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

Question 1: The covenant of quiet enjoyment most directly relates to:

fair housing protections for the mute.
a court action to clear title.
tenant freedom from owner harassment. (Correct answer)
natural hazards.

Correct answer: tenant freedom from owner harassment.

The covenant of quiet enjoyment is an implied promise in every lease that assures the tenant the right to possess and use the leased premises without interference from the landlord or anyone claiming paramount title. This includes freedom from unreasonable disturbances, harassment, or actions by the landlord that substantially interfere with the tenant's peaceful occupancy. It ensures the tenant can enjoy their property without undue interruption.

Question 2: A father conveys ownership of his residence to his son but reserves for himself a life estate in the residence. The interest the son owns during the father's lifetime is

A life tenancy.
Pur autre vie.
Reversionary.
A remainder. (Correct answer)

Correct answer: A remainder.

When a father conveys ownership to his son but reserves a life estate for himself, the father holds a life tenancy, meaning he can live on or use the property for his lifetime. The son, in this scenario, holds a "remainder" interest. This means the son will receive full ownership (fee simple absolute) of the property upon the termination of the father's life estate, typically upon the father's death.

Question 3: A listing agreement between a seller and a real estate broker creates which type of agency?

Transaction brokerage
Buyer's agency
Seller's agency (Correct answer)
Dual 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 4: Which of the following is an example of personal property?

An appurtenant easement.
Trade fixtures. (Correct answer)
Fixtures installed in a property for manufacturing purposes.
Mineral rights.

Correct answer: Trade fixtures.

Personal property is movable and not permanently attached to the real estate. Trade fixtures are items of personal property installed by a tenant for use in their business, such as display cases or specialized equipment. Although attached, they are considered personal property of the tenant and can typically be removed at the end of the lease, provided no damage occurs to the premises.

Question 5: 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
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)
Report it solely to the state real estate commission

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 6: Which of the following is a legal brokerage office? I. permanent building with at least one office II. sign at or about entrance with "Licensed Real Estate Broker" or REALTOR III. names (but not license status) of all licensees of the firm.

I, II and III
I and III
I and II
I only (Correct answer)

Correct answer: I only

A legal brokerage office fundamentally requires a permanent physical location, typically a building with at least one enclosed office space. While other elements like signs and displaying licensee names are often required for proper identification and transparency, the existence of a permanent, established place of business is a core regulatory requirement for a brokerage office.

Question 7: Usually, local planning commissions are composed of

lay members representing a cross section of the community. (Correct answer)
three county commissioners and two school board members.
professionals from each of the local planning authorities.
local developers and representatives of utilities and banks.

Correct answer: lay members representing a cross section of the community.

Local planning commissions are typically composed of volunteer lay members from the community, rather than paid professionals or elected officials. These members are appointed to represent a cross-section of the community, providing diverse perspectives on land-use planning, zoning, and development decisions.

Question 8: John and Edward were brokers with their own firms. An economic downturn made them decide to share office space. They did not put up signs which described that the public was actually dealing with two separate firms. A BPR investigator made a routine office inspection visit. The investigator would probably issue a citation stating that this I. is an ostensible partnership. II. is a general partnership. III. is a violation.

I only
I, II, and III
I and III (Correct answer)
I and II

Correct answer: I and III

When two brokers share office space and do not clearly differentiate their separate firms to the public, they can create an 'ostensible partnership' (or partnership by estoppel). This means the public could reasonably believe they are operating as a single entity, which is a violation of real estate licensing laws. Such misrepresentation can mislead consumers and is subject to regulatory action.

Question 9: Broker Larry, Broker Linda, and Broker Susan form a partnership to buy a tract of land and develop and sell the land. Sales Associate Lee joins the partnership and profits will be split equally among the four. Profits for the first year amount to $80,000. Which is correct?

Profits may be divided three ways only. Sales associate Lee cannot be a partner
a and c
Sales associate Lee may be a partner only if he has broker status
Profits may be divided four ways (Correct answer)

Correct answer: Profits may be divided four ways

While a sales associate cannot be a partner in a real estate brokerage firm, the scenario describes a partnership formed to *buy, develop, and sell land*, which is an investment or development venture, not a brokerage operation. In such a venture, a sales associate can legally be a partner and share in the profits, as they are acting as an investor/developer, not performing brokerage services for others independently.

Question 10: For a dual agency arrangement to be legally valid, which of the following must occur?

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

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 11: Broker Tim accepted a listing on a commercial office complex and was given a one-month option to buy the property. Broker Tim decides to purchase the property on the 25th day of the listing. Broker Tim must ____ before purchasing the house.

Any outstanding offers on the property should be disclosed to the seller.
To the seller, you must disclose all relevant information.
All of the above. (Correct answer)
Obtain the seller's written approval, acknowledging any profit or projected profit.

