PSI Real Estate Exam, National Portion, Practice Exams

A 55-and-over community has 50 units, of which 47 are occupied. At least how many occupied units must have one or more residents aged 55 or older to meet the 80 percent test?

1. 37.
2. 38. ✓
3. 40.
4. 47.

Why: 24 CFR 100.305(a): AT LEAST 80 PERCENT OF ITS OCCUPIED UNITS MUST BE OCCUPIED BY AT LEAST ONE PERSON 55 YEARS OF AGE OR OLDER; (g): WHERE APPLICATION OF THE 80 PERCENT RULE RESULTS IN A FRACTION OF A UNIT, THAT UNIT SHALL BE CONSIDERED TO BE INCLUDED IN THE UNITS THAT MUST BE OCCUPIED BY AT LEAST ONE PERSON 55 YEARS OF AGE OR OLDER. Working: 47 x 0.80 = 37.6, and the fraction counts as a whole unit, so 38. Using all 50 units (40) is wrong, since the base is occupied units.

A tenant with four years left signs a document titled "Sublease" that transfers all her space for all four remaining years. How is the transfer treated?

1. As a sublease, because the parties chose to call it that.
2. As a new lease directly between landlord and newcomer.
3. As an assignment; its nature, not its label, governs. ✓
4. As void, as a sublease cannot cover the entire space.

Why: DRE Reference Book ch. 9 (Transfer of interest by tenant): an assignment transfers the tenant's ENTIRE REMAINING INTEREST IN THE PREMISES FOR THE REMAINDER OF THE LEASE TERM, and REGARDLESS OF WHETHER A TRANSFER IS CALLED AN "ASSIGNMENT" OR A "SUBLEASE," THE NATURE OF THE TRANSFER WILL DETERMINE WHETHER IT WILL BE LEGALLY TREATED AS AN ASSIGNMENT OR A SUBLEASE.

Farah and Gus hold a house as joint tenants. Farah's will leaves her interest to her son. When Farah dies, who owns the house?

1. Gus and the son as tenants in common
2. The son alone, under Farah's will
3. Gus and the son as joint tenants
4. Gus alone, by right of survivorship ✓

Why: Reference Book chapter 5 explains that on the death of a joint tenant the survivor becomes the owner to the exclusion of the heirs or devisees of the deceased, so joint tenancy property cannot be disposed of by will. The son takes nothing, because Farah's interest ended at her death.

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.

A manufacturer pays a hauler to take its drums of hazardous waste to a landfill owned by someone else. Years later the landfill leaks. Can the manufacturer be liable for response costs?

1. No, liability rests only on the landfill's owner
2. No, since it paid a licensed hauler to handle the waste
3. Yes, as a person who arranged for disposal of its waste ✓
4. Only if it still owns an interest in the landfill site

Why: 42 U.S.C. 9607(a)(3) makes liable any person who by contract, agreement or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal, of hazardous substances it owned or possessed, at a facility owned or operated by another. Owners are one liable class among several, and hiring a transporter does not shift the arranger's liability.

Buyer and seller have both signed joint escrow instructions. The seller then writes to the escrow holder alone, telling it to add a condition that the buyer pay her moving costs. What should the escrow holder do?

1. Not act on it; one principal cannot change joint instructions. ✓
2. Add it, since the seller is a principal who may give instructions.
3. Add it, unless the buyer objects in writing within a reasonable time.
4. Cancel the escrow, since the letter repudiates the whole sale.

Why: DRE Reference Book ch. 8 (Escrow Instructions): WHEN JOINT/BILATERAL INSTRUCTIONS HAVE BEEN SIGNED BY THE PRINCIPALS TO THE ESCROW, NEITHER PRINCIPAL MAY UNILATERALLY CHANGE THE ESCROW INSTRUCTIONS. THE PRINCIPALS MAY CHANGE, BY MUTUAL AGREEMENT, THE INSTRUCTIONS AT ANY TIME.

A regular customer with a store account picks up a box of nails, holds it up to the clerk, gets a nod and leaves. What kind of contract has been formed?

1. An implied contract, shown by the parties' conduct ✓
2. An express contract, since both parties assented
3. No contract at all, because nothing was said
4. A unilateral contract binding only the store

Why: Reference Book chapter 6 explains that in an express contract the parties put their terms into words, oral or written, while in an implied contract the agreement is shown by acts and conduct. Its own example is the account customer who waves a pack of gum at the clerk and leaves. Assent without words is still assent, so this is not a case of no contract.

An owner wants $96,000 of NOI from 10 units. Operating expenses are $54,000 and vacancy is 5% of gross. What monthly rent per unit is needed?

1. $842.11
2. $1,250
3. $1,312.50
4. $1,315.79 ✓

Why: Reference Book chapter 15: NOI = effective gross income less expenses, and effective gross is 95% of gross. Gross = ($96,000 + $54,000) / 0.95 = $157,894.74 a year; / 10 units / 12 = $1,315.79. Adding 5% instead of dividing by 0.95 gives $1,312.50.

What is a multiple listing service?

1. A fifth kind of listing agreement signed between seller and service
2. A listing under which the owner may hire any number of competing brokers at once
3. An agency under which the service itself represents the seller
4. A way of spreading listing information to members, not a listing itself ✓

Why: Reference Book chapter 10 lists four kinds of listing agreement (open, exclusive agency, exclusive right to sell and net) and says a multiple listing is not a listing agreement: it is a mechanism and medium through which information on listed properties is disseminated among a wide group of brokers. The glossary adds that it provides for pooling listings and sharing commissions.

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 owner who has given open listings to two brokers finds a buyer entirely on her own and sells directly to him. What does she owe the brokers?

1. Nothing, as her own sale owes no commission. ✓
2. A full commission to each of the two brokers.
3. Half a commission to each of the two brokers.
4. A full commission to the first broker listed.

Why: DRE Reference Book ch. 6: IF THE OWNER PERSONALLY SELLS THE PROPERTY, THE OWNER IS NOT OBLIGATED TO PAY A COMMISSION TO ANY OF THE BROKERS HOLDING OPEN LISTINGS. THE SALE OF THE PROPERTY UNDER SUCH AN AGREEMENT CANCELS ALL OUTSTANDING OPEN LISTINGS.

A 20-unit building rents at $900 per unit per month, and parking brings in another $500 a month. Vacancy and collection loss is 5% of potential gross income. What is annual effective gross income?

