Colorado Contracts and Regulations Exam

Transcription

1 Colorado Contracts and Regulations Exam 1. In a promissory note, an acceleration clause: (a) Allows a borrower to convert from quarterly to monthly payments (b) Allows a borrower to pay off early without a penalty (c) Allows a lender to call the remaining balance due if certain events happen (d) Allows a lender to refinance a balloon payment when due For example: non payment of loan, non payment of taxes or hazard insurance if not escrowed 2. What form may earnest money take? (a) Cash or good funds only (b) Cash or check only (c) Cash, check or promissory note (d) Any form the seller will accept The earnest money can take any form that is agreed to by the parties. 3. In Colorado, the most common instrument used to secure a real estate loan is a: (a) Mortgage (b) Deed of Trust (c) Installment Land Contract (d) Chattel Mortgage Colorado has passed legislation making us a deed of trust state, and established the office of the public trustee in every county. In some small counties, the treasurer may take this responsibility. 4. How long may a landlord hold a tenant s security deposit after termination and surrender of the premises? (a) Thirty days unless the lease calls for a longer period up to sixty days (b) Never more than one month (c) Thirty days unless the lease calls for a longer period up to 75 days (d) Only until any damage has been repaired and charged The longest period a landlord may hold a deposit is established by law at 60 days. 5. Under Colorado law, if you do not have a written agreement or a specific disclosure with a party to a transaction, you are considered to be a(n): (a) Agent for the seller (b) Transaction-Broker (c) Agent for the buyer (d) Dual agent Without an agreement or disclosure you are considered to be a statutory transaction broker under license law 6. A Counterproposal: (a) Accepts the offer and requires changes to all the terms (b) Contains a complete new agreement (c) Must be accepted by the Acceptance Deadline of the original offer (d) Must be securely attached to the original offer Since the counter now supersedes the offer, it is attached on top of the offer.

2 7. If the seller and buyer have a legal dispute regarding the approved Contract to Buy and Sell Real Estate, what must they do: (a) Submit the matter to binding arbitration (b) Interplead the earnest money to a court of competent jurisdiction (c) Submit the matter to mediation and seek resolution within 30 days (d) Submit the matter to binding mediation by the Real Estate Commission The contract determines that before parties can arbitrate or litigate, they must first submit to mediation. 8. The approved Agreement to Amend/Extend Contract: (a) Amends a Contract to Buy and Sell (b) Amends an Exclusive Right to Buy Listing Contract (c) Amends an offer to purchase (d) Amends a Transaction Broker Addendum This form changes (or amends) the original agreement 9. If no general property taxes have not been paid as of March 1; what is the latest date they may be paid to avoid any interest or penalty? (a) The last day of March (b) June 15 (c) The last day of February (d) The last day of April 10. The Commission approved Seller s Property Disclosure form: (a) Is required by statute (b) Is required in all residential sales (c) Is required by a provision of the Residential Contract to Buy and Sell (d) Is required to be completed by the listing broker If the seller chooses not to use the disclosure form, the seller must state so in the listing agreement and counter the contract to buy and sell. 11. Lead based paint disclosure is required: (a) For property built before January 1, 1978 (b) For all residential sales (c) For property in known high lead areas (d) For residential property in which a building permit was issued before January 1, 1978 The lead based paint disclosure form states a residential property built before 01/01/1978, but Colorado is more specific. It states all residential property in which a building permit was issued prior to 01/01/ What is the purpose of the Broker s signature on the sales agreement? (a) Broker is a fiduciary and therefore is a party to the agreement (b) Broker confirms the commission split between the cooperating Brokers (c) Broker receipts for the earnest money and confirms the brokerage relationship (d) Broker is witnessing the legal document for the buyer and seller. The broker s signature is listed below the end of contract because the broker is not a party to the agreement. 13. Colorado s Uniform Consumer Credit Code (UCCC):

3 (a) Requires Creditor lenders to charge 21% interest (b) Allows a Creditor lender to charge up to 45% interest on most loans (c) Requires Creditor lenders to charge higher interest rates for business loans (d) Allows a Creditor lender to charge up to 21% interest on most loans 14. The Colorado Statue of Frauds attempts to limit fraud by: (a) Requiring that a real estate listing be in writing. (b) Requiring that certain types of documents be in writing, and signed, in order to be valid and enforceable in court. (c) Requiring that agency contract be in writing (d) Requiring that certain types of documents be in writing, signed, and witnessed in order to be valid. Any agreement written to convey the title of real property must be in writing and signed to be enforceable. 15. The purpose of Commission Rule F relating to approved forms is to: (a) Help insure the broker s compliance with the Conway-Bogue decision of the Colorado Supreme Court (b) Assist attorneys in handling real estate transactions (c) Require that all real estate transactions be completed using the same form (d) Prohibit the use of addenda to add material to standard forms Real Estate licensees are allowed the limit practice of law by filling in blanks in standard and approved forms 16. A broker, seller and buyer all agree to provide two contracts at different prices. The higher priced contract will be used to apply for financing and the lower will be used for closing. (a) This is fraudulent dual contracting (b) This is legal since all parties agreed (c) This will likely result in a higher loan amount (d) This is appropriate in a rising value market By giving a higher purchase agreement to the lender, the buyer could get a loan with no money down or a lower down payment 17. When a seller receives an offer from an buyer, the seller may properly respond by: (a) Checking the appropriate box, initialing the form, and submitting a counterproposal. (b) Telling his or her broker to call the buyer with a counteroffer (c) Writing rejected at the top and signing it at the bottom on the appropriate seller line. (d) Telling his or her broker to call the buyer with his or her acceptance May in the question would state that this is only one of the options available to the seller. 18. If a Seller is offering Seller financing: (a) The buyer may set the interest rate (b) The listing and sales agreements should specify the type of note and deed of trust (c) The broker must use FNMA forms for the loan (d) Only an attorney for one of the parties may prepare the forms This is found under the section Seller Financing in the contract to buy and sell

