Colorado Contracts and Regulations Exam 1. In a promissory note, an acceleration clause: (a) Allows a borrower to convert from quarterly to monthly payments (b) Allows a borrower to pay off early without a penalty (c) Allows a lender to call the remaining balance due if certain events happen (d) Allows a lender to refinance a balloon payment when due 2. What form may earnest money take? (a) Cash or good funds only (b) Cash or check only (c) Cash, check or promissory note (d) Any form the seller will accept 3. In Colorado, the most common instrument used to secure a real estate loan is a: (a) Mortgage (b) Deed of Trust (c) Installment Land Contract (d) Chattel Mortgage 4. How long may a landlord hold a tenant’s security deposit after termination and surrender of the premises? (a) Thirty days unless the lease calls for a longer period up to sixty days (b) Never more than one month (c) Thirty days unless the lease calls for a longer period up to 75 days (d) Only until any damage has been repaired and charged 5. Under Colorado law, if you do not have a written agreement or a specific disclosure with a party to a transaction, you are considered to be a(n): (a) Agent for the seller (b) Transaction‐Broker (c) Agent for the buyer (d) Dual agent 6. A Counterproposal: (a) Accepts the offer and requires changes to all the terms (b) Contains a complete new agreement (c) Must be accepted by the Acceptance Deadline of the original offer (d) Must be securely attached to the original offer 7. If the seller and buyer have a legal dispute regarding the approved Contract to Buy and Sell Real Estate, what must they do: (a) Submit the matter to binding arbitration (b) Interplead the earnest money to a court of competent jurisdiction (c) Submit the matter to mediation and seek resolution within 30 days (d) Submit the matter to binding mediation by the Real Estate Commission 8. The approved Agreement to Amend/Extend Contract: (a) Amends a Contract to Buy and Sell (b) Amends an Exclusive Right‐to‐Buy Listing Contract

(c) Amends an offer to purchase (d) Amends a Transaction‐Broker Addendum 9. If no general property taxes have not been paid as of March 1; what is the latest date they may be paid to avoid any interest or penalty? (a) The last day of March (b) June 15 (c) The last day of February (d) The last day of April 10. The Commission approved Seller’s Property Disclosure form: (a) Is required by statute (b) Is required in all residential sales (c) Is required by a provision of the Residential Contract to Buy and Sell (d) Is required to be completed by the listing broker 11. Lead‐based paint disclosure is required: (a) For property built before January 1, 1978 (b) For all residential sales (c) For property in known high lead areas (d) For residential property in which a building permit was issued before January 1, 1978 12. What is the purpose of the Broker’s signature on the sales agreement? (a) Broker is a fiduciary and therefore is a party to the agreement (b) Broker confirms the commission split between the cooperating Brokers (c) Broker receipts for the earnest money and confirms the brokerage relationship (d) Broker is witnessing the legal document for the buyer and seller. 13. Colorado’s Uniform Consumer Credit Code (UCCC): (a) Requires “Creditor” lenders to charge 21% interest (b) Allows a “Creditor” lender to charge up to 45% interest on most loans (c) Requires “Creditor” lenders to charge higher interest rates for business loans (d) Allows a “Creditor” lender to charge up to 21% interest on most loans 14. The Colorado Statue of Frauds attempts to limit fraud by: (a) Requiring that a real estate listing be in writing. (b) Requiring that certain types of documents be in writing, and signed, in order to be valid and enforceable in court. (c) Requiring that agency contract be in writing (d) Requiring that certain types of documents be in writing, signed, and witnessed in order to be valid. 15. The purpose of Commission Rule F relating to approved forms is to: (a) Help insure the broker’s compliance with the Conway‐Bogue decision of the Colorado Supreme Court (b) Assist attorneys in handling real estate transactions (c) Require that all real estate transactions be completed using the same form (d) Prohibit the use of addenda to add material to standard forms

16. A broker, seller and buyer all agree to provide two contracts at different prices. The higher priced contract will be used to apply for financing and the lower will be used for closing. (a) This is fraudulent dual contracting (b) This is legal since all parties agreed (c) This will likely result in a higher loan amount (d) This is appropriate in a rising value market 17. When a seller receives an offer from an buyer, the seller may properly respond by: (a) Checking the appropriate box, initialing the form, and submitting a counterproposal. (b) Telling his or her broker to call the buyer with a counteroffer (c) Writing “rejected” at the top and signing it at the bottom on the appropriate seller line. (d) Telling his or her broker to call the buyer with his or her acceptance 18. If a Seller is offering Seller financing: (a) The buyer may set the interest rate (b) The listing and sales agreements should specify the type of note and deed of trust (c) The broker must use FNMA forms for the loan (d) Only an attorney for one of the parties may prepare the forms 19. Your sellers had a radon test done when they bought six years ago. That test showed “action” levels of radon on the basement storeroom only. They should: (a) Disclose the test results and the age of the test (b) Disregard such an old test (c) Keep a basement window open during the listing (d) Have a new test done now 20. A Seller completing the Seller’s Property Disclosure form tells you the air conditioning hasn’t been used in three years. How should they mark the form? (a) “working” since that is the last they knew (b) “not working” since it has been so long (c) “not included” since it may not be working (d) “do not know” or “working” with a note about the time 21. The schedule of exceptions in a title insurance commitment: (a) Lists things to be done before the policy will be issued (b) Lists things against which the company will not insure (c) Lists things which make the title unmerchantable (d) Lists items which will not he replaced if damaged 22. One approved Deed of Trust provides for “Strict Due on Transfer”. This means the lender may call the note due: (a) At any time (b) If the property is transferred under the borrower’s will (c) If the borrower sells the property (d) If the borrower changes employers 23. When a Deed of Trust is used for financing, the beneficiary is the: (a) Borrower (b) Broker (c) Public Trustee

(d) Lender 24. Title to property may be acquired by adverse possession if: (a) The property has been unoccupied for 18 years (b) The claimant has lived on the property for 7 years (c) The claimant has occupied the property for 18 years under certain conditions (d) The claimant has used the property for access for 18 years 25. The seller under and installment land contract: (a) Has full real property rights (b) Can foreclose at any time (c) Retains legal title (d) Retains equitable title 26. If you have an Exclusive Right‐to‐Sell Listing Contract: (a) You agree to work exclusively with this Seller and no others at the same time (b) You cannot work with buyers who might be interested in the Seller’s property (c) You must sell this Seller’s property to comply with the agreement (d) You have permission to work with other sellers at the same time 27. Following a foreclosure sale, the lender receives the: (a) Entire proceeds for the sale, including any excess above the debt. (b) Proceeds of the sale up to the outstanding debit plus court and collection costs (c) Uncollected loan balance only. (d) Property since it was the collateral for the loan 28. After a property inspection, a buyer may: (a) Require the seller to repair all unsatisfactory items (b) List neighborhood features which are unsatisfactory (c) Terminate the contract without listing specific defects (d) Require the seller to provide cash credit at closing for defects 29. Which of the following is exempt from the real estate licensing law in Colorado? (a) An attorney‐at‐law who lists a clients house for sale for a 6% sales commission (b) A son selling his father’s property under a proper power of attorney and receiving a fee of 3% of the selling price (c) An investor who owns more than ten houses and sells three of them to a private individual (d) An inactive licensee helping a co‐worker fill out a purchase offer on a for sale by owner property and not collecting a fee 30. The Buyer has sent the Seller an Inspection Notice with several unsatisfactory items that Seller refuses to correct. If the issue is not resolved by the Resolution Deadline: (a) The contract will terminate at the Resolution Deadline (b) Buyer has one day after the Resolution Deadline to withdraw the notice (c) Seller may be charged for these items at closing (d) Seller may terminate the contract at the Resolution Deadline 31. An investor asks you to assist in arranging a tax‐deferred exchange for her property. You should advise her:

(a) You cannot do this because there are no approved forms (b) You have a form for only a delayed or non‐simultaneous exchange (c) There is a form which can be altered to cover any exchange (d) You can assist with the real estate matters and her attorney and accountant can help with the rest 32. The Closing Instructions form (CL8‐9‐95): (a) May be used only by title insurance companies (b) Must be part of every contract (c) Provides for the Closing Company to give legal advice to the Listing Broker (d) Engages a closing service on behalf of the Buyer and Seller 33. The HUD pamphlet Protect Your Family from Lead in Your Home must be provided to buyers of pre‐1978 residences by: (a) HUD (b) The lender (c) The broker (d) The seller 34. A broker moves his office to the building next door and neglects to inform the real estate commission. What is the status of the brokerage license? (a) The license is revoked (b) The license is cancelled and only the employed licensees may conduct business (c) The license is unaffected as long as the broker informs the commission within thirty days (d) The license is inactive along with the licenses of employed licensees 35. Your company offers a guaranteed buyout program as an incentive for people to list. Based on the Licensee Buyout Addendum, which would be true? (a) The Seller must sell on your terms (b) You and your broker must consummate the sale (c) Your broker is responsible once the Seller accepts the terms (d) Your broker is responsible only if the broker signs at the bottom of the addendum 36. If a property is in a special taxing district the approved Contract to Buy and Sell Real Estate provides: (a) Seller must pay off as this is an encumbrance to the property (b) Buyer will have 30 after closing to petition to be excluded from the district (c) Buyer may terminate the contract by written notice (d) Seller can apply to for a waiver of the taxes and the buyer won’t have to pay them 37. According to the approved Contract to Buy and Sell Real Estate, encumbrances to be paid by the Seller: (a) May be paid at or before closing (b) Must be satisfied prior to closing (c) May not be paid from proceeds of the sale (d) May be paid by the seller after closing 38. Another associate broker in your office has listed a house you would like to buy as a rental investment property. What form(s) would you use to present your offer?

