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NEW JERSEY REAL ESTATE EXAM 1 AND 2
EACH WITH 150 QUESTIONS AND
CORRECT ANSWERS 2024- 2025
How many days does a buyer have in which to cancel a contract according to the New Jersey Real estate Sales Full Disclosure Act? A. 5 business days B. 7 business days C. 7 calendar days D. 10 calendar days CORRECT ANSWER: C. The Act specifies that a buyer may cancel a contract in seven calendar days. What is the statutory period to acquire a prescriptive easement in New Jersey? A. 20 years B. 30 years C. 100 months D. 12 years CORRECT ANSWER: B. Continuous, exclusive, open, and hostile use must be established for 30 years to acquire an easement by prescription. How long must a right-of-way have been abandoned in order to be extinguished by law? A. 20 years B. 30 years C. 100 months D. 12 years CORRECT ANSWER: A. A right-of-way is considered legally abandoned in new Jersey after 20 years. Adam has been crossing Andrea's property to get to a state beach. Andrea would like to stop him from acquiring an easement to cross her land. Which of the following is Andrea's most effective option? A. Andrea should write Adam a letter granting permission to cross the property B. Andrea should write Adam a letter forbidding him to cross the property C. Andrea should follow New Jersey statutory procedures D. Andrea should erect a "No Trespassing" sign CORRECT ANSWER: C. Andrea must follow statutory procedures. Simply putting up a sign may be insufficient. To require land by adverse possession requires use of land without the owner's permission. What is the prescriptive period to acquire title to real property by adverse possession?
A. 10 years B. 20 years C. 15 years D. 7 years CORRECT ANSWER: B. In New Jersey, continuous use, hostile to the owner, for at least 20 years is required to acquire title to real property by adverse possession. Which of the following individuals holds a license and is therefore not entitled to a claim of adverse possession? A. a person who has been parking his car on a neighbor's property for 20 years without permission B. a person who has been in possession of the property for 19 years C. a person who has been entering an orchard and taking apples every year for 30 years D. a person who held property for five years after "inheriting" it from a parent, who was in adverse possession for ten years CORRECT ANSWER: C. Because a license is a personal right that may be revoked at any time, the correct answer is C. Entering the orchard to pick apples is a license. Which of the following circumstances would result in a lessee's release from the obligation to pay rent? A. death of the landlord B. when the tenant abandons the leased premised C. when the building is in foreclosure D. when the tenant is constructively evicted from the leased premises CORRECT ANSWER: D. If the landlord fails to comply with the lease and the lessee is constructively evicted from the leased premises the lessee would be released from the obligation to pay rent. Donna leased space in a warehouse and paid a two-month security deposit. As long as she does not pay her rent late, what interest rate will the deposit earn? A. 3 percent B. 4 percent C. 2 percent D. a rate tied to the current average savings deposit rate CORRECT ANSWER: D. The security deposit earns an interest rate that is tied to the average savings deposit rate How much interest does a tenant forfeit on his security deposit if his monthly rental payment is made more than ten days after the due date? A. no interest B. one month's interest C. two months' interest D. ten days' interest CORRECT ANSWER: A. New Jersey law does not mandate that the tenant forfeit interest on his security deposit for a late rent payment.
