Idaho Real Estate Broker Exam — All Questions

A management agreement pays the firm 7% of rents actually collected. Scheduled rent for the month is $60,000, vacant units account for $2,400, and one tenant owing $1,200 never paid. What is the fee?

• a.$4,200
• b.$4,116
• c.$4,032
• d.$3,948✓

Collected rent is what the fee attaches to, so start there: $60,000 scheduled less $2,400 vacancy less $1,200 uncollected equals $56,400 actually collected. Then 0.07 x $56,400 = $3,948. Check: 7% of $56,000 would be $3,920, so a figure just under $4,000 is reasonable. The $4,200 answer bills 7% of the full scheduled rent, $4,032 forgets the delinquency, and $4,116 forgets the vacancy. Tying the fee to collected rent, rather than to scheduled rent, a flat monthly fee, or a per-unit fee, is what aligns the manager's pay with keeping units filled and rent actually coming in.

An owner's management agreement caps unbudgeted repairs at $2,500 without written approval. The on-site manager signs a $40,000 roof replacement contract without asking the owner. What best describes this?

• a.The owner is bound because a manager has unlimited spending authority
• b.The manager exceeded the authority the management agreement granted✓
• c.The contract is void because only an owner may sign for repairs
• d.The manager acted properly because roof work is ordinary upkeep

A property manager's authority is broad but not unlimited: it is defined by the management agreement, and a spending cap is exactly the kind of limit that binds the manager. Signing a $40,000 contract without approval exceeds that authority and exposes the manager and the supervising broker to the owner for the loss. The contract is not void, since a contractor who reasonably believed the manager had authority may still be able to enforce it against the owner, leaving the owner to look to the manager. A roof replacement is a capital item, not routine upkeep, and nothing about the manager's role grants unlimited spending power.

A manager could raise rents 12% at renewal but expects several long-term, reliable tenants to move out. Which reasoning best reflects a property manager's objectives?

• a.Never raise rent, because tenant goodwill outweighs the owner's income
• b.Always charge the maximum rent the market will bear at renewal
• c.Weigh the added income against turnover cost and the owner's long-term return✓
• d.Let the on-site staff decide, since they know the tenants best

A manager serves three objectives at once: producing the owner's desired return, preserving and enhancing the value of the investment, and keeping tenants satisfied enough to stay. Those goals pull against each other here. A 12% increase looks like more income until you subtract the make-ready cost, marketing, and weeks of lost rent from each unit that turns over; effective rent, which is what the owner actually collects after concessions and vacancy, can fall even as the asking rent rises. Charging the maximum without regard to turnover ignores the owner's return, refusing to ever raise rent ignores it too, and delegating the decision to on-site staff abandons the manager's own duty.

A manager is preparing next year's budget for a 40-unit building whose roof will need full replacement in roughly six years. Where does that cost belong?

• a.In the operating budget, spread evenly across monthly repairs
• b.In a capital reserve budget funded over the roof's remaining life✓
• c.Nowhere, since replacements are paid from rent when they occur
• d.In this year's variable operating expenses as a lump sum

Long-lived components such as roofs, boilers, elevators, and paving are funded through a capital reserve budget, which sets aside money each year so the replacement can be paid for when it comes due. The operating budget covers the recurring income and expenses of running the property this year: utilities, routine repairs, insurance, payroll, and the management fee. Burying a future roof in monthly repairs or in one year's variable expenses distorts both the budget and net operating income. Waiting to pay out of cash flow is how deferred maintenance starts. A reserve study, which estimates each component's remaining life and replacement cost, is the tool that sets the annual funding amount.

A firm's written rental policy automatically rejects any applicant who has any criminal record of any kind. Why does this policy create fair housing exposure?

• a.Criminal history is itself a protected class under federal law
• b.Federal law forbids any consideration of an applicant's record
• c.Applicants may lawfully be screened only on their credit score
• d.A blanket ban can have a disparate impact on protected classes✓

Criminal history is not a protected class, and housing providers may consider it. The problem is discriminatory effect: a policy that is neutral on its face can still violate the Fair Housing Act if it disproportionately excludes members of protected classes and does not serve a substantial, legitimate interest that could be met by a less discriminatory approach. A blanket lifetime ban, especially one counting arrests that never led to conviction, is the classic example. The defensible practice is an individualized assessment of the nature, severity, and recency of the conduct. Federal law does allow exclusion based on conviction for the manufacture or distribution of controlled substances, and screening is not limited to credit scores.

A tenant with a disability in a privately owned building that receives no federal housing assistance asks the manager to waive the no-pets rule for her assistance animal and to have grab bars installed in the bathroom. Which statement is correct?

• a.Both are modifications the landlord must install and pay for itself
• b.Both may be refused because the no-pets rule applies to all tenants equally
• c.The animal is a reasonable accommodation and the grab bars a reasonable modification✓
• d.The animal requires a pet deposit and the grab bars require landlord funding

A reasonable accommodation is a change in rules, policies, or services, such as waiving a no-pets rule; a reasonable modification is a physical change to the premises, such as grab bars. In private, unassisted housing the landlord bears the administrative cost of the accommodation, while the tenant generally pays for the modification and may be required to restore the unit where that is reasonable; where the provider receives federal financial assistance, Section 504 shifts the cost of structural modifications to the provider. An assistance animal is not a pet, so no pet deposit, pet rent, or pet fee may be charged, though the tenant remains responsible for actual damage the animal causes. Refusing both because the rule is applied uniformly is precisely the reasoning fair housing law rejects.

An owner considering the federal Housing Choice Voucher program asks the managing broker how it works. Which statement about that program is accurate?

• a.The federal government dictates the rent the owner must accept
• b.A housing agency pays part of the rent and the unit must pass inspection✓
• c.Federal law requires every private landlord to accept voucher holders
• d.The voucher goes to the tenant, who then owes the owner nothing

Under the Housing Choice Voucher program, a local public housing agency administering federal funds pays a housing assistance payment directly to the owner under a contract, and the tenant pays the balance out of pocket; the unit must pass a housing quality inspection and the rent must be reasonable compared with similar unassisted units. The agency reviews rent reasonableness rather than dictating a price the owner must take, and in the ordinary case the tenant pays a share out of pocket, generally about 30% of adjusted monthly income, though a family with almost no income can owe close to nothing. Federal fair housing law does not make source of income a protected class, so participation is voluntary as a matter of federal law, although some state and local laws do require owners to consider voucher holders.

A single-tenant industrial building is leased so the tenant pays a base rent plus the real estate taxes, the building insurance, and all maintenance on the property. This is a:

• a.A modified gross lease
• b.A gross lease
• c.A triple net lease✓
• d.An index escalation lease

Net leases are named for how many expense categories shift to the tenant: single net adds the taxes, double net adds taxes and insurance, and triple net adds taxes, insurance, and maintenance on top of base rent, which is the arrangement described. In a gross lease the landlord pays the operating expenses out of one flat rent. A modified gross lease splits them, commonly with the tenant paying increases above a base year or an expense stop. An index lease adjusts the rent by a published measure such as a consumer price index, while a graduated lease steps the rent up on a schedule fixed in advance.

A shopping center tenant receives a year-end statement billing its proportionate share of parking lot upkeep, exterior lighting, landscaping, and snow removal. This charge is:

• a.A tenant improvement allowance
• b.Percentage rent on the gross sales
• c.A common area maintenance (CAM) charge✓
• d.A ground rent escalation charge

Common area maintenance charges pass through the cost of operating the areas all tenants share, usually allocated by each tenant's share of leasable square footage, billed in monthly estimates and trued up in a year-end reconciliation. A tenant improvement allowance is the opposite direction of money: a landlord contribution toward building out the tenant's own space, negotiated when the lease is signed. Percentage rent is calculated on the tenant's sales, not on center expenses. Ground rent is what a tenant pays for leased land under a ground lease. A manager must be able to show what went into the pool and defend the allocation method when a tenant audits the bill.

A tenant holding a long-term lease at below-market rent subleases the space to another business at a higher rent, keeping the spread and reserving the final month of the term. The tenant now holds:

• a.A ground lease of the land
• b.A sandwich lease position✓
• c.A novation of the lease
• d.An assignment of the lease

When a tenant subleases and keeps an interest, that tenant's position sits between the original landlord above and the subtenant below, which is why it is called a sandwich lease. The sublessor keeps paying the landlord under the original lease and collects from the subtenant, profiting on the spread and staying fully liable upward. It is not an assignment, because the tenant did not transfer the entire remaining term and instead reserved the last month. Nothing here is a novation, which would require the landlord to release the original tenant and substitute a new one. A ground lease is a lease of the land itself, usually long term.

A commercial tenant assigns the entire remaining lease term to a new company and the landlord consents in writing, but signs no release. Who is liable when the new company stops paying rent?

• a.Only the assignee, since an assignment ends the tenant's duties
• b.The assignee, with the original tenant still secondarily liable✓
• c.Only the landlord's insurer, under the lease liability clause
• d.Neither one, because the landlord's consent discharged the lease

An assignment transfers the tenant's entire remaining interest, so the assignee becomes primarily liable to the landlord for the rent. The original tenant, however, made contractual promises in the lease and stays secondarily liable on them unless the landlord grants an express release or the parties execute a novation. Consenting to an assignment is not the same as releasing the assignor, which is the trap in this question. In a sublease the arrangement differs again: the subtenant owes the sublessor, and the original tenant remains fully liable to the landlord. No liability insurer pays a tenant's unpaid rent. Brokers negotiating assignments should get any release in writing.

An investor sells an apartment building in the middle of the tenants' one-year written leases. What happens to those leases when the deed is delivered at closing?

• a.They continue; the buyer takes title subject to them✓
• b.They terminate automatically once the deed is delivered
• c.They convert to month-to-month tenancies at the buyer's option
• d.They end unless every tenant signs a new lease at closing

A lease creates an interest in the property, so a sale does not end it. The buyer takes title subject to the existing leases, steps into the landlord's position, and must honor the terms, which is why buyers review the rent roll and collect estoppel certificates before closing and why the parties must follow the state's rule for transferring the tenants' security deposits to the new owner. Delivery of the deed changes the landlord, not the tenancy, and a buyer cannot unilaterally convert leases to month-to-month or force tenants to re-sign. The lease itself remains valid so long as it had competent parties, an adequate description of the premises, a term, rent, and a lawful purpose.