(a) The Licensee Buyout Addendum (b) The Residential Contract to Buy and Sell (c) The Residential Contract to Buy and Sell and the Licensee Buyout Addendum (d) The Commercial Contract to Buy and Sell 39. If an offeree wishes to reject an offer and modify its terms in a return offer, the offeree should: (a) Mark up the offer with any terms changed and send it back (b) Have the broker prepare a Counterproposal with the amended terms (c) Have the broker prepare an Agreement to Amend/Extend Contract with the new terms (d) Have the broker tell the original offeror to submit a new offer with the desired terms 40. The approved Exclusive Right‐to‐Lease contracts: (a) All establish agency relationships (b) Don’t require disclosure of material facts (c) Provide that the Broker receive a lump sum commission based on contract rent (d) Establish a Broker’s authority to offer a property for lease 41. What is the purpose of the Colorado real estate license law? (a) Protect licensed brokers in Colorado (b) Establish fair real estate brokerage fees (c) Permit real estate brokers to practice law (d) Protect the public of the state of Colorado 42. In a transaction with a listing broker and a buyer’s agent broker, who holds the earnest money? (a) listing broker (b) Buyer’s agent (c) Must be in a neutral escrow company (d) The brokers establish a joint escrow 43. A buyer who wishes to remain anonymous until closing: (a) Cannot do this, it is illegal (b) Must hire an attorney‐at‐law to be a straw man (c) Must reveal his identity to a seller’s agent (d) May legally do this by instructing the broker in the Exclusive Right To Buy Contract 44. If a property is sold for unpaid taxes, how long does the owner have to redeem? (a) 90 days from the date of first notice of delinquency (b) Up to three years from the tax sale (c) One year from the tax sale (d) Six months from the tax sale date for residential property 45. Water rights in Colorado are:

(a) Real property transferred by deed (b) Appurtenant real property (e) Appurtenant personal property (f) Real property transferred by bill of sale

46. Colorado law provides a homestead exemption to a head of household. This exemption: (a) Protects the first $45,000 of assets from creditors unless the exemption is waived (b) Applies only to debts secured by real estate (c) Cannot be waived because it is automatic under the law (d) Creates a dower right for a widow 47. What form of concurrent ownership does Colorado recognize? (a) Tenancy by the entireties (b) Community property (c) Tenancy for years (d) Joint tenancy 48. Real Estate Professional errors and omissions insurance: (a) Replaced the Real Estate Recovery Fund (b) Protects licensees from loss based on their innocent mistakes (c) Has full coverage for license fraud (d) Is optional, but good business practice

49. According to the Commission approved Exclusive Right‐To‐Sell Listing Contract: (a) A broker’s compensation is set by the Real Estate Commission for certain geographical areas (b) A broker’s compensation is set by local brokers as a standard fee (c) A broker’s compensation is established by the seller (d) A broker’s compensation is established by the brokerage firm 50. An in‐company transaction means one in which: (a) Broker has an agency listing and cooperating broker is a transaction‐broker (b) Broker is agent for the seller and buyer is a customer (c) Broker is agent for the buyer with no working relationship with seller (d) Broker represents or is working with both parties to the transaction 51. Three joint tenants sign a listing with your company what is the minimum number of duplicate originals you need? (a) 2 (b) 1 (c) 4 (d) 5 52. In Colorado, residential properties are conveyed by: (a) Bill of Sale (b) Deed of Trust (c) Trust Deed (d) General Warranty Deed 53. Commissions earned by a broker in a real estate transaction (a) Are determined by agreement of the broker and his or her principal.

(b) May be shared with an unlicensed person, provided that such person aided the broker in bringing the buyer and seller together. (c) May be deducted from the earnest money deposit and claimed by the broker as soon as the buyer and seller execute the purchase and sales agreement. (d) Are based on a schedule of commission rates set by the Real Estate Commission. 54. What is true of a mechanics lien? (a) Has priority over all prior liens (b) Has priority over all tax liens (c) Can be placed by a supplier of materials (d) Can be retroactive to the date of completion 55. A special tax or special assessment is shown on the Certificate of Taxes due in the amount of $834 for a curb and gutter project. The tax is payable over 10 years with annual interest of 5%. If the buyer has agreed to assume this property obligation, how will it show on the settlement worksheet? (a) It will not show up since it has no financial effect on the closing. (b) $834 debit to the seller, $834 credit to the buyer (c) $834 debit to the seller, $834 credit to the broker (d) $834 plus prorated interest debit to the seller and credit to the buyer. 56. In a new loan closing, the settlement worksheet will show an entry for a tax reserve that indicates: (a) The new lender is collecting this tax amount from the seller (b) The new lender is deducting this amount as a loan transfer fee (c) The new lender is withholding this amount from loan proceeds to start the impound account for the next payment of taxes. (d) The new lender is contributing this amount toward the buyer’s taxes for this year.

57. The six‐column settlement worksheet entry for the property purchase price would be: (a) Debit the seller, credit the broker (b) Debit the seller, credit the buyer (c) Credit the seller, debit the buyer (d) Credit the seller, debit the broker 58. At closing, the recording charges for the warranty deed would normally be charged to: (a) Seller (b) Buyer (c) Broker (d) Lender 59. If a Colorado property sells for $245,900, what documentary fee will be paid when the warranty deed is recorded? (a) $24.59 (b) $25.00 (c) $245.90 (d) $250 60. The __________________ shows all deposits and payments to and from a broker’s escrow account in chronological order?

(a) Bank reconciliation (b) Ledger cards (c) Bank statement (d) Account Journal 61. One‐half of the general property tax has been paid by February 28; by what date must the balance be paid to avoid any penalty? (a) March 31 (b) April 30 (c) June 15 (d) March 1 62. According to statute, “good funds” would include: (a) A check drawn on the broker’s escrow account. (b) A teller’s check from a savings and loan. (c) A title insurance company corporate check. (d) A check from the buyer that will clear the bank. 63. The residential Contract to Buy and Sell includes a provision about lead‐based paint disclosure. According to this provision, if the building permit for a residential improvement on the property was issued prior to January 1, 1978: (a) The broker is responsible to disclose the age of the property. (b) Disclosure is required only if Sellers are aware of lead‐based paint on the property. (c) The contract is void unless disclosure is signed by the Seller and brokers prior to the parties signing the sales contract. (d) Seller and brokers must make disclosure prior to closing. 64. A broker’s escrow or trust account must comply with all EXCEPT which of the following: (a) Be maintained in the name of the licensed brokerage (b) Be insured by agency of the federal government (c) Have only the broker authorized to withdraw funds (d) Be reconciled regularly to guard against commingling 65. 12. The seller listed his house for sale with the broker on February 1. The listing agreement was to last five months. In April, the seller decided that the house was no longer for sale. Which of the following statements is true? (a) The seller has canceled the agreement and there are no penalties. (b) The seller has withdrawn the broker's authority to sell the property and may be subject to reimbursing some broker expenses. (c) The seller is required by law to leave his house on the market until June. (d) The Real Estate Commission will decide if the seller’s action is justifiable. 66. Five years ago, Unit 5B in a condominium community was the site of a brutal and highly publicized murder. The unit was sold to an elderly woman who contracted the AIDS virus in a blood transfusion and died in the unit last year. As the agent for the woman's estate, what are your disclosure responsibilities to prospective purchasers of Unit 5B in this situation? (a) You must disclose both the murder and the AIDS‐related death.

(b) You are specifically prohibited by law from disclosing either event. (c) You are specifically relieved of liability for nondisclosure of either by the Colorado stigmatized property disclosure law. (d) You do not need to disclose the murder, but you must disclose the AIDS‐related death. 67. In Colorado a developer must register with the Real Estate Commission for which of the following projects? (a) A mini‐warehouse project with over a hundred storage units. (b) A condominium office park with 40 office warehouse units for sale. (c) A subdivision of 100 acres into 10 sites for residential use. (d) A conversion of an apartment complex into 25 residential condominiums 68. In Colorado, a deed of trust may be used to provide security for a real estate loan. If the deed of trust is set up with a private trustee: (a) This trustee will hold legal title to the property and be shown on the deed. (b) Any foreclosure would be handled by the private trustee. (c) Any foreclosure would be handled by the public trustee. (d) Any foreclosure would be handled in the appropriate court. 69. Based on the transaction‐broker Exclusive Right‐to‐Sell Listing Contract, the listing broker must disclose to any potential buyer: (a) Facts about the Seller actually known by Broker (b) Material facts about the property actually known by Broker (c) All facts about the transaction actually known by Broker (d) The motivations of Seller, if requested by buyer. 70. The “holdover clause” in the approved Exclusive Right‐to‐Sell Listing Contracts forms protects the broker’s commission for certain disclosed buyers: (a) For up to six months after the listing expires. (b) For a negotiated time even if the Seller lists the property with another broker after expiration. (c) For a negotiated time unless the Seller lists the property with another broker after expiration. (d) Only during the term of the listing and any extensions. 71. The residential Contract to Buy and Sell contains a section regarding Common Interest Community Documents. This section refers to documents for: (a) Multifamily housing such as condominiums and townhomes that have common recreational amenities. (b) Any community governed by covenants. (c) Communities covered by special taxing districts. (d) Any community subject to mandatory assessments for maintenance of common elements. 72. Buyer C has been unable to obtain financing to purchase Seller D’s property. Since the property is unencumbered and Seller D wants to facilitate the sale, D offers to finance part of the purchase price. Buyer C will give Seller D a/an: (a) Wraparound mortgage

(b) Blanket mortgage (c) Open‐end mortgage (d) Purchase money mortgage 73. In certain circumstances, a lender may have the right to collect an additional specific amount when a loan is paid off before the end of its term. To determine if a lender has this authority, one would read the: (a) Prepayment clause (b) Defeasance clause (c) Alienation clause (d) Mortgage covenants 74. A benefit of seller financing is that the buyer and seller can avoid paying: (a) State deed tax (b) Recording fees (c) Title insurance premiums (d) Discount points and loan origination fees 75. A method of financing in which regular payments are made by the mortgagee to the mortgagor is: (a) Reverse annuity mortgage (b) Contract for deed (c) Purchase money mortgage (d) Growth equity mortgage 76. Which is not a protected class under the Federal Fair Housing Law? (a) Sex (b) Marital Status (c) Religion (d) Race 77. What happens if the seller does not sign or reject the buyer’s offer, but only initials the offer? (a) The offer is amended (b) The offer is superseded by an addendum (c) The offer is countered (d) The offer is terminated 78. Which of the following is not required to maintain a current errors and omission insurance policy? (a) An active licensee (b) An inactive attorney (c) An inactive real estate broker (d) An active mortgage broker 79. Having found a licensee guilty of a violation of license law, a rule, or regulation, the Real Estate Commission can not do which of the following: (a) Bring criminal charges against the licensee (b) Suspend the licensee (c) Revoke the license of the offender (d) Charge an administrative fine

