A brokerage represents both the seller and a corporate relocation buyer in the same Honolulu transaction. Before proceeding as a dual agent, what must the salesperson obtain from both parties?

Informed written consent to the dual agency

A signed listing agreement only

A broker's unlicensed personal assistant in Kailua-Kona begins negotiating price terms directly with a buyer over the phone on the broker's behalf. What is the primary problem with this situation?

Negotiating price is an activity that requires a real estate license

Assistants may never speak with buyers

The broker must be present in the room during all calls

Only sellers may authorize this task

A salesperson in Hilo tells a buyer that a home's roof was replaced last year when it was not. If the buyer later sues after closing over this misrepresentation, who can potentially be held liable for the salesperson's statement?

The supervising broker as well as the salesperson

Only the salesperson individually

Two salespersons at the same Kapolei brokerage are designated to represent the seller and the buyer separately in a duplex house-hack sale. What is the purpose of this designated agency arrangement?

To allow each salesperson to advocate exclusively for one party despite the shared brokerage

To eliminate the need for written agency disclosure

To convert the transaction into dual agency automatically

To waive both parties' right to independent representation

A brokerage sets a salesperson's exact daily work hours, dictates the precise scripts used with every client, and withholds payroll taxes from the salesperson's commission checks. Under a standard independent contractor analysis, this arrangement most closely resembles what?

An employer-employee relationship despite the contractor label

A true independent contractor relationship

A property management agreement

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PRACTICE ENGINE · HAWAII REAL ESTATE

Hawaii Real Estate Practice Exam.
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QUESTION 1 / 61Financing & SettlementEasy0/0

During escrow on a Kapolei townhome, funds and documents are held by a neutral third party until every condition of the purchase contract has been satisfied. What is this holding arrangement called?

