Question 1
New Jersey Real Estate Exam. Which of the following is true with respect to licensees offering free or discounted products or services?
- A. The offering can be made through a lottery, contest or game.
- B. The offering can be conditioned upon the consumer entering into a contract of sale.
- C. The offering can be conditioned upon the consumer entering into a brokerage agreement.
- D. The licensee’s broker can receive compensation from the provider of the free or discounted product or service.
Question 2
Which of the following is generally true regarding the value of an expensive house built in a neighborhood of inexpensive houses?
- A. It will decrease.
- B. It will increase.
- C. It will not be affected.
- D. It cannot be predicted.
Question 3
A property owner has a mortgage on a lot and wants to borrow money to build a house on it. To accomplish this, which of the following clauses must the existing mortgage contain?
- A. alienation
- B. acceleration
- C. subrogation
- D. subordination
Question 4
A buyer wants to purchase a home for $300,000 with a 30% down payment. The lender charges 1.5 points. How much money does the buyer need up front to make the purchase?
- A. $90,000
- B. $94,500
- C. $91,350
- D. $93,150
Question 5
According to the New Jersey Real Estate License Law, employment agreements between salespersons and brokers MUST include which of the following provisions?
- A. A clause outlining the compensation to salespersons in the event that their employment is terminated
- B. A clause requiring the salesperson to purchase errors and omissions insurance coverage
- C. a clause confirming the salesperson’s status as an independent contractor
- D. An attorney review clause stating that it is the broker’s option to hire an attorney in order to protect the broker’s rights
Question 6
A buyer bought a farm and has a mortgage on it. The buyer then built and paid cash for a new storage barn on the farm. Is the storage barn subject to the mortgage lien?
- A. Yes, because the lien attaches to the buyer’s personal property.
- B. Yes, because the mortgage lien attaches to real property.
- C. No, because the barn is a trade fixture.
- D. No, because the barn was built after the mortgage note was signed.
Question 7
A licensee faxes a list of available properties to prospective buyers. Which of the following is true?
- A. The fax must contain an opt-out provision for future communications.
- B. The licensee must include only a phone number to reply.
- C. The licensee’s company’s name does not need to be listed.
- D. The licensee must mail an identical list to all parties.
Question 8
A buyer wants to purchase a home for $250,000 with a 30% down payment. The lender charges 2.25 points. How much money does the buyer need up front to make the purchase?
- A. $75,000
- B. $80,625
- C. $76,688
- D. $78,938
Question 9
Which of the following statements about an earnest money deposit is true?
- A. The deposit is retained intact by the seller until closing.
- B. The deposit is often given to the responsible broker at the same time the buyer makes an offer.
- C. The amount of the deposit is determined by the responsible broker alone as the seller’s representative.
- D. The deposit is required before any real estate transaction can be completed.
Question 10
Blockbusting, as defined in civil rights laws, involves
- A. refusing to rent to, sell to, negotiate with, or deal with a person because of his race or national origin.
- B. making false statements concerning the availability of housing for inspection by minorities.
- C. quoting different terms or conditions for buying or renting a particular property by minorities.
- D. inducing a property owner to sell her property by indicating that a minority family has purchased a neighboring property.
Question 11
Which of the following statements about federal fair housing laws is true?
- A. They prohibit racial discrimination only.
- B. They may be enforced by filing a complaint with HUD.
- C. They preempt all state laws in the area of housing discrimination.
- D. A number of sections were overturned by a U.S. Supreme Court opinion.
Question 12
An owner contracted with a company to build an addition onto a house. When the addition was finished, the owner refused to pay the balance of the contract price. What type of lien should the company obtain to obtain the balance?
- A. judgment lien
- B. general lien
- C. mechanic’s lien
- D. condemnation lien
Question 13
A seller signs a listing contract with a licensee, but several weeks later wishes to cancel the listing before it expires. Is the seller permitted to do so?
- A. Yes, because it is the seller’s right, but there may be liability to the licensee’s firm for a commission.
- B. Yes, because the seller can transfer the listing to another licensee before the expiration date on the contract.
- C. No, because a listing can be canceled only if the licensee abandons it.
- D. No, because a bilateral written agreement cannot be canceled during its term.
Question 14
Which of the following listings allows more than one brokerage firm to work simultaneously to sell the owner’s property and claim the full commission?
