Real Estate Salesperson Licensing Exam — Questions and Answers

Question 1: The income approach to value is most commonly used for:

Income-producing investment properties (Correct answer)
Single-family owner-occupied homes
New construction only
Vacant land only

Correct answer: Income-producing investment properties

The income approach estimates value by capitalizing or discounting the property's income stream, making it ideal for rental and commercial properties.

Question 2: CAM (Common Area Maintenance) charges in a commercial lease are used to cover:

Shared costs for lobbies, parking lots, landscaping, and hallways (Correct answer)
The tenant's private office maintenance
Property management fees only
Roof and structural repairs exclusively

Correct answer: Shared costs for lobbies, parking lots, landscaping, and hallways

CAM charges allocate each tenant's proportionate share of maintaining shared spaces in multi-tenant properties such as shopping centers and office buildings.

Question 3: TILA (Truth in Lending Act) requires lenders to disclose the:

Annual Percentage Rate (APR) and total finance charges (Correct answer)
Seller's net proceeds
Agent's commission structure
Appraised value of the property

Correct answer: Annual Percentage Rate (APR) and total finance charges

TILA mandates clear disclosure of the APR, total cost of credit, and other loan terms so borrowers can compare loan offers accurately.

Question 4: Functional obsolescence in real estate is caused by:

Deferred maintenance
Outdated design, layout, or features within the property itself (Correct answer)
Factors external to the property
Physical wear and tear over time

Correct answer: Outdated design, layout, or features within the property itself

Functional obsolescence results from features within the property that are outdated, inadequate, or no longer desired by the market, such as a single bathroom in a large home.

Question 5: A private restriction placed in a deed that limits how a property can be used is called a:

Easement
Variance
Deed restriction (covenant) (Correct answer)
Zoning ordinance

Correct answer: Deed restriction (covenant)

A deed restriction (also called a restrictive covenant) is a private limitation written into a deed that runs with the land and binds all future owners.

Question 6: FHA loans are attractive to first-time buyers primarily because they allow:

No mortgage insurance
Unlimited loan amounts
Down payments as low as 3.5% with lower credit score requirements (Correct answer)
No down payment required

Correct answer: Down payments as low as 3.5% with lower credit score requirements

FHA loans, insured by the Federal Housing Administration, allow down payments as low as 3.5% and accept lower credit scores than conventional loans.

Question 7: The implied warranty of habitability requires landlords to:

Provide luxury amenities
Guarantee no vacancies
Maintain the premises in a safe, sanitary, and livable condition (Correct answer)
Provide rent-free living during repairs

Correct answer: Maintain the premises in a safe, sanitary, and livable condition

The implied warranty of habitability is a legal doctrine holding landlords responsible for maintaining rental properties in a condition fit for human habitation.

Question 8: CERCLA, also known as the Superfund law, primarily requires:

Cleanup of contaminated sites and assigns liability to responsible parties (Correct answer)
Federal approval for wetland development
Disclosure of lead paint in homes built before 1978
Environmental impact statements for new construction

Correct answer: Cleanup of contaminated sites and assigns liability to responsible parties

CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) creates a federal program to clean up sites contaminated with hazardous substances and holds responsible parties liable for cleanup costs.

Question 9: A cloud on title refers to:

Any outstanding claim, lien, or encumbrance that may impair the owner's clear title (Correct answer)
A property located in a flood zone
Undisclosed easements only
Digital title records stored online

Correct answer: Any outstanding claim, lien, or encumbrance that may impair the owner's clear title

A cloud on title is any defect, claim, or encumbrance in the title records that casts doubt on the owner's right to the property and must be resolved before sale.

Question 10: The principle of regression states that a higher-value property placed among lower-value properties will:

Increase the value of nearby homes
Experience a decline in value (Correct answer)
Remain unaffected by its surroundings
Increase in value over time

Correct answer: Experience a decline in value

Regression holds that a superior property's value is pulled down when surrounded by inferior properties, the opposite of the principle of progression.

Question 11: Steering in real estate refers to an agent's illegal practice of:

Directing buyers toward or away from neighborhoods based on protected class characteristics (Correct answer)
Driving clients to property showings
Negotiating the price on behalf of clients
Recommending a specific lender to a buyer

Correct answer: Directing buyers toward or away from neighborhoods based on protected class characteristics

Steering is the illegal act of channeling prospective buyers or renters toward or away from certain neighborhoods based on their race, religion, national origin, or other protected characteristics.

Question 12: The Gross Rent Multiplier (GRM) is calculated by dividing the:

Sale price by the annual gross rental income (Correct answer)
Vacancy rate by occupancy rate
Monthly rent by the mortgage payment
Net operating income by the cap rate

Correct answer: Sale price by the annual gross rental income

GRM = sale price ÷ annual gross rents; it provides a quick, rough estimate of value by comparing price to rental income without accounting for expenses.

Question 13: In a non-judicial (trustee's sale) foreclosure, the property is sold without:

A public auction
Lender involvement
Court supervision, using the power of sale clause in the deed of trust (Correct answer)
Any notice to the borrower

Correct answer: Court supervision, using the power of sale clause in the deed of trust

Non-judicial foreclosure is carried out under the power of sale clause in a deed of trust, allowing the trustee to sell the property without court oversight after proper notice.

