Real Estate Sales Exam Practice Questions 5 — Questions and Answers
Question 1: An agent inadvertently tells a buyer that the neighborhood has 'great schools' without verifying this. If the schools are actually rated poorly, the agent may be liable for:
- Fraudulent misrepresentation
- Negligent misrepresentation (Correct answer)
- Puffing
- Steering
Correct answer: Negligent misrepresentation
Negligent misrepresentation occurs when an agent makes a false statement without reasonable basis, even if not intentionally deceptive.
Question 2: A listing agreement expires before the property sells. The seller then sells directly to a buyer who was introduced by the former broker during the listing period. The broker:
- Has no claim to a commission
- May be entitled to a commission if a protection clause was in the listing (Correct answer)
- Can sue the seller for breach of fiduciary duty
- Must split any commission with the seller
Correct answer: May be entitled to a commission if a protection clause was in the listing
A safety clause (protection period) in a listing agreement entitles the broker to a commission if the property sells to a buyer the broker introduced during the listing period.
Question 3: In a mortgage transaction, the document that creates the debt obligation and promises repayment is the:
- Deed of trust
- Promissory note (Correct answer)
- Mortgage instrument
- Settlement statement
Correct answer: Promissory note
The promissory note is the borrower's written promise to repay the loan under stated terms; the mortgage or deed of trust is the security instrument.
Question 4: Which type of deed provides the greatest protection to the buyer?
- Quitclaim deed
- Bargain and sale deed
- Special warranty deed
- General warranty deed (Correct answer)
Correct answer: General warranty deed
A general warranty deed contains covenants warranting title against all defects, even those arising before the seller owned the property.
Question 5: A property manager neglects to make required repairs, causing a tenant to break their lease and vacate. This is known as:
- Actual eviction
- Constructive eviction (Correct answer)
- Unlawful detainer
- Lease abandonment
Correct answer: Constructive eviction
Constructive eviction occurs when the landlord's failure to maintain habitable conditions effectively forces the tenant to leave.
Question 6: Which government power allows a municipality to enact zoning laws?
- Eminent domain
- Escheat
- Police power (Correct answer)
- Taxation
Correct answer: Police power
Police power is the inherent authority of the government to enact laws regulating land use to protect public health, safety, and welfare.
Question 7: An investor purchases a property for $500,000 and later sells it for $650,000. Ignoring other costs, the gain is subject to which federal tax?
- Estate tax
- Capital gains tax (Correct answer)
- Transfer tax
- Self-employment tax
Correct answer: Capital gains tax
Profit from the sale of investment real property is subject to federal capital gains tax, with the rate depending on the holding period.
Real Estate Sales Exam Practice Questions 5
An agent inadvertently tells a buyer that the neighborhood has 'great schools' without verifying this.
If the schools are actually rated poorly, the agent may be liable for: