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NEW QUESTION # 102
What items go into the seller's credit column and the buyer's debit column when calculating prorations?
- A. Home inspection fees
- B. Prepaid property taxes
- C. Unpaid property taxes
- D. The buyer's loan amount
Answer: B
Explanation:
In settlement prorations, prepaid items (e.g., prepaid property taxes or HOA dues) are credited to the seller and debited to the buyer, because the seller has paid for a period that extends beyond the closing date
, and the buyer reimburses the seller for the buyer's post-closing share. Conversely, accrued but unpaid items (e.g., the current year's unpaid property taxes) are debited to the seller and credited to the buyer.
The Maryland course teaches these conventions in the Closing and Math sections.
References:
Maryland 60-Hour Principles & Practices Course - Closing the Real Estate Transaction (settlement statements, prorations) and Math for Real Estate modules.
NEW QUESTION # 103
In what type of agency does a licensee have limited authority to act on behalf of a client buying or selling a property?
- A. A special agent
- B. A universal agent
- C. A designated agent
- D. A general agent
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course:
A special agent (also called a limited agent) is authorized to perform a single, specific act or transaction-such as assisting in the purchase or sale of a property.
Real estate brokers and salespersons generally act as special agents, with limited authority defined in the brokerage agreement.
They may not bind their clients to contracts without express permission.
This principle appears in the Law of Agency module and is contrasted with general agents (brokers' affiliated licensees) and universal agents (power-of-attorney representatives).
Reference (Maryland Source):
- Maryland 60-Hour Principles and Practices Course, Law of Agency section.
- Business Occupations and Professions Article §17-530 - §17-534.
NEW QUESTION # 104
In Maryland, it's customary for the buyer and seller to split the transfer and recordation ______.
- A. 30/70
- B. 50/50
- C. 40/60
- D. 25/75
Answer: B
Explanation:
Maryland practice (as taught in pre-licensing) recognizes a customary 50/50 split of transfer and recordation taxes between buyer and seller, subject to local custom and negotiation. Parties may allocate differently in the contract, and some jurisdictions have varying defaults; however, exam-prep materials present 50/50 as the standard custom unless otherwise agreed.
References: Maryland 60-Hour Course: "Closing the Real Estate Transaction" (Maryland closing customs; allocation of transfer and recordation taxes; contract may supersede custom).
NEW QUESTION # 105
Cameron had a listing agreement with a client named Ben. Ben got mad at Cameron and said he was terminating the agreement. Can Ben do this?
- A. Only if the property is valued at more than $250,000.
- B. Yes, with 30 days' notice.
- C. Yes, but certain terms of the agreement may still be binding upon Ben.
- D. Yes, it's a client's prerogative.
Answer: C
Explanation:
While a client (in this case, Ben) may terminate a listing agreement at any time, the termination does not necessarily release the client from contractual obligations that have already been incurred.
A listing agreement is a bilateral contract between the seller and the broker. If a client ends the agreement without cause, the broker may still be entitled to compensation for expenses or commissions if the property sells to a ready, willing, and able buyer who was introduced during the term.
The Maryland course explains that unilateral termination may constitute breach of contract, depending on the agreement's terms.
Reference:
Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course - "Listing Agreements and Buyer Representation" Module Md. Business Occupations and Professions Article 17-532 - Duties and Rights in Agency Relationships.
NEW QUESTION # 106
What must an agent do if they receive an undisclosed bonus from a seller to incentivize closing by a certain date?
- A. The agent should keep the bonus confidential and not inform the broker.
- B. The agent can accept the bonus without any disclosure requirements.
- C. The agent must disclose the bonus to any buyers they are working with on the transaction.
- D. The agent should pay the bonus to the broker.
Answer: C
Explanation:
Under Maryland Code of Ethics (COMAR 09.11.02.33A) and Maryland Business Occupations and Professions 17-322(a)(23), a licensee must disclose any compensation, commission, fee, or bonus received from a party other than their client in the transaction.
If a seller offers an undisclosed bonus to the buyer's agent, that bonus must be fully disclosed in writing to the buyer (the agent's client) before acceptance. Failure to do so constitutes an ethical and legal violation. The payment, once disclosed, must be processed through the agent's broker, who is responsible for all compensation distribution.
Reference:Maryland 60-Hour Principles and Practices Course - "Fair Housing and Ethics" Module; COMAR
09.11.02.33A(23); Maryland Business Occupations and Professions 17-322.
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NEW QUESTION # 107
Where can you find out what's not covered by a title insurance policy?
