Real Estate Salesperson Exam (National Portion) Sample Questions and Explanations

Eminent domain lets the government take private property for public use, such as a highway, but it must pay the owner just compensation. The legal process of taking the property is called condemnation.

Wrong choices

• Escheat: Escheat is when property goes to the state because the owner died without a will or heirs.
• Police power: Police power is the right to regulate property, such as zoning, without taking ownership.
• Taxation: Taxation is the power to charge taxes on property.

A general warranty deed has the most covenants (promises), such as seisin, quiet enjoyment, against encumbrances, and warranty forever. The seller defends title against claims from any time in the past.

Wrong choices

• Quitclaim deed: A quitclaim deed makes no warranties at all.
• Special warranty deed: A special warranty deed covers only the time the seller owned the property.
• Bargain and sale deed: A bargain and sale deed implies the seller holds title but makes few or no warranties.

The sales comparison (market data) approach compares the subject home with similar homes that sold recently. Because buyers of homes compare homes this way, it is usually the most reliable approach for single-family homes.

Wrong choices

• Income approach: The income approach is best for rental and investment property.
• Cost approach: The cost approach is best for new or special-purpose buildings.
• Gross rent multiplier: A GRM is a quick income method, mostly for rental homes.

The principal (client) hires the agent and is owed fiduciary duties. A customer is a party the agent works with but does not represent, such as a buyer working with the seller's agent.

Wrong choices

• Customer: A customer is a third party the agent works with but does not represent.
• Subagent: A subagent is an agent of the agent.
• Fiduciary: The agent, not the person hiring, is the fiduciary.

Steering is directing buyers toward or away from areas based on a protected class. It is illegal even if the buyer does not complain.

Wrong choices

• Blockbusting: Blockbusting is urging owners to sell by saying people of a protected class are moving in.
• Redlining: Redlining is refusing loans or insurance in certain areas.
• Puffing: Puffing is exaggerated sales talk.

Federal law requires sellers and landlords of housing built before 1978 to disclose known lead-based paint and hazards, give the EPA pamphlet, and keep a lead warning statement in the contract. Buyers get a 10-day chance to test, unless they waive it.

Wrong choices

• 1950: The federal rule covers homes built before 1978, not 1950.
• 1990: 1990 is too late; lead paint for homes was banned in 1978.
• 1965: The cutoff year is 1978.

The borrower gives the mortgage, so the borrower is the mortgagor. The lender receives it and is the mortgagee. With a deed of trust, the borrower is the trustor, the lender is the beneficiary, and a third party is the trustee.

Wrong choices

• Mortgagee: The mortgagee is the lender.
• Trustee: A trustee holds title under a deed of trust.
• Beneficiary: The beneficiary is the lender under a deed of trust.

1. Area = 150 × 290.4 = 43,560 square feet.
2. Acres = 43,560 ÷ 43,560 = 1 acre.
3. Remember: 1 acre = 43,560 square feet.

Wrong choices

• 2 acres: 2 acres would be 87,120 square feet.
• 0.5 acre: 0.5 acre would be 21,780 square feet.
• 4.4 acres: This divides by 10,000 instead of 43,560.

Escheat returns property to the state when an owner dies without a will and without heirs, or when property is abandoned under state law.

Wrong choices

• Eminent domain: Eminent domain is a taking for public use with compensation.
• Adverse possession: Adverse possession is gaining title by open, continuous use of another's land.
• Condemnation: Condemnation is the legal process used for eminent domain.

A quitclaim deed gives up any interest the grantor might have, without promising that the grantor has any. It is often used to clear a cloud on title or to transfer between family members.

Wrong choices

• General warranty deed: A general warranty deed has the most warranties.
• Special warranty deed: A special warranty deed warrants title during the seller's ownership.
• Trustee's deed: A trustee's deed is used by a trustee and normally recites the trustee's authority.