Ohio Real Estate Salesperson Exam — All Questions

The right of a government to take private property for public use upon payment of just compensation is called:

• a.Escheat
• b.Eminent domain✓
• c.Police power
• d.Adverse possession

Eminent domain is the government's power to take private property for a public purpose, with just compensation paid to the owner, exercised through a condemnation action. Escheat, by contrast, is the reversion of property to the state when an owner dies with no heirs.

An owner grants a neighbor the right to cross her land to reach a lake. This nonpossessory right is a(n):

• a.Fee simple estate
• b.Life estate
• c.Easement✓
• d.Encroachment

An easement is a nonpossessory right to use another's land for a specific purpose, such as access. An encroachment, by contrast, is an unauthorized intrusion of a structure onto a neighbor's property.

A building that lawfully existed before a new zoning ordinance now violates the ordinance. It may usually continue as a:

• a.Nonconforming use✓
• b.Variance
• c.Special-use permit
• d.Spot zoning

A use that was legal before a zoning change but no longer conforms is a legal nonconforming use, often allowed to continue ('grandfathered'). A variance, in contrast, is permission granted to deviate from current zoning.

A comparative market analysis (CMA) prepared by a licensee to help a seller set a listing price:

• a.Is the same as a formal appraisal
• b.Is based on comparable recent sales and is not a formal appraisal✓
• c.Must be performed only by a licensed appraiser
• d.Determines the exact loan amount

A CMA estimates likely market value from comparable recent sales to help price a listing, but it is not a formal appraisal and does not carry the same legal weight. Formal appraisals must be prepared by licensed or certified appraisers.

Loss in value due to outdated design or features that are no longer desirable is called:

• a.Physical deterioration
• b.External obsolescence
• c.Functional obsolescence✓
• d.Appreciation

Functional obsolescence is a loss in value caused by outdated design, poor layout, or features that no longer meet market expectations. External obsolescence instead results from negative influences outside the property, such as a nearby nuisance.

The process by which a lender forces the sale of a property after a borrower defaults on the mortgage is called:

• a.Redemption
• b.Novation
• c.Subordination
• d.Foreclosure✓

Foreclosure is the legal process by which a lender forces the sale of the secured property to recover the debt after the borrower defaults. Redemption, by contrast, is the borrower's right to reclaim the property by paying the debt.

A borrower assumes an existing loan and both the buyer and the original borrower remain liable unless the lender releases the seller. To fully release the seller, the lender would use a(n):

• a.Novation✓
• b.Acceleration clause
• c.Estoppel certificate
• d.Satisfaction of mortgage

A novation substitutes a new party for the original borrower and, with the lender's agreement, releases the seller from liability. Without novation, an assuming buyer takes over payments but the original borrower may remain secondarily liable.

A licensee's fiduciary duty of loyalty requires the agent to:

• a.Follow every instruction, even illegal ones
• b.Place the client's interests above the agent's own✓
• c.Disclose the client's confidential information to buyers
• d.Guarantee the property will sell

The duty of loyalty requires the agent to put the client's interests ahead of the agent's own and everyone else's. Agents must never obey illegal instructions or reveal client confidences.

An agency relationship terminates in all of the following ways EXCEPT:

• a.Completion of the transaction
• b.Mutual agreement of the parties
• c.The client changing the property's paint color✓
• d.Expiration of the agreement's term

Agency ends by performance, mutual agreement, expiration, revocation, or operation of law such as death or bankruptcy. A client's ordinary use of the property, like repainting, has no effect on the agency relationship.

Ohio requires most residential sellers to complete a Residential Property Disclosure Form that reports:

• a.Known material defects and conditions of the property✓
• b.A guarantee that the home is defect-free
• c.The seller's asking price justification
• d.The buyer's financing terms

Ohio's Residential Property Disclosure Form requires the seller to disclose known material defects and conditions based on actual knowledge. It is a disclosure of known conditions, not a warranty that the property is free of defects.

Under federal law, the lead-based paint disclosure requirement applies to residential housing built:

• a.After 1978
• b.In any year
• c.Before 1978✓
• d.Only before 1950

The federal lead-based paint disclosure rule applies to housing built before 1978, the year lead-based paint was banned for residential use. Sellers and landlords of such housing must disclose known hazards and provide an EPA pamphlet.

Time is of the essence in a contract means that:

• a.The contract has no deadline
• b.Performance must occur by the stated dates or a party is in breach✓
• c.Either party may extend deadlines freely
• d.The contract expires after one year automatically

A 'time is of the essence' clause makes the stated deadlines binding, so failing to perform on time is a breach. Without such a clause, courts may allow reasonable extensions.

