1. Two people purchase a toy factory, including the land. They agree to share equally in the operation of the business and in the business's profits and losses. Which of the following types of ownership exists?
A. general partnership Correct
B. limited partnership
C. sole proprietorship
D. limited liability company
Explanation
A general partnership is correct because it involves two or more individuals sharing equal responsibility for business operations, profits, and losses, as described. A limited partnership includes partners with limited liability, not equal sharing. A sole proprietorship involves one owner, not two. A limited liability company provides liability protection, which is not mentioned in the scenario.
2. The purchase and sales agreement provides for release of earnest money to the seller after the buyer's property inspection. The seller requests the earnest money prior to the property inspection. The broker should
A. release the earnest money to the seller immediately.
B. notify the buyer of the broker's intention to release the earnest money to the seller.
C. release the earnest money on the buyer's verbal approval.
D. refuse to release the earnest money. Correct
Explanation
Refusing to release the earnest money is correct because the contract specifies release after the inspection, and the broker must adhere to its terms. Releasing it immediately violates the agreement. Notifying the buyer or releasing on verbal approval disregards the written contract, which requires compliance for legal validity.
3. A property is listed for $219,900. An offer of $210,000 is submitted to the listing licensee. The offer includes a free-standing stove and refrigerator. The seller accepts the price and the refrigerator, but is not willing to leave the stove. The listing licensee makes the change in the contract to exclude the stove. The seller signs and initials the change. The listing licensee contacts the buyer's licensee by phone regarding the change. The buyers orally accept the change. Which of the following is true regarding this situation?
A. The original offer was rejected and the seller's counteroffer must be accepted in writing. Correct
B. Neither the seller nor his licensee has a right to make any changes to the original offer.
C. The offer has been signed and accepted by all parties and creates a valid contract.
D. The buyer's licensee can sign the change regarding the stove on behalf of the buyer.
Explanation
The seller's change to exclude the stove constitutes a counteroffer, rejecting the original offer, and real estate contracts require written acceptance for validity, making A correct. The seller can propose changes, so B is incorrect. Oral acceptance does not create a valid contract, ruling out C. The buyer's licensee cannot sign on their behalf without written authorization, so D is wrong.
4. Which of the following is true about a competitive market analysis?
A. It is employed for insurance purposes.
B. It is used to establish depreciable value.
C. It is usually based on local tax assessment.
D. It is useful to the buyer as well as to the seller. Correct
Explanation
A competitive market analysis (CMA) estimates a property's market value, aiding both buyers and sellers in pricing decisions, making D correct. It is not used for insurance purposes (A), depreciable value for taxes (B), or based on tax assessments (C), which are unrelated to CMA's purpose.
5. What type of easement allows a utility company to access land owned by private individuals for essential maintenance purposes?
A. Easement in Gross Correct
B. Easement by Prescription
C. Easement by Necessity
D. Party Wall Easement
Explanation
An easement in gross allows entities like utility companies to access private land for specific purposes without owning adjacent property, making A correct. Easement by prescription requires unauthorized use over time (B), easement by necessity is for landlocked properties (C), and party wall easements involve shared structures (D), none of which apply.