- A. The county clerk's office
- B. The lender's attorney
- C. The title insurance policy's schedule of exceptions
- D. The internet
Answer: C
Explanation:
The course teaches that the title insurance policy itself specifies coverage and exclusions. Coverage basics appear on Schedule A, while Schedule B-Exceptions clearly lists matters excluded from coverage (e.g., specific recorded easements or restrictions, taxes, and other encumbrances identified in the title search).
Therefore, to determine what is not covered, parties must review the policy's schedule of exceptions.
References: Maryland 60-Hour Principles and Practices of Real Estate - Closing and Title Insurance: policy components, schedules, exclusions, and reading a title commitment/policy.
NEW QUESTION # 108
A first-time home buyer needs to take out a loan to help finance his purchase. What's the first thing he must do once the seller has accepted his offer and the contract has been finalized?
- A. Request the settlement date be delayed 30 days
- B. Submit a written application for financing
- C. Check his credit score
- D. Pay off all his credit cards
Answer: B
Explanation:
Once a contract is ratified, buyers who need a loan must promptly submit a written loan application and provide required documentation so the lender can process, underwrite, and issue a loan commitment within the time frames stated in the contract and financing addenda. This step triggers required disclosures, appraisal ordering (when applicable), and rate/lock options; delays can jeopardize financing contingencies and settlement timelines.
References: Maryland 60-Hour Course - Real Estate Financing (loan application process, underwriting timelines, commitments) and Closing the Transaction modules (contractual financing contingencies and deadlines).
NEW QUESTION # 109
Which of the following is the best definition of a covenant between a lessor and lessee?
- A. An addendum to a contract added after it's signed
- B. A provision for which neither party to a contract is willing to compromise
- C. An agreement or promise made between the parties
- D. A rent escalation
Answer: C
Explanation:
In leasing, a covenant is a binding promise or agreement contained within the lease. It can require or restrict certain actions by either the lessor (landlord) or lessee (tenant)-for example, a covenant of quiet enjoyment, a covenant to pay rent, or a covenant to maintain the property. These promises are enforceable under contract and property law.
Reference:Maryland 60-Hour Principles and Practices Course - "Leases and Property Management" Module; Maryland Real Property Article 8-101 et seq.
NEW QUESTION # 110
A veteran licensee always has a face-to-face meeting before he works with any buyer. What might be a good reason for this?
- A. To determine the buyer's ethnicity
- B. To look the buyer in the eye to see if the buyer is hiding anything
- C. To get the buyer's FICO score, credit report, and tax receipts
- D. To build trust and rapport
Answer: D
Explanation:
Under Maryland's agency law, a licensee must establish a relationship of trust, confidence, and loyalty with a client.
Meeting face-to-face helps the agent explain agency relationships, present the Understanding Whom Real Estate Agents Represent disclosure, and begin building rapport and confidence, which are critical in fiduciary relationships.
As emphasized in the Brokerage and Agency module, personal contact helps ensure informed consent and professional transparency-never to collect personal demographic or financial data outside proper procedures.
Reference (Maryland Source):
- Maryland 60-Hour Principles and Practices Course, Law of Agency and Broker-Client Relationships section.
- Business Occupations and Professions Article 17-530 through 17-534.
NEW QUESTION # 111
If you take gross income and deduct operating expenses, what do you get?
- A. Effective gross income
- B. Potential gross income
- C. Profit
- D. Net operating income
Answer: D
Explanation:
Net Operating Income (NOI) is the income remaining after deducting operating expenses from the property's operating income. In appraisal (income approach) and investment analysis, the standard relationships are:
* Potential Gross Income (PGI) = income at full occupancy (before vacancies and collection loss).
* Effective Gross Income (EGI) = PGI minus vacancy/collection loss plus other income.
References: Maryland 60-Hour Course: "Real Estate Appraisal and Valuation" (income approach; PGI, EGI, NOI definitions and formulas); "Math for Real Estate and Practical Applications."
NEW QUESTION # 112
What might the financial implications be if a buyer needed to use individual retirement account funds toward a down payment?
- A. First-time homebuyers can use up to $10,000 of their IRA funds penalty free for down payment and closing costs.
- B. The funds are taxable, and an early withdrawal penalty fee will apply.
- C. Income taxes are waived on IRA distributions for homeownership.
- D. Funds can be used if they go toward the borrower's first-time homeownership in the last five years.
Answer: A
Explanation:
Under the first-time homebuyer exception for IRAs, qualified individuals may withdraw up to $10,000 (lifetime limit) to pay qualified acquisition costs (e.g., down payment and closing costs) without the 10% early withdrawal penalty. Standard income tax may still apply to traditional IRA distributions (Roth rules differ for contributions vs. earnings and five-year holding). Therefore, penalty-free (not tax-free) withdrawals up to $10,000 are permitted for first-time home purchase needs.