Question 14: The Fair Housing Act of 1968 (and amendments) prohibits discrimination based on:

Income level and credit score
Race, color, national origin, religion, sex, familial status, and disability (Correct answer)
Occupation and marital status
Age and education level

Correct answer: Race, color, national origin, religion, sex, familial status, and disability

The Fair Housing Act protects seven federally recognized classes from discrimination in the sale, rental, and financing of housing.

Question 15: A conventional loan is characterized by:

Fixed 30-year term only
Government insurance or guarantee
Exclusive use by veterans
No government backing, conforming to Fannie Mae/Freddie Mac guidelines (Correct answer)

Correct answer: No government backing, conforming to Fannie Mae/Freddie Mac guidelines

Conventional loans are not insured by a government agency and must typically meet conforming limits and standards set by Fannie Mae and Freddie Mac.

Question 16: Which approach to value would an appraiser emphasize most when valuing a new single-family home?

GRM approach
Cost approach
Sales comparison approach (Correct answer)
Income approach

Correct answer: Sales comparison approach

For residential properties, the sales comparison approach using recent comparable sales is the primary and most reliable method.

Question 17: An escrow account held by a mortgage servicer is used to pay:

The borrower's credit card bills
HOA dues only
The broker's commission at closing
Property taxes and insurance premiums on behalf of the borrower (Correct answer)

Correct answer: Property taxes and insurance premiums on behalf of the borrower

Lenders often require escrow accounts to collect monthly portions of property tax and insurance, ensuring these bills are paid and protecting the collateral.

Question 18: Which type of deed offers the highest level of protection to a buyer?

Quitclaim deed
General warranty deed (Correct answer)
Special warranty deed
Bargain and sale deed

Correct answer: General warranty deed

A general warranty deed provides the most protection by guaranteeing the title against all defects, even those arising before the grantor owned the property.

Question 19: A lis pendens is a recorded notice that:

Provides public notice that the property is subject to pending litigation (Correct answer)
Transfers title during probate
Indicates a property is for sale
Creates a tax lien on the property

Correct answer: Provides public notice that the property is subject to pending litigation

Lis pendens ('suit pending') is a notice recorded in the county records alerting potential buyers and lenders that the property is involved in active litigation.

Question 20: A 1031 exchange (like-kind exchange) allows a real estate investor to:

Exchange residential property for commercial property with no restrictions
Defer capital gains taxes by reinvesting proceeds into a like-kind property (Correct answer)
Combine two investment properties into one
Sell property and receive all proceeds tax-free permanently

Correct answer: Defer capital gains taxes by reinvesting proceeds into a like-kind property

Under IRC Section 1031, investors can defer capital gains tax on the sale of investment property by reinvesting the proceeds into another like-kind investment property within specified timeframes.

Question 21: Market value is defined as the most probable price a property would sell for:

After major renovation
To a related party
Under distressed conditions
In an arm's-length transaction between informed and willing parties (Correct answer)

Correct answer: In an arm's-length transaction between informed and willing parties

Market value assumes an arm's-length transaction with a willing buyer and seller, adequate time on the market, and no undue pressure on either party.

Question 22: A mechanic's lien can be filed by a:

Mortgage lender only
Contractor, subcontractor, or supplier who performed work or supplied materials for the property (Correct answer)
Property appraiser
Real estate agent for unpaid commission

Correct answer: Contractor, subcontractor, or supplier who performed work or supplied materials for the property

Mechanic's liens give contractors, subcontractors, and material suppliers a security interest in the property when they are not paid for improvements.

Question 23: Assignment of a real estate contract transfers the:

Title to the property
Contractual rights and obligations to a third party (Correct answer)
Mortgage to a new lender
Listing to another broker

Correct answer: Contractual rights and obligations to a third party

Assignment allows the original contracting party to transfer their rights under the contract to a third party, though the assignor may remain liable.

Question 24: A certificate of occupancy (CO) is issued by a local government agency to certify that:

A building complies with applicable building codes and is safe to occupy (Correct answer)
A property appraisal is complete
A tenant has vacated the premises
A property has sold and closed escrow

Correct answer: A building complies with applicable building codes and is safe to occupy

A CO is issued after inspections confirm a newly constructed or substantially renovated building meets zoning, building codes, and safety requirements.

Question 25: In an adjustable-rate mortgage (ARM), the interest rate is tied to:

A market index plus a margin (Correct answer)
The original purchase price
The prime rate set by the Federal Reserve directly
The borrower's credit score

Correct answer: A market index plus a margin

ARM rates are calculated by adding a fixed margin to a benchmark index (such as SOFR or Treasury rates), causing the rate to fluctuate over time.

Question 26: In the sales comparison approach, if a comparable sold for more than the subject because it has a pool, the appraiser would make a:

Positive adjustment to the subject
Positive adjustment to the comparable
No adjustment
Negative adjustment to the comparable (Correct answer)

Correct answer: Negative adjustment to the comparable

When the comparable is superior to the subject (has a feature the subject lacks), a downward (negative) adjustment is made to the comparable's sale price.

Question 27: A right of first refusal gives a party the:

Right to set the listing price
Right to inspect before listing
Right to purchase at a discount
Opportunity to match any offer before the property is sold to another (Correct answer)

Correct answer: Opportunity to match any offer before the property is sold to another

A right of first refusal requires the owner to offer the property to the holder of the right before accepting any third-party offer.

