1. Which of the following is false regarding an option contract?

(A) An option contract allow the developer to perform a preliminary market study

and feasibility analysis before having to acquire the property

(B) If the developer decides to purchase the property, the price of the option may

be applied toward the price of the property

(C) If the developer decides not to purchase the property, the landowner will

usually refund any money paid for the option

(D) An option contract provides the developer with the assurance that a property

will not be sold during the option period

2. All of the following are clauses that can be found in lease agreements, except:

(A) Parties to the lease, base rent amount, rent increase provisions

(B) Allowable uses, condition of the premises, repair and maintenance obligations

(C) Assignment and subletting, alterations and improvements, renewal options

(D) Loan to value ratio, debt service coverage ratio, and prepayment options.

3. All of following are reasons that construction lenders typically require real estate

developers to borrow on a recourse basis when taking out a construction loan,

except:

(A) Development projects are much riskier than stabilized income-producing

properties

(B)Take-out lenders may not be required to fund upon construction completion if

the project is not completely successfully

(C) If the development project is substantially delayed or over budget, the

construction lender may need to pursue the developer to personally repay the

construction loan

(D) Construction loans are readily available from many lenders

4. Which of the following is a soft cost of construction?

(A) The cost of architectural drawings ????

(B) The cost of pouring the foundation

(C) The cost of erecting the building

(D) The cost of finishing the interior space

5. The most common method of distributing funds provided by a construction loan

is a:

(A) Single lump sum at the closing of the loan

(B) Single lump sum at the end of construction to reimburse the developer for

the projects total costs

(C) Series of payments throughout construction to reimburse the developer for

costs incurred since the previous payment

(D)Series of payments throughout construction to reimburse the developer for

anticipated expenses in the upcoming period

6. In the context of a lease. A percentage rent clause generally provides that:

(A) The tenant will pay a proportionate amount of rent for his space in

comparison to the total net rentable area

(B) The landlord will receive a percentage of the tenants sales or income above

some previously agreed break point

(C)The tenant will pay a rent amount that is a certain percentage of the local

average

(D)The tenant will reimburse the landlord for operating expenses above a certain

per square foot amount.

7. A partnership agreement provides that upon sale the net cash proceeds are to be

distributed first to Mr.Smith in an amount equal to his original investment less any

cash distribution previously received, then split50-50 between Mr. Smith and Ms.

Jones. If the net cash proceeds from sale are $1million, how much would Ms. Jones

receive if Mr. Smiths initial investment was $400,000 and he previously received

$25,000 in distributions?

(A) $300,000

(B)$312,500

(C) $325,000

(D)$500,000

8. Which of the following might impact the density of housing in a landevelopment

project?

(A) The price paid for the land by the developer

(B) The local zoning code regarding maximum density

(C) The local markets preferences regarding density

(D) All of the above

9. Land parcels in a new development are selling for $20,000each and the

developer projects total revenue from land sales to be $5 million. The projects

lender requires that the $3million land loan be completely paid off by the time that

80%of the parcels have been sold. What would be the lenders release price for each

parcel?

(A) $12,000

(B)$15,000

(C)$16,000

(D)$20,000

10. Which of the following statements is true regarding general partnerships?

(A) They are preferred for groups of individuals who are seeking to form a

business entity to invest in real estate because of the decision making ability of each

partner

(B) They protect each of the partners from potential losses associated with the

partnerships business activities

(C)They are not preferred for groups of individuals who are seeking to form a

business entity to invest in real estate because of the unlimited liability of each

partner

(D) They have pass-through income similar to that of corporations

11. One of the primary advantages of a limited liability company over a limited

partnership is:

(A) An LLC does not need to have any general partners

(B) An LP does not need to have any general partners

(C)An LLC is a pass-through entity whereas an LP is not

(D) An LP is a pass-through entity whereas an LLC is not