References: Maryland pre-licensing curriculum-Real Estate Financing (sources of down payment funds; IRA first-time homebuyer exception; overview of tax and penalty treatment).
NEW QUESTION # 113
Why is it important for a seller to disclose the presence of an old fuel tank on a property?
- A. The buyer will need to check if the tank is correctly sized.
- B. Buyers don't need to know.
- C. Older tanks may leak and contaminate the ground.
- D. The buyer may want to use the tank.
Answer: C
Explanation:
Underground storage tanks (USTs), particularly older ones made of steel, may corrode and leak, releasing hazardous substances such as oil or fuel into the soil and groundwater.
Maryland environmental law and the 60-Hour Course emphasize that sellers must disclose known environmental hazards, and buyers should be aware of potential remediation costs.
The Maryland Department of the Environment (MDE) regulates USTs, requiring proper registration, maintenance, and closure procedures to prevent contamination.
Reference: Maryland 60-Hour Principles and Practices - "Environmental Issues and Disclosures"; Maryland Environment Article, Title 4 - Water Management, Subtitle 4 - Oil Pollution and Tank Management.
NEW QUESTION # 114
How do you decide which party you represent in a transaction?
- A. It's based on the implied agreement between you and the party whom you represent.
- B. It's based on compensation. If the seller is paying you, you work for the seller.
- C. It's based on priority. A seller's duties come before a buyer's duties.
- D. It's based on the express written agreement between you and the party whom you represent.
Answer: D
Explanation:
In Maryland, agency is established by an express, written brokerage agreement that identifies the client, defines the scope of services, and sets compensation terms and required disclosures. Who pays compensation does not determine agency; payment can come from any party or through the cooperative compensation system (e.g., MLS offers) without changing whom the licensee represents. Implied agency is not an acceptable substitute for the required written agreement in Maryland.
References:
Maryland Business Occupations & Professions Article, Title 17 - written brokerage agreement requirement and agency disclosures.
COMAR 09.11.02 (MREC regulations) - content and use of brokerage agreements; disclosure obligations.
Maryland 60-Hour Principles & Practices Course - Real Estate Brokerage & Agency Module (written agreements and representation).
NEW QUESTION # 115
Which zoning practice involves changing the zoning of an area to allow for less intensive development, such as reducing the number of units or building size?
- A. Bulk zoning
- B. Density-reduction zoning
- C. Downzoning
- D. Reduction zoning
Answer: C
Explanation:
Downzoning occurs when a local government changes zoning classifications to reduce the density or intensity of land use, such as rezoning an area from multifamily to single-family residential.
It can limit development potential and may lower market value but is typically done to control growth, preserve open space, or maintain community character.
The Maryland course explains downzoning under local land-use authority topics governed by county and municipal zoning ordinances.
Reference: Maryland 60-Hour Principles and Practices - "Land Use Controls and Property Development"; Maryland Land Use Article, 4-102 - Zoning Authority of Local Governments.
NEW QUESTION # 116
What type of violation are you committing when you fail to include a material fact or make false or misleading advertising statements?
- A. Improper delivery of instruments
- B. Conflict of interest
- C. Misrepresentation
- D. Improper brokerage commission
Answer: C
Explanation:
Comprehensive and Detailed
Misrepresentation occurs when a licensee omits or falsifies a material fact or makes false, deceptive, or misleading statements in advertising or communications. In Maryland, misrepresentation is a violation under §17-322(a)(1) and COMAR 09.11.02.01 (Advertising). A material fact is any information that could influence a consumer's decision in a real-estate transaction. Intentional misrepresentation may also lead to civil liability for fraud.
NEW QUESTION # 117
How does the building department ensure that a builder who has obtained a permit builds according to code?
- A. The builder is required to submit to weekly inspections performed by peers in the industry.
- B. The builder signs an affidavit to that effect.
- C. The builder submits a monthly progress report.
- D. The building department sends inspectors to inspect the work.
Answer: D
Explanation:
Once a building permit is issued, the local building department monitors the construction process through inspections at key stages (foundation, framing, electrical, plumbing, final).
The purpose of these inspections is to ensure that work complies with state and local building codes and safety standards.
Maryland's pre-licensing course explains that certified building inspectors-not peers or the builder-conduct these inspections.
Only after passing all required inspections will the department issue a certificate of occupancy (CO) confirming code compliance and permitting lawful use of the structure.
Reference:
Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course - "Land Use Controls and Property Development" Module Maryland Building Performance Standards (COMAR Title 09, Subtitle 12, Chapter 51).
