"I want to keep living in my Hot Springs home until I die, but I want my daughter to automatically own it afterward without probate," a downsizing seller tells her agent. Which arrangement accomplishes this?

A life estate with a remainder interest to the daughter

A leasehold with an option to purchase

A joint tenancy created at closing

A life estate pur autre vie held by the daughter

Two siblings who inherited a rental duplex in Jonesboro want to be certain that if one of them dies, the survivor automatically owns the whole property without the deceased sibling's heirs receiving a share. Which form of co-ownership provides that result?

Joint tenancy with right of survivorship

To sell forty acres of unplatted timberland outside Mountain Home, the seller's agent needs a legal description that begins at a marked point of beginning and follows a series of courses and distances back to that starting point. Which method of legal description is being used?

Government (rectangular) survey

Which fiduciary duty is a listing agent violating if she tells her seller client to reject a full-price offer only because accepting a different, lower offer from her own relative would net her a larger split of commission?

Duty of disclosure to the buyer

"My office manager just told me I can write an offer for a buyer on my own listing — is that even allowed?" a new salesperson asks her trainer during orientation in Bentonville. The trainer explains that before representing both the seller and that buyer in the same transaction, the salesperson must first:

Obtain informed consent from both parties to the dual agency arrangement

Decline to show the buyer any other properties

Automatically terminate the listing agreement

Reduce the commission owed by the seller

"I found this listing through the multiple listing service, but I never signed a buyer representation agreement with anyone," a buyer in Conway explains. If the cooperating salesperson working with this buyer is a subagent rather than a buyer's agent, who does that salesperson legally represent?

The listing broker's seller client

To determine whether her family still owes a brokerage anything, an executor in Hardy reviews a deceased client's paperwork: a 90-day exclusive listing agreement that produced no offers and was never renewed, dated eight months before the client passed away. What is the legal status of that agency relationship today?

It has terminated by expiration of its term

It automatically converts to an open listing

It remains exclusive until the property sells

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PRACTICE ENGINE · ARKANSAS REAL ESTATE

Arkansas Real Estate Practice Exam.
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QUESTION 1 / 60Agency & Brokerage RelationshipsMedium0/0

Two salespersons from different brokerages both showed the same Bentonville home to a buyer, but only one of them continued negotiating and drove the buyer to the final signed contract. A dispute over which agent earned the commission centers on:

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1. Two salespersons from different brokerages both showed the same Bentonville home to a buyer, but only one of them continued negotiating and drove the buyer to the final signed contract. A dispute over which agent earned the commission centers on:
- A. Steering
- B. Procuring cause
- C. Blockbusting
- D. Novation
Show answer & explanation
Answer: B
Procuring cause analysis determines which agent's uninterrupted efforts were the predominant cause that led directly to the completed transaction, and it typically favors the agent who kept negotiations moving to a signed contract rather than the agent whose involvement in the sale simply ended earlier.
2. A buyer purchasing a lake cabin near Beaver Lake wants the ownership interest that comes with the fewest restrictions and lasts forever, passing freely to heirs. Which estate should the salesperson explain to the buyer?
- A. Fee simple absolute
- B. Life estate
- C. Estate for years
- D. Leasehold estate
Show answer & explanation
Answer: A
Fee simple absolute grants the holder the maximum bundle of ownership rights with no built-in time limit or reversion, and it passes to heirs by inheritance; a leasehold or estate for years is temporary and reverts to a landlord, while a life estate ends at a specified life and cannot be freely inherited by the holder's own heirs.
3. "I want to keep living in my Hot Springs home until I die, but I want my daughter to automatically own it afterward without probate," a downsizing seller tells her agent. Which arrangement accomplishes this?
- A. A life estate pur autre vie held by the daughter
- B. A leasehold with an option to purchase
- C. A life estate with a remainder interest to the daughter
- D. A joint tenancy created at closing
Show answer & explanation
Answer: C
A life estate lets the seller retain the right to possess and use the property for the remainder of her own life, and upon her death the property passes automatically to the named remainderman without going through probate; a leasehold requires rent and eventually ends, and holding title as joint tenants would give the daughter an immediate ownership share the mother does not want to grant yet.
4. While preparing to list a Fort Smith property for a downsizing seller, the salesperson discovers the neighbor's fence sits eighteen inches onto the seller's lot according to a new survey. This situation is best described as:
- A. An encroachment
- B. A deed restriction
- C. An easement by necessity
- D. A lien
Show answer & explanation
Answer: A
An encroachment occurs when a structure, such as a fence, physically extends onto a neighboring owner's land without permission or legal right, which is different from an easement, a recorded right to use land that does not itself involve trespassing improvements, and different from a lien, which is a financial claim rather than a physical boundary problem.
5. Two siblings who inherited a rental duplex in Jonesboro want to be certain that if one of them dies, the survivor automatically owns the whole property without the deceased sibling's heirs receiving a share. Which form of co-ownership provides that result?
- A. Community property
- B. Joint tenancy with right of survivorship
- C. Tenancy in common
- D. Tenancy in severalty
Show answer & explanation
Answer: B
Joint tenancy includes the right of survivorship, so when one joint tenant dies the surviving co-owner automatically absorbs the deceased owner's share outside of probate, whereas tenancy in common gives each owner a separate, inheritable share that passes to that owner's own heirs, and tenancy in severalty simply describes ownership by a single individual rather than co-ownership at all.
6. To sell forty acres of unplatted timberland outside Mountain Home, the seller's agent needs a legal description that begins at a marked point of beginning and follows a series of courses and distances back to that starting point. Which method of legal description is being used?
- A. Government (rectangular) survey
- B. Metes and bounds
- C. Lot and block
- D. Street address
Show answer & explanation
Answer: B
Metes and bounds descriptions define a parcel's boundary by starting at a fixed point of beginning and tracing a series of directions and distances around the perimeter back to that point, which suits irregular rural tracts, while lot-and-block descriptions reference a recorded subdivision plat and government survey descriptions instead use townships, ranges, and sections.
7. Which fiduciary duty is a listing agent violating if she tells her seller client to reject a full-price offer only because accepting a different, lower offer from her own relative would net her a larger split of commission?
- A. Duty of accounting
- B. Duty of loyalty
- C. Duty of confidentiality
- D. Duty of disclosure to the buyer
Show answer & explanation
Answer: B
The duty of loyalty requires an agent to put the client's financial interests ahead of the agent's own, so steering the seller away from the best offer to benefit the agent's personal relationship is a direct breach of loyalty rather than a bookkeeping issue like accounting or a secrecy issue like confidentiality.
8. "My office manager just told me I can write an offer for a buyer on my own listing — is that even allowed?" a new salesperson asks her trainer during orientation in Bentonville. The trainer explains that before representing both the seller and that buyer in the same transaction, the salesperson must first:
- A. Reduce the commission owed by the seller
- B. Obtain informed consent from both parties to the dual agency arrangement
- C. Automatically terminate the listing agreement
- D. Decline to show the buyer any other properties
Show answer & explanation
Answer: B
When one licensee represents both the buyer and seller in the same transaction, informed written consent from both parties is required before proceeding, because dual agency inherently limits full loyalty and undivided disclosure to each side; simply lowering a commission or restricting showings does not address the underlying conflict of interest.
9. "I found this listing through the multiple listing service, but I never signed a buyer representation agreement with anyone," a buyer in Conway explains. If the cooperating salesperson working with this buyer is a subagent rather than a buyer's agent, who does that salesperson legally represent?
- A. Both parties equally
- B. The buyer
- C. The listing broker's seller client
- D. No one until closing
Show answer & explanation
Answer: C
A subagent works on behalf of the listing broker and therefore owes fiduciary duties to the seller, even though the subagent is dealing directly with the buyer day to day, which is why buyer representation agreements exist to create a direct agency relationship between the buyer and their own agent instead.
10. To determine whether her family still owes a brokerage anything, an executor in Hardy reviews a deceased client's paperwork: a 90-day exclusive listing agreement that produced no offers and was never renewed, dated eight months before the client passed away. What is the legal status of that agency relationship today?
- A. It remains exclusive until the property sells
- B. It converts to a net listing
- C. It automatically converts to an open listing
- D. It has terminated by expiration of its term
Show answer & explanation
Answer: D
An agency relationship created by a listing agreement ends when the agreement's stated term expires, releasing both parties from further exclusive obligations unless they sign a new agreement; the relationship does not automatically convert into a different listing type simply because time has passed.
11. To avoid liability for a misleading online ad posted by a new salesperson under her supervision, a broker in Texarkana should, at minimum:
- A. Review and approve the salesperson's advertising for accuracy before it is published
- B. Require the salesperson to advertise under a separate unlicensed business name
- C. Wait for a complaint before reviewing any advertising