C. No. Owners are not covered by Reg. Z. D. No. Brokers can advertise the down payment. CORRECT ANSWER: C. Regulation Z requires disclosure of all financing terms and conditions if a low interest rate, down payment or other enticement is featured in an ad. This does not apply in this case, however, because Regulation Z applies only to institutions, not individuals selling their own property. A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called: A. blanket financing. B. package financing. C. warehousing. D. discounting. CORRECT ANSWER: C. Warehousing refers to the process whereby banks and other lenders make mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market. The "warehousing" occurs when individual loans are bundled, often with a common element such as the size of the mortgage or credit worthiness of the borrowers, and sold as a single unit. The primary purpose of Truth in Lending is to: A. Control interest rates on behalf of the consumer. B. Control the true costs to close a transaction. C. Disclose the true costs of only an FHA loan. D. Disclose the true costs of obtaining credit. CORRECT ANSWER: D. Truth in Lending, otherwise known as Regulation Z, is intended to do away with deceptive financing tactics, especially those involving hidden costs--for example, advertising a $250 car lease as zero-down and then tacking a $1,200 upfront payment at the time of contract disguised as an "incidental" acquisition fee. Why is the RESPA closing statement allowed to be examined on or before closing? A. to allow the buyer to see costs at or before closing to see if he/she can get the loan at a cheaper price B. to make sure the title insurance came from the right company C. to check for mathematical errors D. to provide for special fees to specific parties for business related to the real estate transaction CORRECT ANSWER: C. This is not a step that should be dismissed. With the increased volume in home mortgages, the fact is a significant amount of closing statements do contain errors and it's easer and better to correct them before closing than after. If a single parent is applying for a real estate loan, when would the fact have to be revealed that part of the parent's income is from child support? A. when applying for a VA or FHA loan if the parent's income is less than $25,
B. If more than 50% of the parent's income is from non-wage sources C. If the parent was relying on the income for repayment of the loan D. This type of income never needs to be disclosed. It would be a violation of ECOA. CORRECT ANSWER: C. Income of any type--whether alimony, child support, freelance work or a second job--only needs to be disclosed if the applicant is relying on it to qualify for the loan. When the lender under a deed of trust requires title insurance, who would be the most likely person to pay for it? A. the mortgagee B. the trustee C. the trustor D. the beneficiary CORRECT ANSWER: C. "Trustor" is another name for the borrower and "trustee" is a "supposedly" neutral third party who holds naked legal title, the right to foreclose at the instructions of the beneficiary for non-payment of a promissory note. The beneficiary is the lender in a Deed of Trust. Even though it's the lender who requires the insurance to protect his/her position, it's the borrower who pays for it. The Pickets are purchasing a home for $78,000 and the lender is giving them a 90% loan at 10% interest, plus a 2% loan origination fee. How much is the loan origination fee? A. $1, B. $1, C. $1, D. $7,020 CORRECT ANSWER: A. A loan for 90% of the $78,000 purchase price results in a $70,200 mortgage. Since the origination fee is based on the amount of the mortgage, not the price of the home, the fee is 2% of $70,200 or $1,404. Discrimination is prohibited in lending practices under: A. ECOA B. RESPA C. Truth in Lending Act D. FNMA CORRECT ANSWER: A. Passed in 1992, the Equal Credit Opportunity Act prohibits a broad spectrum of discriminatory lending practices, including the granting or denial of credit or the costs associated with borrowing based on race, gender, marital status, source of income (e.g., public assistance) and other factors. A buyer assumes the mortgage. How is the owner relieved of the liability? A. subject to mortgage B. novation C. substitution
A. Yes. The buyer can do as he wishes since he is making the contract. B. Yes. This is acceptable as long as the seller agrees. C. No. Only money can be used for consideration. D. No. Only the seller can write a promissory note. CORRECT ANSWER: B. This is a form of owner financing and is perfectly acceptable, so long as both parties agree to the terms and conditions. If advertised alone, which would be in violation of TRUTH IN LENDING? A. "FHA financing available" B. "assumable loan" C. "No down payment required." D. "easy financing terms" CORRECT ANSWER: C. "No down payment required" triggers the Truth in Lending disclosures because it is a specific statement about only one aspect of the financing. "Easy terms" does not trigger the regulation because it's non-specific. Why would a mortgagee (beneficiary) have an appraisal on the property? A. to make sure the buyer did not pay too much B. to determine the value of the property C. to protect the buyer from fraud D. to assure the property value is sufficient to cover the loan CORRECT ANSWER: D. Appraisals are third-party valuations of a property based on a wide range of variables. Lenders generally insist on this independent assessment to make sure the value of the property is at least sufficient to pay off the loan amount in case of default. In a repayment of a mortgage loan, which type of interest is used? A. simple B. discount C. compound D. floating CORRECT ANSWER: A. Compound interest is associated with savings accounts and reflects the fact that money left on deposit earns interest on the interest it has already earned. "Floating" and Discount" are terms associated with the bank-to- bank transactions and financial markets. An owner was selling his own home. Can he advertise the down payment? A. No, because it violates RESPA. B. No, because it violates Regulation Z. C. Yes--as long as it was listed with a broker. D. Yes, because it was his own home. CORRECT ANSWER: D. Broadly speaking, an individual homeowner is free to sell his/her own home as he/she chooses and is not subject to Truth in Lending or real estate practice restrictions.
