Real Estate Salesperson License Exam (General Structure) — Questions and Answers

Question 1: Which clause allows a buyer to back out if they cannot obtain a mortgage?

Acceleration clause
Escalation clause
Financing contingency (Correct answer)
Defeasance clause

Correct answer: Financing contingency

A financing contingency lets the buyer cancel without penalty if loan approval is not obtained.

Question 2: In a _, implied warranties are not included.

Deed of warranty
Deed of quitclaim (Correct answer)
Deed of gift
grant deed.

Correct answer: Deed of quitclaim

A quitclaim deed transfers only whatever interest the grantor currently has in the property, without offering any warranties or guarantees regarding the title's validity or completeness. This means it explicitly does not include implied warranties, such as the grantor having good title or the legal right to convey it. In contrast, grant deeds and warranty deeds typically provide certain assurances or guarantees about the title.

Question 3: If a seller insist that you not disclose a "latent defect" in the property, what should you do

Tell the seller you are not allowed to hide any defects
Agree with the seller and list the property for sale
List the property and then make sure and disclose the defect to any purchaser
Withdraw or do not take the listing (Correct answer)

Correct answer: Withdraw or do not take the listing

Real estate licensees have a legal and ethical obligation to disclose known material facts and latent defects about a property to prospective buyers. If a seller insists on concealing a latent defect, the agent cannot ethically or legally comply with such a request. The only appropriate action is to withdraw from the listing or refuse to take it, as participating would involve misrepresentation and potential legal liability.

Question 4: The Fair Housing Act of 1968 (with amendments) prohibits discrimination

on the basis of a couple having children. (Correct answer)
on the basis of behavioral characteristics.
on the basis of age.
all of the above

Correct answer: on the basis of a couple having children.

The Fair Housing Act, as amended, prohibits discrimination based on race, color, religion, sex, national origin, disability, and familial status. Familial status specifically protects families with children under 18, pregnant women, and people in the process of securing custody of children, making discrimination against a couple having children illegal.

Question 5: Which of the following is NOT one of the fiduciary duties an agent owes to their principal?

Profitability (Correct answer)
Loyalty
Disclosure
Confidentiality

Correct answer: Profitability

Fiduciary duties include loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care — profitability is not among them.

Question 6: Jill sells commercial property exclusively. Which is correct about her brokerage relationships?

Her broker may appoint her to be a “designated salesperson” for one party, and another person in the firm to be a “designated salesperson” for the other party in the transaction
a and b (Correct answer)
She may have "no official brokerage relationship" status, may be a single agent or may be a transaction broker
She must provide the Notice of Nonrepresentation at first contact with potential buyers and sellers

Correct answer: a and b

In Florida, real estate licensees can operate under different brokerage relationships, including 'no brokerage relationship,' single agent, or transaction broker, making option 'a' correct. Additionally, for commercial transactions, a broker may appoint 'designated salespersons' within the firm to represent the buyer and seller separately, allowing for single agency representation for each party while avoiding dual agency for the broker, making option 'b' correct. Therefore, both 'a' and 'b' are correct.

Question 7: Which of the following is not disclosed in the seller’s Transfer Disclosure Statement (TDS)?

The presence or absence of carbon monoxide detectors.
Criminal activity in the surrounding neighborhood. (Correct answer)
The existence of a septic tank on the property.
Whether quick-release mechanisms are installed on bedroom windows.

Correct answer: Criminal activity in the surrounding neighborhood.

The Transfer Disclosure Statement (TDS) requires sellers to disclose known material facts about the physical condition of the property itself, such as structural defects, environmental hazards, or the presence of specific safety devices. Information about criminal activity in the surrounding neighborhood is generally considered off-site information and is not a required disclosure on the TDS, as it pertains to the community rather than the property's physical condition.

Question 8: A mother is deeding her mortgage-free house to her son. Is the deed required to show "good consideration" to be valid in the case?

Yes, unless she is deeding it to him in her will. (Correct answer)
Yes, because all deeds must show good consideration to be valid.
No, because family transfers are exempt from the law.
No, because the house does not have a mortgage and there is no lien holder involved.

Correct answer: Yes, unless she is deeding it to him in her will.

For a deed to be valid and legally transfer property during the grantor's lifetime, it generally requires "good consideration," which can be monetary or "love and affection." While a deed between family members might state "love and affection" as consideration, some form of consideration is typically necessary to demonstrate the grantor's intent and prevent future challenges. However, if the transfer occurs through a will (devise) after death, the will itself serves as the instrument of transfer, and separate consideration is not required for the will's validity.

Question 9: What type of legal relationship is established when a real estate licensee represents a buyer or seller in a transaction?

Principal-agent relationship (Correct answer)
Third-party brokerage agreement
Independent contractor arrangement
Arm's length transaction

Correct answer: Principal-agent relationship

An agency relationship in real estate is a principal-agent relationship where the licensee (agent) owes fiduciary duties to the client (principal).

Question 10: An expensive home located among smaller, lower-value homes will likely be affected by the principle of:

Regression (Correct answer)
Contribution
Balance
Progression

Correct answer: Regression

Regression holds that a high-value property's worth is dragged down by surrounding lower-value properties.

Question 11: Which of the following acts as an insurance agency?

Fannie Mae
FHA (Correct answer)
VA
Freddie Mac

Correct answer: FHA

The Federal Housing Administration (FHA) acts as an insurance agency by insuring loans made by FHA-approved lenders. This insurance protects lenders against losses if a borrower defaults on their mortgage, making it easier for individuals to qualify for home loans. While Fannie Mae and Freddie Mac are government-sponsored enterprises that buy mortgages, and the VA guarantees loans for veterans, only the FHA primarily functions as a mortgage insurance provider.

Question 12: Jane is depositing $400 dollars in a savings account in hopes of earning interest. If the rate of interest is 6%, and she keeps the money in her account for 5 years, what would her balance be at the end of the 5 year period?

$424.06
$535.29 (Correct answer)
$2000.00
$4194.30

Correct answer: $535.29

This question requires calculating compound interest. The formula is A = P(1 + r)^n, where A is the final amount, P is the principal ($400), r is the annual interest rate (0.06), and n is the number of years (5). Plugging in the values: A = 400 * (1 + 0.06)^5 = 400 * (1.06)^5 = 400 * 1.3382255776 ≈ $535.29.

Question 13: Which clause in a mortgage allows the lender to demand full repayment if the borrower sells the property?

Due-on-sale clause (Correct answer)
Subordination clause
Acceleration clause
Defeasance clause

Correct answer: Due-on-sale clause

A due-on-sale (alienation) clause lets the lender call the loan due when the property is transferred.

Question 14: A bilateral contract is characterized by:

A single party's obligation
A promise exchanged for a promise (Correct answer)
One promise in exchange for an act
No consideration

Correct answer: A promise exchanged for a promise

A bilateral contract involves mutual promises, where both parties are obligated to perform.

Question 15: A contract signed by a minor for the purchase of real estate is generally considered:

Voidable by the minor (Correct answer)
Void
Voidable by the seller
Fully enforceable

Correct answer: Voidable by the minor

Contracts with minors are voidable at the option of the minor because they lack full legal capacity.

Question 16: A deed given to a buyer of property at a court-ordered foreclosure or execution sale is usually a:

Bargain and sale deed
Quitclaim deed
General warranty deed
Sheriff's deed (Correct answer)

Correct answer: Sheriff's deed

A sheriff's deed conveys title following a foreclosure or judgment execution sale.

Question 17: Fred has a long-term capital loss on the sale of his personal residence. He may deduct

none of the loss (Correct answer)
the entire loss
a maximum of 28% of the loss
a maximum of $3,000 each year until the loss has been deducted

Correct answer: none of the loss

Losses from the sale of a personal residence are generally not tax-deductible. The IRS considers a personal residence a personal asset, not an investment property, so any capital loss incurred cannot be used to offset other income or capital gains. This rule applies regardless of the amount of the loss.

Question 18: Which of the following is an example of real property rather than personal property?

A leased copier in an office
Furniture staged for sale
A built-in dishwasher attached to cabinetry (Correct answer)
A car parked in the garage

Correct answer: A built-in dishwasher attached to cabinetry

A built-in dishwasher attached to the structure is a fixture and therefore real property.

Question 19: Title insurance protects the insured against losses arising from:

Physical damage to the structure
Declines in property value
Defects in the title that existed before the policy date (Correct answer)
Future zoning changes

Correct answer: Defects in the title that existed before the policy date

Title insurance covers covered title defects that existed prior to the policy's issuance.

Question 20: In agency law, 'ratification' means:

A principal retroactively approves an unauthorized act performed by the agent (Correct answer)
Both parties sign the final closing and settlement documents
An agent receives their earned commission after a successful closing
A broker receives state board approval to begin practicing

Correct answer: A principal retroactively approves an unauthorized act performed by the agent

Ratification occurs when a principal accepts or approves an act that the agent performed without prior authorization, making that unauthorized act legally binding on the principal.

Question 21: A licensee should make no changes to the promulgated contracts except a change which is:

Not involving money.
Reasonable.
Desired by the broker.
Desired by the principals. (Correct answer)

Correct answer: Desired by the principals.

Licensees are generally prohibited from making unauthorized changes to promulgated forms. The only permissible changes are those specifically desired by the principals (the buyer and seller) to reflect their agreement. Any modifications must be made in a clear and conspicuous manner, often by adding an addendum or striking through and initialing changes, ensuring the principals' intent is accurately documented.

Question 22: A four-unit building rents each unit for $1,200 per month. Using a GRM of 90, what is the indicated value?

$518,400
$129,600
$432,000 (Correct answer)
$108,000

Correct answer: $432,000

Annual gross rent is 4 × $1,200 × 12 = $57,600; multiplied by 90 the GRM here uses monthly rent: $4,800 × 90 = $432,000.

Question 23: Mr. and Mrs. Collins make an offer on their home to Mr. and Mrs. Gray, but they have yet to hear whether or not the offer has been accepted. In the meanwhile, they have spotted another house that they would want to buy. What is the best course of action for them?

Withdraw their offer without incurring any penalties. (Correct answer)
Wait for a response from Mr. and Mrs. Gray. If they accept the offer, pay the contract's withdrawal fee.
Change their offer to one that Mr. and Mrs. Gray are unlikely to accept.
Cancel their offer with penalty.

Correct answer: Withdraw their offer without incurring any penalties.

An offer to purchase real estate can be legally withdrawn by the offeror at any point before it has been formally accepted and that acceptance communicated back to the offeror. Since Mr. and Mrs. Collins have not yet received communication of acceptance from Mr. and Mrs. Gray, their offer is not yet a binding contract. They are therefore free to withdraw their offer without incurring any penalties.

Question 24: Which document is typically used to transfer title of property held in a living trust to a beneficiary?

Tax deed
Trustee's deed (Correct answer)
Gift deed
Sheriff's deed

Correct answer: Trustee's deed

A trustee's deed conveys property out of a trust to the beneficiary or buyer.

Question 25: By _, an offer is terminated.

the offeree's request for an extension
The offeror's refusal.
the offeree's refusal (Correct answer)
the offeree's revocation

Correct answer: the offeree's refusal

An offer to enter into a contract can be terminated in several ways. The offeree's refusal, also known as rejection, directly communicates their unwillingness to accept the terms, thereby ending the offer. Other methods include revocation by the offeror, a counteroffer (which acts as a rejection of the original offer), lapse of time, or death/incapacity of either party.

