Pre-License Final Exam Example (Questions ONLY, ANSWERS WILL BE REVEALED WITH PROPER SUBSCRIPTION)
1 of 100 Broker Regina commingled $5,000 of her client’s earnest money in her personal checking account. Is this illegal?
A. No, it is only illegal if the amount of commingled funds is over $10,000.
B. Yes, it is only illegal if the amount of commingled funds is over $1,000.
C. No, commingling client funds is always legal.
D. Yes, commingling client funds is always illegal.
Pre-License
2 of 100 ______________ dictate(s) the minimum and maximum pressures allowed for plumbing fixtures.
A. The master plan
B. The building codes
C. The elevation of the property
D. The square footage of the property
3 of 100 There is no time limit on tenant Trent’s lease. What type of lease has he entered?
A. An estate at sufferance
B. An estate of freedom
C. An estate for years
D. An estate at will
4 of 100 In Arkansas, non-resident license applicants may be licensed if they
A. comply with the Arkansas Realtor Association Code of Ethics.
B. agree to associate with an Arkansas broker.
C. agree to abide by requirements imposed by their state of residency.
D. meet the same requirements as residents or other prescribed requirements.
5 of 100 A(n) _______ is the third party with whom the agent deals when working on behalf of the principal.
A. tester
B. principal
C. customer
D. Client
?6 of 100 When a licensee quits working for a brokerage, she must
A. immediately surrender her pocket card to her principal broker.
B. surrender her license to the Commission within 7 days.
C. notify the Commission of the change.
D. file with the Commission to place the license on inactive status.
7 of 100 An escrow account ledger would contain
A. the amount of the accepted sales contract, the anticipated closing date, and the name of the transaction’s parties.
B. names of all parties to a transaction, the amount of escrow funds the sponsoring broker received, and the date the broker received the funds.
C. an amount of interest generated, the fee paid to the state’s Commission, and the personal information of the parties.
D. a picture of the check, the deposit slip, and the amount the broker commingled in his business account.
8 of 100 What is the term for the loss of value of an improvement due to functional inadequacies, often caused by age or poor design?
A. Chronological obsolescence
B. Economic obsolescence
C. Environmental obsolescence
D. Functional obsolescence
9 of 100 Licensee Hilda works for broker Sergio. Hilda has not been given the commission she earned from her last transaction due to a fraudulent seller. What should Hilda do?
A. File a suit against the seller herself.
B. Nothing, licensees have no legal recourse.
C. Inform Sergio so he can sue the seller.
D. File a suit with the state’s Recovery Fund.
10 of 100 Joe is a new broker. How often will he be required to reconcile his escrow account(s)?
A. Daily
B. Monthly
C. Quarterly
D. Yearly
11 of 100 Homeowner Nick enjoys the complete bundle of rights to his property, and there are no clouds on title. Nick has what is referred to as _____ to his property
A. legal title
B. assumed title
C. de facto title
D. equitable title
12 of 100 If an appraiser is hired to determine _______ he/she is looking for what the sales price would most likely be in an open market.
A. market value
B. assessed value
C. salvage value
D. replacement value
13 of 100 The owner of a real estate company
A. is exempt from licensure, provided the firm employs an executive broker.
B. must have a company license.
C. need not be licensed.
D. must be licensed.
?14 of 100 The absolute deadline for a written agency disclosure to a buyer is
A. upon initial contact.
B. upon first substantive contact.
C. prior to signing any transaction-related document.
D. prior to signing a lease or sale contract.
15 of 100 Seller Frank receives an offer of $800,000 on a property he listed at $900,000. How much is the offer as a percent of the listing price?
A. 90.6%
B. 86.7%
C. 88.9%
D. 85.0%
16 of 100 The end result of rescinding the contract is
A. that the contract is enforceable.
B. that the contract has been executed.
C. that the contract is null and void.
D. that the contract has been modified but is still valid.
17 of 100 A(n) ________ is the common form of express written agency agreement between a seller and a broker, authorizing the broker to find a ready, willing and able buyer for the property.
A. listing agreement
B. implied agreement
C. permanent agreement
D. estoppel agreement
18 of 100 In a _______, the tenant pays not only the rent for occupancy, but also pays maintenance and operating expenses such as taxes, insurance, utilities and repairs.
A. discounted lease
B. net lease
C. total lease
D. balloon lease
19 of 100 A decrease in the availability of money would have which of the following economic effects?