A manager ignores repeated written reports that the building's only heating system has failed. After weeks without heat in winter, the tenant moves out and stops paying rent. The tenant is claiming:

• a.Actual eviction, which always requires a court order
• b.Breach of quiet enjoyment, which requires staying in possession
• c.Constructive eviction, which can end the rent obligation✓
• d.Abandonment, which forfeits the tenant's security deposit

Constructive eviction arises when the landlord's act or failure to act makes the premises unusable for their intended purpose. The tenant must generally give notice, allow a reasonable chance to cure, and then actually vacate within a reasonable time; having done so, the tenant may treat the lease as ended and stop paying, and may pursue damages. Actual eviction is a physical ouster or removal through the lawful court process, which is not what happened. The covenant of quiet enjoyment is the promise that was breached, but a tenant who stays in possession has not established constructive eviction. Abandonment means leaving without legal cause, and this tenant had cause.

A retail tenant argues that the implied warranty of habitability obligates the landlord to replace the store's outdated ventilation system. How should the manager evaluate that argument?

• a.The warranty applies equally to every kind of leased property
• b.The warranty is mainly residential, so the lease governs here✓
• c.The warranty makes a commercial landlord responsible for all repairs
• d.The warranty requires the tenant to withhold rent before repairs

The implied warranty of habitability requires a residential landlord to deliver and maintain a dwelling fit to live in, covering essentials such as heat, running water, working plumbing, and structural safety, and in most states it cannot be waived. Courts generally do not imply it in commercial leases, where the parties are presumed capable of negotiating; a commercial tenant's rights come from the express repair, services, and maintenance clauses it bargained for. So the warranty does not reach every leased property, does not make a commercial landlord answer for every repair, and does not set up rent withholding as a prerequisite, since withholding and abatement remedies are creatures of state law.

A residential tenant is two months behind in rent. The on-site manager changes the locks and has the electricity shut off to push the tenant out. This action is:

• a.Proper, since the tenant breached the lease agreement first
• b.Proper if the lease authorizes a lockout for nonpayment
• c.Unlawful self-help rather than lawful court process✓
• d.Improper only if the tenant later pays the full balance

Changing locks, cutting utilities, removing doors, or setting a tenant's belongings on the curb are self-help evictions, and they are unlawful, exposing the owner, the manager, and the supervising broker to damages and license discipline. The lawful path is a proper notice, then a summary possession or unlawful detainer action, a judgment for possession, and a writ executed by a law enforcement officer; the notice forms and time periods are set by each state. A lease clause cannot authorize what the law forbids, the tenant's own breach creates no right of self-help, and the tenant paying later does not make the lockout retroactively lawful.

An owner short on cash instructs the managing broker to wire all of the tenants' security deposits to the owner's personal bank account. How should the broker respond?

• a.Refuse; deposits are trust funds held for the tenants✓
• b.Comply, since the owner owns the building and its money
• c.Comply if the owner signs a written indemnity agreement
• d.Send only the amount of each deposit above one month's rent

Security deposits are money belonging to others, held in trust; they are neither the owner's working capital nor the broker's. Releasing them on the owner's demand would be conversion of trust funds, and an indemnity agreement cannot authorize it, because the broker's duty runs to the parties beneficially entitled to the money and to the state's trust-fund rules, not to the owner's promise to make the broker whole. Sending part of each deposit is the same violation in smaller pieces. How much may be collected, whether interest accrues, where the funds sit, and when deductions and refunds must occur are all set by state law, which the broker follows rather than the client's instruction.

Roof flashing, exterior painting, and parking lot patching at an apartment complex have been postponed for several years to increase reported cash flow. An appraiser will treat this as:

• a.Deferred maintenance, a form of physical deterioration✓
• b.Routine maintenance funded in the annual operating budget
• c.Preventive maintenance that lowers future operating cost
• d.Corrective maintenance already covered by the capital reserves

Work that is needed and postponed is deferred maintenance, which appraisers treat as physical deterioration and deduct from value, frequently by more than the bare cost to cure because buyers discount for what else may have been neglected. Preventive maintenance is scheduled servicing and inspection intended to stop failures before they happen. Routine maintenance is the recurring day-to-day upkeep, such as cleaning, landscaping, and minor repairs, budgeted every year. Corrective maintenance is the actual repair performed after something breaks, and nothing here has been repaired or funded. Starving maintenance to raise short-term net operating income erodes both the owner's investment and the property's competitive position.

Rather than repair or insure an aging diving board at a managed apartment property, the manager has it removed entirely so the exposure no longer exists. This response to risk is:

• a.Risk control
• b.Risk transfer
• c.Risk avoidance✓
• d.Risk retention

Avoidance eliminates the activity or feature that creates the exposure, which is exactly what removing the board accomplishes. Control, sometimes called reduction, keeps the activity but lowers the frequency or severity of loss through measures such as fencing the pool, posting depth markers, improving lighting, and enforcing hours. Transfer shifts the financial consequence to another party, chiefly through insurance or an indemnity clause in a lease or vendor contract. Retention is the deliberate decision to absorb a loss, through deductibles, self-insurance, or a funded reserve. A competent manager uses all four, and the exam tests whether you can name which one a described action represents.

A covered fire leaves an owner's office building untenantable for eight months. Rent stops coming in while the mortgage and taxes continue. Which coverage responds to the lost rental income?