1. $205,200
2. $210,900 ✓
3. $216,000
4. $222,000

Why: Reference Book chapter 15's worked problem adds other income, such as parking and laundry, to rents to reach potential gross income, then deducts vacancy and collection loss. $900 times 20 times 12 is $216,000, plus $6,000 of parking is $222,000; less 5% ($11,100) leaves $210,900. Leaving out the parking gives $205,200.

Under a general power of attorney, what may the attorney in fact do?

1. Perform only the acts that the instrument lists.
2. Act only while the principal is out of state.
3. Transact all of the business of the principal. ✓
4. Sign contracts, but never convey title to land.

Why: DRE Reference Book ch. 10: A SPECIAL POWER OF ATTORNEY AUTHORIZES THE ATTORNEY IN FACT TO DO CERTAIN PRESCRIBED ACTS ON BEHALF OF THE PRINCIPAL. UNDER A GENERAL POWER OF ATTORNEY, THE AGENT MAY TRANSACT ALL OF THE BUSINESS OF THE PRINCIPAL. Limiting the agent to listed acts describes the special power.

Two large brokerages agree that one will take listings only north of the river and the other only south of it, so they stop competing. What does federal law say?

1. It is lawful, as each firm keeps full control of its own prices
2. It is lawful if clients can still use a third brokerage
3. It is a contract in restraint of trade under 15 U.S.C. 1 ✓
4. It is unlawful only if a commission rate is also agreed

Why: 15 U.S.C. 1 declares illegal every contract, combination or conspiracy in restraint of trade. Competitors who divide a market between them by territory remove competition as surely as competitors who fix a price, so the agreement is covered whether or not any rate is discussed.

After the Closing Disclosure is delivered, a few charges change, none needing a new waiting period. The day before closing, the buyer asks to see the updated form. What must the creditor allow?

1. Inspection of the form as then completed, during that day ✓
2. Nothing, as corrections are due only at the closing table
3. A fresh three-business-day review before closing
4. Inspection, but only of items in the seller's transaction

Why: 12 CFR 1026.19(f)(2)(i) requires corrected disclosures at or before consummation, and requires the creditor to let the consumer inspect the disclosures, completed with the items then known, during the business day immediately before consummation. Items relating only to the seller's transaction may be left out.

A broker who is also a licensed appraiser is asked by her own seller-client to appraise the listed home for a fee. Under general brokerage principles, on what condition may she take on the related work?

1. Only if the buyer's lender, not her client, orders and pays for the appraisal.
2. Only if she first ends the listing so that no agency exists while she appraises.
3. It must not conflict with her fiduciary duty, and she must fully disclose it. ✓
4. She may not; a broker can never do any other paid work for her own client.

Why: DRE Reference Book ch. 19: A BROKER MAY ENGAGE IN OTHER PURSUITS AS LONG AS THESE PURSUITS DO NOT CREATE A CONFLICT OF INTEREST WITH THE BROKER’S FIDUCIARY DUTY TO THE CLIENT; for example the broker may, UPON FULL DISCLOSURE ... BE LICENSED TO APPRAISE PROPERTY ON A FEE BASIS. The test is conflict and disclosure, not a flat bar.

For a lease of target housing, may the required lead disclosure elements be set out within the lease itself instead of in a separate attachment?

1. Yes; for a lease they may appear within the contract itself. ✓
2. No; they must always be in a separate attachment signed by all.
3. Yes, but only when a certified inspector also signs the lease.
4. No; for a lease the pamphlet alone replaces those elements.

Why: 40 CFR 745.113(b): EACH CONTRACT TO LEASE TARGET HOUSING SHALL INCLUDE, AS AN ATTACHMENT OR WITHIN THE CONTRACT, THE FOLLOWING ELEMENTS, including the Lead Warning Statement, the lessor's disclosure, the list of records, the lessee's acknowledgment and the signatures. A sale contract, by contrast, SHALL INCLUDE AN ATTACHMENT under (a).

A buyer gives her agent express authority to acquire one named house at a stated price, and the purchase contract is signed. Which further act might the agent have implied authority to perform?

1. Raise the price if the seller later asks for more.
2. Buy another house if this one fails to close.
3. Receive notices from the seller under the contract. ✓
4. Sell the buyer's old home to fund the purchase.

Why: DRE Reference Book ch. 10: with express authority to buy a particular property at a set price, THE AGENT MIGHT HAVE IMPLIED AUTHORITY TO SET THE TIME LIMITS FOR PERFORMANCE OF THE AGREEMENT, RECEIVE NOTIFICATIONS FROM THE SELLER, WAIVE CONDITIONS IN THE AGREEMENT AND POSSIBLY UNDERTAKE EFFORTS TO OBTAIN FINANCING FOR THE BENEFIT OF THE BUYER. IMPLIED AUTHORITY CANNOT CONFLICT WITH EXPRESSED AUTHORITY, so a higher price or a different house is outside it.

The borrower received the Closing Disclosure four business days before the scheduled closing. Which later change requires a new three-business-day waiting period?

1. A prepayment penalty is added to the loan ✓
2. The seller agrees to pay more transfer tax
3. The closing is moved back by a single day
4. A misspelled street name is corrected

Why: 12 CFR 1026.19(f)(2)(ii) requires a new three-business-day wait only if the APR becomes inaccurate, the loan product changes, or a prepayment penalty is added. Other changes before consummation need only corrected disclosures at or before closing under 1026.19(f)(2)(i), and non-numeric clerical errors may be fixed after closing.

A house built in a style extremely foreign to the similar homes around it is slow to sell. Which principle explains the lost value?

1. Conformity, through architectural harmony. ✓
2. Change, through constant flux.
3. Balance, through a proper mix of uses.
4. Regression, through lesser neighbors.

Why: Reference Book chapter 15: the principle of conformity holds that maximum value is realized when land uses are compatible and a reasonable degree of architectural harmony is present. The book adds that a house "that has an architectural style extremely foreign to its surroundings tends to encounter difficulty when offered for sale."

Generally, what must a broker achieve to be entitled to a commission under a listing?

1. A buyer ready, willing and able on the listing terms, or an accepted contract. ✓
2. A closed sale with the deed recorded in the buyer's name, and no other way.
3. Proof of reasonable effort, such as open houses and ads, over the full term.
4. A buyer who has viewed the home and told the seller of a wish to buy it.

