Kizito Akobundu

1. Two brokers with separate brokerage firms share common office space to save money. As part of this cost cutting, there are no signs at the office door. The brokers: • (a) have formed a joint venture. • (b) must deactivate one of the licenses. • (c) should register with the FREC as a quasi-partnership. • (d) may have become ostensible partners who are liable for each other's business debts and wrongdoings. 2. Which statement correctly describes the rules for branch offices? • (a) Branch offices are considered an extension of the main brokerage office, and as such, do not need to be individually licensed. • (b) A fee is required for the registration of each branch office. • (c) A temporary shelter used to get out of the sun or rain must be registered as a branch office. • (d) Sales associates who work at a branch office must be registered for that office. 3. A broker receives $3,500 cash as an earnest money deposit on Friday. He doesn't return to the office and decides to keep the cash at his home over the weekend. He uses $1,000 of the deposit over the weekend for personal use but replaces the money before he deposits $3,500 into his escrow account on Tuesday. What form of fraud has the broker committed? • (a) Culpability • (b) Conversion • (c) Concealment • (d) Conspiracy 4. What court action may a broker take for settling an escrow dispute if they do NOT claim an interest in a disputed earnest money deposit? • (a) File a suit for interpleader • (b) File a suit for declaratory decree • (c) File for mediation • (d) File for arbitration 5. What is the definition of an appraisal? • (a) Establishment of the assessed value in the defined market • (b) An opinion (or estimate) of value as of a given date • (c) Calculation of the insurable value upon total loss • (d) Determination of loan limits on behalf of the lender 6. When a real estate broker uses a title company to hold escrow rather than have an escrow account, all the following would be required EXCEPT: • (a) Indicate the name, address and phone number of title company on the contract • (b) Broker must request verification of deposit within 10 days after each deposit • (c) Broker must give the seller or seller's agent a copy of verification within 10 days of written request for verification • (d) Report escrow disputes to the Florida Real Estate Commission within 15 days 7. What accounting term refers to the measure of a company's ability to meet its short-term obligations? • (a) Inventory turnover ratio • (b) Quick ratio • (c) Debt-to-net worth ratio • (d) Cash ratio 8. A broker opens a Florida real estate brokerage office in Georgia and establishes an escrow account for Florida real estate transactions in the State Bank of Atlanta. According to Florida real estate laws and rules, which statement is CORRECT? • (a) There is no violation regarding the escrow account. • (b) The broker is in violation because a Florida real estate brokerage office must be located in Florida. • (c) The broker is in violation because the escrow account of a Florida brokerage must be in a Florida institution. • (d) The broker is in violation because the escrow must be held with a title company. 9. A married couple is buying a unit in a condominium project. Two days after receiving the documents they have second thoughts and cancel the contract and request return of the deposit. The sellers claim the deposit should be forfeited. What should the broker do? • (a) Return the deposit to the buyers • (b) Notify the Florida Real Estate Commission within 15 days • (c) Request an escrow disbursement order • (d) Submit an escrow dispute to mediation 10. Which type of business structure would best serve a broker who wishes to save money in starting up a brokerage firm and does NOT want to share profits and losses with investors? • (a) Corporation • (b) Sole proprietorship • (c) Limited partnership • (d) General partnership 11. The required disclosures under the Brokerage Relationship Disclosure Act apply to which types of transactions? • (a) Auctions • (b) Appraisals • (c) Residential transactions • (d) Nonresidential transactions 12. What is the status of a real estate brokerage corporation if the only active broker resigns? • (a) All licensees registered with that corporation become involuntary inactive until they find a new broker. • (b) The corporation may continue with existing business for 14 days without a new broker. • (c) The corporation may continue with new and existing business for 30 days without a broker. • (d) The corporation is out of business. 