New Jersey Real Estate Salesperson License, Practice Exams

A broker offers buyers a commission rebate only if they finance through the broker's affiliated mortgage company. Under New Jersey law, this rebate offer is:

1. Allowed, if the affiliate relationship is disclosed to them in writing.
2. Allowed, since the rebate goes only to a residential purchaser.
3. Barred, only because rebates must come from the listing broker instead.
4. Barred, because it is contingent on using an affiliate's service. ✓

Why: N.J.S.A. 45:15-16a b: A REBATE SHALL NOT BE ... CONTINGENT UPON THE USE OF OTHER SERVICES OR PRODUCTS BEING OFFERED BY A BROKER OR AN AFFILIATE OF A BROKER. Disclosure does not cure the tie-in.

An owner holds a standard-coverage title policy. A claim later arises from a forged deed buried in the chain of title. Is the loss covered?

1. No; forgery is an off-record risk the policy excludes
2. Yes; standard coverage includes forgery in the chain ✓
3. No, unless the owner bought an extended-coverage policy
4. Only if the forged deed was recorded after the policy

Why: Reference Book chapter 5 lists off-record hazards such as forgery, impersonation and lack of capacity among the risks the standard policy protects against, in addition to risks of record. Its exclusions are matters such as unrecorded easements and the rights of parties in possession, which inspection or survey would reveal.

An option given in connection with a lease may take either of two customary forms. What are they?

1. A net listing to sell, or an exclusive agency to sell the lease.
2. A deed held in escrow, or a mortgage that secures the rent due.
3. A life estate in the premises, or a remainder after the lease.
4. An exclusive right to buy or lease, or a first right of refusal. ✓

Why: DRE Reference Book ch. 6 (Options): THE OPTION MAY BE GIVEN EITHER ALONE OR IN CONNECTION WITH THE LEASE OF THE PROPERTY. IT MAY BE IN EITHER THE CUSTOMARY FORM OF AN EXCLUSIVE RIGHT TO PURCHASE OR LEASE, OR IN THE FORM OF A PRIVILEGE OF FIRST RIGHT OF REFUSAL TO PURCHASE OR LEASE.

An abandoned gas station's leaking underground tanks spread gasoline into the soil. There is no viable responsible party, and a party not liable for the cleanup will clean it up. Can it be a brownfield site under CERCLA?

1. No; petroleum is excluded from all of CERCLA.
2. No; only listed Superfund sites can qualify.
3. Yes; petroleum-contaminated sites can qualify. ✓
4. Yes, but only if the tanks are still in service.

Why: 42 U.S.C. 9601(39)(D): FOR THE PURPOSES OF SECTION 9604(K) OF THIS TITLE, THE TERM "BROWNFIELD SITE" INCLUDES a site that IS CONTAMINATED BY PETROLEUM OR A PETROLEUM PRODUCT EXCLUDED FROM THE DEFINITION OF "HAZARDOUS SUBSTANCE" and IS A SITE FOR WHICH THERE IS NO VIABLE RESPONSIBLE PARTY, to be cleaned up BY A PERSON THAT IS NOT POTENTIALLY LIABLE. Only a portion aided by the LEAKING UNDERGROUND STORAGE TANK TRUST FUND is excluded.

A house in a special flood hazard area has a detached garage that no one lives in. The lender requires flood insurance on the house. Must the garage be insured too?

1. Yes, every building on the mortgaged parcel has to be covered
2. No, a detached structure not used as a residence is excepted ✓
3. Yes, unless the garage is worth less than the loan balance
4. No, garages are never covered by flood insurance policies

Why: 42 U.S.C. 4012a(c)(3): for residential property, flood insurance shall not be required for any structure that is part of the property but is detached from the primary residential structure and does not serve as a residence. The exception is a limit on the purchase requirement; it does not say such structures cannot be insured.

A principal accepts the benefits of an agent's unauthorized deal without learning all the facts, although the circumstances would have put a reasonable person on inquiry. May she be held to have ratified?

1. No; ratification always needs full knowledge.
2. No, unless she signed a written ratification.
3. Yes, but only for the benefits she accepted.
4. Yes, even though she lacked full knowledge. ✓

Why: DRE Reference Book ch. 10: WHERE THE PRINCIPAL'S IGNORANCE OF THE FACT ARISES FROM THE PRINCIPAL'S OWN FAILURE TO INVESTIGATE, AND THE CIRCUMSTANCES ARE SUCH AS TO PUT A REASONABLE PERSON ON INQUIRY, THE PRINCIPAL MAY BE HELD TO HAVE RATIFIED THE ACT IN SPITE OF LACK OF FULL KNOWLEDGE. A ratification also takes the burdens with the benefits.

An apartment manager bars tenants with children from the clubhouse and fitness room at all hours, while adult-only households may use them freely. Which fair housing rule does this breach?

1. The bar on limiting facilities because of familial status. ✓
2. None, as the facilities are extras beyond the rented unit.
3. The bar on refusing outright to rent a dwelling to a family.
4. None, as long as the rent charged is the same for all.

Why: 24 CFR 100.65(a) and (b)(4): it is unlawful, because of FAMILIAL STATUS, TO DENY OR LIMIT SERVICES OR FACILITIES IN CONNECTION WITH THE SALE OR RENTAL OF A DWELLING, including LIMITING THE USE OF PRIVILEGES, SERVICES OR FACILITIES ASSOCIATED WITH A DWELLING.

Which description fits a real estate referral company as the New Jersey statute defines it?

1. A broker's main office that also handles listings and sales.
2. A separate entity a broker sets up for referral-only salespersons. ✓
3. A national franchise that sells its leads to the brokers in the State.
4. An unlicensed firm that is paid a flat fee for each lead it produces.

Why: N.J.S.A. 45:15-3: a real estate referral company is A BUSINESS ENTITY ESTABLISHED AND SUPERVISED BY A LICENSED REAL ESTATE BROKER, SEPARATE AND APART FROM ANY BUSINESS ENTITY MAINTAINED BY THE LICENSED REAL ESTATE BROKER TO CONDUCT REAL ESTATE BROKERAGE-RELATED ACTIVITIES ... FOR THE PURPOSE OF EMPLOYING OR CONTRACTING LICENSED SALESPERSONS WHO STRICTLY ENGAGE IN THE REFERRAL OF PROSPECTS.

A broker's main office has operated since 1958 in part of the broker's house, sharing the family's front door. Under New Jersey rules, must it now add a separate exterior entrance visible from the street?

1. Yes; every office in a residence must have its own entrance, whatever its age.
2. Yes, but only when the broker next renews the license with the Commission.
3. No; the entrance rule does not apply to offices existing before December 1, 1963. ✓
4. No, as long as the office is supervised by a broker-salesperson full time.

Why: N.J.A.C. 11:5-4.4(b): a residence office SHALL HAVE A SEPARATE EXTERIOR ENTRANCE PLAINLY VISIBLE FROM THE STREET, but THIS SUBSECTION SHALL NOT APPLY TO OFFICES IN EXISTENCE PRIOR TO DECEMBER 1, 1963. An office open since 1958 is covered by that exception.

