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National Real Estate Exam Practice Test Questions and Answers | Latest Version | 2025/2026 | Correct & Verified
What is the primary difference between police power and eminent domain?✔✔ Police power allows government to regulate land use for public welfare, while eminent domain allows government to take private property for public use with just compensation.
What happens to a lease if the property is foreclosed upon?✔✔ In most cases, the lease remains valid if it was recorded or if the tenant was in possession before the foreclosure, unless state law specifies otherwise.
What is the key characteristic of a nonconforming loan?✔✔ A nonconforming loan doesn't meet Fannie Mae or Freddie Mac guidelines, often because it exceeds conforming loan limits or has non-standard terms.
What is the legal term for when a property's value decreases due to external factors?✔✔ External obsolescence refers to value loss caused by factors outside the property itself, like neighborhood decline or zoning changes.
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What is the main purpose of a plat map?✔✔ A plat map shows the division of land into lots, including boundaries, streets, and easements, typically used for subdivisions.
What is the difference between a listing agreement and a buyer representation agreement?✔✔ A listing agreement creates an agency relationship between seller and broker, while a buyer representation agreement creates one between buyer and broker.
What is the key feature of a ground lease?✔✔ A ground lease involves leasing land only, where the tenant typically owns and maintains any buildings or improvements on the property.
What is the legal term for when a tenant continues paying rent after lease expiration without a new agreement?✔✔ This creates a tenancy at sufferance, where the tenant stays with the landlord's implied consent but no formal lease.
What is the primary purpose of a mortgagee clause in an insurance policy? 2 / 4
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✔✔ The mortgagee clause protects the lender's interest by ensuring insurance proceeds go toward repairing the property or paying the loan.
What is the difference between a general contractor and a construction manager?✔✔ A general contractor oversees the entire project and hires subcontractors, while a construction manager acts as the owner's agent to coordinate the project.
What is the key characteristic of a REIT (Real Estate Investment Trust)?✔✔ A REIT is a company that owns, operates, or finances income-producing real estate and must distribute at least 90% of taxable income to shareholders.
What is the legal term for when a property's use changes from residential to commercial?✔✔ This is called a change in property use or zoning conversion, which may require approval from local authorities.
What is the primary purpose of a preliminary title report?✔✔ A preliminary title report reveals existing liens, easements, and other encumbrances before a property transaction closes.
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What is the difference between a conventional loan and a government-backed loan?✔✔ Conventional loans aren't insured by the government, while government-backed loans (FHA, VA, USDA) have federal guarantees.
What is the key feature of a blanket mortgage?✔✔ A blanket mortgage covers multiple properties as collateral for a single loan, often used by developers.
What is the legal term for when a property's value increases due to public improvements?✔✔ This is called an increment in value or unearned increment, often seen with properties near new infrastructure.
What is the main purpose of a relocation clause in a lease?✔✔ A relocation clause allows the landlord to move the tenant to a comparable space in the same building or complex.
What is the difference between a property manager and a resident manager?✔✔ A property manager oversees all aspects of a property, while a resident manager lives on- site and handles day-to-day operations.
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