Colorado Real Estate Broker Practice Exam

1. A contract states that time is of the essence. What does the clause change?

• A. The stated deadlines become strictly enforceable rather than approximate
• B. The closing date may be extended once by either party
• C. The contract expires automatically after ninety days
• D. The parties waive all contingency deadlines

2. A buyer's offer includes financing, inspection and appraisal contingencies. What do they provide?

• A. A right to withdraw without breaching if the stated condition is not satisfied
• B. A guarantee that the lender will approve the loan
• C. An automatic price reduction if the appraisal comes in low
• D. An extension of the closing date by default

3. A broker's client instructs them to reveal a competing offer's price to another buyer. The instruction is lawful. Which duty governs compliance?

• A. Obedience, which requires following the principal's lawful instructions even where the broker would choose differently
• B. Confidentiality, which prohibits the disclosure regardless of instruction
• C. Loyalty, which requires the broker to act on their own judgement
• D. Reasonable care, which permits the broker to decline

4. A brokerage relationship has ended and the former client's motivation for selling becomes relevant in a later transaction. What may the broker do?

• A. Nothing with it, because confidentiality survives termination of the relationship
• B. Use it freely, since the relationship has ended
• C. Use it if the new client is unrelated to the former one
• D. Use it after one year has passed

5. A person walks into an open house and asks the listing broker for advice. What is that person owed?

• A. Honesty, fair dealing and disclosure of material defects, but not the fiduciary duties owed to a client
• B. The full set of fiduciary duties, since the broker is assisting them
• C. Nothing, since no relationship exists
• D. Confidentiality only

6. One brokerage is asked to work with both the buyer and the seller in the same transaction. What is required for dual agency where it is permitted?

• A. Verbal acknowledgement from the party who asked
• B. Written consent from the seller only, as the principal on the listing
• C. Informed written consent from both parties
• D. No consent, provided the same individual does not advise both sides

7. A seller signs an agreement under which the broker is paid whether the buyer is found by the broker, another cooperating broker, or the seller personally. Which listing is this?

• A. An exclusive right to sell listing
• B. An exclusive agency listing
• C. An open listing
• D. A net listing

8. A purchase contract is being reviewed for validity. Which set of elements must be present?

• A. Competent parties, mutual assent, lawful object and consideration
• B. Earnest money, a financing contingency and a closing date
• C. A licensed broker, a recorded deed and title insurance
• D. An appraisal, an inspection and a survey

9. A listing agreement is described as an employment contract. Between whom, and employing whom to do what?

• A. Between seller and broker, employing the broker to find a buyer
• B. Between broker and agent, employing the agent to service the listing
• C. Between seller and buyer, employing a closing agent
• D. Between broker and multiple listing service

10. A brokerage relationship reaches its stated expiry date without a sale. What has happened to the agency?

• A. It has terminated by expiration, one of the recognised ways an agency ends
• B. It continues until either party gives written notice
• C. It converts automatically to an open listing
• D. It continues while the property remains unsold

11. A broker learns the roof leaks but the seller instructs them not to mention it to buyers. What must the broker do?

• A. Disclose the material defect, because obedience does not extend to unlawful instructions and customers are owed disclosure of material defects
• B. Follow the instruction, since obedience is a fiduciary duty owed to the client
• C. Withdraw quietly without disclosing or explaining
• D. Disclose only if a buyer asks about the roof directly

12. A broker is asked by a buyer which neighbourhoods have the best schools and families like theirs. What is the risk in answering?

• A. Steering, since channelling a buyer toward or away from areas by reference to a protected class is prohibited however the question was framed
• B. No risk, because the buyer raised the subject
• C. Only a risk if the broker names specific streets
• D. Only a risk in writing rather than conversation

13. A broker advertises a property as ideal for a mature couple with no children. What is the problem?

• A. The wording indicates a preference against familial status, which is prohibited regardless of the broker's intent
• B. Nothing, since it describes the property rather than excluding anyone
• C. It is acceptable if the seller requested that wording
• D. It is acceptable in print but not online

14. A Colorado licensee assists both the buyer and the seller in the same transaction, treating each with honesty and fairness but acting as the agent of neither party. In what capacity is the licensee working?