A registered timeshare plan's ad offers free dinners to prospects who attend a sales presentation. Besides the Commission's rules, which New Jersey law must the ad also comply with?

1. The New Jersey Truth in Renting Act
2. The New Jersey Condominium Act
3. The New Jersey Rent Security Act
4. The New Jersey Consumer Fraud Act ✓

Why: N.J.A.C. 11:5-9A.8(f): ANY ADVERTISEMENT, INCLUDING THOSE WHICH CONTAIN OFFERS OF REIMBURSEMENT OF TRAVEL EXPENSES AND/OR OFFERS OF PREMIUMS OR OTHER INDUCEMENTS, SHALL ALSO COMPLY WITH THE PROVISIONS OF THE NEW JERSEY CONSUMER FRAUD ACT.

An owner bought a house for $280,000 and sold it for $238,000. What percentage of the purchase price did the owner lose?

1. 1.5%
2. 15% ✓
3. 17.6%
4. 85%

Why: DRE Reference Book ch. 26: PERCENTAGE = RATE X BASE, so R = P ÷ B, the base being the original price. Loss $280,000 - $238,000 = $42,000; $42,000 ÷ $280,000 = 15%. 17.6% divides by the sale price; 85% is the share kept.

Rae appears to have met every requirement for title to a lot by adverse possession, but no title insurer will insure her title. What does she usually need?

1. A quitclaim deed signed by Rae herself
2. A court decree in a quiet title action ✓
3. A recorded affidavit of her occupancy
4. A lis pendens recorded in her own name

Why: Reference Book chapter 6 explains that title by adverse possession cannot be traced in the recorder's office, so it is neither marketable nor insurable until perfected by court decree, and that the quiet title action is the usual way to clear titles based on adverse possession. A deed from Rae to herself adds nothing to the record chain.

An owner directly employs a person to handle the day-to-day management of his one large office tower. Which type of property manager is this?

1. An asset manager for the investor.
2. A resident manager for the tower.
3. A leasing agent for the building.
4. An individual building manager. ✓

Why: DRE Reference Book ch. 22: THE INDIVIDUAL BUILDING MANAGER MAY BE EMPLOYED BY A PROPERTY MANAGER OR DIRECTLY BY AN OWNER, AND USUALLY MANAGES A SINGLE LARGE PROPERTY. By contrast, THE RESIDENT MANAGER MAY BE EMPLOYED BY A REAL ESTATE BROKER OR A MANAGING AGENT OR AN OWNER TO MANAGE AN APARTMENT BUILDING, and asset managers make owner-type decisions on use, refinancing and sale.

When a party makes a tender of performance, when must the other party state any objections to it?

1. At the time the tender is made, or they are waived. ✓
2. At any time before trial, in a written pleading.
3. Within ten days, by letter to the tendering party.
4. Only after escrow closes, in a demand for damages.

Why: DRE Reference Book ch. 6: A TENDER IN A REAL ESTATE TRANSACTION IS AN OFFER BY ONE OF THE PARTIES TO THE CONTRACT TO CARRY OUT THAT PARTY'S PART OF THE CONTRACT ... THE PERSON MUST SPECIFY ANY OBJECTIONS AT THE TIME THE TENDER IS MADE OR THE OBJECTIONS ARE WAIVED.

Under New Jersey rules, a licensee's free or discounted promotion requires a written disclosure to the recipient when its retail monetary benefit is greater than what amount?

1. $250
2. $500
3. $1,000 ✓
4. $2,500

Why: N.J.A.C. 11:5-6.1(m)3: WHENEVER A LICENSEE PARTICIPATES IN A PROMOTION OR OFFERING OF FREE, DISCOUNTED, OR OTHER SERVICES OR PRODUCTS THAT CONFERS UPON THE RECIPIENT A MONETARY BENEFIT OF GREATER THAN $1,000 RETAIL, THE LICENSEE SHALL PROVIDE WRITTEN DISCLOSURE TO THE RECIPIENT.

A comparable apartment building sold for $2,500,000 and had net operating income of $212,500. What overall capitalization rate does the sale indicate?

1. 7.5%
2. 8.5% ✓
3. 9.5%
4. 11.8%

Why: Reference Book chapter 15: R = I divided by V, and "the preferred method of Overall Rate derivation is from an analysis of comparable sales and their relationship between net income and sales price." $212,500 divided by $2,500,000 is 0.085, or 8.5%. Dividing price by income instead gives 11.8, which is not a rate.

A salesperson is also individually employed and properly registered as a mortgage solicitor by a licensed mortgage banker. May she accept pay from that banker for residential mortgage services?

1. Yes, the rule allows pay from her licensed mortgage employer. ✓
2. No; a real estate licensee may be paid only by her broker.
3. Yes, but only if her real estate broker shares in the fee.
4. No, unless the buyer waives the conflict in a signed writing.

Why: N.J.A.C. 11:5-7.1(g): ANY REAL ESTATE LICENSEE WHO IS INDIVIDUALLY EMPLOYED AS A MORTGAGE SOLICITOR BY A LICENSED MORTGAGE BANKER OR MORTGAGE BROKER AND REGISTERED IN COMPLIANCE WITH APPLICABLE LAW ... MAY SOLICIT AND ACCEPT COMPENSATION FROM HIS OR HER LICENSED MORTGAGE EMPLOYER FOR PROVIDING MORTGAGE SERVICES IN RESIDENTIAL MORTGAGE TRANSACTIONS.

A listing agent falsely tells a buyer the roof is new. The purchase contract recites that the agent had no authority to make representations, and the seller knew nothing of the lie. What may the buyer still do?

1. Nothing, since the recital bars every remedy he has.
2. Rescind the contract, and seek damages from the agent. ✓
3. Sue only the innocent seller, for punitive damages.
4. Keep the contract and have the agent set a new price.

Why: DRE Reference Book ch. 6: WHERE FALSE REPRESENTATIONS ARE MADE BY AN AGENT AND THE CONTRACT CONTAINS A RECITAL LIMITING THE AGENT'S AUTHORITY TO MAKE REPRESENTATIONS, THE INNOCENT PRINCIPAL MAY ... BE RELIEVED OF LIABILITY ... THE DEFRAUDED THIRD PARTY MAY NEVERTHELESS RESCIND THE CONTRACT. THE GUILTY AGENT MAY, OF COURSE, BE LIABLE IN DAMAGES FOR THE WRONGFUL ACT.

Comparable sales support an annual gross income multiplier of 8.2, derived from gross income before vacancy. The subject's annual gross income, including parking, is $142,000, and vacancy runs 5%. What value is indicated?

1. $1,106,180
2. $1,164,400 ✓
3. $1,731,707
4. $13,972,800

Why: DRE Reference Book ch. 15: GRM’S AND GIM’S MAY BE DERIVED ON EITHER A MONTHLY OR ANNUAL BASIS, BUT MUST BE APPLIED CONSISTENTLY TO THE GROSS INCOME OF THE SUBJECT PROPERTY. $142,000 x 8.2 = $1,164,400. $1,106,180 applies the multiplier after vacancy, inconsistent with its derivation.

