Oregon Real Estate Broker Exam — All Questions

The modern duty to disclose known material defects has largely replaced the old common-law rule of:

• a.caveat emptor (let the buyer beware)✓
• b.respondeat superior
• c.caveat venditor (let the seller beware)
• d.the statute of frauds

Caveat emptor ('let the buyer beware') once placed the full burden on buyers, but modern disclosure duties require sellers and agents to reveal known latent defects. Respondeat superior concerns employer liability, and the statute of frauds concerns written contracts.

An 'as-is' sale generally means that:

• a.every defect is automatically the buyer's fault
• b.the seller has no duty to disclose anything at all
• c.the buyer accepts known conditions, but the seller still cannot conceal latent defects✓
• d.the buyer waives all inspection rights by law

An 'as-is' clause means the seller will not make repairs, but it does not license fraud - known latent material defects must still be disclosed, and buyers typically may still inspect. As-is does not erase the disclosure duty.

Radon is best described as:

• a.a byproduct of faulty electrical wiring
• b.an additive once mixed into lead-based paint
• c.a mold commonly found in bathrooms
• d.a naturally occurring radioactive gas that can seep into homes✓

Radon is a colorless, odorless radioactive gas produced by the natural decay of soil that can accumulate indoors and pose a health risk; testing and mitigation address it. It is unrelated to lead paint, mold, or wiring.

In older buildings, asbestos was commonly used for:

• a.electrical grounding
• b.groundwater treatment
• c.exterior paint pigment
• d.insulation and fireproofing materials✓

Asbestos was widely used for insulation, fireproofing, and various building materials before its health risks (when fibers become airborne) were understood. It is not a paint pigment, a water treatment, or a grounding material.

In many states, a listing agent has a duty to:

• a.inspect the neighboring homes as well
• b.perform a reasonably competent visual inspection and disclose observed defects✓
• c.guarantee the home has no hidden defects at all
• d.hire a structural engineer for every listing

Many jurisdictions require the listing agent to make a reasonably diligent visual inspection of accessible areas and disclose material defects they observe or should have observed. They need not open walls, guarantee against hidden problems, or inspect other properties.

For a deed to be legally effective in transferring title, it must be:

• a.approved by a local judge
• b.notarized by the grantee's signature
• c.recorded in the county courthouse
• d.delivered to and accepted by the grantee✓

Title passes only when a valid deed is delivered by the grantor and accepted by the grantee during the grantor's life. Recording gives notice but is not required for validity, and it is the grantor's signature - not the grantee's - that is acknowledged.

In a deed, the party conveying the property is the ___ and the party receiving it is the ___.

• a.mortgagor; mortgagee
• b.grantor; grantee✓
• c.trustor; trustee
• d.grantee; grantor

The grantor gives (conveys) title and the grantee receives it; a memory aid is that the grant-OR is the one letting go. Mortgagor/mortgagee and trustor/trustee describe loan parties, not the deed's transfer roles.

The words of conveyance in a deed, such as 'I hereby grant,' appear in the:

• a.habendum clause
• b.acknowledgment
• c.granting clause✓
• d.reddendum clause

The granting clause contains the words of conveyance that actually transfer the interest. The habendum clause ('to have and to hold') defines the extent of the estate, and the acknowledgment is the notarized certification needed for recording.

The habendum clause of a deed:

• a.itemizes the buyer's closing costs
• b.sets the interest rate on the loan
• c.defines the extent of the ownership being conveyed✓
• d.names the title insurance company

The habendum clause ('to have and to hold') follows the granting clause and describes the extent or type of estate granted, such as fee simple. It has nothing to do with title insurance, loan rates, or closing costs.

A quitclaim deed is most commonly used to:

• a.guarantee clear title to a purchasing buyer
• b.transfer title with full warranties of ownership
• c.serve as the security instrument for a loan
• d.release or clear a possible cloud on the title✓

A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, which makes it ideal for clearing clouds - such as releasing a possible claim. It offers no protection to a buyer who needs warranted title.