A. Interest rates would go up.
B. Interest rates would go down.
C. Interest rates would NOT be affected due to RESPA guidelines.
D. The lender would be allowed to keep less money in reserve.
20 of 100 A duplex generates $1,400 rent for each of its two units per month. The property has been recently appraised for $350,000. What is this property’s GIM?
A. 9.6
B. 4.8
C. 10.4
D. 20.83
21 of 100 The principal role of an associate broker is to
A. manage a branch office.
B. manage an office’s salespeople.
C. manage an office when the principal broker is absent.
D. offer real estate services on behalf of the company.
22 of 100 Agent Emily’s listing was sold by another agent in her brokerage. Emily is entitled to a
A. selling side commission.
B. neutral party commission.
C. equal party commission.
D. listing side commission.
23 of 100 Licensee Carol is representing seller Cameron. Carol is currently a
A. free agent.
B. dual agent.
C. listing agent.
D. recording agent.
24 of 100 Why would municipal governments be concerned if property values are falling?
A. Because the majority of their revenue comes from real estate taxes. When property values fall, revenue for municipal governments also falls.
B. Because when property values fall, people tend to ignore zoning regulations.
C. Because when property values fall, more people tend to move into the area.
D. Because the mayor will automatically be removed from office if home values fall over 10% in one year.
25 of 100 Licensee Finn reported to the lender that the sales price was $5,000 higher than it actually was as the buyer requested him to. This is an example of
A. intentional fraud.
B. unintentional fraud.
C. negligent misrepresentation.
D. legal obedience.
26 of 100 Seller Gareth is certain there are no clouds on his property’s title. What type of deed should he provide buyers to show his assurance of title?
A. Special
B. Quitclaim
C. General warranty
D. Permanent
27 of 100 A buyer asks if a property has radon gas in the basement. The agent says there is none when he knows there is a radon problem. This is an example of
A. puffing since this action is legal.
B. active fraud since this is an intentional misstatement or omission.
C. negligent misrepresentation since this is an unintentional misstatement or omission.
D. negligent misrepresentation since this is an intentional nondisclosure of a material fact.
28 of 100 Emma’s property is assessed at $650,000. Her property qualified for a $50,000 homestead tax exemption and was appraised at $800,000. What is the taxable value of Emma’s property?
A. $650,000
B. $800,000
C. $600,000
D. $750,000
29 of 100 The Real Estate Settlement Procedures Act (RESPA)
A. allows lenders to accept kickbacks that are from blood relatives.
B. encourages lenders to take kickbacks to increase yield.
C. prohibits lenders from taking kickbacks or unearned fees.
D. allows lenders to accept kickbacks that are less than $100.
30 of 100 A broker applicant had two years of experience, completed five years ago. Does this satisfy the experience requirement?
A. No, it must be within 4 years preceding application.
B. No, it must be within 3 years preceding application.
C. Yes, it completes the requirement.
D. Yes, provided the experience was acquired within Arkansas.
31 of 100 Broker Ola has twice published advertisements that have gotten her in trouble with protected classes. What should Ola do to prevent future advertising problems?
A. Write the ads from the perspective of the largest protected class.
B. Write the ads from the perspective of all protected classes.
C. Hire testers to see what they think of her ads.
D. Purchase additional errors and omissions insurance.
32 of 100 Hubert is a veteran of the First Gulf War. What could be a reason for him to seek a VA loan?
A. The VA automatically pays for half of the mortgage payment
B. It is the easiest way to obtain a loan larger than $750,000
C. The VA does not require Hubert to live on the property with a VA loan
D. Many VA loans do not require down payments
33 of 100 Which of the following statements about restrictive covenants is false?
A. They take priority over less restrictive zoning ordinances.
B. The restrictive covenants will not be enforced if they go against public law or policy.
C. Covenants may not be discriminatory by restricting ownership or use on the basis of race, religion, marital status, or gender.
D. They are permanent and unchangeable.
34 of 100 The Executive director of the Commission may investigate a license law violation
A. only upon the filing of a complaint.
B. upon completion of a hearing.
C. with or without receipt of a complaint.
D. only at the request of a member of the public.
35 of 100 Lamar sells another broker’s $800,000 listing for $785,000 at a commission rate of 6.5%. Lamar has a 40% commission split with his broker. If there is also a 50% brokerage split, what commission will Lamar receive?