A seller keeps her existing low-rate loan in place. The buyer signs a new junior note to the seller for the old loan's balance plus the seller's equity, pays the seller each month, and the seller keeps paying the existing lender. What financing is this?

1. An assumption of the seller's existing loan
2. A blanket mortgage covering both of the loans
3. A package mortgage with the seller as lender
4. A wraparound (all-inclusive) mortgage ✓

Why: Reference Book chapter 12 describes the wrap-around or all-inclusive trust deed: the new note includes the unpaid balance of the existing loan plus the added amount, the borrower pays the wrapping creditor, and that creditor keeps paying the senior loan. The chapter warns that the existing loan must first be checked for a due-on-sale clause.

In good faith, a seller's agent writes a promise about the property into the purchase contract. It proves untrue and was a material part of the deal. What is the buyer ordinarily left with?

1. A tort claim for fraud against the seller and agent.
2. Rescission or damages, but ordinarily no tort claim. ✓
3. No remedy at all, since the promise was made honestly.
4. Only a price cut equal to the agent's commission.

Why: DRE Reference Book ch. 10: IF SUCH A REPRESENTATION IS MADE IN GOOD FAITH, THE FACT THAT IT IS UNTRUE WILL ORDINARILY NOT RENDER THE SELLER OR SELLER'S AGENT LIABLE IN TORT. AN UNTRUE REPRESENTATION WHICH IS A MATERIAL INGREDIENT OF THE PURCHASE CONTRACT MAY, HOWEVER, BE THE BASIS FOR AN ACTION FOR RESCISSION AND/OR DAMAGES BY THE BUYER.

A lender engages an appraiser for a purchase loan, and the buyer's agent phones the appraiser asking for a copy of the report. May the appraiser send it?

1. Yes, since the agent is a party to the sale.
2. Yes, once the loan has closed.
3. No, unless the client authorizes it. ✓
4. Yes, if the agent asks in writing.

Why: Reference Book chapter 15: the Confidentiality Section of USPAP's Ethics Rule bars disclosing assignment results to anyone other than the client or persons the client authorizes (state regulators and parties authorized by law aside). This "prohibits the appraiser from discussing assignment results or providing copies of the appraisal reports to agents or borrowers unless they are the client."

A broker candidate has finished the 90-hour general broker's prelicensure course. How many more hours of broker prelicensure education must she complete?

1. 30 hours
2. 45 hours
3. 60 hours ✓
4. 75 hours

Why: N.J.A.C. 11:5-2.1(g): A 90 HOUR GENERAL BROKER'S PRELICENSURE COURSE SHALL FIRST BE COMPLETED ... THEREAFTER, TWO 30 HOUR BROKER COURSES ... SHALL BE COMPLETED. ALL THREE COURSES, TOTALING 150 HOURS OF INSTRUCTION, must be finished within two years. Working: 150 - 90 = 60 hours (two 30-hour courses).

A state takes a family's land for a new highway. What measure of just compensation do most courts apply?

1. Assessed value on the tax roll
2. The owner's original price
3. Replacement cost of the house
4. Fair market value ✓

Why: Reference Book chapter 17 says the federal Constitution requires just compensation for a taking, that the main issue in condemnation is its amount, and that most courts have ruled that fair market value is just compensation. Chapter 27 ties the right to be paid to the Fifth Amendment.

A borrower choosing between two adjustable-rate mortgages wants to limit her exposure to rising rates. Which features does the Reference Book advise her to look for?

1. A high margin, which keeps each later rate adjustment small
2. A payment option, so she may pay less whenever rates rise
3. Negative amortization, which holds her payment level for life
4. A low margin, reasonable rate caps and a less volatile index ✓

Why: Reference Book chapter 12 states that ARM borrowers share the risk of rising rates and should minimize their exposure by selecting programs with low margins and reasonable caps on rate changes, and that choosing a less volatile index also matters. It warns that negative amortization and payment options have proven troubling, leading to payment shock and balances above value.

Property taxes of $5,475 for a July 1 to June 30 fiscal year are unpaid at an October 14 closing. Counting actual days on a 365-day year, with the seller owning the day of closing, what does the seller owe the buyer?

1. $1,575.00
2. $1,590.00 ✓
3. $1,612.08
4. $3,885.00

Why: DRE Reference Book ch. 26: THERE ARE 12 MONTHS IN A YEAR OR 365 DAYS. July 31 + August 31 + September 30 + October 14 = 106 days; $5,475 ÷ 365 = $15 a day; 106 x $15 = $1,590.00. $1,575.00 leaves out the closing day, and $1,612.08 uses a 360-day year.

A buyer's agreement promises her agent 2.5 percent, but the seller of a home she likes offers the buyer's firm only 1.5 percent. What must the buyer's agreement already address?

1. Nothing, since the seller's offer then becomes the fee owed.
2. Whether she pays the difference, or else how to proceed. ✓
3. Nothing, since the listing firm must make up the shortfall.
4. Only the seller's duty to raise the offer to the full amount.

Why: N.J.S.A. 45:15-16.96 g(2): a buyer's agreement must state, where there is A LIMITED OFFER BY ANY OTHER PARTY OR BROKERAGE FIRM TO PAY COMPENSATION ..., IF THE BUYER WILL PAY THE DIFFERENCE BETWEEN THE OFFER AND THE COMPENSATION THE BUYER HAS AGREED IS DUE TO THE BUYER'S AGENT AND, IF NOT, THE BUYER'S AGREEMENT AS TO HOW TO PROCEED IN THIS SITUATION.

A seller agrees to pay 1.5 points on the buyer's loan. The price is $400,000, the home appraises at $392,500, and the lender lends 80% of the appraised value. What do the points cost the seller?

1. $4,710. ✓
2. $4,800.
3. $5,887.50.
4. $6,000.

Why: DRE Reference Book ch. 27: DISCOUNT POINTS are THE AMOUNT OF MONEY THE BORROWER OR SELLER MUST PAY THE LENDER TO GET A MORTGAGE AT A STATED INTEREST RATE, and A POINT EQUALS ONE PERCENT OF THE LOAN; the LTV ratio applies to the APPRAISED VALUE. Working: $392,500 x 0.80 = $314,000 loan; x 0.015 = $4,710. $4,800 uses 80% of the price; $5,887.50 takes points on the appraised value and $6,000 on the price, not on the loan.

A salesperson is asked to value a complex industrial plant and lacks the expertise to do it competently. What does the Reference Book advise?

1. Seek the advice of a professional appraiser. ✓
2. Give an opinion labeled as informal.
3. Average the list prices of nearby plants.
4. Rely on the owner's book value for it.

Why: Reference Book chapter 15 cautions licensees "not to claim greater appraisal ability or expertise than is actually possessed" and says: "When unable to competently perform a valuation, the advice of a professional real estate appraiser should be sought." It also warns agents not to rely on book values.

Under Regulation Z's general form rule, how must a creditor make the required closed-end credit disclosures?