In a special (limited) warranty deed, the grantor warrants the title against defects:

• a.that arise only after the sale has closed
• b.arising at any time in the property's entire history
• c.arising only during the grantor's period of ownership✓
• d.only those the buyer happens to discover

A special warranty deed warrants title only against defects that arose while the grantor owned the property, not earlier ones. A general warranty deed covers the property's entire history and offers broader protection.

A metes-and-bounds legal description identifies a parcel by:

• a.distances and directions from a point of beginning around the boundary✓
• b.the property's street address only
• c.lot and block numbers on a recorded plat
• d.township, range, and section numbers

Metes and bounds describes a parcel by measured distances (metes) and directions or boundaries (bounds), starting from and returning to a point of beginning. The rectangular survey uses township/range/section, and the lot-and-block system uses a recorded plat.

Under the rectangular (government) survey system, one 'section' contains:

• a.160 acres
• b.43,560 acres
• c.640 acres✓
• d.5,280 acres

A section is one square mile and contains 640 acres; a township is six miles square and holds 36 sections. The number 43,560 is the square feet in one acre, and 160 acres is a quarter-section, not a full section.

The lot-and-block (recorded plat) system of legal description is typically used for:

• a.large rural ranches only
• b.subdivided urban and suburban parcels✓
• c.federal wilderness areas
• d.offshore island properties

The lot-and-block system identifies parcels by lot and block numbers on a subdivision plat recorded in the public records, ideal for developed subdivisions. Rural land more often uses metes and bounds or the rectangular survey.

Recording a deed in the public records provides:

• a.actual notice to one specific buyer
• b.constructive notice to the world of the owner's interest✓
• c.protection against every possible lien
• d.a guarantee of fully marketable title

Recording gives constructive (legal) notice to everyone of the recorded interest, establishing priority. Actual notice is direct knowledge a person truly has; recording alone does not guarantee marketable title or defeat every lien.

An owner's title insurance policy protects:

• a.the lender against the borrower's default
• b.the buyer against future physical damage
• c.the seller against a low appraisal
• d.the buyer against covered title defects that existed before the policy date✓

An owner's title policy indemnifies the buyer against covered hidden title defects, liens, or encumbrances that existed but were undiscovered as of the policy date. A lender's policy protects the lender, and neither covers default, appraisal, or future physical damage.

The 'chain of title' is:

• a.the list of the property's unpaid taxes
• b.the physical survey of the property lines
• c.the recorded history of ownership transfers for a property✓
• d.the loan's amortization schedule

The chain of title is the successive record of conveyances and ownership from the earliest records to the present owner; a gap or defect in it creates a 'cloud.' It is not a survey, a tax list, or an amortization schedule.

'Marketable title' means title that is:

• a.always insured directly by the seller
• b.reasonably free from serious defects and acceptable to a prudent buyer✓
• c.completely free of any and all easements
• d.guaranteed by the federal government

Marketable title is reasonably free from doubt or serious defect so a prudent buyer would accept it; minor, disclosed easements usually do not make title unmarketable. It is not a government guarantee or necessarily easement-free.

In a real estate closing, the escrow (settlement) agent:

• a.holds funds and documents and disburses them when conditions are met✓
• b.represents the buyer as an attorney
• c.guarantees that the loan will be approved
• d.sets the final sale price of the property

A neutral escrow or settlement agent holds the buyer's funds and the seller's deed, then disburses money and delivers documents once all conditions are satisfied. The agent is impartial and does not act as an advocate, set the price, or approve loans.

Acquiring title by openly, notoriously, hostilely, and continuously occupying another's land for the statutory period is known as:

• a.escheat
• b.adverse possession✓
• c.eminent domain
• d.dedication

Adverse possession lets a person gain title by possessing land in a way that is open, notorious, hostile, exclusive, and continuous for the statutory period. Eminent domain is a government taking, escheat is state reversion, and dedication is a gift to the public.

When an owner dies without a will, title to their real property generally passes by:

• a.descent under the state's intestate succession laws✓
• b.adverse possession by the heirs
• c.escheat to the federal government
• d.a general warranty deed to the heirs

A person who dies intestate (without a will) has their property distributed to heirs under state descent-and-distribution laws. Escheat occurs only when there are no heirs at all, and title does not pass by deed or adverse possession in that case.