80. An unlicensed personal assistant may do all of the following, EXCEPT (a) Provide access to the property (b) Distribute information prepared by the broker (c) Negotiate the purchase price (d) Prepare a CMA at the direction of the broker 81. Which of the following is not an approved listing agreement? (a) Exclusive Right‐To‐Sell (b) Open Listing (c) Exclusive Listing (d) Net Listing 82. A lender has filed a notice of election and demand. The sale must take place: (a) No more than 125 days unless agricultural land (b) No less than 45 days (c) 75 days (d) No more than 60 days 83. If the buyer’s purchase is located in a special taxing district, the buyer may choose to _______ the contract (a) Void (b) Cancel (c) Terminate (d) Suspend 84. If a broker does not measure the residential property himself, he must then disclose: (a) Source (b) Methodology (c) Local Standard (d) Exact Square Footage 85. Which of the following trust account records show each individual transaction? (a) Journal (b) Ledger (c) Settlement Worksheet (d) Checking Account Reconciliation 86. Which of the following trust account records show all transactions in chronological order? (a) Settlement Worksheet (b) Checkbook (c) Ledger (d) Journal 87. Which of the following would not be acceptable for disclosing brokerage relationships? (a) Brokerage Disclosure to Buyer (b) Exclusive Right‐to‐Sell Listing Agreement (c) Definitions of Working Relationships (d) Brokerage Disclosure to Seller (For Sale by Owner)

88. Which is a legal brokerage relationship in Colorado? (a) Representing a buyer as his agent and the seller as a customer (b) Representing the seller as an agent and the buyer as a transaction‐broker (c) Representing the seller and buyer as an agent (d) Representing the seller as his agent and the buyer as the seller’s sub agent 89. As an agent for the seller, you must (a) Disclose all psychological stigmas (b) Offer only price and terms acceptable to the seller (c) Require that an attorney review the title commitment (d) Confirm the buyer financial qualifications with the lender 90. An associate broker is transferring to another office, who must notify the Real Estate Commission? (a) The broker associate (b) The employing broker (c) Neither (d) Both 91. Colorado Fair Housing Act provides protection to buyers purchasing what type of property that is not included in the Federal Fair Housing Act? (a) Vacant Land (b) Residential (c) Multifamily Housing (d) Commercial 92. Colorado Use Tax is paid by: (a) Seller (b) ½ is paid by each of the parties (c) Negotiation (d) Buyer 93. Which of the following is NOT good funds? (a) Certified check (b) Cash (c) Title company’s trust account check (d) Wired funds 94. An Exclusive Brokerage Listing Contract allows the seller to (a) Pay the seller’s broker a commission if the seller finds the buyer (b) Pay the seller’s broker a commission if another broker finds the buyer (c) Refuse to pay the seller’s broker a commission if another broker finds the buyer (d) Pay the buyer a commission if the seller’s broker finds the buyer If the seller finds the buyer, the seller does not pay a commission to the seller’s broker. 95. A broker can manage __________ single family residential properties out of his sales trust account before being required to open a property management trust account. (a) 2 (b) 4 (c) 6

(d) 9 96. The hazard insurance reserve for an assumed loan would be entered on a settlement worksheet as: (a) Debit the seller, credit the broker (b) Debit the buyer, credit the seller (c) Credit the seller, debit the broker (d) Credit the buyer, debit the seller 97. The hazard insurance assumed by the buyer would be entered on a settlement worksheet as: (a) Debit the seller, credit the buyer (b) Credit the seller, debit the broker (c) Credit the seller, debit the buyer (d) Credit the buyer, debit the seller 98. The hazard insurance on a new loan would be entered on the settlement worksheet as: (a) Debit the buyer, credit the broker (b) Credit the buyer, debit the broker (c) Debit the buyer, credit the seller (d) Credit the buyer, debit the seller 99. What is the only entry in the brokers debit column for an assumed loan? (a) Seller’s net proceeds (b) Earnest Money (c) Purchase Price (d) Interest on the loan assumed 100. Who owns the property on the day of closing in Colorado? (a) Seller (b) Broker (c) Buyer (d) Title Company 101. A Designated Broker (a) Assists the parties to the transaction as an agent (b) Is appointed by an employing broker (c) Is designated to be a seller’s agent (d) Is always working with both parties as a transaction‐broker 102. An Agent (a) Has a fiduciary relationship with both parties as a transaction‐broker (b) Has a fiduciary relationship with both parties as an agent (c) Has a fiduciary relationship with the seller as an agent and the buyer as a transaction‐ broker (d) Has a fiduciary relationship with the buyer 103. The Real Estate Commission must investigate (a) A telephone complaint (b) A verbal complaint (c) Every complaint

(d) A written complaint 104. The Real Estate Commission can issue a temporary hardship license to a Corporation, Partnership, or limit Liability Company for what term? (a) One year (b) 180 days (c) 90 days with one 60 day extension (d) 90 days with one 90 day extension 105. A Colorado Broker must maintain an office open to the public, Except: (a) If the broker has multiple branch offices in other states (b) If the broker does business only on the internet (c) If the broker has an out of state license, then he must maintain an office in that state (d) If the broker is an independent broker 106. The wrongful holding of a tenant’s security deposit by the landlord: (a) Allow the tenant to get treble the amount wrongfully held, plus costs (b) Allow the landlord an additional 60 to return the deposit (c) Allow the tenant to get back his entire security deposit (d) Allow the tenant go to small claims court 107. The first half of the Colorado property taxes are paid the last day of February, on what date does the last half of the unpaid taxes go into default? (a) June 15th (b) September 1st (c) June 16th (d) March 31st. 108. The total in the Broker’s Credit column is; (a) The total amount received by the Broker (Title Company) (b) The total amount paid out by the broker (Title Company) (c) The total amount received by the seller (d) The total amount paid out by the buyer 109. The seller’s rental property was used as a methamphetamine lab. What disclosure must the seller make, if the property has been cleaned to state standards? (a) The seller would have disclosed that the property was a met lab (b) The seller would have to disclose that the property was a meth lab, but now had been cleaned to state standards (c) The seller would have no disclosure to make (d) The seller would have to disclose that the property was used as a meth lab only after closing 110. Seller and buyers are only vicariously responsible for the acts of the broker when the actions of the broker were: (a) Approved (b) Directed (c) Ratified (d) All of the above

111. To become an Employing Broker requires which of the following: (a) Active in real estate for three years (b) 24 hour Broker Administration course (c) Must have been an independent broker for 2 years (d) Pass an additional test given by the Real Estate Commission 112. Colorado water rights are governed by: (a) Riparian Right (b) Prior Appropriation (c) Littoral Right (d) Accretion Appropriation 113. A rancher lost his property to foreclosure. How long does he have after the sale to reclaim the property? (a) 75 days (b) He has no rights after sale (c) 6 months (d) 60 days 114. What is not one of the requirements making the use of the Foreclosure Act Addendum mandatory? (a) A residential property (b) Must be a short sale (c) A residential property in Foreclosure (d) The buyer won’t live in the property for at least a year 115. Contracts with original signatures are required: (a) If requested (b) At closing (c) 24 hours before closing (d) Before Title Deadline 116. The loan is being assumed and there are taxes from the previous year still owed. The closing is set for February 27th. The entry on the settlement worksheet would be: (a) Debit the buyer, credit the seller (b) Debit the seller, credit the broker (c) Debit the seller, credit the buyer (d) Credit the buyer, debit the broker 117. When a seller carries back a purchase money mortgage, the entry would be: (a) Debit the seller single entry (b) Debit the buyer, credit the seller (c) Debit the seller, credit the broker (d) Debit the seller, credit the buyer 118. When completing the Exclusive Right to Sell listing agreement, which monetary encumbrances does the seller list? (a) All encumbrances known to the seller (b) All encumbrances the seller will not pay off

(c) Only encumbrances or public record (d) All encumbrances to be assumed by the buyer 119. If an earnest money check is no honored by the buyer’s bank, the broker should: (a) Deposit it again (b) Notify the seller and ask what the seller wishes to do next (c) Cancel the contract (d) Do nothing 120. When must the earnest money be deposited in the trust account? (a) Within 24 hours after the acceptance (b) Before closing (c) Within 72 hours after the notice of acceptance (d) Whenever notice is given 121. A Colorado associate broker can collect compensation from: (a) His or her employing broker (b) A satisfied seller (c) Commission from a previous employing broker from a closed transaction before transfer (d) Both C and D 122. How long must an independent broker keep his transaction files? (a) 7 years (b) Must be sent to the commission for safe keeping (c) 4 years (d) Must be kept 30 after closing 123. If a seller wants to counter a offer, what does the seller sign? (a) The offer and the counter proposal (b) Just the counter proposal (c) Just the offer (d) Sign the offer and initial the counter 124. The death of either the employing broker or the buyer will terminate which contract? (a) The Exclusive Right to Sell listing agreement (b) The Contract to Buy and Sell Real Estate (c) The Change of Status form (d) The Exclusive Right to Buy contract 125. Who is responsible to investigate the property’s inclusion in a special taxing district? (a) Seller (b) Buyer (c) Seller’s broker (d) Buyer’s broker 126. Buyer S has signed a purchase agreement. Seller Q has signed the agreement and communicated acceptance to S. Which of the following is true of Buyer S’s interest? (a) S holds equitable title (b) S holds legal title

(c) S holds abstract title (d) S holds certificate of title 127. When a buyer and a seller enter into a purchase agreement (contract of sale), the legal remedy that each has to force the other party to consummate the transaction is: (a) Liquidated damages (b) Actual damages (c) Specific performance (d) Unilateral rescission 128. When a lender refuses to make loans in a given neighborhood populated by racial minorities it is an example of: (a) Steering (b) Blockbusting (c) Credit deviation (d) Redlining 129. Errors and Omissions professional liability insurance is require: (a) For every active Colorado licensee (b) For active and inactive Colorado licensees (c) For the employing broker only (d) For resident Colorado brokers only 130. Salesperson J‐H placed the following order with the telephone company: List my name in the directory under the heading, Real Estate, as “J‐H, Real Estate Salesperson, Residential Property My Specialty." J‐H is also required to include: (a) Her license number. (b) The expiration date of her license. (c) Her street address. (d) The name of her employing broker.