- D. Let the salesperson's personal judgment control all advertising decisions
Show answer & explanation
Answer: A
A supervising broker is responsible for the licensed activities of salespersons working under them, including advertising, so reviewing content for accuracy before publication is a reasonable supervisory step; waiting for a complaint or delegating all judgment to an unsupervised new licensee does not satisfy that oversight responsibility.
12. A buyer in Fayetteville verbally tells a seller, "I'll take it at your asking price," and the seller replies, "Deal." For a legally valid real estate contract to exist beyond this verbal exchange, which additional element is still required?
- A. The property must already be free of any liens
- B. A licensed agent must be present
- C. The buyer must pay the full price in cash immediately
- D. The agreement must be in writing to be enforceable
Show answer & explanation
Answer: D
Real estate contracts fall under the statute of frauds, which requires agreements for the sale of real property to be in writing and signed to be enforceable, regardless of whether the parties reached an oral meeting of the minds; existing liens or the presence of a licensed agent are not what makes the agreement itself legally enforceable.
13. Her loan officer delivers bad news by phone: the mortgage application for a Malvern bungalow was denied through no fault of her own, and the financing contingency deadline in the purchase contract hasn't passed yet. What typically happens to the buyer's earnest money?
- A. It is paid to the listing broker as a cancellation fee
- B. It is returned to the buyer and the contract terminates
- C. It is split evenly between buyer and seller
- D. It is forfeited to the seller as damages
Show answer & explanation
Answer: B
A financing contingency protects the buyer by making the contract's performance conditional on obtaining loan approval, so if financing is denied within the contingency period through no fault of the buyer, the contract terminates and the earnest money is returned to the buyer rather than forfeited to the seller or paid out to third parties.
14. A deed prepared for a closing in Jonesboro identifies the grantor and grantee and is signed and delivered, but the property is described only as "the house on Maple Street." This deed is most likely defective because it lacks:
- A. A recording stamp
- B. Consideration
- C. An adequate legal description
- D. A notary acknowledgment
Show answer & explanation
Answer: C
A valid deed must contain a legal description sufficient to identify the property with certainty, and an informal street reference like "the house on Maple Street" generally will not satisfy that requirement, whereas notarization and recording affect evidentiary proof and public notice rather than the deed's basic validity between the parties.
15. For years, a homeowner near Hardy openly farmed a strip of land actually owned by the neighboring landowner, without permission and without the true owner objecting. Eventually the homeowner might acquire title to that strip through:
- A. Voluntary alienation
- B. Adverse possession
- C. Eminent domain
- D. Escheat
Show answer & explanation
Answer: B
Adverse possession allows a person who openly, continuously, and without permission occupies another's land for a legally required period to eventually gain ownership, unlike escheat, which transfers property to the state when an owner dies without heirs or a will, or eminent domain, which is the government's power to take property for public use with compensation.
16. "I signed the contract on this Van Buren duplex, but I'm not going to be the one who closes — a wholesale buyer is stepping into my spot and taking on everything I owe and everything I'm owed," an investor explains to her agent before the closing date arrives. Handing off contract rights and duties to a new party this way, so that party completes the deal in the original signer's place, is known as:
- A. Subordination
- B. Novation
- C. Escheat
- D. Assignment
Show answer & explanation
Answer: D
An assignment transfers a party's contract rights and duties to another person, who then steps into the assignor's position to complete the transaction, whereas novation replaces the original contract entirely with a new one releasing the original party, and subordination concerns the relative priority of liens rather than transferring contract rights.
17. "Should we file this deed with the county today, or does it even matter?" an heir in Pine Bluff asks after finally receiving the signed deed transferring her late father's rental house into her name through the estate. Her attorney explains that the main legal purpose of recording is to:
- A. Trigger the buyer's property tax assessment
- B. Make the transfer of ownership legally effective for the first time
- C. Satisfy the buyer's mortgage lender that the loan has closed
- D. Provide constructive notice of the new owner's interest to future claimants
Show answer & explanation
Answer: D
Recording a deed places the transfer in the public record, giving constructive notice to the world of the new owner's interest and establishing priority against later claims or competing conveyances, even though ownership actually transfers upon delivery and acceptance of the deed rather than upon recording itself.
18. Refinancing her paid-off cabin near Greers Ferry Lake, a homeowner locks in a new $312,000 loan; her lender quotes 1.25 discount points due at closing. How much does she owe for those points?
- A. $4,680
- B. $6,240
- C. $3,900
- D. $3,120
Show answer & explanation
Answer: C
Discount points are calculated as a percentage of the loan amount, so 1.25 percent of $312,000 equals $3,900; using a flat 1 percent, 1.5 percent, or 2 percent instead of the actual 1.25 percent rate produces the other, incorrect totals shown among the choices.
19. To purchase a home listed for $220,000 in Cabot, a buyer makes a down payment of $44,000 and finances the remainder. What loan-to-value ratio results from this transaction?
- A. 20%
- B. 125%
- C. 80%
- D. 25%
Show answer & explanation
Answer: C
Loan-to-value compares the loan amount to the property's value, and here the loan is $220,000 minus the $44,000 down payment, or $176,000, which divided by the $220,000 price equals 80 percent; the smaller percentages come from mistakenly dividing the down payment instead of the loan amount, and the figure over 100 percent comes from inverting the ratio.
20. After a borrower defaults on a loan secured by a deed of trust that includes a power-of-sale clause, the lender can typically foreclose:
- A. Only by waiting for the borrower to voluntarily deed the property back
- B. Through a non-judicial sale conducted by the trustee, without going to court
- C. Only by obtaining the borrower's written consent
- D. Only through a full court lawsuit process
Show answer & explanation
Answer: B
A power-of-sale clause in a deed of trust authorizes the trustee to sell the property outside of court if the borrower defaults, which is generally faster than a judicial foreclosure that requires a lawsuit and court judgment; borrower consent is not required for a lender to exercise this contractual foreclosure right.
21. To decide between loan options for a new vacation-rental purchase, a buyer near Mountain Home asks her lender which loan type guarantees the interest rate will never change for the entire loan term. The salesperson should explain that this describes:
- A. A balloon-payment loan
- B. A fixed-rate mortgage
- C. A graduated-payment mortgage
- D. An adjustable-rate mortgage
Show answer & explanation
Answer: B
A fixed-rate mortgage locks in the same interest rate for the full life of the loan, giving predictable payments, while an adjustable-rate mortgage's rate can rise or fall periodically based on a market index, a balloon loan requires a large lump-sum payment before the loan is fully amortized, and a graduated-payment loan starts with lower payments that increase over time.