4 19. Your sellers had a radon test done when they bought six years ago. That test showed action levels of radon on the basement storeroom only. They should: (a) Disclose the test results and the age of the test (b) Disregard such an old test (c) Keep a basement window open during the listing (d) Have a new test done now If the seller had a test done, the test results must be disclosed with the age of the test. 20. A Seller completing the Seller s Property Disclosure form tells you the air conditioning hasn t been used in three years. How should they mark the form? (a) working since that is the last they knew (b) not working since it has been so long (c) not included since it may not be working (d) do not know or working with a note about the time This disclosure is answered to the sellers current actual knowledge 21. The schedule of exceptions in a title insurance commitment: (a) Lists things to be done before the policy will be issued (b) Lists things against which the company will not insure (c) Lists things which make the title unmerchantable (d) Lists items which will not he replaced if damaged 22. One approved Deed of Trust provides for Strict Due on Transfer. This means the lender may call the note due: (a) At any time (b) If the property is transferred under the borrower s will (c) If the borrower sells the property (d) If the borrower changes employers The deed is not assumable and must be paid in full before the title can be conveyed. 23. When a Deed of Trust is used for financing, the beneficiary is the: (a) Borrower (b) Broker (c) Public Trustee (d) Lender The borrower is the trustor, the public trustee is the trustee, and the lender is the beneficiary with the three party deed of trust. 24. Title to property may be acquired by adverse possession if: (a) The property has been unoccupied for 18 years (b) The claimant has lived on the property for 7 years (c) The claimant has occupied the property for 18 years under certain conditions (d) The claimant has used the property for access for 18 years The time frame varies in different states. In Colorado the 18 years may be reduced to 7 years if the claimant paid the taxes or purchased under color of title 25. The seller under and installment land contract: (a) Has full real property rights (b) Can foreclose at any time (c) Retains legal title

5 (d) Retains equitable title The buyer has equitable title, but doesn t receive the legal title until the terms of the installed land contract are met 26. If you have an Exclusive Right to Sell Listing Contract: (a) You agree to work exclusively with this Seller and no others at the same time (b) You cannot work with buyers who might be interested in the Seller s property (c) You must sell this Seller s property to comply with the agreement (d) You have permission to work with other sellers at the same time Exclusive means that you are the only broker listing this property, not that you are only working exclusively with this seller 27. Following a foreclosure sale, the lender receives the: (a) Entire proceeds for the sale, including any excess above the debt. (b) Proceeds of the sale up to the outstanding debit plus court and collection costs (c) Uncollected loan balance only. (d) Property since it was the collateral for the loan 28. After a property inspection, a buyer may: (a) Require the seller to repair all unsatisfactory items (b) List neighborhood features which are unsatisfactory (c) Terminate the contract without listing specific defects (d) Require the seller to provide cash credit at closing for defects The contract to buy and sell and the notice to inspect allow for the buyer just to terminate without explanation. The other option available to the buyer is to ask the seller to make certain repairs 29. Which of the following is exempt from the real estate licensing law in Colorado? (a) An attorney at law who lists a clients house for sale for a 6% sales commission (b) A son selling his father s property under a proper power of attorney and receiving a fee of 3% of the selling price (c) An investor who owns more than ten houses and sells three of them to a private individual (d) An inactive licensee helping a co worker fill out a purchase offer on a for sale by owner property and not collecting a fee The investor is a for-sale-by-owner. You can negotiate on your own behalf and be exempt from licensing 30. The Buyer has sent the Seller an Inspection Notice with several unsatisfactory items that Seller refuses to correct. If the issue is not resolved by the Resolution Deadline: (a) The contract will terminate at the Resolution Deadline (b) Buyer has one day after the Resolution Deadline to withdraw the notice (c) Seller may be charged for these items at closing (d) Seller may terminate the contract at the Resolution Deadline The buyer can waive the right to inspection requirements and continue with the contract 31. An investor asks you to assist in arranging a tax deferred exchange for her property. You should advise her: (a) You cannot do this because there are no approved forms (b) You have a form for only a delayed or non simultaneous exchange

6 (c) There is a form which can be altered to cover any exchange (d) You can assist with the real estate matters and her attorney and accountant can help with the rest 32. The Closing Instructions form (CL8 9 95): (a) May be used only by title insurance companies (b) Must be part of every contract (c) Provides for the Closing Company to give legal advice to the Listing Broker (d) Engages a closing service on behalf of the Buyer and Seller The closing service must have an agreement which allows the closing service to provide it s services for the seller and buyer. 33. The HUD pamphlet Protect Your Family from Lead in Your Home must be provided to buyers of pre 1978 residences by: (a) HUD (b) The lender (c) The broker (d) The seller The pamphlet is almost always given to the buyer by the broker or the lender, but for test purposes, it is the seller s responsibility to provide this pamphlet to the buyer 34. A broker moves his office to the building next door and neglects to inform the real estate commission. What is the status of the brokerage license? (a) The license is revoked (b) The license is cancelled and only the employed licensees may conduct business (c) The license is unaffected as long as the broker informs the commission within thirty days (d) The license is inactive along with the licenses of employed licensees 35. Your company offers a guaranteed buyout program as an incentive for people to list. Based on the Licensee Buyout Addendum, which would be true? (a) The Seller must sell on your terms (b) You and your broker must consummate the sale (c) Your broker is responsible once the Seller accepts the terms (d) Your broker is responsible only if the broker signs at the bottom of the addendum Unless the employing broker signs the form, the broker associate is responsible for paying the buy out. 36. If a property is in a special taxing district the approved Contract to Buy and Sell Real Estate provides: (a) Seller must pay off as this is an encumbrance to the property (b) Buyer will have 30 after closing to petition to be excluded from the district (c) Buyer may terminate the contract by written notice (d) Seller can apply to for a waiver of the taxes and the buyer won t have to pay them 37. According to the approved Contract to Buy and Sell Real Estate, encumbrances to be paid by the Seller: (a) May be paid at or before closing (b) Must be satisfied prior to closing

7 (c) May not be paid from proceeds of the sale (d) May be paid by the seller after closing 38. Another associate broker in your office has listed a house you would like to buy as a rental investment property. What form(s) would you use to present your offer? (a) The Licensee Buyout Addendum (b) The Residential Contract to Buy and Sell (c) The Residential Contract to Buy and Sell and the Licensee Buyout Addendum (d) The Commercial Contract to Buy and Sell The only time the licensee buyout addendum must be used is when the licensee is buying his own listing 39. If an offeree wishes to reject an offer and modify its terms in a return offer, the offeree should: (a) Mark up the offer with any terms changed and send it back (b) Have the broker prepare a Counterproposal with the amended terms (c) Have the broker prepare an Agreement to Amend/Extend Contract with the new terms (d) Have the broker tell the original offeror to submit a new offer with the desired terms 40. The approved Exclusive Right to Lease contracts: (a) All establish agency relationships (b) Don t require disclosure of material facts (c) Provide that the Broker receive a lump sum commission based on contract rent (d) Establish a Broker s authority to offer a property for lease All listing agreements establish the broker s authority to represent that seller or buyer in the proposed transaction 41. What is the purpose of the Colorado real estate license law? (a) Protect licensed brokers in Colorado (b) Establish fair real estate brokerage fees (c) Permit real estate brokers to practice law (d) Protect the public of the state of Colorado 42. In a transaction with a listing broker and a buyer s agent broker, who holds the earnest money? (a) listing broker (b) Buyer s agent (c) Must be in a neutral escrow company (d) The brokers establish a joint escrow Colorado rules and regulations require that, without any other written agreement to the contrary, the listing broker holds the earnest money 43. A buyer who wishes to remain anonymous until closing: (a) Cannot do this, it is illegal (b) Must hire an attorney at law to be a straw man (c) Must reveal his identity to a seller s agent (d) May legally do this by instructing the broker in the Exclusive Right To Buy Contract

8 44. If a property is sold for unpaid taxes, how long does the owner have to redeem? (a) 90 days from the date of first notice of delinquency (b) Up to three years from the tax sale (c) One year from the tax sale (d) Six months from the tax sale date for residential property 45. Water rights in Colorado are: (a) Real property transferred by deed (b) Appurtenant real property (e) Appurtenant personal property (f) Real property transferred by bill of sale 46. Colorado law provides a homestead exemption to a head of household. This exemption: (a) Protects the first $45,000 of assets from creditors unless the exemption is waived (b) Applies only to debts secured by real estate (c) Cannot be waived because it is automatic under the law (d) Creates a dower right for a widow The homestead exemption protects the owner from debts secured by real estate up to $45K. If there isn t $45K of equity in the home, the owner cannot be forced to sell it to pay off the debt. If there is more than $45K of equity, the home owner gets the first $45K. Most mortgages waive the homestead exemption. 47. What form of concurrent ownership does Colorado recognize? (a) Tenancy by the entireties (b) Community property (c) Tenancy for years (d) Joint tenancy Colorado also recognizes tenants in common 48. Real Estate Professional errors and omissions insurance: (a) Replaced the Real Estate Recovery Fund (b) Protects licensees from loss based on their innocent mistakes (c) Has full coverage for license fraud (d) Is optional, but good business practice However, E & O insurance does not protect the licensee from fraud, misrepresentation and other felonious acts. 49. According to the Commission approved Exclusive Right To Sell Listing Contract: (a) A broker s compensation is set by the Real Estate Commission for certain geographical areas (b) A broker s compensation is set by local brokers as a standard fee (c) A broker s compensation is established by the seller (d) A broker s compensation is established by the brokerage firm 50. An in company transaction means one in which: (a) Broker has an agency listing and cooperating broker is a transaction broker

9 (b) (c) (d) Broker is agent for the seller and buyer is a customer Broker is agent for the buyer with no working relationship with seller Broker represents or is working with both parties to the transaction 51. Three joint tenants sign a listing with your company what is the minimum number of duplicate originals you need? (a) 2 (b) 1 (c) 4 (d) 5 The broker is required to give a duplicate original of the signed agreement to each party to the agreement and one additional for the brokerage firm s records. 52. In Colorado, residential properties are conveyed by: (a) Bill of Sale (b) Deed of Trust (c) Trust Deed (d) General Warranty Deed 53. Commissions earned by a broker in a real estate transaction (a) are determined by agreement of the broker and his or her principal. (b) may be shared with an unlicensed person, provided that such person aided the broker in bringing the buyer and seller together. (c) may be deducted from the earnest money deposit and claimed by the broker as soon as the buyer and seller execute the purchase and sales agreement. (d) are based on a schedule of commission rates set by the Real Estate Commission. 54. What is true of a mechanics lien? (a) Has priority over all prior liens (b) Has priority over all tax liens (c) Can be placed by a supplier of materials (d) Can be retroactive to the date of completion 55. A special tax or special assessment is shown on the Certificate of Taxes due in the amount of $834 for a curb and gutter project. The tax is payable over 10 years with annual interest of 5%. If the buyer has agreed to assume this property obligation, how will it show on the settlement worksheet? (a) It will not show up since it has no financial effect on the closing. (b) $834 debit to the seller, $834 credit to the buyer (c) $834 debit to the seller, $834 credit to the broker (d) $834 plus prorated interest debit to the seller and credit to the buyer. If the buyer assumes the special assessment, it is not reflected on the settlement worksheet 56. In a new loan closing, the settlement worksheet will show an entry for a tax reserve that indicates: (a) The new lender is collecting this tax amount from the seller (b) The new lender is deducting this amount as a loan transfer fee (c) The new lender is withholding this amount from loan proceeds to start the impound account for the next payment of taxes.

10 (d) The new lender is contributing this amount toward the buyer s taxes for this year. An escrow of 1/12 of the annual taxes is taken by the lender in the monthly payment so that next year when the taxes come due, there is money to pay the taxes 57. The six column settlement worksheet entry for the property purchase price would be: (a) Debit the seller, credit the broker (b) Debit the seller, credit the buyer (c) Credit the seller, debit the buyer (d) Credit the seller, debit the broker 58. At closing, the recording charges for the warranty deed would normally be charged to: (a) Seller (b) Buyer (c) Broker (d) Lender The party who benefits from the recording pays the charge. The buyer benefits because the recording of the deed put the buyer in title 59. If a Colorado property sells for $245,900, what documentary fee will be paid when the warranty deed is recorded? (a) $24.59 (b) $25.00 (c) $ (d) $250 The documentary fee is figured at 1 penny per $100 of the purchase price 60. The shows all deposits and payments to and from a broker s escrow account in chronological order? (a) Bank reconciliation (b) Ledger cards (c) Bank statement (d) Account Journal 61. One half of the general property tax has been paid by February 28; by what date must the balance be paid to avoid any penalty? (a) March 31 (b) April 30 (c) June 15 (d) March According to statute, good funds would include: (a) A check drawn on the broker s escrow account. (b) A teller s check from a savings and loan. (c) A title insurance company corporate check. (d) A check from the buyer that will clear the bank.

11 63. The residential Contract to Buy and Sell includes a provision about lead based paint disclosure. According to this provision, if the building permit for a residential improvement on the property was issued prior to January 1, 1978: (a) The broker is responsible to disclose the age of the property. (b) Disclosure is required only if Sellers are aware of lead based paint on the property. (c) The contract is void unless disclosure is signed by the Seller and brokers prior to the parties signing the sales contract. (d) Seller and brokers must make disclosure prior to closing. 64. A broker s escrow or trust account must comply with all EXCEPT which of the following: (a) Be maintained in the name of the licensed brokerage (b) Be insured by agency of the federal government (c) Have only the broker authorized to withdraw funds (d) Be reconciled regularly to guard against commingling The seller listed his house for sale with the broker on February 1. The listing agreement was to last five months. In April, the seller decided that the house was no longer for sale. Which of the following statements is true? (a) The seller has canceled the agreement and there are no penalties. (b) The seller has withdrawn the broker's authority to sell the property and may be subject to reimbursing some broker expenses. (c) The seller is required by law to leave his house on the market until June. (d) The Real Estate Commission will decide if the seller s action is justifiable. The seller has breeched the agreement, while this terminates the agreement it may leave the seller open to damages 66. Five years ago, Unit 5B in a condominium community was the site of a brutal and highly publicized murder. The unit was sold to an elderly woman who contracted the AIDS virus in a blood transfusion and died in the unit last year. As the agent for the woman's estate, what are your disclosure responsibilities to prospective purchasers of Unit 5B in this situation? (a) You must disclose both the murder and the AIDS related death. (b) You are specifically prohibited by law from disclosing either event. (c) You are specifically relieved of liability for nondisclosure of either by the Colorado stigmatized property disclosure law. (d) You do not need to disclose the murder, but you must disclose the AIDS related death. Under Colorado law you are relieved of the liability for nondisclosure of the murder, but it would be a violation under Fair Housing to disclose the AIDS-related death 67. In Colorado a developer must register with the Real Estate Commission for which of the following projects? (a) A mini warehouse project with over a hundred storage units. (b) A condominium office park with 40 office warehouse units for sale. (c) A subdivision of 100 acres into 10 sites for residential use. (d) A conversion of an apartment complex into 25 residential condominiums The Real Estate Commission requires registration for residential use, 20 or more units.

12 68. In Colorado, a deed of trust may be used to provide security for a real estate loan. If the deed of trust is set up with a private trustee: (a) This trustee will hold legal title to the property and be shown on the deed. (b) Any foreclosure would be handled by the private trustee. (c) Any foreclosure would be handled by the public trustee. (d) Any foreclosure would be handled in the appropriate court. Only deeds of trust set up by the public trustee would be foreclosed publically 69. Based on the transaction broker Exclusive Right to Sell Listing Contract, the listing broker must disclose to any potential buyer: (a) Facts about the Seller actually known by Broker (b) Material facts about the property actually known by Broker (c) All facts about the transaction actually known by Broker (d) The motivations of Seller, if requested by buyer. The broker can only disclose the material defects actually known by the broker. All facts about the transaction, facts specifically about the seller, and the seller s motivations could not be disclosed. 70. The holdover clause in the approved Exclusive Right to Sell Listing Contracts forms protects the broker s commission for certain disclosed buyers: (a) For up to six months after the listing expires. (b) For a negotiated time even if the Seller lists the property with another broker after expiration. (c) For a negotiated time unless the Seller lists the property with another broker after expiration. (d) Only during the term of the listing and any extensions. 71. The residential Contract to Buy and Sell contains a section regarding Common Interest Community Documents. This section refers to documents for: (a) Multifamily housing such as condominiums and townhomes that have common recreational amenities. (b) Any community governed by covenants. (c) Communities covered by special taxing districts. (d) Any community subject to mandatory assessments for maintenance of common elements. 72. Buyer C has been unable to obtain financing to purchase Seller D s property. Since the property is unencumbered and Seller D wants to facilitate the sale, D offers to finance part of the purchase price. Buyer C will give Seller D a/an: (a) wraparound mortgage (b) blanket mortgage (c) open end mortgage (d) purchase money mortgage A wraparound mortgage wraps a new loan around an existing loan; A blanket mortgage encumbers more than one property; and the open-ended mortgage is a line of credit 73. In certain circumstances, a lender may have the right to collect an additional specific amount when a

13 loan is paid off before the end of its term. To determine if a lender has this authority, one would read the: (a) prepayment clause (b) defeasance clause (c) alienation clause (d) mortgage covenants 74. A benefit of seller financing is that the buyer and seller can avoid paying: (a) state deed tax (b) recording fees (c) title insurance premiums (d) discount points and loan origination fees Discount points and loan origination fees are paid on new loans and not on Seller financing 75. A method of financing in which regular payments are made by the mortgagee to the mortgagor is: (a) reverse annuity mortgage (b) contract for deed (c) purchase money mortgage (d) growth equity mortgage 76. Which is not a protected class under the Federal Fair Housing Law? (a) Sex (b) Marital Status (c) Religion (d) Race Marital Status is a protected class under Colorado Fair Housing along with creed and ancestry 77. What happens if the seller does not sign or reject the buyer s offer, but only initials the offer? (a) The offer is amended (b) The offer is superseded by an addendum (c) The offer is countered (d) The offer is terminated 78. Which of the following is not required to maintain a current errors and omission insurance policy? (a) An active licensee (b) An inactive attorney (c) An inactive real estate broker (d) An active mortgage broker An inactive real estate broker does not have to maintain errors and omission insurance policy, but an active licensee and an active mortgage broker would. 79. Having found a licensee guilty of a violation of license law, a rule, or regulation, the Real Estate Commission can not do which of the following: (a) Bring criminal charges against the licensee (b) Suspend the licensee (c) Revoke the license of the offender

14 (d) Charge an administrative fine The Real Estate Commission can turn evidence over to the Attorney General s off ice, but cannot bring about civil or criminal charges against the licensee 80. An unlicensed personal assistant may do all of the following, EXCEPT (a) Provide access to the property (b) Distribute information prepared by the broker (c) Negotiate the purchase price (d) Prepare a CMA at the direction of the broker Negotiating for others for a fee requires a license 81. Which of the following is not an approved listing agreement? (a) Exclusive Right To Sell (b) Open Listing (c) Exclusive Listing (d) Net Listing 82. A lender has filed a notice of election and demand. The sale must take place: (a) No more than 125 days unless agricultural land (b) No less than 45 days (c) 75 days (d) No more than 60 days The new law in effect 01/01/08 states that for non-agricultural land the sale can be no less than 110 days and no more than 125 days from the recording of the notice of election and demand. 83. If the buyer s purchase is located in a special taxing district, the buyer may choose to the contract (a) Void (b) Cancel (c) Terminate (d) Suspend 84. If a broker does not measure the residential property himself, he must then disclose: (a) Source (b) Methodology (c) Local Standard (d) Exact Square Footage Remember :(1) the licensee is never required to measure the property, (2) only residential property is measured by the licensee, (3) if licensee measures, the method used must be disclosed, (4) if licensee didn t measure, the source of measurement must be disclosed, (5) this measurement can t be used for loan purposes, and (6)if exact measurement is a concern, the property should be independently measured. 85. Which of the following trust account records show each individual transaction? (a) Journal (b) Ledger (c) Settlement Worksheet (d) Checking Account Reconciliation