13. A valid, active, and current real estate license permits licensees to prepare any of the following types of contracts, EXCEPT which one? • (a) Buyer Brokerage Agreement • (b) Contract for Sale and Purchase • (c) Lease Agreement • (d) Listing Agreement 14. Which item is NOT deductible for income tax purposes by the owner of an income producing property? • (a) Depreciation (cost recovery) • (b) Reserves for replacements • (c) Real property taxes • (d) Mortgage interest 15. A licensee who is found guilty of a crime is required to notify the Department within how many days? • (a) 10 days • (b) 15 days • (c) 30 days • (d) 60 days 16. ABC Corp and XYZ, Inc. have exchanged like kind investment properties to defer tax consequences. ABC Corp had to pay XYZ, Inc. $100,000 to equalize the trade. What is the $100,000 referred to as? • (a) Tax-sheltered property • (b) Nontaxable equity • (c) Boot • (d) Consideration 17. Two separate real estate brokerage firms in cities 40 miles apart wish to hire broker Valerie. The two firms have distinct business operations which are not in conflict with each other. Both firms are agreeable to Valerie acting as the managing broker for both companies. Can Valerie legally work for both firms at the same time? • (a) Yes, if she obtains a group license. • (b) Yes, if she obtains multiple licenses. • (c) Yes, if she notifies the Department of the brokerage firms' addresses. • (d) No. A broker may only work for one company at a time. 18. An apartment available for rent was built prior to 1978. Which disclosure must be given to prospective tenants? • (a) Asbestos • (b) Suicide occurred on the property • (c) Lead-based paint • (d) Urea formaldehyde 19. Which statement regarding real estate licensing periods and expiration is INCORRECT? • (a) Licenses are valid for a period of up to two years. • (b) Licenses are staggered on a two-year expiration schedule. • (c) The effective date of an initial license is usually the date the applicant receives official notification in writing of passing the state exam. • (d) Licenses expire on July 31st of odd years. 20. What is the maximum financial penalty per offense that the Florida Real Estate Commission may impose on a licensee? • (a) $500 • (b) $1,000 • (c) $5,000 • (d) $10,000 21. A Broker charges $300 to a prospective tenant for the purchase of rental lists which provide the names and contact information of property owners with apartments available on a seasonal basis. Within two weeks of purchasing the list, the prospective tenant informs the Broker that the list contains outdated information. The Broker: • (a) must give the tenant a $300 refund. • (b) must give the tenant a $75 refund. • (c) does not have to give the tenant a refund since the tenant's request was made too late. • (d) must give the tenant the correct information regarding the rentals within 30 days. 22. As part of the complaint process, a licensee may appeal the final order from the FREC by filing a petition for review to the: • (a) Circuit court of appeals within 30 days • (b) District court of appeals within 30 days • (c) District court of appeals within 90 days • (d) Department of Business and Professional Regulation within 90 days 23. For how long may a licensee who properly renews their license remain in voluntary inactive status? • (a) 2 years • (b) Indefinitely • (c) 1 year • (d) 4 years 24. After a formal complaint has been filed against a licensee, who is appointed by the Division of Administrative Hearings (DOAH) to conduct a formal hearing? O (a) A member of the FREC • (b) An administrative law judge • (c) A mediator • (d) An arbitrator 25. A broker wants to call a prospect to attempt to list their home. If the prospect's name appears on the National Do Not Call Registry, under what circumstance may the broker call the prospect? • (a) When the prospect has a "For Sale by Owner" sign in their yard • (b) When the prospect has an ad in the local newspaper giving their phone number • (c) Never • (d) If the broker has an established business relationship with the prospect 26. Real estate consumer Sam has filed a $42,000 claim for financial reimbursement from the Real Estate Recovery Fund. Sam should: • (a) first sue the licensee in a civil action and receive a judgment award. • (b) not expect more than a $35,000 award from the Recovery Fund. • (c) expect that his claim will be denied by the FREC if he is asking for compensatory damages. • (d) not expect