Question 28: A deed restriction (restrictive covenant) is enforceable by:

The original grantor exclusively
Neighboring property owners or homeowners associations (Correct answer)
State licensing boards
The local government only

Correct answer: Neighboring property owners or homeowners associations

Deed restrictions run with the land and can be enforced by parties who benefit from them, such as HOA members or neighboring owners.

Question 29: Dual agency occurs when:

Two brokers co-list a property
Two buyers compete for one property
A property is listed on two MLS systems
One agent represents both buyer and seller in the same transaction (Correct answer)

Correct answer: One agent represents both buyer and seller in the same transaction

Dual agency exists when the same broker or agent represents both the buyer and seller, requiring disclosure and consent from all parties.

Question 30: Amortization in a mortgage refers to:

The process of increasing the loan balance over time
Converting an ARM to a fixed rate
Refinancing to a lower rate
The gradual payoff of the loan through scheduled principal and interest payments (Correct answer)

Correct answer: The gradual payoff of the loan through scheduled principal and interest payments

Amortization is the repayment schedule that systematically reduces the loan principal over its term through regular equal payments.

Question 31: A short sale occurs when the property sells for:

Quickly within 30 days of listing
Under assessed value for tax purposes
Less than the outstanding mortgage balance, with lender approval (Correct answer)
Less than the asking price after a price reduction

Correct answer: Less than the outstanding mortgage balance, with lender approval

In a short sale, the lender agrees to accept less than the full loan balance owed, allowing the owner to sell and avoid foreclosure.

Question 32: When a property owner's land is taken for a public road and the remaining parcel suffers a loss in value due to the severance, the owner may be entitled to:

A conditional use permit
Spot zoning relief
An inverse condemnation waiver
Severance damages (Correct answer)

Correct answer: Severance damages

Severance damages compensate a property owner for the diminished value of the portion of land not taken when a partial condemnation reduces the utility or value of the remainder.

Question 33: Which federal law prohibits discrimination in residential real estate transactions based on race, color, national origin, religion, sex, familial status, and disability?

Community Reinvestment Act
Equal Credit Opportunity Act
Fair Housing Act of 1968 (Correct answer)
Americans with Disabilities Act

Correct answer: Fair Housing Act of 1968

The Fair Housing Act of 1968, as amended in 1988, is the primary federal statute prohibiting discrimination in the sale, rental, or financing of housing.

Question 34: Spot zoning is generally considered illegal because it:

Requires a public hearing before approval
Applies uniform standards across a large area
Increases property values in a neighborhood
Singles out one parcel for treatment inconsistent with surrounding zoning (Correct answer)

Correct answer: Singles out one parcel for treatment inconsistent with surrounding zoning

Spot zoning is typically invalid because it grants a single parcel a zoning classification inconsistent with the surrounding area without a reasonable basis, which courts view as arbitrary and discriminatory.

Question 35: The sales comparison approach estimates value primarily by:

Comparing the subject property to recently sold similar properties (Correct answer)
Capitalizing net operating income
Using the assessed tax value
Calculating replacement cost minus depreciation

Correct answer: Comparing the subject property to recently sold similar properties

The sales comparison approach adjusts the sale prices of comparable properties for differences to arrive at an indicated value for the subject property.

Question 36: What distinguishes lender's title insurance from owner's title insurance?

They cover the same risks but different parties
Lender's policy protects the buyer's equity; owner's policy protects only the mortgage
Only owner's title insurance is required by law
Lender's policy covers only the loan amount and decreases as the loan is paid down; owner's policy covers the full property value (Correct answer)

Correct answer: Lender's policy covers only the loan amount and decreases as the loan is paid down; owner's policy covers the full property value

Lender's title insurance protects the lender's interest up to the loan amount and typically decreases as the loan balance falls, while owner's policy covers the full purchase price.

Question 37: RESPA (Real Estate Settlement Procedures Act) primarily protects consumers by:

Mandating home warranties
Requiring disclosure of settlement costs and prohibiting kickbacks (Correct answer)
Regulating property taxes
Setting maximum mortgage rates

Correct answer: Requiring disclosure of settlement costs and prohibiting kickbacks

RESPA requires lenders to provide a Loan Estimate and Closing Disclosure, and prohibits kickbacks, referral fees, and unearned charges in the settlement process.

Question 38: A lien is best described as a:

Financial claim against a property (Correct answer)
Voluntary gift of property
Transfer of ownership
Type of deed

Correct answer: Financial claim against a property

A lien is a legal claim placed against a property as security for a debt or obligation.

Question 39: A buyer's agency agreement creates a fiduciary relationship in which the agent owes primary loyalty to the:

Seller
Listing broker
Buyer (Correct answer)
Lender

Correct answer: Buyer

A buyer's agency agreement legally obligates the agent to represent the buyer's best interests, creating full fiduciary duties to the buyer.

Question 40: Constructive eviction occurs when a landlord:

Serves formal eviction papers
Raises rent without notice
Fails to maintain the property to a habitable standard, effectively forcing the tenant to leave (Correct answer)
Refuses to renew the lease

Correct answer: Fails to maintain the property to a habitable standard, effectively forcing the tenant to leave

Constructive eviction happens when a landlord's failure to maintain habitable conditions makes the premises unfit, allowing the tenant to vacate and terminate the lease.

Question 41: Blockbusting is an illegal practice in which real estate agents:

Purchase foreclosed properties in bulk
Block new developments from being built
Induce homeowners to sell by suggesting minority groups are moving in, causing property values to decline (Correct answer)
Refuse to show properties in certain areas

Correct answer: Induce homeowners to sell by suggesting minority groups are moving in, causing property values to decline

Blockbusting (panic peddling) involves inducing white homeowners to sell cheaply by implying that minority residents moving in will lower property values — a Fair Housing Act violation.