• A. As a dual agent representing both parties simultaneously
• B. As a transaction-broker providing non-agency assistance to both parties
• C. As a subagent of the listing brokerage
• D. As a designated agent for the buyer only

15. A buyer offers $415,000 for a listed home. The seller crosses out the price, writes in $425,000, signs, and returns the document. Before anything else happens, the buyer finds another property. What is the buyer's position?

• A. The buyer is bound at $415,000 because the seller signed the document
• B. The buyer must respond to the seller's change within a reasonable time or be bound
• C. The buyer may enforce the original offer because a price change needs separate writing
• D. The buyer is free to walk away, because the seller's change was a counteroffer that rejected the original offer

16. For a fee, an owner grants a developer the exclusive right to purchase a parcel at a set price at any time during the next six months. The developer has not promised to buy. How is this agreement best characterized?

• A. A unilateral option contract that binds the owner but leaves the developer free to decide
• B. A bilateral purchase contract with delayed performance by both parties
• C. A right of first refusal triggered only by a third-party offer
• D. An unenforceable agreement to agree on future terms

17. Over coffee, a seller orally agrees to sell a cabin to a neighbor for $250,000, and they shake hands. The neighbor later tries to enforce the deal after the seller changes her mind. What is the likely outcome?

• A. The agreement is enforceable because both parties intended to be bound
• B. The agreement is unenforceable because contracts for the sale of real estate must be in writing under the statute of frauds
• C. The agreement is enforceable because the price term was definite and agreed
• D. The agreement is enforceable if the neighbor can produce a witness to the handshake

18. A purchase contract provides that if the buyer defaults, the seller may keep the earnest money as the seller's sole remedy. The buyer walks away without excuse. What has the seller bargained for?

• A. Specific performance in addition to the deposit
• B. Liquidated damages, accepting the deposit in place of suing for actual losses
• C. Punitive damages measured by the seller's inconvenience
• D. Rescission, which returns the deposit to the buyer

19. A buyer under contract assigns the purchase contract to an investor, and the seller consents to the assignment but signs nothing releasing anyone. The investor later fails to close. Who can the seller pursue?

• A. Only the investor, because assignment substitutes parties completely
• B. No one, because assignment voids the original contract
• C. Only the original buyer, because contract rights cannot be assigned
• D. The investor primarily, and the original buyer, who remains secondarily liable absent a novation

20. Within a single Colorado brokerage, the employing broker names one licensee to work solely with the seller and a different licensee to work solely with the buyer in the same transaction. What does this arrangement accomplish?

• A. It terminates the brokerage's relationship with the seller
• B. It makes the employing broker the exclusive agent of the buyer
• C. Each designated broker serves only their own party, so neither licensee personally works for both sides
• D. It converts both licensees into dual agents of both parties

21. Showing a home, a licensee says the property has "the best sunsets in the valley" and also states the finished basement adds 900 square feet when it actually adds 500. A buyer relies on both statements. How are the two statements treated?

• A. Both are puffing, because sales talk is always non-actionable
• B. Both are misrepresentations, because buyers relied on them
• C. The sunset remark is puffing, but the false square footage is a misrepresentation of material fact
• D. Neither matters unless the statements were put in writing

22. Under an exclusive right-to-sell listing, a broker produces a buyer who is ready, willing and able to purchase at exactly the listed price and terms. The seller then refuses to sell for personal reasons. What is the broker's position on compensation?

• A. The commission must be split with the buyer as compensation for the failed sale
• B. The broker may keep the earnest money instead of a commission
• C. The commission is generally earned, because the broker performed by producing a ready, willing and able buyer on the listing terms
• D. No commission is due because no closing occurred

23. A prospective buyer begins telling a licensee at a listing appointment how high she is truly willing to go on price. The licensee has not yet discussed or disclosed any working relationship. What should have happened first?

• A. Nothing; disclosure is required only at the time a contract is signed
• B. The licensee should have disclosed the nature of the brokerage relationship before receiving confidential information
• C. The buyer should have signed a purchase offer to establish the relationship
• D. The licensee should have obtained the seller's permission to speak with the buyer

24. A seller, the original buyer and a replacement buyer all sign an agreement substituting the replacement buyer into the contract and expressly releasing the original buyer from all obligations. What has occurred?