to receive reimbursement from the Recovery Fund. 27. What is the realized gain on this property considering the following information? A married couple has lived in the home three out of the last five years. The original purchase price was $150,000 with $8,500 in capital improvements and $3,000 in closing costs. The home recently sold for $198,000 with $10,000 in closing costs. • (a) $8,000 • (b) $26,500 • (c) $36,500 • (d) $48,000 28. What is the status of a broker's license if they failed to complete their post-license education prior to the first renewal deadline? • (a) Suspended • (b) Null and void • (c) Involuntary inactive • (d) Revoked 29. Kylie, Jack and Blake decided to establish a limited liability partnership registered to broker real estate. Kylie wants to be actively involved in managing the business as well as providing services of real estate. Jack and Blake do NOT want to be involved in the business except as investors. What must they do to form this partnership according to their desired involvement? • (a) All three must be licensed as active brokers. • (b) Kylie must be licensed as an active broker; Jack and Blake must be licensed as active or inactive brokers. • (c) Kylie must be licensed as an active broker; Jack and Blake must be licensed as active or inactive sales associates. • (d) Kylie must be licensed as an active broker; Jack and Blake must be registered but cannot provide real estate services. 30. Which of the following is an allowable use of a trade name? • (a) By a licensed sales associate in advertisements • (b) By a licensed broker if the trade name is the same as their actual name that is registered with the FREC • (c) By a licensed broker who discloses the trade name on the license or registration • (d) By a real estate brokerage partnership with more than one registered trade name 31. A brokerage office policy and procedures manual should include all of the following, EXCEPT: • (a) Employee home phone numbers • (b) Employment compensation policies • (c) Company objectives • (d) Responsibilities and requirements of associates 32. Which penalty may NOT be imposed against a licensee by the FREC? • (a) Temporary suspension of license for up to ten years • (b) Permanent revocation of license • (c) Administrative fines • (d) Imprisonment 33. Appraiser Benjamin has identified his client's property rights as fee simple as well as his client's objectives. He has also determined that the purpose of the appraisal is market value and that a narrative report will be appropriate. Appraiser Benjamin is in the process of completing: • (a) the first step in the appraisal process: define the problem. • (b) the second step in the appraisal process: plan the appraisal. • (c) the third step in the appraisal process: collect and analyze the data. • (d) the last step in the appraisal process: reconciliation. 34. A buyer and seller wish to hire the same broker to handle their residential real estate transaction. The broker should advise them that she can act as which of the following? • (a) As a transaction broker, providing a limited form of representation to both parties • (b) As a transaction broker, providing full representation to both parties • (c) As a dual agent, providing full representation to both parties • (d) As a single agent, providing full representation to both parties 35. At the conclusion of a formal hearing, a recommended order is prepared that is based on clear and convincing evidence. All of the following are included in the recommended order, EXCEPT: • (a) Findings of fact • (b) Mitigating circumstances • (c) Conclusions of law and interpretation of rules • (d) Recommended penalties, if any 36. If two similar houses are for sale, the lower-priced house will generally sell first. This example illustrates which appraisal principle? • (a) Competition • (b) Highest and best use • (c) Substitution • (d) Contribution 37. Josh hired broker Scott to assist in buying an investment property. Under the concept of agency law, what type of agent is Scott? • (a) Special agent • (b) General agent • (c) Universal agent • (d) Exclusive agent 38. A property owner and tenant entered into a written lease-option agreement where the tenant paid a fee that was sufficient to sustain the agreement. Which statement is CORRECT? • (a) The tenant is obligated to exercise the option within the option period • (b) The property owner must refund the fee if the tenant does not exercise the option • (c) The property owner has the right to