A. $15,308
B. $10,205
C. $15,600
D. $10,400
36 of 100 Broker James received an order from a court of competent jurisdiction directing the disbursement of the escrow funds. What action should broker James take?
A. Broker James must disburse the escrow moneys according to the terms of the order.
B. Broker James should disburse 90% of the money and keep the remaining 10% as a service fee.
C. Broker James must send all the money to the state’s Real Estate Commission.
D. Broker Jones must give the money to just the party he represents.
37 of 100 Tenant Kelly has the right to use landlord Bob’s property according to his lease. Does Kelly have an interest in the property?
A. No, because Kelly does not own the property.
B. Yes, because Kelly can use the property.
C. No, unless Kelly has a life estate.
D. No, unless Kelly has lived there for more than a year.
38 of 100 Which of the following is a discriminatory activity?
A. Telling a prospective buyer or tenant that a property is not for sale or rent when it is
B. Showing only properties that are within a buyer’s financial range
C. Showing properties currently in the process of “filtering down”
D. Describing a property the same way with all buyers
39 of 100 Which document guarantees a person’s right to own land in the United States?
A. The U.S. Constitution
B. The Declaration of Independence
C. The Alloidal Treaty
D. The Monroe Doctrine
40 of 100 In showing properties for sale, which of the following is a recommended course of action?
A. Allow the seller’s pets to roam around and interact with guests.
B. Agents should tell the next door neighbors to stay home.
C. Before the open house, the agent should open the drapes on all windows to let in the natural light.
D. Make sure the home looks “lived in” by having possessions visible to the public.
41 of 100 Salesperson Sarah is about to show some buyers a property for the first time. What should Sarah have the sellers do if possible?
A. Assist Sarah with the showing
B. Leave the property
C. Have the sellers invite over friends to make the house seem more lively
D. Cook for the buyers
42 of 100 What phrase emphasizes the requirement that events related to the contract must be performed on time?
A. Delivery is of importance
B. Freedom of will
C. Time is of the essence
D. Contingencies of magnitude
43 of 100 Seller Charles has a brother who is claiming an ownership interest in Charles’s property. This dispute could lead to what is called
A. a duplicate title.
B. a quitclaimed title.
C. a clouded title.
D. a marketable title.
44 of 100 What type of properties tend to have the shortest leasing terms?
A. Industrial properties
B. Cooperatives
C. Hotel rooms
D. Agricultural properties
45 of 100 Goodsprings has a tax base of $90,000,000 and a budget of $1,100,000. What is the tax rate in terms of mills?
A. 12.2 mills
B. 1.2 mills
C. 8.2 mills
D. 2.1 mills
46 of 100 Which of the following is part of a septic system?
A. Slug field
B. Floating slab
C. Distribution box
D. Recovery tub
47 of 100 Broker Janet just finished a direct e-mailing campaign. How should Janet follow-up on direct e-mail advertising?
A. Completely change her message each time regardless of the results
B. Call the people she mailed, even if they are on the Do-Not-Call List.
C. Track and repeat those campaigns that show results.
D. Repeat the same mailing, until she gets results.
48 of 100 Buyer Tal is regretting the full price offer he just made on a home. Can he still revoke the offer?
A. No, because it was a full price offer.
B. Yes, he can revoke the offer assuming the seller has not already accepted it.
C. Yes, he can revoke an offer even after a seller has accepted it and delivered notice of acceptance.
D. No, he must wait to hear if the seller accepted the offer.
49 of 100 Some taxing bodies recognize that local assessments can lead to unfairly high or low values for properties in certain areas. Therefore the jurisdiction may establish _________ to level out the unevenness of valuations.
A. diversity factors
B. testing factors
C. equalization factors
D. redistribution factors
50 of 100 Which of the following rights is included in a fee simple absolute estate?
A. Right to conduct any and all activities without restriction
B. Right to encroach on neighboring properties
C. Right to grant an easement
D. Right to not pay property taxes
51 of 100 In a comparative market analysis, the subject property has 2 bedrooms, 2 baths, a 1/2 acre lot and a swimming pool. A $115,000 comparable has 2 bedrooms, 1 bathroom, no pool, a 1/2 acre lot, and a screened porch. The appraiser adjusts by $9,000 for the bath, $11,000 for the pool, and $5,800 for the porch. What is the indicated value of the subject?
A. $100,800
B. $129,200
C. $118,800
D. $140,800
52 of 100 Natalie has an easement to drive across Donald’s road. Which of the following circumstances would terminate this easement?
