California Real Estate Salesperson Practice Exam

1. What is the examination fee for the real estate salesperson exam?

• A. $75
• B. $50
• C. $100
• D. $150

2. A candidate answers 100 of the 150 questions correctly. Based solely on the stated passing standard, what is the outcome?

• A. Pass, because 100 correct is a majority
• B. Fail, because 100 correct is below the required threshold
• C. Pass, because any score above 60 percent passes
• D. The result cannot be determined

3. Which statement correctly pairs the salesperson exam's question count with its passing standard?

• A. 120 questions, pass at 70 percent
• B. 200 questions, pass at 75 percent
• C. 150 questions, pass at 70 percent
• D. 150 questions, pass at 60 percent

4. A parcel of land is owned by two people who each hold an equal, undivided interest, and the arrangement includes a right of survivorship so that when one owner dies the survivor automatically absorbs the deceased owner's share. Which form of concurrent ownership does this describe?

• A. Tenancy in common
• B. Joint tenancy
• C. Ownership in severalty
• D. A life estate

5. An owner conveys real property to a relative 'for the duration of her natural life,' with the property to pass to a named third party upon her death. What best describes the interest held by the relative during her lifetime?

• A. A fee simple absolute
• B. A life estate
• C. A leasehold estate
• D. An easement in gross

6. Which of the following is the most complete and unlimited estate a person can hold in real property?

• A. A fee simple absolute
• B. A life estate
• C. An estate for years
• D. A tenancy at will

7. A homeowner grants a utility company the right to run power lines across the edge of her lot. The utility does not own or possess the land itself but may enter to maintain the lines. This right is best classified as:

• A. A possessory freehold estate
• B. An easement
• C. A remainder interest
• D. A joint tenancy

8. Two investors take title to a rental property together. Each owns a distinct fractional share, the shares need not be equal, and either may leave his share to his own heirs by will. There is no right of survivorship between them. This describes:

• A. Joint tenancy
• B. Tenancy in common
• C. Ownership in severalty
• D. A tenancy at sufferance

9. When a person owns real property entirely alone, with no co-owners sharing the title, this is referred to as ownership:

• A. In common
• B. By the entirety
• C. In severalty
• D. In joint tenancy

10. An unpaid contractor who supplied labor and materials to improve a property records a claim against that specific property to secure payment. This is an example of what type of encumbrance?

• A. An easement appurtenant
• B. A mechanic's (or construction) lien
• C. A life estate
• D. A restrictive covenant

11. A subdivision's recorded documents prohibit any lot owner from operating a commercial business on a residential lot. An owner who wants to run a business is bound by this private restriction. Such a restriction is best described as:

• A. A government zoning ordinance
• B. A private deed restriction or restrictive covenant
• C. An easement in gross
• D. A tenancy in common

12. An owner conveys her orchard "to my brother for the duration of his life, and then to my daughter." When the brother later dies, what happens to title to the orchard?

• A. It passes to the daughter as remainderman
• B. It passes to the brother's heirs through his estate
• C. It reverts to the state
• D. It is split equally between the daughter and the brother's heirs

13. A grantor deeds a cottage "to my longtime friend for the friend's life" and names no one to take the property afterward. Upon the friend's death, title to the cottage will:

• A. Escheat automatically to the county
• B. Pass to the friend's heirs by inheritance
• C. Revert to the grantor
• D. Be held in trust until a remainderman is appointed

14. A seller signs a properly drafted deed naming the parties, containing a legal description and a granting clause, then locks it in a desk drawer, intending to hand it over "someday." The seller dies before ever giving the deed to the buyer. Was the conveyance effective?

• A. Yes, because the deed was signed by the grantor
• B. Yes, because the deed contained all required written elements
• C. No, because the deed was never delivered and accepted
• D. No, because the deed was never notarized and recorded

15. A buyer asks her broker which form of ownership gives her the most complete bundle of rights in a parcel, including the ability to leave it to her heirs or sell it at will. Which estate should the broker identify?

• A. A life estate
• B. A fee simple absolute
• C. An easement appurtenant
• D. A month-to-month leasehold

16. A first-time buyer tells his agent, "I want the deed that protects me the most — I want the seller standing behind this title no matter when a problem arose." Which deed best fits this request?

• A. A quitclaim deed
• B. A general warranty deed
• C. A deed of trust
• D. A tax deed

17. To clear up a possible claim from a divorce years earlier, an ex-spouse signs a quitclaim deed in favor of the current owner. What did the quitclaim deed actually convey?

• A. Marketable title guaranteed against all defects
• B. Whatever interest the ex-spouse may have had, with no warranties
• C. A life estate measured by the ex-spouse's life
• D. Title warranted only against defects arising during the ex-spouse's ownership

18. After closing, a buyer promptly records her deed in the public land records. What is the primary legal effect of recording?