A real estate transfer (conveyance) tax is typically:

• a.a tax on the transfer of title, often based on the sale price✓
• b.a charge for performing a home inspection
• c.a yearly tax on the property's assessed value
• d.a fee charged to obtain a new mortgage

A transfer or documentary tax is charged when title is conveyed, usually calculated on the sale price and paid at closing. The annual tax on assessed value is the property tax, which is a separate charge.

The acknowledgment on a deed is:

• a.the buyer's professional inspection report
• b.the notary's certification that the grantor's signature is genuine and voluntary✓
• c.the grantee's written promise to repay a debt
• d.the lender's approval of the buyer's loan

An acknowledgment is a formal declaration before a notary that the person signing did so voluntarily; it is generally required before a deed can be recorded. It is not a payment promise, a loan approval, or an inspection.

The federal Fair Housing Act of 1968, as amended, protects how many classes?

• a.three
• b.seven✓
• c.five
• d.ten

The federal Fair Housing Act protects seven classes: race, color, religion, national origin, sex, familial status, and disability (handicap). Race and color trace to the 1866 and 1968 acts, sex was added in 1974, and familial status and disability in 1988.

'Familial status' under the federal Fair Housing Act protects:

• a.senior citizens only
• b.married couples only
• c.households with children under 18 and pregnant persons✓
• d.people classified by marital status

Familial status protects families with one or more children under 18, pregnant women, and those securing custody of a child, guarding against discrimination such as refusing to rent to families with kids. It is broader than marital status and is not limited to seniors.

Under fair housing law, a housing provider generally must, for a tenant with a disability:

• a.pay for all of the tenant's medical costs
• b.charge a higher security deposit for a disability
• c.refuse to rent to any tenant with a disability
• d.allow reasonable modifications and permit assistance animals✓

Housing providers must allow reasonable accommodations in rules (such as permitting an assistance animal despite a no-pets policy) and permit reasonable modifications; a no-pets rule cannot bar assistance animals. They may not charge extra deposits or deny housing based on disability.

Convincing owners to sell by claiming that members of a protected class are moving into the neighborhood is the illegal practice of:

• a.blockbusting✓
• b.redlining
• c.steering
• d.puffing

Blockbusting (panic selling) induces owners to sell by exploiting fears about protected-class neighbors moving in. Steering directs buyers by protected class, redlining denies lending in areas, and puffing is lawful sales exaggeration.

A lender's refusal to make loans in certain neighborhoods based on their racial composition is:

• a.steering
• b.redlining✓
• c.a lawful underwriting practice
• d.blockbusting

Redlining is denying or restricting loans or insurance in specific areas based on race or another protected characteristic rather than the applicant's qualifications, and it is illegal. It is not a legitimate underwriting practice.

Which situation may qualify for a limited exemption under the federal Fair Housing Act?

• a.owner-occupied buildings of four or fewer units in some circumstances✓
• b.any home the owner simply wishes to sell
• c.homes sold above a set price threshold
• d.all high-end luxury properties

Limited exemptions exist (for example, owner-occupied buildings of four or fewer units, or a single-family home sold by the owner without a broker or discriminatory advertising), but they never permit discriminatory advertising and do not apply to race under the 1866 Act. Price and luxury are irrelevant.

Even where a transaction might qualify for an exemption, the Fair Housing Act still prohibits:

• a.requiring a routine credit check of applicants
• b.charging a fair market rent for the unit
• c.using a licensed broker for the transaction
• d.publishing any advertisement that states a discriminatory preference✓

Discriminatory advertising that indicates a preference or limitation based on a protected class is always prohibited, regardless of any transactional exemption. Ordinary business practices like credit checks and market rent are permitted.

The Americans with Disabilities Act (ADA) primarily requires:

• a.that every private home be made wheelchair accessible
• b.that commercial facilities and public accommodations be accessible to people with disabilities✓
• c.that lenders offer lower interest rates to disabled buyers
• d.that sellers disclose their own personal health status

The ADA requires that public accommodations and commercial facilities remove barriers and provide accessibility, such as ramps and accessible restrooms. It focuses on commercial and public spaces rather than mandating accessibility in every private residence.