Question 42: The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against loan applicants based on:

Type of property purchased
Credit score and debt ratio
Loan amount requested
Race, color, religion, national origin, sex, marital status, age, or receipt of public assistance (Correct answer)

Correct answer: Race, color, religion, national origin, sex, marital status, age, or receipt of public assistance

ECOA requires lenders to evaluate all credit applicants equally without regard to protected characteristics, ensuring fair access to mortgage financing.

Question 43: Which listing agreement allows a seller to also sell the property themselves without owing a commission?

Open listing
Exclusive agency listing (Correct answer)
Exclusive right-to-sell
Net listing

Correct answer: Exclusive agency listing

In an exclusive agency listing, only one broker is authorized, but the seller retains the right to sell without owing a commission if they find the buyer themselves.

Question 44: The government takes private property for public use and pays just compensation. This is an exercise of:

Escheat
Adverse possession
Eminent domain (Correct answer)
Police power

Correct answer: Eminent domain

Eminent domain is the government's constitutional right to take private property for public use, provided the owner receives just compensation as required by the Fifth Amendment.

Question 45: What distinguishes real property from personal property?

Real property can be moved; personal property cannot
Personal property includes buildings and fixtures
Personal property is permanently attached to land; real property is not
Real property includes land and permanently attached improvements (Correct answer)

Correct answer: Real property includes land and permanently attached improvements

Real property consists of land and anything permanently attached to it, while personal property (personalty) is movable and not attached to land.

Question 46: FIRPTA (Foreign Investment in Real Property Tax Act) requires that when a foreign seller sells US real property, the buyer must:

Notify the state real estate commission
Pay an extra transfer tax
Obtain special financing
Withhold a percentage of the sales price and remit it to the IRS (Correct answer)

Correct answer: Withhold a percentage of the sales price and remit it to the IRS

FIRPTA requires buyers to withhold typically 15% of the gross sale price from a foreign seller and remit it to the IRS to ensure payment of US capital gains taxes.

Question 47: The cost approach to value is most reliable for:

Owner-occupied single-family resales
Income-producing apartment buildings
Commercial retail centers
Unique or special-use properties with few comparables (Correct answer)

Correct answer: Unique or special-use properties with few comparables

The cost approach is most applicable for unique properties (schools, churches, government buildings) where comparable sales data is scarce.

Question 48: Which form of co-ownership includes the right of survivorship and is recognized by all US states?

Tenancy in common
Joint tenancy (Correct answer)
Tenancy by the entirety
Community property

Correct answer: Joint tenancy

Joint tenancy requires the four unities (time, title, interest, possession) and includes automatic right of survivorship.

Question 49: Transfer of Development Rights (TDR) programs allow property owners to:

Sell the right to develop their land to another property owner in a designated receiving area (Correct answer)
Transfer title to undeveloped land to the local government in exchange for tax credits
Move a nonconforming structure to a conforming location on the same lot
Convert agricultural land to residential use without zoning approval

Correct answer: Sell the right to develop their land to another property owner in a designated receiving area

TDR programs allow owners of restricted land (sending areas) to sell their unused development rights to landowners in designated receiving areas, compensating them while directing growth where infrastructure can support it.

Question 50: Police power in real estate refers to the government's right to:

Arrest trespassers
Regulate land use through zoning and building codes (Correct answer)
Tax property transfers
Manage foreclosure proceedings

Correct answer: Regulate land use through zoning and building codes

Police power is the state's authority to enact laws promoting public health, safety, and welfare, including zoning, building codes, and environmental regulations.

Question 51: Seller financing (owner financing) means the:

Seller helps the buyer get a bank loan
Title company funds the transaction
Government subsidizes the purchase price
Seller acts as the lender, extending credit to the buyer directly (Correct answer)

Correct answer: Seller acts as the lender, extending credit to the buyer directly

In seller financing, the property owner extends a loan directly to the buyer, often used when traditional financing is unavailable or to expedite closing.

Question 52: In a joint tenancy, when one co-owner dies, their share:

Is sold to the remaining owners
Passes to their heirs via will
Automatically transfers to the surviving co-owners (Correct answer)
Reverts to the state

Correct answer: Automatically transfers to the surviving co-owners

The right of survivorship in joint tenancy means the deceased owner's interest passes automatically to the surviving joint tenants, bypassing probate.

Question 53: The principle of conformity holds that maximum value is achieved when:

A property is unique and unlike its neighbors
Land is used for its highest and best purpose
All homes have the same sale price
Properties in an area are similar in size, style, and use (Correct answer)

Correct answer: Properties in an area are similar in size, style, and use

Conformity states that properties attain maximum value when they are similar to surrounding properties, supporting consistent market expectations.

Question 54: In a net lease, operating expenses are paid by the:

Property management company
Landlord entirely
Tenant in addition to base rent (Correct answer)
Local government

Correct answer: Tenant in addition to base rent

In a net lease, the tenant pays base rent plus some or all of the property's operating costs such as taxes, insurance, and maintenance.

