Question 1

A home warranty for a previously owned home would usually cover which of the following items?

Accepted Answer

C

Explanation: A home warranty is a residential service contract, not an insurance policy. It provides for the repair or replacement of a home's major systems and appliances that fail due to normal wear and tear during the contract term. Standard coverage typically includes items like the heating and air conditioning (HVAC) systems, plumbing, electrical systems, water heater, and major kitchen appliances such as the oven, dishwasher, and garbage disposal. This type of warranty is particularly common in transactions involving previously owned homes to provide the buyer with peace of mind against unexpected repair costs after closing.

Question 2

A buyer is considering a property in one of the subdivisions of a Planned Unit Development (PUD).
The buyer noticed nearby properties having detached garages and workshops. The buyer mentions
to their agent that they want to build a detached building on the back of the lot for a home business.
There is an HOA for this subdivision. Additionally, there are overarching covenants, conditions, and
restrictions (CC&Rs) for the PUD. What actions, if any, should be taken by the broker to assure the
buyer can use the property as they wish?

Accepted Answer

D

Explanation: The broker's fiduciary duty includes exercising reasonable care and skill, which involves advising the buyer to conduct thorough due diligence. In a Planned Unit Development (PUD) with a Homeowners Association (HOA), the Covenants, Conditions, and Restrictions (CC&Rs) and HOA governing documents are the legally binding sources that dictate property use. These documents will contain the definitive rules on new construction, architectural standards, permissible uses (such as home businesses), and any restrictions on detached structures. Recommending the buyer obtain and review all current documents is the most comprehensive and prudent action to ensure their intended use is permissible before proceeding with the purchase.

Question 3

Which of the following assurances is provided to home buyers who purchase a $75,000 property with an FHA-insured mortgage?

Accepted Answer

D

Explanation: The Federal Housing Administration (FHA) insures loans made by private lenders; it does not lend money directly. To protect its insurance fund and the lender, the FHA requires that any property securing an FHA-insured loan undergo a thorough appraisal by an FHA-approved appraiser. This appraisal establishes the property's market value and ensures it meets the FHA's Minimum Property Standards for health and safety. This mandatory appraisal provides an assurance to the buyer and lender that the property's value supports the loan amount, which is a fundamental component of the FHA loan process.

Question 4

Based on the common law of agency, which of the following would always be an agent's duty?

Accepted Answer

D

Explanation: The common law of agency establishes a set of fiduciary duties that an agent owes to a principal. The duty of loyalty is the cornerstone of this relationship. It requires the agent to place the interests of the principal above all others, including the agent's own self-interest. This is a fundamental, unwavering obligation that exists in every agency relationship, regardless of the specific tasks assigned. The other options describe actions that are either conditional upon the principal's instruction, a violation of other fiduciary duties, or constitute the unauthorized practice of law.

Question 5

Multi-ethnic families were beginning to move into a neighborhood that had previously been all one
ethnicity. A local broker passed out flyers to homeowners that said, "Sell now before it's too late! We
have beautiful new homes with attractive financing and good schools." These flyers would likely be
viewed by the courts as

Accepted Answer

B

Explanation: This action is a clear example of blockbusting, also known as panic peddling. The broker is attempting to induce homeowners to sell by making representations about the changing ethnic composition of the neighborhood. The phrase "Sell now before it's too late!" is a fear-based tactic implying that the arrival of multi-ethnic families will negatively impact property values or the quality of life. This practice is illegal under both the federal Fair Housing Act of 1968 and Massachusetts General Law Chapter 151B, as it exploits racial and ethnic prejudice for commercial gain.

Question 6

Which of the following is true about mortgage assumptions?

Accepted Answer

B

Explanation: When a buyer assumes a seller's mortgage, the buyer becomes primarily liable for the debt. However, the seller (the original mortgagor) is not automatically released from their obligation. The seller remains secondarily liable as a surety for the loan. For the seller to be fully released from liability, the lender must agree to a "novation," which is a new contract substituting the buyer for the seller. Since the lender's release is not guaranteed, the seller may or may not be released from liability depending on the terms of the assumption and the lender's agreement.

Question 7

The need to protect the public's health and safety against poor construction practices has resulted in the enactment of

Accepted Answer

C

Explanation: Building codes are sets of state and local laws that establish minimum acceptable standards for construction methods and materials. The primary purpose of these codes is to protect the public's health, safety, and general welfare by regulating the structural integrity, fire resistance, sanitation, electrical systems, and other safety-critical aspects of buildings. They are the direct legal mechanism enacted by governments to prevent hazardous conditions resulting from poor construction practices.

Question 8

A buyer and a seller have a purchase agreement that contains a home inspection contingency. The
buyer has applied for a VA mortgage. After the home inspection is completed, the buyer writes an
addendum requesting that the seller pay to repair several items found by the home inspector. The
seller counters the addendum by requiring that the buyer agree that the repairs will be made, but
that no further expenses will be incurred by the seller. The VA appraisal inspection has not been
conducted. Under these circumstances, which of the following is correct?