1. Orally at closing, with a written copy given on request
2. In clear, conspicuous writing the consumer may keep ✓
3. Only on paper, since electronic form is not permitted
4. In any form, if the consumer initials each disclosure

Why: 12 CFR 1026.17(a)(1) requires the creditor to make the disclosures clearly and conspicuously in writing, in a form that the consumer may keep. The same paragraph allows them to be provided in electronic form, subject to the consumer consent and other provisions of the E-Sign Act (15 U.S.C. 7001 et seq.).

A salesperson transferring to a competitor wants to take the original closed transaction files and listing files she worked on with her. What do the rules say?

1. She may take them, as long as she leaves copies in the broker's office.
2. She may take the files for any listings she herself obtained for the firm.
3. She may take them once the broker has kept the files for six months.
4. She may not remove any of the contents of those files from the office. ✓

Why: N.J.A.C. 11:5-5.5(c): UPON TERMINATING THEIR EMPLOYMENT WITH SUCH A BROKER, AND/OR TRANSFERRING TO THE EMPLOY OF ANOTHER SUCH BROKER, NO REFERRAL AGENT, SALESPERSON OR BROKER-SALESPERSON SHALL REMOVE OR CAUSE TO BE REMOVED ANY OF THE CONTENTS OF SUCH FILES FROM THE OFFICES OF THE BROKER.

Under the State Uniform Construction Code Act, which new building must be built in accordance with the barrier free subcode?

1. A row of townhouses, each unit with its own entrance at grade.
2. A detached single-family home built for sale on a separate lot.
3. A two-family home whose owner will live in one of the two units.
4. A single apartment building containing four dwelling units. ✓

Why: N.J.S.A. 52:27D-123 b(5): MULTI-FAMILY RESIDENTIAL BUILDINGS WITH FOUR OR MORE DWELLING UNITS IN A SINGLE STRUCTURE SHALL BE CONSTRUCTED IN ACCORDANCE WITH THE BARRIER FREE SUBCODE, and that term SHALL NOT INCLUDE BUILDINGS CONSTRUCTED AS TOWNHOUSES.

A certified firm will soon start a paint-disturbing job in an owner-occupied 1962 house. When must it give the owner the Renovate Right pamphlet?

1. At any time before the renovation work is finished.
2. No more than 60 days before the renovation begins. ✓
3. At least 60 days before the renovation work begins.
4. Within 7 days after the renovation work has begun.

Why: 40 CFR 745.84(a): NO MORE THAN 60 DAYS BEFORE BEGINNING RENOVATION ACTIVITIES IN ANY RESIDENTIAL DWELLING UNIT OF TARGET HOUSING, THE FIRM PERFORMING THE RENOVATION MUST ... PROVIDE THE OWNER OF THE UNIT WITH THE PAMPHLET.

Can the surface, the subsurface minerals and the air space of one parcel be owned by different persons?

1. No; they always pass with the surface owner
2. Yes; the interests may be split among owners ✓
3. Only the air space may be separated by deed
4. Only by lease, never by transfer of ownership

Why: Reference Book chapter 5 gives the example that one person may use the surface, another extract subsurface minerals and a third control the air space above, and says interests in land may be divided in many ways. Chapter 4 confirms that land includes space both below and above the surface.

A broker earned a $19,950 commission on a $285,000 sale. What commission rate was charged?

1. 0.07%
2. 0.7%
3. 7% ✓
4. 14.3%

Why: DRE Reference Book ch. 26: COMMISSION = SALE PRICE X RATE, so R = C ÷ S. $19,950 ÷ $285,000 = 0.07, or 7%. Dividing the price by the commission gives 14.3, which is not a rate; 0.7% and 0.07% misplace the decimal.

An investor-owned electric utility needs a strip of a farm for a transmission line, and the farmer refuses to sell. What can the utility do?

1. Nothing, as only a government may use eminent domain.
2. Take the strip at once and pay nothing for the land.
3. Use eminent domain, as public utilities may condemn. ✓
4. Ask the zoning board to rezone the strip for utility use.

Why: DRE Reference Book ch. 17: THE FEDERAL GOVERNMENT, STATES, CITIES, COUNTIES, IMPROVEMENT DISTRICTS, PUBLIC UTILITIES, PUBLIC EDUCATION INSTITUTIONS, AND SIMILAR PUBLIC AND SEMI-PUBLIC BODIES MAY ALL EXERCISE THE POWER OF EMINENT DOMAIN, and the Constitution requires “JUST COMPENSATION” for a taking. Examples of public uses include ELECTRIC POWER.

Because of a couple's race, a salesperson tells them a listed house is under contract when it is still available for showing. Which New Jersey rule has she broken?

1. The ban on saying property is unavailable when it is available. ✓
2. Only the duty to tell the seller about each inquiry received.
3. No rule, as a salesperson may screen buyers for the seller.
4. No rule, as long as she shows the couple other listings instead.

Why: N.J.S.A. 10:5-12 h(1): it is unlawful for any real estate salesperson, because of race among other classes, TO REPRESENT THAT ANY REAL PROPERTY OR PORTION THEREOF IS NOT AVAILABLE FOR INSPECTION, SALE, RENTAL, LEASE, ASSIGNMENT, OR SUBLEASE WHEN IN FACT IT IS SO AVAILABLE.

Under the Law Against Discrimination, a real estate office must post or display notices of rights and responsibilities as required by whom?

1. The Real Estate Commission, by bulletin.
2. The county planning board, by resolution.
3. The municipal clerk, by local ordinance.
4. The state Attorney General, by regulation. ✓

Why: N.J.S.A. 10:5-12 j: it is unlawful FOR ANY PERSON WHOSE ACTIVITIES ARE INCLUDED WITHIN THE SCOPE OF THIS ACT TO REFUSE TO POST OR DISPLAY SUCH NOTICES CONCERNING THE RIGHTS OR RESPONSIBILITIES OF PERSONS AFFECTED BY THIS ACT AS THE ATTORNEY GENERAL MAY BY REGULATION REQUIRE.

A buyer's agent at another firm sends a signed written offer to the listing firm at 4 p.m. on a Friday. The listing agent wants to wait for a second offer expected on Monday afternoon. What do New Jersey rules require?

1. Transmit the offer to the seller within 24 hours of the firm's receipt. ✓
2. Hold the offer until Monday so that both offers can be presented together.
3. Transmit it within three business days, the usual cooperation standard.
4. Transmit it only if the seller has asked to see offers from other firms.

Why: N.J.A.C. 11:5-6.4(f)1ii: listing brokers must TRANSMIT TO THEIR PRINCIPAL(S) ALL WRITTEN OFFERS ON THEIR LISTINGS SUBMITTED BY LICENSEES WITH OTHER FIRMS WITHIN 24 HOURS OF RECEIPT OF THE WRITTEN OFFER BY THEIR FIRM. Waiting for a later offer, or a three-day window, is not allowed.

A Commission investigator looking into a specific complaint asks a licensee for books of account and forms used in the business. What must the licensee do?