Question 55: An environmental impact statement (EIS) is required under NEPA for projects that:

Exceed 10 acres in size regardless of funding source
Are federally funded or require federal approval and may significantly affect the environment (Correct answer)
Are located within 500 feet of a navigable waterway
Involve any private land sale over $500,000

Correct answer: Are federally funded or require federal approval and may significantly affect the environment

The National Environmental Policy Act (NEPA) requires an Environmental Impact Statement for major federal actions significantly affecting the quality of the human environment, including federally funded or approved projects.

Question 56: Under a race-notice recording statute, a subsequent purchaser is protected if they:

Record first regardless of knowledge of prior interests
Simply pay fair market value
Record first AND had no notice of prior unrecorded interests at the time of purchase (Correct answer)
File with the court within 30 days

Correct answer: Record first AND had no notice of prior unrecorded interests at the time of purchase

Under race-notice statutes (most common in the US), a subsequent bona fide purchaser who had no prior knowledge of an earlier claim and records first wins priority.

Question 57: A holdover tenant who remains after the lease expires without permission becomes a:

Trespasser subject to immediate eviction
Tenant at sufferance until the landlord acts (Correct answer)
Life estate holder
Month-to-month tenant automatically

Correct answer: Tenant at sufferance until the landlord acts

A holdover tenant becomes a tenant at sufferance — they have no landlord permission to remain and may be treated as a trespasser or converted to a periodic tenancy at the landlord's option.

Question 58: The debt-to-income (DTI) ratio most commonly used by lenders for conventional loans should not exceed:

50%
60%
43% (Correct answer)
30%

Correct answer: 43%

Most conventional lenders require a back-end DTI of 43% or less, meaning total monthly debt payments should not exceed 43% of gross monthly income.

Question 59: Which federal law requires sellers and landlords to disclose the presence of lead-based paint in housing built before 1978?

The Fair Housing Act
CERCLA
The Residential Lead-Based Paint Hazard Reduction Act (Correct answer)
RESPA

Correct answer: The Residential Lead-Based Paint Hazard Reduction Act

The Residential Lead-Based Paint Hazard Reduction Act (Title X) requires sellers and landlords of pre-1978 housing to disclose known lead-based paint hazards and provide buyers/tenants with an EPA pamphlet.

Question 60: For a real estate contract to be legally valid, it must include all EXCEPT:

Notarization (Correct answer)
Offer and acceptance
Consideration
Competent parties

Correct answer: Notarization

Notarization is required for recording a deed but is not one of the essential elements for a contract to be valid and enforceable.

Question 61: A bilateral contract in real estate is one where:

Only one party makes a promise
The government is involved
No consideration is exchanged
Both parties make promises to each other (Correct answer)

Correct answer: Both parties make promises to each other

A bilateral contract involves mutual promises — both parties are legally obligated to perform, as in a typical purchase and sale agreement.

Question 62: An open listing allows the seller to:

Sell through multiple brokers and pay commission only to the one who produces the buyer (Correct answer)
Cancel the listing without notice at any time for free
List with only one broker exclusively
Sell only to cash buyers

Correct answer: Sell through multiple brokers and pay commission only to the one who produces the buyer

An open listing is a non-exclusive arrangement where multiple brokers may market the property and only the procuring broker earns a commission.

Question 63: A property manager's primary fiduciary duty is to the:

Local government
Property owner (principal) (Correct answer)
Tenant
Mortgage lender

Correct answer: Property owner (principal)

A property manager acts as an agent for the property owner and owes fiduciary duties of loyalty, care, and obedience to the owner as their principal.

Question 64: A buffer zone in zoning is primarily used to:

Increase property tax revenue for municipalities
Separate incompatible land uses such as industrial and residential areas (Correct answer)
Establish the maximum density for residential development
Define the boundaries of a historic district

Correct answer: Separate incompatible land uses such as industrial and residential areas

Buffer zones are areas of land used to separate incompatible land uses, reducing conflicts between zones such as placing a park or landscaped strip between a factory and a neighborhood.

Question 65: Under the Americans with Disabilities Act (ADA), commercial property owners must provide:

Free parking for disabled employees
Reasonable accommodations and accessible facilities for people with disabilities (Correct answer)
Dedicated residential units
Reduced rent for disabled tenants

Correct answer: Reasonable accommodations and accessible facilities for people with disabilities

The ADA requires places of public accommodation and commercial facilities to be accessible to people with disabilities, including accessible entrances, restrooms, and common areas.

Question 66: Adverse possession requires continuous, open, hostile possession for a statutory period in order to:

Obtain a mortgage
Acquire title to another's land (Correct answer)
Create an easement by necessity
Record a deed

Correct answer: Acquire title to another's land

Adverse possession allows a party to claim legal title after meeting statutory requirements of open, notorious, hostile, and continuous use.

Question 67: Owner's title insurance protects the:

Lender against title defects
Seller against post-closing claims
Buyer's equity against title claims arising from pre-existing defects (Correct answer)
Title company against errors

Correct answer: Buyer's equity against title claims arising from pre-existing defects

Owner's title insurance protects the buyer's equity and ownership interest against title defects, liens, or encumbrances that existed prior to the purchase.

Question 68: Loan-to-value (LTV) ratio is calculated as:

Monthly payment divided by gross income
Loan amount divided by the appraised property value (Correct answer)
Loan amount divided by the borrower's income
Down payment divided by purchase price

Correct answer: Loan amount divided by the appraised property value

LTV = loan amount ÷ appraised value, expressed as a percentage; a higher LTV represents more risk to the lender.