131. A broker received an earnest money deposit from a buyer. Under Colorado law, the broker should: (a) Open a special, separate escrow account that will contain funds for this transaction only, separate from funds received in any other transaction (b) Deposit the money in an existing special non‐interest bearing escrow account in which all earnest money received from buyers may be held at the same time. (c) Immediately deposit the earnest money in the broker’s personal interest‐bearing checking or savings account. (d) Hold the earnest money deposit in a secure place in the broker’s real estate brokerage office until the offer is accepted. 132. If a broker establishes an account to hold money belonging to others, which of the following is correct? (a) All checks, deposit slips and bank statements must include the word "Escrow" or “Trust” as part of the account name (b) The names of all authorized signers must be on the checks. (c) The account cannot be in the same bank as the broker's personal checking account. (d) An individual account is required for each transaction.

133. What does the Exclusive Right‐to‐Sell listing form state about the Seller’s Property Disclosure form? (a) Seller is required by law to provide this form to every buyer. (b) Seller may refuse to provide the disclosure and avoid disclosure of material defects. (c) Seller may check the “As Is” box and make buyer responsible to find any defects. (d) Seller may decline to provide the disclosure, but must still disclose latent material defects. 134. Real estate practice in Colorado assumes that which type of deed will convey residential property, unless otherwise provided? (a) General warranty deed (b) Special warranty deed (c) Bargain and sale deed (d) Quit claim deed 135. In Colorado, real estate commissions are (a) Set by law. (b) Set by the Real Estate Commission. (c) Determined by local groups of brokers. (d) Negotiable between the broker and the seller or buyer. 136. The broker has developed a web site advertising the broker’s office with the brokerage name, location and phone number. What additional information does the broker need to include? (a) Name and address of home office and states in which brokerage holds licenses (b) License number of brokerage and list of current active licensees (c) Names of active licensees, addresses and phone numbers (d) There is no need for any additional disclosures

137. Listings based on a "net price" are (a) More profitable because no minimum is set on the amount of commission collectible. (b) Legal in Colorado as long as the seller agrees (c) Illegal in Colorado at any time. (d) Permissible with approval of the commission. 138. According to the Commission approved Exclusive Right‐to‐Sell Listing Contract: (a) Broker’s compensation is set by the Commission for certain geographic areas. (b) A broker’s compensation is established by the brokerage firm. (c) Broker’s compensation is set by the local brokers as a standard fee. (d) A broker’s compensation is established by the Board of Realtors. 139. Which of the following establishes the broker’s power to act as an agent for the buyer? (a) Commissioner of commerce (b) Multiple listing service (c) Listing agreement (d) Buyer representation agreement

140. Associate broker Becker, an agent for Acme Realty, has listed a property. Associate broker Hayes, an agent for Best Realty, later sells the property. The contractual right to collect a commission from the seller belongs to: (a) Associate broker Becker (b) Acme Realty (c) Associate broker Hayes (d) Best Realty Colorado Math Questions 141. Mr. Jones borrowed $40,000 on July 1 at 13% interest to purchase a home. The loan was amortized over a 30‐year period with a monthly payment of $442.80 for principal and interest. What is the portion of the first payment that applies to interest? (a) $433.33 (b) $434.44 (c) $349.33 (d) $439.33 142. Based on the problem in 126, how much of the principal balance is paid off in the first two months of the loan? (a) $9.57 (b) $9.47 (c) $20.54 (d) $19.04 143. The Jones' buy a house for $50,000. They pay 20% down and finance the balance by a mortgage. If the Jones' pay 3 points at closing, what is the cost of the points? (a) $1500 (b) $400 (c) $1200 (d) $1000 144. A house is sold for $80,000 and the buyer receives a loan of $40,000. What was the loan‐to‐ value ratio? (a) 50% (b) 40% (c) 80% (d) 20% 145. If the real estate taxes for last year were $3,685, what would the prorated tax entry be for this year’s taxes for a September 11 closing? (a) $1,130.74 debit to the seller, $2,554.26 credit to the buyer (b) $1,130.75 debit to the buyer, $2,554.26 credit to the seller (c) $2,554.26 debit to the seller, $2,554.26 credit to the buyer (d) $2,554.26 debit to the seller, $2,554.26 credit to the broker

146. If the buyer is assuming an 8.5% loan with a balance of $127,538.00 at a closing on July 11, what is the interest proration? (a) $291.42 Debit the seller, credit the buyer (b) $297.01 Debit the seller, credit the buyer (c) $611.98 Debit the seller, credit the buyer (d) $623.71 Debit the seller, credit the buyer 147. M is purchasing a property from H. The closing is on August 18. M is assuming H’s homeowner's insurance policy, which has a one‐year premium of $780. If the annual premium was paid on Nov 1, what entries would be made on the buyer's and seller's closing statements. (a) $619.73 Credit the seller, debit the buyer (b) $619.73 Debit the seller, credit the buyer (c) $160.27 Credit the seller, debit the buyer (d) $160.27 Debit the seller, credit the buyer 148. A four-plex has 2 units renting for $550 each and 2 units renting for $650 each per month. Rent was paid on October 1st in advance. Closing is scheduled for October 17. Who owes whom and how much do they owe? (a) $1280 credit the seller, debit the buyer (b) $1280 debit the seller, credit the buyer (c) $1120 credit the seller, debit the buyer (d) $1120 credit the buyer, debit the seller 149. The water and sewer bill $44.00 was paid by the seller. The bill covered January 1 through February 28. The closing is set for February 27. Who owes whom and how much do they owe? (a) $1.49 debit the buyer, credit the seller (b) $1.49 credit the seller, debit the buyer (c) $42.51 credit the seller, debit the buyer (d) 42.51 debit the seller, credit the buyer 150. The closing is April 1 and the HOA monthly assessment of $200.00 has been paid by the seller. Who owes whom and how much? (a) $ 6.67 debit the buyer, credit the seller (b) $6.67 credit the buyer, debit the seller (c) There is no proration, buyer owes seller $200.00 (d) There is no proration, seller owes buyer $200.00

Colorado Contracts and Regulations Exam 151. If you list a home for $230.000 and the seller signs a contract for $225,000: (a) Your commission is based on the sales price of $230,000 per your listing agreement with the seller (b) Your commission is based on the sales price of $225,000 (c) You must renegotiate the commission portion of the listing agreement (d) You owe the seller the commission difference between the listed and sold price The broker’s commissions are based on the purchase price. 152. A broker’s license expires on December 31st. (a) Will be renewed for a 2 year period (b) Will be renewed for a 3 year period (c) Will be renewed for a full 2 years and expires in the third year on the licensee’s anniversary date (d) Will be renewed for a full 2 years and expires in the third year on the licensee’s state exam passing date A broker’s license now expires, every three years, on the anniversary date of the attainment of the license and not on December 31st of every third year. 153. When acting as a Buyer’s Agent: (a) The broker is vicariously responsible for acts of the buyer (b) The buyer is vicariously responsible for all of the acts of the broker (c) The buyer is never vicariously responsible for the acts of the broker (d) The buyer is vicariously responsible for the acts of the broker that the buyer approved The buyer can only be vicariously liable for the acts of the broker if the buyer directed, approved, or ratified the acts. 154. The landlord inserts in the lease agreement that the earnest money must be returned no later than 45 days. The maximum time that the landlord can return the earnest money is: (a) 30 days (b) 45 days (c) 1 Year (d) 60 days The statute states a maximum of 60 days, buts the lease can call for a shorter term. 155. The Real Estate Commission’s E&O Insurance has a maximum coverage of: (a) $200,000 per claim and $300,000 annual aggregate (b) $150,000 per claim and $300,000 annual aggregate (c) $100,000 per claim and $3000,000 annual aggregate (d) None of the above is true The coverage must not be less $100,000 per claim and a $300,000 annual aggregate. The deductible for each claim is $1,000; there is no deductible for legal expenses and defense.

156. The Contract to Buy and Sell real estate has a provision if agreed upon would allow signatures to be evidenced by email. Documents with original signatures: (a) Are always required at closing (b) Are provided upon request of any party. (c) Are provided only upon written request by the closing entity (d) Are required if requested by a representative of the real estate commission The CBS states in section 30.2 that documents with original shall be provided upon request of any party. 157. If the buyer determines that a property is in a special taxing district, the buyer may do all of the following: (a) Terminate under the off‐records deadline (b) Terminate with written notice to the seller within the time frame allowed (c) Contact the special taxing district and asked to be excluded (d) Terminate the contract with written notice to the seller on or before the off‐records d deadline There is no exclusion request allowed from a special taxing district. 158. If in the event of a controversy between the parties regarding the earnest money: (a) Broker may use digression and return the earnest money to the appropriate party (b) Broker may allow an attorney to hold the earnest money till resolution (c) The broker may hold the earnest money and wait for written instruction from the parties (d) The broker may divide the money equally between the seller and him/herself The broker can not take any independent action without written instruction from the parties, except to interplead the earnest money into a court of competent jurisdiction. 159. When would the sale of condominium units be considered the sale of a security? (a) When money collected is pooled and disbursed to owners based on their proportionate interests (b) When the majority of the units are non‐owner occupied (c) When there are more than 20 residential units in the complex (d) Never The individual has no direct control of the monies dispersed. 160. When measuring residential property, all but the following is true: (a) The licensee is responsible for indications of the obvious mismeasurement by others (b) The broker is required to measure the property (c) The buyer and seller must be advised that if exact square footage is a concern, the property should be independently measured (d) The method or manner in which the measurement was taken must be disclosed The licensee is never required to measure a property. E‐43 in CREM, Chapter 2. 161. The Real Estate Commission dictates the ethical standards of licensee: (a) True (b) False The REALTOR association is a trade association and the members agree to a code of ethics.