Correct answer: All of the above.

When a broker has an option to buy a property they are listing, they are acting in a dual capacity, creating a potential conflict of interest. To protect the seller, the broker must disclose all material facts, including any other offers and their potential profit, and obtain the seller's informed written consent. This ensures transparency and that the seller's best interests are prioritized.

Question 12: A seller's agent learns confidential negotiation information from an unrepresented buyer during showings. The agent's correct course of action is to:

Report the information to the state real estate board for guidance
Share the information with the seller to fulfill the fiduciary duty of disclosure and loyalty (Correct answer)
Enter the information into the MLS remarks for transparency
Keep the information confidential and not disclose it to any party

Correct answer: Share the information with the seller to fulfill the fiduciary duty of disclosure and loyalty

A seller's agent owes fiduciary duties of loyalty and disclosure to the seller (their principal), which requires sharing information received from third parties that could benefit the seller in negotiations.

Question 13: A subdivision developer gives the county title to streets in a subdivision. The county accepts the streets for maintenance. This transfer of title is known as

dedication. (Correct answer)
eminent domain.
a patent deed.
a public grant.

Correct answer: dedication.

Dedication is the voluntary transfer of private property by its owner to the public for public use, such as streets, parks, or utilities. When a developer gives the county title to streets and the county accepts them for maintenance, this formal act of transferring ownership for public benefit is known as dedication. This process ensures that public infrastructure within a subdivision is properly maintained and accessible.

Question 14: An appraisal report that simply states a value without supporting analysis would most likely violate the requirement for:

A title insurance policy
A signed listing agreement
A property survey
Adequate documentation and credible support (Correct answer)

Correct answer: Adequate documentation and credible support

Appraisal standards require that the value opinion be credible and supported by adequate analysis and documentation.

Question 15: An owner wishes to have a survey made of a commercially-zoned parcel. It is 90 feet on the front, 159 feet on the north side, 120 feet on the back and 180 feet on the south side. It is not in a recorded subdivision. Which survey method would be most appropriate for the parcel?

rectangular
government survey
lot and block
metes and bounds (Correct answer)

Correct answer: metes and bounds

Metes and bounds is the most appropriate survey method for irregularly shaped parcels, especially those not part of a recorded subdivision. This method describes property boundaries by starting at a known point of beginning and then defining the perimeter using courses (directions) and distances (metes) and physical markers (bounds). Given the varying side lengths and lack of subdivision, metes and bounds provides the precise description needed.

Question 16: A novation is BEST defined as:

The substitution of one party for another in a contract wherein both the original parties remain liable.
A means of acquiring title by adverse possession.
Substitution of a new contract for an existing agreement with the intent of extinguishing the old contract. (Correct answer)
The same as an assignment.

Correct answer: Substitution of a new contract for an existing agreement with the intent of extinguishing the old contract.

Novation is a legal term referring to the substitution of a new contract for an existing one, with the express intent of extinguishing the obligations of the old contract. This typically involves replacing one of the original parties with a new party, or substituting a new obligation for an old one, with the consent of all parties involved. It effectively releases the original party from their prior obligations.

Question 17: A property has a building value of $250,000 and an effective age of 10 years with a 50-year economic life. Using straight-line depreciation, how much value has been lost?

$5,000
$25,000
$125,000
$50,000 (Correct answer)

Correct answer: $50,000

Straight-line depreciation is 10/50 = 20% of $250,000, equaling $50,000 lost.

Question 18: A lot measures 420' x 670' sold for $633,150. What was the cost per square foot?

$2.00
$2.50
$1.75
$2.25 (Correct answer)
$1.50

Correct answer: $2.25

First, calculate the total square footage of the lot: 420 feet * 670 feet = 281,400 square feet. Then, divide the total sale price by the total square footage to find the cost per square foot: $633,150 / 281,400 sq ft = $2.25 per square foot.

Question 19: In agency law, 'ratification' means:

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

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 20: Which of the following best describes 'duress' in contract formation?

A fair negotiation
A mutual mistake
Unlawful pressure forcing a party to agree (Correct answer)
A minor signing a contract

Correct answer: Unlawful pressure forcing a party to agree

Duress is unlawful coercion or threat that forces a party into a contract, making it voidable.

Question 21: A newspaper advertisement is considered “blind” when it:

fails to state the fact the advertiser is a broker or agent and does not include their California Bureau of Real Estate (CalBRE) license number (Correct answer)
doesn’t include the property address.
doesn’t state the sales price.
contains misleading information

Correct answer: fails to state the fact the advertiser is a broker or agent and does not include their California Bureau of Real Estate (CalBRE) license number

A 'blind ad' is an advertisement that does not clearly indicate that the advertiser is a licensed real estate broker or agent, and it typically omits their license number. This practice is illegal because it misleads the public by concealing the professional nature of the advertiser, preventing consumers from verifying the legitimacy and credentials of the party placing the ad.

