Colorado Real Estate Broker Practice Exam.
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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 parties waive all contingency deadlines
• C. The closing date may be extended once by either party
• D. The contract expires automatically after ninety days

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

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

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

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

4. 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

5. 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. 120 hours
• B. 72 hours
• C. 48 hours in total across both
• D. 96 hours, since each component is 48 hours

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

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

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

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

8. 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

9. 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

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

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

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

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

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

13. 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

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

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

15. 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. Loyalty, which requires the broker to act on their own judgement
• C. Confidentiality, which prohibits the disclosure regardless of instruction
• D. Reasonable care, which permits the broker to decline

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

17. 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. Nothing, since no relationship exists
• C. Confidentiality only
• D. The full set of fiduciary duties, since the broker is assisting them

18. 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

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

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

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

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

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

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

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

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

24. 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 grantor's competence to convey
• C. The validity of the current deed
• D. The adequacy of the legal description

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

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

26. 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

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

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

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

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

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

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

31. 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. Taxation, which funds public services
• D. Escheat, which applies when an owner dies without heirs

32. 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 conditional use permit
• C. A variance, granted on application for hardship
• D. Spot zoning of the individual parcel

33. 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. A lien, a claim securing a debt
• C. An easement, a right to use another's land
• D. A licence, a revocable permission

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

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

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

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

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

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

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

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

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

39. 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

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

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

41. 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. Leave the shortfall until the next deposit covers it
• C. Close the account and open a new one
• D. Deduct the fee proportionally from each beneficiary's balance

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

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

43. 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

65. 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

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

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

68. 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

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

70. 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

71. 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. The lender's policy automatically covers the buyer as well
• B. 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
• C. Annual renewal premiums keep the buyer's coverage in force
• D. The recorded deed itself insures the buyer against title defects

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

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

74. 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. Accretion, because long use gradually adds land to the user's parcel
• C. Dedication, requiring the neighbor's implied gift of the strip
• D. Prescriptive easement, which transfers full title after any period of use

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

76. 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. Return it, because bonuses on real estate transactions are illegal
• C. Split it with the buyer's broker under cooperation rules
• D. Decline direct payment; compensation for brokerage services must come through the employing broker

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

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

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

79. 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

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

81. 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

82. 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 bank's, once deposited into any account
• C. The owner's, available for building expenses as needed
• D. The manager's, as an advance on management fees

83. 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. Ordinary cash-flow management within the broker's discretion
• C. Conversion, because the broker used money belonging to others for the broker's own purposes
• D. A permissible short-term loan from the trust account

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

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

86. 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%

87. 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

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

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

90. 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

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

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

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

94. 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

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

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

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

98. 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. Designated brokerage agreements
• D. Open listings, unilateral offers compensating only the procuring broker

99. 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

100. 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 requires the buyer to pay the commission
• C. It creates a conflict between the broker's self-interest and the duty to obtain the best price for the client
• D. It is enforceable only for commercial property

101. A seller under a valid contract refuses to convey a one-of-a-kind mountain property, offering instead to refund the buyer's costs. The buyer wants the property itself, not money. What remedy addresses this?

• A. A suit for specific performance compelling the seller to convey as agreed
• B. An action for slander of title
• C. Unilateral rescission by the buyer
• D. Liquidated damages under the deposit clause

102. A 16-year-old signs a contract to buy a condominium from an adult seller. Which best describes the contract's status?

• A. Voidable at the option of the minor, while the adult remains bound unless the minor disaffirms
• B. Void from the outset with no legal effect for either party
• C. Valid only if the minor's parents ratify it in writing
• D. Fully enforceable against both parties once signed

103. Buyer and seller sign a contract both believing it covers Lot 4; in fact the legal description attached describes Lot 14, which neither party ever intended. What doctrine applies?

• A. Mutual mistake about a material fact, making the contract subject to rescission or reformation
• B. Unilateral mistake, binding the party who drafted the description
• C. Impossibility of performance excusing the seller only
• D. Fraud in the inducement by the seller

104. A deed is being prepared for closing. Which of the following is NOT required for the deed to be valid between the parties?

• A. A legally competent grantor who signs the deed
• B. An identifiable grantee and words of conveyance
• C. The grantee's signature on the deed
• D. An adequate legal description of the property

105. A buyer's standard title commitment lists exceptions for matters a survey would reveal and for parties in possession. A neighbor's shed, it turns out, sits over the boundary line. Why might the standard policy not cover this?