Why: DRE Reference Book ch. 10: TO BE ENTITLED TO A COMMISSION THE BROKER MUST (1) PRODUCE A BUYER READY, WILLING AND ABLE TO PURCHASE UPON THE TERMS AND AT THE PRICE STIPULATED BY THE SELLER OR (2) SECURE FROM THE PROSPECTIVE BUYER A BINDING CONTRACT UPON TERMS AND CONDITIONS WHICH THE SELLER SUBSEQUENTLY ACCEPTS.

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.

Because zoning standards must be applied uniformly, zoning is inherently inflexible. Which of these is a method that has evolved to make zoning more responsive to unique land use situations?

1. A floating zone or an overlay (combining) zone. ✓
2. Spot zoning of one parcel to suit its owner alone.
3. One setback rule for every lot in the city.
4. Repeal of the zoning map for one district only.

Why: DRE Reference Book ch. 18: ZONING IS INHERENTLY INFLEXIBLE ... ZONING STANDARDS MUST ALSO BE APPLIED UNIFORMLY ... OVER THE YEARS, A VARIETY OF METHODS HAVE EVOLVED TO MAKE ZONING MORE RESPONSIVE AND ACCOMMODATING TO THE MANY UNIQUE CIRCUMSTANCES INVOLVING LAND USE. “FLOATING ZONES,” SPECIAL PURPOSE OVERLAY OR COMBINING ZONES, MIXED-USE DEVELOPMENT, BUILDING BLOCK ZONING AND PLANNED UNIT DEVELOPMENTS EXEMPLIFY SOME OF THESE METHODS. Spot zoning is not such a method: ch. 5 says zoning MUST BE UNIFORM AND CANNOT BE DISCRIMINATORY OR CREATED FOR THE BENEFIT OF ANY PARTICULAR GROUP.

An employer-employee relationship and an agency are often confused. Which statement about them is accurate?

1. An employee is an agent of the employer, but not all agents are employees. ✓
2. Every agent is an employee of the particular principal the agent represents.
3. An employee can never act as an agent in any dealings with third persons.
4. A listing broker is ordinarily an employee of the seller who hires her.

Why: DRE Reference Book ch. 10: AN EMPLOYEE IS AN AGENT OF THE EMPLOYER BUT NOT ALL AGENTS ARE EMPLOYEES. A REAL ESTATE BROKER IS AN AGENT OF HIS OR HER PRINCIPAL BUT NOT AN EMPLOYEE OF THE PRINCIPAL. So a listing broker is the seller's agent, not the seller's employee.

A home worth $250,000 rises 5% in value one year and falls 5% the next. What is it worth at the end of the second year?

1. $237,500
2. $249,375 ✓
3. $250,000
4. $262,500

Why: DRE Reference Book ch. 26: PERCENTAGE = RATE X BASE, and each year's change runs on that year's base. $250,000 x 1.05 = $262,500; $262,500 x 0.95 = $249,375. $250,000 assumes the two changes cancel, which they do not.

Using an interest table based on a 360-day year, whose factor for 20 days at 9% is $5.0000 per $1,000, what is the interest on $7,500 for 20 days at 9%?

1. $3.75
2. $36.99
3. $37.50 ✓
4. $375.00

Why: DRE Reference Book ch. 26: FROM THE INTEREST TABLE, WE DETERMINE THE FACTOR AND MULTIPLY IT BY THE AMOUNT INVOLVED; the table is ON $1,000. $7,500 is 7.5 thousands, and 7.5 x $5.0000 = $37.50. $36.99 counts a 365-day year, which the table does not use.

An owner lets a friend occupy a vacant cottage with no agreed term and no set rental period, on the understanding that either of them may end it. What estate does the friend hold?

1. An estate for years, lasting a definite period.
2. An estate at will, terminable by either party. ✓
3. An estate at sufferance, as a holdover tenant.
4. A periodic tenancy, renewing from month to month.

Why: DRE Reference Book ch. 27 (Glossary), ESTATE AT WILL: THE OCCUPATION OF LANDS AND TENEMENTS BY A TENANT FOR AN INDEFINITE PERIOD, TERMINABLE BY ONE OR BOTH PARTIES. There is no definite term (estate for years), no fixed rental period (periodic tenancy) and no wrongful holding over after a term (sufferance).

In a state that uses community property, which of these is generally a spouse's separate property?

1. Wages either spouse earned during the marriage
2. A house bought during marriage with both salaries
3. A lot one spouse inherited during the marriage ✓
4. Savings from both spouses' pay during marriage

Why: Reference Book chapter 5 describes community property as property acquired by either spouse during a valid marriage, other than separate property, and lists property acquired during marriage by gift or inheritance as separate. Earnings during the marriage, and what they buy, are the core of the community. Community property is used only in some states, and the details vary.

A purchase contract lists no personal property as included in the sale. When she moves out, the seller takes several large potted plants from the patio. Has she breached the contract?

1. No; the plants are personal property not listed in it. ✓
2. Yes; all landscaping passes to the buyer with the land.
3. Yes, unless she replaces them with plants of equal value.
4. No, but only because she removed them before closing.

Why: DRE Reference Book ch. 20 (Items Included or Excluded From Purchase Price): SUBJECT TO SPECIFIC EXCLUSIONS MADE PART OF THE CONTRACT, THE BUYER IS ENTITLED TO ALL FIXTURES ... THE BUYER IS ENTITLED TO ONLY THAT PERSONAL PROPERTY LISTED IN THE CONTRACT ... THIS COULD INCLUDE ANY LARGE OUTSIDE POTTED PLANTS, AS THESE ARE ORDINARILY NOT FIXTURES. Unlisted, the plants stay with the seller.

A town passes a zoning rule that applies to one tract only, drafted to shut out a rival of a local developer. Why is it open to challenge?

1. Zoning may only be adopted by the state, never a town
2. Zoning applies only to land that is not yet built on
3. Zoning must be uniform and serve the public welfare ✓
4. Zoning must be approved by every owner in the zone

Why: Reference Book chapter 5 says zoning restrictions, to be valid, should be substantially related to the protection of public health, safety, morals or general welfare, and must be uniform and not created for the benefit of any particular group. Cities and counties do have the power to zone.

A description reads "township 4 north, range 3 east" of a named base line and meridian. What does that locate?