Question 22: It is appropriate for real property managers to be compensated in all of the following ways, except:

a commission for new tenants solicited.
additional compensation for supervising renovations and improvements.
a percentage of the total gross rents received
receiving kickbacks from contractors and suppliers. (Correct answer)

Correct answer: receiving kickbacks from contractors and suppliers.

Property managers can legitimately be compensated through various methods, such as commissions for new tenants, a percentage of gross rents, or additional fees for supervising renovations. However, receiving undisclosed kickbacks or secret profits from contractors, suppliers, or other third parties is unethical and illegal. Such actions constitute a conflict of interest and a breach of fiduciary duty to the property owner.

Question 23: 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:

Contribution (Correct answer)
Conformity
Substitution
Balance

Correct answer: Contribution

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

Question 24: A small apartment property is estimated to have potential gross income of $ 25,000. Vacancy and collection losses are expected to average 5 percent over the life of the property. Operating expenses are expected to average about 30 percent of effective gross income. An overall capitalization rate of 12 percent is derived from market transactions of similar properties. What is the market value?

$145,833
$208,333
$138,542 (Correct answer)
$197,917

Correct answer: $138,542

First, calculate the Effective Gross Income (EGI) by subtracting vacancy losses: $25,000 * (1 - 0.05) = $23,750. Next, determine the Net Operating Income (NOI) by subtracting operating expenses from EGI: $23,750 * (1 - 0.30) = $16,625. Finally, divide the NOI by the capitalization rate to find the market value: $16,625 / 0.12 = $138,541.67, which rounds to $138,542.

Question 25: Ownership: I. Is tangible II. Is intangible III. May be divided into different rights owned by different people. IV. Is not divisible.

II and IV
I and III
I and IV
II and III (Correct answer)

Correct answer: II and III

Ownership in real estate is considered intangible because it represents a bundle of legal rights, not the physical property itself. These rights can be divided and owned by different individuals, such as surface rights, mineral rights, or air rights, demonstrating its divisibility. Therefore, ownership is both intangible and divisible into various rights.

Question 26: An appraiser values a 4-bedroom home with a pool. A pool normally adds $14,000 value to a property, and a bedroom is worth $9,000. She locates the following comparable sales: 5 bedroom home, no pool, sold for $125,000 4 bedroom home, no pool, sold for $116,000 3 bedroom home with pool, sold for $121,000 What is the value of the subject property?

$125,000
$130,000 (Correct answer)
$135,000
$120,000

Correct answer: $130,000

To find the subject property's value, use the most similar comparable and adjust for differences. The 4-bedroom home with no pool sold for $116,000. Since the subject property has a pool, which adds $14,000 in value, you add this amount to the comparable's price. Therefore, $116,000 (comparable) + $14,000 (pool adjustment) = $130,000, which is the estimated value of the subject property.

Question 27: What is designated agency in real estate?

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

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 28: Carol made a real estate purchasing offer. The seller accepted the offer, but Heather died before the seller's representative informed her of the acceptance. Which of the following statements is true based on these facts?

Even if Carol was unaware of the acceptance, the offer and acceptance form an enforceable contract.
Because Carol's deed was not delivered before her death, the accepted offer is binding on the administrator's estate.
The notification of the seller's acceptance to Carol's estate's administrator or executor obligates her estate to complete and close escrow.
Carol's death results in the offer being revoked. (Correct answer)

Correct answer: Carol's death results in the offer being revoked.

An offer to purchase real estate is terminated by the death or incapacity of either the offeror (buyer) or the offeree (seller) before acceptance has been communicated. Even though the seller accepted the offer, Carol's death occurred before she was notified of the acceptance, meaning no binding contract was formed. Death revokes an unaccepted offer.

Question 29: In a buydown, what is reduced for the borrower?

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

Correct answer: The interest rate

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

Question 30: In order to be enforceable, which of the following contracts must be in writing?

A buyer's agreement to take over an existing loan secured by a deed of trust. (Correct answer)
A one-year lease listing for real estate.
A contract that does not have to be fulfilled within a year of its signing.

Correct answer: A buyer's agreement to take over an existing loan secured by a deed of trust.

The Statute of Frauds requires certain contracts to be in writing to be legally enforceable. Contracts involving the transfer of an interest in real estate, such as a buyer's agreement to take over an existing loan secured by a deed of trust, fall under this requirement. This ensures clarity and prevents fraudulent claims regarding significant real estate obligations.