• A. An assignment, leaving the original buyer secondarily liable
• B. A rescission, canceling the contract entirely
• C. An accord and satisfaction of a disputed debt
• D. A novation, replacing one party with another and extinguishing the original buyer's liability

25. An owner lists with one brokerage but reserves the right to sell the home herself without owing a commission; if any broker procures the buyer, only the listing brokerage is compensated. Which listing agreement is this?

• A. An exclusive agency listing
• B. An exclusive right-to-sell listing
• C. A net listing
• D. An open listing

26. A for-sale-by-owner seller tells three different brokerages that whichever one brings a buyer first will be paid, and that no one is paid if the seller finds the buyer. What kind of listing has the seller created with each brokerage?

• A. Exclusive right-to-sell listings with all three
• B. A multiple listing service obligation
• C. Open listings, unilateral offers compensating only the procuring broker
• D. Designated brokerage agreements

27. A seller says: "Get me $500,000 and keep anything above that as your fee." Why do regulators and careful brokers treat this compensation arrangement as dangerous?

• A. It guarantees the broker will earn less than a percentage fee
• B. It creates a conflict between the broker's self-interest and the duty to obtain the best price for the client
• C. It requires the buyer to pay the commission
• D. It is enforceable only for commercial property

28. A grantor conveys property with the broadest possible assurance of clear title. Which deed is used?

• A. A general warranty deed, which warrants against defects arising at any point in the property's history
• B. A special warranty deed
• C. A quitclaim deed
• D. A bargain and sale deed without covenants

29. A deed has been signed and notarised but remains in the grantor's desk drawer. What has been conveyed?

• A. Nothing, because delivery is required for a deed to convey title
• B. Equitable title, with legal title following on recording
• C. Full title, since signature and notarisation complete execution
• D. Title subject to the grantor's right of revocation

30. A buyer asks why recording the deed matters if the transfer is already complete between the parties. What is the answer?

• A. Recording gives constructive notice to the world and establishes priority against later claims
• B. Recording is what makes the conveyance legally effective
• C. Recording transfers the risk of defects to the county
• D. Recording substitutes for title insurance

31. A title search reveals an old, unreleased mortgage from a previous owner. What standard does this affect?

• A. Marketable title, which requires title free from reasonable doubt or serious defect
• B. The validity of the current deed
• C. The grantor's competence to convey
• D. The adequacy of the legal description

32. Colorado devotes a dedicated 24-hour component of qualifying education to closings. What does that emphasis reflect about the broker's role at settlement?

• A. The broker must handle settlement mechanics competently, including the proration and disbursement steps that decide what each party actually pays
• B. The broker is expected to prepare the deed and opinion of title
• C. The broker assumes the closing agent's escrow liability
• D. The broker must personally record the instruments

33. A closing agent prepares to disburse funds. What must be true of the seller's title at that point?

• A. It must be marketable, meaning free from reasonable doubt or serious defect, unless the buyer has agreed to accept a known issue
• B. It must be insured, since insurance substitutes for marketability
• C. It must be recorded in the buyer's name before disbursement
• D. It must have been searched within the last five years

34. Colorado brokers draft contracts using standard forms approved by the Real Estate Commission. Why does that arrangement exist?

• A. It lets a licensee complete a binding contract without practising law, since the Commission rather than the broker authored the terms
• B. It guarantees the contract cannot later be challenged in court
• C. It removes the need for the parties to obtain title evidence
• D. It applies only to transactions above a stated value

35. A deed omits the grantee's name entirely. What is the effect?

• A. The deed is defective, since a valid deed requires identifiable parties along with words of conveyance, an adequate description and delivery
• B. The deed is valid and the grantee may be added later by the grantor
• C. The deed is valid once recorded
• D. The deed conveys to whoever holds it

36. A proration question does not state whether to use actual days or a 360-day year. Why does this matter?

• A. Because a 360-day banker's year with 30-day months produces a different figure from an actual-day calculation
• B. Because prorations are prohibited without a stated convention
• C. Because the convention determines who pays rather than how much
• D. Because only leap years require a stated convention

37. Divorcing spouses want one to release any interest in the marital home to the other quickly, without making any promises about the state of the title. Which deed fits?