cancel the option agreement at any time during the option period • (d) The tenant can allow the option to expire without recourse against them by the property owner 39. What term refers to a complaint from the public that, after analysis, has been found to be an alleged violation of state law or rules? • (a) A formal complaint • (b) Legally sufficient • (c) An informal complaint • (d) An administrative complaint 40. What does a sound tax shelter provide? • (a) Negative taxable income and positive cash throw off • (b) Positive taxable income • (c) Negative cash throw off • (d) Negative amortization 41. Which listing best protects a broker with respect to receiving compensation? • (a) Open • (b) Exclusive Agency • (c) Net • (d) Exclusive Right of Sale 42. The potential gross income of a warehouse is $72,000 per year and the vacancy allowance is 5%. Property taxes are $4,000 per year, annual maintenance costs are $8,000 per year, annual reserves for replacements is $3,600, annual debt service is $27,000 and depreciation is $7,000. If the capitalization rate is 9%, what is the estimated value of the warehouse? • (a) $286,667 • (b) $586,667 • (c) $626,667 • (d) $-. Using the information below, what is the estimated net operating income of the apartment complex? • Each unit in a 20-unit apartment complex rents for $1,375 per month • Vacancy and collection losses = 6% • Fixed expenses = $33,920 • Variable expenses = $38,720 • Reserves for replacements = $14,560 • Annual debt service = $28,000 • (a) $195,000 • (b) $223,000 • (c) $310,200 • (d) $330,000 44. Which is CORRECT regarding state transfer stamp taxes? • (a) The documentary tax on the deed is on page 3 of the Closing Disclosure. • (b) The intangible tax on the mortgage is on page 3 of the Closing Disclosure. • (c) The note tax is on page 3 of the Closing Disclosure. • (d) The intangible tax is paid on new mortgages and is on page 2 of the Closing Disclosure. 45. How would title insurance be shown on a Closing Disclosure? • (a) Debit buyer, credit seller • (b) Debit seller, credit buyer • (c) Debit buyer or seller • (d) Credit buyer or seller 46. A tax-sheltered real estate investment is one: • (a) in which taxable income is less than allowable deductions. • (b) that is made possible because of the absence of real estate taxes and mortgage interest. • (c) in which expenses are greater than gross income. • (d) in which debt service is greater than NOl. 47. During an office inspection, errors are detected by the escrow account audit, but there is no shortage of funds or threat to the public. What is the most likely consequence for the broker? • (a) Broker would be given a reasonable time to correct any errors without a criminal charge • (b) Broker charged with first-degree misdemeanor • (c) Broker charged with third-degree felony • (d) Broker charged with first-degree felony 48. A licensee receiving an administrative (or formal) complaint must file an answer within how many days? • (a) 10 days • (b) 21 days • (c) 30 days • (d) 60 days 49. In prorations, unless agreed otherwise, who is the day of closing customarily charged to? • (a) Seller • (b) Buyer • (c) Seller and buyer • (d) Broker 50. A warehouse was built ten years ago at a cost of $250,000. The cost to build it today would be approximately $1,000,000. New warehouses have an estimated life of 25 years. If the appraiser estimates the effective age at 15 years, what is the present depreciated cost of the warehouse? • (a) $250,000 • (b) $400,000 • (c) $600,000 • (d) $750,000 51. The current replacement cost of an apartment building is $1,050,000 and similar structures have an economic life of 25 years. If the effective age of the building is estimated to be 15 years, what is the accrued depreciation? • (a) $420,000 O (b) $525,000 • (c) $630,000 • (d) $735,000 52. After the first renewal, when a licensee decides NOT to renew their real estate license, it will automatically revert to what status? • (a) Voluntary active • (b) Involuntary active • (c) Voluntary inactive • (d) Involuntary inactive 53. All of the following are typical methods by which the broker would compensate sales associates, EXCEPT: • (a) Hourly with overtime • (b) Straight commission with split • (c) Sliding scale commission • (d) Straight salary 54. A sales associate is paid by the broker on a commission basis, is not paid for vacations, and is responsible for reporting their own income to the IRS. What is this sales associate considered to be according to the IRS for tax