Real Estate Sales Exam Real Estate Sales Fair Housing and Disclosures 1 — Questions and Answers
Question 1: A real estate licensee tells prospective buyers that a particular neighborhood is 'changing' and suggests they look at homes in another area instead. This practice is known as:
- Blockbusting
- Redlining
- Steering (Correct answer)
- Puffing
Correct answer: Steering
Steering is the illegal practice of guiding buyers toward or away from certain neighborhoods based on protected class characteristics. Directing buyers to different areas based on racial or ethnic composition of a neighborhood violates the Fair Housing Act.
Question 2: Under the Federal Fair Housing Act, which of the following is a protected class?
- Marital status
- Sexual orientation
- National origin (Correct answer)
- Income level
Correct answer: National origin
National origin is one of the seven federally protected classes under the Fair Housing Act of 1968. The seven classes are race, color, religion, sex, national origin, disability, and familial status. Marital status, sexual orientation, and income level are not federally protected (though some states add additional protections).
Question 3: A lender refuses to provide mortgage loans in a specific geographic area regardless of the applicants' qualifications, based on the racial composition of that area. This practice is called:
- Steering
- Blockbusting
- Redlining (Correct answer)
- Panic selling
Correct answer: Redlining
Redlining is the illegal practice of denying financial services, such as mortgages, to residents in certain geographic areas based on race or other protected characteristics. The term originated from lenders literally drawing red lines around minority neighborhoods on maps.
Question 4: A homeowner discloses to a buyer's agent that the home's roof leaks during heavy rain. The agent is representing the seller. What must the agent do with this information?
- Keep it confidential to protect the seller's negotiating position
- Disclose it to potential buyers because it is a material fact (Correct answer)
- Disclose it only if the buyer specifically asks about the roof
- Disclose it only if the leak has caused structural damage
Correct answer: Disclose it to potential buyers because it is a material fact
A known roof leak is a material fact that could affect the buyer's decision or the property's value. Agents have a duty to disclose material defects to all parties, even when representing the seller. Concealing known material defects constitutes fraud and violates real estate license law.
Question 5: Under the Fair Housing Act, which of the following advertising statements would be considered discriminatory?
- 'Quiet neighborhood close to schools'
- 'Perfect for a Christian family' (Correct answer)
- 'Easy highway access and ample parking'
- 'Recently renovated kitchen and bathrooms'
Correct answer: 'Perfect for a Christian family'
Advertising a property as 'Perfect for a Christian family' expresses a religious preference, which violates the Fair Housing Act's prohibition on discriminatory advertising. Real estate ads cannot indicate any preference, limitation, or discrimination based on protected class characteristics.
Question 6: A seller tells a listing agent that a neighbor dispute over a shared fence has led to ongoing litigation. The agent should:
- Omit the information since it is the neighbor's issue, not the property's
- Disclose the litigation to prospective buyers as a material fact (Correct answer)
- Wait until an offer is received before disclosing
- Disclose only if the buyer asks whether there are any disputes
Correct answer: Disclose the litigation to prospective buyers as a material fact
Ongoing litigation involving a neighboring property boundary or shared structure is a material fact that could affect the buyer's use and enjoyment of the property. Agents must proactively disclose known material facts; waiting for a buyer to ask or withholding until after an offer is received constitutes a breach of duty.
Real Estate Sales Exam Real Estate Sales Fair Housing and Disclosures 1
A real estate licensee tells prospective buyers that a particular neighborhood is 'changing' and suggests they look at homes in another area instead.
This practice is known as: