Determine your answer, then click the arrow to see the correct response.
What Is a "Balloon Payment" in a Real Estate Loan?
A) A small initial payment
B) An extra payment required annually
C) A large payment due at the end of a loan term
D) A payment that covers closing costs
Correct Answer: C) A large payment due at the end of a loan term
Explanation: A balloon payment is a large, final payment at the end of a loan term, after a series of smaller periodic payments.
What Is a "Deed Restriction"?
A) A limitation on the use of property written into the deed
B) A requirement to pay property taxes
C) A rule imposed by a homeowners' association
D) A federal zoning regulation
Correct Answer: A) A limitation on the use of property written into the deed
Explanation: A deed restriction is a provision in a deed that limits how the property can be used by the owner.
The Term "Escrow" Refers To:
A) A legal document that conveys property ownership
B) An arrangement where a third party holds funds or documents until conditions are met
C) The repayment of a loan over time
D) The interest rate on a mortgage
Correct Answer: B) An arrangement where a third party holds funds or documents until conditions are met
Explanation: Escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction.
A Buyer Purchases a Property for $400,000 and Makes a 20% Down Payment. How Much Is the Down Payment?
A) $60,000
B) $70,000
C) $80,000
D) $100,000
Correct Answer: C) $80,000
Explanation: The down payment is calculated by multiplying the purchase price by the down payment percentage: $400,000 × 0.20 = $80,000.
What Is the Purpose of a "Right of Way" in Real Estate?
A) To provide an easement for utilities
B) To grant access to a property through another property
C) To delineate property boundaries
D) To establish a building setback line
Correct Answer: B) To grant access to a property through another property
Explanation: A right of way allows individuals to pass through a property owned by another person, typically to access another property.
In Real Estate, "Title Insurance" Protects Against:
A) Property damage
B) Financial loss due to title defects
C) Market value fluctuations
D) Unpaid property taxes
Correct Answer: B) Financial loss due to title defects
Explanation: Title insurance protects the owner or lender against financial loss from defects in the title to a property, such as liens, encumbrances, or errors in public records.
A Rental Property Generates $2,500 per Month in Rental Income. What Is the Annual Rental Income?
A) $25,000
B) $30,000
C) $35,000
D) $40,000
Correct Answer: D) $30,000
Explanation: The annual rental income is calculated by multiplying the monthly income by 12: $2,500 × 12 = $30,000.
Under Section 46:8-21.1, What Is the Time Frame Within Which a Landlord Must Return a Tenant's Security Deposit After the Termination of a Lease?
A) 15 days
B) 20 days
C) 30 days
D) 60 days
Correct Answer: C) 30 days
Explanation: The landlord must return the security deposit within 30 days after the lease termination, along with any interest earned.
A Buyer Makes an Offer on a Property, and the Seller Accepts It. What Type of Contract Is Created?
A) Implied contract
B) Executory contract
C) Executed contract
D) Voidable contract
Correct Answer: B) Executory contract
Explanation: When a buyer’s offer is accepted by the seller, an executory contract is created, meaning there are still obligations to be performed by both parties.
A Seller Has Signed an Agreement With a Broker To Pay a Commission Only if the Broker Sells the Property, but the Seller Retains the Right To Sell It Independently Without Paying a Commission. What Type of Listing Is This?
A) Open listing
B) Exclusive agency listing
C) Exclusive right-to-sell listing
D) Net listing
Correct Answer: B) Exclusive agency listing
Explanation: An exclusive agency listing allows the seller to sell the property independently without paying a commission but obligates the seller to pay a commission if the broker sells the property.