1. The fourth section north of the meridian, third section east of the base line
2. A parcel 4 miles north of the base line and 3 miles east of the meridian
3. The fourth township north of the base line, third range east of the meridian ✓
4. The third township north of the base line, fourth range east of the meridian

Why: Reference Book chapter 4 explains that townships are counted north or south from a principal base line and ranges east or west from a principal meridian, so the description directs us four townships north and three east. Each township is six miles, so the distances are not 4 and 3 miles.

A state condemns part of a farm for a new highway, causing severance damage to the rest. The state argues the highway benefits the farm as it does every other user. Can that benefit reduce the severance damages?

1. No; a general benefit is not an offset against them. ✓
2. Yes; any benefit the highway brings reduces the award.
3. Yes, but only up to half of the severance damages.
4. No, because severance damages are not ever payable.

Why: DRE Reference Book ch. 17: BENEFITS AFFECTED BY SEVERANCE ARE EITHER GENERAL OR SPECIAL. A HIGHWAY BENEFITS ALL WHO USE IT, INCLUDING THE CONDEMNEE. THIS GENERAL BENEFIT IS NOT AN OFFSET AGAINST SEVERANCE DAMAGES. Only a special benefit to the remainder may be offset.

A home sells for $300,000. The buyer assumes the seller's $180,000 loan and pays the rest in cash. The seller pays a 6% commission and $2,500 of other costs. What cash does the seller receive?

1. $99,500 ✓
2. $102,000
3. $117,500
4. $279,500

Why: DRE Reference Book ch. 26: COMMISSION = SALE PRICE X RATE, on the full price: $300,000 x 0.06 = $18,000. Cash = $300,000 - $180,000 assumed - $18,000 - $2,500 = $99,500. $279,500 ignores the assumed loan; $117,500 ignores the commission.

An owner's tax records show $80,000 of depreciation taken on a rental building since purchase. How does an appraiser using the cost approach treat that figure?

1. Deducts it from current replacement cost new.
2. Deducts it from the owner's original purchase price.
3. Disregards it and estimates actual depreciation. ✓
4. Adds it to land value to find the property's value.

Why: Reference Book chapter 15 distinguishes book depreciation, an income tax deduction from the owner's original cost, from actual depreciation. The appraiser "looks not to owner's original cost, but cost new on date of value" and deducts accrued actual, not book, depreciation; agents "should not rely on book values" to estimate it.

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 SHALL BE UNLAWFUL, BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN, TO IMPOSE DIFFERENT TERMS, CONDITIONS OR PRIVILEGES ... OR 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.

An agent with full authority signs a contract for a principal who, unknown to the agent, is legally incompetent. Is the agent liable to the other party for breach of the warranty of authority?

1. Yes; an agent guarantees that the principal can legally contract.
2. Yes, unless the other party personally knew the principal well.
3. No; an agent warrants his authority, not the principal's capacity. ✓
4. No, but only because the agent received no commission for it.

Why: DRE Reference Book ch. 10: WHILE THE AGENT WARRANTS THE AGENTS OWN AUTHORITY, THE AGENT DOES NOT IMPLIEDLY GUARANTEE THE PRINCIPAL'S CAPACITY TO CONTRACT. THE AGENT IS NOT LIABLE THEREFORE IF THE PRINCIPAL IS INCAPABLE OF CONTRACTING THROUGH INFANCY OR INCOMPETENCY UNLESS THE AGENT HAS EXPRESSLY WARRANTED CAPACITY OR FRAUDULENTLY CONCEALED THE FACT OF INCAPACITY.

A person with no real estate license helps an owner find a buyer under an oral promise of a fee, then sues when the owner refuses to pay. What is the likely result?

1. The claim succeeds, because the owner received the benefit
2. The claim succeeds once the fee agreement is put in writing
3. It fails; an unlicensed broker cannot enforce it ✓
4. The claim fails only if the buyer objects to the arrangement

Why: Reference Book chapter 6 lists contracts of unlicensed "brokers" among the common violations of the lawful object requirement: such persons are not permitted to enforce their contracts. A later writing does not cure the want of a license, and the buyer's view has nothing to do with it.

Two parties have fully performed an agreement whose object was unlawful. Neither was more to blame, and the law broken was not meant to protect either one. One now sues to rescind and get back what he paid. What result?

1. He loses; neither party may rescind and recover consideration. ✓
2. He wins, because an illegal contract is void and must be unwound.
3. He wins, but only if he sues before the limitations period runs.
4. He loses, unless he gives the other party a full release first.

Why: DRE Reference Book ch. 6 (Lawful Object): THE LAW WILL NOT LEND ITS RESOURCES TO EITHER PARTY INVOLVED IN AN ILLEGAL CONTRACT. THUS, IF A CONTRACT IS EXECUTORY AND ILLEGAL, NEITHER PARTY MAY ENFORCE IT. IF IT IS EXECUTED, NEITHER PARTY MAY RESCIND AND RECOVER CONSIDERATION. None of the exceptions (a protective law, unequal blame, timely repentance) applies on these facts.

A lot is 90 feet wide. The setback ordinance requires every building to stand at least 12 feet from each side line. What is the widest a house on the lot may be?

1. 54 feet.
2. 66 feet. ✓
3. 78 feet.
4. 90 feet.

Why: DRE Reference Book ch. 27 (Glossary), SET BACK ORDINANCE: AN ORDINANCE REQUIRING IMPROVEMENTS BUILT ON PROPERTY TO BE A SPECIFIED DISTANCE FROM THE PROPERTY LINE, STREET OR CURB. Working: 12 feet x 2 side lines = 24 feet; 90 - 24 = 66 feet.

A landlord has evidence that an applicant with a disability would, as a tenant, pose a direct threat to the health or safety of other residents. Do the federal handicap rules require the landlord to rent to him?

1. No; the rules do not require renting to such a tenant. ✓
2. Yes; a disability bars any refusal of this applicant.
3. Yes, unless the landlord first gets a court order.
4. No, but only in buildings with four or fewer units.

Why: 24 CFR 100.202(d): NOTHING IN THIS SUBPART REQUIRES THAT A DWELLING BE MADE AVAILABLE TO AN INDIVIDUAL WHOSE TENANCY WOULD CONSTITUTE A DIRECT THREAT TO THE HEALTH OR SAFETY OF OTHER INDIVIDUALS OR WHOSE TENANCY WOULD RESULT IN SUBSTANTIAL PHYSICAL DAMAGE TO THE PROPERTY OF OTHERS.

What is a condition precedent in a purchase contract?