• A. It guarantees the title is free of all encumbrances
• B. It substitutes for delivery and acceptance of the deed
• C. It gives constructive notice to the world and establishes the buyer's priority
• D. It makes the deed valid between the buyer and the seller

19. A property is subject to a mortgage recorded several years ago and, more recently, to an unpaid property tax lien. If the liens are enforced, which one generally comes first, and why?

• A. The mortgage, because it was recorded first
• B. The mortgage, because voluntary liens always outrank involuntary liens
• C. The property tax lien, because tax liens generally take priority over all other liens regardless of recording date
• D. Neither; the liens share priority in proportion to the amounts owed

20. Lot 14 enjoys a driveway easement across neighboring Lot 15 to reach the public road. In describing this easement appurtenant, which statement is accurate?

• A. Lot 15 is the dominant tenement because the driveway is on its land
• B. Lot 15 is the servient tenement because it bears the burden of the easement
• C. Lot 14 is the servient tenement because it uses the driveway
• D. Both lots are dominant tenements because the easement touches both

21. The owner of a dominant tenement that benefits from a recorded easement appurtenant sells the parcel. Does the new owner get the benefit of the easement?

• A. Yes, but only if the deed mentions the easement by name
• B. No, unless the servient owner signs a new easement agreement
• C. Yes, because an easement appurtenant runs with the land
• D. No, because easements are personal to the owner who negotiated them

22. A city rezones a corridor from general commercial to low-density residential. An investor who bought a parcel there for a retail project finds it is now worth far less, though it can still be developed with houses. He demands that the city pay him the difference. What is the likely outcome?

• A. The city must compensate him, because the rezoning took a property right without payment
• B. The city must compensate him for the difference between the two zoning classifications
• C. No compensation is owed, because the rezoning is an exercise of the police power and a viable use remains
• D. No compensation is owed, because zoning changes are never subject to constitutional challenge

23. A broker receives an earnest money check from a client and deposits it into the brokerage's general operating account to "keep things simple." How should this conduct be characterized?

• A. Acceptable, as long as the broker keeps accurate internal records of the deposit.
• B. A violation of the duty of accounting, because client funds must be kept in a separate trust or escrow account and never commingled with the broker's own funds.
• C. A violation of the duty of obedience, because the client did not authorize the deposit.
• D. Acceptable, provided the funds are transferred to a trust account before closing.

24. A buyer submits a written offer on a home. The seller crosses out the proposed closing date, writes in a date three weeks later, signs the document, and returns it. What is the legal status of the buyer's original offer?

• A. It remains open, and the buyer may still accept the original terms.
• B. It has been rejected and extinguished, because a material change to the terms operates as a counteroffer.
• C. It has been accepted, because the seller signed the document.
• D. It is automatically extended for three weeks to match the new closing date.

25. A homeowner selling her own residence without an agent refuses to sell to an applicant because of the applicant's race, claiming that owners selling their own homes are exempt from fair housing rules. Which statement is correct?

• A. She is correct — for-sale-by-owner transactions are exempt from all discrimination rules.
• B. She is incorrect — discrimination based on race, established under the Civil Rights Act of 1866, has no exemptions.
• C. She is correct as long as she does not use a real estate licensee or discriminatory advertising.
• D. She is incorrect only if the buyer also belongs to a second protected class.

26. A licensee proposes to represent both the buyer and the seller in the same purchase transaction. Under what condition is this arrangement permitted?

• A. It is permitted only with the informed written consent of both parties.
• B. It is permitted whenever the licensee orally notifies both parties before closing.
• C. It is never permitted under any circumstances.
• D. It is permitted automatically as long as the commission is split evenly between the parties.

27. Six months after a listing agreement ended, the former listing agent tells a prospective buyer that the ex-client had privately been willing to accept far less than the asking price on a new listing. Which fiduciary duty has the agent most likely violated?

• A. Accounting, because the agent mishandled client funds.
• B. None — all fiduciary duties end when the agency relationship terminates.
• C. Obedience, because the agent failed to follow lawful instructions.
• D. Confidentiality, because that duty survives termination of the agency and forbids revealing information that harms the principal's bargaining position.

28. An owner hires a licensee to manage an apartment building on an ongoing basis, with authority to lease units, arrange repairs, and handle a range of matters that bind the owner. In this role, the licensee is BEST described as a:

• A. Special agent, because property management is limited to a single transaction.
• B. General agent, because the licensee may bind the principal in a range of matters.
• C. Customer, because the licensee owes the owner only honesty and fair dealing.
• D. Principal, because the licensee controls the property.

29. A landlord and tenant orally agree to a two-year lease of a commercial storefront and shake hands on the terms. If the landlord later refuses to honor the arrangement, the lease is BEST described as:

• A. Void, because it never existed as a legal agreement.
• B. Voidable at the option of either party.
• C. Unenforceable, because leases longer than one year must be in writing and signed by the party to be charged.
• D. Fully enforceable, because oral leases of any length are valid.

30. A property is encumbered by a first mortgage recorded in 2019, a judgment lien recorded in 2021, and a property tax lien that arose in 2024. In a forced sale, which lien is generally paid first?

