REA Legal, Regulatory & Ethical Standards 2 — Questions and Answers
Question 1: Under the Americans with Disabilities Act (ADA), which of the following is a public accommodation requirement for commercial real estate?
- Landlords must provide accessible parking if the property has a parking lot (Correct answer)
- Only newly constructed buildings built after 1993 must be ADA compliant
- Tenants are solely responsible for all accessibility modifications
- ADA applies only to federally funded properties
Correct answer: Landlords must provide accessible parking if the property has a parking lot
The ADA requires places of public accommodation to provide accessible parking when a parking facility is available, regardless of building age.
Question 2: What is the primary purpose of RESPA (Real Estate Settlement Procedures Act)?
- To establish zoning laws for residential neighborhoods
- To require disclosure of settlement costs and prohibit kickbacks in mortgage transactions (Correct answer)
- To regulate the licensing of real estate appraisers
- To set maximum interest rates on home loans
Correct answer: To require disclosure of settlement costs and prohibit kickbacks in mortgage transactions
RESPA requires lenders and settlement agents to disclose settlement costs and prohibits kickbacks or referral fees that inflate settlement costs.
Question 3: A real estate analyst discovers that a developer client is planning to misrepresent a property's flood zone status to buyers. The analyst's ethical obligation is to:
- Remain silent to preserve the client relationship
- Refuse to participate and report the misrepresentation to relevant authorities if necessary (Correct answer)
- Complete the analysis but note the discrepancy in an internal memo only
- Allow the developer to handle all disclosures independently
Correct answer: Refuse to participate and report the misrepresentation to relevant authorities if necessary
Professional ethics require analysts to refuse participation in fraud and, depending on jurisdiction and severity, report material misrepresentations to protect public interest.
Question 4: Which federal law prohibits discrimination in the sale, rental, and financing of housing based on race, color, national origin, religion, sex, familial status, and disability?
- Community Reinvestment Act
- Equal Credit Opportunity Act
- Fair Housing Act (Correct answer)
- Home Mortgage Disclosure Act
Correct answer: Fair Housing Act
The Fair Housing Act of 1968, amended in 1988, prohibits housing discrimination based on those seven protected classes.
Question 5: In a 1031 exchange, which rule governs the timeline for identifying replacement property?
- Replacement property must be identified within 30 days of closing
- Replacement property must be identified within 45 days of closing (Correct answer)
- Replacement property must be identified within 60 days of closing
- There is no time limit for identifying replacement property
Correct answer: Replacement property must be identified within 45 days of closing
IRS rules for a 1031 like-kind exchange require the taxpayer to identify replacement property within 45 days of selling the relinquished property.
Question 6: The term 'redlining' in real estate refers to:
- Marking boundaries of commercial zones on property maps
- Illegally denying services to residents of certain areas based on racial or ethnic composition (Correct answer)
- Flagging properties with environmental hazards in disclosure documents
- Highlighting priority acquisition targets in an investment portfolio
Correct answer: Illegally denying services to residents of certain areas based on racial or ethnic composition
Redlining is the illegal practice of denying financial services or insurance to neighborhoods based on their racial or ethnic demographics.
Question 7: Under the Uniform Standards of Professional Appraisal Practice (USPAP), an appraiser's work file must be retained for at least:
- 1 year after the date of the appraisal report
- 3 years after the date of the report or 2 years after final disposition of legal proceedings (Correct answer)
- 5 years from the date of the appraisal
- 7 years for all federally related transactions
Correct answer: 3 years after the date of the report or 2 years after final disposition of legal proceedings
USPAP requires appraisers to retain their work file for at least five years after preparation or two years after final disposition of any related legal proceeding, whichever is longer — but the standard threshold cited in USPAP is the longer of 5 years or 2 years after legal proceedings.
REA Legal, Regulatory & Ethical Standards 2
Under the Americans with Disabilities Act (ADA), which of the following is a public accommodation requirement for commercial real estate?