Two competing brokerages that agree to charge the same commission rate have committed:

• a.illegal price fixing✓
• b.a legal tie-in arrangement
• c.lawful cooperation between firms
• d.a permissible market allocation

Price fixing - competitors agreeing on prices or commission rates - is a per se violation of antitrust law; commission rates must be set independently and are negotiable between a broker and client. Market allocation and tie-ins are also illegal, not lawful.

When competing firms agree to divide territories or customers among themselves, they have engaged in:

• a.a permitted form of subagency
• b.a legal referral network
• c.an illegal market allocation scheme✓
• d.a lawful listing agreement

Market allocation - competitors agreeing not to compete in each other's territories or for certain customers - is an antitrust violation. It is not a legitimate referral arrangement, listing, or subagency.

If several brokers agree among themselves to refuse to cooperate with a discount broker, they have engaged in:

• a.a standard open listing
• b.a lawful tie-in arrangement
• c.an illegal group boycott✓
• d.a routine escrow procedure

A group boycott - competitors conspiring to exclude or refuse to deal with another competitor - violates antitrust law. A tie-in ties one product to another, and the remaining options are unrelated transaction terms.

Depositing a client's earnest money into the broker's personal or general operating account is:

• a.a required accounting practice
• b.permitted whenever the client consents
• c.lawful as long as it is repaid quickly
• d.commingling, a serious license-law violation✓

Commingling mixes client trust funds with the broker's own money and is prohibited; funds belonging to others must stay in a separate trust or escrow account. It is not cured by prompt repayment or by client consent.

A broker who uses a client's trust funds to pay the broker's own business expenses has committed:

• a.amortization
• b.conversion✓
• c.proration
• d.subrogation

Conversion is the unauthorized use or misappropriation of client trust funds for the broker's benefit - a serious offense beyond mere commingling. Proration allocates costs, subrogation substitutes claims, and amortization is loan repayment.

A 'blind ad,' prohibited by most license laws, is one that:

• a.includes the property's street address
• b.fails to disclose that the advertiser is a real estate licensee or broker✓
• c.lists an accurate price for the property
• d.contains the brokerage's full business name

A blind ad conceals the fact that a licensee or brokerage placed it, misleading the public; most license laws require ads to identify the broker. Including the broker's name, an accurate price, or the address does not create a blind ad.

Real estate advertising must be:

• a.printed only in a local newspaper
• b.approved by the buyer before it is published
• c.drafted and reviewed by an attorney
• d.truthful and not misleading about the property or its terms✓

Advertising must be accurate and not deceptive about the property, price, or terms, and it must comply with fair housing rules. It need not be pre-approved by a buyer, limited to newspapers, or drafted by a lawyer.

A property management agreement typically creates:

• a.a general agency between the owner and the manager✓
• b.a subagency owed to the tenants
• c.a special agency limited to a single act
• d.a dual agency serving both sides

A property manager is usually a general agent authorized to handle ongoing operations - leasing, rent collection, and maintenance - on the owner's behalf. A special agent handles a single task, and the manager does not represent the tenants.

In a gross lease:

• a.the tenant pays all of the operating expenses
• b.the rent varies with the tenant's gross sales
• c.the tenant owns the building outright
• d.the landlord pays the property's operating expenses such as taxes and insurance✓

Under a gross lease the tenant pays a flat rent and the landlord covers operating expenses such as taxes, insurance, and maintenance - common in residential and some office leases. A net lease shifts expenses to the tenant, and a percentage lease ties rent to sales.

In a net lease, the tenant pays base rent plus:

• a.some or all of the property expenses such as taxes, insurance, or maintenance✓
• b.the landlord's mortgage principal payments
• c.nothing at all beyond the base rent
• d.a percentage of the tenant's gross sales

A net lease requires the tenant to pay base rent plus one or more property expenses (taxes, insurance, maintenance); a triple-net lease passes all three to the tenant. Percentage leases instead tie rent to sales.