• A. The first mortgage, because it was recorded earliest.
• B. The judgment lien, because judgments outrank consensual liens.
• C. The property tax lien, because property tax liens generally take priority over all other liens regardless of when they were recorded.
• D. All three liens share equal priority and are paid proportionally.

31. A borrower obtains a $300,000 loan and agrees to pay two discount points at closing to buy down the interest rate. How much will the borrower pay for the points?

• A. $3,000
• B. $6,000
• C. $600
• D. $1,500

32. A broker is reviewing a purchase agreement to confirm it is legally valid. Which of the following is NOT one of the essential elements required for a valid real estate contract?

• A. Mutual assent between the parties
• B. An earnest money deposit
• C. Legally competent parties
• D. A lawful object

33. A buyer submits a written offer on a home. The seller signs it but first crosses out the proposed closing date and writes in a later one. What is the legal effect of the seller's response?

• A. It is a valid acceptance because the change is minor
• B. It is a counteroffer that rejects and extinguishes the buyer's original offer
• C. It binds the buyer unless the buyer objects in writing
• D. It keeps the original offer open while the parties negotiate the date

34. An offeror who has made a written offer to purchase a parcel of land calls the seller's broker and withdraws the offer. The seller had signed the acceptance moments earlier but had not yet communicated it to anyone on the buyer's side. Which statement is correct?

• A. The revocation is effective because acceptance had not yet been communicated
• B. A binding contract exists because the seller had already signed
• C. The offer cannot be revoked once the seller begins reviewing it
• D. The revocation is ineffective because it was not made in writing

35. A landlord and tenant orally agree to a residential lease with a term of two years. If the tenant later refuses to honor the agreement, which doctrine most directly affects the landlord's ability to enforce it?

• A. The doctrine of specific performance
• B. The parol evidence rule
• C. The Statute of Frauds
• D. The doctrine of liquidated damages

36. A seventeen-year-old signs a contract to purchase a condominium. How is this contract best classified?

• A. Void, because it never legally existed
• B. Voidable, because the minor may disaffirm it
• C. Unenforceable, because it cannot be enforced in court
• D. Valid, because real estate contracts are exempt from capacity rules

37. Two parties reach a complete oral agreement for the sale of a vacant lot: the price is settled, both are competent adults, and the purpose is lawful. If the seller refuses to convey, how is this agreement best described?

• A. Void
• B. Fully enforceable, because all essential elements are present
• C. Voidable
• D. Unenforceable

38. A purchase agreement states that the buyer's duty to close depends on the buyer obtaining loan approval, a satisfactory inspection, and an appraisal supporting the price. These provisions are best described as:

• A. Covenants that survive closing
• B. Contingencies that must be satisfied before the buyer is obligated to perform
• C. Liquidated damages provisions
• D. Warranties made by the seller

39. A seller under a valid written purchase contract refuses to convey the property, and the buyer sues asking the court to order the seller to complete the transfer. Why are courts willing to grant this remedy in real estate cases?

• A. Because land is deemed unique, so money damages are not an adequate substitute
• B. Because sellers are always presumed to act in bad faith
• C. Because the buyer's earnest money automatically converts to equity
• D. Because recording statutes require every contract to result in a conveyance

40. A buyer defaults on a purchase contract that contains a liquidated damages clause. Under such a clause, what is the seller entitled to do?

• A. Retain the buyer's earnest money as the agreed measure of the default
• B. Sue for specific performance and keep the earnest money as a penalty
• C. Recover the full purchase price from the buyer
• D. Force the buyer's lender to complete the purchase

41. Which sequence of events results in NO binding contract being formed?

• A. Buyer offers, seller accepts without changes, and acceptance is communicated to the buyer
• B. Buyer offers, seller responds by materially raising the price, and the buyer then signs the seller's revised terms and communicates acceptance
• C. Buyer offers, then revokes the offer before the seller communicates acceptance, and the seller later signs
• D. Buyer offers in writing, seller signs the identical terms, and the signed acceptance is delivered to the buyer

42. A buyer signs two documents at closing on her home loan: one contains her personal promise to repay the debt, and the other pledges the home itself as security for that debt. Which pair of instruments has she signed?

• A. A promissory note and a mortgage or deed of trust
• B. A general warranty deed and a quitclaim deed
• C. A listing agreement and an option contract
• D. A Loan Estimate and a Closing Disclosure

43. In State X, a homebuyer who finances a purchase keeps legal title to the property while the lender merely holds a security interest against it until the loan is repaid. State X is best described as following which doctrine?

• A. The Statute of Frauds
• B. Lien theory
• C. The doctrine of substitution
• D. Title theory

44. After a borrower misses several payments, the lender notifies him that the entire remaining loan balance — not just the missed installments — is now immediately due. Which loan provision permits the lender to do this?

• A. A liquidated damages clause
• B. A financing contingency
• C. An acceleration clause
• D. A granting clause

45. A borrower takes out a $250,000 loan and agrees to pay two discount points at closing to lower her interest rate. How much will she pay for the points?