1. Make the pertinent records available for the Commission to inspect. ✓
2. Refuse until the Commission issues a court order for each document.
3. Produce only the records the complaining consumer has signed.
4. Produce them only if the licensee's attorney consents in writing.

Why: N.J.A.C. 11:5-5.5(a): EVERY LICENSEE SHALL MAKE AVAILABLE FOR INSPECTION BY THE COMMISSION OR ITS DESIGNATED REPRESENTATIVES ALL RECORDS OF TRANSACTIONS, BOOKS OF ACCOUNT, INSTRUMENTS, DOCUMENTS AND FORMS ... WHICH MAY BE PERTINENT TO THE CONDUCT OF THE INVESTIGATION OF ANY SPECIFIC COMPLAINT.

How often may a broker reduce the reserve she keeps in a special trust account for credit card rental payments?

1. Once a month, when she replenishes the transaction fees.
2. At any time, provided the change is noted in her ledger.
3. Only once a year; she may add to it as often as needed. ✓
4. Only once a quarter, after her quarterly reconciliation.

Why: N.J.A.C. 11:5-5.1(j)2iii: BROKERS MAY REPLENISH OR INCREASE THE SAID RESERVE AMOUNT AS OFTEN AS NECESSARY. BROKERS MAY ONLY REDUCE THE SAID RESERVE AMOUNT ON AN ANNUAL BASIS. Fees are replenished at least monthly under (j)2i.

A deed moving a home from one former spouse to the other is recorded after their divorce decree. To be exempt from the realty transfer fee, within what time after the decree must it be recorded?

1. Within 30 days.
2. Within 60 days.
3. Within 90 days. ✓
4. Within 180 days.

Why: N.J.S.A. 46:15-10(p): the fee does not apply to a deed RECORDED WITHIN 90 DAYS FOLLOWING THE ENTRY OF A DIVORCE DECREE WHICH DISSOLVES THE MARRIAGE BETWEEN THE GRANTOR AND GRANTEE.

A couple finance the purchase of their new principal residence with a first mortgage. Two days after closing they want to cancel the loan under Regulation Z's right of rescission. Can they?

1. No; a residential mortgage transaction is exempt. ✓
2. Yes; they have until midnight of the third business day.
3. Yes; the right lasts three years on a purchase loan.
4. No; rescission applies only to open-end credit plans.

Why: 12 CFR 1026.23(f): THE RIGHT TO RESCIND DOES NOT APPLY TO THE FOLLOWING: (1) A RESIDENTIAL MORTGAGE TRANSACTION, which is credit to finance the acquisition of the consumer's principal dwelling. The three-day right covers other credit secured by the principal dwelling.

A broker offers a free home inspection worth $1,200 to any owner who sits through a listing presentation. What must the written disclosure say about the presentation?

1. Nothing, since attending a meeting is not an action under the rule.
2. That attending it is an action the owner must perform to qualify. ✓
3. That the owner must sign a listing agreement at the presentation.
4. That the Commission has reviewed and approved what is presented.

Why: N.J.A.C. 11:5-6.1(m)3i: the disclosure must state WHETHER THE CONSUMER IS REQUIRED TO PERFORM ANY ACTION TO QUALIFY, and A CONSUMER'S ATTENDANCE AT ANY LISTING PRESENTATION, INFORMATIONAL SESSION, OR OTHER MEETING IS CONSIDERED TO BE AN ACTION BY THE CONSUMER. The offer exceeds $1,000, so the disclosure is required.

A brokerage's telemarketing system blocks its number from showing on recipients' caller ID screens. Is this allowed under the Telemarketing Sales Rule?

1. Yes; transmitting caller ID information is optional.
2. Yes, if the caller gives the number during the call.
3. No; the telemarketer must transmit its number to caller ID. ✓
4. No, but only for calls made after 8:00 p.m. local time.

Why: 16 CFR 310.4(a)(8): it is an abusive practice to fail to TRANSMIT OR CAUSE TO BE TRANSMITTED THE TELEPHONE NUMBER, AND, WHEN MADE AVAILABLE BY THE TELEMARKETER'S CARRIER, THE NAME OF THE TELEMARKETER, TO ANY CALLER IDENTIFICATION SERVICE IN USE BY A RECIPIENT.

In a state that recognizes tenancy by the entirety, who may hold title that way?

1. Any two unrelated co-owners
2. Only a married couple ✓
3. A partnership and its partners
4. A parent and a minor child

Why: The Reference Book glossary (chapter 27) describes tenancy by the entireties as, under certain state laws, ownership of property acquired by a husband and wife during marriage, jointly and equally owned, passing to the survivor on the death of one spouse. It is a marital form of ownership, which is why unrelated co-owners and partners cannot use it.

Under New Jersey rules, where does a listing broker who represents only the seller, and offers buyers mortgage services for a fee, make the required disclosure to the seller?

1. In the contract of sale signed at the end.
2. In a closing letter sent after settlement.
3. In the listing agreement with the seller. ✓
4. In the broker's ads for the listed property.

Why: N.J.A.C. 11:5-6.7(d): A LISTING BROKER WHO REPRESENTS ONLY THE SELLER AND WHO OFFERS TO PROVIDE MORTGAGE FINANCING SERVICES TO BUYERS FOR COMPENSATION OR REIMBURSEMENT SHALL PROVIDE WRITTEN DISCLOSURE TO THE SELLER BY INCLUDING THE FOLLOWING STATEMENT IN THE LISTING AGREEMENT.

Which residential leases prepared by a New Jersey licensee with a fee interest must carry the attorney review notice?

1. Every lease, whatever the length of term.
2. Only leases for a term over two years.
3. Only leases with rent over a set amount.
4. Leases for a term of one year or more. ✓

Why: N.J.A.C. 11:5-6.2(g)4: the notice is required in ALL LEASES PREPARED BY LICENSEES FOR A TERM OF ONE YEAR OR MORE FOR RESIDENTIAL DWELLING UNITS IN TRANSACTIONS IN WHICH THEY HAVE A COMMISSION OR FEE INTEREST.

Under Title XI of FIRREA, whose real estate appraiser qualifications criteria must the states adhere to?

1. The Appraisal Standards Board of The Appraisal Foundation.
2. The Appraiser Qualifications Board of The Appraisal Foundation. ✓
3. Each state's real estate licensing commission, acting alone.
4. The Federal Housing Administration, through its appraiser roster.

Why: Reference Book chapter 15: "Title XI additionally requires states to adhere to real estate appraiser qualifications criteria set by the Appraiser Qualifications Board (AQB) of The Appraisal Foundation." The Appraisal Standards Board is the body that adopted USPAP, the standards of practice, not the qualifications criteria.

A landlord asks a broker to advertise an apartment as "ideal for a married couple." Under New Jersey rules, may the broker run that wording?

1. Yes, since marital status is not covered by the ad rules.
2. No; ads may not express a limitation as to marital status. ✓
3. Yes, if the landlord makes the request to the broker in writing.
4. Yes, if the ad also says that other applicants are welcome.