Which is true about restrictive covenants? A. They are placed by private parties in a deed. B. They are placed by government agencies in a deed. C. They are voidable by successive owners. D. They are placed by government agencies in the public record. CORRECT ANSWER: A. Restrictive covenants are most commonly associated with subdivisions and community management associations and are intended to maintain consistency within the neighborhood. While viewed as a benefit by most, they do limit the owner's use of the property and are binding on future owners. Looking at shopping centers in the appraisal process, the social fiber of the community and distances from schools is called: A. neighborhood analysis B. market data approach C. site analysis D. social analysis CORRECT ANSWER: A. This involves more than just driving around. It is a formal process of identifying, measuring and analyzing the influences that help determine a neighborhood's vitality and desirability. Which best describes why a buyer purchases a home using the market data approach? A. Buyers buy on impulse. B. Buyers buy based on how much income can be derived from other property. C. Buyers buy after they compare the house with others. D. Buyers buy based on current construction costs. CORRECT ANSWER: C. While emotion and impulse are certainly strong motivators, a home is also a considered purchase. What most people seek, within their affordability range, is value more than price. The only way to determine which home combines the elements of price, features, quality, condition, location and other factors that give a particular buyer the best value for his or her needs is to compare as many properties as possible. A scale drawing shows a room to be 3 inches by 4 ½ inches. Carpet, which is $15 per square yard, is to be installed in the room. If the scale is 1 inch to 4 feet, how much would it cost to install the carpet? A. $ B. $ C. $ D. $3,240 CORRECT ANSWER: C. At a scale of 4' to the inch, the room measures 12' x 18' or 216 square feet. Since there are nine square feet to one square yard, the room will require twenty-four square yards of carpet at $15 per yard. A tenant leased 3000 square feet at $10 per square foot and 8% of gross income. The total annual rent she paid was $60,000. What was the gross income on which she paid percentage rent?
A real estate agent should tell the buyer, his customer, which of the following? A. how long a property has been on the market B. the seller's motivation for marketing his property C. a pending or recent zoning change D. The seller is getting a divorce. CORRECT ANSWER: C. A zoning change is a "material fact"--something that can have a direct impact on the property's value or desirability. For example, if the zoning in a middle class neighborhood on the edge of a growing city was changed from residential to mixed use, it means that a number of homes could be turned into businesses, which will make the property less desirable to people seeking a quiet place to raise a family. A square is 1/8 of a mile by 1/8 of a mile. How many acres is this? A. 10 acres. B. 20 acres. C. 40 acres. D. 160 acres. CORRECT ANSWER: A. One-eighth of a mile square is the same as 10 acres. Multiply 1/8 X 1/8 = 1/64 divided into 640 acres = 10 acres The first step in an appraisal is: A. a market data comparison. B. to define the problem. C. a neighborhood analysis. D. to gather information. CORRECT ANSWER: B. Appraisers can legitimately come up with different values for the same property depending on the purpose of the appraisal. For example, an appraisal for a second mortgage generally would be more conservative than one for a competitive market analysis for the purpose of selling the home. Additionally, an appraisal for insurance purposes focuses more on the costs of replacing the structure rather than what the house, land and intangibles, such as curb appeal, would be worth on the open market. A recorded subdivision plat is used in the: A. geodetic survey system. B. rectangular survey system. C. lot and block system. D. metes and bounds system. CORRECT ANSWER: C. Lot and block is the "final" survey of property being readied for development and identifies each individual parcel in a subdivision. An appraiser is usually paid: A. a fee based on a percentage of the appraised value. B. a fee based on the amount of time and effort.