• A. $2,500
• B. $5,000
• C. $25,000
• D. $500

46. An eligible military veteran wants to buy a home but has saved almost nothing toward a down payment. Which loan program is specifically designed to allow him to purchase with potentially no down payment at all?

• A. A conventional loan
• B. An FHA-insured loan
• C. A VA-guaranteed loan
• D. Any loan covered by RESPA

47. A buyer obtains a conventional loan and makes a down payment equal to 15 percent of the purchase price. What will the lender most likely require as a condition of the loan?

• A. Private mortgage insurance
• B. An FHA endorsement
• C. A VA guaranty
• D. A three-day right of rescission

48. A title company offers a lender a cash payment for every borrower the lender sends its way on federally related mortgage loans. This arrangement most directly violates which federal law?

• A. The Truth in Lending Act
• B. The Real Estate Settlement Procedures Act
• C. The Civil Rights Act of 1866
• D. The Statute of Frauds

49. A homeowner refinances the loan on her principal residence and, two days later, changes her mind about the transaction. Under which law, and through which mechanism, may she still be able to back out?

• A. RESPA, by demanding a revised Closing Disclosure
• B. TILA under Regulation Z, by exercising the three-day right of rescission
• C. The Fair Housing Act, by filing a discrimination complaint
• D. The acceleration clause, by declaring the balance due

50. Which statement correctly matches each loan type with the federal government's role in it?

• A. All three loan types carry the same federal insurance
• B. FHA loans are guaranteed for veterans; conventional loans are insured by the government
• C. Conventional loans are insured by the FHA; VA loans are not government-backed
• D. Conventional loans are not government-backed; FHA loans are insured by the FHA; VA loans are guaranteed for eligible veterans

51. A purchase agreement states that the buyer's obligation to close depends on her obtaining a mortgage loan on specified terms. If she makes a diligent effort but cannot secure the loan, what is the effect of this provision?

• A. She is not yet obligated to perform, because the financing contingency was not satisfied
• B. The seller may compel her to buy through specific performance
• C. The lender may invoke the acceleration clause against her
• D. The contract becomes a counteroffer

52. A landowner sells a vacant parcel to a builder and carries back a note secured by a deed of trust recorded in January. In March the builder obtains a construction loan, and the construction lender insists on being in first position. Which provision in the landowner's instrument would permit that result?

• A. A defeasance clause
• B. A subordination clause
• C. An acceleration clause
• D. A prepayment clause

53. An investor signs a straight note in the amount of 180,000 dollars bearing simple interest at an annual rate of 7.5 percent, with interest payable monthly and the entire principal due at the end of the term. What is the amount of each monthly interest payment?

• A. 1,350 dollars
• B. 1,125 dollars
• C. 1,500 dollars
• D. 2,250 dollars

54. An unscrupulous owner deeds a parcel to a first buyer, who pays in full but does not record. Two weeks later the owner deeds the identical parcel to a second buyer who pays fair value, knows nothing about the first transaction, and records immediately. Who holds title under California's recording statute?

• A. Neither buyer, because a grantor who conveys twice renders both deeds void
• B. The second buyer, as a good faith purchaser for value who recorded first without notice
• C. The two buyers take as tenants in common in equal shares
• D. The first buyer, because the earlier deed was delivered and accepted first in time

55. A buyer of a rural parcel is deciding between a standard coverage title policy and an extended coverage policy. Her main worry is a neighbor whose barn may sit partly across the boundary and a farmhand who appears to occupy an outbuilding under some unwritten arrangement. Which advice is correct?

• A. Extended coverage is appropriate, because it addresses matters a physical inspection or survey would reveal
• B. Standard coverage is sufficient, because encroachments and occupancy are always matters of public record
• C. Neither policy responds to those risks, which can only be addressed by a separate boundary endorsement
• D. Extended coverage is unnecessary, because the preliminary report will disclose anyone in possession

56. Midway through a transaction the buyer telephones the escrow officer and asks her to release the deposit early so he can pay a contractor, explaining that the seller will surely not mind. How should the escrow officer respond?

• A. Decline, because the escrow holder may act only on the mutual written instructions of both parties
• B. Decline, because escrow is the agent of the seller and takes direction only from the seller
• C. Release the funds if the buyer's agent confirms the request in writing
• D. Release the funds, because the deposit belongs to the buyer until closing

57. A buyer purchases an apartment building. The title report is clean, but a family has been living in the ground-floor unit for six years under an unrecorded twenty-year lease at a very low rent. The buyer, who never toured that unit, now wants them out. What is the buyer's position?

• A. The lease is unenforceable against the buyer, since only recorded instruments bind a subsequent purchaser
• B. The lease is unenforceable, because the title company issued a policy showing no such encumbrance
• C. The buyer may terminate on thirty days' notice, because an unrecorded lease is reduced to a month-to-month tenancy
• D. The buyer takes subject to the lease, being charged with notice of the rights of parties in open possession

58. A licensee is handling four closings this month: a home being sold by the executor of a decedent's estate, a duplex being sold by the retiring couple who have lived in one unit for years, a house being transferred between two spouses as part of a marital dissolution, and a house being resold by the lender that acquired it at a trustee's sale. Which seller must deliver a Real Estate Transfer Disclosure Statement?