Question 26: Any suggestion by a licensee that the racial makeup of a neighborhood is changing to induce panic selling is an example of:

usury.
steering.
redlining.
blockbusting (Correct answer)

Correct answer: blockbusting

Blockbusting is an illegal practice where real estate licensees induce homeowners to sell their properties by making representations that the racial or ethnic composition of the neighborhood is changing, often implying a decline in property values. This tactic aims to create panic selling, allowing the licensee to profit from rapid turnover of properties.

Question 27: The security deposit law is designed to protect which party?

The bailiff
The tenant (Correct answer)
The landlord
The property manager

Correct answer: The tenant

Security deposit laws are primarily designed to protect the tenant by regulating how landlords can collect, hold, and return security deposits. These laws typically specify limits on the deposit amount, require landlords to keep deposits in separate accounts, and dictate conditions for their return or forfeiture, ensuring fairness for the tenant.

Question 28: Bell got $950,000 for her home residence. She paid $750,000 for the house four years ago. During her ownership, she invested $300,000 in capital renovations. What may Bell deduct on her tax return?

700, 000 gain
150,000 loss
None of the above (Correct answer)
3000 gain

Correct answer: None of the above

Bell's adjusted cost basis is her original purchase price plus capital renovations ($750,000 + $300,000 = $1,050,000). Since her selling price ($950,000) is less than her adjusted cost basis, she incurred a loss of $100,000. Under federal income tax laws, losses on the sale of a personal residence are not tax-deductible.

Question 29: What will happen when a loan on a sold property is assumed?

The purchaser assumes responsibility for the debt. (Correct answer)
The original borrower is released from further liability.
The purchaser must get an eligibility certificate.
All of the above

Correct answer: The purchaser assumes responsibility for the debt.

When a loan on a sold property is assumed, the purchaser takes over the existing mortgage and becomes responsible for the remaining debt. The original borrower may or may not be released from liability, depending on whether the lender grants a novation. However, the immediate effect is that the new owner is now obligated to make the loan payments.

Question 30: Express agency in real estate is best described as an agency relationship:

Clearly established through a written or oral agreement (Correct answer)
Where the principal grants the agent unlimited authority
Processed and approved within 24 hours of listing
Created through the parties' behavior and conduct alone

Correct answer: Clearly established through a written or oral agreement

Express agency is explicitly created by a written or oral agreement between principal and agent, distinguishing it from implied agency which arises from conduct.

Question 31: A legal action filed to remove a cloud or settle conflicting claims to a property's title is called a:

Specific performance suit
Quiet title action (Correct answer)
Partition suit
Lis pendens

Correct answer: Quiet title action

A quiet title action asks the court to resolve defects and confirm clear ownership.

Question 32: A property generates $90,000 in potential gross income with a 5% vacancy and $30,000 in operating expenses. What is the NOI?

$85,500
$55,500 (Correct answer)
$45,000
$60,000

Correct answer: $55,500

Effective gross income is $90,000 − $4,500 vacancy = $85,500; minus $30,000 expenses equals $55,500 NOI.

Question 33: If you finance a home with a long-term loan and make equal monthly payments, the amount of each payment applied to the remaining principle balance will be as follows:

Decreases at a consistent rate
Increases by a fixed amount during the life of the loan
Drops as the interest payment rises.
Increases as the interest payment falls (Correct answer)

Correct answer: Increases as the interest payment falls

In a long-term, equal monthly payment (amortized) loan, the initial payments are heavily weighted towards interest. As the loan matures, the outstanding principal balance decreases, meaning less interest accrues each month. Consequently, a larger portion of each fixed payment is then applied to reduce the principal balance.

Question 34: When you assign a contract you are transferring

Deed and deed of trust
Ownership and deed
Benefits and obligations (Correct answer)
Title and disclosures

Correct answer: Benefits and obligations

When you assign a contract, you are transferring your contractual rights and duties to another party. The assignee steps into the assignor's shoes, taking on both the benefits (like the right to purchase the property) and the obligations (like the duty to pay the purchase price). This process allows the original party to exit the contract, with the new party assuming their role.

Question 35: An agent's fiduciary duty of loyalty primarily requires the agent to:

Maintain accurate financial records for every transaction
Disclose all material property facts to all parties
Follow all lawful instructions from any party in the transaction
Place the client's interests above all others, including the agent's own (Correct answer)

Correct answer: Place the client's interests above all others, including the agent's own

The duty of loyalty obligates the agent to act exclusively in the client's best interest, even when doing so conflicts with the agent's own financial gain.

Question 36: Jim, Matt and Jack were co-owners of a parcel of real property. Matt died, and his coownership passed, according to his will, to become part of his estate. The parties owned the property as

tenants at will.
tenants in common. (Correct answer)
joint tenants.
tenants by the entireties.

Correct answer: tenants in common.

In a tenancy in common, each co-owner holds an undivided interest in the property, and there is no right of survivorship. This means that upon the death of a tenant in common, their interest passes to their heirs or beneficiaries according to their will, rather than automatically to the surviving co-owners. This is distinct from joint tenancy, where the right of survivorship dictates that the deceased's interest automatically passes to the remaining joint tenants.

Question 37: Which category is exempt from licensing when performing real estate services?

funeral directors
partners receiving more than their pro-rata share of profits for selling services
employees of a corporation who are paid on a transactional basis for selling corporate property
CPAs acting within the scope of their duties (Correct answer)

Correct answer: CPAs acting within the scope of their duties

Certain professionals are exempt from real estate licensing requirements when performing real estate services that are incidental to their primary professional duties. Certified Public Accountants (CPAs) are one such group; they can provide advice or services related to real estate transactions within the scope of their accounting practice without needing a real estate license. Other options like transactional-based employees or funeral directors typically do not fall under this exemption for real estate activities.

Question 38: A listing agent discovers a serious structural defect in the property they represent. What is the agent's primary obligation?

