Free Real Estate License practice test

A. ✓ Correct: Cornell Wex says a recorded document creates constructive notice of the recorded instrument's contents.

B. × Incorrect: Recording does not forgive property tax liens or remove tax obligations.

C. × Incorrect: Tenancy at will is a landlord-tenant relationship, not an effect of recording a title instrument.

D. × Incorrect: Fair housing advertising duties come from nondiscrimination law, not title recordation.

A. ✓ Correct: Enforcement of restrictive covenants typically requires that the party seeking enforcement has an actual and substantial benefit from the restriction.

B. × Incorrect: As restrictive covenants do not necessarily provide equal benefits to all property owners; only those who are directly affected may have standing.

C. × Incorrect: Any neighbor does not automatically have legal standing to enforce a restrictive covenant without showing personal or direct benefit.

D. × Incorrect: Restrictive covenants can be enforced beyond the initial conveyance if they continue to provide benefits to subsequent property owners.

A. × Incorrect: There is no mutual obligation, only one-sided agreement with no payment received.

B. × Incorrect: The buyer's promise lacks firm commitment without a price reduction being made.

C. × Incorrect: As it involves gratuitous promise where the agent has no legal obligation to pay for advertising.

D. ✓ Correct: Both parties have obligations that bind them, forming valid consideration.

A. ✓ Correct: The Fair Housing Act prohibits a notice or advertisement that indicates a preference or limitation based on race.

B. × Incorrect: Highlighting community amenities does not indicate a preference or limitation based on race under the Fair Housing Act.

C. × Incorrect: Mentioning property features does not constitute a discriminatory preference or limitation based on race, religion, national origin, familial status, disability, or sex.

D. × Incorrect: Listing available housing units without specifying preferences or limitations based on protected characteristics is compliant with the Fair Housing Act.

A. ✓ Correct: CFPB says the window lets borrowers compare final terms and costs to the Loan Estimate they previously received.

B. × Incorrect: Recording a deed is a title-recording step, not the purpose of the Closing Disclosure waiting period.

C. × Incorrect: Zoning exceptions are land-use approvals and are not handled through the Closing Disclosure window.

D. × Incorrect: A lead-based paint warning statement is a separate disclosure concept and not the CFPB Closing Disclosure comparison period.

A. × Incorrect: A deed because it is a legal document used to convey title to real property.

B. × Incorrect: A mortgage agreement because it secures a loan with the property as collateral, not for transferring ownership.

C. ✓ Correct: A will because it transfers assets after death and does not involve an immediate transfer of title during the grantor's lifetime.

D. × Incorrect: A lease because it grants temporary possession rather than permanent ownership.

A. × Incorrect: It requires notice for termination and provides more stability than a tenancy at will.

B. ✓ Correct: As it allows both parties to terminate the agreement without any formal notice, making it highly flexible but unstable.

C. × Incorrect: A fixed term tenancy has a defined end date and cannot be terminated by either party before that date unless there are specific breach of contract conditions.

D. × Incorrect: As month-to-month tenancies require proper notice for termination.

A. × Incorrect: It does not hold their own funds during an escrow arrangement; they deposit them with a neutral third party.

B. × Incorrect: Also does not hold the buyer's funds directly; these funds go to a neutral third party for safekeeping until conditions are met.

C. ✓ Correct: The escrow agent acts as a neutral intermediary, ensuring that funds are released only when all parties' agreed-upon instructions have been fulfilled.

D. × Incorrect: It does not typically handle buyer's funds during an escrow process; this role falls to a dedicated escrow agent.

A. × Incorrect: It is fraud prevention, but it is important, it is not the primary reason for this prohibition under RESPA.

B. × Incorrect: Although fair market rates are desirable, they are not directly addressed by prohibiting unearned fees.

C. ✓ Correct: Protecting consumers from unnecessary charges and inflated costs due to kickbacks or other improper payments is a key goal of RESPA's prohibitions.

D. × Incorrect: Real estate agent commissions are regulated separately and not covered under the prohibition of unearned fees.

A. × Incorrect: Annual statements detailing escrow account activity are required under different regulations, not at the time of loan application.

B. ✓ Correct: As it accurately reflects the requirement for lenders to provide a special information booklet containing important disclosures about credit terms and costs when consumers apply for a mortgage.

C. × Incorrect: Lead-based paint hazards disclosure requirements pertain specifically to real estate transactions under different regulations, not at the time of loan application.

D. × Incorrect: Statutory lien rights are covered by other legal provisions rather than Regulation Z.