A. Sale of Natalie’s property
B. Sale of Donald’s property
C. Revocation of the easement by Donald
D. If Donald bought Natalie’s property
53 of 100 Tallpenny Tower was built in 1985. However, the building has been constantly maintained and remodeled. In valuation terms, the building’s _________ age is greater than the building’s _________ age.
A. chronological age, effective age
B. effective age, chronological age
C. depreciated age, projected age
D. projected age, depreciated age
54 of 100 The property manager’s first responsibility is to
A. increase the vacancy rate.
B. increase the percent of minority tenants.
C. cut the maintenance budget as much as possible.
D. realize the maximum profit on the property.
55 of 100 Borrower Patti exercised her statutory right of reinstatement after her lender initiated a foreclosure suit. What must Patti’s lender do now?
A. The lender must pay all fees and renegotiate the mortgage.
B. The lender must dismiss the lien and continue the suit.
C. The lender must demand that the mortgage is paid in full within the next 60 days.
D. The lender must dismiss the suit and honor the mortgage.
56 of 100 What piece of legislation states that commercial emails must offer an opt-out option and cannot have a deceptive subject line?
A. The Do-Email Protection Act
B. The Uniform Email Law of 2009
C. The CAN-SPAM Act
D. The Freedom of Email Act
57 of 100 In Arkansas, the requirement of a criminal background check
A. is required for broker applicants only.
B. includes fingerprinting.
C. is conducted by the Department of Homeland Security.
D. authorizes the release of information to the public under the Freedom of Information Act.
58 of 100 A borrower earns $8,000/month and makes credit card and car note payments of $900. A conventional lender requires a 30% income ratio. What monthly amount for housing expenses (principle, interest, taxes, insurance) will the lender allow this person to have in order to qualify for a conventional mortgage loan?
A. $2,400
B. $900
C. $1,500
D. $1,200
59 of 100 A homeowner receives a tax bill that includes an amount for the police district, taxed at $2.50 per $1,000, and the fire protection district, taxed at $1.80 per $1,000. How much does the taxpayer have to pay for these two items if the property’s taxable value is $77,000?
A. $1,930
B. $331
C. $3,310
D. $193
60 of 100 The principle balance of a loan is $360,000. The monthly principal and interest payment will be $2,160 per month for 30 years. How much interest will be paid over the term of the loan?
A. $360,000
B. $777,600
C. $288,000
D. $417,600
30X12=360
2160X360=777,600
777,600-360,000=417,600
61 of 100 If a new manufacturing plant opens nearby and is offering a 1,000 new, high-paying jobs, the likely increase of the area’s real estate values will reflect the principle of
A. substitution.
B. progression.
C. supply and demand.
D. contribution.
62 of 100 In construction, the term “pitch” refers to
A. the type of flooring used.
B. the slope of the roof.
C. a type of frame construction.
D. the type of piping used.
63 of 100 Both the agent and seller just signed the listing agreement. What must the licensee give to the seller now?
A. A detail advertising plan
B. A copy of the signed listing agreement
C. Professional pictures of the property
D. An appraisal of the property
64 of 100 What significant piece of legislation created the Environmental Protection Agency (EPA)?
A. The Federal Nature Protection Act of 1977
B. The Clean Land Act of 1962
C. The National Environmental Policy Act of 1969
D. The Green Act of 1980
65 of 100 Licensee Katy sees a legal description that includes a subdivision plat map. This indicates the legal description method utilized is
A. the metes and bounds system.
B. the urban planning method.
C. the lot and block system.
D. the appraisal identification system.
66 of 100 Under what listing clause may the broker claim a commission if the owner sells to a person the broker introduced to the property within a certain time after the listing’s expiration?
A. An innocence clause
B. A prevention clause
C. An extension clause
D. A safety, or protection clause
67 of 100 Retailer Blake owns a commercial store front lot that he wants to sell. The lot is 1/2 acres. The agent informs Blake he can get $15 per square feet for the lot. What total price should Blake list the property for?
A. $326,700
B. $718,740
C. $359,370
D. $96,000
one acre 43,560/2=21,780 x 15= 326,700
68 of 100 Under the rectangular survey system, one section is equal to
A. 360 acres.
B. 36 acres.
C. 64 acres.
D. 640 acres.
69 of 100 A rental house has monthly gross income of $3,000. A suitable gross income multiplier derived from market data is 13. What estimated sale price (to the nearest $1,000) is indicated?
