PSI real estate exam: the national portion

A baker owns the building where her bakery operates. She sells the building and plans to take the commercial ovens she bolted to the floor. The contract does not mention the ovens. Can the baker legally remove the ovens prior to closing?

1. No, unless she replaces the commercial ovens with residential ovens before closing
2. Yes, because items bolted to the floor remain personal property of the business owner
3. Yes, because the commercial ovens qualify as exempt trade fixtures used in business
4. No, because the owner-installed ovens are classified as standard fixtures
5. Yes, provided she repairs any floor damage caused by unbolting the heavy equipment

During a property inspection, a real estate licensee notes that a residential property has a severely damaged roof that leaks during rainstorms and an outdated one-car garage that buyers in the current market find entirely inadequate. How should these two issues be classified respectively?

1. Physical deterioration and functional obsolescence
2. Functional obsolescence and external economic obsolescence
3. Physical deterioration and external obsolescence
4. External economic obsolescence and functional obsolescence

An investor is evaluating several residential duplexes but lacks detailed operating expense data for the properties. Which valuation tool is most appropriate for a quick price comparison in this scenario?

1. Direct Income Capitalization Rate
2. Gross Rent Multiplier
3. Effective Gross Income Multiplier
4. Cash-on-Cash Return
5. Net Operating Income Extraction

A buyer's title examination reveals that the legal description in the seller's deed references a point of beginning (POB) described as 'an iron pin at the northwest corner of Lot 12,' but the county surveyor confirms that no such pin can be located on the ground and no recent survey of Lot 12 exists. The buyer's lender requires a clear legal description tied to verifiable monuments before closing. Which contract clause should the buyer's agent recommend to protect the buyer and ensure the seller provides a corrective survey prior to closing?

1. Seller shall buy an extended title policy endorsement insuring over survey exceptions instead of a new survey
2. Seller shall, at Seller's expense, obtain and record a boundary survey by a licensed surveyor that re-establishes the POB with new monuments at least 10 days before closing
3. Buyer may, at Buyer's option and expense, commission a new survey to locate the POB; if the survey discloses any boundary discrepancies, Buyer may terminate the contract and receive return of earnest money
4. Seller shall execute an affidavit of monumentation attesting that the iron pin existed at the time of Seller's purchase and that the legal description is accurate to the best of Seller's knowledge, which affidavit shall be recorded at closing
5. Seller shall provide a corrective survey if reasonably possible, but if the POB cannot be established before the scheduled closing date, the parties agree to close using the existing description and resolve the issue post-closing

Both a buyer and seller enter a purchase agreement genuinely believing the property includes mineral rights. A title search later reveals those rights were severed decades ago. What is the most appropriate legal remedy for the buyer?

1. Specific performance.
2. Liquidated damages.
3. Punitive damages for fraudulent misrepresentation.
4. Reformation of the deed to restore the lost rights.
5. Contract rescission due to a mutual mistake.

A lawful dual agent is asked by the buyer for a CMA to decide on an offer price, while the seller requests a CMA for a counteroffer. How must the agent proceed?

1. Provide the CMA but suggest different strategic prices to each party
2. Advise the seller on a counteroffer price but not the buyer
3. Terminate the dual agency agreement before providing any market data
4. Refuse both requests entirely to maintain complete strict neutrality
5. Provide objective CMA data without recommending specific pricing

A buyer wants a radon test contingency, but the seller refuses because state law does not require testing. The buyer's agent advises the buyer to drop the request to make the offer more competitive. Is this appropriate?

1. No, because the agent should not discourage the buyer's due diligence.
2. Yes, because if state law does not require testing, the buyer has no right to request it.
3. Yes, because the seller's refusal is a valid reason to waive the contingency.
4. No, but only if the buyer agrees to pay for the radon test themselves.
5. Yes, because agents are expected to help buyers make competitive offers over other considerations.

A brokerage represents both buyer and seller through designated agents. The seller's agent shares the seller's confidential bottom line with the buyer's agent. Which statement is correct?

1. A breach occurred; written consent and safeguards required.
2. No breach; designated agents owe no conflict duties.
3. No breach; no additional consent is needed.
4. No breach; intra-brokerage sharing is always allowed.
5. A breach occurred only if the buyer's agent actually used the information.

A brokerage receives client earnest money today. Trust account reconciliations are months overdue, no written supervision policy exists, new agent files are unreviewed, and E&O insurance has lapsed. Which sequence best reduces liability?

1. Postpone deposit until the E&O policy is renewed
2. Withhold deposit until written supervision policy is adopted
3. Deposit funds immediately; then reconcile and supervise
4. Restore E&O coverage first, then reconcile the trust account
5. Review new agent files before depositing client funds

A buyer notices old floor tiles and asks if they pose an asbestos health risk. Without viewing any inspection reports, the buyer's agent states the home is perfectly safe. What risk does the agent face?

1. Violation of federal building codes by failing to test for asbestos.
2. Liability for making unsubstantiated claims about a property's safety.
3. Breach of the federal environmental hazard disclosure mandatory timeline.
4. Mandatory fines from the EPA for ignoring national testing protocols.
5. Immediate revocation of their license by the federal health department.