purposes? • (a) An employee • (b) An independent contractor • (c) A broker associate • (d) A sales associate 55. A broker accepted a buyer's escrow deposit from a sales associate on Tuesday. He deposited the funds one week later. The buyer's check was returned due to non-sufficient funds (NSF). Which statement is CORRECT? • (a) The broker is responsible for the "bounced" NSF check since he did not deposit the funds in a timely way. • (b) The sales associate is responsible for accepting a check that "bounced." • (c) The broker and the sales associate are both responsible for accepting a bad check. • (d) Neither the broker nor the sales associate is responsible for accepting a bad check 56. Which statement is INCORRECT regarding a comparative market analysis (CMA) and an appraisal of real property? • (a) A CMA is just as involved and complex as an appraisal. • (b) A CMA and an appraisal can each provide an owner with information helpful in establishing a list price for a property. • (c) Real estate licensees provide CMAs; Appraisers provide appraisals. • (d) Appraisals must conform to the Uniform Standards of Professional Appraisal Practice (USPAP). CMAs do not need to conform to USPAP. 57. In appraisal terms, what does a Florida home that lacks air-conditioning suffer from? • (a) Physical deterioration • (b) Incurable obsolescence • (c) Functional obsolescence • (d) External obsolescence 58. Which statement regarding brokerage relationships is CORRECT? • (a) A real estate broker may act as a single agent, transaction broker, designated sales associate or engage in no brokerage relationship. • (b) A broker who wants to offer limited representation must act as a single agent. • (c) In a single agency representation, the broker would not have to disclose if they know that the buyer is willing to pay more than the offered price. • (d) A broker should deal with their principal at "arm's length." 59. Which is NOT a requirement for a valid contract? • (a) Competent parties • (b) In writing • (c) Legal purpose • (d) Consideration 60. During the term of a contract for deed, what does the buyer receive? • (a) The deed • (b) A lease • (c) Equitable title • (d) Legal title 61. Jeremy signs a legal instrument in a real estate transaction that refers to a 5% interest rate and $2,200 payable monthly. The instrument is a: • (a) promissory note. • (b) satisfaction. • (c) mortgage. • (d) deed. 62. Adam buys a building with an estimated net operating income of $20,000. Depreciation for income tax purposes is $10,000 for the year purchased, and the reserves for replacements are $5,000. If the annual mortgage loan payments are $8,000, which includes interest of $7,200, what is the taxable income from Adam's investment? • (a) $2,000 • (b) $5,000 • (c) $7,000 • (d) $7,800 63. What remedy may be taken by a buyer when there is a breach of contract by the seller in a real estate sales contract? • (a) File a suit for specific performance • (b) File a suit for liquidated damages • (c) File a suit against the listing brokerage • (d) Submit an Escrow Disbursement Order to the FREC 64. A potential buyer of commercial property performs a Phase I environmental assessment of the site as due diligence prior to purchase. Which action would NOT be part of the Phase assessment? • (a) Test the soil and perform remediation, if necessary • (b) Visit the site to observe any potential concerns • (c) Review aerial photography and topographic maps • (d) Review historical records of ownership and use 65. Which activity in the sale or rental of real property is NOT a violation of the Federal Fair Housing Act? • (a) Utilizing a different type of "sales pitch" based on nationality • (b) Using the term "restricted" unless the exact restriction is lawful and made clear • (c) Using catch words which may be suggestive of race, color, religion, or national origin • (d) Selecting neighborhoods for prospective buyers based on affordability 66. When a broker has an escrow account for sales transactions, how much of their personal or brokerage funds are allowed to be in the account? • (a) $0 O (b) Up to $500 • (c) Up to $1,000 • (d) Up to $5,000 67. What impact did the Johnson v. Davis and Rayner v. Wise Realty Co. Florida Supreme Court rulings have on real estate practice in Florida? • (a) Both the seller and the seller's real estate licensee have a duty to disclose any known material defects affecting the property value to the buyer • (b) A real estate licensee has a duty to disclose any known