C. a fee agreed upon after the appraisal is completed. D. a standard fee agreed upon by the National Appraisal Association. CORRECT ANSWER: B. There are two fundamental reasons for the "time and effort" rather than valuation method. First is the fact that the differences between any two properties make it impossible to relate the complexity of the task to the value of the property. A high-end property could be a relative "no brainer" while a particular mid-market home could have dozens of variables to be analyzed. The second reason is that basing fees on value places an obvious incentive on appraisers to estimate high, thus distorting reality. The primary survey line running north and south in the rectangular survey system is the: A. township line. B. base line. C. range line. D. principal meridian. CORRECT ANSWER: D. Crossing a base line, the PM is the primary reference point for locating and describing land falling within its boundaries. The zoning commission of Jefferson County requires that all new construction in a specific area adhere to a specific type of architecture. What type of zoning is this? A. bulk B. incentive C. directive D. aesthetic CORRECT ANSWER: D. Aesthetic zoning helps ensure consistency within a neighborhood or area, thus raising its visual appeal and, very often, its desirability and value as a place to live. The appraisal approach most likely to be used in valuing a public library building would be: A. market. B. cost. C. income. D. residual. CORRECT ANSWER: B. The cost method is most often used for buildings where actual income or comparative commercial value are unavailable--such as schools and libraries. Physical deterioration is considered curable whenever: A. It is caused by lack of maintenance. B. It does not result in loss of economic utility. C. It costs less to correct than the resulting value increase. D. It can be repaired regardless of the cost. CORRECT ANSWER: C. For example, let's say an older office building needs to update electric and add bathrooms, repartition offices and fire safety features to meet code for resale. The cost to complete the work is estimated at $2.2 million. However, the building is fully paid for and can easily be sold
D. an increase adjustment to the comparable's selling price. CORRECT ANSWER: A. It's important to remember that adjustments are made to the comparable, not the subject property. For example, let's assume two homes are identical in every respect, except the comparable property has a swimming pool the subject home lacks. If the subject property is on the market for $175,000 and a swimming pool typically adds $8,000 to the selling price of homes in that area, the appraiser would deduct $8, from the sale price of the comparable rather than adding it to the subject property to make his comparison. Economic obsolescence in a property is generally: A. a result of poor maintenance. B. due to architectural faults. C. a type of depreciation that is incurable. D. caused by the aging process. CORRECT ANSWER: C. Implicit in the term "economic obsolescence" is the conclusion that repairs and upgrades have already been considered and would not present a cost-effective option. At this point, next to abandonment, demolition for re-use of the land is the only viable alternative. When an appraiser uses the phrase "effective age," he is referring to: A. the number of years since the improvements were made. B. the age of the property based upon its condition. C. the estimated total life of an improvement. D. the number of years during which the property will yield a worthwhile return on the investment made. CORRECT ANSWER: B. Effective age is a combination of many factors, including location, quality of construction and maintenance, architectural style, actual age, climate and so forth. A well-built building in a desirable location will have a much longer effective life than a cheaply constructed space in a poorly maintained office park setting. The Adams family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered the monetary value of the home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an example of the principle of: A. diminishing return. B. change. C. regression. D. substitution. CORRECT ANSWER: C. The regression principle is the reason people are cautioned against owning the most expensive house in the neighborhood. It's an observation of the fact that lower priced homes (and commercial buildings) have a much greater downward pull on the value of higher end properties than the other way around. In valuing a single-family residence by the comparison approach, an appraiser would make adjustments to:
A. the comparable properties. B. the subject property. C. both the comparable and the subject property. D. current properties being offered for sale. CORRECT ANSWER: A. The objective of an appraisal is to arrive at a fair estimate of the subject property's value based on what comparable properties have actually sold for. The most reliable way of achieving this is to make additions and subtractions from the comparables rather than the other way around. In the example of a 3-bredroom ranch, property A might have sold for $225,000, but features a two-car garage instead of the subject property's 3-car garage. If the value of the extra garage space is $5,500, the first comparable is raised to $230,500. If the next property is identical to the subject, except it had a brand-new, high-end kitchen that added approximately $25,000 to the selling price and the home sold for $257,000, that comparable's price would be reduced to $232,000. An owner was