• A. The executor selling the decedent's estate
• B. The spouse transferring title in the dissolution
• C. The lender reselling the foreclosed house
• D. The retiring couple selling the duplex

59. A seller instructs the listing agent to market a single-family residence strictly "as is" and to have the buyer sign a written waiver of the Transfer Disclosure Statement so escrow can close in ten days. How should the agent advise the seller?

• A. The disclosure cannot be waived, and an "as is" sale does not excuse the seller from disclosing known material defects
• B. The waiver is valid once the buyer has received and approved the preliminary title report
• C. The waiver is valid because an "as is" sale shifts the entire burden of investigation onto the buyer
• D. The waiver is valid so long as the buyer is separately represented by a buyer's agent

60. A buyer's written offer on a house is accepted on Monday. The seller does not produce the Transfer Disclosure Statement until Friday, when the listing agent hands it to the buyer in person. The form reveals a history of roof leaks the buyer had not known about. What is the buyer's position?

• A. The buyer has no right of withdrawal, having signed the offer before receiving the disclosure
• B. The buyer may terminate the offer by delivering written notice within three days of the personal delivery
• C. The buyer may terminate only if the seller agrees to release the buyer from the contract
• D. The buyer is bound to close but may recover damages for the concealed condition after closing

61. A seller of a single-family residence located in a designated very high fire hazard severity zone asks the listing agent what other conditions the Natural Hazard Disclosure Statement is designed to reveal. Which of the following belongs on that statement?

• A. Whether the parcel lies within a state-designated earthquake fault zone
• B. Whether the structure has a documented history of termite infestation
• C. Whether any registered sex offender resides in the immediate neighborhood
• D. Whether the parcel is subject to a community facilities district special tax

62. A listing agent is assembling disclosures for a home in which the prior owner died of natural causes four years ago and, separately, an occupant died of an AIDS-related illness two years ago. Which statement correctly describes the agent's obligations?

• A. Both deaths must be volunteered to every prospective buyer before an offer is written
• B. Neither death may be mentioned, because a death on the premises is never a material fact
• C. The death four years ago need not be disclosed, and the agent must not reveal that an occupant died of an AIDS-related illness
• D. Both must be itemized on the Transfer Disclosure Statement as conditions affecting desirability

63. A buyer asks her agent to search the state's registered sex offender database and report back which registrants live near the home she is considering. What is the agent's correct course of action?

• A. Run the search, because the presence of registrants is a material fact affecting value
• B. Direct the buyer to the statutory notice contained in the contract and let her consult the public database herself
• C. Decline to mention the database at all, since any reference to it violates fair housing law
• D. Run the search only after obtaining the seller's written consent to release the information

64. A seller is transferring a residence located inside a community facilities district that levies a special tax to repay bonds issued for local streets and schools. What does California law require of this seller?

• A. Retire the outstanding bond obligation attributable to the parcel before close of escrow
• B. Disclose the special tax only if the buyer submits a written request for tax information
• C. Say nothing, because the levy appears on the county tax bill and is already a public record
• D. Make a good faith effort to obtain the notice of special tax from the levying agency and deliver it to the buyer

65. A broker lists a hillside single-family home. The seller's written disclosures say nothing about soil movement, but a cracked patio slab and a visibly bowed retaining wall are apparent from the rear yard. What does the broker's statutory inspection duty require?

• A. Nothing further, since the broker is entitled to rely on the seller's written disclosures
• B. A reasonably competent and diligent visual inspection of the reasonably accessible areas, with disclosure of what it reveals
• C. Engagement of a licensed geotechnical engineer to test the soil before the property is marketed
• D. An inspection of the whole property including crawl spaces, the area beneath slabs, and cavities behind finished walls

66. A buyer instructs her agent in writing that her deposit check is not to be negotiated until the seller accepts the offer. The broker holds the uncashed check for four days while the parties negotiate terms. Is the broker's handling of the check proper?

• A. No, because all trust funds must be placed on deposit regardless of the offeror's instructions
• B. No, because a broker may never hold a negotiable instrument beyond one business day
• C. Yes, if the offeror gave that instruction in writing and the seller is told of the arrangement before accepting
• D. Yes, but only if the check is drawn payable to the escrow holder rather than to the brokerage

67. Two and a half years after a transaction closed, a Department of Real Estate auditor asks a broker to produce the purchase agreement, the canceled trust account checks, and the closing statement from that file. The broker replies that the entire file was shredded at the end of the prior calendar year. What is the broker's position?

• A. A violation, because these records must be retained for three years and be available for inspection
• B. Acceptable, because retention is required only until the transaction closes and all funds are disbursed
• C. Acceptable, because trust account records are subject to retention rules but transaction documents are not
• D. A violation only if the broker is unable to reconstruct the file from the escrow holder's copies

68. A salesperson posts an online advertisement for a listing showing only photographs, the asking price, and a mobile telephone number, with nothing to indicate that the person to be contacted holds a real estate license. What is the defect in this advertisement?

