Tennessee Real Estate License Exam
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Question 1 of 5.
Prospective buyers asked the licensee representing them if it would be a good idea to check the property they wish to purchase for radon. The licensee's best response would be to tell the buyers that:
A. It is unlikely that radon would be a problem in that area.
B. As long as they are non-smokers, it should not be an issue.
C. They should do so, because radon is now considered to be one of the causes of lung cancer.
D. They need not do so, because if radon were present, there would be an odor that would make it easy to detect.
Explanation: A real estate licensee must advise clients to get a radon inspection because radon is a known health hazard. It's a naturally occurring, radioactive gas that can accumulate in homes and is a leading cause of lung cancer, second only to smoking. A is incorrect because a licensee cannot guarantee that an area is free of radon. B is also incorrect because radon exposure is a risk for everyone, regardless of their smoking habits. D is incorrect because radon is an odorless, colorless gas, making it impossible to detect without specialized testing equipment. A licensee's duty is to recommend due diligence to protect the client, and a radon test is a crucial part of that process.
Question 2 of 5.
Which of the following best describes the Housing for Older Persons Act?
A. It allows grandparents with grandchildren to be exempt from the provisions of the Act.
B. It requires that at least 80% of occupied units have one person age 55 or older living there.
C. It requires that 55-and-older housing have significant facilities and services designed for seniors.
D. It allows the awarding of monetary damages against those who believed that property designated as housing for older persons was exempt.
Explanation: The Housing for Older Persons Act (HOPA) of 1995 provides an exemption from the Familial Status provisions of the Fair Housing Act, allowing certain housing communities to cater specifically to seniors. A key requirement for this exemption is that at least 80% of the occupied units must be occupied by at least one person who is 55 years of age or older. A is incorrect because HOPA does not create exemptions for family members living with seniors; rather, it sets the criteria for the community as a whole. C is incorrect because HOPA does not mandate specific facilities or services; it only addresses the age of the residents. D is incorrect as the Act does not concern the awarding of damages for a mistaken belief about an exemption.
Question 3 of 5.
A licensee listed a property that had an unfinished garage. The licensee received an offer subject to the garage being finished. Was a contractual obligation created?
A. Yes, because both the seller and buyer offered to enter into a contract.
B. Yes, because a definite and certain offer was made by the buyer.
C. No, because the seller has not accepted the offer.
D. No, because contractual obligations must be in writing and notarized.
Explanation: A contractual obligation is not created until there is mutual agreement between both the seller and the buyer. The scenario describes an offer made by the buyer, which includes a specific condition (the garage being finished). An offer, by itself, does not create a binding contract. A contract is formed only when the seller accepts the offer. In this case, the seller has not yet accepted the offer, so there is no legally binding obligation. D is incorrect because while most real estate contracts must be in writing, notarization is generally not a requirement for the validity of a real estate purchase agreement.
Question 4 of 5.
An owner has a freestanding cabinet that was custom-built to fit an alcove of the living room. When the owner sells the home, the cabinet will be best described as:
A. real property.
B. personal property.
C. a fixture.
D. an appurtenance.
Explanation: The cabinet is considered a fixture because it was custom-built to fit a specific space in the home, which indicates an intention for it to become a permanent part of the real estate. While a freestanding cabinet would typically be considered personal property, the act of custom-building it for an alcove demonstrates a degree of attachment or adaptation that converts it from personal property to a fixture, which is then transferred with the sale of the real property unless specifically excluded in the contract. Real property is the land and anything permanently attached to it, but a fixture is a separate category of item that was once personal property. An appurtenance is a right or privilege that runs with the land, such as an easement, not a physical object like a cabinet.
Question 5 of 5.
Which of the following methods for establishing value is generally considered most useful for a special-purpose building such as a church?
A. cost
B. income capitalization
C. market data
D. sales comparison
Explanation: The cost approach is the most reliable method for appraising special-purpose properties like churches, schools, or public buildings. These types of properties are difficult to appraise using other methods because they do not have a consistent market for sales, nor do they generate a regular income from which to calculate a value. The cost approach involves estimating the cost of replacing the building, factoring in depreciation and the value of the land, to determine the property's overall worth. The income capitalization approach is used for income-generating properties, the market data or sales comparison approach is used for residential homes with many comparable sales, and neither of these is suitable for a special-purpose property.