Keep it confidential to protect the seller's negotiating position
Report it solely to the state real estate commission
Disclose it only if a buyer's agent asks a direct question about it
Disclose it to potential buyers as a material fact (Correct answer)

Correct answer: Disclose it to potential buyers as a material fact

Agents must disclose all known material facts to potential buyers; concealing a structural defect violates the duty of disclosure and can expose the agent to legal liability.

Question 39: A 'breach of contract' occurs when:

Both parties fully perform
A contingency is met
A party fails to perform a contractual obligation (Correct answer)
The contract is signed

Correct answer: A party fails to perform a contractual obligation

A breach is the failure of a party to fulfill its duties under the contract without legal excuse.

Question 40: When the value of a property feature is measured by how much its presence adds to the whole, the appraiser is applying the principle of:

Substitution
Contribution (Correct answer)
Balance
Conformity

Correct answer: Contribution

The principle of contribution measures a component's value by the amount it adds to the total property value.

Question 41: A real estate broker takes listing on a residential property. The broker likes the property and chooses to buy it in the name of a separate investment company he owns. Which of the following statements is most correct?

The broker may offer to purchase the property, but must first disclose to the seller that they are the buyer. (Correct answer)
The broker has failed to serve the client’s best interests and cannot collect a fee.
The broker need not disclose his interest in the investment company, so long as he is not the sole owner of it.
The broker may purchase the property, but may only accept half of his agreed-to fee.

Correct answer: The broker may offer to purchase the property, but must first disclose to the seller that they are the buyer.

A real estate broker owes their client a fiduciary duty of utmost loyalty, honesty, and good faith. If a broker wishes to purchase a property they are listing, it creates a potential conflict of interest. To uphold their fiduciary duty and avoid self-dealing, the broker must fully disclose their interest as the buyer to the seller and obtain the seller's informed consent before proceeding with the purchase.

Question 42: The Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending based on all EXCEPT:

Marital status
Creditworthiness (Correct answer)
Race
Religion

Correct answer: Creditworthiness

ECOA bars discrimination on prohibited bases but lenders may consider actual creditworthiness.

Question 43: Time is of the essence in a contract means:

Closing can be postponed freely
Deadlines are merely suggestions
Parties must perform exactly by the stated dates (Correct answer)
The contract has no expiration

Correct answer: Parties must perform exactly by the stated dates

This clause makes the stated deadlines strict, and failure to perform on time is a breach.

Question 44: Implied agency is created when:

A state license board assigns an agent to a client
An agency relationship is established through the parties' words, conduct, or actions (Correct answer)
A court appoints a broker to represent a party
A written agency agreement is signed by both parties

Correct answer: An agency relationship is established through the parties' words, conduct, or actions

Implied agency arises from the behavior and actions of the parties rather than a formal written or oral agreement, and can unintentionally create fiduciary obligations.

Question 45: An offer was made and accepted on the basis of assuming a $300,000 loan. It was revealed during escrow that the loan was for $290,000 rather than $300,000. Which outcome is the most likely?

The seller must accept the $10,000 buyer's note.
The contract can be canceled by the buyer. (Correct answer)
The buyer will be required to pay an additional $10,000 in cash.
The seller must lower the price by 10,000.

Correct answer: The contract can be canceled by the buyer.

A writ of execution is a court order issued to enforce a judgment, typically a monetary one. It directs a law enforcement officer, such as a sheriff, to seize and sell the debtor's property to satisfy the outstanding debt. This legal process culminates in a sheriff's sale, where the property is auctioned off to pay the judgment creditor.

Question 46: Which of the following is an appropriate action for an intermediary

To appoint associated licensees to work with the parties (Correct answer)
To represent the Seller
All of the above
To represent the Buyer

Correct answer: To appoint associated licensees to work with the parties

In Texas, an intermediary broker facilitates a transaction where the same broker represents both the buyer and the seller. An appropriate action for an intermediary is to appoint different associated licensees (salespersons) to work with and advise each party separately. This allows the appointed licensees to provide advice and opinions to their respective parties, while the intermediary broker remains neutral.

Question 47: A Real Estate salesperson may receive compensation from

Only the employing broker. (Correct answer)
Any broker taking part in a transaction.
Any of the parties to a transaction.
The property owner, as long as disclosure is made to all agents.

Correct answer: Only the employing broker.

In Texas, a real estate salesperson can only receive compensation for real estate activities from their employing broker. This rule is a fundamental aspect of the agency relationship and ensures that the broker maintains supervision and responsibility for the salesperson's actions. Receiving compensation directly from a client or another party is a violation of license law.

Question 48: The legal process by which a court oversees the distribution of a deceased person's estate is called:

Probate (Correct answer)
Condemnation
Foreclosure
Partition

Correct answer: Probate

Probate is the court-supervised process of validating a will and distributing the estate.

Question 49: The Tax Reform Act of 1986 provided a vehicle for the issuance of multiclass securities. What is the name of this entity?

Escrow officer
198000
REMIC (Correct answer)
Reducing

Correct answer: REMIC

The Tax Reform Act of 1986 created the Real Estate Mortgage Investment Conduit (REMIC). A REMIC is a special purpose vehicle that holds commercial and residential mortgages in trust and issues multi-class securities to investors, facilitating the securitization of mortgages.

Question 50: A single-family home's listing time differs from that of commercial property because:

Single-family homes are only allowed to be advertised for one year by law, whereas commercial properties can be offered for up to 18 months.
The listing for a commercial property does not have an expiration date, whereas the listing for a single family home does.
A single-family home is usually advertised for 60-120 days, whereas commercial properties are usually offered for 6 months to a year. (Correct answer)
Commercial property listing periods are limited by legislation, whereas single family residences can be advertised for as long as the seller wants.

Correct answer: A single-family home is usually advertised for 60-120 days, whereas commercial properties are usually offered for 6 months to a year.