• A. There is no defect, provided the salesperson states her license status when a caller responds
• B. There is no defect, provided the employing broker approved the advertisement before it was posted
• C. It is unlawful because every advertisement for a listed property must name the record owner
• D. It is a blind advertisement, because a licensee must disclose licensee status in advertising

69. At a local marketing meeting, several competing brokers agree among themselves that none of their firms will accept a listing at a total commission below six percent, so that discount brokerages in the area cannot undercut them. How is this agreement characterized?

• A. Lawful, since commission rates remain negotiable between each broker and each individual client
• B. Lawful so long as the understanding is never reduced to writing and no client is told of it
• C. Unlawful price fixing under antitrust law, whether or not the agreement is written
• D. Unlawful only if the participating brokers together hold a majority share of the local market

70. A loan processor who holds no real estate license refers three buyers to a broker over the course of a year, and each referral results in a closed sale. The broker wants to reward her with a percentage of each commission earned. May the broker do so?

• A. No, because compensation for acts requiring a real estate license may not be paid to an unlicensed person
• B. Yes, provided the payment is disclosed in writing to the buyers involved
• C. Yes, provided the total paid in any calendar year remains modest relative to the commissions earned
• D. No, unless the loan processor's own employer consents to the arrangement in writing

71. A salesperson negotiates a difficult sale to a successful close, and the delighted seller wants to hand the salesperson a personal bonus check at the closing table in addition to the commission already agreed with the brokerage. What is the correct handling of that bonus?

• A. The salesperson may accept it directly because a voluntary bonus is a gift rather than a commission
• B. The salesperson may accept it directly so long as the employing broker is notified afterward
• C. The salesperson may accept it only if the buyer receives an equivalent credit at closing
• D. The bonus must be paid to the employing broker and then passed through to the salesperson

72. An unlicensed administrative assistant staffs a brokerage office while the agents are showing property. A caller asks about one of the firm's listings. Which task may the assistant lawfully perform?

• A. Reading the caller the asking price and terms exactly as they appear in the published listing
• B. Advising the caller which of two similar listings represents the better value
• C. Hosting an open house alone and answering buyers' questions about the property's condition
• D. Discussing with a prospective seller whether the firm would reduce its commission

73. While a broker is away on an extended leave, one of the salespersons licensed under that broker defrauds a client in a transaction the broker never reviewed. The brokerage has a written policy manual requiring honest dealing with all clients. What is the broker's exposure?

• A. None, because a written policy manual discharges the broker's supervisory obligation
• B. None, because a salesperson who commits fraud is acting outside the scope of the employment
• C. The broker remains responsible for supervising licensed activity and may be disciplined for failing to do so
• D. The broker's liability is capped at the portion of the commission the brokerage actually received

74. A salesperson decides to purchase one of her own listings for herself, intending to renovate the property and resell it at a profit. Which disclosure does California law most directly require of her in that purchase?

• A. Written notice to the Department of Real Estate within thirty days after the purchase closes
• B. Written disclosure to the seller of her licensee status and of her interest as a principal in the purchase
• C. Written disclosure to the seller of the resale profit she expects to realize after renovation
• D. Nothing beyond the agency relationship disclosure form already delivered at the time of listing

75. A listing agent tells prospective buyers that the property has the finest sunset views anywhere on the street and, in the same conversation, that the roof was completely replaced three years ago. In fact only a section of the roof was patched. Which analysis is correct?

• A. Both statements are actionable misrepresentations because both helped induce the purchase
• B. Neither statement is actionable, because sales talk about a listed property is privileged
• C. The roof statement is protected opinion because the agent never personally climbed onto the roof
• D. The views remark is puffing, while the roof statement is an actionable misrepresentation of fact

76. A broker sits down with an owner of a triplex to sign a listing agreement for the building. At what point must the broker deliver the statutory form describing the available agency relationships and their respective duties?

• A. At the first open house, so that prospective buyers receive it at the same time
• B. At the time the first written offer is presented to the owner for consideration
• C. Before the owner enters into the listing agreement
• D. In escrow, together with the other disclosures required to be signed before closing

77. A prospective buyer attends several showings with a licensee who is the seller's agent. Over three weeks the licensee analyzes the buyer's finances, recommends what to offer, and advises the buyer on negotiating strategy against the seller. No written agreement is ever signed with the buyer. What relationship has most likely arisen?

• A. An ostensible agency with the buyer, created by the licensee's conduct
• B. No relationship with the buyer, because agency requires a signed written agreement
• C. No relationship with the buyer, because a compensation agreement with the seller is already in place
• D. A subagency of the seller, in which the buyer is treated as the seller's own principal

78. A listing agent holds an accepted offer on a home, with escrow open and contingencies still outstanding. A second buyer's agent submits a cleaner backup offer at a higher price. The seller has given no written instruction about additional offers. What must the listing agent do?