• A. General warranty deed
• B. Special warranty deed
• C. Bargain and sale deed with covenants
• D. Quitclaim deed

38. At closing, a buyer learns the lender requires a title insurance policy protecting the loan. The buyer asks what protects the buyer's own stake in the property. What is the correct answer?

• A. An owner's title insurance policy, purchased once at closing, covers the buyer's interest for as long as they or their heirs hold it
• B. The lender's policy automatically covers the buyer as well
• C. The recorded deed itself insures the buyer against title defects
• D. Annual renewal premiums keep the buyer's coverage in force

39. A sale closes on September 30. Annual property taxes of $3,600 are paid in arrears at year-end, and the parties prorate using a 360-day year with the buyer owning the day of closing. Roughly how is the tax item handled on the settlement statement?

• A. Credit the seller about $2,700 because the seller prepaid the year's taxes
• B. Debit the buyer about $900 for the seller's remaining quarter
• C. Debit the seller and credit the buyer about $2,700 for the nine months the seller owned the property
• D. Split the $3,600 equally because both parties owned the property during the year

40. An investor buys from a bank that acquired the property through foreclosure. The bank's deed warrants title only against claims arising during the bank's period of ownership. What did the investor receive?

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

41. For many years a rancher has fenced, grazed and openly used a strip of a neighbor's land without permission, treating it as his own the entire time. He now claims ownership. What is the legal theory, and what character must the use have had?

• A. Adverse possession, requiring use that was open, notorious, hostile, exclusive and continuous for the statutory period
• B. Prescriptive easement, which transfers full title after any period of use
• C. Dedication, requiring the neighbor's implied gift of the strip
• D. Accretion, because long use gradually adds land to the user's parcel

42. A title examiner finds that a past owner in the chain of title conveyed the property, but no deed into that owner was ever recorded, leaving a gap in the record. What proceeding is typically used to resolve ownership?

• A. A partition action dividing the property among possible claimants
• B. A quiet title action asking a court to determine and settle ownership of record
• C. An escrow closing, which cures record defects automatically
• D. A lis pendens filing, which itself establishes clear title

43. Before recording a deed, the county clerk requires that the grantor's signature have been made before a notary or other authorized officer. What is the purpose of this acknowledgment?

• A. It substitutes for delivery of the deed
• B. It transfers title from grantor to grantee
• C. It verifies the signature is genuine and voluntary, qualifying the deed for recording
• D. It guarantees the grantor actually owns the property

44. Colorado issues only one level of real estate licence. What follows for someone entering the industry there?

• A. They hold a limited licence until an apprenticeship is completed
• B. They may practise under a sponsoring agent without any licence
• C. They must first hold a salesperson licence for two years
• D. They qualify as a broker from the outset, which is why the education requirement is heavier than a salesperson pathway in other states

45. A candidate has completed the contracts and the law and practice components of Colorado qualifying education. How many of the 168 required hours do those two account for?

• A. 96 hours, since each component is 48 hours
• B. 72 hours
• C. 120 hours
• D. 48 hours in total across both

46. A candidate passes the national portion of the Colorado exam but fails the state portion. What must they retake?

• A. Only the state portion, since the two portions are timed and scored separately
• B. Both portions, since the result is combined
• C. Neither, since a pass on one portion carries the other
• D. The state portion plus a repeat of qualifying education

47. What proportion of questions must a candidate answer correctly on each Colorado exam portion?

• A. 60 of 80 on the national portion and 53 of 74 on the state portion, which are 75 percent and about 71.6 percent
• B. The same 70 percent standard applies to both portions
• C. 53 of 80 on the national portion and 60 of 74 on the state portion
• D. A combined 113 of 154 across both portions

48. How much time is allowed for each Colorado exam portion, and what is the effective pace?

• A. 110 minutes for the national portion and 120 for the state portion
• B. 120 minutes for 80 national questions and 110 minutes for 74 state questions, which is about 90 seconds per question on each
• C. 60 minutes per portion regardless of question count
• D. 230 minutes for all 154 questions in one continuous block