material defects affecting the property value to the buyer only when acting as a single agent with fiduciary duties • (c) "As-Is" contracts relieve the seller and the seller's real estate licensee from the duty to disclose any known defects affecting the property value to the buyer • (d) The seller is solely responsible for the disclosure of any known material defects to the buyer 68. Randy and Marta plan to own and operate a real estate brokerage corporation. Randy is a licensed active real estate broker, and Marta has a sales associate license. Which statement is CORRECT? • (a) Marta can be the registered broker of the corporation. • (b) Both Randy and Marta must be licensed real estate brokers. • (c) Randy must register as the qualifying broker of the firm. • (d) Marta can be a director in the corporation. 69. A newly licensed broker wants to open his own brokerage firm but is concerned about lack of name recognition with customers and staff recruiting. What action might quickly alleviate these concerns? • (a) Establishing name recognition in the area first, before opening an office • (b) Posting hiring opportunities on social media and in local publications • (c) Purchasing a franchise • (d) Incorporating the business 70. A sales associate forgot to renew his Florida real estate license by the renewal deadline but intends to do so as soon as he earns his next commission. He has good prospects who may make an offer on one of his listings in a week or two. By continuing to transact real estate, the sales associate is acting: • (a) Lawfully, as long as he intends to pay his renewal fees. • (b) Lawfully, as long as he continues to be supervised by his broker. • (c) Unlawfully, and may have his license suspended or revoked. • (d) Unlawfully, only if he has not disclosed his expired license status to his prospects. 71. A buyer wishes to use securities as part of an earnest money deposit. The seller agrees, provided that the securities be converted to cash. Which statement is CORRECT? • (a) Securities cannot be accepted by the broker as part of an earnest money deposit. • (b) The securities can be placed in an investment transaction account until they are converted to cash. • (c) The conversion to cash should be postponed until the day of closing. • (d) The conversion to cash should be made at the earliest practical time and the proceeds deposited immediately. 72. A $100,000 residential investment building would have an allowable depreciation deduction in the first year of ownership of how much? • (a) $2,564 • (b) $3,174 • (c) $3,636 • (d) $4.254 73. In addition to being of legal age and mentally competent, requirements for a broker license may be met by any of the following conditions, EXCEPT which one? • (a) Employed by a government agency for a salary performing duties authorized for real estate licensees for at least 24 months during the preceding five years • (b) Employed by a licensed broker as an active sales associate for at least 24 months during the preceding five years • (c) Employed by an owner-developer as an active sales associate for at least 24 months during the preceding five years • (d) Holding a current and valid real estate broker's license for at least 24 months during the preceding five years in this state or any other state, territory, or jurisdiction of the U.S. 74. All of the following are allowable options for landlord handling of deposits and advance rents, EXCEPT: • (a) Keep funds in a separate, non-interest-bearing account in a Florida banking institution for the benefit of the tenant • (b) Keep funds in an interest-bearing account in a Florida banking institution for the benefit of the tenant, where the tenant receives 75% of the interest payable on the account • (c) Keep funds in a non-interest-bearing account in a Florida banking institution, comingled with the landlord's other funds • (d) Post a bond in the amount of the total amount of deposits and advance rents or $50,000, whichever is less 75. Under what condition may a single agent relationship be changed to a transaction broker relationship? • (a) At any time the brokerage firm and its agent think it is appropriate • (b) At any time during the relationship between an agent and principal, provided the brokerage firm agrees • (c) At any time during the relationship between an agent and principal, provided the principal signs a consent to transition to transaction broker disclosure • (d) Only within ten days of substantive contact with consumers 76. Which statement correctly describes the Statute of Frauds? • (a) It provides time limits for enforcement of contracts. • (b) It requires that contracts for the sale and purchase of real property must be in writing to be enforceable. • (c) It provides guidelines for developing offers. • (d) It states that real estate licensees are guilty of fraud if they facilitate oral agreements to purchase. 