Question 31: 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.
Will have a higher total effective interest rate than if the loan was an installment loan.
Will have equal yearly principal reduction payments
There will be no principle payments over the loan's term, except for the final payment. (Correct answer)

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 32: In most FHA and VA loans, the discount points are paid by the

Broker
Lender
Seller (Correct answer)
Purchaser

Correct answer: Seller

In most FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) loans, discount points are typically paid by the seller. This is often done to make the loan more attractive to the buyer by reducing their upfront costs or to help the buyer qualify for a lower interest rate, which can be a negotiating point in the sale.

Question 33: An older building's plumbing is so outdated it cannot be economically modernized. This is an example of:

Incurable functional obsolescence (Correct answer)
Curable physical deterioration
Land depreciation
External obsolescence

Correct answer: Incurable functional obsolescence

When an outdated feature cannot be economically corrected, it is incurable functional obsolescence.

Question 34: Voluntary transfer of privately owned land to the public, such as for streets in a subdivision, is called:

Dedication (Correct answer)
Eminent domain
Escheat
Alienation

Correct answer: Dedication

Dedication is the voluntary granting of private land for public use.

Question 35: A property's net operating income is $48,000 and the capitalization rate is 8%. What is its indicated value?

$384,000
$600,000 (Correct answer)
$540,000
$960,000

Correct answer: $600,000

Value equals NOI divided by cap rate: $48,000 / 0.08 = $600,000.

Question 36: John purchases a home, and the seller helps to finance the sale. The price is $100,000, and John is to make a $10,000 cash down payment. The amount of the mortgage payments would pay it off in thirty years, but the owner requires that it come due in seven years. What type mortgage is this?

partially amortizing (Correct answer)
fully amortizing
term
adjustable rate

Correct answer: partially amortizing

A partially amortizing mortgage features regular payments calculated as if the loan would be paid off over a longer term, but the loan itself matures and becomes due in full much sooner. This structure results in a large lump sum payment, known as a balloon payment, at the end of the loan term, as the principal has not been fully paid down.

Question 37: When a deed is recorded in the public records, the primary legal effect is to:

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

Correct answer: Give constructive notice of ownership

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

Question 38: 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 personal account
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

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

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

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

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)
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.
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 41: In order to be a licensee member of the Florida Real Estate Commission, an individual must have been licensed a minimum of

1 year
5 years
4 years
2 years (Correct answer)

Correct answer: 2 years

To be eligible to serve as a licensee member on the Florida Real Estate Commission (FREC), an individual must meet specific experience requirements. While four broker members must have been actively licensed for at least 5 years, one licensee member (either a broker or sales associate) is required to have been actively licensed for a minimum of 2 years preceding their appointment. This allows for a broader range of licensee experience on the commission.

Question 42: VA loan may be approved for the purchase of a one- to four-family home property if:

The veteran agrees to stay. (Correct answer)
The loan will be amortized over a maximum of 20 years.
The down payment will be at least 10% of the purchase price.
The veteran certifies that the rent earned will cover the mortgage payments.

Correct answer: The veteran agrees to stay.

A key requirement for a VA loan on a one-to-four family home is that the veteran intends to occupy one of the units as their primary residence. This owner-occupancy requirement is fundamental to the VA loan program, which aims to help veterans secure housing for themselves.

Question 43: The principle that a property's value is influenced by the cost of acquiring an equally desirable substitute is the principle of:

Substitution (Correct answer)
Anticipation
Contribution
Conformity

Correct answer: Substitution

The principle of substitution holds that a buyer will pay no more than the cost of an equally desirable alternative.

Question 44: An easement that benefits an adjacent parcel of land and transfers with ownership is an:

License
Encroachment
Easement in gross
Easement appurtenant (Correct answer)

Correct answer: Easement appurtenant

An easement appurtenant runs with the land and benefits the dominant tenement.

Question 45: State regulations in California contain a statement that prohibits discrimination due to race, color, religion, marital status, national origin, or ancestry. Discrimination in which of the following areas would not be a direct violation of the Rumsford Act?

Four unit apartment building.
Vacant housing accommodations.
Unimproved land to be used for a home.
Unimproved land to be used for a commercial development. (Correct answer)

Correct answer: Unimproved land to be used for a commercial development.

The Rumsford Act (now part of the Fair Employment and Housing Act, FEHA) in California primarily prohibits discrimination in housing accommodations. This includes residential properties, vacant land intended for residential use, and apartment buildings. However, it typically does not extend to unimproved land specifically designated for commercial development, as its focus is on ensuring equal access to housing.

Question 46: An example of institutional advertising would be

an ad describing a private academy for sale
an ad about a private hospital for sale
an ad describing a duplex for sale in the northern part of the county
an ad about the outstanding service offered by a real estate firm (Correct answer)

Correct answer: an ad about the outstanding service offered by a real estate firm

Institutional advertising focuses on promoting the image, reputation, or services of the firm itself, rather than specific properties. Its goal is to build brand recognition and goodwill, highlighting the company's professionalism, expertise, or customer service. An ad describing the outstanding service offered by a real estate firm directly aligns with this objective.

