is obligated to perform, commonly including financing, inspection, and appraisal contingencies.43. A purchase agreement states that if the buyer defaults, the seller may retain the buyer's earnest money deposit as the agreed measure of damages, rather than suing for actual losses. What type of clause is this?
- A. An acceleration clause
- B. A liquidated damages clause
- C. A contingency clause
- D. A due-on-sale clause
Show answer & explanation
Answer: B
Liquidated damages clauses let the seller retain the earnest money as the agreed measure of the buyer's default.44. A seller receives two competing written offers on the same day. The seller signs one offer without any changes and has it delivered back to that buyer's agent before doing anything else. Under contract formation principles, what has occurred?
- A. A counteroffer, because two offers existed simultaneously
- B. A valid acceptance, because the seller's signature was an unqualified acceptance of that offer's terms
- C. Nothing, because acceptance requires the buyer to sign a second time
- D. A void contract, because competing offers cannot both be considered
Show answer & explanation
Answer: B
Acceptance must be unqualified; because the seller signed the offer without altering any terms, the seller's signature constitutes a valid, unqualified acceptance, forming a contract with that buyer, since a material change would instead have created a counteroffer.45. A buyer and seller execute a written agreement for the sale of a home, but the agreement omits the purchase price entirely. Applying the essential elements of a valid contract, what is the legal status of this document?
- A. It is void, because it lacks the required element of consideration
- B. It is voidable at the buyer's option only
- C. It is unenforceable, but only until the parties agree to a price
- D. It is fully valid because mutual assent alone is sufficient
Show answer & explanation
Answer: A
A valid real estate contract requires mutual assent, consideration, legally competent parties, and a lawful object; an agreement missing consideration lacks a required element, making it void rather than merely voidable or unenforceable.46. A borrower's loan documents include a promissory note and a deed of trust. What is the primary legal function of the promissory note in this transaction?
- A. It pledges the property as security for the debt
- B. It evidences the debt and the borrower's promise to repay
- C. It grants the lender legal title to the property
- D. It authorizes the lender to declare the full balance due upon default
Show answer & explanation
Answer: B
A mortgage loan involves a promissory note evidencing the debt and the borrower's promise to pay, and a mortgage or deed of trust that pledges the property as security. The note itself evidences the debt obligation, not the security interest.47. A buyer submits a written offer to purchase a home. Before the seller communicates acceptance, the buyer changes their mind. Under contract law principles, may the buyer withdraw the offer?
- A. No, once submitted in writing an offer cannot be withdrawn
- B. Yes, an offer may be revoked any time before acceptance is communicated
- C. Only if the seller has not yet reviewed the offer
- D. Only with the listing broker's written permission
Show answer & explanation
Answer: B
An offer may be revoked any time before acceptance is communicated, so the buyer retains the right to withdraw up to that point.48. In a lien-theory state, which party holds legal title to real property during the term of a mortgage loan?
- A. The lender, until the debt is fully repaid
- B. The borrower, with the lender holding only a lien
- C. A neutral trustee appointed by the court
- D. Title is held jointly by borrower and lender as tenants in common
Show answer & explanation
Answer: B
In a lien-theory state the borrower holds title and the lender holds only a lien against the property, unlike a title-theory arrangement where the lender holds legal title until the debt is paid.49. A borrower defaults on mortgage payments, and the lender invokes a clause that makes the entire remaining loan balance immediately due. What is this clause called?
- A. Alienation clause
- B. Acceleration clause
- C. Defeasance clause
- D. Subordination clause
Show answer & explanation
Answer: B
The acceleration clause lets the lender declare the entire balance due upon default, allowing the lender to demand full repayment rather than waiting for further missed installments.50. A lender offers a borrower a lower interest rate in exchange for paying 2 discount points on a $200,000 loan. How much will the borrower pay in points at closing?
- A. $400
- B. $2,000
- C. $4,000
- D. $20,000
Show answer & explanation
Answer: C
One discount point equals one percent of the loan amount. Two points on a $200,000 loan equal 2% of $200,000, or $4,000, paid as prepaid interest to buy down the rate.51. A veteran who qualifies for VA financing wants to minimize upfront cash needed to purchase a home. Which feature of VA-guaranteed loans most directly supports this goal?
- A. They are insured by the Federal Housing Administration
- B. They can permit no down payment for eligible veterans
- C. They automatically waive the need for a promissory note
- D. They are not government-backed, reducing lender fees
Show answer & explanation
Answer: B
VA loans are guaranteed for eligible veterans and can permit no down payment, directly supporting a buyer's goal of minimizing upfront cash. FHA loans, by contrast, are insured (not guaranteed) and allow low, not necessarily zero, down payments.52. A buyer is obtaining a conventional loan with a 10 percent down payment. Based on standard industry practice for conventional financing, what will the lender most likely require?
- A. FHA mortgage insurance
- B. Private mortgage insurance
- C. A VA funding fee
- D. No mortgage insurance, since the loan is conventional
Show answer & explanation
Answer: B
Private mortgage insurance is typically required on conventional loans when the down payment is less than twenty percent. A 10 percent down payment falls below that threshold, so PMI would typically be required.53. A mortgage broker refers borrowers to a title company in exchange for an unearned fee for each referral. Which federal law most directly prohibits this practice?
- A. The Truth in Lending Act
- B. The Fair Housing Act
- C. The Real Estate Settlement Procedures Act
- D. The Civil Rights Act of 1866
Show answer & explanation
Answer: C
RESPA governs federally related mortgage loans and prohibits kickbacks and unearned referral fees, making it the law that directly addresses a broker receiving an unearned fee for referring business to a title company.54. Under RESPA, which two disclosure documents are lenders required to provide to borrowers on federally related mortgage loans?
