Missouri Real Estate Salesperson Exam — All Questions

A form of co-ownership in which two or more owners each hold an undivided interest with the right of survivorship is known as:

• a.Tenancy in common
• b.Joint tenancy✓
• c.Ownership in severalty
• d.A leasehold estate

In a joint tenancy, co-owners hold equal, undivided interests and enjoy the right of survivorship: when one joint tenant dies, that share passes automatically to the surviving joint tenants rather than to heirs. Tenancy in common has no survivorship, and ownership in severalty is ownership by one person alone.

A city's authority to enact zoning ordinances that regulate how land may be used comes primarily from its:

• a.Police power✓
• b.Power of eminent domain
• c.Power of escheat
• d.Power of taxation

Zoning, building codes, and other land-use regulations are exercises of the government's police power: the inherent authority to enact rules that protect public health, safety, and general welfare. Eminent domain is the power to take private property for public use with compensation; escheat returns property to the state when an owner dies without heirs.

Which approach to value is generally the most reliable for appraising a single-family, owner-occupied home?

• a.The sales comparison approach✓
• b.The income approach
• c.The gross rent multiplier method
• d.The cost approach only

The sales comparison approach compares the subject property to recently sold, similar properties and adjusts for differences. Because ample comparable sales usually exist for residential homes, it best reflects what a buyer would pay. The income approach suits rental and investment property, while the cost approach is most useful for new or special-purpose buildings.

A mortgage clause that lets the lender demand full repayment of the loan balance if the borrower sells or transfers the property is a(n):

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

An alienation clause, also called a due-on-sale clause, allows the lender to call the entire balance due when the property is transferred, preventing an unqualified buyer from assuming the loan. A defeasance clause requires the lender to release the lien when the debt is paid in full.

Under which legal doctrine must a contract for the sale of real estate be in writing to be enforceable?

• a.The parol evidence rule
• b.The statute of frauds✓
• c.The doctrine of laches
• d.The statute of limitations

The statute of frauds requires certain contracts, including those for the sale of an interest in real estate, to be in writing and signed to be enforceable. The parol evidence rule limits use of outside evidence to change a written contract, and laches concerns unreasonable delay in asserting a right.

A seller receives a buyer's offer and responds by changing the closing date and price. The seller's response is best described as a(n):

• a.Counteroffer that terminates the original offer✓
• b.Acceptance that forms a binding contract
• c.Option to purchase
• d.Novation of the contract

Changing any material term of an offer creates a counteroffer, which rejects and terminates the original offer. The original offeror (the buyer) is then free to accept, reject, or counter again. Only an unqualified acceptance of all terms forms a binding contract.

An agreement that gives a prospective buyer the right, but not the obligation, to purchase a property at a set price within a stated period in exchange for consideration is a(n):

• a.Option contract✓
• b.Assignment
• c.Exclusive listing
• d.Land contract

An option is a unilateral contract in which the optionor (owner) gives the optionee the right to buy within a set time for agreed consideration. The optionee may choose whether to exercise the option; the owner is bound to sell only if the option is exercised.

An agent's fiduciary duty to place the principal's interests above the agent's own and to avoid conflicts of interest is the duty of:

• a.Loyalty✓
• b.Accounting
• c.Disclosure
• d.Reasonable care

Loyalty requires the agent to act solely in the principal's best interest and avoid self-dealing or conflicts of interest. Accounting concerns safeguarding and reporting the principal's money and property; disclosure requires sharing material facts. These are commonly summarized by the acronym OLD CAR.

An agency relationship that is created by the conduct of the parties rather than by a written or spoken agreement is a(n):

• a.Express agency
• b.Implied agency✓
• c.Designated agency
• d.Dual agency

Implied agency arises from the actions and conduct of the parties, even without a formal contract, when a person reasonably relies on another to act as their agent. Express agency, by contrast, is created by a written or oral agreement that states the relationship.

Federal law requires sellers and landlords to disclose known lead-based paint hazards for residential housing built before:

• a.1968
• b.1978✓
• c.1988
• d.1992

The federal Residential Lead-Based Paint Hazard Reduction Act requires disclosure of known lead-based paint and hazards, and delivery of an EPA pamphlet, for target housing built before 1978, the year residential lead paint was banned. Buyers must generally be given a 10-day period to test for lead.

Which type of deed offers the grantee the greatest protection by warranting the title against all defects, even those arising before the grantor owned the property?

• a.Quitclaim deed
• b.Special warranty deed
• c.General warranty deed✓
• d.Bargain and sale deed

A general warranty deed contains the full set of covenants, warranting the title against defects arising at any time in the property's history, and is the strongest deed for the grantee. A special warranty deed covers only the grantor's period of ownership, and a quitclaim conveys only whatever interest the grantor may have, with no warranties.

The federal Fair Housing Act prohibits discrimination in housing based on all of the following EXCEPT:

• a.Religion
• b.National origin
• c.Occupation✓
• d.Familial status

The Fair Housing Act protects seven classes: race, color, religion, sex, national origin, familial status, and disability. Occupation is not a protected class under federal law. Note that many states and localities add protected classes such as age, marital status, or source of income.