22. A property manager in Texarkana walks a client through the numbers on her strip-mall investment before advising whether to sell: $52,800 a year in net operating income, against a 6.6 percent capitalization rate for comparable retail properties in the area. Under the income approach, what value do those numbers indicate?
- A. $754,286
- B. $348,480
- C. $880,000
- D. $800,000
Show answer & explanation
Answer: D
The income approach estimates value by dividing net operating income by the capitalization rate, so $52,800 divided by 0.066 equals $800,000; using a 6 percent or 7 percent rate instead produces the other two estimates, and multiplying the income by 6.6 instead of converting the rate to a decimal produces the smallest, clearly mistaken figure.
23. A small rental home in Van Buren recently sold for $204,000 and rents for $1,700 per month. Based on this sale, what gross rent multiplier should the appraiser apply to similar rental properties in the area?
- A. 140
- B. 120
- C. 12
- D. 10
Show answer & explanation
Answer: B
The gross rent multiplier is calculated by dividing the sale price by the monthly rent, so $204,000 divided by $1,700 equals 120; dividing the price by the annual rent instead of the monthly rent produces the much smaller figure of 10, and a misplaced decimal in the rent figure produces the other incorrect results.
24. "There's nothing nearby to compare it to — it's a one-of-a-kind timber-frame lodge," an appraiser tells a trainee about a newly built property near Mountain Home. She explains that to value it, she'll estimate the cost to construct a similar new structure, subtract any depreciation, and add the land value separately — a technique known as the:
- A. Sales comparison approach
- B. Income approach
- C. Gross rent multiplier method
- D. Cost approach
Show answer & explanation
Answer: D
The cost approach estimates value by calculating the cost to reproduce or replace the improvements, subtracting depreciation, and adding the land value, and it is especially useful for new or unique structures that lack enough comparable sales for the sales comparison approach or lack rental income data for the income approach.
25. An appraiser evaluating a 1970s home in Pine Bluff notes that its single small bathroom and outdated, poorly laid-out kitchen make it less desirable than similar homes with modern floor plans. This type of value loss is called:
- A. Functional obsolescence
- B. Economic (external) obsolescence
- C. Physical deterioration
- D. Curable physical depreciation only
Show answer & explanation
Answer: A
Functional obsolescence refers to a loss in value caused by outdated design, layout, or features within the property itself, such as an inadequate bathroom count or poor kitchen layout, which differs from physical deterioration caused by wear and aging materials, or economic obsolescence caused by negative factors outside the property's boundaries.
26. A vacant lot in downtown Fayetteville is zoned for either single-family or multifamily use, and an appraiser determines the legally permitted, physically possible, and financially feasible use that would produce the greatest value is a small apartment building. This analysis illustrates:
- A. Highest and best use
- B. Plottage
- C. Curable depreciation
- D. Assemblage
Show answer & explanation
Answer: A
Highest and best use identifies the legally permissible, physically possible, financially feasible, and maximally productive use of a site, and it can differ from the property's current use; assemblage and plottage instead describe combining separate parcels and the resulting value increase from that combination, not identifying the optimal single-site use.
27. A seller in Jonesboro privately tells her agent about a known foundation crack that was patched but never fully repaired, then asks the agent to keep quiet about it so the sale goes smoothly. The agent should:
- A. Disclose the defect only if a buyer specifically asks about the foundation
- B. Wait until after closing to mention the issue if it becomes relevant
- C. Disclose the known material defect as required, regardless of the seller's request
- D. Honor the seller's request and say nothing to any buyer
Show answer & explanation
Answer: C
A known material defect, such as an unresolved foundation problem, must be disclosed because it could reasonably affect a buyer's decision or the price offered, and an agent's duty to deal honestly and disclose known material facts overrides a client's request to conceal a defect from a prospective buyer, unlike ordinary confidential negotiating information.
28. A buyer's earnest money check for a home in Rogers is given to the salesperson at the time an offer is signed. What must happen to these funds to comply with standard trust-fund handling practice?
- A. The funds should be held uncashed by the salesperson until closing
- B. The funds may be forwarded directly to the seller immediately
- C. The funds must be placed in the broker's trust or escrow account, not commingled with the brokerage's own operating funds
- D. The salesperson may deposit the check into a personal account temporarily
Show answer & explanation
Answer: C
Earnest money must be deposited promptly into a broker's trust or escrow account, kept separate from the brokerage's own operating funds, because commingling client funds with business funds is a serious violation of trust-account handling rules; personal accounts, uncashed checks, and immediate payment to the seller before closing are all improper handling of client funds.
29. A seller in Texarkana receives three offers on the same day. The listing agent's ethical obligation regarding these offers is to:
- A. Present all offers received to the seller, allowing the seller to decide
- B. Present only the highest offer and quietly reject the other two
- C. Choose whichever offer would generate the largest commission for the agent
- D. Ask each buyer to bid against each other before presenting anything to the seller
Show answer & explanation
Answer: A
An agent representing the seller has a duty to promptly present all offers received to the seller and let the seller, not the agent, decide which to accept, counter, or reject, because withholding offers or choosing based on the agent's own commission would violate the duty of loyalty and full disclosure owed to the seller.
30. An agent writes a listing description for a Springdale home claiming it has a "brand-new roof" when the roof was actually patched but not replaced. This advertisement is problematic because it:
- A. Does not mention the listing broker's phone number
- B. Is too short to attract buyer interest
- C. Contains a false and misleading statement about the property's condition
- D. Fails to include the seller's asking price
Show answer & explanation
Answer: C
Advertising must be truthful and not misrepresent a property's condition, and describing a merely patched roof as brand-new is a false statement that could deceive a buyer into overvaluing the property's condition; omitting a price or phone number is a marketing choice, not a truthfulness violation.
31. A salesperson in Hot Springs regularly refers her buyer clients to a particular home inspector in exchange for an undisclosed cash payment from that inspector for each referral. This arrangement is problematic mainly because:
- A. Home inspectors are not allowed to accept any referrals
- B. The undisclosed payment creates an undisclosed conflict of interest affecting the referral's objectivity
- C. The client did not sign a separate referral agreement
- D. Referral fees between licensees and inspectors are always illegal in every case
Show answer & explanation
Answer: B
Accepting an undisclosed payment for steering clients toward a particular service provider creates a hidden conflict of interest, because the client cannot know the referral may be influenced by the agent's own financial benefit rather than purely by the inspector's quality, which is why such payments generally must be disclosed to the client.
32. A landlord in Fayetteville refuses to rent a two-bedroom apartment to a couple because they have two young children, telling them the unit is "better suited for a quiet single professional." This refusal likely violates the Fair Housing Act's protection against discrimination based on:
- A. Familial status
- B. Disability
- C. Religion
- D. National origin
Show answer & explanation
Answer: A
The Fair Housing Act prohibits discrimination based on familial status, which protects households with children under eighteen from being refused housing or steered away from certain units, and refusing to rent specifically because a family has young children falls squarely within this protected category rather than national origin, religion, or disability.
33. An agent in Bentonville consistently shows a Black homebuying couple only listings in one part of town, while showing white buyers with similar budgets listings throughout the entire metro area. This practice is known as:
- A. Blockbusting
- B. Steering
- C. Puffing
- D. Redlining
Show answer & explanation
Answer: B
Steering occurs when an agent guides homebuyers toward or away from certain neighborhoods based on a protected characteristic such as race, limiting their housing choices, which is distinct from redlining, a lender's refusal to make loans in certain areas, and blockbusting, which involves inducing panic selling by suggesting a protected class is moving into a neighborhood.
34. "My registered service dog isn't a pet, and I use a wheelchair — can you make an exception to the no-pets rule here?" a prospective renter says to a property manager while touring a Cabot apartment community. Under fair housing law, the manager generally must:
- A. Deny the request because the building has a strict no-pets policy
- B. Require the applicant to find a different, pet-friendly building
- C. Charge an additional pet deposit for the service animal
- D. Grant a reasonable accommodation allowing the service animal
Show answer & explanation
Answer: D
Fair housing law requires landlords and property managers to make reasonable accommodations for tenants with disabilities, and waiving a no-pets policy for a legitimate service or assistance animal is a standard reasonable accommodation because the animal is not treated as an ordinary pet; managers generally cannot charge a pet deposit or fee specifically for an assistance animal.
35. To pressure homeowners in a Little Rock neighborhood into selling quickly and below market value, an investor spreads rumors that families of a particular protected class are about to move in and property values will fall. This tactic is called:
- A. Steering
- B. Blockbusting
- C. Commingling
- D. Redlining
Show answer & explanation
Answer: B
Blockbusting is the illegal practice of inducing owners to sell by suggesting that the entry of persons of a particular protected class into the neighborhood will cause property values to decline or other undesirable consequences, which differs from steering, a practice that limits where buyers are shown homes, and from redlining, which involves lenders denying services to entire areas.
36. What term describes a bank's decision to stop issuing any home loans at all within a Little Rock zip code that has a high concentration of minority residents, applied uniformly regardless of individual applicants' credit history?
- A. Steering
- B. Blockbusting
- C. Redlining
- D. Net listing
Show answer & explanation
Answer: C
Redlining occurs when a lender denies or limits loans and other financial services within a specific geographic area based on the racial or ethnic composition of its residents, rather than the creditworthiness of individual applicants, which differs from steering, a real estate agent's practice of directing buyers toward or away from certain neighborhoods.
37. After investigating a complaint that a licensed salesperson in Jonesboro forged a client's signature on a listing agreement, the Arkansas Real Estate Commission has the authority to:
- A. Award the client monetary damages directly against the salesperson
- B. Order the salesperson's broker to pay the client's attorney fees
- C. Suspend or revoke the salesperson's real estate license
- D. File criminal forgery charges on the client's behalf
Show answer & explanation
Answer: C
The Arkansas Real Estate Commission has regulatory authority over licensees and can suspend or revoke a license for serious violations such as forgery, which is a matter of administrative discipline over the license itself; awarding civil damages or pursuing criminal charges are separate matters handled through courts and prosecutors, not the licensing commission.
38. The Arkansas Real Estate Commission periodically adopts detailed regulations that expand on the state's real estate licensing statutes, covering topics such as trust account handling and advertising standards. This regulatory power is an example of the Commission's authority to:
- A. Promulgate rules and regulations governing licensees' conduct
- B. Draft municipal zoning ordinances
- C. Approve individual sale prices in residential transactions
- D. Set market interest rates for real estate loans
Show answer & explanation
Answer: A
Real estate commissions such as AREC are typically granted authority to adopt detailed rules and regulations that implement and clarify the broader licensing statutes, covering practical matters like trust accounting and advertising, which is a core administrative power distinct from setting loan rates, approving sale prices, or drafting local zoning laws, none of which fall within a real estate commission's authority.
39. A former client of a Fayetteville brokerage files a written complaint with the Arkansas Real Estate Commission alleging that a salesperson misrepresented the square footage of a home. What is the Commission's role in this situation?
- A. Immediately award the client a refund from state funds
- B. Investigate the complaint and take appropriate administrative action if warranted
- C. Decline involvement because square footage disputes are purely civil matters
- D. Refer the matter to the local sheriff for arrest
Show answer & explanation
Answer: B
The Commission is responsible for investigating written complaints against licensees and, where a violation of licensing law or regulation is found, taking appropriate administrative action such as discipline, rather than awarding refunds directly, making arrests, or refusing to look into complaints that involve a licensee's conduct.
40. "I'll turn eighteen two weeks after I finish my pre-license course — can I go ahead and submit my Arkansas salesperson application early?" a Bentonville high school student asks her instructor. Based on Arkansas licensing requirements, the honest answer is that she:
- A. May apply only with a parent's co-signature on the application
- B. May apply now, since coursework completion is the only requirement
- C. Must wait until she turns eighteen, the age of majority, to apply
- D. May apply now and simply complete the age requirement before renewal
Show answer & explanation
Answer: C
Arkansas licensing requirements include reaching the age of majority, eighteen, as a basic eligibility criterion for a real estate salesperson license, so an applicant who is still seventeen cannot yet qualify for licensure no matter how much coursework has been completed; there is no parental co-signature exception or later grace period that allows applying before turning eighteen.
41. Before an applicant in Pine Bluff can sit for the Arkansas salesperson licensing exam, Arkansas licensing requirements mandate that the applicant first:
- A. Pass a separate state civics examination
- B. Successfully complete an approved pre-license real estate education course
- C. Work for one year as an unlicensed assistant
- D. Own at least one piece of investment real estate
Show answer & explanation
Answer: B
Arkansas licensing requirements make completion of an approved pre-license real estate education course a prerequisite to sitting for the licensing exam, ensuring applicants have foundational knowledge before testing, whereas owning investment property, working as an unlicensed assistant, or passing an unrelated civics test are not part of Arkansas's actual licensing prerequisites.
