Massachusetts Real Estate Salesperson Exam — All Questions

A life estate gives the holder the right to use property for the duration of a person's life. When that life estate ends, the property passes to the person designated to receive it, who is called the:

• a.Remainderman✓
• b.Trustee
• c.Grantor's creditor
• d.Lessee

When a life estate ends, title passes to the remainderman if a third party is named, or reverts to the grantor (a reversion) if none is named. A life tenant may use the property but cannot leave it by will.

Which of the following is a private, rather than governmental, control on land use?

• a.Zoning ordinance
• b.Building code
• c.Restrictive covenant in a subdivision✓
• d.Eminent domain

A restrictive covenant is a private limitation placed by a developer or prior owner and enforced among property owners. Zoning ordinances, building codes, and eminent domain are governmental (public) controls exercised through police power or condemnation.

Two adjacent lots differ in value mainly because one is much larger. When adjusting comparables, this reflects the appraisal principle of:

• a.Anticipation
• b.Contribution✓
• c.Escheat
• d.Novation

The principle of contribution states that the value of a component (such as extra lot size or an added feature) is measured by how much it adds to the whole property's value, not by its cost. Appraisers use it when adjusting comparable sales.

An appraiser is asked for the value of a unique historic library building with no comparable sales and no rental income. The most appropriate approach is usually the:

• a.Income approach
• b.Gross rent multiplier
• c.Sales comparison approach
• d.Cost approach✓

For special-purpose properties with few or no comparable sales and no income stream, the cost approach (land value plus depreciated replacement cost) is generally the most reliable. The income and sales comparison approaches lack the data such a property provides.

A clause in a mortgage that requires the loan to be paid in full if the property is sold or transferred is the:

• a.Alienation (due-on-sale) clause✓
• b.Defeasance clause
• c.Habendum clause
• d.Subordination clause

The alienation or due-on-sale clause lets the lender require full repayment when the borrower transfers the property, preventing a buyer from simply assuming the loan without approval. The defeasance clause releases the lien when the debt is paid.

A loan-to-value (LTV) ratio of 80% on a $300,000 home means the loan amount is:

• a.$300,000
• b.$60,000
• c.$240,000✓
• d.$375,000

LTV of 80% means the loan is 80% of the property's value: $300,000 x 0.80 = $240,000. The remaining $60,000 is the borrower's down payment (equity). Lower down payments (higher LTV) may require private mortgage insurance.

A contract signed by a 16-year-old minor to purchase real estate is generally:

• a.Void from the start
• b.Voidable by the minor✓
• c.Fully enforceable against the minor
• d.Automatically enforceable after 30 days

Contracts with a minor are generally voidable at the minor's option because minors lack full contractual capacity. The minor may disaffirm the contract. A void contract, by contrast, has no legal effect from the outset for either party.

A remedy that compels a defaulting seller to actually convey the specific property, because real estate is considered unique, is called:

• a.Liquidated damages
• b.Rescission
• c.Reformation
• d.Specific performance✓

Specific performance is an equitable remedy compelling a party to perform the contract, often used in real estate because each parcel is considered unique and money damages may be inadequate. A buyer may seek it when a seller wrongfully refuses to close.

An agency relationship in which the principal, by words or conduct, causes a third party to reasonably believe someone is their agent, is called agency by:

• a.Estoppel✓
• b.Ratification
• c.Express agreement
• d.Necessity

Agency by estoppel arises when a principal's words or conduct lead a third party to reasonably believe an agency exists, and the principal is then prevented (estopped) from denying it. Ratification is later approval of an act done without prior authority.

An agent's duty to keep and report accurate records of all money and property belonging to the client is the duty of:

• a.Loyalty
• b.Obedience
• c.Accounting✓
• d.Care

The duty of accounting requires the agent to accurately track and report all funds and property entrusted by the client, such as earnest money deposits. It supports the prohibition against commingling and conversion of client funds.

Under federal law, which disclosure must be provided to buyers and renters of most housing built before 1978?

• a.Radon test results
• b.Lead-based paint disclosure✓
• c.Termite inspection report
• d.Flood elevation certificate

The federal Residential Lead-Based Paint Hazard Reduction Act requires that sellers and landlords of most pre-1978 housing provide a lead-based paint disclosure, the EPA pamphlet, and, for sales, an opportunity for the buyer to test. Lead was banned from residential paint in 1978.

Acquiring title by openly, continuously, and exclusively using another's land without permission for the period set by law is called:

• a.Escheat
• b.Novation
• c.Adverse possession✓
• d.Dedication

Adverse possession lets a person gain title by possessing another's land in a way that is open, notorious, continuous, exclusive, and hostile (without permission) for the statutory period. Escheat is reversion to the state when an owner dies without heirs.

A broker persuades homeowners to sell by suggesting that members of a particular group are moving into the neighborhood and values will drop. This illegal practice is called:

• a.Blockbusting✓
• b.Steering
• c.Redlining
• d.Puffing

Blockbusting (panic selling) is inducing owners to sell by suggesting that people of a particular protected class are entering the area and that values or safety will decline. It violates the Fair Housing Act. Steering and redlining are separate prohibited practices.