• A. Reject the new offer, because the property is already under contract to another buyer
• B. Hold the new offer until the first buyer's contingencies are either removed or expire
• C. Forward the new offer to the first buyer's agent so the parties can negotiate directly
• D. Present the new offer to the seller promptly

79. A seller tells the listing agent to say nothing to buyers about the chronic sewer line backups the seller has paid to clear four times in two years, insisting that the agent works for the seller and must follow the seller's directions. How should the agent proceed?

• A. Follow the instruction, since obedience to the principal is a core fiduciary duty
• B. Refuse to conceal the condition and, if the seller persists, withdraw from the listing
• C. Follow the instruction but require the seller to sign a written indemnity in the agent's favor
• D. Disclose the condition only to buyers who specifically ask about the plumbing

80. A licensee is acting as a dual agent with the informed written consent of both the buyer and the seller. During negotiations the seller privately admits he would take fifteen thousand dollars less than the listed price to close quickly, and the buyer privately admits she would pay full price if pressed. What may the dual agent reveal?

• A. Both admissions, because informed written consent to dual agency waives confidentiality on price
• B. Only the seller's admission, because the seller's willingness to reduce is a material fact about the listing
• C. Only the buyer's admission, because the seller is the party who signed the listing agreement
• D. Neither admission, absent separate express written permission from the party who made it

81. An unrepresented buyer walks into an open house and begins working directly with the seller's agent. The buyer asks whether the agent will look out for her interests in the negotiation. What does the agent owe this buyer?

• A. Honesty, fair dealing, and disclosure of known material defects, but not the fiduciary duties owed to the seller
• B. The same fiduciary duties owed to the seller, because both parties are now in the same transaction
• C. Nothing beyond the accuracy of the written disclosures the seller has already provided
• D. A duty of undivided loyalty to the buyer, since no other licensee is representing her

82. An owner signs a listing employing a broker to locate a ready, willing, and able buyer for one specific parcel, with no authority to sign anything on the owner's behalf. In agency terms, the broker occupies which position?

• A. A general agent, because the employment continues for the whole listing term
• B. A universal agent, because the broker may deal with any member of the public
• C. A special agent, with authority limited to a single transaction
• D. An attorney-in-fact, because the broker markets the owner's property to third parties

83. Three months into a six-month listing, and with no offer yet in hand, the property owner dies. The owner's adult children want the broker to keep marketing the home while the estate is opened. What is the status of the listing agreement?

• A. It continues for the remaining three months and binds the heirs to its terms
• B. It terminates, because the death of the principal ends the agency
• C. It is suspended and automatically resumes when an executor is appointed
• D. It continues, because a listing runs with the land rather than with the owner

84. An owner signs a listing with a brokerage and, midway through the term, finds a buyer entirely on her own through a neighbor, with no involvement by the brokerage whatsoever. She closes the sale and refuses to pay any commission, and the brokerage sues successfully. Which listing form did she most likely sign?

• A. An open listing given to several brokerages at once
• B. An exclusive agency listing
• C. A net listing under which the broker keeps any amount above a stated price
• D. An exclusive right to sell listing

85. A broker drafts an exclusive listing that states it will remain in force until the owner gives the broker written notice of cancellation, with no ending date specified. The property sells during the term and the owner disputes the commission. What is the broker's exposure?

• A. Claiming compensation under an exclusive listing that lacks a definite termination date is grounds for discipline
• B. None, because the cancellation provision gives the owner an adequate means of ending the listing
• C. None, because the parties are free to set whatever term they mutually agree upon
• D. The listing is valid but the commission is capped at the local customary rate

86. A listing expires without a sale. Nineteen days later the owner sells the property directly to a couple the former listing agent had shown the home twice and had identified to the owner in writing before expiration. The listing contained a clause covering sales within ninety days after expiration to registered prospects. What is the result?

• A. No commission is owed, because an expired listing creates no further obligation of any kind
• B. No commission is owed, because the owner rather than the broker negotiated the final sale
• C. A commission is owed under the safety clause, because the buyers were registered before expiration
• D. A commission is owed only if the owner failed to relist the property with another brokerage

87. In a transaction the seller pays the entire brokerage compensation, including the amount received by the brokerage that worked with the buyer throughout. The seller argues at closing that because he wrote the check, the buyer's brokerage actually represented him. How does California law treat that argument?

• A. The arrangement automatically creates a dual agency requiring both parties' written consent
• B. The seller is correct, because an agent's loyalty follows the source of compensation
• C. The seller is correct, but only if the compensation was offered through a cooperating arrangement
• D. The payment of compensation does not by itself determine which party a licensee represents

88. An owner and a broker agree that the owner will receive four hundred thousand dollars from the sale and the broker may keep everything above that figure as compensation. The property ultimately sells for four hundred sixty thousand dollars. What is required of the broker?