The typical listing period for residential properties, like single-family homes, is generally shorter, often ranging from two to four months. Commercial properties, however, usually have longer listing periods due to their complexity, higher price points, and smaller pool of potential buyers, often requiring six months to a year or more to find a suitable purchaser. This reflects the different market dynamics for each property type.

Question 51: When is an appraiser least worried about the state's economy?

When appraising the value of a hardware shop
When appraising a medical building (Correct answer)
When assessing a restaurant
When appraising a home

Correct answer: When appraising a medical building

Medical buildings, especially those serving essential healthcare needs, tend to be less affected by short-term economic fluctuations compared to retail businesses or residential homes. Healthcare demand is generally more stable, making medical properties more resilient during economic downturns and thus less sensitive to the state's economy.

Question 52: Which set of professional standards governs appraisal practice in the United States?

TILA
USPAP (Correct answer)
RESPA
ECOA

Correct answer: USPAP

The Uniform Standards of Professional Appraisal Practice (USPAP) governs U.S. appraisal practice.

Question 53: Which may be deducted for income tax purposes by a homeowner?

taxes and interest (Correct answer)
property taxes, insurance and interest
insurance, depreciation and taxes
depreciation, taxes and interest

Correct answer: taxes and interest

For income tax purposes, homeowners can typically deduct the interest paid on their mortgage and the property taxes assessed on their home. Other expenses like homeowner's insurance premiums, depreciation (for a primary residence), and principal payments are generally not deductible.

Question 54: Possession, control, and enjoyment are included in

an appurtenance
deed restrictions
the bundle of legal rights (Correct answer)
the statute of frauds

Correct answer: the bundle of legal rights

The 'bundle of legal rights' is a metaphorical term describing the comprehensive set of rights that come with property ownership. These rights include possession (the right to occupy), control (the right to use within legal limits), enjoyment (the right to use without interference), exclusion (the right to keep others out), and disposition (the right to sell, lease, or will the property). These are fundamental aspects of owning real estate.

Question 55: The presence of lead paint in a home must only be disclosed if the home is being purchased using an FHA loan.

False (Correct answer)
True

Correct answer: False

Lead paint in a home must always be disclosed.

Question 56: Which of these characteristics does NOT describe a fee simple estate?

Freely inheritable
Freely transferable
Definite duration (Correct answer)
Unlimited duration

Correct answer: Definite duration

A fee simple estate represents the highest and most complete form of ownership in real property, characterized by its unlimited duration. It is freely transferable and inheritable, meaning the owner can sell, gift, or will the property without significant restrictions. The characteristic that does NOT describe a fee simple estate is "definite duration," as that applies to leasehold estates or other limited interests, not perpetual ownership.

Question 57: The ____ is the instrument that is used to transfer title to personal property.

agreement on security
The bill of sale (Correct answer)
Deed of quitclaim
Deed of chattel.

Correct answer: The bill of sale

A bill of sale is the standard legal document used to transfer ownership of personal property, also known as chattels, from one party to another. Unlike deeds, which are used for real property, a bill of sale provides evidence of the transfer of title for movable items. A security agreement, conversely, is used to create a lien on personal property, not to transfer ownership outright.

Question 58: When one landowner uses the land of another for a specific purpose, it is known as a(n):

easement (Correct answer)
littoral right
lien
restrictive covenant

Correct answer: easement

An easement is a legal right that allows one party to use or access the land of another for a specific, limited purpose. This right does not grant ownership of the land itself but rather a defined privilege, such as a right-of-way for utilities or access to a neighboring property. It is an encumbrance on the property but benefits another.

Question 59: A formal request to use land in a way prohibited by zoning, granted due to unique hardship, is a:

Conditional use
Rezoning
Nonconforming use
Variance (Correct answer)

Correct answer: Variance

A variance permits a use that deviates from zoning requirements due to special hardship.

Question 60: An FHA loan is insured by the:

Veterans Affairs
Federal Housing Administration (Correct answer)
Federal Reserve
Department of the Treasury

Correct answer: Federal Housing Administration

FHA loans are insured by the Federal Housing Administration, allowing lower down payments.

Question 61: Under an Exclusive Right to Sell listing agreement, the listing broker earns a commission:

Only if the broker personally introduces the buyer to the seller
Regardless of who procures the buyer, including the seller themselves (Correct answer)
Only if the property sells at or above the original listing price
Only if a cooperating MLS agent procures the buyer

Correct answer: Regardless of who procures the buyer, including the seller themselves

An exclusive right to sell listing guarantees the listing broker a commission no matter who ultimately produces the buyer — the broker, a cooperating agent, or even the seller acting independently.

Question 62: An appraiser observes that homes lose value because a busy highway was built behind them. This is best classified as:

Physical deterioration
External (economic) obsolescence (Correct answer)
Curable depreciation
Functional obsolescence

Correct answer: External (economic) obsolescence

External obsolescence is a loss in value caused by factors outside the property boundaries.

Question 63: When a deed is recorded in the public records, the primary legal effect is to:

Eliminate the need for delivery
Give constructive notice of ownership (Correct answer)
Validate an otherwise invalid deed
Transfer title automatically

Correct answer: Give constructive notice of ownership

Recording provides constructive notice to the world of the grantee's interest.

Question 64: An unlicensed assistant may

show property to prospective buyers
. prepare a comparative market analysis (CMA) for a client (Correct answer)
encourage a prospective client to use the broker’s services
discuss the terms or conditions of a possible sale.

Correct answer: . prepare a comparative market analysis (CMA) for a client

Unlicensed assistants are permitted to perform administrative tasks that do not require a real estate license. Preparing a Comparative Market Analysis (CMA) involves gathering data and compiling information, which is considered an administrative function, as long as the assistant does not interpret the data or advise the client on pricing. Activities like showing property or discussing terms are considered licensed activities.