Question 47: Who is authorized to manage property for the general public?

A responsible adult.
Only a Certified Property Manager (CPM)
A licensed real estate broker. (Correct answer)
An escrow officer.

Correct answer: A licensed real estate broker.

In California, managing property for others for compensation, which includes activities like collecting rents, negotiating leases, and overseeing maintenance, falls under the definition of real estate activity. Therefore, anyone performing these services for the general public must hold a valid and active real estate broker's license. A salesperson can manage property, but only under the direct supervision of their employing broker.

Question 48: A document appearing valid on its face but lacking some legal requirement, giving an apparent but defective right to title, is called:

Quiet title
Cloud on title
Color of title (Correct answer)
Marketable title

Correct answer: Color of title

Color of title is an instrument that appears to convey title but is actually defective.

Question 49: Which is not correct? I. Redlining is not a violation of state and federal laws. II. “Blockbusting” is a description of the practice of scaring owners into selling because of 'undesirable elements' moving into the neighborhood. III. A sales associate has a direct fiduciary relationship with his seller under an exclusive right of sale agreement.

I and II
I, II, and III
I only
I and III (Correct answer)

Correct answer: I and III

Statement I is incorrect because redlining is an illegal discriminatory practice under federal and state laws. Statement III is incorrect because a sales associate has a direct fiduciary relationship with their employing broker, and the broker then has the direct fiduciary relationship with the seller. Therefore, I and III are not correct statements.

Question 50: A life estate gives the holder the right to use property:

For a fixed 99-year term
Forever, with inheritance rights
Only for the duration of a specified person's life (Correct answer)
Only with the lender's permission

Correct answer: Only for the duration of a specified person's life

A life estate lasts only for the lifetime of a named person and cannot be inherited.

Question 51: When a real estate license expires, how long is the agent’s grace period in which they may reinstate their license?

Four years
Two years (Correct answer)
One year
Three years.

Correct answer: Two years

In many jurisdictions, including California, a real estate license can typically be reinstated within two years after its expiration date by completing renewal requirements and paying any late fees. If the license is not renewed within this grace period, it becomes permanently lapsed. In such a case, the individual would generally need to re-qualify and pass the licensing exam again to obtain a new license.

Question 52: An agent's fiduciary duty of loyalty primarily requires the agent to:

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

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 53: What is the closest definition of "delivery in escrow" in terms of deeds?

A deed isn't regarded valid until the grantor signs it.
From the grantor, the grantee receives physical possession of the completed deed.
A deed is finished but not delivered, such as when the grantor dies and the deed is discovered at his or her home.
The grantor hands over the deed to a trustee, who keeps it until the grantee has completed all of the necessary steps. (Correct answer)

Correct answer: The grantor hands over the deed to a trustee, who keeps it until the grantee has completed all of the necessary steps.

'Delivery in escrow' refers to the process where a deed is given to a neutral third party, the escrow agent or trustee, with specific instructions. This agent holds the deed until all the conditions of the purchase agreement are fully satisfied by both the buyer and seller. Once all conditions are met, the escrow agent then officially delivers the deed to the grantee, thereby transferring legal title.

Question 54: As an agent you received $1,312.50 as commission for a referral fee. The listing agent paid 25% of her commission for the referral. The total commission paid was 6%, which was split equally between the listing and selling brokerage firms. If the listing agent was paid 50% of her firm's commission, what was the sale price of the property?

$400,000
$350,000 (Correct answer)
$250,000
$200,000
$300,000

Correct answer: $350,000

Start by finding the listing agent's full commission: $1,312.50 (referral fee) / 0.25 (25%) = $5,250. This $5,250 represents 50% of the listing firm's commission, so the listing firm's total commission was $5,250 / 0.50 = $10,500. Since the total 6% commission was split equally, the total commission paid was $10,500 * 2 = $21,000. Finally, divide the total commission by the commission rate to find the sale price: $21,000 / 0.06 = $350,000.

Question 55: When purchasing a business, the buyer needs to be certain a certificate of clearance has been issued by the:

Secretary of State (SOS)
State Board of Equalization (SBOE). (Correct answer)
Department of Business and Transportation (DBT).
Alcoholic Beverage Control (ABC).

Correct answer: State Board of Equalization (SBOE).

When purchasing a business, especially one that collects sales tax, the buyer needs to ensure that the seller has paid all sales and use taxes. A certificate of clearance from the State Board of Equalization (SBOE), now California Department of Tax and Fee Administration (CDTFA), confirms that the seller has no outstanding tax liabilities. Without this, the buyer could become liable for the seller's unpaid taxes.