15 86. Which of the following trust account records show all transactions in chronological order? (a) Settlement Worksheet (b) Checkbook (c) Ledger (d) Journal 87. Which of the following would not be acceptable for disclosing brokerage relationships? (a) Brokerage Disclosure to Buyer (b) Exclusive Right to Sell Listing Agreement (c) Definitions of Working Relationships (d) Brokerage Disclosure to Seller (For Sale by Owner) The Definitions of Working Relationships is just an informational definitions form that describes the legal brokerage relationships in Colorado, but it is not a disclosure form. 88. Which is a legal brokerage relationship in Colorado? (a) Representing a buyer as his agent and the seller as a customer (b) Representing the seller as an agent and the buyer as a transaction broker (c) Representing the seller and buyer as an agent (d) Representing the seller as his agent and the buyer as the seller s sub agent 89. As an agent for the seller, you must (a) Disclose all psychological stigmas (b) Offer only price and terms acceptable to the seller (c) Require that an attorney review the title commitment (d) Confirm the buyer financial qualifications with the lender (a)colorado law states the broker is under no duty to disclose psychological stigmas, (c)the broker is only required to advise the seller to seek legal counsel, (d) the broker has not duty to investigate for the seller. 90. An associate broker is transferring to another office, who must notify the Real Estate Commission? (a) The broker associate (b) The employing broker (c) Neither (d) Both The Commission states that there joint responsibility on both the employing broker and the broker associate to give notice. 91. Colorado Fair Housing Act provides protection to buyers purchasing what type of property that is not included in the Federal Fair Housing Act? (a) Vacant Land (b) Residential (c) Multifamily Housing (d) Commercial 92. Colorado Use Tax is paid by: (a) Seller (b) ½ is paid by each of the parties (c) Negotiation (d) Buyer

16 Colorado Use Tax is paid on the personal property transferred in the sale of a business opportunity. The tax is paid by the buyer. 93. Which of the following is NOT good funds? (a) Certified check (b) Cash (c) Title company s trust account check (d) Wired funds 94. An Exclusive Brokerage Listing Contract allows the seller to (a) Pay the seller s broker a commission if the seller finds the buyer (b) Pay the seller s broker a commission if another broker finds the buyer (c) Refuse to pay the seller s broker a commission if another broker finds the buyer (d) Pay the buyer a commission if the seller s broker finds the buyer If the seller finds the buyer, the seller does not pay a commission to the seller s broker. 95. A broker can manage single family residential properties out of his sales trust account before being required to open a property management trust account. (a) 2 (b) 4 (c) 6 (d) 9 The Commission states less than 7 single family residences 96. The hazard insurance reserve for an assumed loan would be entered on a settlement worksheet as: (a) Debit the seller, credit the broker (b) Debit the buyer, credit the seller (c) Credit the seller, debit the broker (d) Credit the buyer, debit the seller 97. The hazard insurance assumed by the buyer would be entered on a settlement worksheet as: (a) Debit the seller, credit the buyer (b) Credit the seller, debit the broker (c) Credit the seller, debit the buyer (d) Credit the buyer, debit the seller 98. The hazard insurance on a new loan would be entered on the settlement worksheet as: (a) Debit the buyer, credit the broker (b) Credit the buyer, debit the broker (c) Debit the buyer, credit the seller (d) Credit the buyer, debit the seller 99. What is the only entry in the brokers debit column for an assumed loan? (a) Seller s net proceeds (b) Earnest Money (c) Purchase Price (d) Interest on the loan assumed

17 On a new loan there would be two entries in the broker s debit column: the earnest money and the seller s net proceeds Who owns the property on the day of closing in Colorado? (a) Seller (b) Broker (c) Buyer (d) Title Company 101. A Designated Broker (a) Assists the parties to the transaction as an agent (b) Is appointed by an employing broker (c) Is designated to be a seller s agent (d) Is always working with both parties as a transaction broker 102. An Agent (a) Has a fiduciary relationship with both parties as a transaction broker (b) Has a fiduciary relationship with both parties as an agent (c) Has a fiduciary relationship with the seller as an agent and the buyer as a transactionbroker (d) Has a fiduciary relationship with the buyer 103. The Real Estate Commission must investigate (a) A telephone complaint (b) A verbal complaint (c) Every complaint (d) A written complaint 104. The Real Estate Commission can issue a temporary hardship license to a Corporation, Partnership, or limit Liability Company for what term? (a) One year (b) 180 days (c) 90 days with one 60 day extension (d) 90 days with one 90 day extension 105. A Colorado Broker must maintain an office open to the public, Except: (a) If the broker has multiple branch offices in other states (b) If the broker does business only on the internet (c) If the broker has an out of state license, then he must maintain an office in that state (d) If the broker is an independent broker 106. The wrongful holding of a tenant s security deposit by the landlord: (a) Allow the tenant to get treble the amount wrongfully held, plus costs (a) Allow the landlord an additional 60 to return the deposit (c) Allow the tenant to get back his entire security deposit (d) Allow the tenant go to small claims court 107. The first half of the Colorado property taxes are paid the last day of February, on what date does the last half of the unpaid taxes go into default?