building a house for himself. Due to personal preference, he decided not to put in a bathtub. This would result in: A. physical deterioration. B. external obsolescence. C. functional obsolescence. D. social obsolescence. CORRECT ANSWER: C. Functional obsolescence can result from both outdated features as well as poor design. For example, while an older home with five bedrooms and only one bath is obsolete by today's standards, so too is a new home with no bathtubs or with bedrooms that can be accessed only by going through another bedroom. How does one determine the gross rent multiplier? A. Property value divided by the capitalization rate. B. Property value divided by the monthly rent. C. Property value divided by the net income. D. Property value divided by the gross income. CORRECT ANSWER: B. This is used as a quick, short-hand "guesstimate" for a property's approximate value. Sometimes this calculation produces a positive cash flow; other times a negative one--and one is not necessarily better than the other. Far more detailed calculations are necessary to determine a property's real market value and attractiveness as an investment. Restrictive covenants that run with the land: A. are no longer effective when the title is transferred. B. apply only until the developer has conveyed the title. C. can be removed by a court of competent jurisdiction. D. apply to and bind all successive owners of the property. CORRECT ANSWER: D. Often put in place to maintain the consistency and desirability of a neighborhood, restrictive covenants have withstood court tests and prohibit all future owners from certain actions or modifications of their property, such as adding outbuildings or
D. being declared mentally incompetent CORRECT ANSWER: C. Depositing earnest money into the firm's escrow account IS proper conduct for a broker. The other circumstances are grounds for suspension or revocation. Sam is a licensed broker in new Jersey who has given a lender a sales price that is higher than the actual price. Which of the following is correct? A. Sam has done nothing wrong as long as the appraisal confirms the higher price B. Sam may lose his license and be fined and/or imprisoned C. the buyer may receive an interest rate break on the larger amount, yet still close on the correct amount D. the buyer can receive a higher mortgage amount in this situation CORRECT ANSWER: B. In this situation, the broker is considered a party to a dual contract for the purpose of obtaining a larger loan amount. This may result in a loss of the broker's license or possible fine and imprisonment. Maureen Jordan is a New Jersey salesperson with a paid telephone directory advertisement stating "Maureen Jordan, Real estate Salesperson, Residential Property My Specialty." What additional information should Maureen include? A. her license number B. her license number and date license was first issued C. the expiration date of her license D. the name of her employing broker CORRECT ANSWER: D. All advertising must be done in the employing broker's name. None of the other information is necessary. Which of the following must be done before placing a "For Sale" sign on a listed property? A. list the property B. obtain the property owner's consent C. get the neighbor's permission D. all of the above CORRECT ANSWER: B. A broker may install a "for Sale" sign on the property after obtaining permission from the owner of the property What information must be included on a web site advertising a broker's office? A. name and address of the home office and a list of states in which the brokerage holds licenses B. names, addresses, and phone numbers of active licensees C. license number of the brokerage and a list of current active licensees D. all of the above CORRECT ANSWER: A. The name of the brokerage, the home office address, and the states where the brokerage holds license must be contained on each screen of the salesperson's web site Which of the following is true concerning listings based on a "net price?"
A. permissible with approval of the New Jersey Real Estate Commission B. legal in New Jersey if the seller agrees C. illegal in New Jersey at any time D. more profitable because no minimum is set on the commission CORRECT ANSWER: C. Because of the potential conflict of interest for the broker, net listings are illegal in New Jersey. Which of the following is true regarding real estate commissions in new jersey? A. they are determined by brokers B. they are set by law C. they are set by the real Estate Commission D. they are negotiable between the principal and the broker CORRECT ANSWER: D. Commissions are fees are not set by law, determined by local brokers, or set by the Real Estate Commission. They are always negotiable between the principal and the agent. With regard to commissions earned by a broker in a real estate sales transaction, which of the following is true? A. commissions may be deducted from the earnest money deposit and claimed by the broker following the execution of the purchase and sales agreement B. commissions are determined by agreement of the broker and the principal C. commissions may be shared with an unlicensed person, provided this person was directly responsible for the sale D. all of the above CORRECT ANSWER: B. In New Jersey, commissions are always negotiable between the principal and the broker. How long does a broker have to deposit funds received on behalf of a principal in an escrow or trust account? A. five business days after the money is received by the licensee B. five working days after receiving the offer C. three days after obtaining all signatures on the contract D. three days after receiving the offer CORRECT ANSWER: A. A licensee must deposit other peoples' money within five business days after it is received After receiving an earnest money deposit from a buyer, what should the broker do next? A. hold the deposit in a secure place in the broker's office until the offer is accepted B. immediately deposits the money in the broker's personal checking or savings account C. within five business days, 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 D. open a special, separate escrow account that twill contain funds for this transaction only CORRECT ANSWER: C. The broker is not required to open separate trust accounts. He may deposit the buyer's funds into an escrow account within five business