Question 56: A man dies without leaving a valid will. He is said to have died

in fee simple defeasible.
probate
via devise.
intestate. (Correct answer)

Correct answer: intestate.

When a person dies without having made a valid will, they are said to have died "intestate." In such cases, the deceased's assets are distributed according to the laws of descent and distribution of the state where they resided or where the property is located. This legal term distinguishes it from dying "testate," which means dying with a valid will.

Question 57: Implied agency is created when:

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

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 58: A Transaction Broker (also called a Facilitator or Non-Agent) is a licensee who:

Is a dual agent who has received written consent from both parties
Assists both parties in a transaction without serving as a fiduciary for either (Correct answer)
Specializes in commercial transactions exceeding $1 million
Only prepares paperwork and does not show properties

Correct answer: Assists both parties in a transaction without serving as a fiduciary for either

A transaction broker provides limited assistance to both parties without owing full fiduciary duties to either the buyer or seller.

Question 59: The legal process by which a court oversees the distribution of a deceased person's estate is called:

Condemnation
Probate (Correct answer)
Partition
Foreclosure

Correct answer: Probate

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

Question 60: A point paid to a lender at closing typically equals what percentage of the loan amount?

1% (Correct answer)
2%
0.5%
5%

Correct answer: 1%

One discount or origination point equals 1% of the loan amount.

Question 61: The principle of balance refers to:

Equal weighting of all three approaches
Balancing assets and liabilities on a settlement statement
The point where the mix of land uses maximizes value (Correct answer)
Matching mortgage to property value

Correct answer: The point where the mix of land uses maximizes value

Balance is achieved when complementary land uses are in proper proportion, maximizing overall value.

Question 62: Which type of deed contains no warranties and simply transfers whatever interest the grantor may have, if any?

Grant deed
Special warranty deed
Quitclaim deed (Correct answer)
General warranty deed

Correct answer: Quitclaim deed

A quitclaim deed conveys only the grantor's interest, if any, with no warranties of title.

Question 63: The F.R.E.C. is composed of

four brokers and three lay members.
seven members. (Correct answer)
three brokers, two brokers or sales associates, and two lay members.
five brokers and two lay members

Correct answer: seven members.

The Florida Real Estate Commission (FREC) is composed of seven members. These include four licensed brokers who have held active licenses for at least five years, one licensed broker or sales associate who has held an active license for at least two years, and two lay members who have never been licensed as real estate brokers or sales associates.

Question 64: Mr. Rodrigo's duplex had a $750,000 cost base when he bought it. According to the tax assessor, the value breakdown is 80 percent renovations and 20 percent land. Mr. Rodrigo depreciated the improvements at a rate of 2% per year for the first five years. Mr. Rodrigo then paid $50,000 to a licensed contractor to install a swimming pool. How much will the property's modified cost base be once the pool is finished?

700,000
740,000 (Correct answer)
790,000
730,000

Correct answer: 740,000

The modified cost base is calculated by taking the original cost, subtracting accumulated depreciation on the improvements, and then adding the cost of any new capital improvements. Mr. Rodrigo's initial cost base was $750,000, with $600,000 for improvements (80%) and $150,000 for land (20%). After 5 years of 2% depreciation on improvements ($12,000/year), total depreciation is $60,000. The adjusted basis for improvements is $600,000 - $60,000 = $540,000. Adding the land value ($150,000) and the new swimming pool ($50,000) results in a modified cost base of $540,000 + $150,000 + $50,000 = $740,000.

Question 65: A buyer of a common interest development (CID) is entitled to receive all except copies of:

the governing conditions, covenants and restrictions (CC&Rs). (Correct answer)
a homeowner warranty. (Correct answer)
the HOA’s financial statement.
the homeowners’ association (HOA) bylaws

Correct answer: the governing conditions, covenants and restrictions (CC&Rs).

Buyers of Common Interest Developments (CIDs), such as condominiums or homes in homeowners' associations (HOAs), are typically entitled to receive documents governing the community and its financial health. These include the Conditions, Covenants, and Restrictions (CC&Rs), HOA bylaws, and financial statements, as they outline the buyer's rights and obligations. A homeowner warranty, however, is a separate contractual agreement usually provided by the builder or a third-party, and is not a standard disclosure document provided by the HOA itself during a resale transaction.

Question 66: A subordination clause in a mortgage:

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

Correct answer: Changes the lien's priority position

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

Question 67: An appraiser observes that homes lose value because a busy highway was built behind them. This is best classified as:

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

Correct answer: External (economic) obsolescence

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

Question 68: Your seller says that he doesn't want to accept any offers from buyers who are represented by a buyer's agent. What should you do when a buyer's agent brings an offer on the listing on behalf of his/her client?

Throw it away.
Send it back to the buyer's agent.
File it and forget about it.
Present it to the seller. (Correct answer)

Correct answer: Present it to the seller.