• A. Title insurance never covers boundary issues under any policy form
• B. Standard coverage excepts unrecorded, off-record matters such as encroachments and possession rights that only inspection or a survey would disclose
• C. The neighbor's shed automatically transfers ownership of the strip
• D. Encroachments are covered only if the seller discloses them

106. A property owner dies leaving no will. Her adult son assumes the house is simply his to take. How does title actually pass?

• A. By devise to whoever occupies the property first
• B. To the state immediately, because there is no will
• C. By descent under the intestacy statutes, to the heirs the law designates through probate
• D. By dedication to the decedent's creditors

107. On a closing settlement statement, how does the earnest money the buyer deposited at contract normally appear?

• A. It does not appear, because it was paid before closing
• B. As a debit to the buyer, increasing the amount due at closing
• C. As a credit to the seller, reducing the seller's proceeds
• D. As a credit to the buyer, reducing the cash the buyer must bring

108. In a closing handled by an escrow agent, the buyer's funds and the seller's deed are both delivered to a third party before the closing date. What defines what that third party may do with them?

• A. The escrow agent may invest the funds for its own account until closing
• B. The escrow agent acts as a neutral party and may disburse and record only according to the parties' escrow instructions
• C. The escrow agent takes title briefly and resells to the buyer
• D. The escrow agent represents the buyer and follows the buyer's directions alone

109. A newly licensed Colorado broker asks whether professional liability coverage is optional while actively practicing. What is the accurate answer?

• A. Coverage is required only for property managers
• B. The state provides free coverage to all licensees automatically
• C. Coverage is optional and purely a business decision
• D. Active Colorado licensees must carry errors and omissions coverage, obtained individually or through the employing brokerage

110. A Colorado licensee quits one brokerage on Friday and wants to start selling for a different brokerage on Monday. What must be true before the licensee performs any brokerage activity for the new company?

• A. The licensee must retake the state exam portion
• B. Nothing; a license is fully portable between companies without any update
• C. The license must be associated with the new employing broker through the regulator before brokerage activity begins for that company
• D. The old employing broker must approve the move in writing

111. Driving past a competitor's "For Sale" sign, a licensee calls the seller directly and says, "When your listing expires, I can do better — let's talk terms now." The property is under an exclusive listing with the competitor. How is this conduct viewed?

• A. Acceptable if the licensee does not disparage the competitor
• B. Acceptable competition, since sellers may hear all options
• C. Improper interference with another brokerage's exclusive agency relationship
• D. Required by the licensee's duty to serve the public

112. A licensee's license lapsed three months ago, but she negotiated a sale last week anyway and now requests her commission. What is the consequence of practicing on the lapsed license?

• A. The sale is void and the buyer loses the property
• B. She engaged in unlicensed activity, faces discipline, and generally cannot recover a commission for it
• C. The commission is payable but taxed at a penalty rate
• D. No consequence, provided she renews within the year

113. The real estate regulator opens an investigation into a broker's trust account handling and requests the account records. The broker considers ignoring the letter. What is the broker's obligation?

• A. None; account records are private business papers
• B. Transfer the account to a new bank to end the inquiry
• C. Produce records only if a client files a lawsuit first
• D. Respond and produce the required records; failing to cooperate with a lawful investigation is itself a disciplinable violation

114. A broker wants to thank an unlicensed friend who steered three home buyers to the brokerage by paying the friend $500 per referral. May the broker pay?

• A. Yes, because referral fees are exempt from license law
• B. Yes, if the payments are disclosed to the buyers
• C. Yes, if each payment stays under a modest dollar limit
• D. No; compensation for activity requiring a license may not be paid to unlicensed persons

115. A property manager's trust account holds tenant security deposits and owners' rental proceeds in separate ledgers. An owner demands an immediate draw larger than that owner's ledger balance, pointing to the healthy total account balance. What may the manager disburse?

• A. Any amount, if repaid from next month's rents
• B. Half the requested amount as a compromise
• C. The requested amount, since the account overall has sufficient funds
• D. Only funds belonging to that owner per the owner's ledger, never other beneficiaries' money

116. A management agreement entitles the manager to 8% of rents collected. Rents for the month arrive in the trust account. When may the manager move the fee to the brokerage operating account?

• A. Once the fee is earned and identified under the agreement, it should be promptly withdrawn rather than left mixed with trust funds
• B. Never; management fees must remain in the trust account permanently
• C. Only at year-end, after the owner's tax return is filed
• D. Whenever the operating account runs low, as an advance

117. A commercial tenant signs a lease paying a modest base rent plus the property taxes, building insurance and common-area maintenance costs. How is this lease described?

