PSI Exam Test Prep Questions and Answers with Certified Solutions

PSI Exam Test Prep Questions and Answers with Certified Solutions A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbor's land to gain access to the ri ...

PSI Exam Test Prep Questions and Answers with Certified Solutions A homeowner has negotiated with a neighbor to obtain the permanent right to pass over the northern part of the neighbor's land to gain access to the river. He pays the neighbor $9,000 for the right of access and receives a deed. This is an easement ✔✔appurtenant A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have? ✔✔Tenancy at will The main difference between tenancy in common and joint tenancy is that with tenancy in common, when a co-owner dies, ✔✔his undivided interest passes to his heirs Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian and littoral rights are automatically conveyed with property, or all water rights are controlled by the state under the doctrine of prior appropriation. The doctrine of prior appropriation is MOST likely to be followed in states where ✔✔water is scarce A legal easement can be created by any of the following EXCEPT ✔✔merger of the titles Legal descriptions using the government survey system are NOT generally used in ✔✔the original 13 states Real property can be converted to personal property by ✔✔severance A lawsuit for inverse condemnation may be brought by ✔✔homeowner Building codes are ✔✔ordinances that specify construction standards A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? ✔✔Conditional use permit or zoning variance. An environmental impact statement typically describes the effects of a proposed project on factors such as ✔✔public health and safety. A deed restriction is applicable to the activities of ✔✔all owners, present and future A commercial property lost value because a recently constructed highway moved traffic away from the property. This is an example of ✔✔economic or external obsolescence. A competitive market analysis is MOST often used fo ✔✔setting a listing price. When compiling a competitive market analysis, a broker would look for comparable properties that ✔✔were located near the property being listed. If all other factors are equal, in which location is a parking lot likely to bring the highest sales price? ✔✔Business district zoned for a six-story office building. A formal appraisal will ALWAYS be REQUIRED when the ✔✔lender wants to sell the mortgage to the secondary market. A competitive market analysis takes into consideration ✔✔square footage of the subject property. Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price? ✔✔The first sold. A prospective seller asks a salesperson to recommend a listing price for a property. The salesperson should suggest ✔✔a competitive market analysis to determine the property's value. In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT ✔✔more variety of loan programs available. A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to ✔✔demand immediate payment of the entire note. ccording to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the ✔✔prepayment penalties and rebates. Federal Truth-in-Lending laws are also known as ✔✔Regulation Z Which of the following consumers would be able to derive the most benefit from a reverse mortgage? ✔✔A couple in their late 60?s who need to tap their home equity to help cover their expenses but do not want to sell their house. The FHA functions MOST like ✔✔an insurance company. Which of the following real estate contracts is a service contract? ✔✔a listing agreement A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is ✔✔an agent to the broker and a subagent to the principal. The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that ✔✔he is no longer the listing agent. When a principal authorizes an agent to perform a particular act or transaction, it is an example of a ✔✔special agency. A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with ✔✔the builder. A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns down the offer. When presenting the offer, the broker should ✔✔tell the seller that the buyer will pay more. Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release? ✔✔The buyer finds a better property for better terms. To what party or parties does the broker owe the fiduciary duty of care? ✔✔the party or parties employing the broker An agency relationship between a property owner and a property manager is usually created by ✔✔a management agreement. Under the common law of agency, licensees owe the broker with whom they are associated all of the following duties EXCEPT ✔✔indemnification State laws differ on whether a buyer is entitled to know about ✔✔a suicide that occurred in the house last year. The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, ✔✔require the buyer to acknowledge disclosure of the presence of any known lead paint. Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond? ✔✔If you feel it is in your best interest, please do so. A licensee is listing a property in a known flood plain. The seller flatly denies that the structure and the property have ever been flooded. What is the licensee required to do in this situation? ✔✔Inform the seller of the legal obligation to disclose facts regarding flood plains. A seller's statement in a property disclosure document means ✔✔the owner is disclosing known latent defects. What critical aspect of the property inspection process MUST licensees convey to prospective buyers? ✔✔Need for inspections to be completed within the time stated in the contract. What is the duration of a home warranty's coverage? ✔✔as disclosed in the contract that offers the warranty A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should ✔✔tell the seller to disclose the termite treatment on the property disclosure. A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called ✔✔contract A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does the buyer have? ✔✔The buyer may sue the seller for specific performance. A gross lease can be best defined as one where the tenant pays, as a part of the rent, ✔✔no operating expenses of the leased space. A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when ✔✔the seller accepts the offer. Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE? ✔✔Both contracts are valid A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if ✔✔the owner withdraws the counteroffer before it is accepted. In an exclusive right-to-sell listing, an owner lists the property for sale with how many brokers? ✔✔one When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should ✔✔have short deadlines. A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable? ✔✔The seller is heavily under the influence of alcohol at the time of signing A licensee has an agency representation agreement with a buyer. When showing another company's listing, what obligation does the licensee have to the seller and the listing broker at the other company? ✔✔Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer. A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called ✔✔an option contract. The buyer wants to make the purchase offer contingent on a complex mortgage arrangement. The buyer's agent who is drawing up the contract should ✔✔suggest the buyer ask a lawyer to furnish the wording. An equal housing opportunity notice MUST be ✔✔displayed in the brokerage office. A managing broker can be held responsible for ✔✔all real estate activities of salespersons. A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that ✔✔there is no dollar limit on damages paid. Under the Federal Fair Housing Law, which of the following is considered discriminatory advertising? ✔✔Catholics preferred A salesperson in a branch office is sued for damages by a buyer after the salesperson misrepresents a property. Who has the ultimate responsibility for the salesperson's actions? ✔✔the supervising broker A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice is known as ✔✔steering Salesperson Susan was at the local coffee shop with some agents from other offices. The subject of commissions came up, and agents began to compare their commission rates. Susan should ✔✔advise her friends this could constitute a violation of Sherman Antitrust Act. Antitrust laws prohibit competing brokers from all of the following EXCEPT ✔✔receiving compensation from both the buyer and the seller. During the listing presentation, the seller questions the amount of commission to be paid and is told ✔✔he amount of commission is negotiable. The Civil Rights Act of 1866 prohibits any type of discrimination based on ✔✔race Earnest money should be deposited into a trust account ✔✔in a timely manner, according to state laws. If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30-year loan at 5-1/2%, or a 20-year loan at 4-1/2%, what is the largest loan (rounded to the nearest $100) this buyer can afford? (BE SURE TO USE THE AMORTIZATION TABLE.) ✔✔$176,100 A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) ✔✔$407 An owner lists his home and agrees to pay a 6% commission provided he nets $10,000 after paying the commission and the balance of his mortgage, which is $75,000. To the nearest dollar, what should the selling price be to net the owner his $10,000? ✔✔$90,426 An investment property returns 12% of its value or $21,000 annually. What is the value of the property? ✔✔175,000 Davis, Hernandez, and Moore are vested as tenants in common on a parcel of land. Each received a pro-rata undivided interest in the parcel. The total price was $120,000. Davis put up 40% and Hernandez put up $22,500. What percentage does Moore own (to the nearest tenth of a percent)? ✔✔41.2% A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for taxes? Round to the nearest cent. ✔✔$225.00 Which restrictive covenant would be considered illegal? ✔✔A covenant that restricts selected parcels within a defined subdivision. A property management plan may serve different purposes for different owners, and generally has to strike a balance between preservation of the property's value and generation of income. Which of the following owners would MOST likely prefer a property manager who emphasizes maintenance of value over profitability? ✔✔The Department of Housing and Urban Development. In MOST states, foreclosed property is sold through ✔✔public auction. An exception to title insurance coverage is ✔✔defects that clearly appear in the title search. MOST closed real estate transactions should be reported to the IRS. REQUIRED information includes seller name(s) and social security number(s) and ✔✔the sale price. At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? ✔✔Debit seller $300; credit buyer $300. To be valid, every deed must ✔✔be executed by the grantor.