A percentage lease, common in retail shopping centers, bases the rent on:

• a.the leased square footage alone
• b.a base rent amount plus a percentage of the tenant's sales✓
• c.the landlord's cost of borrowing capital
• d.the tenant's total number of employees

A percentage lease charges a minimum base rent plus a percentage of the tenant's gross sales, aligning the landlord's return with the retailer's success. It is not based on employee count, financing costs, or square footage alone.

The implied warranty of habitability requires a residential landlord to:

• a.provide luxury finishes and upgrades
• b.always pay all of the tenant's utility bills
• c.guarantee that the tenant earns a profit
• d.keep the premises in a safe, livable condition✓

The implied warranty of habitability obligates a residential landlord to maintain essential services and a safe, livable dwelling, such as heat, water, and structural safety. It does not require luxury features, a guaranteed profit, or always paying utilities.

A tenant's security deposit generally must be:

• a.applied toward the landlord's mortgage payment
• b.treated as the managing broker's commission
• c.returned to the tenant, less lawful deductions, after the tenancy ends✓
• d.kept by the landlord as additional rental income

A security deposit secures against damage and unpaid rent; the landlord must return it, minus lawful deductions for damage beyond normal wear, within the legally required time. It is the tenant's money held in trust, not extra income for the landlord.

Constructive eviction occurs when:

• a.the tenant sublets the unit with permission
• b.the landlord files a routine lease renewal notice
• c.a landlord's failure to maintain the premises makes them uninhabitable, forcing the tenant to leave✓
• d.the tenant simply stops paying rent voluntarily

Constructive eviction happens when the landlord's breach - such as failing to provide heat or water - renders the unit unusable, letting the tenant leave and end the lease obligation. It is triggered by the landlord's conduct, not the tenant's voluntary acts.

A property sells for $425,000 at a 6% commission that is split equally between the listing and selling brokerages. How much does each brokerage receive?

• a.$6,375
• b.$2,550
• c.$12,750✓
• d.$25,500

Total commission = $425,000 x 0.06 = $25,500. Split equally, each brokerage receives $25,500 / 2 = $12,750. The $25,500 is the full commission, and $6,375 would be a further half of one brokerage's share.

A $310,000 sale pays a 7% total commission. The listing brokerage keeps 50%, and the listing agent receives 70% of the brokerage's half. How much does the agent earn?

• a.$15,190
• b.$6,510
• c.$10,850
• d.$7,595✓

Total commission = $310,000 x 0.07 = $21,700. The brokerage's half = $10,850. The agent's 70% share = $10,850 x 0.70 = $7,595. The $10,850 is the brokerage's full half, and using 60% would give $6,510.

A seller wants to net $150,000 after paying a 5% commission and $3,000 in other closing costs. Rounded to the nearest dollar, what sale price is required?

• a.$161,053✓
• b.$161,000
• c.$160,500
• d.$157,500

The seller must net $150,000 plus $3,000 in costs = $153,000 after commission, and keeps 95% of the price: Price = $153,000 / 0.95 = $161,052.63, which rounds to $161,053. You cannot simply add 5% to the net, because the commission is charged on the higher sale price.

Annual property taxes are $3,650, paid in arrears. Using a 365-day year, closing is on the 90th day of the year and the seller is responsible through the day before closing (89 days). What is the seller's share credited to the buyer?

• a.$890✓
• b.$900
• c.$875
• d.$1,000

Daily tax = $3,650 / 365 = $10 per day. The seller owes for 89 days through the day before closing: 89 x $10 = $890, credited to the buyer since taxes are paid in arrears. Charging the seller for 90 days would give $900.

A loan of $240,000 carries a 5% annual interest rate. What is the interest portion of the first month's payment?

• a.$1,000✓
• b.$1,200
• c.$100
• d.$12,000

Annual interest = $240,000 x 0.05 = $12,000. One month's interest = $12,000 / 12 = $1,000. The $12,000 figure is the full year's interest, and the other options come from misplacing the decimal.