• A. A percentage lease based on the tenant's sales
• B. A triple net lease, with the tenant bearing taxes, insurance and maintenance on top of rent
• C. A ground lease of unimproved land
• D. A gross lease, because the rent is fixed

118. An appraisal defines the figure it seeks as the most probable price a property should bring in a competitive, open market, with informed parties acting prudently and neither under duress. What is being defined?

• A. Investment value to a particular buyer
• B. Assessed value for taxation
• C. Replacement cost of the improvements
• D. Market value

119. A tenancy ends and the tenant leaves the unit clean apart from ordinary wear. The owner tells the manager to keep the entire security deposit "as a buffer." What should the manager understand?

• A. The owner's instruction controls, since the owner is the client
• B. The deposit belongs to the tenant absent lawful deductions, and wrongful withholding exposes the owner and manager to liability
• C. Deposits may always be retained for thirty percent of their value
• D. The deposit converts to the manager's fee if unclaimed

120. A well-maintained warehouse loses value because a new flight path now routes low-altitude air traffic directly overhead. How does an appraiser classify this loss?

• A. Functional obsolescence within the structure
• B. Curable physical deterioration
• C. A market-condition adjustment, not depreciation
• D. External obsolescence, which arises outside the property and is treated as incurable

121. An appraiser notes a rental house needs interior repainting and new carpet, and that doing the work would add more value than it costs. How is this condition classified?

• A. Incurable functional obsolescence
• B. External obsolescence
• C. Economic life expiration
• D. Curable physical deterioration, because the cure costs less than the value it restores

122. Five years into a thirty-year, fixed-rate, fully amortizing loan, a borrower is surprised at how little principal has been repaid. What explains the slow early progress?

• A. Amortized loans repay no principal until the final decade
• B. The lender misapplied the payments to fees
• C. The rate must have adjusted upward silently
• D. In a level-payment amortizing loan, early payments are mostly interest, with the principal share growing over time

123. A buyer makes a 10% down payment on a conventional loan, and the lender requires private mortgage insurance. Whom does the PMI actually protect?

• A. The lender, against loss from borrower default on the high-LTV loan
• B. The seller, by guaranteeing the sale closes
• C. The title company, against record defects
• D. The borrower, by paying the mortgage during unemployment

124. A buyer purchases a unit in a multi-story building, receiving fee simple title to the interior airspace of the unit plus an undivided interest in the halls, roof and grounds shared with other owners. What has the buyer purchased?

• A. A leasehold apartment
• B. A cooperative share with a proprietary lease
• C. A timeshare interval
• D. A condominium unit

125. A home has a first mortgage recorded years ago. The county then files a lien for unpaid property taxes. If the property is sold to satisfy the debts, which obligation is paid first, and why?

• A. The mortgage, because private liens always outrank government claims
• B. They share proceeds equally as secured creditors
• C. The mortgage, because it was recorded first
• D. The property tax lien, because tax liens take priority over previously recorded private liens

126. A remodeling contractor completes a kitchen renovation and is never paid. The homeowner refuses to return calls. What claim can the contractor record against the property itself?

• A. An attachment lien requiring no lawsuit
• B. A mechanic's lien, a specific involuntary lien securing payment for labor and materials that improved the property
• C. A general judgment lien covering all the owner's assets
• D. A voluntary lien, with the owner's consent

127. A congregation wants to build a church in a district zoned for single-family homes, where the ordinance lists churches as allowable upon special review of traffic, parking and neighborhood impact. What approval does the congregation seek?

• A. A building moratorium exemption
• B. A nonconforming use designation
• C. A use variance based on economic hardship
• D. A conditional (special) use permit for a use the ordinance allows upon review

128. A survey reveals a recorded utility easement across a lot's rear ten feet and a neighbor's unpaid judgment attached to the neighbor's own parcel. The buyer asks which matters burden the lot being purchased. How are encumbrances distinguished from liens?

• A. Only monetary claims can encumber real property
• B. An encumbrance is any right or interest held by another that diminishes the property's use or value; liens are the subset that secure a money obligation
• C. Easements are liens because they can be foreclosed
• D. Encumbrances and liens are identical terms

129. A buyer mails an offer on Monday. On Wednesday, before the seller has communicated any acceptance, the buyer phones the listing broker and withdraws the offer. The seller signs it an hour later. Is there a contract?

