National Real Estate Exam (PSI)

C. Duty of loyalty

The duty of loyalty requires an agent to act in the client's best interest and avoid self-dealing or conflicts of interest that benefit the agent at the client's expense. Steering a client toward a property for personal financial gain rather than the client's needs is a clear breach of loyalty.

B. It allows individual lots to be released from the lien and sold free and clear after a specified payment

A blanket mortgage covers multiple parcels under one loan; a partial release clause lets the developer sell individual lots free of the blanket lien as each is paid off, typically for a set amount per lot. Without this clause, the entire subdivision would remain encumbered until the whole loan is paid, making individual sales impractical.

A. Potentially exempt under the owner-occupied dwelling exemption

The Fair Housing Act includes a limited exemption for owner-occupied buildings with no more than four units (often called the 'Mrs. Murphy' exemption), provided the owner does not use discriminatory advertising or an agent. This may exempt the owner from familial status claims, though not from all forms of discrimination in some states.

B. Steering

Steering occurs when an agent directs buyers toward or away from certain neighborhoods based on a protected class, limiting housing choice. This violates the Fair Housing Act.

B. Agency by estoppel

Agency by estoppel arises when a principal's conduct or statements lead a third party to reasonably believe an agency relationship exists, and the principal is then legally prevented ('estopped') from denying that agency to the detriment of the third party who relied on it.

A. Whether Agent A's uninterrupted efforts were the direct cause that led to the buyer's ultimate purchase

Procuring cause is determined by whether an agent's efforts started an uninterrupted chain of events that directly led to the successful transaction. Simply spending more time or being licensed with the same firm does not establish procuring cause; the key is whether the causal link between the agent's efforts and the final sale remained unbroken.

C. Termination by mutual agreement

When both parties voluntarily agree to end the agency relationship before the contract term ends, this is termination by mutual agreement (mutual rescission).

B. Mutual rescission

Mutual rescission occurs when both parties agree to cancel a contract and restore each other to their pre-contract positions. This differs from novation, which substitutes a new party or obligation rather than canceling the agreement entirely.

C. $46,288

Area of a trapezoid = ½ × (sum of parallel sides) × height = ½ × (200 + 260) × 175 = ½ × 460 × 175 = 40,250 sq ft. Total price = 40,250 × $1.15 = $46,287.50, rounded to $46,288.

D. Duty of confidentiality, which survives termination of the agency relationship

The fiduciary duty of confidentiality continues even after the agency relationship terminates. Disclosing confidential information learned during the agency, such as the seller's motivation to sell quickly, breaches this ongoing duty even though the listing had already expired.

C. A fixture, so it transfers with the real property to the buyer

Courts apply the fixture test (method of attachment, adaptation to the property, and intent) to determine whether an item has become real property. Here the shelves are attached to the structure and clearly intended to stay permanently, so they are fixtures that pass with the sale unless excluded in the contract.

C. The current owner, potentially along with prior owners, under strict and joint liability

Under CERCLA (the federal Superfund law), current property owners can be held strictly, jointly, and severally liable for cleanup costs regardless of who caused the contamination, unless they qualify for a specific defense such as innocent landowner status.

A. Illegal, because it expresses a preference based on religion and familial status

The Fair Housing Act prohibits advertisements that indicate a preference, limitation, or discrimination based on protected classes, including religion and familial status. Even without intent to discriminate in practice, the wording itself violates the Act.

A. Familial status

Familial status protects families with children under 18 from housing discrimination, including occupancy-based refusals unless the property qualifies for a bona fide age restriction. Refusing to rent solely because children are present violates this protection.

C. Gross lease

A gross lease requires the tenant to pay a single flat rent, while the landlord is responsible for property expenses such as taxes, insurance, and maintenance.

D. The seller has likely violated disclosure obligations by failing to reveal a known material fact affecting habitability and value

Known mold contamination, especially resulting from a past flood, is a material fact that can affect health, habitability, and property value; concealing it (e.g., painting over evidence) typically violates seller disclosure obligations in most states.

A. A sublease

When a tenant transfers only part of the leased premises or less than the full remaining term, and remains liable and involved with the landlord, this is a sublease, not a full assignment.

C. A variance

A variance grants permission to deviate from a specific zoning requirement, such as a setback, due to hardship unique to the property. It is different from a special use permit, which allows a listed conditional use.

C. National origin

The federal Fair Housing Act protects seven classes: race, color, national origin, religion, sex, familial status, and disability. Marital status, source of income, and sexual orientation are not federally protected, though some states add them.

B. Other property owners within the subdivision, through private legal action

Deed restrictions and covenants are private agreements enforced through civil action, typically by other owners in the subdivision or a homeowners' association, usually seeking an injunction. Government zoning agencies do not enforce private covenants.

A. Spot zoning, which courts often find invalid

Spot zoning occurs when a single parcel is rezoned in a way inconsistent with the surrounding area and comprehensive plan, typically benefiting one owner without a legitimate public purpose. Courts frequently strike down spot zoning as arbitrary and beyond the proper exercise of police power.

C. Title automatically reverts to the grantor or the grantor's heirs

Language such as 'so long as' creates a fee simple determinable, which automatically reverts to the grantor (or heirs) via a possibility of reverter the moment the stated condition is violated, with no legal action required.

B. The buyer holds no title at all because the forged deed is void from the start

A forged deed is void, not merely voidable, meaning it never legally transfers any interest, regardless of the buyer's good faith or the price paid. Because a void deed conveys nothing, the original owner retains title and can recover the property even from an innocent purchaser.

D. Permitted, as most states allow a limited personal reserve to cover bank fees

Most state regulations permit brokers to maintain a small, specified amount of personal funds in the trust account strictly to cover bank service charges, preventing the account from being depleted by fees rather than mixing client funds for other purposes.

D. Legal, under the religious organization exemption, since the housing is owned by the religious institution and preference is limited to its own religion

The Fair Housing Act includes a specific exemption allowing religious organizations that own or operate housing for noncommercial purposes to limit occupancy or give preference to members of the same religion, provided membership is not restricted based on other protected classes like race or national origin. No annual waiver is required.