- A. an exclusive listing
- B. a written listing
- C. an open listing
- D. an exclusive right-to-sell listing
Question 15
When MUST a listing broker provide a copy of a fully executed written listing agreement to the owner?
- A. Upon execution of the listing agreement by all parties
- B. Within three days of execution of the listing agreement by registered mail, return-receipt-requested
- C. Within five business days of execution of the listing agreement
- D. At the time of presentation of a written offer
Question 16
A secretary in a real estate office who does NOT have a real estate license may:
- A. review the Consumer Information Statement with a prospective buyer
- B. perform bookkeeping functions concerning escrowed funds
- C. sign escrow checks with the written authorization of the broker
- D. disclose the current status of a commercial listing
Question 17
A listing agent presents a signed offer to a seller who then changes the amount of the down payment. Before presenting the counteroffer to the buyer, the New Jersey Real Estate License Law requires the listing agent to
- A. obtain the consent of the listing broker.
- B. secure the seller’s initials confirming the revision.
- C. prepare a separate addendum that reflects the revision.
- D. verbally inform any buyer’s agent of the proposed revision.
Question 18
An agreement between two parties where one party is hired to represent or act for another is called
- A. a general contract.
- B. an agency contract.
- C. a contract of forbearance.
- D. a limited contract.
Question 19
The New Jersey Real Estate Timeshare Act applies to all of the following EXCEPT a timeshare plan
- A. consisting of 10 units.
- B. extending over a 5 year period only.
- C. already approved by the Department of Commerce.
- D. where the purchaser’s total financial obligation is less than $5,000.
Question 20
Which of the following statements about dual agency is true?
- A. It is illegal in some states.
- B. It requires very few disclosures.
- C. It is the most common form of agency.
- D. Each party has the undivided loyalty of the agent.
Question 1
C purchases a property from B in April. In October of the same year, C is assessed $\$2,000$ by the condominium association for a new roof. Who is responsible for the payment of the assessment?
- A. B
- B. C
- C. split between B and C
- D. pro-rated between B and C
PART 2
Question 1
A broker is offering a $100 gift certificate at a jewelry store to all sellers who list with the broker during a specified time period. According to the New Jersey Real Estate License Law, the promotion is prohibited because it:
- A. discriminates against sellers who do not list with the broker during the specified time period
- B. makes the receipt of the free offering contingent upon sellers listing their properties with the broker
- C. offers compensation for brokerage activity to unlicensed persons
- D. discriminates against sellers whose religion prohibits the wearing of jewelry
Question 2
Who may give a supportable opinion of market value to be used in seeking a federally-related loan to finance a real estate transaction?
- A. A certified appraiser.
- B. A licensed real estate principal broker.
- C. Any real estate licensee, in each state in which she is licensed.
- D. A Certified Public Accountant.
Question 3
A potential buyer signs a contract with a seller but then decides not to buy. The seller may sue the potential buyer for specific performance or damages unless the contract was
- A. a bilateral contract.
- B. an installment contract.
- C. a land contract.
- D. an option contract.
Question 4
A licensee obtains a listing for a property owned by Jones and then introduces a prospect, Bailey, to Jones. Jones and Bailey negotiate, but Jones sells to another buyer, Smitts. Six months later, Smitts sells the property to Bailey. Is the licensee entitled to a commission from Smitts?
- A. Yes, because the licensee originally interested Bailey in the property.
- B. Yes, because negotiations between Jones and Bailey were made in good faith.
- C. No, because Jones’ property was resold after 3 months.
- D. No, because the licensee’s listing agreement was with Jones.
Question 5
When a licensee takes a listing to sell a new multi-family residential property, the document that MUST be provided to the owner by the licensee is
- A. an Attorney General’s Memorandum on Discrimination.
- B. a lead-based paint disclosure form.
- C. a copy of the Truth-in-Renting Law.
- D. a list of all municipalities in the multiple listing systems to which the licensee belongs.
Question 6
Elderly homeowners paid off their loan 5 years ago. Due to a limited fixed income, they would like to borrow on the equity of the home. Which type of loan would be most desirable?
- A. open-end loan
- B. reverse mortgage
- C. blanket loan
- D. growing-equity loan
Question 7
A home warranty for a previously owned home would usually cover which of the following items?
- A. structure or flooding issues after closing
- B. only home systems such as the roof, plumbing, and foundation
- C. major appliances and home systems such as electric, heating, and plumbing
- D. major appliances, the buyer’s personal property, and any seller added fixtures
Question 8
In the case where a mortgage loan with level period payments has been completely repaid by its maturity date, it is said to be
- A. depreciated.