The federal Fair Housing Act protects families with children under which protected class?

• a.Marital status
• b.Age
• c.Source of income
• d.Familial status✓

Familial status protects households with children under 18 and pregnant persons from housing discrimination. Marital status, age, and source of income are not federal protected classes, though some state or local laws add them.

A tenant remains in possession after the lease expires, without the landlord's consent. This creates a:

• a.Estate for years
• b.Tenancy at sufferance✓
• c.Tenancy by the entirety
• d.Freehold estate

A tenancy at sufferance arises when a tenant stays after the lease ends without the landlord's permission (a holdover). The landlord may treat the person as a trespasser or accept rent and create a periodic tenancy. An estate for years has a definite term.

A buyer's annual property tax is $6,000. At a closing on the first day of the fourth month, how much tax has accrued for the seller's portion of the year (using 12 equal months)?

• a.$500
• b.$2,000
• c.$1,500✓
• d.$6,000

Annual tax of $6,000 is $500 per month ($6,000 / 12). By the start of the fourth month, three full months have accrued to the seller: 3 x $500 = $1,500. That amount is typically credited to the buyer at closing if taxes are paid in arrears.

Massachusetts real estate salespersons and brokers are licensed by the:

• a.Massachusetts Department of Revenue
• b.Board of Registration of Real Estate Brokers and Salespersons✓
• c.Federal Real Estate Bureau
• d.Massachusetts MLS Association

Licensing is handled by the Massachusetts Board of Registration of Real Estate Brokers and Salespersons, which operates under the state's occupational licensure division. It sets requirements, issues licenses, and disciplines licensees for violations.

In Massachusetts, which activity is a real estate salesperson generally NOT permitted to do?

• a.Show listed properties to buyers
• b.Hold an open house under the broker's supervision
• c.Present offers to a seller through the broker
• d.Independently hold client escrow funds in the salesperson's own account✓

A Massachusetts salesperson must work under the supervision of a licensed broker and may not independently hold client escrow funds; the broker is responsible for maintaining the escrow account. Salespersons may show property, host open houses, and handle offers under the broker's supervision.

Massachusetts requires licensees to present consumers with a mandatory agency disclosure form. This disclosure must generally be provided:

• a.At the first personal meeting to discuss a specific property✓
• b.Only after a purchase contract is signed
• c.Only at the closing table
• d.Never, because Massachusetts has no agency disclosure

Massachusetts requires the Mandatory Licensee-Consumer Relationship Disclosure to be presented at the first personal meeting between a licensee and a consumer to discuss a specific property, so the consumer understands whom the licensee represents before sharing information.

Massachusetts real estate law recognizes a relationship in which a licensee assists a buyer and seller without representing either as a client. This is known as a:

• a.Designated seller agent
• b.Dual agent
• c.Facilitator (non-agent)✓
• d.Subagent of the buyer

Massachusetts recognizes the facilitator relationship, in which a licensee helps parties reach an agreement without acting as the agent of either and without owing fiduciary duties of loyalty, though the facilitator must still be honest and account for funds.

Massachusetts is generally considered a 'buyer beware' (caveat emptor) state, but sellers and agents must still:

• a.Provide a state-mandated seller disclosure form for every sale
• b.Disclose known material defects they are aware of✓
• c.Guarantee the home is free of all defects
• d.Pay for the buyer's home inspection

Unlike many states, Massachusetts does not require a standardized statewide seller disclosure form; it follows caveat emptor. However, sellers and agents may not misrepresent the property and must disclose known material defects, and lead-paint disclosure is required for older homes.

Under the Massachusetts Lead Law, special obligations arise when a child under age 6 resides in a home built before 1978. The law primarily requires owners to:

• a.Demolish the home
• b.Refuse to rent to families with children
• c.Ignore the paint if it looks intact
• d.Address lead paint hazards, such as by removing or covering them✓

The Massachusetts Lead Law requires the removal or covering of lead paint hazards in homes built before 1978 where a child under six lives, to prevent lead poisoning. Refusing to rent to families with children would itself violate fair housing law.

How many hours of approved prelicensing education must a Massachusetts real estate salesperson applicant complete?

• a.40 hours✓
• b.90 hours
• c.24 hours
• d.No education is required

Massachusetts requires 40 hours of approved prelicensing education for a salesperson applicant, who must also be at least 18 and pass the licensing examination administered on behalf of the Board.

To keep a Massachusetts real estate license active, licensees must complete continuing education and renew the license. Massachusetts licenses are renewed on which cycle?

• a.Every 6 months
• b.Annually
• c.Every 2 years✓
• d.Every 5 years

Massachusetts real estate licenses are renewed every two years, and licensees must complete the required continuing education hours to renew. Staying current keeps licensees informed about changes in law and practice.