131. The owner of a hardware store who owned the real property on which is was located, sold the real property and leased it back for income tax purposes. The seller may:

A. Continue to depreciate the building

B. Deduct 100% of future rents

C. Keep the fee simple title of the property

D. Do all of the above

Answer: B. Deduct 100% of future rents

132. Which of the following is considered real property?

A. Land and building

B. Underground water

C. Easements

D. All of the above

Answer: D. All of the above

133. If a principal no longer desires the broker to act on his behalf during an Exclusive Right To Sell listing, the principal may:

A. Revoke the agency created by the listing contract but may be liable for damages

B. Revoke the listing and would not be liable for any possible damages

C. Not revoke the agency

D. Revoke the listing but may be forced to sell

Answer: A. Revoke the agency created by the listing contract but may be liable for damages

134. When deciding whether to make a home loan, a lender will usually consider which of the following to be the most important factor?

A. The availability of mortgage funds

B. The degree of risk

C. The general economic outlook

D. Federal and state laws

Answer: B. The degree of risk

135. For federal income tax purposes, the basis of real property acquired by a purchaser is the property’s:

A. Cost

B. Fair market value

C. Basis to the seller plus the seller’s profit

D. Market value minus any outstanding loan balance

Answer: A. Cost

136. A person who holds fee title to real estate in severalty would probably have:

A. A defeasible estate

B. A tenancy in common

C. A life estate

D. Sole ownership

Answer: D. Sole ownership

137. When the real estate market changes from a buyer’s market to a seller’s market, which of the following is naturally expected?

A. Prices will drop

B. Construction will decline

C. Prices will not be affected

D. Prices will rise because of the increased demand and lagging supply

Answer: D. Prices will rise because of the increased demand and lagging supply

138. What is NOT included in a standard title insurance policy?

A. Forgery

B. Capacity of parties

C. Easements that are not recorded

D. None of the above

Answer: C. Easements that are not recorded

139. When depreciation is taken on real property:

A. The property has no salvage value

B. The basis is reduced

C. The value increases

D. None of the above

Answer: B. The basis is reduced

140. A seller sold land which had a recorded easement appurtenant. The deed made no reference to the easement. The buyer:

A. Has received clouded title

B. Takes title to the property but it is now landlocked

C. Loses the easement to the servient tenement

D. Has the same right to the easement as the seller had

Answer: D. Has the same right to the easement as the seller had