Directing prospective buyers toward or away from particular neighborhoods based on their race or other protected class is an illegal practice known as:

• a.Blockbusting, which is legal with disclosure
• b.Steering, which is prohibited by fair housing law✓
• c.A permitted marketing strategy
• d.A RESPA requirement

Steering is guiding buyers toward or away from neighborhoods based on a protected characteristic, limiting their housing choices. It violates the Fair Housing Act. Blockbusting (inducing panic selling) and redlining (denying loans by area) are separately prohibited practices.

In which type of lease does the tenant pay a fixed rent while the landlord pays the property taxes, insurance, and maintenance?

• a.Gross lease✓
• b.Net lease
• c.Percentage lease
• d.Ground lease

Under a gross lease the tenant pays a flat rent and the landlord covers the operating expenses such as taxes, insurance, and maintenance. In a net lease the tenant pays some or all of those expenses in addition to base rent, and a percentage lease ties rent partly to the tenant's sales.

A home sells for $300,000 and the total real estate commission is 6% of the sale price. What is the total commission?

• a.$1,800
• b.$18,000✓
• c.$15,000
• d.$24,000

Commission equals sale price multiplied by the rate: $300,000 x 0.06 = $18,000. Be careful to convert the percentage to a decimal (6% = 0.06). This $18,000 is the total paid to the brokerages before any split between the listing and selling sides.

A property has a market value of $250,000 and is assessed at 40% of value. If the tax rate is $2.50 per $100 of assessed value, what is the annual property tax?

• a.$2,500✓
• b.$6,250
• c.$1,000
• d.$10,000

First find assessed value: $250,000 x 0.40 = $100,000. Then divide by 100 to get the number of tax units: $100,000 / 100 = 1,000. Multiply by the rate: 1,000 x $2.50 = $2,500. Always apply the assessment ratio before the tax rate.

Real estate licensing in Missouri is governed by Chapter 339 RSMo and administered by which body?

• a.The Missouri Real Estate Commission (MREC)✓
• b.The National Association of REALTORS
• c.The local multiple listing service
• d.The U.S. Department of Housing and Urban Development

The Missouri Real Estate Commission (MREC), part of the Division of Professional Registration, licenses and regulates real estate brokers and salespersons under Chapter 339 of the Revised Statutes of Missouri. Private trade groups and the MLS do not issue or regulate licenses.

In Missouri, a licensed salesperson may lawfully receive compensation for a brokerage transaction from:

• a.Any party to the transaction directly
• b.Only the broker with whom the salesperson is licensed✓
• c.The buyer only
• d.The Missouri Real Estate Commission

Under Missouri license law a salesperson works under and is paid by their employing broker. A salesperson may not accept a commission or fee directly from a buyer, seller, or another broker; compensation must flow through the broker who holds the salesperson's license.

A Missouri broker who deposits a client's earnest money into the broker's personal or operating account has engaged in commingling, which is:

• a.Permitted if the client is told
• b.Prohibited under Missouri license law✓
• c.Required for small deposits
• d.Allowed for up to 30 days

Missouri license law requires client funds to be held separately in an escrow or trust account. Mixing client money with the broker's own funds (commingling) is prohibited and is grounds for discipline by the Missouri Real Estate Commission.

Under Missouri's brokerage relationship law, a licensee who assists a party in a transaction without representing that party as an agent acts as a:

• a.Transaction broker✓
• b.Dual agent
• c.Subagent
• d.Designated broker

Missouri statute recognizes several brokerage relationships, including seller's agent, buyer's agent, dual agent, designated agent, subagent, and transaction broker. A transaction broker assists one or more parties without acting as an advocate or agent for any of them.

Missouri requires a licensee to give a party the Broker Disclosure Form that identifies the brokerage relationship:

• a.At the closing table
• b.At the first substantive contact with the party✓
• c.Only after an offer is accepted
• d.Only if the party asks for it

Missouri law requires the written Broker Disclosure Form (the Missouri broker disclosure) to be provided at the first substantive contact with a party, so consumers understand early whether the licensee represents them or is acting in another capacity.

Earnest money and other funds a Missouri broker holds for clients must be kept in:

• a.The broker's personal checking account
• b.A separate escrow or trust account✓
• c.An account held by the Missouri Real Estate Commission
• d.Cash in the office safe

Missouri brokers must maintain client funds in a designated escrow or trust account, separate from their own money, and keep accurate records. This protects consumers' deposits and is enforced by the Missouri Real Estate Commission.

A Missouri salesperson who wishes to move from one employing broker to another must:

• a.Do nothing, because licenses move automatically
• b.Have the change processed so the license record reflects the new broker✓
• c.Wait one year before affiliating with a new broker
• d.Retake the state licensing examination

A Missouri salesperson's license is tied to a specific broker. To change brokers, the license must be transferred and the Commission's records updated to show the new employing broker before the salesperson works under that broker; a salesperson may not practice without an active broker affiliation.

To keep a Missouri real estate license active, a licensee must complete continuing education during each renewal period, which in Missouri occurs on a:

• a.Monthly basis
• b.Biennial (every two years) basis✓
• c.Five-year basis
• d.One-time basis that never repeats

Missouri real estate licenses are renewed biennially, and licensees must complete required continuing education, including a Missouri Real Estate Commission core course, during each two-year renewal period to renew on active status.