Why: N.J.A.C. 11:5-6.1(i): NO LICENSED INDIVIDUAL, LIMITED OR GENERAL PARTNERSHIP, FIRM OR CORPORATION SHALL ADVERTISE ... WHICH EXPRESSES DIRECTLY OR INDIRECTLY ANY LIMITATION, SPECIFICATION OR DISCRIMINATION AS TO ... MARITAL STATUS. The wording signals a preference based on marital status.

How is an open listing, under which the broker promises nothing in return, classified?

1. As a bilateral agreement.
2. As a conditional contract.
3. As a unilateral agreement. ✓
4. As an executed contract.

Why: DRE Reference Book ch. 10: A UNILATERAL AGREEMENT IS ONE IN WHICH ONE PARTY MAKES A PROMISE TO INDUCE SOME ACT OR PERFORMANCE BY THE OTHER PARTY, BUT THE LATTER CAN ACT OR NOT ACT AS HE CHOOSES. FOR EXAMPLE, IN THE CASE OF AN OPEN LISTING, THE INTENDED SELLER AGREES TO PAY COMPENSATION ... BUT THERE IS NO OBLIGATION ON THE PART OF THE BROKER TO DO SO.

Which of these is NOT one of the essential elements of a valid contract?

1. Parties capable of contracting
2. Recording of the agreement ✓
3. Mutual consent of the parties
4. A lawful object

Why: Reference Book chapter 6 lists four essential elements: parties capable of contracting, mutual consent, a lawful object and sufficient consideration, with a proper writing added for certain contracts. Recording gives notice to the world; it is not needed to make a contract valid between the parties.

An owner asks her property manager how she should treat the building's rental income and repairs on her income tax return. What is the manager's proper course?

1. Recommend that she get the advice of a qualified accountant ✓
2. Give his best tax advice, as an agent owes full disclosure
3. Prepare the tax return himself for an added management fee
4. Tell her the return is not his concern and say nothing more

Why: Reference Book chapter 22 notes that the preparation of leases, tax reports and other matters may involve legal and accounting services beyond the province of the property manager, and that in such cases professional counsel should be obtained. The duty of disclosure does not turn a manager into a tax adviser, and simply refusing to engage leaves the principal without the referral she needs.

A broker represents Buyer 1, who is in contract on a house. Buyer 2 then asks the same broker to write a backup offer on it. What is the better practice for the broker?

1. Avoid it without clear, informed consent from both buyers. ✓
2. Write it; buyers' agents may represent any number of buyers.
3. Write it, but only after Buyer 1's contingencies are removed.
4. Write it, as long as Buyer 1's price is kept confidential.

Why: DRE Reference Book ch. 10: THE SITUATION BECOMES EVEN WORSE IF BUYER 1 IS IN CONTRACT AND BUYER 2 MAKES A BACK-UP OFFER. BUYER 1'S POSITION IS ALMOST CERTAINLY WEAKENED. THE BETTER PRACTICE WOULD BE FOR THE REAL ESTATE BROKER TO AVOID ATTEMPTING TO REPRESENT TWO BUYERS ON THE SAME PROPERTY WITHOUT THE CLEAR, INFORMED AND UNEQUIVOCAL CONSENT OF BOTH PARTIES.

Absent an extension, by what date must an owner file the application for farmland assessment with the local assessor?

1. June 1 of the year before the tax year.
2. August 1 of the year before the tax year. ✓
3. October 1 of the year before the tax year.
4. January 1 of the tax year it applies to.

Why: N.J.S.A. 54:4-23.6(c): APPLICATION BY THE OWNER OF SUCH LAND FOR VALUATION HEREUNDER IS SUBMITTED ON OR BEFORE AUGUST 1 OF THE YEAR IMMEDIATELY PRECEDING THE TAX YEAR. Under 23.6(d) the assessor may extend this to September 1 only for the owner's illness or a death.

The instrument creating an easement is unclear about whether it benefits a parcel of land or only a person. If it can fairly be read as attached to land, how is it construed?

1. As in gross, personal to the one person who holds it.
2. As a license the landowner may revoke at will.
3. As void, since it fails to state what kind it is.
4. As appurtenant, passing with the benefited land. ✓

Why: DRE Reference Book ch. 5: IF THE INSTRUMENT CREATING AN EASEMENT IS UNCLEAR, THE FOLLOWING FACTORS ARE USEFUL IN DETERMINING WHETHER THE EASEMENT IS APPURTENANT OR IN GROSS: (1) IF THE EASEMENT CAN FAIRLY BE CONSTRUED AS BEING ATTACHED TO THE LAND/PROPERTY, IT WILL BE SO CONSTRUED. Appurtenant easements PASS AUTOMATICALLY UPON TRANSFER OF THE DOMINANT TENEMENT.

An owner grants land to a city 'so long as it is used as a public library.' Years later the library closes. What happens to the city's estate?

1. It ends automatically; title returns to the grantor ✓
2. The grantor must reenter or sue before the estate ends
3. Nothing, because a use limit in a deed is unenforceable
4. The city keeps title but owes the grantor the land's value

Why: Reference Book chapter 6 explains that when an owner imposes a special limitation and the stated event occurs, the estate automatically terminates and the grantor or successor reacquires title; the chapter 27 glossary defines a determinable fee as an estate that may end on an event that may or may not occur. The need to act to terminate belongs to a condition subsequent, not to a determinable fee.

May a landlord ask every rental applicant whether the applicant has a disability and, if so, how severe it is?

1. No; asking about the existence or severity of a handicap is barred. ✓
2. Yes, because the same question is put to every single applicant.
3. Yes, so long as the answer is never used to turn down the application.
4. No, but only because the form fails to explain why the question is asked.

Why: 24 CFR 100.202(c): IT SHALL BE UNLAWFUL TO MAKE AN INQUIRY TO DETERMINE WHETHER AN APPLICANT FOR A DWELLING ... HAS A HANDICAP OR TO MAKE INQUIRY AS TO THE NATURE OR SEVERITY OF A HANDICAP OF SUCH A PERSON. Asking everyone does not save a question outside the permitted list.

To whom does a New Jersey brokerage firm acting as an agent owe the statutory duties to deal honestly and in good faith and to exercise reasonable skill and care?

1. Its principal only, and the principal may waive them in writing.
2. All parties, but only when the firm is acting as a transaction broker.
3. Its principal and all parties in the transaction, without waiver. ✓
4. Its principal only, unless the other party is also unrepresented.

Why: N.J.S.A. 45:15-16.87: a firm WHEN ACTING AS A BUYER'S AGENT, SELLER'S AGENT, DISCLOSED DUAL AGENT, OR DESIGNATED AGENT, OWES THE FOLLOWING DUTIES TO THE BROKERAGE FIRM'S PRINCIPAL AND TO ALL PARTIES IN A TRANSACTION, WHICH MAY NOT BE WAIVED, including TO EXERCISE REASONABLE SKILL AND CARE and TO DEAL HONESTLY AND IN GOOD FAITH.

A buyer of a main home pays a state transfer (stamp) tax, recording fees and the premium for an owner's title policy at closing. How are these treated for federal tax purposes?