1. An event after closing that returns title to the seller.
2. A promise by the buyer to use the land only for a home.
3. A clause that fixes damages in advance for a breach.
4. An event that must occur before the obligation takes full effect. ✓

Why: DRE Reference Book ch. 27: a CONDITION PRECEDENT is A QUALIFICATION OF A CONTRACT OR TRANSFER OF PROPERTY, PROVIDING THAT UNLESS AND UNTIL A GIVEN EVENT OCCURS, THE FULL EFFECT OF A CONTRACT OR TRANSFER WILL NOT TAKE PLACE.

A broker accepts a buyer's promissory note as earnest money but lets the seller believe cash was received. What has the broker done?

1. Nothing wrong at all, as notes are the legal equivalent of cash.
2. Nothing wrong at all, if the note is paid before the closing date.
3. Breached the duty to disclose facts that could affect the seller. ✓
4. Only a clerical error, cured by correcting the deposit receipt later.

Why: DRE Reference Book ch. 10: WHILE CHECKS HAVE BEEN UNIVERSALLY ACCEPTED AS THE EQUIVALENCY OF MONEY IN BUSINESS TRANSACTIONS, PROMISSORY NOTES ARE NOT. ... A REAL ESTATE BROKER, LIKE A TRUSTEE, HAS AN AFFIRMATIVE DUTY TO DISCLOSE ALL MATERIAL FACTS WHICH MIGHT INFLUENCE A PRINCIPAL'S DECISION. THUS THE BROKER WHO IMPLIEDLY REPRESENTS TO A PRINCIPAL THAT THE BROKER HAS RECEIVED CASH ... (WHEN IN FACT THE BROKER HAS ACCEPTED A NON-NEGOTIABLE PROMISSORY NOTE) HAS VIOLATED THE REAL ESTATE LAW.

A title company acting as settlement agent prepares the borrower's Closing Disclosure and delivers it late. Who is answerable for meeting the timing rule?

1. Only the title company, which took on the task
2. Nobody, since a settlement agent may not deliver it
3. The seller, whose agent chose the title company
4. The creditor, which must ensure the rules are met ✓

Why: 12 CFR 1026.19(f)(1)(v) lets a settlement agent provide the Closing Disclosure if it complies with the rules, but states that the creditor shall ensure the disclosures are provided in accordance with all requirements of 1026.19(f). Delegating delivery does not shift the creditor's obligation.

On what are appraisals for fire insurance purposes based principally?

1. The market value of land and buildings.
2. The assessed value on the tax roll.
3. The capitalized net income of the property.
4. The cost of replacement. ✓

Why: Reference Book chapter 15, on the purposes and uses of appraisals: for insurance purposes "appraisals are based principally upon the cost of replacement. This is important for the purpose of insuring properties for fire insurance." The purpose of an appraisal frequently dictates the valuation method employed.

In a community property state, how much of the community property may a spouse leave by will?

1. Her own half of the community property. ✓
2. All of it, if title stands in her name.
3. None; it passes wholly to the survivor.
4. Only her separate property, not any of it.

Why: DRE Reference Book ch. 5: EACH SPOUSE HAS THE RIGHT TO DISPOSE OF HIS OR HER HALF OF COMMUNITY PROPERTY BY WILL. Only absent a will does the decedent's half pass to the surviving spouse.

A veteran takes a $310,000 VA-guaranteed purchase loan. The lender charges a flat fee in place of its other origination costs. What is the largest flat charge allowed?

1. $1,550
2. $3,100 ✓
3. $6,200
4. $9,300

Why: 38 CFR 36.4313(d)(2): A LENDER MAY CHARGE AND THE VETERAN MAY PAY A FLAT CHARGE NOT EXCEEDING 1 PERCENT OF THE AMOUNT OF THE LOAN, PROVIDED THAT SUCH FLAT CHARGE SHALL BE IN LIEU OF ALL OTHER CHARGES RELATING TO COSTS OF ORIGINATION not specified in the schedule. $310,000 x 1% = $3,100.

What does the Total Interest Percentage (TIP) in the Closing Disclosure's Loan Calculations table show?

1. The difference between the APR and the note rate on the loan
2. First-year interest as a percent of the sale price
3. The share of each payment that goes to interest
4. All interest over the term, as a share of the loan ✓

Why: 12 CFR 1026.38(o)(5) requires the Total Interest Percentage with the statement that it is the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount. It is distinct from the APR, which 1026.38(o)(4) discloses separately.

A contract provides that it will be extinguished if the buyer ever fails to keep the property insured. What kind of condition is this?

1. A condition subsequent. ✓
2. A condition precedent.
3. A financing contingency.
4. A time-essence clause.

Why: DRE Reference Book ch. 27 (Glossary), CONDITION SUBSEQUENT: A CONDITION ATTACHED TO AN ALREADY-VESTED ESTATE OR TO A CONTRACT WHEREBY THE ESTATE IS DEFEATED OR THE CONTRACT EXTINGUISHED THROUGH THE FAILURE OR NON-PERFORMANCE OF THE CONDITION. A condition precedent must occur BEFORE the contract takes full effect.

A comparable house sold with the seller carrying back financing on terms far better than the market offers. How should the appraiser treat that sale?

1. Use its price unadjusted, as a closed sale.
2. Adjust the subject's value, not the comparable.
3. Treat the price as conclusive of market value.
4. Adjust its price for the favorable financing. ✓

Why: Reference Book chapter 15: "Financing terms receive value adjustment considerations, e.g., for favorable existing assumable financing, or perhaps seller-assisted financing," and financing terms come first in the suggested order of adjustments. "The adjustment is always made to the comparable, not to the subject property."

A renovation firm cannot get the owner's signed acknowledgment and mails the pamphlet instead. How does it satisfy the RRP rule's delivery requirement?

1. By a signed receipt from the post office on delivery.
2. By a certificate of mailing at least 60 days before work.
3. By an e-mail from the owner confirming it was read.
4. By a certificate of mailing at least 7 days before work. ✓

Why: 40 CFR 745.84(a)(1): the firm must PROVIDE THE OWNER OF THE UNIT WITH THE PAMPHLET, AND COMPLY WITH ONE OF THE FOLLOWING: (I) OBTAIN, FROM THE OWNER, A WRITTEN ACKNOWLEDGMENT ... (II) OBTAIN A CERTIFICATE OF MAILING AT LEAST 7 DAYS PRIOR TO THE RENOVATION. Sixty days is the outer limit for delivery, not the mailing rule.