42. Once licensed, a new Arkansas salesperson in Springdale wants to begin representing buyers and sellers independently, without affiliating with any broker. Under Arkansas license law, this salesperson:
- A. May practice independently after her first year of licensure
- B. May practice independently only for rental transactions
- C. Must be affiliated with and supervised by a licensed broker to engage in licensed activities
- D. May practice independently as long as she carries her own errors-and-omissions insurance
Show answer & explanation
Answer: C
A real estate salesperson license does not authorize independent practice; Arkansas law requires a salesperson to be affiliated with and supervised by a licensed broker in order to engage in licensed brokerage activities, and this affiliation requirement does not expire after a set period of experience or depend on the type of transaction being handled.
43. "Can we just run client escrow money through the same checking account we use for rent and payroll? It would simplify our bookkeeping," a new office administrator in El Dorado asks the managing broker. Under Arkansas statutory requirements governing licensee activities, the proposed setup is:
- A. Permitted if disclosed to the client after the fact
- B. A prohibited commingling of client trust funds with the broker's own operating funds
- C. Permitted only during the brokerage's first year of operation
- D. Permitted as long as someone keeps a mental note of whose money is whose
Show answer & explanation
Answer: B
Arkansas statutory requirements governing licensee activities prohibit commingling client trust funds with a broker's personal or operating funds, requiring a separate trust or escrow account instead, because mixing the funds risks client money being used for business expenses or seized by business creditors; after-the-fact disclosure does not cure an already prohibited commingling.
44. A newly licensed broker in Hot Springs wants to operate her brokerage entirely out of her car, meeting clients at coffee shops with no fixed office location. Arkansas's other statutory licensing requirements generally call for a brokerage to:
- A. Relocate offices every six months to serve new markets
- B. Share office space exclusively with a competing brokerage
- C. Operate exclusively online with no physical presence
- D. Maintain a definite, fixed place of business
Show answer & explanation
Answer: D
Arkansas's statutory requirements for licensees generally require a broker to maintain a definite, fixed place of business where records can be kept and the public can reach the brokerage, rather than operating without any permanent location; there is no requirement to relocate periodically or to share space with a competitor, and an online-only presence without any fixed office would not satisfy this requirement.
45. "I want my social media posts to just say 'call Dana' with my cell number — no brokerage branding at all," a salesperson in Sherwood tells her office manager while planning her listing marketing. Under Arkansas statutory requirements governing licensee activities, this advertising plan:
- A. Is acceptable as long as the salesperson pays for the posts herself
- B. Requires no broker reference since it is running on social media rather than print
- C. Must instead identify the supervising broker, since salespersons may not advertise independently of their broker
- D. Is acceptable only for rental listings, not sales listings
Show answer & explanation
Answer: C
Because a salesperson's licensed activities are conducted under the supervision of a broker, Arkansas statutory requirements generally prohibit a salesperson from advertising real estate independently of that broker, requiring the brokerage's identity to appear in the advertisement; this obligation does not disappear based on who pays for the ad, the property type, or whether the ad is digital or print.
46. An Arkansas salesperson who wants her license to remain active into the following year, without a lapse, needs to complete her renewal:
- A. Within 24 hours of the license's original issue date
- B. Only after passing a repeat licensing exam
- C. At any point during the following calendar year
- D. On or before September 30 of the current year
Show answer & explanation
Answer: D
Arkansas real estate licenses must be renewed on or before September 30 of the current year to remain active without lapsing, a recurring statutory deadline distinct from the initial licensing exam, which is not repeated for a routine renewal, and distinct from any post-exam waiting period, which applies only to retesting after an exam failure, not to annual renewal.
47. A buyer in Fort Smith, grateful for a salesperson's hard work, wants to hand the salesperson a cash bonus directly at closing, separate from the brokerage's commission. Under Arkansas statutory requirements governing licensee activities, the salesperson:
- A. Must split the cash bonus evenly with the buyer's own agent
- B. May accept the bonus only if it is under $100
- C. May not accept compensation directly from a party to the transaction; compensation must flow through her employing broker
- D. May accept the cash bonus directly and keep it without telling her broker
Show answer & explanation
Answer: C
Because a salesperson's licensed activities are performed under and compensated through her employing broker, Arkansas statutory requirements generally prohibit a salesperson from accepting compensation for real estate activities directly from a client or any other party outside her broker; there is no dollar-amount exception, and splitting an informal cash gift with an unrelated agent would not cure the underlying prohibited direct payment.
48. A vacation-rental buyer in Heber Springs needs to cross a neighbor's lot to reach the boat dock on Greers Ferry Lake, and this right was created by a recorded document that benefits the buyer's parcel specifically, not the buyer personally. What kind of interest is this?
- A. License
- B. Encroachment
- C. Easement appurtenant
- D. Easement in gross
Show answer & explanation
Answer: C
An easement appurtenant attaches to and benefits a specific parcel of land, called the dominant estate, and transfers automatically with that parcel's ownership, unlike an easement in gross, which benefits a person or company rather than land, or a license, which is a revocable personal permission rather than a real property interest.
49. A buyer is evaluating a waterfront lot on Greers Ferry Lake for a vacation-rental business and wants to know whether owning the lot automatically grants any rights to use the adjoining water. This question concerns:
- A. Littoral or riparian rights
- B. Air rights
- C. Subsurface mineral rights
- D. Police power
Show answer & explanation
Answer: A
Riparian and littoral rights are the rights of an owner whose land borders a body of water to reasonable use and access to that water, and they differ from mineral rights, which concern what lies beneath the surface, air rights, which concern the space above the land, and police power, which is a government's authority to regulate land use for public welfare rather than an owner's water-use rights.
50. A seller in Pine Bluff wants to list with several different brokerages at once and pay a commission only to whichever one ultimately produces a buyer, while remaining free to sell the home herself without owing anyone a commission. Which listing type fits this arrangement?
- A. Net listing
- B. Exclusive right-to-sell listing
- C. Open listing
- D. Exclusive agency listing
Show answer & explanation
Answer: C
An open listing allows a seller to work with multiple brokerages simultaneously and to sell the property personally without owing any commission, with payment due only to the broker who actually procures the buyer; an exclusive right-to-sell listing, by contrast, entitles one broker to a commission regardless of who finds the buyer, including the seller.