Which of the following would make a real estate contract void rather than merely voidable?

• a.A minor signed it
• b.One party was defrauded
• c.One party was under duress
• d.The purpose of the contract is illegal✓

A contract for an illegal purpose is void from the outset because courts will not enforce an unlawful agreement. Contracts involving a minor, fraud, or duress are typically voidable at the option of the injured or protected party.

The assignment of a contract generally means that:

• a.One party transfers its rights under the contract to another party✓
• b.The contract is canceled
• c.A new contract replaces the old one for all parties
• d.The seller keeps all obligations and rights

An assignment transfers a party's rights (and often duties) under a contract to a third party, the assignee. Unlike novation, an assignment does not automatically release the original party from liability unless agreed.

For a deed to transfer title, which of the following is essential?

• a.The deed must be recorded before it is valid between the parties
• b.The deed must be delivered to and accepted by the grantee✓
• c.The grantee must sign the deed
• d.The deed must be notarized to be valid between the parties

A deed transfers title when it is delivered by the grantor and accepted by the grantee; recording is for public notice, not validity between the parties. The grantor, not the grantee, signs the deed.

A licensee directs minority buyers only to certain neighborhoods and steers white buyers to others. This violation of fair housing law is called:

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

Steering is the illegal practice of directing prospective buyers toward or away from particular neighborhoods based on a protected characteristic such as race. It limits housing choice and violates the Fair Housing Act.

A broker must place a buyer's earnest money deposit into:

• a.A separate trust or escrow account✓
• b.The broker's personal checking account
• c.The seller's bank account immediately
• d.The listing agent's own account

Earnest money and other client funds must be held in a separate trust or escrow account, never mixed with the broker's personal or operating funds. Commingling client funds is a serious violation of license law.

A property sold for $180,000, and the seller paid a 5% commission plus $2,000 in other closing costs. Ignoring the loan payoff, how much did those costs total?

• a.$9,000
• b.$11,000✓
• c.$7,000
• d.$2,900

The commission is 5% of $180,000 = $9,000, plus $2,000 in other costs, for a total of $11,000. Adding the percentage-based commission to the flat costs gives the combined figure.

A lot is 90 feet wide and 120 feet deep. What is its area in square feet?

• a.210 sq ft
• b.1,080 sq ft
• c.10,800 sq ft✓
• d.21,600 sq ft

Area of a rectangle equals width times depth: 90 x 120 = 10,800 square feet. Multiplying the two dimensions gives the lot's area.

In a condominium, an individual owner typically holds fee simple title to their unit and a shared interest in:

• a.The neighboring units
• b.The developer's future projects
• c.Only the parking lot
• d.The common elements✓

A condominium owner holds title to their individual unit plus an undivided shared interest in the common elements, such as hallways, grounds, and amenities. This shared ownership is governed by the condominium association and its documents.

Ohio real estate licensees are regulated by which body?

• a.The Ohio Association of Realtors
• b.The Ohio Division of Real Estate and Professional Licensing✓
• c.The county auditor
• d.The Ohio Attorney General's office

The Ohio Division of Real Estate and Professional Licensing, within the Department of Commerce, licenses and regulates real estate professionals. Trade associations do not issue or govern licenses.

Under Ohio license law, a salesperson's real estate license is held and their activities supervised by:

• a.The Ohio Real Estate Commission directly
• b.The salesperson personally
• c.The affiliated broker✓
• d.The multiple listing service

An Ohio salesperson must work under a broker who holds the salesperson's license and is responsible for supervising their activities and trust funds. Salespersons cannot operate independently.

Ohio law requires an 'Agency Disclosure Statement' to be provided so that:

• a.The parties understand which party each licensee represents✓
• b.The buyer can waive the home inspection
• c.The commission is guaranteed
• d.The seller can avoid disclosing defects

Ohio's Agency Disclosure Statement informs the parties which brokerage and agent represent whom in the transaction, promoting transparency about agency relationships. It must be provided at the appropriate time under Ohio agency law.

To qualify for an Ohio real estate salesperson license, an applicant must generally:

• a.Be at least 16 years old with no education
• b.Already own a brokerage
• c.Complete required pre-license education and pass the licensing exam✓
• d.Hold a license in another profession

Ohio requires salesperson applicants to complete the mandated pre-license coursework and pass the state licensing examination, in addition to meeting age and character requirements. Completing education before testing is a core prerequisite.