1. A home warranty for a previously owned home would usually cover which of the following items?
A. structure or flooding issues after closing
B. only home systems such as the roof, plumbing, and foundation
C. major appliances and home systems such as electric, heating, and plumbing Correct
D. major appliances, the buyer's personal property, and any seller added fixtures
Explanation
Home warranties for previously owned homes are designed to protect buyers from unexpected repair costs after closing. They typically cover major mechanical systems (plumbing, electrical, heating, air conditioning) and built-in appliances (oven, dishwasher, water heater, etc.). Structural defects, flooding, and personal property are almost always excluded, making choice C the standard and correct coverage description.
2. A real estate licensee was very devout in a certain religion... the licensee is guilty of
A. steering.
B. blockbusting.
C. panic peddling.
D. religious freedom. Correct
Explanation
Simply being personally devout in a religion does not violate fair housing laws. Steering, blockbusting, and panic peddling are illegal practices based on directing or discouraging buyers because of protected characteristics. A licensee's personal religious beliefs and practices are protected under religious freedom and do not constitute discrimination unless they influence housing decisions based on a buyer's protected class.
3. A tenant leased a building for use as a bookstore, and the tenant installed wall-mounted shelving. Is the tenant permitted to remove the shelving?
A. Yes, because the shelving is a trade fixture. Correct
B. Yes, because the shelving is real property.
C. No, because the shelving becomes an emblem.
D. No, because installed fixtures become the property of the owner.
Explanation
Items installed by a commercial tenant to conduct their specific trade or business are considered trade fixtures. Bookstore shelving qualifies as a trade fixture because it is essential to operating the bookstore. Trade fixtures remain the personal property of the tenant and may be removed at the end of the lease provided the premises are returned to their original condition.
4. The term "loan-to-value ratio" means the ratio of the loan amount to the
A. appraised value or sale price, whichever is higher.
B. appraised value or sale price, whichever is lower. Correct
C. listed price, whichever is higher.
D. listed price, whichever is lower.
Explanation
LTV is calculated using the lesser of the appraised value or the contract sale price. This conservative approach protects the lender by ensuring the loan amount does not exceed the property's true market value as determined by either the appraiser or the actual agreed-upon price between buyer and seller.
5. On federal income tax returns, a homeowner is allowed to deduct
A. utility expenses.
B. mortgage interest. Correct
C. homeowner's association dues.
D. hazard insurance.
Explanation
The IRS allows qualified homeowners to deduct mortgage interest paid on their primary and secondary residences (subject to limits). Property taxes are also deductible, but utilities, HOA dues, and hazard insurance premiums are not considered deductible expenses on Schedule A.