18 (a) June 15 th (b) September 1 st (c) June 16 th (d) March 31 st. The first half of the Colorado property taxes is due on the last day of February and the other half is due on June 15 th. If not paid, the taxes are in default June 16 th The total in the Broker s Credit column is; (a) The total amount received by the Broker (Title Company) (b) The total amount paid out by the broker (Title Company) (c) The total amount received by the seller (d) The total amount paid out by the buyer 109. The seller s rental property was used as a methamphetamine lab. What disclosure must the seller make, if the property has been cleaned to state standards? (a) The seller would have disclosed that the property was a met lab (b) The seller would have to disclose that the property was a meth lab, but now had been cleaned to state standards (c) (d) The seller would have no disclosure to make The seller would have to disclose that the property was used as a meth lab only after closing 110. Seller and buyers are only vicariously responsible for the acts of the broker when the actions of the broker were: (a) Approved (b) Directed (c) Ratified (d) All of the above 111. To become an Employing Broker requires which of the following: (a) Active in real estate for three years (b) 24 hour Broker Administration course (c) Must have been an independent broker for 2 years (d) Pass an additional test given by the Real Estate Commission 112. Colorado water rights are governed by: (a) Riparian Right (b) Prior Appropriation (c) Littoral Right (d) Accretion Appropriation 113. A rancher lost his property to foreclosure. How long does he have after the sale to reclaim the property? (a) 75 days (b) He has no rights after sale (c) 6 months (d) 60 days The new foreclosure process brought new changes in January 1, There is no longer a statutory right of redemption following the sale. The equitable redemption period was

19 extended from for non agricultural property and 215 to 230 for agricultural after the recording of the notice of election and demand What is not one of the requirements making the use of the Foreclosure Act Addendum mandatory? (a) A residential property (b) Must be a short sale (c) A residential property in Foreclosure (d) The buyer won t live in the property for at least a year The property does not necessarily be a short sale Contracts with original signatures are required: (a) If requested (b) At closing (c) 24 hours before closing (d) Before Title Deadline 116. The loan is being assumed and there are taxes from the previous year still owed. The closing is set for February 27 th. The entry on the settlement worksheet would be: (a) Debit the buyer, credit the seller (b) Debit the seller, credit the broker (c) Debit the seller, credit the buyer (d) Credit the buyer, debit the broker This example is an assumed loan when the lender is escrowing for taxes. If taxes are unpaid, usually for a closing before the end of April, charge the seller and credit the buyer. The lender will then pay the taxes out of the escrow when they become due. You will see a large reserve balance to cover this payment When a seller carries back a purchase money mortgage, the entry would be: (a) Debit the seller single entry (b) Debit the buyer, credit the seller (c) Debit the seller, credit the broker (d) Debit the seller, credit the buyer This is money that the seller will not get in cash at closing=debit. Money the buyer will not have to bring in cash to closing=credit When completing the Exclusive Right to Sell listing agreement, which monetary encumbrances does the seller list? (a) All encumbrances known to the seller (b) All encumbrances the seller will not pay off (c) Only encumbrances or public record (d) All encumbrances to be assumed by the buyer 119. If an earnest money check is no honored by the buyer s bank, the broker should: (a) Deposit it again (b) Notify the seller and ask what the seller wishes to do next (c) Cancel the contract (d) Do nothing If the earnest money is dishonored, the broker must contact the seller immediately and ask for instructions

20 120. When must the earnest money be deposited in the trust account? (a) Within 24 hours after the acceptance (b) Before closing (c) Within 72 hours after the notice of acceptance (d) Whenever notice is given 121. A Colorado associate broker can collect compensation from: (a) His or her employing broker (b) A satisfied seller (c) Commission from a previous employing broker from a closed transaction before transfer (d) Both C and D The associate broker can only receive current compensation from his/her employing broker. The associate can also receive compensation from a previous employer for transactions that closed after the associate transferred his license to a new brokerage firm 122. How long must an independent broker keep his transaction files? (a) 7 years (b) Must be sent to the commission for safe keeping (c) 4 years (d) Must be kept 30 after closing All independent brokers and employing brokers must retain transaction files for 4 years 123. If a seller wants to counter a offer, what does the seller sign? (a) The offer and the counter proposal (b) Just the counter proposal (c) Just the offer (d) Sign the offer and initial the counter To counter an offer the seller initials the offer and checks the box for countered. The seller then signs the counter proposal and sends it back to the buyer. If the seller signs the offer then a contract is created The death of either the employing broker or the buyer will terminate which contract? (a) The Exclusive Right to Sell listing agreement (b) The Contract to Buy and Sell Real Estate (c) The Change of Status form (d) The Exclusive Right to Buy contract The Exclusive Right to Buy contract is a personal services contract or an employment agreement. If one of the parties is deceased there is either no one to serve or no one to render the service. However, if one of the parties is deceased in the Contract to Buy and Sell Real Estate, the contract survives to probate Who is responsible to investigate the property s inclusion in a special taxing district? (a) Seller (b) Buyer (c) Seller s broker (d) Buyer s broker The Contract to Buy and Sell Real Estate states that it is the buyer s responsibility to investigate