• a.General liability coverage
• b.Fire legal liability coverage
• c.Business interruption coverage✓
• d.Workers compensation coverage

Business interruption coverage, often written as rent loss for investment property, replaces the income the building would have produced while it cannot be occupied after a covered peril, which is why lenders and experienced owners insist on it. Property or hazard insurance pays to repair the physical damage but not for the stream of rent that stopped. General liability responds to bodily injury and property damage claims brought by others on the premises. Workers compensation covers job injuries to on-site employees. Fire legal liability covers a tenant's liability for fire damage to the space it rents. Managers also require tenants to carry renters insurance, since the owner's policy covers neither tenants' belongings nor tenants' liability.

A firm manages a multi-tenant office building whose lobby, corridors, and restrooms are open to the public. Which statement best describes the ADA obligations for those existing areas?

• a.The building is exempt because it predates the ADA entirely
• b.Compliance is triggered only when the city issues a permit
• c.Barriers must be removed where removal is readily achievable✓
• d.A lease clause assigning ADA duties to tenants ends liability

Title III of the Americans with Disabilities Act covers public accommodations and commercial facilities, and in existing buildings it requires removal of architectural barriers where that is readily achievable, meaning able to be carried out without much difficulty or expense; alterations and new construction must meet the accessibility standards outright. Being built before the ADA is not an exemption, and no permit application triggers or postpones the duty. Landlords and tenants may allocate the work between themselves by lease, but that private allocation does not extinguish either one's liability to the public. A prudent manager keeps a written barrier-removal plan and documents what has been completed each year.

A brokerage manages 60 buildings for different owners, with on-site managers collecting the rent. Which practice best satisfies the broker's supervision and trust-fund duties?

• a.Letting each on-site manager hold receipts in a personal account
• b.Reconciling the trust account and keeping a ledger per owner✓
• c.Combining the owners' funds with the firm's operating account
• d.Relying on each owner's accountant to audit the deposits yearly

The broker must reconcile the property-management trust account on the schedule state law requires, comparing the bank balance to the book balance and to the total of the individual owner ledgers, and must maintain a separate ledger showing every receipt and disbursement for each owner. Unlicensed on-site staff who handle money must be trained, supervised, and often bonded, with every dollar routed into the firm's trust account rather than into personal or building accounts. Merging owner funds into the operating account is commingling. An owner's own accountant does not discharge the broker's recordkeeping and supervision duty, and failure to supervise is a common independent ground for broker discipline.

A licensee is deciding whether a particular fact about a listed property has to be disclosed to buyers. Which test best identifies a material fact?

• a.Any fact the seller personally finds embarrassing to reveal
• b.Only a fact that appears on the state's disclosure form
• c.A fact a reasonable buyer would consider important to the decision✓
• d.Only a defect a licensed inspector has already confirmed

A fact is material when a reasonable person would attach importance to it in deciding whether to buy or what to pay, usually because it affects the property's value, its desirability, or the buyer's intended use. Latent defects, hidden problems an ordinary inspection would not reveal, are the classic example, while patent defects are visible but still may never be misrepresented or papered over. The seller's discomfort does not define materiality. The state form sets a floor, not a ceiling, so known material facts it does not ask about still require disclosure. And a fact does not become immaterial merely because no inspector has verified it yet.

A lender selling a foreclosed house and a trustee selling a home neither has ever occupied both ask the broker whether they must complete the state's seller disclosure form. The broker should explain:

• a.The exemption is complete, so neither the seller nor the licensee owes disclosure
• b.The form may be excused, but known material facts must still be disclosed✓
• c.Every seller must complete the form, because these statutes admit no exceptions
• d.The exemption shifts the duty to complete the form onto the listing brokerage

Most states with a seller property disclosure statute exempt certain transfers from the form itself, commonly sales by a fiduciary such as an executor, personal representative, or trustee, and transfers by a lender after foreclosure, on the theory that the seller has no personal knowledge of the property. Which sellers qualify differs by state and must be checked against the local statute, so no single rule fits every jurisdiction. The exemption excuses paperwork, not honesty: a seller who actually knows a material fact may not conceal it, and the licensee's own duty to disclose known material facts to a buyer is unaffected. The obligation is never transferred to the brokerage by the exemption.

A seller lists a home strictly 'as is' and will make no repairs. The seller knows the foundation leaks actively, and the evidence is hidden behind finished basement walls. Does the clause protect the seller?

• a.No; known material defects must be disclosed✓
• b.Yes; an as-is clause waives every disclosure duty
• c.Yes, if the buyer had an opportunity to inspect
• d.Yes, provided the clause is printed in bold type

An 'as is' clause tells the buyer that the seller will not repair anything and that the property is taken in its present condition. It does not waive the duty to disclose known material defects, and it never excuses active concealment or an affirmative false statement. Giving the buyer an inspection opportunity does not shift the burden for a defect deliberately hidden behind finished walls, since the point of concealment is that inspection will not find it, and formatting the clause in bold cures nothing. Used honestly alongside full disclosure, 'as is' is a legitimate way to set expectations; used to bury a known hidden problem, it invites rescission and damages.

Two weeks after a home goes under contract, a heavy storm reveals a serious roof leak that neither the seller nor the agent previously knew about. What does the disclosure duty require?

• a.The newly discovered material fact must be disclosed to the buyer promptly✓
• b.The seller may simply address the leak at the final walk-through
• c.Nothing further, since disclosure closed when the contract was signed
• d.The contract must be canceled and the property relisted from scratch

The obligation to disclose material facts continues until closing, so a defect that appears or is discovered after the contract is signed must go to the buyer promptly and in writing, together with any updated disclosure statement the state requires. The buyer can then decide whether to proceed, renegotiate, ask for a repair, or use a contract right to cancel. Saving the news for the walk-through takes that choice away and is a frequent source of post-closing claims against brokers. Nothing requires the parties to tear up the contract and relist; the agreement stays in force unless a contingency or the parties themselves end it.