A woman is raising her 10-year-old niece while the girl's parents work overseas, and the parents have given her written permission to do so. A landlord refuses to rent to her because of the child. Is she protected on the basis of familial status?

1. No; familial status covers only parents and legal guardians.
2. Yes; a parent's designee with written permission is covered. ✓
3. No, unless a court has first awarded her legal custody.
4. Yes, but only if the niece is younger than 6 years old.

Why: 42 U.S.C. 3602(k): familial status means a minor DOMICILED WITH ... (2) THE DESIGNEE OF SUCH PARENT OR OTHER PERSON HAVING SUCH CUSTODY, WITH THE WRITTEN PERMISSION OF SUCH PARENT OR OTHER PERSON. The aunt is the parents' designee with written permission; custody by court order is not required.

When a HECM reverse mortgage borrower dies, the loan balance is more than the home's market value. What protects her estate from the shortfall?

1. A deficiency judgment that FHA may collect from heirs.
2. FHA insurance, which pays the lender the difference. ✓
3. A lien the lender may place on the heirs' homes.
4. The estate's other assets, which must cover the whole gap.

Why: Reference Book, ch. 12 (reverse mortgages): THE INSURANCE COVERAGE ALSO PROTECTS THE LENDER AND THE HOMEOWNER IN THE EVENT THE AMOUNT OWING AT THE TIME OF THE MATURITY OF THE REVERSE MORTGAGE LOAN EXCEEDS THE THEN MARKET VALUE OF THE SECURITY PROPERTY. THE DIFFERENCE IS SUBJECT TO A CLAIM AGAINST THE INSURANCE COVERAGE BY THE REVERSE MORTGAGE LENDER THUS PROTECTING THE ESTATE OF THE HOMEOWNER FROM ANY SHORTFALL. Regulation Z (12 CFR 1026.33(a)) likewise defines a reverse mortgage as NONRECOURSE, so no deficiency, heirs' lien or claim on other assets arises.

In a telemarketing campaign covered by the Telemarketing Sales Rule, an agent wants to call a homeowner whose number is on the national do-not-call registry. The homeowner asked the agent's firm about its services 60 days ago and has never asked not to be called. May the agent call?

1. No; a number on the registry may never be called for any sales purpose
2. Yes; an inquiry within 90 days is an established business relationship ✓
3. Only with the homeowner's express agreement in writing to take calls
4. Only if the call is made from a number within the homeowner's area

Why: 16 CFR 310.4(b)(1)(iii)(B) bars calls to registered numbers unless the seller has the person's express written agreement or an established business relationship with a person who has not asked not to be called. 16 CFR 310.2(q) defines that relationship to include an inquiry about the seller's services within the 90 days before the call, or a purchase or transaction within the 540 days before it.

How does RESPA section 8 treat a listing broker's payment of part of the commission to a cooperating broker on a sale financed with a federally related mortgage loan?

1. It is permitted as a cooperative brokerage arrangement. ✓
2. It is a banned referral fee paid between two providers.
3. It is allowed only if the buyer consents to it in writing.
4. It is prohibited unless both brokers work for one firm.

Why: 12 CFR 1024.14(g)(1): SECTION 8 OF RESPA PERMITS ... (V) A PAYMENT PURSUANT TO COOPERATIVE BROKERAGE AND REFERRAL ARRANGEMENTS OR AGREEMENTS BETWEEN REAL ESTATE AGENTS AND REAL ESTATE BROKERS. 12 U.S.C. 2607(c)(3) states the same exemption.

A listing's protection clause runs 90 days past expiration. A month after the listing expires, the owner sells directly to a buyer the broker showed the home to during the listing. What does the clause typically require for the broker to be paid?

1. Nothing further, since the clause pays on any sale made within the 90 days
2. A new listing agreement covering the sale, signed before the owner closes
3. That the broker gave the owner the buyer's name in writing in time ✓
4. That the buyer signed a buyer representation agreement with the broker

Why: Reference Book chapter 20 describes the protection clause: for a set period after expiration it protects the broker's compensation if the owner sells to someone who was shown the property or wrote an offer on it, but to be effective the broker must notify the owner in writing, within the time specified, of the names of the prospective buyers with whom the broker negotiated.

Which of these is a recognized way that private deed restrictions may be terminated?

1. A lot owner's failure to read them before buying.
2. A single lot owner's recorded notice of objection.
3. The sale of any one lot in the tract to a buyer.
4. A court finding that conditions have changed. ✓

Why: DRE Reference Book ch. 5: restrictions may be terminated by expiration of their terms, VOLUNTARY CANCELLATION, MERGER OF OWNERSHIP, ACT OF GOVERNMENT, or CHANGED CONDITIONS (I.E., A COURT FINDS THAT THE RESTRICTIONS SHOULD BE TERMINATED BECAUSE THE CONDITIONS WHICH THE RESTRICTIONS ADDRESSED HAVE CHANGED).

An owner deep in debt deeds his only valuable lot to his brother as a gift, leaving himself unable to pay his creditors. What may the creditors generally do?

1. Nothing; a deed needs no consideration to be valid.
2. Collect the debt from the brother's other property.
3. Void the deed, but only if the brother knew of the debts.
4. Sue to have the deed set aside as fraudulent as to them. ✓

Why: DRE Reference Book ch. 7: A TRANSFER MADE WITHOUT CONSIDERATION BY A GRANTOR WHO IS OR WILL THEREBY BE RENDERED INSOLVENT, IS FRAUDULENT AS TO GRANTOR’S CREDITORS AND THOSE CREDITORS MAY HAVE THE DEED SET ASIDE IN A COURT ACTION. Lack of consideration does not void the deed between the parties, but it does not protect the gift against the creditors.

A firm will repaint the interior of a tenant-occupied 1959 rental house for its owner. To whom must the firm give the Renovate Right pamphlet?

1. To the owner only, since the owner hired the firm.
2. To the occupant only, since the occupant lives there.
3. To the owner and to an adult occupant of the unit. ✓
4. To the local health department before any work.

Why: 40 CFR 745.84(a)(2): IF THE OWNER DOES NOT OCCUPY THE DWELLING UNIT, the firm must also PROVIDE AN ADULT OCCUPANT OF THE UNIT WITH THE PAMPHLET, in addition to giving it to the owner under (a)(1).