A listing agent has a fiduciary duty to their seller client to present all offers, regardless of the source or the seller's stated preferences, unless the seller has explicitly instructed otherwise in writing. Even if the seller expresses a general dislike for buyer's agents, a verbal preference does not override the agent's obligation to present a legitimate offer for consideration. Failure to present an offer can lead to disciplinary action.

Question 69: A loan that combines an existing mortgage with a new one into a single payment is a:

Wraparound mortgage (Correct answer)
Bridge loan
Balloon loan
Term loan

Correct answer: Wraparound mortgage

A wraparound mortgage wraps the existing loan into a new, larger loan with one payment.

Question 70: The type of manager most likely to be licensed as a real estate broker is the:

Building manager
Property manager (Correct answer)
Any of the above
Resident manager

Correct answer: Property manager

A property manager typically handles the overall operation, maintenance, and leasing of an income-producing property for an owner. These responsibilities often include negotiating leases, collecting rent, and handling finances, which generally require a real estate broker's license in many jurisdictions. Building managers or resident managers usually have more limited, on-site roles.

Question 71: Which of the following is not a common type of short-term mortgage loan?

The most complete type of ownership
Inability to maintain property in good condition
The tenant's relocation
A loan for a single-family home (Correct answer)

Correct answer: A loan for a single-family home

Short-term mortgage loans are typically used for specific purposes like construction, bridge financing, or property rehabilitation, where the loan is expected to be repaid or refinanced quickly. A loan for a single-family home is generally a long-term commitment, often 15 or 30 years, making it not a common type of short-term mortgage.

Question 72: ____ is the right of the government to acquire property when the owner dies intestate and has no heirs eligible to inherit the property.

Escheat (Correct answer)
Claimancy
Eminent domain
Severance

Correct answer: Escheat

Escheat is the right of the state to take title to property when an owner dies without a will (intestate) and without any legal heirs. This ensures that property does not remain ownerless and reverts to government ownership. It is one of the four government powers over real estate, along with eminent domain, police power, and taxation.

Question 73: A bilateral contract is characterized by:

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

Correct answer: A promise exchanged for a promise

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

Question 74: The primary appeal of VA mortgages to borrowers lies in

Easy availability
Low interest rates
Minimum down payment (Correct answer)
An unlimited mortgage ceiling

Correct answer: Minimum down payment

The primary appeal of VA mortgages for eligible veterans lies in their requirement for a minimum down payment, which is often zero. This significantly reduces the upfront financial burden for veterans looking to purchase a home. While VA loans can also offer competitive interest rates and no private mortgage insurance, the ability to purchase with no money down is a major advantage.

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

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

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

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

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 77: Which loan feature protects an ARM borrower by limiting how much the rate can rise?

Index
Buydown
Margin
Interest rate cap (Correct answer)

Correct answer: Interest rate cap

An interest rate cap limits how much an ARM's rate can increase per adjustment or over the loan's life.

Question 78: In the cost approach, what must be subtracted from the reproduction cost of improvements?

The capitalization rate
Land value
Accrued depreciation (Correct answer)
Closing costs

Correct answer: Accrued depreciation

Accrued depreciation is deducted from improvement cost, then land value is added back to reach the estimate.

Question 79: 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 80: Which document formally establishes a buyer's agency relationship in a real estate transaction?

Listing Agreement
Purchase and Sale Agreement
Buyer Representation Agreement (Correct answer)
MLS Registration Form

Correct answer: Buyer Representation Agreement

A Buyer Representation Agreement (also called a Buyer Agency Agreement) is the contract that formally creates the agency relationship between a buyer and their agent.

Question 81: The ____ is the instrument that is used to transfer title to personal property.

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

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

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)
Special agents represent buyers; general agents represent sellers

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 83: Which of the following individuals or entities is prohibited from working in the escrow industry?

An lawyer
A corporation that is either domestic or international.
The transaction's principal (Correct answer)
Broker in real estate

Correct answer: The transaction's principal

An escrow holder must maintain strict neutrality and impartiality in a real estate transaction. The principals (buyer and seller) are directly involved and have vested interests, which would compromise the unbiased role required of an escrow agent. Therefore, a principal in the transaction is prohibited from acting as the escrow holder for that specific transaction.

Question 84: A violation of a provision of the Texas Real Estate License Act constitutes what type of legal violation?

A felony.
A class A misdemeanor. (Correct answer)
A class C misdemeanor.
A class B misdemeanor.

Correct answer: A class A misdemeanor.

Violations of the Texas Real Estate License Act (TRELA) are serious offenses designed to protect the public. TRELA specifies that engaging in real estate brokerage activities without a license, or other significant violations, can be prosecuted as a Class A misdemeanor. This classification carries potential penalties including fines and jail time, underscoring the importance of compliance with licensing laws.