An agent repeats the seller's statement that the room addition was fully permitted, without checking anything, and the county's records show no permit was ever issued. This conduct is best classified as:

• a.Puffing, an opinion only
• b.Intentional fraud, which requires proof of actual knowledge
• c.Negligent misrepresentation of a material fact✓
• d.Passive concealment of a defect the agent hid on purpose

Asserting a material fact carelessly, with no idea whether it is true, is negligent misrepresentation, and the agent can be liable without any bad intent because permit status was verifiable in public records the agent chose not to check. Fraud sets a higher bar: a knowing or reckless false statement, or deliberate concealment, made to induce reliance, which these facts do not establish. Passive concealment means staying silent about a known problem, not repeating someone else's claim. Permit status is a verifiable fact rather than sales opinion, so puffing does not apply. The safe practice is to attribute the statement to its source and direct the buyer to verify it independently.

A licensee lists a single-family home built in 1962 for sale. Under the federal lead-based paint rule, what must the seller provide before the buyer is obligated under the contract?

• a.A certified laboratory result showing the home's lead levels
• b.The EPA pamphlet, known hazards and records, and a chance to test✓
• c.A signed guarantee that the home contains no lead-based paint
• d.Written proof that all lead-based paint has been removed

For target housing built before 1978 the seller must give the buyer the EPA-approved lead hazard pamphlet, disclose any known lead-based paint and lead hazards, hand over any available records or reports, and include the Lead Warning Statement with signed acknowledgments in the contract. In a sale the buyer must also be given a 10-day period, unless both sides agree to a different period, to conduct an inspection or risk assessment. Nothing in the rule obliges the seller to test the property, to remove paint, or to certify the home lead-free; the rule delivers information and opportunity. The licensee must ensure compliance and retain the signed disclosure.

A management firm handling apartments in a 1958 building asks the broker how far the federal lead-based paint disclosure rule reaches. Which statement is correct?

• a.It governs sales only and never residential rentals
• b.It applies to all housing regardless of the year it was built
• c.It reaches leases as well as sales, with narrow exemptions✓
• d.It stops applying once the unit is repainted with modern paint

The rule covers both sales and leases of target housing, so a landlord owes tenants the same pamphlet, the disclosure of known lead-based paint and hazards, and any available records and reports. The exemptions are deliberately narrow: zero-bedroom units such as studios and dormitory rooms, short-term leases of 100 days or less that cannot be renewed or extended, and housing for the elderly or persons with disabilities where no child under six resides or is expected to reside. Painting over old paint neither removes the underlying lead nor the duty to disclose it, and housing built after 1978 falls outside the rule entirely, which is why the construction date is always the first question.

The owner of a 1965 duplex hires a contractor to sand and repaint the window trim throughout an occupied unit. Under the EPA Renovation, Repair and Painting rule, the contractor must be:

• a.Licensed by the state as a general home improvement contractor
• b.Insured for lead claims by a federally approved carrier
• c.Cleared in advance by the local health department
• d.Certified by EPA and using lead-safe work practices✓

The Renovation, Repair and Painting rule requires firms that disturb painted surfaces in pre-1978 housing and child-occupied facilities to hold certification from EPA or an authorized state program, to assign certified renovators, to follow lead-safe work practices such as containment and cleaning verification, and to deliver the 'Renovate Right' pamphlet to owners and occupants. A state contractor license, a lead liability policy, or a health department sign-off does not substitute for that certification. Very small jobs below the rule's square-footage thresholds, and owners doing work on their own homes, fall outside it, but a hired contractor sanding trim in an occupied rental does not.

A buyer asks the listing agent directly whether the house has a radon problem, and the agent has no information either way. What is the appropriate response?

• a.Test the basement personally and interpret the result
• b.Assure the buyer that radon is not present in this region
• c.Recommend a radon test by a qualified professional✓
• d.Explain that radon affects only homes served by a well

Radon is a colorless, odorless radioactive gas released as uranium breaks down naturally in soil and rock, entering through foundation cracks, sumps, and slab penetrations, and it is a recognized cause of lung cancer, with EPA recommending action at four picocuries per liter. It can occur in any construction type and any region, so regional reassurance is a guess the agent cannot support, and it has nothing to do with well water, though lead can leach into drinking water from older plumbing and solder, which is a separate test. Testing and interpreting results is the specialist's job. The licensee discloses what is known, recommends qualified testing, and refers out.

While previewing a listing, an agent sees dark staining and smells a musty odor in the basement, and notices an old fill pipe suggesting a buried heating oil tank. The agent should:

• a.Say nothing, since neither observation has been confirmed
• b.Arrange remediation and tank removal before any showings
• c.Describe the staining as harmless mildew in the listing
• d.Disclose both observations and refer the parties to specialists✓

A licensee is expected to recognize the signs of a possible environmental problem, disclose what was observed, and refer the parties to qualified professionals; the licensee is not qualified to identify mold, judge whether an underground storage tank has leaked, or reassure anyone that a condition is harmless. Calling the staining mildew in the listing is an affirmative misrepresentation. Ordering remediation and tank removal casts the agent as the contractor, creating liability for the work itself and for destroying evidence of the condition. Suspected asbestos is handled the same way: note it, leave it undisturbed, and let a qualified inspector decide whether it is friable and how to manage it.