- B. capitalized.
- C. fully amortized.
- D. refinanced.
Question 9
Using references to the influx of persons of a particular ethnic origin into a neighborhood to secure listings from residents in that neighborhood is:
- A. permissible aggressive marketing
- B. illegal and known as redlining
- C. illegal and known as steering
- D. illegal and known as blockbusting
Question 10
Smith had an easement by necessity to use a road near Johnson’s farmhouse. The pickup truck that Smith drove sent dust toward the house. Does this give Johnson grounds to terminate the easement?
- A. Yes, because an easement by necessity must not run contrary to the interest of either party.
- B. Yes, because an easement by necessity exists at the pleasure of the servient estate holder.
- C. No, because Smith must be allowed access to his land no matter what the inconvenience to Johnson.
- D. No, because an easement by necessity cannot be terminated under any circumstances.
Question 11
A real estate licensee has been asked to estimate the value of the seller’s home for the purpose of deciding upon a listing price. Which of the following are the four essential elements of value to be considered?
- A. utility, scarcity, demand, transferability
- B. physical, fundamental, social, functional
- C. physical, social, economic, governmental
- D. income, capitalization, depreciation, utilization
Question 12
A borrower will likely be required to pay mortgage insurance premiums if a property is financed by
- A. an FHA loan.
- B. an owner-financed loan.
- C. a VA loan.
- D. a land contract/contract for deed.
Question 13
Two prospective tenants feel that because of their national origin, they were denied rental of an apartment in a 12-unit apartment building. The building was owned by a private individual who lived in one of the units and who used no discriminatory advertising and no real estate broker. Do the prospective tenants have any recourse?
- A. Yes, because discrimination was in the rental of a unit in a 12-unit building.
- B. Yes, because the owner of the building did not use a broker.
- C. No, because the owner occupied one of the units.
- D. No, because the owner avoided discriminatory advertising.
Question 14
In order to provide real estate brokerage services to the public for compensation, all of the following entities must be licensed EXCEPT
- A. property management companies.
- B. financial institutions.
- C. corporations.
- D. partnerships.
Question 15
A real estate salesperson, acting as a subagent for the seller, tells a prospective buyer to make a lower offer because the seller is very anxious to sell quickly. Which of the following statements is FALSE regarding the salesperson’s conduct?
- A. She violated her fiduciary duty to the seller.
- B. Her conduct implies she is representing the buyer.
- C. She should not assume that an anxious seller will accept a lower offer.
- D. She acted appropriately to sell the seller’s property.
Question 16
When appraising a single-family residence, which of the following properties would be the BEST comparable sale?
- A. A property located 10 blocks away that sold two years ago.
- B. A property next door that was purchased last week by the owner’s sister.
- C. A property across the street that sold eight months ago through a bank foreclosure.
- D. A property two blocks away that sold seven months ago in an arm’s length transaction.
Question 17
In a jurisdiction where a seller’s property condition disclosure is required, the disclosure is to be completed by the
- A. seller of the property.
- B. inspector who inspects the property.
- C. the listing agent to ensure completeness.
- D. listing agent, and amended by the seller to ensure accuracy.
Question 18
A married couple is purchasing a home. They ask the broker to advise them regarding the best way to take title. The broker should
- A. ask his principal broker to make a recommendation.
- B. advise them to take title as tenants by the entirety.
- C. decline to advise them and suggest that they consult an attorney.
- D. explain the possible types of joint ownership so they understand the options.
Question 19
A person who is disabled wants to rent an apartment and alter the apartment to meet special needs. Which of the following is true regarding the costs of changing the apartment back to its original condition after termination of the lease?
- A. The landlord can increase the security deposit up to an amount equal to 6 months’ rent to cover renovation costs.
- B. HUD will make a ruling on a case-by-case basis as to who pays for any renovation costs.
- C. The landlord can require the lessee to restore the apartment at the lessee’s expense.
- D. The federal government will reimburse the landlord for any renovation costs if the landlord cannot find another person who is disabled to rent the unit.
Question 20
A buyer’s agent is NOT permitted to tell a buyer that:
- A. the seller is willing to accept less than the listing price because of financial circumstances.
- B. a former occupant of a property had AIDS
- C. the roof leaked recently but was patched by the owner
- D. the property was the scene of a serious crime
Question 21
Which of the following is a permitted free offering?