Question 65: A listing agreement between a seller and a real estate broker creates which type of agency?

Dual agency
Transaction brokerage
Seller's agency (Correct answer)
Buyer's agency

Correct answer: Seller's agency

A listing agreement establishes a seller's agency, meaning the broker is engaged to represent the seller's interests throughout the transaction.

Question 66: For a dual agency arrangement to be legally valid, which of the following must occur?

Only the seller's written consent is required
Both the buyer and seller must provide informed written consent (Correct answer)
Each dual agency arrangement must receive prior approval from the state real estate board
The commission must be split evenly between the buyer and seller

Correct answer: Both the buyer and seller must provide informed written consent

Dual agency is only lawful when both the buyer and seller are fully informed of the conflict of interest and each provides written consent to the arrangement.

Question 67: Jane is a broker and accepts a deposit made out to her firm for $3,000. What is her legal requirement?

She must place it in her business account no later than the end of the next business day
She must place it in her trust account within three business days (Correct answer)
She must hold it until acceptance of the offer, then deposit it immediately
She must place it in her personal account

Correct answer: She must place it in her trust account within three business days

In Florida, a real estate broker who receives an earnest money deposit must place it into an escrow or trust account. The legal requirement is to deposit these funds no later than the end of the third business day following their receipt. This ensures the safekeeping of client funds and prevents commingling with the broker's operating funds.

Question 68: A married couple is selling its homestead, owned as community property. For the deed conveying the property to be valid, who must sign it?

Both husband and wife. (Correct answer)
The wife.
The husband.
Only the managing spouse.

Correct answer: Both husband and wife.

In Texas, a homestead, even if owned as community property, requires the signatures of both spouses for a valid conveyance. This protection is enshrined in Texas homestead laws, which aim to prevent one spouse from unilaterally selling or encumbering the family home. Both husband and wife must sign the deed to ensure the property's transfer is legally binding and to protect the family's interest.

Question 69: The Real Estate Commissioner may discipline a broker for committing which of the following violations of Fair Housing law?

All of the above. (Correct answer)
Blockbusting.
Hiring salespersons from only one specific ethnic group.
Steering.

Correct answer: All of the above.

The Real Estate Commissioner is responsible for enforcing real estate laws, including Fair Housing regulations. Blockbusting (inducing sales by suggesting demographic changes), steering (directing clients based on protected characteristics), and discriminatory hiring practices are all serious violations of Fair Housing laws. A broker engaging in any of these activities can face severe disciplinary action, including license suspension or revocation, as they undermine equitable access to housing.

Question 70: Broker Jacqui decides to move her branch office from Fort Walton to Panama City. The proper procedure is for Jacqui to

request that the Division transfer the license to the new location.
wait until it is time to renew the branch office license.
cancel the existing branch license and submit the request and a new fee for the Panama City branch office (Correct answer)
report the move to the Board of Realtors.

Correct answer: cancel the existing branch license and submit the request and a new fee for the Panama City branch office

Branch office licenses are issued for a specific physical location. If a broker decides to move a branch office, the existing license for the old location becomes invalid. The proper procedure is to cancel the current branch office license and then submit a new application and fee for a new branch office license at the desired Panama City location. This ensures that each branch operates under a valid, location-specific license.

Question 71: A Kentucky lawyer and a Florida broker joint venture to sell property in Florida for a friend of the Kentucky lawyer. What can the Kentucky lawyer receive?

a commission provided he doesn't come to Florida
no part of the real estate commission (Correct answer)
a referral fee if he doesn't come to Florida
a commission if he actually performs services in the transaction

Correct answer: no part of the real estate commission

Real estate licensing laws generally prohibit unlicensed individuals from receiving compensation for performing real estate services that require a license. A Kentucky lawyer is not licensed as a real estate broker in Florida, so they cannot legally receive any portion of a real estate commission for a transaction in Florida, even if they refer a client or assist in some capacity.

Question 72: Which statement is TRUE regarding a life estate?

It may be created by will or deed (Correct answer)
It requires that the holder make principal payments on any encumbrances
Because it is based on life, it may not be encumbered by the holder
It must be measured by the life of one person only.

Correct answer: It may be created by will or deed

A life estate can be established through various legal instruments. It can be created by a grantor through a deed during their lifetime (an inter vivos transfer) or by a testator through a will, with the estate taking effect upon their death. This flexibility allows property owners to plan for the future use and eventual transfer of their real estate according to their wishes.

Question 73: The Real Estate Center at Texas A&M University is funded by

$15 from brokers and $7.50 from sales persons, to be paid when a license is renewed.
$10 of each application fee for brokers and sales persons.
A fee not to exceed $15 from each broker and salesperson annually.
$20 from brokers and $17.50 from sales persons, each time a license is issued or renewed. (Correct answer)

Correct answer: $20 from brokers and $17.50 from sales persons, each time a license is issued or renewed.

The Real Estate Center at Texas A&M University, which conducts valuable research and provides education for the real estate industry, is funded by specific fees collected during the licensing process. Each time a real estate license is issued or renewed, a portion of the fee—$20 from brokers and $17.50 from salespersons—is allocated to support the Center's operations, ensuring its continued contribution to the industry.

Question 74: The right of a defaulted borrower to reclaim property before a foreclosure sale is the:

Right of first refusal
Right of survivorship
Statutory right of reversion
Equitable right of redemption (Correct answer)

Correct answer: Equitable right of redemption

The equitable right of redemption lets a borrower reclaim the property by paying the debt before the sale.

Question 75: Vicarious liability holds a real estate broker legally responsible for:

Structural defects in the properties the broker lists
Wrongful acts committed by the agents the broker supervises (Correct answer)
Liability arising when an agent is licensed in two states simultaneously
Joint liability shared equally between a buyer and seller

Correct answer: Wrongful acts committed by the agents the broker supervises

Vicarious liability means a broker can be held legally responsible for their agents' misconduct even if the broker did not participate directly, because of the supervisory relationship.