77. All of the following items are required in a written listing agreement, EXCEPT: • (a) Names of the property owners) and listing broker and identification of the property being sold • (b) Listing price and the terms the seller will accept • (c) Amount of the broker's commission and listing expiration date • (d) Automatic renewal date and renewal duration 78. With an adjustable rate mortgage loan, the interest rate: • (a) automatically increases every six months. • (b) is based upon the average in a given area. • (c) may go up or down based upon changes in an index. • (d) gradually decreases throughout the term of the loan. 79. The potential gross income on an investment property is $360,000 with $160,000 in operating expenses. The owner-customer pays $150,000 for annual debt service; of this, $120,000 consists of mortgage interest. If the proper reserve for replacements is estimated at $4,000, what is the cash breakeven ratio? • (a) 43.4% O (b) 44.4% O (c) 76.7% • (d) 85.0% 80. In residential sales of property built in 1973 with an "as is" contract, which of the following is the seller NOT required to disclose? • (a) The possibility of lead base paint • (b) Known defects with the property that affect the value • (c) The previous occupant was infected with HIV or AIDS • (d) The possibility of property tax being higher than the seller has been paying 81. Travis owns an apartment complex. Which statement correctly describes who he may employ? • (a) Anyone employed by Travis at the complex must be a real estate licensee. O (b) If Travis is unlicensed, he must employ a broker to lease the units within the complex. • (c) Travis may legally employ unlicensed, salaried persons to work in a leasing capacity from an on-site office. • (d) Any of Travis' employees who discuss leases with prospective tenants must have a real estate license, except clerical personnel. 82. The concept of development of property designed to produce a high density of improvements (buildings) and maximum utilization of common areas and open spaces is referred to as a: • (a) special exception. • (b) non-conforming use. • (c) planned unit development (PUD). • (d) zoning restriction. 83. Which condition is required for a brokerage office to set up a designated sales associate relationship? • (a) The transaction must be over $1,000,000 • (b) The buyer and seller must have assets in excess of $2,000,000 each • (c) The real estate agents must be experienced • (d) It must be a nonresidential transaction 84. What is one of the primary purposes of the Real Estate Settlement Procedures Act (RESPA)? • (a) To assist consumers and stimulate the real estate market by limiting the costs of closing services • (b) To educate customers by informing them of the costs involved in loan settlements • (c) To prevent discrimination in real estate lending practices • (d) To disclose settlement costs associated with commercial real estate transactions 85. Which type of closing cost is NOT a proration? • (a) Property taxes • (b) Rent • (c) Prepaid HOA dues • (d) Transfer taxes 86. Which statement is CORRECT regarding a broker's lien rights against a seller in a real estate transaction? • (a) A broker may have lien rights in regard to commission in the sale of commercial property • (b) A broker may have lien rights in regard to commission in the sale or lease of residential property • (c) A broker may have lien rights against the real property in the sale or lease of commercial property • (d) A broker may have lien rights against the real property in the sale or lease of residential property 87. What is the purpose of the Florida Landlord and Tenant Act? • (a) To define the rental agent's duties • (b) To require all rental agreements to be in writing and signed by the parties • (c) To create a careful balance of rights between the landlord and tenant • (d) To establish the maximum amount of monthly rent that a landlord may charge a tenant 88. A mortgagee with a mortgage on a parcel of vacant land allows a developer's construction mortgage to assume a superior position in recording priority so that funds for construction can