- A. A complimentary home warranty with every listing
- B. A coupon for discounted commission on listing services
- C. A free dinner for attendees at a homebuyers’ evening seminar
- D. Free use of a local moving van for all listings
Question 22
The role of a real estate licensee in relation to their broker is always
- A. to act as an independent contractor.
- B. to function as an employee, as scheduled and assigned by the broker.
- C. to work and act on behalf of the broker who supervises and manages them.
- D. to market property, assist in office management, represent clients, answer phone inquiries, and follow licensing law.
Question 23
An executed contract is best described as one for which
- A. the title has been recorded.
- B. all obligations have been performed.
- C. the deed has been acknowledged.
- D. approval has been granted by the probate court.
Question 24
A licensee leases space in an office complex. The lessor requires the licensee to pay monthly rent plus a portion of the building’s taxes and operating expenses based on the number of square feet occupied. Which of the following types of leases does the licensee have?
- A. gross
- B. percentage
- C. triple net
- D. net
Question 25
A broker was helping a customer who needed hazard insurance to close a property transaction. Which of the following actions is the most appropriate for the broker to take?
- A. Purchase a short-term standard policy on the customer’s behalf so that the closing could proceed.
- B. Choose an agent for the buyer and explain the buyer’s options for insurance coverage.
- C. Give the buyer a choice of agents and allow the buyer to choose coverage.
- D. Recommend one insurance agent and allow the buyer to choose coverage.
Question 26
When clearing the title when a mortgage is paid in full, a person should obtain
- A. mortgage title insurance.
- B. a mortgage release.
- C. a promissory note marked paid in full.
- D. a quitclaim deed.
Question 27
Smith and Jones sign a properly prepared contract to grant Jones an option to buy Smith’s commercial building. The consideration given by Jones is $5. The contract is
- A. void.
- B. voidable.
- C. valid.
- D. unenforceable.
Question 28
Which of the following is an accurate description of 1 acre of land?
- A. 5,280 linear feet
- B. 1 square mile
- C. one-fourth of a section
- D. 43,560 square feet
Question 29
A house has been appraised at $85,000. A buyer offers and a seller accepts the appraised value for the house. Under which of the following loan programs would the buyer, if qualified, most likely to obtain a 100% loan?
- A. VA-guaranteed loan
- B. FHA-insured loan
- C. conventional loan insured by private mortgage insurance
- D. conventional uninsured loan
Question 30
What type of deed may sellers use to limit their risk by not providing covenants or guarantees against title defects that occurred before they held title to a property?
- A. General Warranty Deed
- B. Special Warranty Deed
- C. Bargain and Sale Deed
- D. Trust Deed
Question 31
An offer to purchase a property is delivered to the listing principal broker by a cooperating principal broker. The listing principal broker makes an appointment with the owner to present the offer at 7 p.m. of that same day. However, before 7 p.m., two more offers arrive on the same property. Which offer should be presented to the owner at the 7 p.m. appointment?
- A. all three of the offers
- B. the first offer received
- C. the offer with the highest sale price
- D. the offer most favorable to the seller, including price and all terms
Question 32
Smith bought a landlocked property from Jones on the condition that Jones grants Smith an easement across the property to the road. The appropriate documents were drawn, but the easement was never recorded. Later, Smith sold the property, but did not mention the easement. Is there a valid easement across the property?
- A. No, because the original easement was not recorded.
- B. No, because the second transfer did not specifically mention the easement.
- C. Yes, because the easement runs with the land, not the person.
- D. Yes, because Smith held the servient estate and Jones held the dominant estate.
Question 33
Which of the following is required in a valid written lease?
- A. witness signature
- B. lease expiration date
- C. tenant security deposit
- D. provision regarding pets
Question 34
A contract of sale prepared by a licensee MUST include an attorney review clause if it pertains to which of the following types of properties?
- A. Six-family dwelling unit, a portion of which is used for non-residential purposes
- B. Commercial building that does not exceed 10,000 square feet
- C. Subdivision of fifteen or more lots
- D. Single family residential vacant lot
Question 35
The listing broker has been presented with multiple offers. The seller would accept only a cash offer on the home, so the broker will present
- A. the highest cash offer to the seller.
- B. the highest offer to the seller.
- C. only cash offers to the seller.
- D. all offers to the seller.