Question 69: A landlord may legally use information from a rental application to:

Discriminate based on disability
Share with other landlords freely
Screen for creditworthiness, rental history, and income verification (Correct answer)
Deny applicants from protected classes

Correct answer: Screen for creditworthiness, rental history, and income verification

Landlords may use rental application data to evaluate financial stability, rental history, and income in a consistent, non-discriminatory manner.

Question 70: Development of wetlands in the United States is primarily regulated by:

The Americans with Disabilities Act (ADA)
Section 404 of the Clean Water Act (Correct answer)
CERCLA Superfund provisions
The National Environmental Policy Act (NEPA)

Correct answer: Section 404 of the Clean Water Act

Section 404 of the Clean Water Act requires a permit from the Army Corps of Engineers for the discharge of dredged or fill material into wetlands and other waters of the United States.

Question 71: Which government power allows land to be taken for public use such as a highway?

Eminent domain (Correct answer)
Police power
Escheat
Taxation

Correct answer: Eminent domain

Eminent domain (condemnation) authorizes government to acquire private land for public purposes, with just compensation required by the Fifth Amendment.

Question 72: In a gross lease, the tenant pays:

Only utilities
A percentage of sales plus base rent
All operating expenses plus base rent
Base rent only, with the landlord covering most operating expenses (Correct answer)

Correct answer: Base rent only, with the landlord covering most operating expenses

In a gross (full-service) lease, the landlord pays most or all operating expenses from the rent received, simplifying costs for the tenant.

Question 73: What is the key difference between subletting and assigning a lease?

There is no legal difference
Subletting transfers all rights permanently; assignment is temporary
Subletting requires landlord approval; assignment does not
In an assignment, the original tenant transfers all remaining lease rights; in a sublease, the original tenant retains obligations and collects rent from the subtenant (Correct answer)

Correct answer: In an assignment, the original tenant transfers all remaining lease rights; in a sublease, the original tenant retains obligations and collects rent from the subtenant

Assignment transfers all lease rights to a new tenant (assignee), while subletting creates a new landlord-tenant relationship between the original tenant and subtenant, with the original tenant remaining liable to the landlord.

Question 74: 'Time is of the essence' in a real estate contract means:

Inspections must be done immediately
The agent must respond within 24 hours
The property must close quickly
All deadlines in the contract are strictly binding (Correct answer)

Correct answer: All deadlines in the contract are strictly binding

A 'time is of the essence' clause makes all dates and deadlines in the contract strictly enforceable; missing a deadline constitutes a material breach.

Question 75: In an exclusive right-to-sell listing, the listing broker earns a commission if the property is sold by:

Any of the above (Correct answer)
Any cooperating agent
Only the listing agent
The owner themselves

Correct answer: Any of the above

Under an exclusive right-to-sell listing, the broker earns a commission regardless of who procures the buyer, including the seller.

Question 76: A comprehensive plan (master plan) in land use planning is best described as:

A long-range policy document guiding a community's physical development goals (Correct answer)
A recorded subdivision plat showing lot dimensions and street locations
A legally binding zoning ordinance that specifies permitted uses for each parcel
A federal mandate requiring environmental impact assessments

Correct answer: A long-range policy document guiding a community's physical development goals

A comprehensive plan is a general policy document that outlines a community's long-term goals for land use, transportation, housing, and other elements, serving as a guide but not itself a binding zoning law.

Question 77: When a seller responds to a buyer's offer by changing the price, this creates a:

Counteroffer that voids the original offer (Correct answer)
Ratified contract
Binding acceptance
Contingency

Correct answer: Counteroffer that voids the original offer

A counteroffer legally rejects the original offer and substitutes a new offer, giving the original offeror the right to accept, reject, or counter again.

Question 78: A life estate grants ownership rights for how long?

The measuring life of a designated person (Correct answer)
25 years
Until the mortgage is paid
99 years

Correct answer: The measuring life of a designated person

A life estate lasts only for the duration of a specified person's life, after which ownership reverts or passes to a remainderman.

Question 79: A lease renewal option gives the tenant the:

Right to purchase the property
Right to sublease without permission
Automatic rent reduction at renewal
Right to extend the lease for an additional term at pre-agreed terms (Correct answer)

Correct answer: Right to extend the lease for an additional term at pre-agreed terms

A renewal option clause in the lease allows the tenant to extend the tenancy for a specified term, often at a predetermined rent or formula.

Question 80: Specific performance as a remedy in real estate means:

The agent loses their license
The seller must lower the price
The court orders the breaching party to complete the transaction (Correct answer)
The buyer must pay a penalty fee

Correct answer: The court orders the breaching party to complete the transaction

Specific performance is a legal remedy requiring the defaulting party to fulfill their contractual obligations since real estate is considered unique.

Question 81: An estoppel certificate in commercial real estate is a document signed by a tenant that:

Waives the tenant's security deposit
Transfers the lease to a new tenant
Terminates the lease early
Certifies the current lease terms and status as accurate (Correct answer)

Correct answer: Certifies the current lease terms and status as accurate

An estoppel certificate is a binding statement confirming lease terms, payment status, and any disputes, commonly required by lenders or buyers during due diligence.

Question 82: Eminent domain allows the government to:

Tax property owners annually
Zone land for residential use only
Take private property for public use with just compensation (Correct answer)
Enforce deed restrictions

Correct answer: Take private property for public use with just compensation

Eminent domain is the government's constitutional authority to acquire private property for public use, provided just compensation is paid.