162. Based on the Colorado Statutes of Fraud, which contract must be in writing: (a) A one year lease on an apartment (b) An exclusive right to sell listing agreement and the licensee is a transaction broker (c) A lease for one year that will continue on a month to month basis if the tenant doesn’t terminate the lease at the end of year term (d) The contract to buy and sell real estate Any contract for the conveyance of real property must be in writing. 163. Which best defines the ‘hold over’ period in an exclusive right to sell listing agreement. (a) The period between offer and acceptance (b) The period between the termination and a defined period of time subsequent to the termination (c) The period between the signing of the agreement and an offer (d) The period between the listing appointment and the signed agreement The ‘hold over’ period prevents the seller and the buyer from waiting until the listing agreement terminates to cut the licensee out of a commission. 164. If a seller has made more than 5 credit transactions in the preceding year using a note and deed of trust, the seller: (a) Will be allowed to charge an interest rate up to 45% (b) Will only be allowed to charge an interest rate up to 45% on a loan not to exceed $25,000 (c) Will be allowed to charge an interest rate up to 21% (d) Will only be allowed to charge an interest rate up to 21% on a loan not to exceed $25,000 Seller would be considered a creditor under the U.C.C.C 165. The Minimum time allotted for a residential property for foreclosure through the Public Trustee’s office once the notice of election and demand is filed: (a) 125 (b) 110 (c) 215 (d) 230 The minimum time for residential property is 110 and the maximum is 125 days after the notice of election and demand is recorded. 166. The maximum time allotted for an agricultural property for foreclosure through the Public Trustee’s office once the notice of election and demand is filed: (a) 215 (b) 245 (c) 225 (d) 230 The minimum time for agricultural is 215 and the maximum is 230 days after the notice of election and demand is recorded.

167. The buyer makes an offer on a property using FHA financing. The purchase price is $200,000 and the buyer puts 3.5% down. The property does not appraise (a) The buyer must pay the appraisal price (b) The contract automatically terminates if the appraisal comes in at less than purchase price (c) The buyer has an option to proceed with the transaction or not if the purchase price is less than the appraised value (d) The buyer has until the appraisal objection deadline to negotiate with the seller HUD verbiage in the contract to buy and sell real estate states the buyer will not be obligated to complete the purchase of the property or to incur any penalty by forfeiture of earnest money deposits, if the appraised value is less than the amount filled in the blank (usually the purchase price). Section 6a ,CBS 168. An unlicensed personal assistant not: (a) Prepare a marketing flyer that states specific terms of sale on a property (b) Attend an open house and offer an opinion (c) Negotiate a counter offer in an email (d) Show property to a perspective client You must have a license to negotiate for others for a fee. 169. For a broker to receive compensation for services performed by any third party, the broker must give the buyer/seller written notice before the Off‐Records Matters Objection deadline (a) True (b) False The broker must have written permission from the buyer/seller to receive the compensation 170. If an offer is faxed and the seller signs the faxed copy: (a) Original signatures must be given at the closing (b) Original signatures must be given prior to the closing (c) Faxed signatures may constitute a binding contract (d) All faxed signatures constitute a binding contract Faxed signatures would constitute a binding contract if the contract states that facsimile signatures are acceptable. 171. Must an association’s property manager leaving his position, keep all original records and files for that association in his possession for 4 years? (a) True (b) False The property manager must copy all records and turn the copies over to the association. 172. A managing broker has an interest bearing trust account. All of the following is true regarding this account, EXCEPT: (a) Pay the buyer the interest if the transaction does not close (b) Pay the seller the interest if the transaction does close (c) Transfer the interest to the broker’s operating account (d) Transfer the interest to a fund providing affordable housing to Colorado residents The broker is never entitled to the interest on an interest bearing account

173. A transaction broker must do all of the following, EXCEPT; (a) Advise both parties to seek legal counsel (b) Keep information regarding a previous transaction confidential (c) Perform the terms of any written or oral agreement with a buyer or seller (d) Account in a timely manner for all money and property received The statutes mandate that only a licensee acting as an agent must keep information regarding a previous transaction confidential. 174. A real estate license may be granted to a Colorado corporation when; (a) The broker has reach the licensing level of an ‘Independent Broker’ (b) The broker is a member of the board of directors (c) The broker is an active Colorado licensee (d) The broker must own shares in a publically held corporation A real estate license granted to a corporation can only be given to an applicant that meets all of the qualifications to be an active licensed broker in Colorado 175. The seller is contractually obligated to give the buyer possession to the property at 12:00 pm (noon). What is the buyer’s recourse if the seller does not leave? (a) The buyer may adversely take possession and have the locks changed (b) The buyer may start eviction proceedings as his/her only recourse (c) The buyer may charge the seller a negotiated, daily charge from the possession date and time until delivery of possession as his/her only recourse. (d) The buyer may do both (b) and/or (c) The buyer may start eviction proceedings against the seller and charge the seller a daily charge from the possession date and time until delivery of possession. 176. A For Sale by Owner brokerage disclosure requires the following, EXCEPT: (a) That the broker and seller have not entered into a seller agency agreement (b) Signatures are not required by the For Sale by Owner (c) The For Sale by Owner understands that his/her signature does constitute a binding agreement (d) None of the above The disclosure that stipulate that, “THIS IS NOT A CONTRACT”. 177. Which of the following listing agreements allow the seller to sell the property and not pay any commission? (a) Exclusive Right to Sell (b) Exclusive Brokerage (Agency) Listing (c) Open Listing (d) Both (b) and (c) See CREM , Chapter 27 178. What would not constitute ‘Abandonment’ when working with a buyer? (a) The broker made the buyer an unlicensed assistant and allowed the buyer to look at properties alone (b) The buyer signs an agreement with another broker (c) The broker shows the buyer properties that did not meet the buyer’s requirements (d) The broker did not timely return calls and constantly cancelled showing appointments The buyer may be able to avoid payment of commission if the buyer can prove that the broker abandoned the buyer.

179. The Commission position on earnest money deposits states that; (a) The listing broker must release all moneys to the buyer if the contract does not close (b) The listing broker must through fiduciary duty release the earnest money to the seller if the transaction does not close (c) If the transaction fails to close and there is no dispute, earnest money

should be returned to buyer without seller’s written authorization (d) If any dispute is not resolved in one year, the buyer is awarded the earnest money If there is no dispute, the broker may return the money to the buyer with a signed earnest money release. The broker only holds the earnest and waits for written instructions from the parties if there is dispute over the earnest money deposit. 180. A sales commission is earned by the broker; (a) When the property sells (b) When a ready and willing and able buyer has made an offer that meets the terms in the Seller's listing agreement and the seller decides not to sell (c) 24 hours after closing in escrow(e) At the settlement The question asks when the commission is earned, NOT when the commission paid. The commission is paid at closing. If the transaction does not close, the broker may have to look to the courts.

181. A person who wants to sell options on real estate must have; (a) Option’s License (b) No license is required (c) Real Estate License (d) Finance Degree An option dealer is a person or legal entity that, for compensation, offers or uses an option of any real estate interest for the purpose of purchasing, selling, exchanging, renting, or leasing real estate. Dealing in options requires a real estate license. 182. The real estate recovery fund is maintained by:

(a) State Treasurer (b) Attorney General (c) Real Estate Commission (d) Governor The fund is maintained by the state treasurer under the direction of the Commission. 183. When the current claims are paid from the recovery fund; (a) The recovery fund will be replenished (b) The recovery fund will be audited by the State Treasurer (c) The fund recovery fund will be extinguished (d) The fund with be audited by the Real Estate Commission At this time no new fees are being collected to replenish the fund, and it will cease to exist when all pending claims are paid.

184. There are ____ Colorado real estate commissioners, (a) 5‐ 4 real estate brokers and 1 unlicensed member of the public (b) 5- 3 real estate brokers and 2 unlicensed members of the public (c) 5‐ 3 real estate brokers and 1 developer, and 1 unlicensed member of the public (d) 5‐ 2 real estate brokers and 2 developers The commissioners are appointed by the governor to serve for a three year term. The commission was changed from having one commissioner with expertise in subdivision law to two members of the public. The other three commissioners are real estate licensees with at least five years of experience. 185. A licensee can become an employing broker; (a) After 1 year and additional testing (b) After 2 years and additional education and testing

(c) After 2 years and additional education (d) After 3 years and additional education A licensee can become an employing broker after 2 years and a 24 hour Broker Administration class. 186. The Colorado Fair Housing Act prohibits discrimination based on some of the Following, EXCEPT: (a) Sex (b) Age (c) Religion (d) Race Age is not a protected class except under ECOA. 187. Guide dogs must be allowed in all public places; (a) False (b) True This is a stipulation of the Fair Housing Act .

188. A time share estate can be considered "Real Property" in the state of Colorado: (a) True (b) False Colorado does allow a deed to be recorded with the purchase of a time share 189. Colorado water law provides a preference to those claiming use of water for (a) Agricultural Use (b) Recreational Use (c) Commercial Use (d) Domestic Use The state constitution provides a preference in use, placing domestic use first, followed by agricultural use. 190. An Improvement Survey differs from an Improvement Location Certificate primarily in;

(a) The precise boundary locations of the survey (b) No significant difference (c) Less acceptance of the Improvement Location Certificate in real estate transactions (d) The cost of the Improvement Location Certificate is substantially higher than the Improvement Survey

The improvement location certificate shows where the improvement is located on the lot, easements, and encroachments. 191. All licensees must have E&O Insurance? (a) True (b) False All ACTIVE licensees must have E&O Insurance. 192. A provision in a trust deed which allows the public trustee to foreclose upon default: (a) Defeasance (b) Due‐on‐Sale (c) Power of Sale (d) Acceleration The public trustee is given authorization to conduct the foreclosure sale in the deed of trust. 193. Who must notify the Real Estate Commission when a licensee relocates to a new brokerage firm? (a) The licensee (b) The Employing Broker (c) Neither (d) Both It is the joint responsibility of the licensee and the employing broker to notify the commission in a timely manner. 194. Under which circumstance could a broker work with a seller as both an agent and a transaction broker? (a) Never (b) In separate transactions (c) With agreement of the parties (d) This would be an illegal relationship Only in separate transactions could a broker work with a seller a both an agent and a transaction broker. 195. Which of the following may not be disclosed as a material fact? (a) Property boundary lines (b) Special taxing district (c) A repaired cracking foundation (d) A refrigerator that is excluded from the transaction (b) The special taxing district disclosure is mandated for disclosure in the contract. (c)The seller’s property disclosure requires (in section A. Structural Conditions) disclosure for the following conditions now exist or have they ever existed. This would include cracks. (d) The refrigerator would still have to have disclosure as to whether the appliance is working because negotiations might eventually include the refrigerator. (a) There is no requirement to disclose property boundary lines, although the seller’s property disclosure does state the buyer can do an improvement survey to determine legal boundary lines.