A buyer is financing a home that sits inside a FEMA-designated special flood hazard area. What follows from that designation for this transaction?

• a.The lender must reduce the loan amount by the flood risk
• b.Flood damage is already covered by a homeowners policy
• c.A federally regulated lender requires flood insurance✓
• d.The seller must pay for a private flood mitigation study

A property mapped inside a special flood hazard area triggers a flood insurance requirement on loans made, guaranteed, or regulated by the federal government, with coverage available through the National Flood Insurance Program or private carriers. Standard homeowners policies exclude flood, which regularly surprises buyers who assume otherwise. The designation neither shrinks the loan amount nor obliges the seller to fund a study. A broker should disclose known flood-zone status and any history of flooding on the property and tell the buyer to verify the current map, and should also flag that mapped wetlands can separately restrict building through federal permitting even where flooding is not the issue.

A client buys a small industrial parcel and later learns that solvents used by an operator decades earlier contaminated the soil. Under CERCLA, what is this buyer's exposure?

• a.Strict, joint and several liability as the current owner✓
• b.Limited to the cleanup share matching the years of ownership
• c.Capped at the price the buyer paid for the contaminated parcel
• d.None, because only the party that spilled the solvents pays

CERCLA, the federal Superfund law, imposes liability that is strict, meaning no fault need be shown; joint and several, meaning any one responsible party can be pursued for the entire cleanup; and retroactive, reaching conduct that occurred before the statute was enacted. Current owners are on the list of potentially responsible parties even though they spilled nothing, so liability is not confined to the original polluter, is not prorated across years owned, and is not capped at the purchase price. The innocent landowner defense, along with the bona fide prospective purchaser protection, can shield a buyer who made all appropriate inquiries into prior ownership and use before acquiring the site.

A commercial client under contract on a former dry cleaning site asks the broker what a Phase I environmental site assessment actually involves. The best answer is:

• a.Laboratory analysis of soil and groundwater samples
• b.Records, a site visit, and interviews, with no sampling✓
• c.A cleanup plan approved by the state environmental agency
• d.An appraisal adjustment reflecting the contamination found

A Phase I assessment is non-intrusive: a review of historical records and chain of title, regulatory database and map research, a walk-through of the site, and interviews with owners, occupants, and officials, all aimed at identifying recognized environmental conditions. It collects no samples. If it flags a concern, a Phase II follows and does take samples of soil, groundwater, or building materials for laboratory testing. A remediation plan comes later, if it is needed at all, and an appraisal adjustment is a valuation question rather than an assessment. Commercial buyers and their lenders order a Phase I both to price the risk and to establish the all appropriate inquiries that supports the innocent landowner defense.

A listing agent copies the square footage from the county tax record into the MLS. The figure overstates the house by 300 square feet, and after closing the buyer sues. What is the likely outcome?

• a.The agent is protected because a public record was the source
• b.The buyer is barred from suing once the sale has closed
• c.The agent may be liable for repeating an unverified figure✓
• d.The tax assessor bears sole responsibility for the error

Licensees have been held liable for passing along inaccurate measurements as though they were fact, because a buyer reasonably relies on the professional who published the number. Sourcing it to a tax record or an old listing is not an automatic defense, and it is no defense at all when the figure is presented without qualification. Buyers routinely sue after closing, so the sale ending changes nothing, and the assessor is not a party to the transaction. Safer practice is to attribute the figure to its source, state that it has not been independently measured, urge buyers to verify what matters to them, or have the space measured to a recognized standard.

A buyer asks the listing agent point blank whether a violent crime took place inside the home several years ago, and the agent knows that it did. How should the licensee handle it?

• a.Deny knowledge in order to protect the seller's privacy
• b.Never answer falsely; the disclosure rule varies by state✓
• c.Disclose it, since federal law makes such events material
• d.Answer only after the buyer's offer has been accepted

Whether a stigmatizing event such as a crime, a death, or a suicide must be volunteered is governed by state law, and the states differ sharply: some statutes declare these facts non-material and expressly protect licensees who stay silent, while others require disclosure or leave the question to case law, so no single national rule can be stated. What does not vary is that a licensee may not knowingly give a false answer to a direct question, which is misrepresentation in any state. Stalling until an offer is accepted has the same practical effect as lying. Federal law makes no such event material; it instead forbids disclosing that an occupant has HIV or AIDS, which is protected disability information.

A buyer is under contract on a condominium unit governed by an owners association. Why does delivery of the association's governing documents and budget matter before closing?

• a.They fix the mortgage interest rate the lender may charge
• b.They reveal assessments, use restrictions, and reserve funding✓
• c.They take the place of a title search on the individual unit
• d.They transfer the seller's association voting rights to the lender

Buying into a common interest community means buying a set of continuing obligations, so the declaration, bylaws, rules, current budget, assessment schedule, any pending special assessment or litigation, and the reserve study or reserve balance are all decision-relevant facts. Most states require delivery of a resale package or disclosure certificate and give the buyer a right to cancel within a period after delivery, but the required contents, the timing, and the cancellation right differ from state to state, so the licensee follows the local requirement. These documents do not set loan pricing, do not substitute for a title search of the unit and its liens, and do not move voting rights to any lender.