A real estate broker refers clients to an affiliated title company without providing an affiliated business arrangement disclosure, tells clients they must use the affiliate, and receives a payment from the title company for each client it refers. Which violations occurred?

1. Failure to provide AfBA disclosure only
2. No violations occurred because the broker and title company are affiliated
3. Requiring use and receiving a referral fee, but not failure to disclose
4. Failure to provide AfBA disclosure, requiring use, and receiving a referral fee
5. Failure to provide AfBA disclosure and receiving a referral fee, but not requiring use

A veteran purchases a home with no down payment using a VA-guaranteed loan. Which statement correctly describes mortgage insurance and eligibility documentation for this loan?

1. PMI is required because there is no down payment; no COE is required
2. Conventional PMI is required until 80% LTV is reached, and a VA funding fee cannot be charged
3. No PMI is required, but a VA funding fee may apply; a COE is required
4. No PMI is required, and no funding fee applies; only a DD-214 is required

A comparable rental property sold for $216,000 with monthly rent of $1,800. The subject property has monthly rent of $2,000. Using a market-derived gross rent multiplier (GRM) from the sale, what is the subject's estimated value?

1. $2,880,000
2. $216,000
3. $20,000
4. $240,000
5. $200,000

A buyer breaches a purchase agreement. The seller intentionally keeps the property off the market for six months, then sues the buyer for those six months of mortgage payments. How will a court likely rule?

1. The seller is entitled to full compensatory damages.
2. The buyer's earnest money automatically converts to liquidated damages.
3. The buyer is strictly liable for all consequential losses.
4. The seller properly preserved the property for specific performance.
5. The seller failed to mitigate their actual damages.

A signed purchase contract contains a mandatory binding arbitration clause. A party claims a breach and immediately files a lawsuit for specific performance in state court. What is the most likely outcome of the lawsuit?

1. The court will stay or dismiss the suit and send the dispute to arbitration.
2. The judge will convert the lawsuit into an equitable right of redemption.
3. The defendant must pay treble damages for breaching the arbitration clause.
4. The court will automatically grant specific performance to the plaintiff.
5. The state real estate commission will take over the civil litigation process.

A developer purchases a parcel of land in a neighborhood that was recently rezoned by the city from residential to commercial use. However, the property's deed contains a 50-year-old restrictive covenant limiting the land's use strictly to single-family residential purposes. The developer plans to build a retail store. Which of the following statements BEST describes the developer's legal position?

1. The developer is bound by the residential deed restriction because the more restrictive rule dictates the use.
2. The developer must seek a conditional-use permit from the city planning board to legally bypass the private restrictive covenant.
3. The developer can proceed because the recent commercial zoning ordinance supersedes any older private deed restrictions on the property.
4. The developer must file an eminent domain claim against the original grantor's heirs to formally extinguish the residential covenant.
5. The developer can build the store because restrictive covenants automatically expire when a municipality fundamentally changes the zoning.

An owner attempts to convey a life estate to a relative, but the deed identifies the parcel merely as 'my land up north.' Why might this conveyance fail to create a valid, enforceable freehold estate?

1. The property description is legally ambiguous.
2. A life estate cannot be conveyed to relatives.
3. The deed must explicitly define the measuring life.
4. The grantor failed to mandate avoidance of waste.
5. Freehold estates require exact lot-and-block data.

A buyer's agent unknowingly forwards an email containing fraudulent wiring instructions to the buyer. The buyer wires $50,000 to a scammer. The agent claims no liability as a mere messenger. Has the agent breached a duty?

1. No, because the closing attorney or title company bears exclusive liability for wire transactions.
2. No, the agent is fully protected by federal safe harbor provisions for third-party communications.
3. Yes, but strictly under the condition that the agent intentionally conspired with the third party.
4. Yes, because licensed real estate agents act as absolute guarantors for all monetary transfers.
5. Yes, the agent failed to use reasonable care and competent knowledge regarding client funds.

A claims-made E&O policy ran from January 2019 through May 2022. A new claims-made policy effective June 2022 has no retroactive coverage for earlier acts, and no extended reporting period (tail) was purchased on the old policy. An error occurred in March 2022; a claim was filed in September 2022. What coverage exists?

1. Extended reporting period automatically applies under the old policy
2. No coverage under either policy
3. Old policy covers because the error occurred before cancellation
4. Both policies cover pro rata based on the relative time periods
5. New policy covers because the claim was made during the policy period

A seller conveys property to a buyer by general warranty deed. After closing, the buyer discovers an unrecorded utility easement that existed before the seller owned the property. Neither party knew of the easement at closing. Which of the following is TRUE regarding the buyer's legal recourse against the seller?

1. The buyer can sue only if the easement was known to the seller.
2. The buyer can sue the seller for breach of warranty.
3. The buyer can only rescind the deed.
4. The buyer has no recourse because the easement was unrecorded.
5. The buyer has no recourse because the easement predates the seller.