• A. Yes, because the seller signed within the offer's stated deadline
• B. No; an offer may be revoked any time before acceptance is communicated, so the later signature accepted nothing
• C. No, but the buyer forfeits the earnest money for withdrawing
• D. Yes, because revocation requires the seller's consent

130. A relocating engineer signs an agreement making one brokerage her sole representative for her home search, owing that brokerage compensation however a suitable home is found during the term. What has she signed?

• A. A transaction-broker addendum only
• B. A listing agreement covering her current home
• C. An exclusive right-to-buy agreement with that brokerage
• D. An open buyer agreement with several brokerages

131. Two cooperating brokers claim the same commission: one introduced the buyer to the property and negotiated for weeks; the other merely wrote the final offer after the buyer returned from a vacation. What standard resolves who earned the fee?

• A. Final accession: whoever drafts the accepted offer is always paid
• B. Procuring cause: which broker set in motion the unbroken chain of events that produced the sale
• C. Seniority: the broker licensed longer prevails
• D. Equal division is mandatory whenever two brokers are involved

132. Two parties draw up a detailed, signed agreement to share profits from renting out a property in violation of a court order forbidding its use. One party later sues to enforce the deal. How will a court treat the agreement?

• A. Enforceable if both parties acted in good faith
• B. Enforceable, because it was written and signed
• C. Void, because a contract for an illegal purpose creates no enforceable obligation
• D. Voidable at the option of the suing party

133. Working as a transaction-broker for both parties, a licensee learns the seller is weeks from foreclosure and desperate. The buyer presses the licensee for "anything useful." What may the licensee share?

• A. The seller's situation, but only if asked in writing
• B. Any information, provided both parties pay the same fee
• C. Nothing about the seller's motivation or financial pressure; even a non-agent must keep such information confidential
• D. Everything, since a transaction-broker owes loyalty to neither party

134. A buyer mails a written offer to an elderly seller. Before the seller responds in any way, the buyer dies in an accident. The seller then signs and returns the offer to the buyer's family. What is the result?

• A. A contract binding the buyer's estate to purchase
• B. The family may elect whether to honor the offer
• C. A contract, because written offers survive the offeror
• D. No contract; the offer terminated automatically when the offeror died before acceptance

135. A seller markets a home strictly "as is," and the listing broker knows the crawl space floods every spring. A buyer asks the broker directly about water issues. What does the "as is" clause permit?

• A. It bars the buyer from inspecting the property
• B. It relieves everyone of any disclosure duties
• C. It shifts repair obligations to the buyer, but it never authorizes concealing or misrepresenting known adverse facts
• D. It converts all defects into cosmetic matters

136. A buyer asks a licensee whether anyone ever died in the house, mentioning internet rumors. Under Colorado's approach to psychologically stigmatizing events, how may the licensee respond?

• A. The licensee must reduce the price to reflect the stigma
• B. The licensee must investigate and disclose any death on the property
• C. The licensee must refuse to discuss the property further
• D. Facts of purely psychological impact are not treated as material defects requiring disclosure, though the licensee must never answer with a lie

137. An owner sells the same parcel twice. The first buyer never records her deed and never takes possession. The second buyer pays value, knows nothing of the first sale, and promptly records. Who generally prevails, and why?

• A. The second buyer, as a bona fide purchaser without notice who recorded, gaining the protection of the recording act
• B. The first buyer, because her deed is older
• C. The first buyer, because recording is optional between the parties
• D. Neither; the parcel returns to the seller

138. Reviewing a deed, a broker points to the clause beginning "to have and to hold," which follows the granting clause. What does this clause do?

• A. It appoints the closing agent
• B. It provides the property's legal description
• C. It lists the monetary consideration paid
• D. It is the habendum clause, defining the extent of the estate being conveyed

139. A tenant-occupied duplex sells with closing on the 20th of a 30-day month. The seller collected the full month's rent of $1,800 on the 1st. Using a day-of-closing-to-buyer convention, how is rent handled at settlement?

• A. The buyer is credited $660, the rent for the eleven days of the month the buyer will own the property
• B. The buyer is debited $1,140 for the seller's nineteen days
• C. The seller keeps the entire $1,800 because it was collected before closing
• D. The tenant must pay rent twice, once to each owner

140. A woman's will leaves her mountain cabin to her nephew. After her death, the estate is administered and the cabin passes to him. What is the correct terminology for this transfer?