51. A seller in Eureka Springs privately tells her agent that she must relocate within thirty days and will accept well under asking price if needed. Later, a buyer's agent asks the listing agent directly whether the seller is desperate to sell. The listing agent's duty of confidentiality means the agent should:
- A. Decline to disclose the seller's confidential motivation or bottom line
- B. Disclose the information because buyers are entitled to know a seller's urgency
- C. Confirm the seller's timeline and lowest acceptable price to speed up the deal
- D. Disclose the information only if the buyer's agent promises to keep it secret
Show answer & explanation
Answer: A
Confidentiality requires an agent to protect a client's sensitive information, such as a motivation to sell quickly or a willingness to accept less than the asking price, both during and after the agency relationship, because revealing that information would weaken the seller's negotiating position; a promise of secrecy from the other side does not remove this duty.
52. A downsizing seller in Little Rock wants to give the buyer the strongest possible assurance that the title is free of defects arising both during and before her own ownership. Which deed should her attorney prepare?
- A. Bargain and sale deed
- B. General warranty deed
- C. Special warranty deed
- D. Quitclaim deed
Show answer & explanation
Answer: B
A general warranty deed provides the broadest protection because the grantor warrants against title defects arising at any time, including before the grantor owned the property, while a special warranty deed only covers the period of the grantor's own ownership and a quitclaim deed offers no warranties at all, only a release of whatever interest, if any, the grantor holds.
53. Before closing on a historic home in Hot Springs, the buyer's lender requires a policy that will pay for defense and losses if an undiscovered defect in the chain of title, such as a forged prior deed, surfaces after closing. The buyer needs to purchase:
- A. Homeowner's hazard insurance
- B. Title insurance
- C. Private mortgage insurance
- D. Errors and omissions insurance
Show answer & explanation
Answer: B
Title insurance protects against losses from defects in the chain of title that existed before the policy was issued but were not discovered during the title search, such as forged documents or undisclosed heirs, unlike hazard insurance, which covers physical damage to the structure, or private mortgage insurance, which protects the lender against borrower default.
54. "Who actually holds legal title while I'm paying off my loan?" a first-time buyer in Malvern asks. If the buyer's state uses a deed of trust rather than a traditional mortgage, the correct answer is:
- A. The buyer holds legal title outright from day one
- B. A neutral trustee holds title on behalf of the lender until the debt is satisfied
- C. The county recorder holds title until closing costs are paid
- D. The lender holds legal title until the loan is paid in full
Show answer & explanation
Answer: B
Under a deed of trust arrangement, the borrower conveys legal title to a neutral third-party trustee, who holds it as security for the lender and can execute a non-judicial foreclosure sale if the borrower defaults, which differs from a traditional mortgage, where the borrower typically retains title, subject to the lender's lien.
55. To make sure property taxes and hazard insurance are paid on time each year, a lender for a vacation-rental buyer in Heber Springs collects a portion of these costs with every monthly payment and holds the funds in a separate account. This account is called:
- A. A trust account for earnest money
- B. An escrow or impound account
- C. A security deposit account
- D. A reserve for replacement fund
Show answer & explanation
Answer: B
An escrow or impound account lets a lender collect a prorated share of recurring costs like property taxes and insurance with each mortgage payment and pay those bills directly when due, protecting the lender's collateral from a tax lien or lapsed coverage; it is distinct from an earnest money trust account, which holds a buyer's good-faith deposit during a pending transaction.
56. A lender reviewing a buyer's application for a vacation-rental purchase near Beaver Lake compares the buyer's total monthly debt obligations to the buyer's gross monthly income before approving the loan amount. This underwriting comparison is generally known as the buyer's:
- A. Debt-to-income ratio
- B. Gross rent multiplier
- C. Loan-to-value ratio
- D. Capitalization rate
Show answer & explanation
Answer: A
The debt-to-income ratio measures a borrower's monthly debt payments against gross monthly income and is a key underwriting tool lenders use to judge repayment ability, which is different from the loan-to-value ratio that compares the loan amount to the property's value rather than to the borrower's income.
57. Before listing her large family home in Conway, a downsizing seller asks her agent for a document estimating the likely sale price based on recently sold comparable homes nearby. This document is best described as a:
- A. Comparative market analysis
- B. Certified appraisal report
- C. Broker price opinion required by the lender
- D. Formal fee appraisal
Show answer & explanation
Answer: A
A comparative market analysis is an agent's informal estimate of value based on recently sold, active, and expired comparable listings, useful for pricing a home for sale, whereas a formal appraisal is a licensed appraiser's independent, more rigorous valuation typically required by a lender before closing.
58. A house built in 1965 is being listed for sale in Little Rock. Under federal law, before the buyer becomes obligated under the contract, the seller and listing agent must provide:
- A. A homeowner's association budget
- B. A federally mandated lead-based paint disclosure and pamphlet
- C. A termite inspection report
- D. A radon testing certificate
Show answer & explanation
Answer: B
Federal law requires sellers and agents of homes built before 1978 to disclose any known lead-based paint hazards and provide the buyer with an EPA-approved pamphlet before the buyer is obligated under a purchase contract, because lead-based paint was commonly used before that year; termite reports, radon tests, and HOA budgets are not this specific federally mandated disclosure.
59. A salesperson in Fort Smith wants to personally purchase a home that she currently has listed for a seller client. Before doing so, she must:
- A. Fully disclose her licensee status and interest in purchasing to the seller in writing
- B. Purchase the home through a relative's name to avoid any disclosure
- C. Immediately cancel the listing agreement and forfeit any commission
- D. Wait until the listing expires naturally before making an offer
Show answer & explanation
Answer: A
When a licensee wants to buy a property she has listed, she must disclose her license status and her personal interest in the transaction to the seller in writing, so the seller can make an informed decision knowing the person on the other side of the deal is also the seller's own agent; concealing the purchase through another name would defeat the purpose of this disclosure duty.
60. While proofreading a listing flyer for a Malvern rental before it goes live, a broker flags a line a junior agent drafted: 'ideal for empty-nesters, not suited for large families.' This wording raises a serious fair housing concern because it:
- A. Omits the property's square footage
- B. Expresses a preference that excludes families based on familial status
- C. Fails to list the security deposit amount
- D. Does not mention whether pets are allowed
Show answer & explanation
Answer: B
Fair housing law prohibits advertisements that express a preference, limitation, or discrimination based on a protected class, and language steering the property toward empty-nesters while discouraging large families signals an intent to exclude households with children, a protected familial status category, regardless of what other routine details like deposit amount or square footage the ad may omit.