196. Where might the source of potable water be disclosed? (a) Sellers Property Disclosure (b) Source of Water Addendum to Contract to Buy and Sell Real Estate (c) Contract to Buy and Sell Real Estate (d) (a) and (b) The source of potable water can be disclosed in either (a) or (b). 197. Compensation is the major consideration to determine agency. (a) True (b) False Compensation and agency are both determined by the agreement of the parties, but that is the only way that they are similar. 198. A buyer’s agent may be paid by: (a) The seller (b) The listing brokerage (c) The buyer (d) All of the above The buyer’s agent can be paid by anyone who has signed a compensation agreement. 199. All of the following are true, EXCEPT: (a) The listing agent has the relationship with the seller (b) The selling agent has the relationship with the buyer (c) The listing broker cannot have a relationship with both the buyer and the seller (d) The employing broker can designate himself/herself to work with the seller The listing broker may work with both the seller and the buyer as a transaction broker. 200. When a buyer or seller enters into a brokerage relationship, the relationship is: (a) Only with the designated broker (b) With the designated broker and the employing broker (c) Only with the brokerage firm (d) With the designated broker and the brokerage firm. The relationship formed is only the designated broker. 201. A promissory note is the (a) Collateral (b) Debt (c) Security (d) all of the above The promissory note is the promise to pay the debt and evidences the debt. 202. Which of the following contracts may be best defined as exclusive? (a) Listing Agreement (b) Licensee Buy‐ Out Addendum (c) Contract to Buy and Sell Real Estate (d) Counter Proposal

A listing agreement is best defined as “exclusive”. Example: the Exclusive Right to Sell Listing Agreement. 203. The foreclosure addendum must be used in the following situation; (a) The buyer is an equity purchaser (b) The buyer will occupy the property as his primary residence (c) Previous to the notice of election and demand (d) The property in foreclosure is commercial building An equity purchaser is one who is buying a residential foreclosure, but will not occupy the property for at least a year. 204. A foreclosure consultant’s contract must meet all conditions, EXCEPT: (a) Signatures must be notarized (b) Disclosures must be in 24 pt bold (c) Seller must have 24 hours to review the agreement (d) Seller has a 3 day right of rescission There is not rescission period with this contract. 205. A “Walk‐Through” allows the buyer (a) Must be done immediately before the closing (b) Is an additional inspection opportunity (c) Allows the buyer to verify the completion of inspection requirements (d) Used only for new construction The walk through allows the buyer to (1) verify the condition of the property and (2) verify that inspection requirements are completed. It is not a new inspection opportunity for the buyer. 206. According to the Source of Water Addendum, the seller is responsible for the inadequacy of the water source. (a) True (b) False The seller is only responsible for the disclosure of the water source. 207. All but which of the following must be completed by the Inspection Deadline? (a) The resolution must be agreed upon by the parties (b) The inspection must be completed (c) The Notice to Inspect must be completed and signed by the buyer (d) The Notice to Inspect must be received by the seller The inspection requirements must be resolved by the Inspection Resolution Deadline. 208. Increasing loan balances resulting from the application of periodic payments creates which of the following for borrowers: (a) Negative payments (b) Negative amortization (c) Lower credit scores (d) Negative equity Negative amortization occurs when the payment is not sufficient to cover the interest payment and therefore there is not decrease in the principle balance. Each month the loan balance increases until eventually the loan term must be extended.

209. Which of the following is another term for a junior lien? (a) Subordinate lien (b) First deed of trust (c) Inferior lien (d) HELOC The junior or subordinate lien is inferior to all superior liens. For example a property tax lien is superior to all other liens. 210. A reverse mortgage is the financing option for which of the following individuals? (a) A young couple looking to purchase their first home (b) A homeowner with poor credit who needs to refinance their home (c) An Investor buying a foreclosure (d) A retired person who wishes to access the equity in their home in order to make home repairs The reverse mortgage is available to seniors who cannot afford to make the payment on a home equity loan. This mortgage allows the senior to access the equity and not make a repayment. 211. What agency is responsible for implementing and regulating the Colorado Mortgage Broker Registration Act? (a) Colorado Association of Mortgage Brokers (b) Colorado Mortgage Lenders Association (c) Department of Regulatory Agencies (d) Colorado Attorney General The Department of Regulatory Agencies is the agency that oversees the regulations of mortgage and real estate brokers. 212. Which of the following protects a lender from undisclosed liens associated with a property? (a) Title commitment (b) Flood insurance (c) PMI (d) Title Insurance If the borrower has a LTV ratio higher than 80%, the lender (PMI company) will charge the borrower a monthly amount to secure an insurance from a private mortgage insurance company to protect the lender from the borrower’ default. The lender feels that if the borrower has 20% equity position, there is less risk of default. 213. Discrimination in mortgage lending is addressed by which of the following? (a) Fair Credit Reporting Act (b) Fair Housing and ECOA (c) TILA (d) FACTA Fair Housing and ECOA are two federal agencies regulating all entities involved in the real estate industry, to assure discriminate does not occur based on one’s inclusion in a protected class.

214. VA loans require which of the following? (a) MIP (b) Eligibility fee (c) Funding fee (d) Private Mortgage Insurance The Veteran’s Administration builds an upfront funding fee into every loan. Although, it is not specifically called an insurance, the funding fee makes it possible for the VA to guarantee 25% on all VA loans. 215. Which of the following document pledges a property as a security for a payment of debt? (a) Deed of trust (b) Trustee’s deed (c) Promissory note (d) Deed in trust Colorado has passed laws to make our state a deed of trust state. The deed of trust is security for the payment of the note. A public trustee is set up in each county (in smaller counties, the treasurer may also serve as the public trustee) to foreclosure for beneficiary lender. 216. Which of the following documents is evidence that a debt exists and also specifies the terms of repayment? (a) Mortgage (b) Deed (c) Deed of trust (d). Note The note is the promise to repay debt and is evidence of the debt. If there is no note, there is no debt. The note is not recorded, but is kept in safe place by the lender. 217. Flood insurance in Colorado is provided by? (a) DORA (b) FEMA (c) HUD (d) FACTA FEMA is the federal emergency management agency and takes on the responsibility of providing flood insurance. 218. Which of the following ends the mortgage when the last payment is made? (a) Subordination clause (b) Power of sale clause (c) Promissory note (d) Defeasance clause The defeasance clause is a clause in the deed of trust that defeats the mortgage. The defeasance clause requires the lender to record a release that removes the lien from the title when the loan is paid off.

219. RESPA is regulated by which of the following? (a) Federal Trade Commission (b) FNMA (c) FHA (d) HUD The real estate settlement procedures act mandates disclosure to consumers regarding settlement costs and regulates such things as kickbacks, and affiliated business arrangements. RESPA is a part of HUD. 220. When a Colorado trustee forecloses on a property, by what method is the property sold? (a) Judicially (b) Through a public sale (c) Through private sale (d) Through the courts The public trustee can foreclose on a deed of trust through the power of sale clause. The type of foreclosure is a public sale and not a judicial foreclosure unless the trustee is a private trustee. 221. A_______________ guarantees a lender’s lien priority? (a) Insured closing Letter (b) Subordination agreement (c) Junior lien agreement (d) Title insurance policy A subordination agreement lowers the priority of a lien. 222. RESPA and the Fair Housing Act are both regulated by HUD? (A) True (B) False Both RESPA and the Fair Housing Act are both under the auspices of Dept of Housing and Urban Development. 223. What percentage of mortgage broker ownership interest in a settlement service provider’s business would trigger the need to provide an Affiliate Business Arrangement Disclosure? (a) 10% (b) 5% (c) 1% (d) 15% To qualify for an affiliated business arrangement, the broker must have more than 1% ownership in the settlement service provider’s business. 224. A mechanic’s lien is defined as: (a) Prejudgment lien (b) A nonconsensual lien placed by a contractor (c) A tax lien (d) A consensual lien on real property, such as a mortgage A mechanic lien is filed by a contractor who did some work on the home and has not been paid. Colorado law allows the contractor to lien the title for a limited period of time before the lien must be perfected or fall off the title.

225. Which of the following would begin a public foreclosure? (a) An intent to redeem (b) Notice of Election and Demand (c) Court order (d) A notice to cure After the borrower has missed three payments, the lender will send a notice of election and demand to the public trustee. The notice must be recorded with in 10 days and this recordation of the notice of election and demand begins the foreclosure process. 226. A borrower has a loan with a 30‐year term. The loan is structured in such a way that there will be a zero balance at the end of the term. What type of loan is this? (a) Interest only loan (b) A negatively amortizing loan (c) Amortized loan (d) Fixed rate loan The term is also referred to as a “fully amortized” loan. This loan maintains a fixed payment that is structured to make additional payment to the principle each month resulting in a zero balance at the end of the term of the loan 227. Discount points do what? (a) Raise the loan amount (b) Compensate the mortgage broker for their services (c) Lower the interest rate (d) Decrease monthly payments Discount points are paid to the lender upfront to make up for the lesser amount of interest the lender will receive over the life of the loan because of the lower interest rate. In essence, the discount points paid upfront raises the yield to the lender. 228. A real estate professional may work as both a broker and a mortgage broker. (a) True (b) False Colorado law allows a real estate licensee to also work as a licensed mortgage broker in the same transaction with written disclosure. 229. When would a business opportunity broker NOT need a real estate license? (a) When no ownership of real property is included with the business (b) When the transfer involves securities such as stock in the business (c) When the transfer involves neither real estate nor any rights in real property (d) When the value of the real property is less than 20 percent of the price A business opportunity transaction could be accomplished by a CPA as long as there is no transfer of real estate or any interests in real estate; for example, a lease 230. A single agent under Colorado law (a) May only represent a seller, but never a buyer (b) May represent a buyer (c) Has no duty of fiduciary (d) Has duties to the non-principal A single agent can only represent one of the parties to a transaction as an agent. Only a transaction broker may represent both parties to the transaction.