A rental applicant uses a wheelchair. The manager asks about the nature and severity of her condition before deciding. What may the manager lawfully ask every applicant instead?

1. Whether the applicant has any medical condition at all.
2. Whether the applicant can meet tenancy requirements. ✓
3. Whether the applicant's condition is likely to worsen.
4. Whether the applicant's doctor approves of the unit.

Why: 24 CFR 100.202(c): it is unlawful TO MAKE INQUIRY AS TO THE NATURE OR SEVERITY OF A HANDICAP, but the rule does not bar INQUIRY INTO AN APPLICANT'S ABILITY TO MEET THE REQUIREMENTS OF OWNERSHIP OR TENANCY, if such inquiries are made of all applicants.

For a USDA Rural Development guaranteed loan on an existing home, what caps the loan amount?

1. The greater of the appraised value plus the guarantee fee, or the purchase price plus closing costs.
2. Ninety percent of the appraised market value of the home, with no guarantee fee added to the loan.
3. The purchase price alone, since neither a guarantee fee nor any closing cost may be financed in it.
4. The lesser of appraised value plus the up-front guarantee fee, or the price plus eligible costs. ✓

Why: 7 CFR 3555.103: THE AMOUNT OF THE LOAN MUST NOT EXCEED THE LESSER OF: (A) ... THE MARKET VALUE OF THE PROPERTY AS DETERMINED BY AN APPRAISAL ... PLUS THE AMOUNT OF THE UP-FRONT LOAN GUARANTEE FEE ... OR (B) ... THE TOTAL OF THE PURCHASE PRICE AND ALL ELIGIBLE ACQUISITION COSTS. The 90% limit applies only to certain new dwellings.

A single owner lived in his home for exactly 12 months when a change in his place of employment forced a sale. He had no other exclusion. What is the most gain he may exclude?

1. $62,500.
2. $100,000.
3. $125,000. ✓
4. $250,000.

Why: 26 U.S.C. 121(c)(1) and (2)(B): for a sale BY REASON OF A CHANGE IN PLACE OF EMPLOYMENT, the limit is reduced to the ratio that the period of ownership and use BEARS TO ... 2 YEARS. Working: 12 months / 24 months x $250,000 = $125,000.

A buyer pays $410,000 with a $369,000 loan, a $10,000 earnest deposit and $8,700 of closing costs. The seller credits $1,560 of unpaid taxes and a $4,000 concession. What is the buyer's cash to close?

1. $34,140 ✓
2. $37,260
3. $44,140
4. $403,140

Why: 12 CFR 1026.38(j) adds the price and closing costs as due from the borrower and deducts the deposit, loan, seller credit and unpaid-tax proration as paid already on the borrower's behalf: $418,700 - $384,560 = $34,140. Forgetting the deposit gives $44,140, and leaving out the loan gives $403,140.

A paving company resurfaces the parking lot of a new county courthouse under a subcontract and is never paid by the general contractor. May it claim a mechanic's lien on the county's land?

1. Yes; the same lien rights apply to publicly owned land.
2. Yes, though only after it has sued the general contractor.
3. No; a mechanic's lien does not attach to a public work. ✓
4. No, unless the county itself signed a contract with it.

Why: DRE Reference Book ch. 5: PERHAPS THE ONLY SAFE EXCEPTION TO THIS IS REAL PROPERTY OWNED AND USED BY THE PUBLIC. NO LIEN FOR WORK OR MATERIAL ATTACHES TO A “PUBLIC WORK.” Unpaid contributors on public projects look to other protections, such as payment bonds, instead.

A restaurant tenant bolted its ovens and shelving to the floor to run its business. Removal will not damage the premises. What may the tenant do?

1. Nothing; bolted items belong to the landlord
2. Remove them only with the landlord's consent
3. Remove them during the term of the tenancy ✓
4. Remove them at any time, even years later

Why: Reference Book chapter 4 lets a tenant remove, during the term, anything affixed for purposes of trade, manufacture, ornament or domestic use, if removal can be done without damage. The glossary calls these trade fixtures: personal property of a business tenant that is removable by the tenant. Consent is not required, and the right is tied to the tenancy, not open-ended.

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 house under contract burns down, through no fault of the buyer, before either legal title or possession has passed to her. The contract is silent on risk of loss. Under the Uniform Vendor and Purchaser Risk Act, what follows?

1. The seller cannot enforce the sale, and she recovers what she paid. ✓
2. She must still close, since she holds equitable title to the house.
3. The price is cut by the loss, and she must close at the lower price.
4. The seller may enforce the sale once the insurer pays for the damage.

Why: DRE Reference Book ch. 6 (Uniform Vendor and Purchaser Risk Act): unless the contract expressly provides otherwise, IF, WHEN NEITHER THE LEGAL TITLE NOR THE POSSESSION OF THE SUBJECT MATTER OF THE CONTRACT HAS BEEN TRANSFERRED, AND ALL OR A MATERIAL PART THEREOF IS DESTROYED WITHOUT FAULT OF THE PURCHASER ..., THE SELLER CANNOT ENFORCE THE CONTRACT, AND THE PURCHASER IS ENTITLED TO RECOVER ANY PORTION OF THE PRICE PAID.

What is menace, as an obstacle to genuine assent in a contract?

1. A mistake made by both parties about a material fact of the deal.
2. A false statement of fact made to induce a deal.
3. A promise made with no intention of keeping it.
4. A threat to commit duress, such as unlawful injury. ✓

Why: DRE Reference Book ch. 6: DURESS INVOLVES COERCION OR CONFINEMENT ... MENACE CONSISTS OF A THREAT TO COMMIT DURESS, INCLUDING THE THREAT OF UNLAWFUL AND VIOLENT INJURY TO A PERSON OR THE PERSON'S CHARACTER. Either may make a contract voidable.

A building has a remaining economic life of 40 years, and investors require an 8% interest rate on it. Using straight-line recapture, what is the building capitalization rate?

1. 2.5%
2. 5.5%
3. 8%
4. 10.5% ✓

Why: DRE Reference Book ch. 15: RECAPTURE RATE IS 4% (100% ÷ 25) in its example, and THE OVERALL CAP RATE IS THE SUM OF THE INTEREST RATE (RETURN ON) AND RECAPTURE RATE (RETURN OF). 100% ÷ 40 = 2.5%; 8% + 2.5% = 10.5%. 5.5% subtracts the recapture instead of adding it.