A. $360,000
B. $390,000
C. $429,000
D. $468,000
3,000 x 12 months x 13 = 468,000
70 of 100 What is the balance on an amortized loan of $110,000 after the first payment if the interest rate is 5.5% with a monthly P&I payment of $568?
A. $109,432
B. $109,496
C. $109,754
D. $109,936
Principal paid = monthly payment – (loan amount x rate /12)
568 – (110,000 x 5.5%/12) = 63.83333333
110,000 – 63.83333333 = 109,936.1667
109,936
71 of 100 Real estate salespeople are called upon to provide comparable sales to a seller who wants to list a property for sale. This is called a
A. licensee appraisal of value (LAV).
B. assessed value analysis (AVA).
C. listing price projection (LPP).
D. competitive market analysis (CMA).
72 of 100 The buyer must pay the seller $245,000 at closing. For the buyer, the amount of $245,000 is a
A. cloud.
B. debit.
C. credit.
D. receivable.
73 of 100 An inactive licensee moves to a different part of town. What is the consequence of this?
A. There is no consequence and the licensee need not do anything.
B. The move must be reported within seven days.
C. Her license becomes suspended until the Commission has received notice.
D. She is in violation of license laws.
74 of 100 Homeowner Dean owns the Northwestern ½ of the Northeastern ¼ of the Southwestern ¼ of the South western ¼ of Section 31. How many acres is that property?
A. 5 acres
B. 10 acres
C. 80 acres
D. 2.5 acres
2 x 2 x 4 x 4 x 4= 256
640/256= 2.5
75 of 100 Carrie has been growing a garden on her property. However, the garden now extends onto Amanda’s property. Carrie has created
A. an encroachment.
B. a judgment lien.
C. a special assessment lien.
D. a zoning violation.
76 of 100 Buyer Yancy offered $6,750 in earnest money with an offer that was accepted. Both Yancy and the seller want the escrow account to be interest bearing. Will this be allowed?
A. Yes, escrow accounts can be interest bearing if both parties agree.
B. Yes, escrow accounts can be interest bearing if the escrow amount is over $5,000.
C. No, escrow accounts cannot be interest bearing unless the escrow amount is over $10,000.
D. No, escrow accounts can never be interest bearing.
77 of 100 Beginning at the NW corner of the intersection of Pine & 675, thence north 950 feet, thence west 380 feet, thence south 950 feet, thence southeast 380 feet. Is this an acceptable metes and bounds description?
A. No, this is not a good legal description because it does not begin and end at the point of beginning.
B. No, legal descriptions cannot be determined in this manner.
C. No because there is no reference to the meridians or parallels.
D. Yes, this is a good legal description because it does begin and end at the point of beginning.
78 of 100 The north-south area between consecutive ______ is called a range.
A. parallels
B. metes
C. bounds
D. meridians
79 of 100 A licensee is required to continue to provide _____________ even after the agency agreement has been terminated.
A. care
B. obedience
C. compensation
D. confidentiality
80 of 100 An income property generates $9,200 per month, and is valued at $985,000. What is its gross rent multiplier?
A. 99
B. 82
C. 107
D. 274
985,000 / 9200 = 107
81 of 100 In a(n) _____, an owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum.
A. open listing
B. net listing
C. closed listing
D. return listing
82 of 100 A $400,000 loan has monthly interest-only payments of $2,600. What is the annual interest rate?
A. 6.5%
B. 7.2%
C. 7.4%
D. 7.8%
83 of 100 What is an example of an in-house sale?
A. Jan always represents buyers and Dan always represents sellers. Jan and Dan work for the competing brokerages.
B. A transaction where the closing occurs within the home being sold.
C. Kim represented the buyer and Tim represented the seller in the same transaction. Kim and Tim work for the same brokerage.
D. Kate represented the buyer and Jack represented the seller in the same transaction. Kate and Jack work for the different brokerages.
84 of 100 An agent’s duties to a principal include which of the following?
A. Obstruction of justice
B. Ineptitude
C. Disclosure or notice
D. Legal advice
85 of 100 Homeowner Abraham has a monthly PITI payment of $756. What is not covered by this payment?
A. Real estate taxes
B. Homeowner’s insurance
C. Utilities
D. Mortgage interest
86 of 100 Solve for the amount of monthly interest that is owed on an interest-only loan based on the following facts: Loan amount $115,000, annual interest rate of 7%?