Question 85: The maximum security deposit for a furnished apartment is:

two months’ rent
one month’s rent
three months’ rent (Correct answer)
$10,000

Correct answer: three months’ rent

In California, state law limits the amount a landlord can charge for a security deposit. For an unfurnished residential property, the maximum security deposit is two months' rent. However, for a furnished residential property, the maximum allowed security deposit is three months' rent, accounting for the additional value and potential wear and tear on the furnishings.

Question 86: Which of the following amounts for documented transfer tax stamps is incorrect?

200.00
100.00
250.00
111.00 (Correct answer)

Correct answer: 111.00

Documentary transfer tax is typically calculated based on a specific rate per increment of value (e.g., $0.55 per $500 or $1.10 per $1,000 in many jurisdictions). This means the total tax amount should always be an exact multiple of the base tax unit (e.g., $0.55). An amount like $111.00 is not an exact multiple of $0.55 or $1.10, making it an unlikely or incorrect total for documented transfer tax stamps under standard calculation methods.

Question 87: Under an Exclusive Right to Sell listing agreement, the listing broker earns a commission:

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 the broker personally introduces the buyer to the seller
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 88: The clause that allows a lender to declare the entire loan balance due upon default is the:

Habendum clause
Prepayment clause
Defeasance clause
Acceleration clause (Correct answer)

Correct answer: Acceleration clause

An acceleration clause makes the full balance immediately due if the borrower defaults.

Question 89: Usury laws are designed to limit:

Loan terms
Property tax rates
Down payment amounts
Maximum interest rates charged (Correct answer)

Correct answer: Maximum interest rates charged

Usury laws cap the maximum interest rate a lender may legally charge.

Question 90: Fred has a long-term capital loss on the sale of his personal residence. He may deduct

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

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 91: Rescission of a contract results in:

A new closing date
The contract being canceled and parties restored to original positions (Correct answer)
Both parties continuing performance
Doubling the deposit

Correct answer: The contract being canceled and parties restored to original positions

Rescission cancels the contract and returns both parties to their pre-contract positions.

Question 92: Which of the following is NOT one of the fiduciary duties an agent owes to their principal?

Confidentiality
Profitability (Correct answer)
Loyalty
Disclosure

Correct answer: Profitability

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

Question 93: The sales comparison approach to valuation is directly related to ____.

the quality and amount of sales data available (Correct answer)
market investment return rates
the principle of anticipation
the principle of substitution

Correct answer: the quality and amount of sales data available

The sales comparison approach relies heavily on comparing the subject property to recently sold comparable properties in the same market. The accuracy and reliability of this approach are directly dependent on the availability of sufficient, recent, and relevant sales data. Without good quality and quantity of comparable sales, the appraisal becomes less reliable.

Question 94: 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 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 offer to purchase the property, but must first disclose to the seller that they are the buyer. (Correct answer)
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 95: Which approach to value would an appraiser rely on most heavily for a single-family home in an active subdivision?

Gross income multiplier
Sales comparison approach (Correct answer)
Cost approach
Income capitalization approach

Correct answer: Sales comparison approach

Abundant comparable sales make the sales comparison approach the most reliable for typical residential homes.

Question 96: What is a promissory note?

is an agreement to perform or refrain from performing specific activities.
is the major proof of a debt. (Correct answer)
cannot be carried out in connection with a real estate loan.
is a government agency's guarantee.

Correct answer: is the major proof of a debt.

A promissory note is a written promise by a borrower to repay a specific sum of money to a lender under specified terms. It serves as the primary legal evidence of the debt and outlines the repayment schedule, interest rate, and other conditions of the loan.

Question 97: Hypothecation in financing refers to:

Pledging property as collateral without giving up possession (Correct answer)
Refinancing an existing loan
Transferring title to the lender
Paying off a loan early

Correct answer: Pledging property as collateral without giving up possession

Hypothecation lets a borrower pledge property as security while retaining possession and use.

Question 98: John and Leslie are business partners and they decided to list their apartment complex for sale. John met with Susan, an agent, and told him that he and his partner would give her the listing. John met with Susan on Monday afternoon and signed the listing agreement. Leslie was, scheduled to meet with Susan on Tuesday morning but was called into a emergency meeting in another state. Leslie decide to send her friend, Daniella to meet with Susan instead. Daniella signed the listing agreement for Leslie.Susan had no idea that Daniella was not an owner of the property. <p>The status of the listing agreement is:</p>

voidable
void. (Correct answer)
valid
unenforceable

Correct answer: void.

The listing must be signed by the parties who have the authority to sell.

Question 99: The passage of rules require

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

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

Prepare the seller's tax returns related to the property sale
Provide complete financial records to the state licensing board
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.

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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