Question 83: An option contract in real estate gives the optionee the:

Right but not the obligation to purchase within a set period (Correct answer)
Obligation to buy the property
Right to list the property for sale
Title to the property immediately

Correct answer: Right but not the obligation to purchase within a set period

An option contract provides the buyer the right to purchase the property at an agreed price within a specified timeframe, but they are not required to do so.

Question 84: Familial status as a protected class under the Fair Housing Act protects:

Families with children under 18 and pregnant women (Correct answer)
Extended family members only
Unmarried couples
Divorced individuals

Correct answer: Families with children under 18 and pregnant women

Familial status protects households with one or more children under 18 in the care of a parent or guardian, as well as pregnant women.

Question 85: Which type of zoning allows for a mix of residential and commercial uses in a coordinated development with flexible internal standards?

Agricultural zoning
Planned Unit Development (PUD) (Correct answer)
Industrial zoning
Euclidean zoning

Correct answer: Planned Unit Development (PUD)

A Planned Unit Development (PUD) allows developers to mix land uses and vary building placements within an overall plan, providing flexibility not available under standard zoning.

Question 86: A conditional use permit (CUP) differs from a variance in that a CUP:

Allows a use that is permitted in a zone only under specific conditions (Correct answer)
Waives a dimensional requirement like a setback
Is granted automatically without a public hearing
Permanently changes the zoning classification of a parcel

Correct answer: Allows a use that is permitted in a zone only under specific conditions

A conditional use permit allows a use that is listed in the zoning ordinance as acceptable in a zone under certain conditions, whereas a variance waives a specific zoning dimension requirement.

Question 87: The Statute of Frauds requires that real estate contracts must be:

In writing and signed to be enforceable (Correct answer)
Approved by the state real estate commission
Notarized by a public official
Filed with the county recorder

Correct answer: In writing and signed to be enforceable

The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed by the party to be charged to be legally enforceable.

Question 88: Redlining is an illegal discriminatory practice in which lenders:

Refuse to lend on properties below a minimum value
Charge higher rates to investors
Deny or limit loans in minority neighborhoods based on race or national origin (Correct answer)
Require higher down payments for new construction

Correct answer: Deny or limit loans in minority neighborhoods based on race or national origin

Redlining is the discriminatory practice of refusing to extend credit or insurance to residents in specific geographic areas based on racial or ethnic composition.

Question 89: VA home loans are exclusively available to:

Low-income first-time buyers
Eligible veterans, active-duty service members, and qualifying surviving spouses (Correct answer)
Federal government employees
All US citizens

Correct answer: Eligible veterans, active-duty service members, and qualifying surviving spouses

VA loans are guaranteed by the Department of Veterans Affairs and available only to eligible military borrowers, offering no down payment and no PMI.

Question 90: A property management agreement must include:

The scope of authority, management fee, and duration of the agreement (Correct answer)
The tenant's social security number
Mortgage payment details
A guarantee of occupancy

Correct answer: The scope of authority, management fee, and duration of the agreement

A management agreement defines the manager's authority, compensation (usually a percentage of collected rent), term, and responsibilities to create a valid agency relationship.

Question 91: Private Mortgage Insurance (PMI) is typically required when the borrower's down payment is:

More than 20% of the purchase price
Equal to the loan amount
Less than 20% of the purchase price (Correct answer)
Less than 10% on FHA loans only

Correct answer: Less than 20% of the purchase price

PMI protects the lender when the borrower puts down less than 20%, compensating for the higher default risk associated with a high LTV loan.

Question 92: Capitalization rate (cap rate) is calculated as:

Effective gross income ÷ vacancy rate
Gross rent ÷ purchase price
Mortgage payment ÷ rent
Net operating income ÷ property value (Correct answer)

Correct answer: Net operating income ÷ property value

Cap rate = NOI ÷ property value; it expresses the relationship between a property's income and its value, used to compare investment properties.

Question 93: A balloon payment mortgage requires the borrower to:

Pay a large lump-sum balance at the end of the loan term (Correct answer)
Make increasing payments each year
Refinance after 5 years mandatorily
Make bi-weekly payments

Correct answer: Pay a large lump-sum balance at the end of the loan term

A balloon loan has smaller regular payments but requires the remaining principal balance to be paid in full at the end of a short term.

Question 94: Highest and best use is defined as the use that is:

Most common in the neighborhood
Preferred by the property owner
Physically possible, legally permissible, financially feasible, and maximally productive (Correct answer)
The most expensive to build

Correct answer: Physically possible, legally permissible, financially feasible, and maximally productive

Highest and best use is the reasonably probable and legal use of property that produces the highest value, considering physical, legal, and financial factors.

Question 95: A wraparound mortgage is a form of seller financing where:

The lender wraps PMI into the loan
The seller pays off the existing mortgage
A new loan wraps around and includes the existing mortgage balance (Correct answer)
The buyer assumes the seller's mortgage only

Correct answer: A new loan wraps around and includes the existing mortgage balance

In a wraparound, the seller creates a new mortgage that includes the existing loan balance; the buyer pays the seller, who continues to pay the underlying lender.

Question 96: In a triple-net (NNN) lease, the tenant is responsible for:

Common area maintenance only
Base rent plus property taxes, insurance, and maintenance (Correct answer)
Utilities only
Base rent only

Correct answer: Base rent plus property taxes, insurance, and maintenance

A triple-net lease requires the tenant to pay base rent plus the three 'nets': property taxes, building insurance, and maintenance/repairs.