49. A Colorado candidate passed the exam 14 months ago and has not yet applied for a licence. What is the position?

• A. The result has expired, since a Colorado passing score is valid for 1 year
• B. The result remains valid for 3 years
• C. The result is valid indefinitely once achieved
• D. The result remains valid provided qualifying education is still current

50. What does a Colorado broker candidate pay to sit the exam, and what recurring fee follows licensure?

• A. An exam fee of $44.95 per attempt, with a renewal fee of $252 once licensed
• B. An exam fee of $252 with renewal at $44.95
• C. A single $44.95 payment covering both the exam and the licence
• D. No exam fee, with all cost carried in the renewal

51. A candidate arrives for the Colorado exam and is offered a tutorial before the timed portion begins. What should they know about it?

• A. It runs 15 minutes and is separate from the timed portion, so taking it costs nothing against the question time
• B. It consumes part of the 120 minutes allowed for the national portion
• C. Declining it forfeits the sitting
• D. It is scored and contributes to the result

52. A Colorado broker moving to another state is asked to provide certification of their licence status. What does that document cost?

• A. $15 for a licence history
• B. $44.95, the same as the exam fee
• C. $252, the renewal fee
• D. Nothing, as it is issued automatically at renewal

53. An owner lives in one unit of a four-unit building they own and declines to rent another unit to an applicant because of the applicant's religion. Which analysis applies?

• A. The Mrs. Murphy exemption may reach the refusal itself, but it does not extend to discriminatory advertising
• B. The exemption applies to buildings of any size while owner-occupied
• C. The exemption removes all fair housing obligations from the owner
• D. No exemption is available for any owner-occupied property

54. A seller, delighted with a licensee's work, hands the licensee a $2,000 bonus check at the closing table, made out to the licensee personally. How must the licensee handle it?

• A. Deposit it personally, since a gratuity is not a commission
• B. Split it with the buyer's broker under cooperation rules
• C. Return it, because bonuses on real estate transactions are illegal
• D. Decline direct payment; compensation for brokerage services must come through the employing broker

55. A busy licensee hires an unlicensed assistant. Which task can the assistant lawfully perform?

• A. Hosting an open house alone and answering buyers' questions about price and terms
• B. Negotiating a repair credit with the buyer's broker
• C. Preparing marketing flyers and scheduling showings at the licensee's direction
• D. Explaining the listing contract's holdover clause to the seller

56. A licensee runs an online ad for a listing that shows only the licensee's own name and cell number, with no mention of any brokerage. What is wrong with the ad?

• A. It is a blind ad; advertising must identify the employing brokerage, not just the individual licensee
• B. Nothing, so long as the price is accurate
• C. Online ads are exempt from advertising rules
• D. It only needs the seller's written consent to be valid

57. An employing broker builds a fast-growing office with fifteen licensees. Which obligation belongs personally to the employing broker rather than to the individual licensees?

• A. Personally signing every purchase offer written in the office
• B. Guaranteeing the profitability of each licensee's transactions
• C. Attending every showing conducted by any licensee in the office
• D. Maintaining reasonable supervision over the licensees, the office's transaction records and its trust accounts

58. A seller asks a Colorado broker to draft a custom clause indemnifying the seller against all post-closing claims, going well beyond anything in the standard forms. What should the broker do?

• A. Draft the clause carefully, since brokers may write any term the client requests
• B. Insert the clause but have both parties initial it
• C. Refuse to continue the transaction
• D. Decline to draft it and recommend the seller have an attorney prepare the language

59. An audit reveals a broker briefly parked client earnest money in the brokerage's operating account before moving it to the trust account. No client lost a dime. What is the broker's exposure?

• A. Discipline by the regulator, because commingling client funds with brokerage funds is a violation regardless of loss
• B. Automatic license revocation with no hearing
• C. None, because no client suffered a loss
• D. Only civil liability to the clients involved

60. A Colorado broker holds money belonging to a client in connection with a transaction. What does the accounting duty require?