The seller's disclosure form on a rural listing states the septic system is sound, but the broker knows it failed an inspection last year in a sale that fell through. What must the broker do?

• a.Rely on the form, because disclosure is the seller's obligation
• b.Disclose the known septic failure independently of the seller's form✓
• c.Report the seller to the regulator before showing the home
• d.Ask the buyer to waive any septic inspection contingency

The seller's statutory disclosure statement and the broker's own duty are two separate obligations. A broker who personally knows a material fact must disclose it to the buyer even when the seller's form omits or flatly contradicts it, and cannot hide behind the client's paperwork; silence makes the firm a participant in the seller's misrepresentation. Reporting the seller to the regulator is not the immediate answer and does nothing to protect this buyer. Asking for a waiver while withholding what the broker knows compounds the wrong. Properties served by a private well and an on-site septic system should be disclosed as such, with testing and inspection recommended in every case.

A city adopts a zoning ordinance that limits a broker's client to residential use of a vacant lot, and no compensation is paid. What is the government's authority for this restriction?

• a.Eminent domain, which requires payment of just compensation
• b.Police power, the authority to regulate for public welfare✓
• c.Escheat, the state's claim to property left without heirs
• d.Taxation, the power to raise revenue from real property

Zoning rests on the police power, the inherent authority of state and local government to regulate land use to protect public health, safety, and general welfare. Because it regulates rather than acquires, no payment is owed so long as an economically viable use remains. Eminent domain is different in kind: it takes the property or an interest in it, and the Fifth Amendment then requires just compensation. Escheat applies only when an owner dies with no will and no heirs. Taxation raises revenue and creates a lien for nonpayment, but it does not dictate how a parcel may be used.

A city's new zoning map is attacked in court because it conflicts with the long-range document the city adopted to guide growth, land use, and public facilities. That document is:

• a.The comprehensive plan that zoning is meant to implement✓
• b.The building code adopted from a national model code
• c.The official schedule of impact fees for construction
• d.The subdivision plat recorded for each new development

Local governments adopt a comprehensive plan, also called a master or general plan, as the long-range policy statement for growth, land use, transportation, and public facilities. Zoning is the tool that implements it. Some states require the ordinance to be consistent with the adopted plan, while in others the plan is advisory, though a sharp conflict still invites challenge. A recorded plat maps lots and streets inside one development and sets no citywide policy. Building codes govern construction quality and materials rather than the pattern of land use. An impact fee schedule fixes charges that offset a project's burden. A broker who reads the plan can anticipate where rezoning and new demand are likely.

An investor asks a broker how much total building floor area a zoning district will allow on a specific lot. Which bulk control answers that question directly?

• a.The buffer zone separating incompatible districts
• b.The setback measured from each of the property lines
• c.The floor area ratio, total floor area divided by lot area✓
• d.The height limit expressed in feet or in stories

Floor area ratio compares total building floor area to lot area, so multiplying the FAR by the lot size tells an investor how much building the district permits. Setbacks fix how far a structure must sit from the property lines and govern placement, not total size. A buffer zone is a transitional strip or district separating incompatible uses, such as landscaping between a commercial block and homes. Height limits cap stories or feet but say nothing about how much floor area may be spread across the lot. Together these dimensional controls define the envelope a developer has to work within.

An owner divided his own parcel into two lots, leaving one too narrow to satisfy the side-yard rule, and now asks the zoning board for setback relief on that lot. The board should:

• a.Deny relief, because the owner created the hardship by his own act✓
• b.Grant relief, because the lot cannot otherwise be built on at all
• c.Grant relief if the adjoining neighbors state that they do not object
• d.Deny relief, because a board may never modify a dimensional requirement

A variance rests on a hardship arising from the land itself, and the standards written into state enabling acts and local ordinances generally refuse relief where the applicant manufactured the difficulty. Splitting a conforming parcel into an undersized lot is exactly that, so the board may say no even though the remaining lot is now hard to build on; land the owner rendered unusable does not become a hardship on that account. Neighbor consent is not an element of the test, and a board deciding on that basis would trade the ordinance's standards for a popularity vote. Boards do modify dimensional rules, since that is what a variance is; the issue is whether the applicant met the standard.

A broker's buyer wants to run a day care center in a residential district where the ordinance lists day care as allowed subject to review and conditions. What should the buyer obtain?

• a.A certificate of occupancy after the sale closes
• b.A variance excusing the buyer from the use restriction
• c.A spot rezoning of this one parcel to commercial use
• d.A conditional use permit issued by the zoning board✓

Where an ordinance already lists a use as allowed in the district subject to review, the applicant seeks a conditional use permit, also called a special exception or special use permit. Because the ordinance contemplates the use, no hardship must be shown; the board simply imposes conditions such as hours, parking, or screening. A variance excuses a dimensional requirement on proof of hardship and is not the tool for authorizing a use. Rezoning one parcel for one owner invites a spot zoning attack. A certificate of occupancy only confirms a finished building may be occupied. The broker should verify the permitted use before advertising the property for day care.