Question 97: Earnest money in a purchase transaction is best described as:

A non-refundable fee
The broker's commission
The down payment amount
A good-faith deposit demonstrating buyer's intent to purchase (Correct answer)

Correct answer: A good-faith deposit demonstrating buyer's intent to purchase

Earnest money is a deposit made by the buyer to show serious intent; it is typically applied toward the purchase price at closing.

Question 98: A financing contingency in a purchase agreement protects the buyer if:

The closing date is delayed
The home appraises below asking price
The seller fails to make repairs
The buyer cannot obtain mortgage financing (Correct answer)

Correct answer: The buyer cannot obtain mortgage financing

A financing contingency allows the buyer to cancel the contract and recover their earnest money if they cannot secure a loan as specified in the agreement.

Question 99: Mortgage pre-approval differs from pre-qualification because pre-approval involves:

A home inspection
A formal review of verified financial documents by the lender (Correct answer)
Only a verbal income estimate
A title search

Correct answer: A formal review of verified financial documents by the lender

Pre-approval requires verification of income, assets, and credit, giving the buyer a conditional commitment for a specific loan amount.

Question 100: The 'bundle of rights' in real estate includes all of the following EXCEPT:

Right to eminent domain (Correct answer)
Right to use
Right to destroy
Right to exclude others

Correct answer: Right to eminent domain

Eminent domain is a government power, not a private ownership right within the bundle of rights.

Question 101: Tenancy in common differs from joint tenancy primarily because:

Co-owners must hold equal shares
Only married couples can use it
It requires a special deed
There is no right of survivorship (Correct answer)

Correct answer: There is no right of survivorship

In tenancy in common, each owner's interest passes through their estate upon death; there is no automatic right of survivorship.

Question 102: A quitclaim deed transfers:

Title after a court judgment
Ownership only upon the grantor's death
Whatever interest the grantor has, with no warranties (Correct answer)
A guaranteed clear title

Correct answer: Whatever interest the grantor has, with no warranties

A quitclaim deed conveys only whatever interest the grantor holds at the time, providing no warranties or guarantees of title.

Question 103: A purchase and sale agreement becomes binding when:

The title company is notified
The buyer signs it
Both parties sign and communication of acceptance is received (Correct answer)
The earnest money clears the bank

Correct answer: Both parties sign and communication of acceptance is received

A contract is formed upon mutual assent, meaning both parties must sign and acceptance must be communicated back to the offeror.

Question 104: In a deed of trust, who holds legal title to the property during the loan term?

A neutral third-party trustee (Correct answer)
The title insurance company
The lender (beneficiary)
The borrower (trustor)

Correct answer: A neutral third-party trustee

In a deed of trust, legal title is conveyed to a trustee who holds it on behalf of the lender until the loan is repaid, then reconveyed to the borrower.

Question 105: Assessed value is used primarily for:

Determining market value for a sale
Setting the listing price
Qualifying for a mortgage
Calculating property taxes (Correct answer)

Correct answer: Calculating property taxes

Assessed value is set by the local tax assessor as a basis for calculating property tax obligations and may differ significantly from market value.

Question 106: Paying 'points' at loan closing means the borrower is:

Paying upfront fees to permanently reduce the mortgage interest rate (Correct answer)
Paying realtor commissions early
Paying property taxes in advance
Making a larger down payment

Correct answer: Paying upfront fees to permanently reduce the mortgage interest rate

Each discount point equals 1% of the loan amount and reduces the interest rate, lowering monthly payments in exchange for a higher upfront cost.

Question 107: The principle of substitution states that a buyer will pay no more for a property than the cost of:

Remodeling the existing property
The property's replacement cost only
The assessed tax value
An equally desirable substitute property (Correct answer)

Correct answer: An equally desirable substitute property

The principle of substitution holds that value is set by the price of acquiring an equally desirable alternative, forming the basis of the sales comparison approach.

Question 108: The primary role of a title company in a real estate transaction is to:

Appraise the property's market value
Manage the property after sale
Provide mortgage financing
Search title records, issue title insurance, and facilitate closing (Correct answer)

Correct answer: Search title records, issue title insurance, and facilitate closing

A title company searches public records to verify clear title, identifies any defects or encumbrances, and issues title insurance to protect buyers and lenders.

Question 109: Economic obsolescence (external obsolescence) is generally considered:

Incurable because the cause is beyond the owner's control (Correct answer)
A form of physical deterioration
Curable because the owner can fix it
Relevant only to commercial properties

Correct answer: Incurable because the cause is beyond the owner's control

Economic obsolescence stems from factors outside the property, such as neighborhood decline or nearby nuisances, which the owner cannot control or cure.

Question 110: PITI stands for:

Purchase, Investment, Title, Income
Property, Insurance, Taxes, Interest
Principal, Interest, Taxes, Insurance (Correct answer)
Principal, Index, Term, Interest

Correct answer: Principal, Interest, Taxes, Insurance

PITI represents the four components of a typical monthly mortgage payment: Principal, Interest, Taxes (property), and Insurance (homeowners/hazard).

Real Estate Salesperson Licensing Exam

The Real Estate Salesperson Licensing Exam tests knowledge of property ownership, contracts, agency relationships, financing, disclosures, and state real estate practice required to obtain a salesperson license.

110

Questions

150 min

Time Limit

70%

To Pass

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