• A. The funds must be safeguarded and kept separate from the broker's own money, with commingling prohibited
• B. The funds may be held in the broker's operating account if the amount is recorded
• C. The funds may be used for business expenses provided they are repaid before closing
• D. No separation is required where the client consents verbally

61. Earnest money is received on a Colorado transaction. Where does it belong before closing?

• A. In the broker's operating account until the transaction closes
• B. With the seller directly on receipt
• C. With the listing agent personally
• D. In the broker's trust account, since it is a good-faith deposit held on behalf of the parties rather than broker income

62. A broker manages rental property and collects monthly rent for owners. Which duty most directly governs the handling of those receipts?

• A. Accounting, which requires the receipts to be safeguarded and separated from the broker's own funds
• B. Obedience, which requires following the owner's lawful instructions
• C. Disclosure, which requires revealing material facts
• D. Reasonable care, which requires competent performance

63. A broker maintains one trust account holding funds for several transactions. What record-keeping standard applies?

• A. The broker must be able to identify the amount held for each beneficiary at any time, so pooled funds remain individually accounted for
• B. A single running balance is sufficient, since the funds are pooled
• C. Records need only be reconstructed at audit
• D. Individual accounting is required only above a threshold amount

64. A broker discovers their trust account is short by a small amount due to a bank fee. What is the correct response?

• A. Restore the shortfall from the broker's own funds immediately and document it, since the beneficiaries' balances must remain intact
• B. Deduct the fee proportionally from each beneficiary's balance
• C. Leave the shortfall until the next deposit covers it
• D. Close the account and open a new one

65. A property manager signs a management agreement with an owner. What relationship does it typically create?

• A. An agency relationship, since the owner authorises the manager to act on their behalf, bringing the fiduciary duties with it
• B. A customer relationship owing honesty and fair dealing only
• C. A partnership in the ownership of the property
• D. No relationship until a tenant is placed

66. A property manager collects security deposits from tenants of a managed building. Until a tenancy ends and deductions are lawfully made, whose money are those deposits?

• A. The tenants', held in trust and accounted for until lawfully applied
• B. The owner's, available for building expenses as needed
• C. The manager's, as an advance on management fees
• D. The bank's, once deposited into any account

67. Short on cash at month-end, a broker moves $3,000 out of the trust account to cover the brokerage's office rent, intending to replace it within a week. How is this act classified?

• A. Commingling, because two kinds of funds touched the same account
• B. Conversion, because the broker used money belonging to others for the broker's own purposes
• C. A permissible short-term loan from the trust account
• D. Ordinary cash-flow management within the broker's discretion

68. A pipe bursts at a managed rental at midnight, and the property manager authorizes an emergency plumber before reaching the owner. What determines whether the manager had authority to do this?

• A. The tenant's consent to the repair
• B. The plumber's willingness to bill the owner directly
• C. Local custom among property managers
• D. The management agreement's terms on repairs, spending limits and emergency action

69. A broker holds one trust account for dozens of tenancies and transactions. Each month the broker compares the bank statement, the account journal and the individual ledgers, confirming the three agree. What practice is this?

• A. Netting, which offsets owner debts against tenant deposits
• B. Escrow substitution, replacing ledgers with bank records
• C. Budgeting, projecting future account balances
• D. Three-way reconciliation, verifying that bank balance, journal and beneficiary ledgers all match

70. A borrower is choosing between a mortgage whose rate is fixed for the whole term and one that moves with an index. What is the trade being made?

• A. Payment certainty against the possibility of a lower rate, since the adjustable product transfers rate risk to the borrower
• B. The adjustable product always costs less over the full term
• C. The fixed product cannot be repaid early
• D. Only the adjustable product amortizes

71. A property appraises at $400,000 and is under contract at $420,000. The buyer borrows $340,000. What is the loan-to-value ratio?

• A. 85 percent, because the ratio uses the lesser of appraised value or sale price
• B. About 81 percent, using the contract price
• C. About 118 percent, using value divided by loan
• D. 80 percent, the conventional threshold

72. A property sold for $360,000 and rents for $2,400 per month. What is the gross rent multiplier?

• A. 150
• B. 12.5
• C. 0.0067
• D. $28,800

73. A borrower pays discount points at closing. What do they buy?

• A. A lower note rate, since points are prepaid interest
• B. A waiver of private mortgage insurance
• C. A reduction in the principal balance
• D. An extension of the amortization period

74. An appraiser selects recently sold nearby properties similar to the subject and adjusts for differences. Which approach is being used?