Accepted Answer

B

Explanation: The seller's counteroffer to the buyer's addendum constitutes a rejection of that specific addendum, not the original, executed purchase agreement. The original contract remains valid and in effect while the parties negotiate the terms of the home inspection contingency. The negotiation over repairs is a process to satisfy a condition within the existing contract. Until the contract is terminated by either party according to the terms of that contingency (e.g., the deadline for resolution passes) or by mutual agreement, it remains a binding agreement.

Question 9

A ranch house with a double garage is being valued. The house next door, which is similar except that
it lacks a garage and has an outside deck, was sold last month for $138,000. Experience in that area
shows that a two-car garage is probably worth $10,000 to buyers, while in general, they will pay only
$500 extra for a deck. The ranch house is most likely to sell for around

Accepted Answer

C

Explanation: This valuation uses the Sales Comparison Approach. The process begins with the sale price of the comparable property ($138,000) and adjusts it for differences with the subject property. The subject property is superior because it has a two-car garage, which the comparable lacks; therefore, the value of the garage ($10,000) is added. The comparable property is superior because it has a deck, which the subject property lacks; therefore, the value of the deck ($500) is subtracted. The calculation is: $138,000 (Comparable Price) + $10,000 (Garage) - $500 (Deck) = $147,500.

Question 10

Prospective buyers for a house want to operate a recycling center in their backyard. Local zoning laws do not allow this. What do they need to do first?

Accepted Answer

C

Explanation: When a proposed property use is not permitted by local zoning ordinances, the first step is to seek administrative relief from the local zoning authority. This is done by applying for a variance or a special exception (also known as a special permit or conditional use permit). A variance is a request to deviate from the zoning law due to a unique hardship imposed by the regulations on that specific property. A special exception is for a use that is conditionally allowed within the zone if specific criteria are met. This administrative process must be pursued before any legal action or construction can commence.

Question 11

A motel is the subject of an appraisal and it is determined that a rerouting of a county highway has limited customer access to the motel. This is an example of

Accepted Answer

A

Explanation: The loss in value to the motel is caused by the rerouting of a county highway, a factor that is external to the property itself and beyond the owner's control. This type of depreciation is known as economic obsolescence (also called external obsolescence). It arises from negative influences outside the property lines, such as changes in public infrastructure, adverse zoning, or neighborhood decline. Since the owner cannot fix the highway's route, this form of obsolescence is considered incurable.

Question 12

The broker has a single agency relationship with the seller. The broker will show the property to a buyer who is a customer. The broker must disclose that the

Accepted Answer

C

Explanation: Under Massachusetts law, a real estate broker, regardless of their agency relationship, owes a duty of honesty and fair dealing to all parties in a transaction. This includes the affirmative duty to disclose any known material defects of the property to a prospective buyer (customer). A leaky roof is a classic example of a material defect, as it significantly impacts the property's value and a buyer's decision to purchase. Failure to disclose such a known fact would be a violation of the Massachusetts Consumer Protection Act (MGL c. 93A).

Question 13

Which of the following is true of a quitclaim deed?

Accepted Answer

C

Explanation: A quitclaim deed is a legal instrument used to transfer interest in real property. Unlike warranty deeds, it offers no covenants or warranties about the quality of the title. The grantor simply transfers whatever interest they may have—if any—to the grantee. Because of this, its most common and appropriate use is to cure a "cloud on the title," which is any claim or potential encumbrance that makes the title's validity uncertain. By having the party with the potential claim sign a quitclaim deed, they release their interest, thus clearing the title.

Question 14

An owner signed a contract to sell an apartment building. Just before closing, the owner informed the buyers that the owner would NOT sell the property. A lawsuit filed by the buyers would be for

Accepted Answer

A

Explanation: The lawsuit would be for specific performance. This is an equitable remedy in contract law where a court orders a party to perform the specific obligations outlined in a contract. Because every parcel of real estate is considered unique, monetary damages are generally not an adequate remedy for a buyer when a seller breaches a purchase and sale agreement. Therefore, the buyer can sue to compel the seller to go through with the sale and transfer title to the property as originally agreed.

Question 15

To be legally binding, a listing agreement can be signed for the owner by the

Accepted Answer

D

Explanation: An attorney-in-fact is an agent who has been granted legal authority to act on behalf of another person (the principal) through a written document called a power of attorney. If this document specifically grants the power to engage in real estate transactions, the attorney-in-fact can legally sign a listing agreement for the owner. This signature creates a legally binding contract, as the attorney-in-fact is acting within the scope of their designated authority. This is a common and legally recognized practice for property owners who are unable to handle their affairs directly.

Free Massachusetts Actual Estate Salesperson Actual Exam Questions