231. Freddie Mac buys what type of mortgage loans? (a) Subprime loans (b) VA loans (c) Conventional loans (d) FHA Freddie Mac is a private corporation and purchases conventional loans. 232. Sellers had a radon test done when the home was purchased 3 years ago. Since the test showed “action “levels, the sellers should (a) Have a new test done (b) Disclose the test results done 3 years ago (c) Disregard the test (d) Disclosure is not necessary since a radon mitigation system was installed If a test was done that showed action levels, the test results and the age of the test must be disclosed. 233. The relationship between a broker and his buyer principal may be described as all of the following, EXCEPT? (a) Agency (b) Principal/agent (c) Transaction broker/buyer (d) Exclusive The following descriptions all define an agency relationship except transaction broker/buyer. 234. Who would be responsible for paying the premium for mortgagee title insurance? (a) Lender (b) Seller (c) Buyer (d) Broker The seller purchases the owner’s title policy (mortgagor’s) for the buyer and the buyer purchasers the lender’s title policy (mortgagee’s) for the lender. 235. The term “3rd Party” in Colorado refers to (a) A customer (b) The seller in an agency relationship (c) The buyer in a transaction broker relationship (d) The represented buyer or seller The customer is the unrepresented party in the transaction. The buyer who comes to an open house, or the buyer who is not represented by the listing agent (who represents the seller). 236. The Homeowner’s Protection Act requires discontinuation of PMI at what LTV? (a) 76% (b) 77% (c) 80% (d) 78% The LTV must be a result of amortization and not appraised value.

237. The relationship between a broker and the principal would be all EXCEPT (a) Agency (b) Fiduciary (c) Customer (d) Agent/client A customer is unrepresented and all other relationship are words synonymous with agency. 238. Calculate the per diem interest for the following loan components, assuming a 365 day year. Loan Amount‐$100,000 with an interest rate of 8% (a) $29.12 (b) $21.92 (c) $23.59 (d) $ 25.39 I (Annual interest)/ (divided by) R (Interest rate) X (multiplied by) P (Principle), 8% times $100,000= $8,000, $8000 divided 365= $21.92 238. Which form of insurance coverage insures against damage caused by fire? (a) Casualty (b) Hazard (c) PMI (d) Title (a) is a general insurance term, (c) is insurance to protect the lender form the borrower default, (c) and title insurance protects against defects in the title. 239. In each broker relationship approved form, a section calls for broker to recommend legal counsel, this provision complies with (a) Federal law (b) State Law (c) Commission rules and regulation (d) Both (c) and (d) This provision is found both in license law and commission rules and regulations. 240. An in‐company transaction means the broker (a) Broker has a listing agreement and the cooperating broker is a transaction broker (b) Broker is representing the seller and the buyer in the same transaction (c) Broker represents the seller and the buyer is a customer (d) Broker represents the seller who is related to the employing broker In an in‐company transaction, the broker can only represent the buyer and the seller as a transaction broker. 241. The purchase price for a property is $95,000. The buyer is putting down 10% and is paying 3 discount points to buy down the interest rate. What will the buyer be charged for the discount points? (a) $850 (b) $2,850 (c) $2580 (d) $2565 $95,000 multiplied by 10% = $9,500. $95,000 minus $9,500= $85,500. $85,500 times .03 (1%=discount points are equal to one percent of the loan amount times 3 discount points or .03%) =$2,565.

242. A MIP is mandatory when a loan is: (a) A conventional loan with a down payment of 20% or less (b) A FHA loan (c) A subprime loan (d) A VA loan An FHA loan requires an upfront MIP (mortgage insurance premium) on single family homes and townhomes and a monthly MIP on all loans. 243. A buyer’s broker under either an agency or a transaction broker agreement will be paid (a) Only by the buyer (b) Only by the seller (c) Only by the listing company (d) By the buyer and other authorized sources The Exclusive Right –to‐ Buy Contract allows the broker’s compensation to be negotiated by the broker and the buyer. 244. The Exclusive Right‐to‐Buy Contract obligates the buyer to pay the broker’s commission (a) True (b) False The contract allows the broker and the buyer the right to negotiate the buyer’s obligations for compensation. 245. “Predatory lending” and “subprime lending” are synonymous terms. (a) True (b) False Subprime lending is not necessarily predatory in nature; however, it is a higher risk loan. 246. A broker in an Exclusive Right‐to –Buy Contract (Buyer Agency) agrees to (a) Keep confidential the buyer’s ability to finally complete the transaction (b) Keep confidential any material defects the broker knows about the property (c) Promote the interests of the buyer (d) Negotiate to make accounting available to the buyer The only fiduciary requirement mentioned in this question is to promote the interest of the buyer. (a), (b), and (d) would be in violation of fiduciary. 247. Using a misleading advertisement in Colorado can place a real estate broker at risk of violation of all but the following regulations (a) Real Estate Settlement Protection Act (b) Truth in Lending Act (c) Federal Trade Commission (d) Colorado Consumer Protection Act The Real Estate Settlement Protection Act makes disclosure of settlement costs mandatory. (b), (c), and (d) agencies would regulate misleading advertising. (b) Truth in Lending makes disclosure of the cost of financing mandatory.

248. A Colorado homeowner has not paid their taxes for the previous year, by what date must payment be made to avoid penalties? (a) April 30 (b) June 16 (c) July 15 (d) February 28 mcmmm249. In subprime refinancing, borrowers are taking cash against the equity in their homes rather than taking advantage of a lower interest rate (a) True (b) False A subprime loan will always incorporate higher interest rates as the loan creates more risk for the lender. 250. Contract with original signatures is required (a) No later than the recording of the deed (b) At closing (c) At acceptance of the offer (d) If requested Original signatures are only required if requested by either party. Original signatures may be acquired at closing, but the acquisition of the signatures is not mandatory. 251. The right of a borrower to cancel an agreement for refinancing within three days of the closing is called the right of ______________ (a) Renegotiation (b) Defeasance (c) Rescission (d) Repeal In a refinance the borrower is given a 3 day right of rescission allowing the borrower to cancel the transaction. 252. The acronym for APR stands for (a) Annual Price Representation (b) Appraisal Price Reduction (c) Annual Percentage Rate (d) Annual Percentage Ratio “APR” stands for Annual Percentage Rate. APR is the interest rate plus the loan costs that are financed into the loan, expressed as a percent. The APR allows a borrower to compare lenders. 253. What does a “Notice of Election and Demand” initiate? (a) A public foreclosure (b) A judicial foreclosure (c) A deed in lieu of foreclosure (d) A strict foreclosure The lender under the “Power of Sale” clause in the deed of trust authorizes the public trustee with the NED to start the public foreclosure. The public trustee must record the NED within 10 days after the receipt. The recordation date is the benchmark date for the foreclosure sale.

254. If there is damage to the inclusions during the transaction prior to closing, the seller (a) Must replace the inclusion (b) Must repair the inclusion (c) May repair the inclusion (d) Must pay the buyer the value of the inclusion The seller must repair, or replace the inclusion with a similar unit, or give an equivalent credit. 255. The buyer may choose as a remedy to breach of the contract either “specific performance “or “liquidated damages”. The seller is never given a choice of remedy for breach. (a) True (b) False The seller is always under “specific performance” for remedy of a breach of contract. 256. If there is a disagreement regarding earnest money, the broker (a) Must interplead all parties and deposit the earnest money with the court (b) Must demand the title company return the earnest money to the seller (c) Must wait for written instructions (d) Must return the earnest money to the buyer after 30 days The broker must hold the earnest money and await written instructions from the parties. The broker may choose to interplead the parties and the earnest money to a court of competent jurisdiction. 257. The purchase agreement states the buyer may select financing appropriate and acceptable to the buyer, including a different loan that initially sought. If the buyer cannot get the original loan (a) The buyer did not contract in good faith (b) The contract is automatically terminated (c) The seller gets the earnest money (d) The buyer may terminate the contract The buyer might be able to terminate the contract under the “loan conditions” deadline. 258. If the title commitment shows there is a defect (a) The buyer can avoid the contract (b) The title must insure it (c) The seller has the right to try to correct to the defect (d) The contract automatically terminates The contract allows the seller the opportunity to attempt to correct the defect. 259. Which of the following is not considered “Good Funds?” (a) Cash (b) Wired funds (c) Broker’s trust account check (d) Certified check The broker’s trust account check is not good funds. Good funds must be immediately available upon demand. 260. What form must earnest money take? (a) Good funds only (b) Whatever the seller will accept (c) Only personal check (d) Either a personal check or a promissory note

The earnest money can take any form that is acceptable to the seller. 261. What form of co‐ownership does Colorado recognize? (a) Community property (b) Severalty (c) Tenancy by the entireties (d) Tenants in common Colorado recognized 2 forms of concurrent ownership‐“tenants in common’ and “joint tenants”. 262. Which of the following would be required to obtain a real estate license? (a) A personal representative acting under proper authorization (b) An investor selling one of his condo units (c) A person requiring a fee from a tenant concerning the availability of housing (d) A dealer in gas and oil leases The requirement for licensing: one who negotiates for others for a fee. See CREM page 1‐6. 263. All of the following statements is true, EXCEPT (a) A transaction broker must disclose to the buyer that the TB can only help the seller (b) The transaction broker can not represent the buyer as a TB and act as the seller’s agent in the same transaction (c) The transaction broker can represent a seller as a TB in one transaction and as an agent in a separate transaction (d) The transaction broker assists the parties to a transaction without being an agent for either party Colorado law prohibits representing both parties to the transaction as other than a transaction broker. 264. If a seller has granted an unrecorded easement across the property (a) A sale would void the easement (b) The seller is not required to disclose the easement as it is not material to the transaction (c) The seller would provide a copy of the easement to the buyer (d) The buyer must agree to continue the easement This would be considered an off‐record matter that only the seller would know and disclosure of this matter would be required. The buyer could terminate the contract based on the unrecorded material defect. 265. When the inspection is not satisfactory to the buyer, the contract must be terminated. (a) True (b) False Terminating the contract is only one of the buyer’s options if the inspection is not satisfactory to the buyer. The buyer may opt to ask the seller to correct the unsatisfactory items. 266. Water may be taken from a lower to a higher use only buy (a) The use of a “Taking” (b) Eminent Domain (c) Police Power (d) Condemnation