• A. The income approach, based on capitalized net income
• B. The gross rent multiplier method
• C. The sales comparison approach, adjusting the comparables toward the subject rather than the reverse
• D. The cost approach, based on replacement cost less depreciation

75. A homeowner adds a swimming pool costing $60,000 and the property's market value rises by $25,000. Which appraisal principle explains this?

• A. Contribution, under which an improvement adds only what the market will pay for it rather than what it cost
• B. Substitution, under which a buyer pays no more than for an equivalent alternative
• C. Conformity, under which value is maximised by similarity to surrounding property
• D. Anticipation, under which value reflects expected future benefits

76. An appraisal identifies depreciation from an outdated floor plan that cannot practically be changed. Which type is this?

• A. Incurable functional obsolescence, arising from the design of the property itself
• B. Physical deterioration from wear and tear
• C. External obsolescence caused by factors outside the property
• D. Curable physical deterioration

77. A lender describes a loan as conventional. What does that indicate?

• A. It is not government-backed, unlike FHA loans which are insured or VA loans which are guaranteed
• B. It carries a fixed rate for the whole term
• C. It requires no down payment
• D. It is originated by a credit union rather than a bank

78. A borrower asks what the mortgage document itself accomplishes. What is the answer?

• A. It pledges the property as security for the loan, while the promissory note is the promise to repay
• B. It is the promise to repay, with the deed serving as security
• C. It transfers title to the lender permanently
• D. It records the loan with the county for tax purposes

79. A borrower owes $240,000 on a loan at 6% annual interest. What is the interest portion of the first monthly payment?

• A. $600
• B. $960
• C. $1,200
• D. $14,400

80. A buyer refuses to pay $520,000 for a house because an equally desirable home on the same street can be bought for $495,000. Which appraisal principle explains the buyer's reasoning?

• A. Anticipation
• B. Substitution
• C. Conformity
• D. Regression

81. A borrower taking a $300,000 loan agrees to pay two discount points at closing. What is the dollar cost of the points?

• A. $1,500
• B. $3,000
• C. $6,000
• D. $12,000

82. An investment property generates $30,000 of annual net operating income and is offered at $375,000. What capitalization rate does the asking price imply?

• A. 8.0%
• B. 12.5%
• C. 7.2%
• D. 6.5%

83. An appraiser must value a newly built fire station, a property type that almost never sells and produces no rent. Which valuation approach carries the most weight?

• A. The income approach, capitalizing hypothetical rents
• B. The cost approach, based on land value plus current cost to build less depreciation
• C. The gross rent multiplier method
• D. The sales comparison approach, using residential sales nearby

84. Analyzing a vacant corner lot, an appraiser rejects a use that zoning prohibits, a use the lot is too small to hold, and a use that would lose money, before settling on the use producing the greatest value. What analysis is being performed?

• A. Highest and best use analysis, screening for what is legally permissible, physically possible, financially feasible and maximally productive
• B. Reconciliation of the three approaches to value
• C. A competitive market analysis of recent listings
• D. Plottage analysis of assemblage gains

85. A Colorado home purchase is financed with an instrument under which the borrower conveys the property in trust to a county public official, empowering foreclosure through that official if the loan defaults. Who are the three parties to this arrangement?

• A. Mortgagor, mortgagee and the county assessor
• B. Vendor, vendee and the closing agent
• C. Optionor, optionee and the escrow holder
• D. The borrower as trustor, the lender as beneficiary, and the public trustee

86. A municipality restricts the height of buildings in a residential district. Under what power does it act?

• A. Police power, the authority to regulate for public health, safety and welfare without compensating owners
• B. Eminent domain, which requires just compensation
• C. Escheat, which applies when an owner dies without heirs
• D. Taxation, which funds public services

87. A property lawfully used as a shop before the area was rezoned residential continues operating. What is this called?

• A. A legal nonconforming use, permitted to continue because it predated the zoning change
• B. A variance, granted on application for hardship
• C. A conditional use permit
• D. Spot zoning of the individual parcel

88. A neighbour's fence has been built two feet onto the adjoining owner's land. What is this?

• A. An encroachment, a physical intrusion onto another's land that a survey typically reveals
• B. An easement, a right to use another's land
• C. A licence, a revocable permission
• D. A lien, a claim securing a debt

89. A landlocked parcel has no road frontage. What legal device most commonly provides access across the neighbouring land?