A council rezones one lot in the middle of a residential block to commercial use for a single owner's benefit, with no support in the comprehensive plan. This is most vulnerable to attack as:

• a.Downzoning, which reduces the density a district allows
• b.Inverse condemnation claimed by the neighboring owners
• c.A regulatory taking requiring payment to the neighbors
• d.Spot zoning, which is inconsistent with the overall plan✓

Singling out a small parcel for treatment different from the surrounding land, chiefly for the owner's private benefit and without support in the comprehensive plan, is spot zoning, and courts frequently invalidate it. Downzoning is a legitimate legislative act that lowers permitted density or intensity across an area, and it is not limited to one owner. Inverse condemnation is an owner's suit for compensation after government action has effectively taken property without a formal case being filed. A regulatory taking requires loss of economically viable use; neighbors who merely dislike a rezoning have suffered nothing of the kind.

A legal nonconforming gas station sits closed and idle for a long stretch, and the owner then wants to reopen it. Under general zoning principles, what is the risk?

• a.The status is permanent
• b.The use may be expanded
• c.Only a court, not the ordinance, can end the status
• d.The status can be lost through abandonment✓

Grandfathered status is not permanent. Ordinances commonly provide that a legal nonconforming use ends when it is abandoned or discontinued, or when the structure is destroyed beyond a stated share of its value, after which any rebuilding must conform to current rules. The protection generally bars enlarging or expanding the use rather than allowing it, so reopening bigger is doubly risky. Termination does not require a lawsuit; the ordinance itself supplies the rule and the zoning authority applies it. A broker marketing such a property should confirm with the zoning office that the status survives before advertising the nonconforming use.

A developer's subdivision plat is approved by the planning commission and recorded. Which statement best describes what that approval and recording accomplish?

• a.A certificate of occupancy issues for each vacant lot
• b.Lots are legally created and the streets are dedicated✓
• c.The county issues title insurance on every new lot
• d.The parcel's zoning class changes automatically

Recording an approved plat creates the lots legally, so they can be conveyed by reference to the map, and the streets, alleys, and easements shown on it are offered for dedication and, once accepted, become public. A certificate of occupancy is issued for a completed building after inspection, never for a vacant lot at the plat stage. Title insurance is written by insurers in individual transactions, not issued by the county. Plat approval does not rezone anything; the developer must already hold a classification that permits the lots proposed. Subdivision regulations also reach streets, drainage, utilities, and open space.

A city conditions approval of a large residential subdivision on a one-time payment meant to offset the cost of new schools, parks, and roads the project will require. This charge is:

• a.An ad valorem tax levied annually on each finished lot
• b.A dedication of land required instead of any payment
• c.A special assessment repaid through the seller's escrow
• d.An impact fee charged for the burden the project creates✓

An impact fee is exactly this: a one-time exaction imposed as a condition of development approval to offset the burden a new project places on schools, parks, roads, and utilities. Ad valorem taxes are annual levies based on assessed value and are not tied to approving any particular project. A special assessment funds a specific improvement benefiting identified parcels and is typically repaid over years by those owners. Dedication conveys land or easements for public use, and jurisdictions commonly require dedication in addition to fees, not as a substitute. Both raise the developer's cost and are negotiated during approval.

A broker represents a developer whose large project needs a federal permit. Officials require a study of the project's effects on air, water, traffic, and wildlife habitat. That study is:

• a.A property condition disclosure form given by the seller
• b.An impact fee study used to set the developer's charges
• c.An environmental impact statement on the project✓
• d.A Phase I audit ordered once contamination appears

Projects that need a federal permit or use federal funds trigger federal environmental review, and the resulting document is an environmental impact statement, which examines effects on air, water, traffic, noise, and habitat and weighs alternatives and mitigation; many states impose a parallel review of their own, sometimes called an environmental impact report. A seller's property condition disclosure reports known defects in an existing home and has nothing to do with project review. An impact fee study calculates what a jurisdiction may charge, not what the project will do to the environment. A Phase I assessment screens one site's history for possible contamination and is ordered before purchase, not only after a problem surfaces. Review can add many months to a schedule.

A builder finishes a new home and the buyer is ready to move in. Which document shows that the local authority inspected the work and approved the building for occupancy?

• a.The building permit issued before construction began
• b.The certificate of occupancy from the building official✓
• c.The general contractor's written warranty on the work
• d.The recorded plat that shows the finished lot's boundaries

The certificate of occupancy is issued by the building official after final inspection and is what makes the structure legal to occupy. A building permit comes at the front end and only authorizes work to begin, so holding one proves nothing about completion or compliance. A recorded plat fixes the lot's boundaries and says nothing about the building standing on it. The contractor's warranty is a private promise between builder and owner and carries no municipal approval at all. Brokers should confirm the certificate exists for new or substantially remodeled property before closing, since occupying without one can expose the buyer to penalties.

A public agency builds an elevated roadway that leaves an adjacent parcel unusable, but the agency never filed a condemnation case. The owner sues to force payment. That suit is:

• a.Inverse condemnation, a suit demanding just compensation✓
• b.A quiet title action removing a recorded cloud on title
• c.A regulatory taking claim over the denied building permit
• d.An injunction enforcing the subdivision's private CC&Rs

When government action effectively takes private property or destroys its use but no condemnation case was filed, the owner may sue in inverse condemnation; the roles are reversed, with the owner rather than the agency starting the case and asking for the just compensation the Fifth Amendment requires for a taking for public use. A quiet title action clears a defect or competing claim from the record and seeks no money. A taking claim here does not arise from a denied permit, since the harm is the physical project. An injunction on CC&Rs is a private remedy among owners, unrelated to a public agency's roadway.