Susan is a broker who has signed a listing agreement with a seller. The agreement includes this statement: "If the Property has not been sold after three months from the date of this signing, this agreement will automatically continue for additional three- month periods thereafter until the Property is sold." Which of the following statements is true about this agreement? A. it is legal under New Jersey law because the listing periods are < 6months B. it is illegal under New Jersey law C. it is legal under New Jersey law because the time limit is specified D. it would be legal in New Jersey if the stated time periods were six months in length CORRECT ANSWER: B. A broker must obtain a new listing agreement when the first one expires. Listings must contain a specific termination date and rollover extensions are not permitted under New Jersey law. Which of the following facts does NOT have to be disclosed in a listing contract? A. the seller's net return B. the property condition C. special compensation D. the disposition of earnest money in the event of default of buyer or seller CORRECT ANSWER: A. The seller's net return does not need to be discussed in a listing contract. A broker or licensed salesperson in New Jersey is obligated to do which of the following upon obtaining a listing? A. cooperate with all real estate offices who wish to participate in marketing the property B. prepare advertisements and flyers C. provide the person(s) signing the listing a legible, signed, true and correct copy D. create a numbered listing file in compliance with New Jersey real estate license law CORRECT ANSWER: C. One need not permit other brokers to participate in marketing, advertising is not required, and the law does not require that the files be numbered, thus the only correct answer is that the salesperson or broker must give the person singing the listing a legible, signed, true and correct copy of the agreement. Drew listed his house for sale with a broker on February 1 and signed a listing agreement for five months. In April he decided the house was no longer for sale. Which of the following statements is correct? A. Drew is required by law to leave his house on the market until June. B. Drew has canceled the agreement and there are no penalties. C. The New Jersey Real Estate Commission will decide if Drew's action was justified. D. Drew has withdrawn the broker's authority to sell the property and may be subject to a penalty. CORRECT ANSWER: D. Drew may cancel the listing agreement but he may be responsible for some penalties or expenses. There is no involvement from the Real Estate Commission.
Bill is a salesperson in New Jersey who discriminated on the basis of disability and engaged in blockbusting, both considered violations of the New Jersey Law Against Discrimination. Bill also cashed a sizable earnest money check from a buyer, and used the money to purchase a new car. These actions were all unknown to Bill's broker. Which of the following actions will result when Bill's violations are reported to the Real Estate Commission? A. The employing broker will not have his licensed revoked. B. The employing broker will only be held liable for the fair housing violations. C. Bill's actions are legally the responsibility of the employing broker who will face the same disciplinary action as Bill. D. Bill's broker will be required to pay any resulting fines. CORRECT ANSWER: A. There will be no action taken against the broker because he was unaware of Bill's illegal activities. With whom should a complaint be filed if a person believes he has been discriminated against according to the New Jersey Law Against Discrimination? A. New Jersey Attorney General B. New Jersey Real Estate Commission C. New Jersey Association of Realtors D. New Jersey Housing Department CORRECT ANSWER: A. In New Jersey, complaints of discrimination must be filed with the Attorney General's office. What is the acceptable length of time for a housing discrimination charge to be filed based on the new Jersey Law Against Discrimination? A. 1 year B. 180 days C. 2 years D. 90 days CORRECT ANSWER: B. A person has 180 days to file a fair housing complaint with the New Jersey Attorney General's office. From whom may a New Jersey salesperson legally collect compensation? A. a buyer or a seller B. a licensed real estate broker only C. any designated party to a transaction D. his or her employing broker only CORRECT ANSWER: D. In New Jersey, salespeople may only receive compensation from their employing brokers. Nell is a salesperson in New Jersey who has chosen to terminate her affiliation with her broker. Which of the following best descries the procedure Nell should follow? A. She should return her license with a letter describing her intent to the real estate commission.