be obtained and development can proceed on the vacant land. What mortgage clause allows the mortgagee's first mortgage to become a second mortgage? • (a) Subordination clause • (b) Release clause • (c) Escalator clause • (d) Blanket clause 89. What accounting method would most likely be used by a large real estate brokerage entity for accounts receivable and payable, where transactions are reported at the time of contract or recording, instead of at closing? • (a) Cash accounting • (b) Accrual accounting • (c) Company dollar accounting • (d) Transaction accounting 90. Which business arrangement may NOT act as a real estate brokerage? • (a) Corporation • (b) Limited Partnership • (c) General Partnership • (d) Cooperative Association 91. A sales associate receives a binder deposit from a buyer on Tuesday and gives it to the broker the next day by 3:00 pm. Assuming there are no holidays involved, by when must the broker place the deposit in the escrow account? • (a) Any time before closing O (b) By 3:00 pm on Friday • (c) By the end of the business day on Friday • (d) By the end of the business day on Monday 92. What benefit do investors typically NOT expect from Real Estate investments? • (a) Appreciation • (b) Liquidity • (c) Tax benefits • (d) Return of investment 93. The day of closing for a Florida real estate sales transaction is May 15 and is charged to the buyer. Property taxes are $3,650. Using the 365-day method, how is the property tax prorated and where does it appear on the Closing Disclosure? • (a) Debit seller $1,340; credit buyer $1,340; page 3 • (b) Debit seller $2,310; credit buyer $2,310: page 3 • (c) Debit buyer $1,340; credit seller $1,340: Page 2 • (d) Debit buyer $2,310; credit seller $2,310; Page 2 94. A Broker lists a triplex. The sellers reside in one unit and rent out the other two units, one for $1,500 a month and one for $1,300 a month. Closing is scheduled for March 15. The buyer will own the day of closing. Rent is due and payable on the first of the month, and the sellers have a security deposit in the amount of the monthly rent from each of their tenants. How much is the rent proration and how does it appear on the closing disclosure? • (a) $4,064.52; debit seller, credit buyer O (b) $4,335.48; debit seller, credit buyer O (c) $4,335.48; debit buyer, credit seller • (d) $4,064.52, debit seller, $4,335.48 credit buyer 95. A buyer makes an offer on a property for $165,000, which the sellers accept. The commission rate is 7.5%. The listed price is $175,000. How much is the brokerage fee and how would it typically appear on the Closing Disclosure? • (a) $13,125; debit seller • (b) $13,125; debit buyer • (c) $12,375; debit seller • (d) $12,375; debit buyer 96. A real estate closing is scheduled for July 15. The buyer owns the day of closing. The buyer is assuming the seller's mortgage. The monthly payment on the mortgage is $1,174.02 (principal and interest). The mortgage is paid in arrears at the end of each month. Using the 365-day method, how much is the proration on the assumed loan payment and how does it appear on the Closing Disclosure? • (a) $643.82; debit buyer, credit seller O (b) $530.20; debit buyer, credit seller • (c) $643.82; debit seller, credit buyer • (d) $530.20; debit seller, credit buyer 97. A buyer makes an offer on the property for $165,000, which the sellers accept. The listed price is $175,000. How much is the sale price and where is it placed on the Closing Disclosure? • (a) $165,000; credit to buyer; page 2 • (b) $165,000; credit to seller, debit to buyer; page 3 • (c) $175,000; credit to seller, debit to buyer; page 1 • (d) $175,000; credit to seller; page 2 98. How does the binder deposit appear on the Closing Disclosure? • (a) Debit to seller; page 1 • (b) Credit to buyer; page 2 • (c) Debit to buyer; page 2 • (d) Credit to buyer; page 3 99. A buyer purchases a property for $165,000. The buyer is assuming the seller's mortgage; the balance at closing is $140,000 at 8% interest with 27 years remaining on the term. How much are the government transfer taxes for the buyer and seller? • (a) $1,645, seller; $0, buyer • (b) $0, seller; $1,645, buyer • (c) $1,155, seller; $490, buyer • (d) $1,155, seller; $0, buyer 100. A buyer in a real estate transaction assumes the seller's mortgage. How and where is this recorded on the Closing Disclosure? • (a) Debit to seller; page 1 • (b) Credit to buyer, debit to seller; page 3 • (c) Debit to buyer, credit to seller; page 3 • (d) Credit to seller; page 1