Question 21
Real Estate Minnesota Pre-license Exam. A seller claiming to be the fee simple owner of an estate in land conveys the property to a buyer with a general warranty deed. The buyer later discovers that the seller was a co-owner of the property in question. Has the seller violated any covenants in the deed?
- No, because the principle of caveat emptor supersedes any of the covenants in a general warranty deed.
- No, because a general warranty deed contains only the covenant that the subject property was not encumbered during the owner’s possession.
- Yes, because one of the covenants of a general warranty deed guarantees that a marketable title is being delivered.
- Yes, because one of the covenants of a general warranty deed guarantees that an equitable title is being delivered.
Question 22
A seller sent a buyer a letter in which she offered to sell her property for $85,000 cash by a special warranty deed. The buyer sent a letter back to the seller stating, “I accept your offer at $85,000 cash, but you must convey with a general warranty deed.” Which of the following is true about the buyer’s letter?
- It is an acceptance, because the buyer is entitled to a general warranty deed.
- It is merely an inquiry of the seller, and has no legal effect on the seller’s original offer.
- It is a rejection of the seller’s offer, but it is also a counteroffer.
- It is an implied contract, because the buyer was willing to pay cash, and because the buyer accepted in writing.
Question 23
A buyer is purchasing a $400,000 home and the lender has approved a $320,000 mortgage with a 6% interest rate, amortized over 30 years. What will the buyer’s yearly principal and interest payments total (rounded up)? (BE SURE TO USE THE AMORTIZATION TABLE.)
- $23,248
- $29,060
- $29,867
- $34,874
Question 24
A broker has an opportunity to take a listing that has been in the family for years and the broker still owns a part of the property with the family. The broker
- has an agency by estoppel. The broker should refuse to list the property and proceed as a seller principal.
- needs to negotiate a single agency which means that only the broker can list or sell the property. No cooperating brokers are allowed.
- has an agency coupled with an interest. The broker should take the listing while disclosing any ownership interest to the other sellers and to any prospective buyer.
- can represent the sellers of the property through agency by ratification. The other owners should be informed that the broker is the only broker who can represent them due to the ownership interest.
Question 41
A property is being sold “as is.” The listing agent has not seen the property but knows it has significant defects. The agent’s best course of action is to
- question the seller as to any known defects.
- tell the buyer the property is being sold “as is.”
- state that the listing agent has not seen the property.
- say nothing unless asked by the buyer’s agent.
Question 42
A real estate broker is representing both a buyer and a seller in the same transaction with the written consent of both. This type of agency is called
- single agency.
- dual agency.
- transactional brokerage.
- sub-agency.
Question 43
A borrower has a loan where the interest rate can change over the life of the loan based on an economic indicator. This is known as an
- Adjustable rate mortgage.
- FHA loan.
- VA loan.
- Fixed-rate mortgage.
Question 44
A survey is the best way to determine the
- location of property boundaries.
- existence of liens.
- fair market value.
- condition of the structure.
Question 45
A property is closing on June 15th. The monthly rent of $600 was paid in advance on June 1st. Using a 30-day month and the day of closing belonging to the seller, the proration would be a
- debit to the seller of $300 and a credit to the buyer of $300.
- credit to the seller of $300 and a debit to the buyer of $300.
- debit to the seller of $280 and a credit to the buyer of $280.
- credit to the seller of $280 and a debit to the buyer of $280.
Question 46
Improvements installed on leased premises by tenants to enable or enhance the tenants’ practice of their profession are called
- fixtures.
- easements.
- emblements.
- trade fixtures.
Question 47
Licensee A is the agent of the sellers and Licensee B is the agent of the buyers. After the offer is accepted, the buyers change their minds and want to void the contract. Which of the following is the proper course of action by the licensees?
- They should each explain to their own clients the possible legal implications and the need to consult an attorney.
- They should each talk to both the buyers and the sellers and try to get them to change their minds.
- Licensee A should call the buyers and offer part of her commission if they will complete the sale.
- Licensee A should tell the buyers that they owe her a commission even if they do not complete the sale.
Question 48
A contract based on a promise in exchange for another promise describes a
- unilateral real estate contract.
- bilateral real estate contract.
- multilateral contract.
- binary contract.
Question 49
A home is being purchased with an 80% loan. The buyer is making a $15,000 down payment in addition to paying all typical buyer’s loan and other closing costs. What is the sale price of the home?
- $75,000
- $90,000
- $95,000
- $100,000
Question 50
A broker is working with a family which is multiracial. The broker only shows properties located in multiracial neighborhoods. Even though the broker thinks they are doing the family a favor, this is violating the Fair Housing Act prohibition against
- redlining.
- disparate treatment.
- steering.
- blockbusting.
Question 51
A listing agent is told by the seller that the property has a history of flooding. The listing agent should
- keep the information confidential.
- tell the buyer only if the buyer asks.
- inform any potential buyer that the property has a history of flooding.
- suggest the buyer purchase a home warranty.
Question 52
When a lender requires flood insurance, it is because
- the property is in a low-risk area.
- the property is in a high-risk flood area and that flood insurance is required.
- the borrower requested it.
- it is a standard requirement for all loans.
Question 53
The total income a property could produce if it were fully rented with no rent concessions, and if no collection losses were incurred, is the property’s
- net operating income.
- effective gross income.
- potential gross income.
- gross operating income.
Question 54
Legally nonconforming use usually results from a change in
- building codes.
- development costs.
- zoning.
- a performance bond.
Question 55
Lead-based paint must be disclosed and a Federal Disclosure must be signed by all parties for all residential properties built before
- 1978.
Question 56
A tax against a specific property resulting from a public improvement that benefits that property is known as
- an improvement cost.
- a benevolence to community redevelopment.
- the proportional method of assessing property.
- a special assessment. Real Estate Minnesota Pre-license Exam
Question 75
The amount of ad valorem taxes is determined by
- the size of the lot.
- the income of the owner.
- the current market value of the property.
- the replacement cost of the building.
Question 76
In a jurisdiction where the common law of agency prevails, a buyer enters into a buyer agency agreement with a real estate licensee. This agreement establishes a
- dual agency relationship.
- sub-agency relationship.
- fiduciary relationship.
- customer relationship.
Question 77
Which of the following statements regarding an open listing is correct?
- The listing agreement may be renewed automatically without signature.
- No matter who sells the property, the listing broker is entitled to a fee.
- If the seller sells the property, commission is still due.
- The listing agreement should be in writing and signed by the seller.
Question 78
A contract to purchase has been signed by the buyer and one of the co-owners. Is the contract valid?
- Yes, as long as the other co-owner had been notified in writing of the impending sale.
- Yes, because the signature of only one co-owner is required for a valid contract.
- No, because both of the co-owners’ signatures are required for a valid contract.
- No, because for property to be sold, full ownership rights must first be vested in one owner.