• A. An easement appurtenant, which benefits the landlocked parcel and burdens the neighbouring one, running with the land
• B. An easement in gross, which benefits a person or company rather than a parcel
• C. A deed restriction limiting the neighbour's use
• D. A lease of the access strip renewed annually

90. Two people take title with right of survivorship, so that on the death of one the survivor takes the whole. Which form of ownership is this?

• A. Joint tenancy, in which the survivor takes the deceased's interest outside probate
• B. Tenancy in common, in which each share passes by will
• C. A life estate measured by the life of one owner
• D. A leasehold estate held jointly

91. A subdivision's recorded declaration prohibits detached garages. A buyer wants to build one. What governs?

• A. The private deed restriction, which binds regardless of what zoning permits
• B. Zoning alone, since public regulation overrides private agreement
• C. Whichever is less restrictive of the two
• D. Neither, once the subdivision is fully built out

92. An owner holds the largest possible interest in land, of unlimited duration and freely transferable. What estate is this?

• A. Fee simple absolute
• B. A life estate
• C. A leasehold estate
• D. A fee simple determinable

93. A local government takes private land for a highway widening. What must accompany the taking?

• A. Just compensation to the owner, through the condemnation process
• B. Nothing, since public use overrides private ownership
• C. A zoning variance for the affected parcel
• D. The owner's written consent

94. Items are being classified as real or personal property in a sale. Which test is applied to a disputed item?

• A. Whether it has become a fixture, judged on attachment, adaptation to the property and the intention of the party who installed it
• B. Its purchase price relative to the property value
• C. Whether it was installed by a licensed contractor
• D. Whether it appears in the listing photographs

95. After her divorce, a woman takes title to a townhome in her name alone, as the only owner. How is her ownership described?

• A. Tenancy in common with a 100% share
• B. Ownership in severalty
• C. Joint tenancy of one
• D. A leasehold estate

96. Three siblings inherit a property together with unequal shares of 50%, 30% and 20%, each free to sell or will their share, with no survivorship between them. How do they hold title?

• A. In severalty
• B. As joint tenants
• C. As tenants by the entirety
• D. As tenants in common

97. A grandmother deeds her farm "to my daughter for life, then to my grandson." While the daughter is alive, what interest does the grandson hold?

• A. A reversion that returns the farm to the grandmother's estate
• B. A leasehold measured by the daughter's life
• C. No interest until the daughter dies
• D. A remainder interest that becomes possessory when the life estate ends

98. An oddly shaped lot leaves its owner unable to meet the side setback when building a home of ordinary size. The owner asks the zoning authority for relief from the setback because of the lot's unique hardship. What is being requested?

• A. A rezoning of the entire district
• B. A conditional use permit
• C. A variance excusing strict compliance because of the parcel's unique hardship
• D. A nonconforming use certificate

99. A driveway easement allows the owner of one parcel to cross the neighboring parcel to reach the road. The benefited parcel is sold. What happens to the easement?

• A. It ends automatically, because easements are personal to the original parties
• B. It passes with the land to the new owner, because an easement appurtenant runs with the benefited parcel
• C. It must be repurchased from the neighboring owner
• D. It converts into a revocable license on transfer

100. A buyer of Colorado ranchland assumes that owning land along a creek automatically includes the right to divert its water for irrigation. What should the buyer understand about Colorado water rights?

• A. Water rights follow the doctrine of prior appropriation and are separate from land ownership, with earlier appropriators having senior rights
• B. All streamside owners share the water equally under riparian rights
• C. Whoever owns the longest stretch of bank controls the stream
• D. Water rights transfer automatically with every deed to streamside land