21 126. Buyer S has signed a purchase agreement. Seller Q has signed the agreement and communicated acceptance to S. Which of the following is true of Buyer S s interest? (a) S holds equitable title (b) S holds legal title (c) S holds abstract title (d) S holds certificate of title Equitable is given to the buyer at the signing of the agreement. Legal title is given to the buyer at the conveyance of the deed When a buyer and a seller enter into a purchase agreement (contract of sale), the legal remedy that each has to force the other party to consummate the transaction is: (a) liquidated damages (b) actual damages (c) specific performance (d) unilateral rescission 128. When a lender refuses to make loans in a given neighborhood populated by racial minorities it is an example of: (a) steering (b) blockbusting (c) credit deviation (d) redlining 129. Errors and Omissions professional liability insurance is require: (a) For every active Colorado licensee (b) For active and inactive Colorado licensees (c) For the employing broker only (d) For resident Colorado brokers only 130. Salesperson J H placed the following order with the telephone company: List my name in the directory under the heading, Real Estate, as J H, Real Estate Salesperson, Residential Property My Specialty." J H is also required to include: (a) Her license number. (b) The expiration date of her license. (c) Her street address. (d) The name of her employing broker A broker received an earnest money deposit from a buyer. Under Colorado law, the broker should: (a) Open a special, separate escrow account that will contain funds for this transaction only, separate from funds received in any other transaction (b) Deposit the money in an existing special non interest bearing escrow account in which all earnest money received from buyers may be held at the same time. (c) Immediately deposit the earnest money in the broker s personal interest bearing checking or savings account. (d) Hold the earnest money deposit in a secure place in the broker s real estate brokerage office until the offer is accepted. Earnest money is not deposited into a trust account until there is a notice of

22 acceptance If a broker establishes an account to hold money belonging to others, which of the following is correct? (a) All checks, deposit slips and bank statements must include the word "Escrow" or Trust as part of the account name (b) The names of all authorized signers must be on the checks. (c) The account cannot be in the same bank as the broker's personal checking account. (d) An individual account is required for each transaction What does the Exclusive Right to Sell listing form state about the Seller s Property Disclosure form? (a) Seller is required by law to provide this form to every buyer. (b) Seller may refuse to provide the disclosure and avoid disclosure of material defects. (c) Seller may check the As Is box and make buyer responsible to find any defects. (d) Seller may decline to provide the disclosure, but must still disclose latent material defects. The broker can only offer the standard Seller s Property Disclosure to the seller, but the seller doesn t have to use the form to make disclosure. The form is optional, the disclosure is not 134. Real estate practice in Colorado assumes that which type of deed will convey residential property, unless otherwise provided? (a) General warranty deed (b) Special warranty deed (c) Bargain and sale deed (d) Quit claim deed 135. In Colorado, real estate commissions are (a) Set by law. (b) Set by the Real Estate Commission. (c) Determined by local groups of brokers. (d) Negotiable between the broker and the seller or buyer The broker has developed a web site advertising the broker s office with the brokerage name, location and phone number. What additional information does the broker need to include? (a) Name and address of home office and states in which brokerage holds licenses (b) License number of brokerage and list of current active licensees (c) Names of active licensees, addresses and phone numbers (d) There is no need for any additional disclosures 137. Listings based on a "net price" are (a) More profitable because no minimum is set on the amount of commission collectible. (b) Legal in Colorado as long as the seller agrees (c) Illegal in Colorado at any time. (d) Permissible with approval of the commission. Legal, but at the very least Problematic

23 138. According to the Commission approved Exclusive Right to Sell Listing Contract: (a) Broker s compensation is set by the Commission for certain geographic areas. (b) A broker s compensation is established by the brokerage firm. (c) Broker s compensation is set by the local brokers as a standard fee. (d) A broker s compensation is established by the Board of Realtors Which of the following establishes the broker s power to act as an agent for the buyer? (a) Commissioner of commerce (b) Multiple listing service (c) Listing agreement (d) Buyer representation agreement Or, the Exclusive Right To Buy contract 140. Associate broker Becker, an agent for Acme Realty, has listed a property. Associate broker Hayes, an agent for Best Realty, later sells the property. The contractual right to collect a commission from the seller belongs to: (a) Associate broker Becker (b) Acme Realty (c) Associate broker Hayes (d) Best Realty The associate broker Becker is designated to represent the seller for the Acme brokerage firm and all commissions are owed to the brokerage firm and then paid per the independent contractor s agreement to the associate broker Colorado Math Questions 141. Mr. Jones borrowed $40,000 on July 1 at 13% interest to purchase a home. The loan was amortized over a 30 year period with a monthly payment of $ for principal and interest. What is the portion of the first payment that applies to interest? (a) $ (b) $ (c) $ (d) $ This is the IRP formula (Interest is equal to the interest rate times the principle balance) 13% interest rate is =.13 x the principle balance of $40,000 = Annual interest of $5,200; Then divide the annual interest by 12 to find one month s interest = $ The total payment is $ is the total payment and of that first month s payment, $ is paid toward the interest and $9.47 goes toward paying of the principle balance. The second month the process is duplicated. In the second month the principle balance has been reduced by $9.47 and so the new principle balance is $39, The IRP formula is used again..13 x $39, = $ divided by 12= $ The second month the amount going to interest is $ and the amount going to the principle balance is $9.57. This is how a loan that is fully amortized is computed. Over the term of the loan, the amortization process would bring the balance of the loan to zero.