NEW QUESTION # 118
Which of the following financing types involves the sale of personal property with the real property?
- A. Package
- B. Wrap-around
- C. Blanket
- D. Security
Answer: A
Explanation:
A package loan (package mortgage) finances both real property and personal property (chattels) together in a single loan-common with new homes that include appliances or furnishings. A blanket loan covers multiple parcels; a wrap-around is junior financing that "wraps" an existing loan; "security" is not a loan type but a general concept.
References: Maryland pre-licensing topic Real Estate Financing (types of mortgages: package, blanket, purchase-money, wrap-around; treatment of personal property in financing).
NEW QUESTION # 119
A statement such as "This is a dream home with the best views in town" made by a licensee is an example of what?
- A. A lie
- B. Intentional misrepresentation
- C. Positive misrepresentation
- D. Puffery
Answer: D
Explanation:
Puffery refers to subjective statements of opinion or sales talk that a reasonable person would not take as a factual representation.
Phrases like "best views," "dream home," or "finest neighborhood" are considered puffing, not misrepresentation.
Maryland's pre-licensing course distinguishes puffery (legally permissible) from misrepresentation, which involves false statements of material fact that can lead to disciplinary action or liability.
Reference (Maryland Source):
- Maryland 60-Hour Principles and Practices Course, Ethical Conduct and Misrepresentation section.
- Maryland Business Occupations and Professions Article 17-322 (Grounds for Disciplinary Action).
NEW QUESTION # 120
________ can be defined as everything that's not real property.
- A. Land property
- B. Private property
- C. Personal property
- D. Real estate
Answer: C
Explanation:
Comprehensive and Detailed Explanation From Exact Extract of Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course:
Personal property (also known as chattel) refers to movable items that are not permanently attached to the land or the improvements on it.
Examples include furniture, vehicles, and trade equipment. In contrast, real property includes land, improvements, and the legal rights associated with ownership.
The distinction between real and personal property is a core principle of real estate law covered early in the Maryland 60-Hour Course under "Real Property and the Law." Reference:
Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course - "Real Property and the Law" Module Common Law Property Definitions recognized by the Maryland Real Estate Commission.
NEW QUESTION # 121
The lender will require flood insurance if the home is ________.
- A. New construction
- B. Located in a valley
- C. Located in a flood plain
- D. More than 100 years old
Answer: C
Explanation:
Comprehensive and Detailed
Lenders that make federally related loans must require flood insurance if the property is located in a Special Flood Hazard Area (SFHA), as designated by the Federal Emergency Management Agency (FEMA).
Flood insurance protects the lender's collateral and the borrower's investment.
The Maryland pre-licensing course covers flood hazards in the "Environmental Issues and Disclosures" unit.
Reference:
Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course - "Environmental Issues and Disclosures" Module National Flood Insurance Act of 1968 (42 U.S.C. §4001 et seq.) - FEMA Floodplain Management.
NEW QUESTION # 122
Jorge is a dual agent in a single-license dual agency situation. He owes his clients all of the following fiduciary duties EXCEPT.
- A. honesty
- B. undivided loyalty
- C. reasonable skill and care
- D. disclosure
Answer: B
Explanation:
In dual agency (and Maryland's intra-company/dual agency framework), an agent cannot provide undivided loyalty to both clients in the same transaction. Maryland requires written, informed consent and limits the fiduciary duty of loyalty because representing opposing interests precludes undivided advocacy.
The agent still owes honesty, disclosure of material facts, reasonable skill and care, and confidentiality (within statutory limits), but undivided loyalty is expressly curtailed in dual agency.
References: Maryland 60-Hour Course: "Maryland Agency Law" (dual agency and designated/intra- company agency; required consents; modified duties); Business Occupations and Professions Article, Title 17 (agency disclosures and limitations).
NEW QUESTION # 123
What type of violation are you committing when you fail to include a material fact or make false or misleading advertising statements?
- A. Improper delivery of instruments
- B. Conflict of interest
- C. Misrepresentation
- D. Improper brokerage commission
Answer: C
Explanation:
Misrepresentation occurs when a licensee omits or falsifies a material fact or makes false, deceptive, or misleading statements in advertising or communications. In Maryland, misrepresentation is a violation under17-322(a)(1) and COMAR 09.11.02.01 (Advertising). A material fact is any information that could influence a consumer's decision in a real-estate transaction. Intentional misrepresentation may also lead to civil liability for fraud.
Reference:Maryland 60-Hour Principles and Practices Course - "Agency and Advertising Ethics" Section; Maryland Business Occupations and Professions 17-322(a)(1); COMAR 09.11.02.01.
NEW QUESTION # 124
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