Question 36
Which of the following is an operating expense in a property management budget?
- A. security deposit reimbursements
- B. property taxes
- C. debt service
- D. capital expenditures
Question 37
An individual hired by the homeowners’ association of KLM Condominiums. The individual is not required to be a real estate licensee in New Jersey UNLESS the individual engages in which of the following activities?
- A. Collecting the monthly association membership fees
- B. Negotiating a contract with a security service
- C. Retaining a landscaping service
- D. Soliciting tenants for vacant rental units
Question 38
The Freshwater Wetlands Protection Act of 1987 is a New Jersey law that:
- A. requires environmental impact statements to be filed with the New Jersey Department of Environmental Protection before title to developed real estate can be transferred
- B. restricts development of real estate in certain designated areas
- C. empowers the New Jersey Department of Environmental Protection to acquire title to certain real estate for less than its fair market value through condemnation
- D. requires the registration of residential development projects with the New Jersey Department of Community Affairs
Question 39
Major sources of real estate financing are lenders in the secondary mortgage market. An example of a lender in the secondary mortgage market is:
- A. the Federal Housing Administration (FHA).
- B. Fannie Mae (FNMA).
- C. the Veterans Administration (VA).
- D. the Farmers Home Administration (FmHA).
Question 40
According to the Real Estate Licensing Law, a real estate licensee can provide a rebate of the commission to a buyer:
- A. if the licensee is the broker.
- B. if notated on the contract of sale.
- C. provided it does not exceed 50% of the total commission.
- D. if a writing confirming the terms of the rebate is provided to the buyer at closing.
Question 41
Whenever a salesperson receive cash to be held in trust, the salesperson MUST:
- A. deposit the money within twenty-four hours in an interest bearing account
- B. give a written receipt signed by the salesperson to the prospective purchaser and immediately deliver the funds to the salesperson’s broker
- C. notify the customers that cash is unacceptable and request that payment be made by certified check as required by the license law
- D. immediately deposit the funds in the salesperson’s account and write a check to the broker’s escrow account
Question 42
The property located at 345 Main Street sold in foreclosure for $100,000. The default was on a $70,000 loan and the related expenses total $5,000. Which of the following is true regarding the foreclosure?
- A. The trustee is entitled to the excess proceeds.
- B. The mortgagor is entitled to the excess proceeds.
- C. The mortgagee must file a claim in the courts for the excess.
- D. The lender is entitled to all proceeds.
Question 43
A contract in which a licensee is employed by an owner to find a buyer for a 20-unit apartment building is most likely:
- A. an option contract.
- B. a listing contract.
- C. a property management contract.
- D. a contract of sale.
Question 44
A property owner and a tenant enter into a written agreement whereby the owner will let the tenant live in a home in exchange for monthly rent. Which of the following types of contracts has been created?
- A. conditional
- B. assigned
- C. implied
- D. bilateral
Question 45
A proposed zoning regulation mandates that buildings of 10 or more stories leave 25% of the land area as open space. Is such a regulation valid?
- A. Yes, because such a regulation is a typical example of directive zoning.
- B. Yes, because zoning regulations may control the amount of open space that a property must have.
- C. No, because zoning regulations may restrict only the use of the property, but not its development.
- D. No, because a commercial property is not subject to regulations that control the amount of open space that it must have.
Question 46
The rules governing New Jersey real estate licensees require that a comparative market analysis (CMA) for a property MUST include:
- A. the square footage of the property
- B. school reports
- C. the sales price of pending properties
- D. a statement indicating that the CMA is not an appraisal
Question 47
A seller accepts an offer from a buyer subject to the following: 80% financing, home inspection, closing on or before October 1, approval of an attorney on marketable title, and possession within 30 days of closing with a daily rental amount from closing to possession. This is an example of:
- A. a unilateral contract.
- B. a contract subject to contingencies.
- C. an offer subject to the buyer’s approval.
- D. an offer subject to the seller’s approval.
Question 48
A broker is offering a $100 gift certificate at a jewelry store to all sellers who list with the broker during a specified time period. According to the New Jersey Real Estate License Law, such a promotion is prohibited because it:
- A. discriminates against sellers who do not list with the broker during the specified time period
- B. makes the receipt of the free offering contingent upon sellers listing their properties with the broker
- C. offers compensation for brokerage activity to unlicensed persons
- D. discriminates against sellers whose religion prohibits the wearing of jewelry