1. They are deducted in full in the year of purchase.
2. They are ignored; only the price counts as basis.
3. They are added to the buyer's basis in the home. ✓
4. They reduce the buyer's selling price later on.

Why: IRS Publication 523, Fees and Closing Costs (explaining 26 U.S.C. 121): SOME SETTLEMENT FEES AND CLOSING COSTS YOU CAN INCLUDE IN YOUR BASIS ARE ... RECORDING FEES ... TRANSFER OR STAMP TAXES, AND ... OWNER’S TITLE INSURANCE.

Which cost-estimating method prices every item of labor and material in each building component, then adds overhead, insurance and the contractor's profit?

1. The quantity survey method. ✓
2. The unit-in-place method.
3. The square-foot cost method.
4. The cubic-foot cost method.

Why: DRE Reference Book ch. 15, Cost Approach: THE QUANTITY SURVEY METHOD INVOLVES A DETAILED ESTIMATE OF ALL LABOR AND MATERIALS FOR EACH COMPONENT OF THE BUILDING. ITEMS SUCH AS OVERHEAD, INSURANCE, AND CONTRACTOR’S PROFIT MUST BE ADDED TO DIRECT COSTS ... THIS METHOD IS SELDOM USED, EXCEPT BY BUILDING CONTRACTORS AND PROFESSIONAL COST ESTIMATORS. The unit-in-place method prices installed units such as walls and roof instead, and the square-foot and cubic-foot methods work from the known costs of comparable buildings.

Which nonresident seller of New Jersey real property is exempt from filing the estimated gross income tax form?

1. A seller who expects to have no gain on the sale of her rental property.
2. A seller of vacant land who has owned the lot for more than ten years.
3. A seller whose property was used exclusively as her principal residence. ✓
4. A seller whose buyer is a private individual paying cash at closing.

Why: N.J.S.A. 54A:8-10 b: the requirements SHALL NOT APPLY IF: (1) THE REAL PROPERTY BEING SOLD OR TRANSFERRED IS USED EXCLUSIVELY AS THE PRINCIPAL RESIDENCE OF THE SELLER OR TRANSFEROR; under 10 a other nonresident sellers SHALL FILE THE ESTIMATED TAX FORM, WHETHER OR NOT THEY HAVE A GAIN ON THE SALE OR TRANSFER.

Years after signing a will that leaves her house to her nephew, an owner sells and deeds the house to a buyer. She later dies without changing the will. Who holds title to the house?

1. The buyer; the will had no effect on the house during her life. ✓
2. The nephew; the earlier signed will takes priority over the deed.
3. The nephew, though the buyer may recover the price from the estate.
4. The buyer, but only if the nephew consented to the sale in writing.

Why: DRE Reference Book ch. 6: THE EXECUTION OF A WILL DURING LIFE HAS NO EFFECT ON PROPERTY INTERESTS, AS THE INSTRUMENT ONLY BECOMES EFFECTIVE AT DEATH, while deeds and contracts CREATE SOME PRESENT INTEREST AND ARE NOT DEPENDENT UPON DEATH TO BE EFFECTIVE. The deed passed title to the buyer at once; at death the owner no longer owned the house for the will to pass.

A prospective tenant fills out a rental application for an apartment. On what basis may the landlord obtain the applicant's consumer credit report under the Fair Credit Reporting Act?

1. Any landlord may pull a report on anyone who asks about a unit.
2. Only a court order or subpoena allows a report to be furnished.
3. Only if the landlord is also a lender extending the tenant credit.
4. A legitimate business need in a transaction the consumer began. ✓

Why: 15 U.S.C. 1681b(a)(3)(F)(i): a consumer reporting agency may furnish a report to a person it believes OTHERWISE HAS A LEGITIMATE BUSINESS NEED FOR THE INFORMATION ... IN CONNECTION WITH A BUSINESS TRANSACTION THAT IS INITIATED BY THE CONSUMER. The rental application is such a transaction; mere inquiry by someone who has not applied is not.

A married couple filing jointly sells their main home. Only the wife is on the title, but both have lived there for the past four years. What is their maximum exclusion?

1. Nothing, as both spouses must hold title to the home.
2. $250,000, as the husband has never owned the property.
3. $375,000, as the husband qualifies only for a partial share.
4. $500,000, as only one spouse must meet the ownership test. ✓

Why: 26 U.S.C. 121(b)(2)(A): the limit is $500,000 IF (I) EITHER SPOUSE MEETS THE OWNERSHIP REQUIREMENTS ... (II) BOTH SPOUSES MEET THE USE REQUIREMENTS ... AND (III) NEITHER SPOUSE IS INELIGIBLE because of the two-year rule.

A broker already has one trust account for sales deposits and starts taking credit card deposits on summer rentals. Where must the card payments be credited?

1. To her existing trust account for sales deposits, noted in the ledger.
2. To her general business account, which then pays the owners monthly.
3. To an account in the owner's name that the broker cannot sign on.
4. To a special trust account kept apart from her other trust accounts. ✓

Why: N.J.A.C. 11:5-5.1(i)3: BROKERS WHO ACCEPT PAYMENTS IN THE FORM OF CREDIT CARD CHARGES IN SHORT TERM RENTALS SHALL CAUSE THOSE PAYMENTS TO BE CREDITED TO A SPECIAL TRUST OR ESCROW ACCOUNT, DISTINCT FROM THE ESCROW OR TRUST ACCOUNT(S) MAINTAINED BY THE BROKER FOR OTHER PURPOSES, and must also keep a separate business account.

A listing broker tells cooperating agents that every showing appointment on her listings must be booked through her office. A cooperating agent says this breaches the New Jersey duty to cooperate. Is the agent right?

1. Yes; any condition on showings by a cooperating firm breaches the duty.
2. No; requiring appointments through the listing office is not unreasonable. ✓
3. Yes, unless the seller has signed a waiver of broker cooperation first.
4. No, because a listing broker may refuse all showings by other firms at will.

Why: N.J.A.C. 11:5-6.4(f)1iii: listing brokers must PLACE NO UNREASONABLE RESTRICTIONS UPON THE SHOWING OF PROPERTIES ... A REQUIREMENT THAT ALL APPOINTMENTS FOR SHOWINGS MUST BE MADE THROUGH THE LISTING BROKER'S OFFICE IS NOT CONSIDERED AN UNREASONABLE RESTRICTION UPON SHOWINGS.

A developer builds a new two-story office building, 2,500 square feet per story, to lease to real estate and insurance firms. Must it install an elevator under ADA Title III?

1. Yes; all new commercial buildings must include an elevator.
2. Yes, since tenants will serve members of the public.
3. No; under three stories, it need not have an elevator. ✓
4. No, but it must install one once any tenant asks for it.

Why: 42 U.S.C. 12183(b): SUBSECTION (A) SHALL NOT BE CONSTRUED TO REQUIRE THE INSTALLATION OF AN ELEVATOR FOR FACILITIES THAT ARE LESS THAN THREE STORIES OR HAVE LESS THAN 3,000 SQUARE FEET PER STORY UNLESS THE BUILDING IS A SHOPPING CENTER, A SHOPPING MALL, OR THE PROFESSIONAL OFFICE OF A HEALTH CARE PROVIDER. An office for real estate and insurance firms is none of those.