• A. The cabin passes by escheat
• B. The nephew inherits by descent as an heir
• C. The transfer is a bequest of personal property
• D. The cabin passes by devise, the will's gift of real property, and the nephew is a devisee

141. A recluse dies owning a paid-off house. An exhaustive search finds no will and no living relatives, however remote. What ultimately happens to the house?

• A. Title passes to the state by escheat, so that property is never left ownerless
• B. The nearest neighbor may claim it by occupancy
• C. It is auctioned and the proceeds destroyed
• D. The county sheriff takes personal title

142. The day before closing, a lower backup offer arrives on a property already under contract. The listing broker considers discarding it since the property is pending. What does the duty regarding offers require?

• A. Return it to the buyer as legally ineffective
• B. Hold it until after closing to avoid confusing the seller
• C. Discard it, because pending status suspends offer duties
• D. Present the offer to the seller promptly; the client decides its significance, not the broker

143. At a weekend open house, a buyer hands the hosting licensee a personal check for earnest money payable to the brokerage. What does proper handling of that check look like?

• A. The licensee delivers it promptly to the employing broker for handling per the contract, such as deposit into trust or delivery to the named holder
• B. The licensee cashes it and holds the currency for safekeeping
• C. The licensee mails it directly to the seller as a show of good faith
• D. The licensee holds the check in a desk drawer until closing

144. A brokerage's social media ad claims a listed home has "brand-new plumbing throughout" when only one bathroom was updated. A buyer relies on the claim and later complains to the state. What exposure does the advertising create?

• A. None, because social media posts are informal
• B. Liability for the platform that displayed the ad
• C. Only a private dispute between buyer and seller
• D. License discipline for misrepresentation in advertising, in addition to any civil liability to the buyer

145. Years after a closing, a dispute erupts over a transaction and the employing broker is asked to produce the file: contracts, disclosures and trust account entries. The broker admits everything was discarded shortly after closing. What obligation was violated?

• A. The duty to retain transaction and trust records for the period required by law and produce them for regulator inspection
• B. The duty applies only to transactions that end in litigation
• C. Only an internal company policy, not a legal duty
• D. None; files may be discarded once a transaction closes

146. An employing broker hires a licensee who obtained her license two weeks ago. Another new hire has fifteen years of experience in a neighboring state. How should the employing broker calibrate supervision?

• A. Identical minimal supervision for both, to avoid favoritism
• B. No supervision for either, since both hold licenses
• C. Supervision of the experienced hire only, since newcomers are exempt from error
• D. Supervision must be reasonable for each licensee, with closer oversight matched to inexperience

147. A Colorado homeowner believes her listing broker forged her initials on a price-reduction amendment. She wants the broker's conduct investigated by the licensing authority. Where does her complaint belong?

• A. The county recorder's office
• B. The multiple listing service's ethics hotline
• C. The title insurance commissioner
• D. The Colorado Division of Real Estate, the DORA agency that regulates broker conduct

148. A licensee lists her own investment condo for sale and also writes an offer on a neighbor's house for herself. What disclosure obligation attaches to both transactions?

• A. None, because she is acting for herself, not a client
• B. She must disclose in the transaction documents that she is a licensed broker acting as a principal
• C. She must surrender her license before buying or selling personally
• D. She need only disclose if the other party asks

149. An owner instructs his property manager to quietly discourage applicants with children from renting units on upper floors, citing safety. The building is an ordinary apartment complex. What must the manager do?

• A. Follow it, but document the owner's reasoning in the file
• B. Apply it only during peak rental season
• C. Refuse; steering families with children violates fair housing law, and the manager must not implement a discriminatory instruction
• D. Follow the instruction, since safety is a legitimate concern

150. A property manager routes all repair work to a contractor who quietly pays the manager 10% of each invoice. The owner knows nothing of the arrangement. What principle does this violate?

• A. The rule against managing multiple properties at once
• B. No principle, since the owner still receives the repairs
• C. The agent's duty to account for and disclose all compensation; secret profits belong to the principal
• D. Only the contractor's licensing rules

151. Preparing an annual plan for an apartment building, a manager budgets utilities and landscaping in one category, and sets aside funds toward an eventual roof replacement in another. How are these two items classified?

• A. The roof fund is the owner's personal expense, outside the budget
• B. Both are operating expenses of the current year
• C. Utilities and landscaping are operating expenses; the roof set-aside is a capital reserve for a long-lived replacement
• D. Both are capital expenditures

152. A manager's trust account holds funds for eight different owners. Owner A's furnace fails, but Owner A's ledger is empty until rent day. The manager pays the furnace invoice from the account anyway, since Owner B's ledger has plenty. What just happened?

• A. Prudent cash management within the manager's discretion
• B. Proper use of the account's aggregate balance
• C. A permissible inter-owner loan, if repaid with interest
• D. Deficit spending against one beneficiary funded by another's money — an improper use of trust funds

153. An appraiser's three approaches yield $410,000, $402,000 and $455,000, the last from thin income data. How does the appraiser reach a final opinion of value?

• A. Reconcile by weighting each approach according to the quality of its data and its relevance to the property type
• B. Average the three figures arithmetically
• C. Discard any figure that differs from the others
• D. Select the highest figure to protect the seller

154. A home sells for $450,000 with a 6% commission, split equally between the listing and cooperating brokerages. What does the listing brokerage receive before paying its licensee?

• A. $6,750
• B. $22,500
• C. $27,000
• D. $13,500

155. A veteran with full entitlement asks what distinguishes VA home loan financing from a typical conventional loan. What is the key difference?

• A. VA loans are available to any first-time homebuyer
• B. Eligible veterans can finance with no down payment, because the government guarantees part of the loan for the lender
• C. VA loans require larger down payments to offset risk
• D. The VA lends the money directly in all cases

156. At a loan closing, the borrower signs one document promising to repay the debt and a second placing the home as collateral. What does the first document, the promissory note, accomplish by itself?

• A. It pledges the property as security for the loan
• B. It transfers title to the lender until payoff
• C. It merely estimates the loan's closing costs
• D. It is the borrower's personal, legally enforceable promise to repay and the evidence of the debt, even without any collateral

157. A borrower has missed four payments, and the lender has begun foreclosure, but no foreclosure sale has yet occurred. The borrower inherits money and offers the full amount owed. What right is being exercised?

• A. Defeasance of the recorded lien by the trustee
• B. Novation of the loan
• C. Statutory reinstatement after the sale
• D. The equitable right of redemption, paying the debt in full to stop the foreclosure before the sale

158. A county assesses a home at 7% of its $400,000 market value, and the total levy in the taxing district is 80 mills. What is the annual property tax?

• A. $3,200
• B. $22,400
• C. $28,000
• D. $2,240

159. Three friends own a cabin in joint tenancy. One of them, without telling the others, deeds her interest to her daughter. What is the state of title afterward?

• A. All four owners are now joint tenants
• B. The conveyance is void without the co-owners' consent
• C. The daughter holds her share as a tenant in common, while the two remaining friends stay joint tenants between themselves
• D. The cabin must be sold and the proceeds divided

160. A buyer tours a community where each owner holds fee title to their own lot and home, while a homeowners association owns the pool, trails and greenbelts that every owner may use. What form of development is this?

• A. A tenancy in common among all residents
• B. A planned unit development, with individually owned lots and association-owned common areas
• C. A condominium, because there are shared amenities
• D. A cooperative apartment corporation

161. A family finishes building a custom home. Before they may move in, the building department must confirm the completed structure complies with the applicable codes after final inspection. What document provides this confirmation?

• A. The recorded plat of the subdivision
• B. A zoning variance from the board of adjustment
• C. A certificate of occupancy issued after final inspection
• D. The builder's one-year workmanship warranty

162. A homeowner tells a neighbor, "You can park your boat on my side yard until I say otherwise." Nothing is written or recorded, and no payment changes hands. What interest does the neighbor have?

• A. A license — personal, revocable permission that creates no interest in the land
• B. A prescriptive easement effective immediately
• C. An easement appurtenant benefiting the neighbor's lot
• D. A leasehold estate in the side yard

163. Decades ago, a previous owner of a ranch sold the underlying minerals to an energy company, reserving nothing. The current owner now contracts to sell "the ranch" to a buyer who assumes he is getting everything. What should the buyer understand?

• A. Minerals always transfer with the surface regardless of prior sales
• B. Surface ownership automatically pulls severed minerals back after decades
• C. The mineral estate was severed and remains with the energy company; the deed to the buyer conveys only what the seller owns
• D. The buyer can void the severance by recording first

164. An investor who owns a downtown parcel sells a neighboring developer the right to build in the airspace above her low-rise building while keeping the building itself. What concept makes this transaction possible?

• A. The doctrine of merger, which forbids dividing ownership
• B. Escheat of unused airspace to the city
• C. The bundle of rights: ownership is a collection of separable rights, including air rights, that can be sold individually
• D. Adverse possession of airspace by the developer