Eminent Domain is the right to use the process of condemnation when water may be taken from an agricultural use to domestic use. Payment must be made for the water, just as any other property right. 267. Water Law is (a) Unfair (b) Complicated (c) Antiquated (d) Simple Because water law is so complicate, the broker should make sure of proper conveyance of the rights and validity of court decrees, well permits, and other makers. 268. Priority mean (a) Equal importance (b) Subordinate (c) Seniority (d) Junior Priority is a senior right or matter that takes precedence over all other subordinate or junior rights. 269. “Day” (n the CBS1‐11‐08.)is used in this contract to mean (a) The entire day ending at 12:00 am (b) Business Day (c) The entire day ending at 11:59 pm, standard or daylight savings time (d) The entire day ending at 11:59 pm, mountain standard or daylight savings time This is found in the Contract to Buy and Sell Real Estate Section 2.5. Day; Computation of Period of Days, Deadline. 270. The seller signs an Exclusive Right‐ to‐ Sell Listing Contract. If the buyer calls the seller, the seller should (a) Show the property to the buyer (b) Refer the buyer to the seller’s agent (c) Tell the buyer to wait 90 days so that he can sell the property without paying a commission (d) Show the property and negotiate a sales price All communication regarding the property must be directed through the listing broker. 271. To be able to receive compensation for services from any third party or affiliated business, the broker must first (a) Get permission from the employing broker (b) File the invoice and the check for possible audit by the Real Estate Commission (c) Get prior written approval from the buyer or seller (d) As long as this compensation is not a commission earned for the sale of a property, the broker need not disclose the compensation The broker can only receive this compensation if the buyer or seller gives the broker written permission. This compensation would have to be given to the employing broker and shared with the broker according to his agreed upon compensation percentage split.

272. The maximum number of days allowed for a foreclosure sale on residential property after the notice of election and demand has be recorded is (a) 75 (b) 125 (c) 110 (d) 230 The maximum number of days to foreclose on a residential property after the notice of election and demand is recorded is 125 and the minimum number of days is 110. 273. A deed of trust that is held by a private trustee is foreclosed the same as (a) Public trustee sale (b) Public foreclosure (c) Mortgage (d) Any other deed of trust If there is no public trustee, the foreclosure is treated like a mortgage and a judicial foreclosure is conducted by the sheriff. 274. A “Confirmation Deed” is (a) Sheriff’s deed (b) Trustee’s deed (c) Quit claim deed (d) Both (a) and (b) are correct The holder of the certificate of purchase at the end of the foreclosure process, both public and judicial, is given a confirmation deed. This deed is the compilation of a sheriff’s and a trustee’s deed. 275. If a payment is made from the recovery fund after a successful judgment against a broker, the benefiting broker (a) Loses his license for a period not to exceed one year (b) Has his license suspended until a repayment plan is implemented (c) Must pay the money back within a year with interest (d) Automatically has his license revoked The broker’s license is revoked for at least a year, but remains a revocation until the broker repays the recovery fund the judgment amount plus statutory interest. 276. The Amend/ Extend Contract with Broker is the form used to change the Contract to Buy and Sell Real Estate (a) True (b) False The amend extend contract with broker is used to change a listing agreement. 277. In Colorado, residential property is generally conveyed by (a) Quit Claim Deed (b) Special Warranty Deed (c) General Warranty Deed (d) Deed of Trust Most buyers, in a normal transaction, are going to require the seller to give a general warranty deed.

278. All money belonging to others which is received by a broker must be placed in a (a) Trust account (b) Operating account (c) Checking account (d) Title company’s business account All money belonging to others must be put into a trust or escrow account within a certain time frame established by the Real Estate Commission and state law. 279. Which of the following leasehold estates has a definite termination date? (a) Tenancy at Will (b) Tenancy for Years (c) Periodic Tenancy (d) Tenancy at Sufferance All the other leaseholds listed above have an indefinite termination date. 280. Colorado has a Warranty of Habitability in all leases (a) True (b) False The HB 08‐1356 was passed and Colorado now has warranty of habitability in all leases after 9‐1‐08. 281. Which is not a protected class under the Federal Fair Housing Act? (a) Religion (b) Sex (c) Marital Status (d) Race Marital status is a protected class under Colorado Fair Housing Act. Other protected classes in Colorado are creed, and ancestry. 282. An exempt property under the subdivisions is a parcel that exceeds ____ acres or more and not more than 19 tracts, which is not intended for use by multiple owners. (a) 20 (b) 40 (c) 25 (d) 35 The answer is 35 acres. See Subdivision Laws in Chapter 4 CREM. 283. An installment land contract is essentially a (a) Deed of Trust (b) Mortgage (c) A Note (d) Financing Instrument in combination with a contract A typical land installment contract provides for all the terms found in a buy/sell agreement, but also contains a provision that a deed will not be delivered until the purchase price has been paid.

284. A Homestead exemption is automatic and protects the homeowner up to _________ from execution and attachment form any debt, contract or civil obligation. (a) $45,000 (b) $35,000 (c) $60,000 (d) $55,000 The answer is $45,000. A judgment creditor cannot force the judgment credit to sell the principal residence unless there is $45,000 of equity in the home. If there is more than $45,000 of equity, the first $45,000 must go to the judgment creditor or homeowner. 285. The federal tax law provides that certain tax benefits for the purchase and ownership of real estate. The seller is able to exclude up to ________________________ of any realized gain on the sale or exchange of a personal residence. (a) $100,000 to $300,000 (b) $200,000 to $400,000 (c) $250,000 to $500,000 (d) $300,000 t0 $600,000 The exclusion is $250,000 for single persons and up to $500,000 for married persons. 286. In Colorado, a mechanic’s lien (a) Encumbers the property until the lien is paid (b) Has priority over all other liens (c) Must be perfected within 6 months (d) Establishes its priority when work was finished The mechanic’s lien must be perfected (adjudicated) within 6 months or the lien is extinguished. 287. If property taxes have not been paid as of March 1st, what is the latest date they may be paid to avoid any penalty? (a) Last day of February (b) Last day of April (c) June 16th (d) June 15th The last day that the property taxes may be paid without penalty is June 15th. 288. When a Deed of Trust is used for financing, the beneficiary is (a) The lender (b) The borrower (c) The public trustee (d) The broker In a deed of trust, there are three parties (1) the trustor is the borrower, (2) the trustee is the public trustee, and the (3) beneficiary is the lender. 289. If a property is sold for unpaid taxes, how long does the homeowner have to redeem? (a) One year (b) Two years (c) Three years (d) Four years The property owner has three years from the tax sale date to redeem the property.

290. If a broker has an interest bearing account, the interest (a) Belongs to the seller (b) Belongs to the buyer (c) Could accrue to a nonprofit, affordable housing fund (d) Belongs to the buyer only if the transaction closes The Colorado contract allows for the interest in an interest bearing account be donated to an non profit, affordable housing fund to help Colorado residents get homes. 291. If a property owner pays one‐half of the property taxes by February 28th, by what date must the balance be paid without penalty? (a) March 1st. (b) June 15th (c) April 30th (d) June 16th The second half of the property taxes must be paid by June 15th to avoid paying any penalty. 292. What document records all deposits and payments to and from a broker’s escrow account in chronological order? (a) Account journal (b) Ledger card (c) Bank statement (d) Bank reconciliation The account journal is a booking keeping tool for employing and independent brokers to keep track of all monies going into the broker’s trust account. This is the first step in a three step process required by the commission. 293. Listings based on a “net price” are (a) Illegal in Colorado (b) Legal with permission from the commission (c) Legal with the appropriate contract (d) Legal with agreement of the seller The commission does not encourage the use of the net listing because it can be very problematic for both the broker and the seller. However, with the agreement of the seller the use of the net listing is legal in Colorado. 294. The Colorado Real Estate Commission has a broad variety of standard and approved forms. Which of the following is one of the primary reasons for these commission approved forms? (a) Protects the public (b) Assures compliance with the Conway-Bogue decision. (c) Makes the use of attorneys mandatory for preparation of contracts (d) Commission controls all contracts between the buyer and seller The Conway‐Bogue decision gave real estate agents the limited practice of law by filling in the blanks in contracts. One of the requirements to stay in compliance with the decision is the use of standard and approved contracts promulgated by the real estate commission. 295. A Colorado licensee can collect compensation (a) From a seller (b) From a buyer (c) From an employing broker (d) Both (a) and (b) are correct

The licensee can only receive compensation for real estate transactions from the licensee’s employing broker. 296. Errors and Omissions Insurance is required for (a) Just employing brokers (b) All licensees (c) All inactive licensees (d) All active licensees Inactive licensees are not required to carry E&O insurance. An inactive licensee wishing to activate would need to secure the insurance before becoming active. 297. Which is required from a listing agreement? (a) Signature of the employing broker (b) A definite termination date (c) The buyer’s signature on the Exclusive Right‐ to –Sell Listing Agreement (d) The broker’s and the seller’s notarized signatures Colorado license law states that all listing agreements MUST have a definite termination date. 298. What type of deed will convey a bank owned property? (a) General Warranty Deed (b) Quit Claim Deed (c) Bargain and Sale Deed (d) Special Warranty Deed The bank will convey a special warranty deed to the purchaser of a bank owned REO property. The bank will only warrant the title for the time the bank held the title after the foreclosure. The foreclosure cleansed the title so there is no additional risk to the buyer to receive this deed. 299. If a dispute arises over the Contract to Buy‐and –Sell Real Estate goes to court, legal fees will be (a) Awarded to the broker (b) Awarded to the seller (c) Awarded to the prevailing party (d) Split between the parties The losing party in court is responsible to paying the legal fees of the prevailing or winning party. 300. In Colorado, water rights are (a) Real property rights (b) Real property rights that must be severed and sold separately from the land (c) Real property rights that must be conveyed with the land (d) Personal property rights Water is determined to be a real property right in Colorado and is generally conveyed separate from the land, with its own deed.