• A. Nothing, because the owner received exactly the amount bargained for
• B. Refund of any amount exceeding the customary commission rate in the area
• C. Nothing, because this arrangement is void in California and no compensation is payable
• D. Disclosure of the amount of the broker's compensation before the owner is bound to the sale

89. An appraiser is valuing a home that has no swimming pool. The single best comparable sold last month for 620,000 dollars and is identical to the subject in every respect except that it has an in-ground pool, which the local market data indicate contributes 25,000 dollars. What is the indicated value of the subject from this comparable?

• A. 620,000 dollars
• B. 570,000 dollars
• C. 645,000 dollars
• D. 595,000 dollars

90. An investor is evaluating a small apartment building that produces net operating income of 84,000 dollars per year. Comparable apartment sales in the same submarket indicate an overall capitalization rate of 7 percent. Using the income approach, what value does this indicate?

• A. 588,000 dollars
• B. 840,000 dollars
• C. 1,050,000 dollars
• D. 1,200,000 dollars

91. An appraiser is asked to value a forty-year-old church building on a large parcel. There have been no sales of comparable churches in the county for many years, and the property generates no rental income. Which approach to value should carry the greatest weight?

• A. The income approach
• B. The gross rent multiplier method
• C. The cost approach
• D. The sales comparison approach

92. A well-maintained house loses a substantial share of its value after a regional transit authority builds an elevated rail line along the street behind it. Nothing about the house itself has changed. How is this loss in value classified, and can the owner cure it?

• A. Physical deterioration, curable by upgrading the windows and exterior wall insulation
• B. Functional obsolescence, curable by reorienting the floor plan away from the rail line
• C. External obsolescence, which lies beyond the owner's control and is therefore incurable
• D. Functional obsolescence, incurable because the noise cannot be designed out of the structure

93. A large 1950s home has four bedrooms served by a single bathroom, and the only access to the fourth bedroom is through the third. The structure is sound and has been carefully maintained. An appraiser notes a significant value penalty relative to competing homes. What is the source of that penalty?

• A. Physical deterioration attributable to the age of the improvements
• B. Functional obsolescence arising from an outdated layout
• C. External obsolescence arising from the age of the surrounding neighborhood
• D. Regression caused by the influence of adjoining lower-value properties

94. An owner spends heavily to expand a modest tract house into the largest and most luxurious residence on a block of otherwise similar smaller homes. When the home is appraised, it does not command anything close to the value it would carry in a neighborhood of comparable custom homes. Which valuation principle explains this outcome?

• A. Anticipation
• B. Contribution
• C. Progression
• D. Regression

95. A vacant corner parcel is currently zoned for and used as a small parking lot. An appraiser concludes that a three-story mixed-use building would be legally permissible under the zoning, physically possible on the site, financially feasible, and the most productive use. How should the parcel be valued?

• A. At its value in the existing parking lot use, since that is the actual present use
• B. At the average of its value in the current use and in the proposed use
• C. At its value only after a building permit for the proposed structure is issued
• D. At its value in the mixed-use development, as its highest and best use

96. A rental house in a neighborhood collects 2,500 dollars per month in rent. Sales of similar rental houses in the same neighborhood indicate a gross rent multiplier of 160 based on monthly rent. What value does the multiplier indicate for this property?

• A. 30,000 dollars
• B. 360,000 dollars
• C. 400,000 dollars
• D. 4,800,000 dollars

97. A buyer is choosing between two nearly identical homes on the same street, equally desirable in every respect the buyer cares about, one priced at 725,000 dollars and the other at 690,000 dollars. Economic reasoning says the buyer will not pay more than 690,000 dollars for either. Which appraisal principle is at work?

• A. Substitution
• B. Conformity
• C. Supply and demand
• D. Balance

98. An eight-unit building has a gross scheduled income of 120,000 dollars per year. The owner projects vacancy and collection losses of 5 percent, operating expenses of 38,000 dollars, annual mortgage debt service of 30,000 dollars, and an annual depreciation deduction of 18,000 dollars. What is the net operating income?

• A. 76,000 dollars
• B. 46,000 dollars
• C. 82,000 dollars
• D. 28,000 dollars

99. A developer quietly acquires four adjoining narrow lots from four separate owners. Individually each lot is too small to support the project, but combined they will support a mid-rise building, and the assembled site is worth substantially more than the sum of the four purchase prices. What term describes the increment of value created?

• A. Severance
• B. Accretion
• C. Subrogation
• D. Plottage

100. A homeowner spends 80,000 dollars installing a temperature-controlled wine cellar. When the home is later listed, the appraiser's analysis of buyer behavior in that market shows purchasers will pay only about 20,000 dollars more for a home that has one. The seller insists the home must be worth 80,000 dollars more. How should the licensee explain the discrepancy?

• A. The appraiser must use the owner's documented expenditure, since actual cost is the most reliable evidence of value
• B. Market value reflects what buyers will most probably pay, and cost does not necessarily equal value
• C. The full expenditure will be recognized once the improvement has been in place long enough to be considered permanent
• D. The difference is functional obsolescence and will disappear if the home is marketed to luxury buyers