A minor signs a contract and dies before reaching majority. Who may disaffirm the contract on the ground of his age?

1. No one, as the right ended at his death.
2. Only the adult who contracted with him.
3. Only a guardian whom a court appoints.
4. His heirs or personal representatives. ✓

Why: DRE Reference Book ch. 6: IN CASE OF A MINOR'S DEATH WITHIN THAT PERIOD, THE MINOR'S HEIRS OR PERSONAL REPRESENTATIVES MAY DISAFFIRM ANY CONTRACT INTO WHICH THE MINOR ENTERED. The right survives him and passes to those who stand in his place.

Which method converts income into value by discounting each year's cash flow and the eventual sale proceeds to present value?

1. Direct capitalization using one year's overall rate.
2. Gross rent multiplier analysis of a single year's rent.
3. Yield capitalization, such as discounted cash flow. ✓
4. The building residual technique with a land rate.

Why: Reference Book chapter 15: yield capitalization "measures the present worth of a series of income payments occurring over the multi-year life of the investment"; its most common form, discounted cash flow analysis, discounts each benefit, including the reversion, to present value. Direct capitalization, including overall rate and GRM analysis, converts a single year's income.

What is an abstract of title?

1. A policy that insures the owner against losses from title defects
2. A summary of the recorded documents on which a title rests ✓
3. A court judgment declaring who holds title and removing any cloud
4. A lawyer's written opinion that the title is good and marketable

Why: Reference Book chapter 5 defines an abstract of title as a summary statement of the successive conveyances and other facts in the public records on which a person's title rests. Historically the abstract was paired with a lawyer's opinion of the documents in the chain of title; the opinion and the abstract are two different things.

Under HUD's rules, what is it when a leasing agent assigns every tenant with children to the ground floor of a building, however the rule is explained?

1. Steering, by assigning people to a floor on familial status. ✓
2. A lawful rule, since all families still receive a unit.
3. Blockbusting, since it changes the makeup of each of the floors.
4. Lawful, if the ground-floor units rent at the same price.

Why: 24 CFR 100.70(c): practices GENERALLY REFERRED TO AS UNLAWFUL STEERING PRACTICES include (4) ASSIGNING ANY PERSON TO A PARTICULAR SECTION OF A COMMUNITY, NEIGHBORHOOD OR DEVELOPMENT, OR TO A PARTICULAR FLOOR OF A BUILDING, BECAUSE OF ... FAMILIAL STATUS. Equal rent does not cure the assignment.

Which of these is one of the features of adaptive design that every unit in a covered multifamily dwelling must contain?

1. Bathroom wall reinforcement for later installation of grab bars. ✓
2. An automatic door opener at the entrance to every dwelling unit.
3. A roll-in shower with a fixed seat in at least one bathroom.
4. Kitchen counters installed at a fixed, lowered wheelchair height.

Why: 42 U.S.C. 3604(f)(3)(C)(iii): the features are an accessible route, controls in accessible locations, (III) REINFORCEMENTS IN BATHROOM WALLS TO ALLOW LATER INSTALLATION OF GRAB BARS; AND (IV) USABLE KITCHENS AND BATHROOMS SUCH THAT AN INDIVIDUAL IN A WHEELCHAIR CAN MANEUVER ABOUT THE SPACE. Lowered counters, roll-in showers and door openers are not on the list.

A manager runs a full credit analysis and asks for extra references only from applicants of one national origin. Other applicants are approved on a simple income check. Is this lawful?

1. Yes, as long as every applicant is charged the same fee.
2. Yes, since the manager does not refuse anyone outright.
3. No; it applies different qualification criteria by origin. ✓
4. No, but only if an applicant is then refused the unit.

Why: 24 CFR 100.60(b)(4): prohibited actions include USING DIFFERENT QUALIFICATION CRITERIA OR APPLICATIONS, OR SALE OR RENTAL STANDARDS OR PROCEDURES, SUCH AS INCOME STANDARDS, APPLICATION REQUIREMENTS, APPLICATION FEES, CREDIT ANALYSIS ... BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN.

Which statement belongs in the Lead Warning Statement attached to a contract to sell target housing?

1. That the seller has tested and found the home lead-free.
2. That a buyer must have a lead inspection before closing.
3. That lead poisoning is a risk only for adults who smoke.
4. That a lead risk assessment or inspection is recommended. ✓

Why: 40 CFR 745.113(a)(1): the Lead Warning Statement ends: A RISK ASSESSMENT OR INSPECTION FOR POSSIBLE LEAD-BASED PAINT HAZARDS IS RECOMMENDED PRIOR TO PURCHASE. It recommends, but does not require, an inspection, and it warns that lead places YOUNG CHILDREN AT RISK.

A lease has a dual legal nature. Which two relationships does it create between the landlord and the tenant?

1. Privity of estate from the conveyance, and privity of contract. ✓
2. A fiduciary duty on each side, and an agency for rent collection.
3. A lien on the building for the rent, and a license to enter it.
4. Co-ownership of the premises, and a partnership in its income.

Why: DRE Reference Book ch. 9 (Dual Legal Nature of Lease): A LEASE HAS TWO CHARACTERISTICS ... A CONVEYANCE BY THE LANDLORD TO THE TENANT OF AN ESTATE IN REAL PROPERTY ... (WHICH CREATES "PRIVITY OF ESTATE" BETWEEN THE LANDLORD AND TENANT); AND ... A CONTRACT BETWEEN THE LANDLORD AND TENANT ... (WHICH CREATES "PRIVITY OF CONTRACT" BETWEEN THE LANDLORD AND TENANT).

Which question may a landlord ask, provided it is asked of all applicants whether or not they have handicaps?

1. Whether the applicant takes any medication for a mental illness.
2. Whether the applicant can meet the requirements of the tenancy. ✓
3. Whether the applicant has ever been treated for drug addiction.
4. Whether the applicant uses a wheelchair or other mobility aid.

Why: 24 CFR 100.202(c): the ban on disability inquiries DOES NOT PROHIBIT THE FOLLOWING INQUIRIES, PROVIDED THESE INQUIRIES ARE MADE OF ALL APPLICANTS ...: (1) INQUIRY INTO AN APPLICANT'S ABILITY TO MEET THE REQUIREMENTS OF OWNERSHIP OR TENANCY. Only CURRENT illegal abuse may be asked about, not past treatment.