Real Estate Licensing Massachusetts-Real-Estate-Salesperson Exam Questions

The Massachusetts Real Estate License Law (M.G.L. c. 112, 87PP--87DDD) applies to anyone who engages in the business of buying, selling, leasing, or negotiating real estate transactions for a fee, commission, or other valuable consideration, unless specifically exempt.

Exemptions include:

Regular salaried employees of property owners who lease or manage property owned by their employer (no license needed).

Salespersons selling their own primary residence (no license needed, as owners always may sell their own property).

Referrals: A licensed person may receive compensation, but unlicensed referral fees are prohibited.

A property manager who handles sales of units (not just leasing or maintenance) is engaged in brokerage activities requiring a license. Therefore, the Real Estate License Law applies in this case.

In Massachusetts, the seller is legally responsible for completing the property condition disclosure form. The listing broker or agent may provide the form and ensure it is delivered to prospective buyers, but they do not complete it on behalf of the seller.

The rationale is that the seller is the party with direct knowledge of the property's condition. Licensees must never fill out the disclosure themselves, as this could expose them to liability for inaccuracies. The broker's duty is limited to ensuring the disclosure is provided in accordance with Massachusetts law (M.G.L. c.93, 114) but not to make representations or complete the document.

Thus, the correct answer is A: seller.

The Massachusetts Consumer Protection Act (M.G.L. c. 93A) prohibits unfair and deceptive business practices. It applies to a broad range of commercial transactions, including real estate transactions. The law is designed to protect consumers from unethical practices and to ensure transparency and fairness in the marketplace.

This act does not specifically apply to homeowners selling without a broker, nor does it protect tenants from personal property disputes or only from deceptive practices in landlord-tenant law. It is a comprehensive law aimed at regulating the business practices of all commercial entities, including real estate professionals.

Comprehensive and Detailed Explanation (150--250 words):

An FHA-insured mortgage ensures the lender against loss from borrower default but does not guarantee property values or eliminate government powers like eminent domain. FHA requires an FHA appraisal to confirm the property meets minimum standards of safety, soundness, and security, and to establish a value for loan purposes.

The FHA makes clear that the appraisal is for lender protection, not a guarantee to the buyer of condition or future value. A down payment (C) is still required (typically 3.5% minimum). Eminent domain (A) always remains a government power, and no program guarantees increasing neighborhood values (B).

Thus, the correct assurance FHA provides is that the property has been appraised for value.

Comprehensive and Detailed Explanation (150--250 words):

A competitive market analysis (CMA) is a tool prepared by real estate licensees to help sellers establish a listing price and to help buyers determine an appropriate offer. It compares recent sales of similar properties, active listings, and expired listings to estimate a property's fair market value.

A: Insurance companies use replacement cost appraisals, not CMAs.

B: Depreciable value is for tax accounting and appraisals, not CMAs.

C: Local tax assessments do not typically reflect current market value and are not the basis of a CMA.

Because it helps both sellers and buyers understand market value, the correct answer is D.