A. $767
B. $671
C. $575
D. $7,475
87 of 100 Which of the following acts is a violation of the Arkansas license law?
A. An unlicensed party negotiates the price of a property.
B. A licensed party to A licensee negotiates the price of his or her own property.
C. A licensee to accepts compensation from her principal broker.
D. An unlicensed person is paid for assisting in the procurement of a buyer prospect.
88 of 100 What form should agents show sellers near the end of a listing presentation to help them become more familiar with the upcoming transaction?
A. A blank copy of a buyer’s agency agreement
B. A “Fair Housing and You” disclosure form
C. A blank copy of the purchase agreement
D. A mortgage application form
89 of 100 What is the legal avenue for an owner who wants to dispose of his or her interest against the wishes of other co-owners?
A. A foreclosure suit
B. A partition suit
C. A redistribution suit
D. A plottage suit
90 of 100 How are Commissioners put into office?
A. By appointment by the governor
B. By state election
C. By legislative appointment
D. By county election
91 of 100 Seller Deangelo agreed to mediate the radon gas problem in his basement within 31 days. It has been 31 days and he still has not addressed the issue. What is the current status of the sales contract?
A. It is not affected and is in force.
B. The buyer must now address the problem within 31 days.
C. Deangelo will now receive $5,000 less from the buyer.
D. Deangelo has defaulted on the contract.
92 of 100 Does a seller have the option to reject subagency when signing the listing agreement?
A. No, sellers must accept subagency.
B. Yes, subagency is banned in every state.
C. Yes, the seller can choose to reject or accept subagency.
D. No, unless they ask their Real Estate Commission for permission.
93 of 100 A license applicant has passed the license exam. The application process will be complete when the applicant pays
A. A license fee
B. A background check fee
C. A license fee and a Real Estate Recovery Fund fee
D. A Real Estate Recovery Fund Fee
94 of 100 Trust funds must be deposited within which time frame?
A. Immediately upon receipt by the salesperson.
B. Immediately upon receipt by the principal broker.
C. No later than 3 days following receipt by the principal broker.
D. No later than 3 days following contract execution.
95 of 100 Salesperson Steve receives an hourly wage of $14 an hour from broker Clayton. Clayton tells the IRS Steve is an independent contractor. The IRS then says Steve has failed the __________ and does not qualify as an independent contractor.
A. salary test
B. sedition test
C. seller’s test
D. safe harbor test
96 of 100 William just purchased a residential investment property for $225,000. William is 60, married, and will not occupy the property. Will this new property qualify for a homestead exemption?
A. Yes, because William bought the property for less than $500,000.
B. Yes, because William is older than 50.
C. No, only single people can qualify for homestead exemptions.
D. No, he has to reside on the property to qualify for a homestead exemption.
97 of 100 A property sells for $620,000 two years after it was purchased. If the annual appreciation rate was 4%, how much did the original buyer pay for the property (round to the nearest $1,000)?
A. $600,000
B. $566,000
C. $573,000
D. $596,000
$620,000 / 1.04 / 1.04 = $573,224.85 (round to $573,000)
98 of 100 Licensee Chad works for broker Michael. Licensee Chad has a listing agreement with seller Ray. Licensee Chad decided to transfer brokers. What will most likely happen with Chad’s listing?
A. It will stay with Michael’s brokerage.
B. It will be automatically terminated.
C. It will go with Chad.
D. It will be transfer to an unbiased brokerage.
99 of 100 Who regulates Ginnie Mae and Freddie Mac?
A. The Treasury Department
B. The Department of Housing and Urban Development (HUD)
C. The Internal Revenue Service (IRS)
D. The Securities and Exchange Commission (SEC)
100 of 100 Albert finally found a buyer for his five-plex and closing is set for August 8th. At closing, four of Albert’s tenants have already paid their $987.50 monthly rent and one of the units remains unoccupied. What will the rent proration be assuming the 365-day method and that the closing day belongs to the seller?
A. Debit the buyer $2,931, credit the seller $2,931
B. Credit the buyer $2,931, debit the seller $2,931
C. Credit the buyer $3,663, debit the seller $3,663
D. Debit the buyer $3,663, debit the seller $3,663
At closing, four of Albert’s tenants have already paid their $987.50 monthly rent and one of the units remains unoccupied.
There are 31 days in August.
The closing is set for August 8th.
31-8 = 23 days
Therefore, the rent proration will be:
Hence, Credit the buyer $2,931, debit the seller $2,931.
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