Question 76: The license period is currently

3 years
1 year.
4 years.
2 years. (Correct answer)

Correct answer: 2 years.

In Florida, real estate licenses are issued for a specific duration. The current license period for real estate professionals is two years. Licensees must renew their licenses before the expiration date to maintain an active status and continue practicing real estate.

Question 77: What is meant by riparian rights?

The property was given to the current owner by a deceased family member.
The property owner has property that borders a moving body of water. (Correct answer)
The former property owner still lives at the property, but it has officially been sold.
There is no legal owner to the land so the property becomes possession of the government.

Correct answer: The property owner has property that borders a moving body of water.

Riparian rights are a system of rights and duties that govern the use of water for those who own land adjacent to a river, stream, or other flowing body of water. These rights typically allow for reasonable use of the water, but not ownership of the water itself. They are distinct from littoral rights, which apply to non-flowing bodies of water like lakes or oceans.

Question 78: Which estate gives an owner the most complete form of ownership with rights of inheritance?

Life estate
Fee simple absolute (Correct answer)
Fee simple defeasible
Leasehold estate

Correct answer: Fee simple absolute

Fee simple absolute is the highest and most complete form of ownership recognized by law.

Question 79: A conventional loan is one that is:

Guaranteed by the VA
Issued only by the federal government
Not insured or guaranteed by a government agency (Correct answer)
Insured by the FHA

Correct answer: Not insured or guaranteed by a government agency

Conventional loans are not backed by FHA, VA, or other government insurance programs.

Question 80: A contract is: I. An exchange of promises that courts will enforce II. An offer made by one party that was accepted by another

I and II
II
I (Correct answer)
Neither

Correct answer: I

A contract is fundamentally a legally enforceable agreement, which is an exchange of promises that courts will uphold. While an offer and acceptance are essential components that lead to the formation of a contract, they describe the process of agreement, not the comprehensive definition of a contract itself. The core characteristic is its enforceability in a court of law.

Question 81: What is the primary distinction between a special agent and a general agent in real estate?

Special agents represent buyers; general agents represent sellers
Special agents are licensed; general agents are not required to be
Special agents handle commercial deals; general agents handle residential
Special agents are authorized for one specific act; general agents have broader ongoing authority (Correct answer)

Correct answer: Special agents are authorized for one specific act; general agents have broader ongoing authority

A special agent is authorized only to perform a specific act such as selling one property, while a general agent has broader, continuing authority to act for the principal.

Question 82: What is designated agency in real estate?

A broker assigns separate agents from their office to each party in the same transaction (Correct answer)
An agent is appointed as the sole representative for all properties in a defined area
A buyer selects their preferred agent from an MLS-provided list
The state designates which brokerage must handle a particular transaction

Correct answer: A broker assigns separate agents from their office to each party in the same transaction

Designated agency allows a managing broker to appoint different licensees within the same firm to represent the buyer and seller separately, reducing dual agency conflicts.

Question 83: In a buydown, what is reduced for the borrower?

The interest rate (Correct answer)
The loan term
The principal balance
The property taxes

Correct answer: The interest rate

A buydown pays points upfront to lower the borrower's interest rate, often temporarily.

Question 84: Which of the following is an example of functional obsolescence?

A factory built next door
An outdated single bathroom in a four-bedroom house (Correct answer)
A roof that needs replacement
A declining neighborhood

Correct answer: An outdated single bathroom in a four-bedroom house

Functional obsolescence is a loss in value from outdated design or features within the property itself.

Question 85: Lien theory means that the mortgage

is a lien on the property, but property title is vested with the mortgagor (Correct answer)
creates a lien on the property, with the mortgagee having title
instrument conveys title to the mortgagee with mortgagor having a lien
is a lien on the property, but property title is vested with the mortgagee

Correct answer: is a lien on the property, but property title is vested with the mortgagor

In a lien theory state, the borrower (mortgagor) retains legal title to the property, and the mortgage merely creates a lien against the property as security for the debt. If the borrower defaults, the lender (mortgagee) must initiate a judicial foreclosure process to enforce the lien and obtain title.

Question 86: What is the name of the type of system that allows land to be owned and controlled by individuals?

appurtenant system
allocational system
accessible system
allodial system (Correct answer)

Correct answer: allodial system

The allodial system is a system of land ownership where individuals can hold absolute ownership of land, free from any superior landlord or sovereign. This contrasts with the feudal system, where land ownership was ultimately tied to a lord or monarch. The United States operates under an allodial system, allowing private ownership of real estate.

Question 87: Sudden removal of land by the violent action of water, such as a flood, is called:

Accretion
Reliction
Avulsion (Correct answer)
Alluvion

Correct answer: Avulsion

Avulsion is the sudden loss or change of land caused by violent water action.

Question 88: When a real estate agent tells a prospective buyer, 'This is absolutely the best neighborhood in the entire city,' without factual support, the agent is engaging in:

Breach of fiduciary duty
Fraudulent misrepresentation
Material omission
Puffing (Correct answer)

Correct answer: Puffing

Puffing refers to exaggerated, subjective promotional statements that are not considered legally actionable because reasonable buyers understand them as opinions rather than fact.

Question 89: A single agent broker who wishes to remain loyal to the principal yet be involved in both sides of a transaction

must work with the other party in a "no official brokerage relationship" role. (Correct answer)
may transition to dual agent with the written approval of both parties.
may be a transaction broker for the other party.
are unable to do so if working with the other party in a transaction.

Correct answer: must work with the other party in a "no official brokerage relationship" role.

In Florida, dual agency is prohibited. A single agent broker owes undivided loyalty to their principal. If a single agent wishes to work with the other party in the same transaction while maintaining loyalty to their principal, they cannot represent the other party as a single agent or transition to a transaction broker without both parties' written consent. The only way to interact with the other party without violating their single agency duty or creating an illegal dual agency is to work with that other party in a 'no official brokerage relationship' capacity, providing limited services without representation.