At closing, the current year's property tax, payable in arrears, has not yet been billed. How is the seller's share of that tax entered on the closing statement?

1. Debit the seller and credit the buyer for the accrued share. ✓
2. Credit the seller and debit the buyer for the accrued share.
3. Debit the buyer only, since the buyer will later pay the tax bill.
4. Credit the seller only, since the tax is not yet due at all.

Why: DRE Reference Book ch. 27: ACCRUED ITEMS OF EXPENSE are THOSE INCURRED EXPENSES WHICH ARE NOT YET PAYABLE; THE SELLER’S ACCRUED EXPENSES ARE CREDITED TO THE PURCHASER IN A CLOSING STATEMENT. The seller is charged for the days owned, and the buyer, who will pay the whole bill, is credited.

A buyer paid for an option to buy a lot that expires at 5 p.m. on June 30. He delivers written notice of exercise at 9 a.m. on July 1, and the owner refuses to sell. Must she sell to him?

1. No; time is of the essence in an option, and it has expired. ✓
2. Yes; a delay of a few hours is not a material breach of terms.
3. Yes, because he paid for the option and so it cannot lapse.
4. No, unless he also tenders the full price with the notice.

Why: DRE Reference Book ch. 6 (Options): THE OPTION WILL TERMINATE AUTOMATICALLY UPON EXPIRATION OF THE TIME SPECIFIED WITHOUT EXERCISE BY THE OPTIONEE ... TIME IS OF THE ESSENCE IN AN OPTION AND IS USUALLY STRICTLY CONSTRUED. The notice came after the deadline, so the owner's irrevocable offer had already ended; paying for the option bought only the stated time.

A listing broker, with no authority from the seller to delegate, brings in another broker to help find a buyer. The second broker is:

1. A subagent of the seller, because the seller benefits from the help
2. The agent of the listing broker, not a subagent of the seller ✓
3. A dual agent of both the seller and any buyer it later locates
4. An agent of no one, as a broker cannot delegate any of its duties

Why: Reference Book chapter 10 states that where the listing broker appoints another broker without the consent of the principal, the second broker becomes the agent of the listing broker and not the subagent of the principal. Delegation itself is not barred: an agent may generally delegate unless the principal forbids it.

When a firm will renovate the painted hallways and other common areas of multi-unit target housing, what must it do for the occupants, besides giving the owner the pamphlet?

1. Hand each occupant the pamphlet and collect a signed receipt from each.
2. Nothing, since the occupants have no ownership in common areas.
3. Notify each affected unit in writing, or post informational signs. ✓
4. Get each occupant's written consent before any of the work begins.

Why: 40 CFR 745.84(b)(2): the firm must NOTIFY IN WRITING, OR ENSURE WRITTEN NOTIFICATION OF, EACH AFFECTED UNIT AND MAKE THE PAMPHLET AVAILABLE UPON REQUEST PRIOR TO THE START OF RENOVATION, or, WHILE THE RENOVATION IS ONGOING, POST INFORMATIONAL SIGNS DESCRIBING THE GENERAL NATURE AND LOCATIONS OF THE RENOVATION AND THE ANTICIPATED COMPLETION DATE. Signed receipts from each occupant and occupant consent are not required.

When a timeshare purchaser cancels in time and her check has already cleared, within how many days after receiving the notice of cancellation must the developer make the refund?

1. 10 days.
2. 15 days.
3. 30 days. ✓
4. 60 days.

Why: N.J.S.A. 45:15-16.67: THE REFUND SHALL BE MADE WITHIN 30 DAYS AFTER THE RECEIPT OF THE NOTICE OF CANCELLATION, OR RECEIPT OF FUNDS FROM THE PURCHASER'S CLEARED CHECK, WHICHEVER OCCURS LATER, less any benefits actually received.

A purchase contract says the buyer takes title subject to a recorded utility easement, which it describes. At closing the buyer refuses to perform, saying the easement makes the title unmerchantable. Is that a valid defense?

1. No; an encumbrance agreed to in the contract is no defense. ✓
2. Yes; a buyer may always demand title free of every easement.
3. Yes, unless the easement was removed before the contract date.
4. Yes, if the easement lowers the market value of the lot.

Why: DRE Reference Book ch. 6 (Adequate consideration, merchantable title): A BUYER IS ALWAYS ENTITLED TO RECEIVE A MERCHANTABLE TITLE ... IF THE PARTIES AGREE THAT THE TRANSFER OF TITLE WILL BE SUBJECT TO THE AGREEMENT THAT TITLE WILL BE CONVEYED, THESE ENCUMBRANCES SHOULD BE DESCRIBED IN THE CONTRACT AND WILL NOT BLOCK SPECIFIC PERFORMANCE. The buyer accepted the described easement, so it cannot excuse his refusal, whatever its effect on value.

A homeowner takes a short-term bridge loan, secured by her current single-family house, to fund the down payment on her next home before the first one sells. Is the bridge loan covered by RESPA's Regulation X?

1. Yes; every loan secured by a 1- to 4-family home is covered by it.
2. Yes, but only if the bridge loan's term runs two years or longer.
3. No; a bridge loan on such a home is not covered by Regulation X. ✓
4. No, unless the same lender also makes the loan on the next home.

Why: 12 CFR 1024.5(b)(3) exempts TEMPORARY FINANCING, SUCH AS A CONSTRUCTION LOAN, and states that a bridge loan or swing loan IN WHICH A LENDER TAKES A SECURITY INTEREST IN OTHERWISE COVERED 1- TO 4-FAMILY RESIDENTIAL PROPERTY IS NOT COVERED BY RESPA AND THIS PART. The two-year term test applies to construction loans, not bridge loans.

An advertisement for home loans says only: 'Just 5% down!' Under Regulation Z, what else must the ad state?

1. Nothing more, as a down payment is not a trigger term
2. The lender's license number and a toll-free number
3. The note rate and an estimate of total closing costs
4. The repayment terms and the annual percentage rate ✓

Why: 12 CFR 1026.24(d)(1) makes the amount or percentage of any down payment a triggering term, and 1026.24(d)(2) then requires the ad to state the down payment, the terms of repayment and the annual percentage rate, using that term. A toll-free number is an option only for radio and television ads under 1026.24(g).

A lender sells a 1965 house at a foreclosure sale. Must the lead pamphlet and lead disclosures be given to the buyer at that sale?

1. No; sales of target housing at foreclosure are exempt. ✓
2. Yes; every sale of pre-1978 housing is covered by it.
3. No, but only if the buyer is a lender or an investor.
4. Yes, unless the buyer waives the disclosures in writing.

Why: 40 CFR 745.101: THIS SUBPART APPLIES TO ALL TRANSACTIONS TO SELL OR LEASE TARGET HOUSING ... WITH THE EXCEPTION OF THE FOLLOWING: (A) SALES OF TARGET HOUSING AT FORECLOSURE. The exemption turns on the kind of sale, not on who buys.