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Key facts: Arkansas Real Estate exam

Scaled 70

To pass

$75

Exam fee

The Arkansas Real Estate is administered by Arkansas Real Estate Commission (AREC), with a Scaled 70 result.

This free Arkansas Real Estate practice test has 60 original questions written to Arkansas Real Estate Commission (AREC)'s official content outline, last checked against it on August 10, 2026. Every question shows a worked explanation, and nothing here requires a signup.

As of 2026, the Arkansas Real Estate exam fee is $75 (separate $50 resident application fee and $25 recovery-fund fee).

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Official sources

Every exam fact on this page traces to a primary document published by the body that administers the exam.

Arkansas Real Estate and Property Management Content Outlines (Pearson VUE, #090402)Arkansas Real Estate Commission (AREC)home.pearsonvue.com
Frequently Asked Questions | Arkansas Real Estate CommissionArkansas Real Estate Commission (AREC)arec.arkansas.gov
Arkansas Real Estate & Property Management Candidate Handbook (Pearson VUE, #090400, June 2026)Arkansas Real Estate Commission (AREC)home.pearsonvue.com
Real Estate Applicants | Arkansas Real Estate CommissionArkansas Real Estate Commission (AREC)arec.arkansas.gov
Exam Information | Arkansas Real Estate CommissionArkansas Real Estate Commission (AREC)arec.arkansas.gov

Last verified against the official exam content outline: August 10, 2026

Frequently asked questions

How many questions are on the real Arkansas Real Estate Salesperson exam?

The national portion has 80 scored items plus 5 unscored pretest items, and the Arkansas law portion has 30 scored items plus 10 unscored pretest items. The two portions are scored separately.

What score do I need to pass a practice test to be ready for the real exam?

The Arkansas Real Estate Commission sets a passing scaled score of 70 on each portion of the actual exam, so aim to consistently hit that mark on practice sets before scheduling your real appointment.

What topics should a good practice test for this exam cover?

A solid practice bank should mirror the official Arkansas law content outline, which covers duties and powers of the Real Estate Commission, licensing requirements, statutory requirements governing licensee activities, other statutory requirements, and agency relationships and disclosures.

Is this practice test free, and do I need to sign up to use it?

Yes, this practice test is free to use and does not require creating an account or entering payment information, so you can start reviewing questions immediately.

How should I use practice questions to prepare for the state law portion versus the national portion?

Since the national and state law portions are scored separately, it helps to split your study time and drill each portion's practice questions on its own so you can track weak areas by section rather than blending them together.

Does missing questions on a practice test mean I'll fail the real exam?

Not necessarily, but consistently missing questions in a specific content area is a signal to review that topic further, since the real exam applies the same scaled-70 passing standard to both portions.