Question 90: A subordination clause in a mortgage:

Forgives the debt
Accelerates the loan
Increases the interest rate
Changes the lien's priority position (Correct answer)

Correct answer: Changes the lien's priority position

A subordination clause allows a lien to take a lower priority than a later loan.

Question 91: When a straight note is compared to an installment note, the straight note:

Will have all principal payments made over the loan's duration, including the final payment.
There will be no principle payments over the loan's term, except for the final payment. (Correct answer)
Will have equal yearly principal reduction payments
Will have a higher total effective interest rate than if the loan was an installment loan.

Correct answer: There will be no principle payments over the loan's term, except for the final payment.

A straight note (or interest-only loan) requires the borrower to make regular interest payments throughout the loan term, but the entire principal amount is due as a single 'balloon' payment at the end of the term. In contrast, an installment note involves periodic principal reductions over the loan's duration.

Question 92: A listing agency agreement most commonly terminates when:

The agent submits the listing to the MLS
The agreed listing period expires or the transaction closes (Correct answer)
The property is shown to its first prospective buyer
The listing price is reduced at the seller's request

Correct answer: The agreed listing period expires or the transaction closes

A listing agreement typically ends upon expiration of its agreed term, completion of the sale, mutual agreement to cancel, or termination by operation of law.

Question 93: The passage of rules require

the decision of the Chairman
a quorum vote of the Commission (Correct answer)
the vote of all members of the Commission
the full vote of the Commission and the Governor's signature

Correct answer: a quorum vote of the Commission

The Florida Real Estate Commission (FREC) is a quasi-legislative body empowered to adopt rules necessary to implement Florida real estate law. For the passage of these rules, a quorum of the Commission members must be present, and a majority vote of that quorum is required. This ensures that rules are formally approved by the governing body.

Question 94: A real estate licensee is prohibited from doing all of the following, except , unless otherwise/vise licensed.

real estate for sale (Correct answer)
provide tax advice
draft building plans
provide legal counsel

Correct answer: real estate for sale

A real estate licensee's primary function is to facilitate transactions involving real estate, such as buying, selling, or leasing properties. Therefore, engaging in 'real estate for sale' is a core and permissible activity for a licensee. The other options (drafting building plans, providing tax advice, providing legal counsel) require separate professional licenses and fall outside the scope of a standard real estate license, making them prohibited unless the licensee holds those additional qualifications.

Question 95: Physical deterioration that is economically feasible to repair is referred to as:

Curable physical deterioration (Correct answer)
Incurable depreciation
External obsolescence
Functional inutility

Correct answer: Curable physical deterioration

Curable physical deterioration is wear and tear whose repair cost is justified by the value it restores.

Question 96: The agent's fiduciary duty of accounting requires the agent to:

Provide complete financial records to the state licensing board
Prepare the seller's tax returns related to the property sale
Properly account for all funds received or held on behalf of the client (Correct answer)
Verify the buyer's financial qualifications before each showing

Correct answer: Properly account for all funds received or held on behalf of the client

The duty of accounting obligates the agent to accurately manage all client funds, such as earnest money deposits, preventing commingling or misappropriation.

Question 97: Which principle states that maximum value is achieved when a property conforms with surrounding properties?

Anticipation
Conformity (Correct answer)
Regression
Substitution

Correct answer: Conformity

The principle of conformity holds that uniformity among nearby properties supports maximum value.

Question 98: Under the income approach, value equals

rate times income
vacant land value plus depreciated building value
income divided by rate (Correct answer)
rate divided by income

Correct answer: income divided by rate

Under the income approach to valuation, the value of an income-producing property is determined by dividing its net operating income (NOI) by the capitalization rate. This formula, often expressed as Value = Income / Rate (V = I / R), converts the property's future income stream into a present value.

Question 99: A landowner grants a utility company the right to run power lines across the property. This is most likely an:

Encroachment
Easement appurtenant
Estate in land
Easement in gross (Correct answer)

Correct answer: Easement in gross

An easement in gross benefits an individual or entity rather than an adjacent parcel of land.

Question 100: A sales associate gets a signed contract from a buyer and mails it to the seller. The seller has agreed to the terms and the escrow deposit is safely in the broker's escrow account. The sales associate has a disagreement with his broker and quits. The broker refuses to pay a commission because the sales associate was not in his employ when the contract was actually received and signed. The sales associate should

notify the state.
sue the broker (Correct answer)
sue the seller for his share
forget it. He is not entitled to the commission.

Correct answer: sue the broker

A sales associate earns their commission when they successfully procure a ready, willing, and able buyer and a binding contract is secured, regardless of when the closing occurs or if they are still employed by the broker at that exact moment. The commission is owed by the employing broker, not the seller, as the sales associate works under the broker's license. Therefore, the sales associate should sue the broker for their rightful share of the commission.

Real Estate Salesperson License Exam (General Structure)

The Real Estate Salesperson License Exam assesses knowledge of real estate principles, practices, and laws required to become a licensed real estate agent.

100

Questions

150 min

Time Limit

70%

To Pass

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Unanswered questions count as wrong — answer everything
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These practice questions were written with AI tools. They are not real exam questions. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy

Sources & references

Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy

trec.texas.gov — Passing score, fees, retake policy, exam information · verified Oct 2026
dre.ca.gov — Score validity, registration deadline, eligibility, test dates, fees, retake fee, exam format, passing score, time limit · verified Oct 2026
bls.gov — Eligibility, renewal · verified Oct 2026
dos.ny.gov — Renewal, fees · verified Oct 2026
pearsonvue.com — Test delivery, fees, retake fee, time limit, score release · verified Oct 2026
www2.myfloridalicense.com — Fees · verified Oct 2026