- A. The Loan Estimate and the Closing Disclosure
- B. The APR disclosure and the rescission notice
- C. The promissory note and the deed of trust
- D. The appraisal report and the title commitment
Show answer & explanation
Answer: A
RESPA requires the Loan Estimate and Closing Disclosure as part of its governance of federally related mortgage loans, giving borrowers standardized disclosures of loan terms and closing costs.55. A lender fails to disclose the annual percentage rate on a borrower's loan for a principal residence. Which federal law and implementing regulation governs this disclosure requirement?
- A. RESPA, implemented by Regulation X
- B. The Fair Housing Act, implemented by Regulation B
- C. The Truth in Lending Act, implemented by Regulation Z
- D. The Statute of Frauds, implemented by state regulation
Show answer & explanation
Answer: C
TILA, implemented by Regulation Z, requires disclosure of the APR and total finance charge so borrowers can compare the true cost of credit, making it the governing law for APR disclosure failures.56. A homeowner refinances the mortgage on their principal residence with a new lender. Under TILA/Regulation Z, what right does the borrower have after signing the new loan documents?
- A. An unlimited right to cancel the refinance at any time
- B. A three-day right of rescission
- C. A thirty-day right of rescission
- D. No right of rescission on refinances
Show answer & explanation
Answer: B
TILA, implemented by Regulation Z, grants a three-day right of rescission on certain refinances of a principal residence, giving the borrower a short window to cancel after closing.57. Months after a sale closes, a former buyer-client asks the agent to disclose information that would weaken the seller's position in a separate, unrelated negotiation. What does the fiduciary duty of confidentiality require?
- A. The agent must disclose because the agency relationship has already terminated
- B. The agent must withhold the information, because confidentiality survives termination of the agency
- C. The agent may disclose only with a fee
- D. The agent must disclose only to a court
Show answer & explanation
Answer: B
Confidentiality survives termination of the agency and forbids revealing information that would harm the principal's bargaining position, regardless of when the request is made.58. A licensee is representing both the buyer and the seller in the same transaction. Under agency law principles, what must occur for this arrangement to be permissible?
- A. Nothing; dual representation is automatically allowed once a contract is signed
- B. The broker's manager must approve verbally
- C. Both parties must give informed written consent
- D. Only the seller's consent is required
Show answer & explanation
Answer: C
Dual agency is permitted only with the informed written consent of both parties to the transaction.59. An agent representing the seller is dealing with an unrepresented buyer who is a customer, not a client. Which statement correctly describes the agent's obligations to that buyer?
- A. The agent owes the buyer the same full fiduciary duties owed to the seller
- B. The agent owes the buyer no duties whatsoever
- C. The agent owes honesty, fair dealing, and disclosure of known material latent defects, but not fiduciary duties
- D. The agent owes only the duty of loyalty to the buyer
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Answer: C
Agents owe customers honesty and fair dealing and must disclose known material latent defects, but customers are not owed fiduciary duties, which are reserved for the agent's own principal.60. A seller receives a buyer's purchase offer and signs the acceptance but crosses out the closing date and writes in a new one before returning it. What is the legal effect of this change?
- A. It is a valid acceptance because the seller signed the document
- B. It operates as a counteroffer that rejects and extinguishes the original offer
- C. It has no legal effect until escrow closes
- D. It automatically binds the buyer to the new closing date
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Answer: B
Acceptance must be unqualified, so any material change to the terms, such as altering the closing date, operates as a counteroffer that rejects and extinguishes the original offer.61. Two parties orally agree to the sale of a parcel of land, and neither ever signs a written document. If the seller later refuses to convey the property, what is the legal status of the oral agreement?
- A. Void, because no agreement was ever legally formed
- B. Voidable at the buyer's option only
- C. Enforceable, because real estate custom permits oral sale agreements
- D. Unenforceable, because the Statute of Frauds requires real estate sale contracts to be in writing
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Answer: D
The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed by the party to be charged; an unwritten land-sale agreement is unenforceable even though it may otherwise be valid.62. A purchase agreement includes a clause requiring the buyer to obtain loan approval before being obligated to close. What is this clause called, and what is its function?
- A. An acceleration clause, which speeds up the closing date
- B. A contingency, which is a condition that must be satisfied before a party is obligated to perform
- C. A granting clause, which conveys title
- D. A liquidated damages clause, which sets a default remedy
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Answer: B
Contingencies are conditions that must be satisfied before a party is obligated to perform, and a financing contingency is a common example.63. A buyer breaches a contract to purchase a uniquely situated parcel of land. Rather than seeking money damages, the seller asks a court to force the buyer to complete the purchase as agreed. What remedy is the seller pursuing?
- A. Liquidated damages
- B. Rescission
- C. Specific performance
- D. Novation
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Answer: C
Specific performance compels conveyance because land is deemed unique, making it the appropriate remedy when a party wants the actual property rather than a monetary substitute.64. A minor signs a contract to purchase a small parcel of real estate. Which term best describes the legal status of this contract?
- A. Void, because it never existed legally
- B. Voidable, because the minor may disaffirm it
- C. Unenforceable in every case involving a minor
- D. Fully enforceable against both parties
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Answer: B
A contract that a party may disaffirm, such as one signed by a minor, is voidable, distinguishing it from a void contract that never existed legally or an unenforceable one that is otherwise valid but barred from court enforcement.