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1. During escrow on a Kapolei townhome, funds and documents are held by a neutral third party until every condition of the purchase contract has been satisfied. What is this holding arrangement called?
- A. A trust deed
- B. An escrow
- C. A listing
- D. A lien
Show answer & explanation
Answer: B
Escrow is a neutral third-party arrangement in which funds and documents are held until all conditions of the purchase contract are met before being released to the appropriate parties. A lien, by contrast, is a financial claim against a property for an unpaid debt rather than a holding arrangement for closing funds.
2. Which type of freehold estate does an heir hold when a deceased Waimea landowner's will grants the family home 'to my son for life, then to my granddaughter in fee simple'?
- A. Easement in gross
- B. Fee simple absolute
- C. Life estate
- D. Leasehold estate
Show answer & explanation
Answer: C
A life estate gives the son the right to possess and use the property only for the duration of his own life; when he dies, title automatically passes to the named remainderman rather than to his own heirs. Fee simple absolute would let him pass the property through his own estate, which the will's wording rules out here.
3. A company relocating an employee to Kapolei signs a two-year lease on a condo for the employee's temporary housing rather than purchasing a home outright. What type of estate does the company hold in the unit during the lease term?
- A. Leasehold estate
- B. Remainder estate
- C. Life estate
- D. Fee simple estate
Show answer & explanation
Answer: A
A leasehold estate is a temporary, non-freehold possessory interest created by a lease, giving the tenant the right to occupy the space for a defined term without owning the underlying land. Fee simple and life estate are freehold interests involving ownership rather than a landlord-tenant relationship.
4. A homeowner in Kihei owns a lot bordering the ocean. Which category of property right describes the owner's relationship to the adjoining shoreline and water?
- A. Littoral rights
- B. Riparian rights
- C. Subsurface rights
- D. Avulsion rights
Show answer & explanation
Answer: A
Littoral rights apply to land bordering oceans, seas, or lakes, while riparian rights instead apply to land bordering flowing water such as rivers or streams. Since the Kihei lot borders the ocean rather than a river, littoral rights is the correct classification for this shoreline relationship.
5. A corporation purchasing a Waikiki condo unit for executive housing discovers the association's recorded declaration limits rentals to stays of thirty days or longer. This limitation is best classified as what kind of restriction?
- A. A zoning ordinance
- B. An encroachment
- C. A deed restriction (covenant)
- D. An easement
Show answer & explanation
Answer: C
Private limits like a minimum-stay rental rule are deed restrictions, or covenants, recorded against the property's title and enforced by the association rather than by the government. Zoning ordinances are public land-use laws enacted by a municipality, which is a separate and distinct source of restriction from a private recorded covenant.
6. A brokerage represents both the seller and a corporate relocation buyer in the same Honolulu transaction. Before proceeding as a dual agent, what must the salesperson obtain from both parties?
- A. An appraisal contingency
- B. A waiver of earnest money
- C. A signed listing agreement only
- D. Informed written consent to the dual agency
Show answer & explanation
Answer: D
Because dual agency creates a divided loyalty situation where the same brokerage owes fiduciary duties to two opposing parties, both the buyer and seller must give informed written consent before the arrangement can proceed. A listing agreement alone does not address the conflict created by representing both sides of the same deal.
7. A broker's unlicensed personal assistant in Kailua-Kona begins negotiating price terms directly with a buyer over the phone on the broker's behalf. What is the primary problem with this situation?
- A. The broker must be present in the room during all calls
- B. Assistants may never speak with buyers
- C. Only sellers may authorize this task
- D. Negotiating price is an activity that requires a real estate license
Show answer & explanation
Answer: D
Negotiating the price or material terms of a real estate transaction is a licensed activity, so an unlicensed assistant performing this task is practicing real estate without the required license. Unlicensed personnel can handle administrative tasks, but substantive negotiation crosses into activity reserved for licensees.
8. A salesperson in Hilo tells a buyer that a home's roof was replaced last year when it was not. If the buyer later sues after closing over this misrepresentation, who can potentially be held liable for the salesperson's statement?
- A. The escrow company
- B. The supervising broker as well as the salesperson
- C. Only the salesperson individually
- D. Only the seller
Show answer & explanation
Answer: B
Under vicarious liability principles, a supervising broker can be held responsible for the acts of a salesperson performed within the scope of their agency, in addition to the salesperson's own liability. The escrow company is a neutral third party that had no role in making the misrepresentation and would not share this liability.
9. Two salespersons at the same Kapolei brokerage are designated to represent the seller and the buyer separately in a duplex house-hack sale. What is the purpose of this designated agency arrangement?
- A. To convert the transaction into dual agency automatically
- B. To eliminate the need for written agency disclosure
- C. To waive both parties' right to independent representation
- D. To allow each salesperson to advocate exclusively for one party despite the shared brokerage
Show answer & explanation
Answer: D
Designated agency lets individual licensees within the same firm act as the exclusive advocate for one party's interests, rather than the whole brokerage being deemed a dual agent representing both sides equally. This preserves single-party loyalty for each designated agent instead of eliminating disclosure obligations.
10. A brokerage sets a salesperson's exact daily work hours, dictates the precise scripts used with every client, and withholds payroll taxes from the salesperson's commission checks. Under a standard independent contractor analysis, this arrangement most closely resembles what?
- A. A property management agreement
- B. A true independent contractor relationship
- C. An employer-employee relationship despite the contractor label
- D. A referral fee arrangement
Show answer & explanation
Answer: C
A true independent contractor generally controls their own hours and methods and is responsible for their own taxes, so dictating a fixed schedule, scripting client interactions, and withholding payroll taxes are hallmarks of an employer-employee relationship instead. The label used in the agreement does not override how the working relationship actually functions in practice.
11. A corporation submits a signed purchase offer on a Wailuku property with a stated price, and the seller signs an unconditional acceptance in return. Which additional element must still be present for this exchange to form a legally binding contract?
- A. Consideration exchanged between competent parties
- B. Attorney review
- C. Recording at the Bureau of Conveyances
- D. Notarization of both signatures
Show answer & explanation
Answer: A
A valid contract requires offer, acceptance, consideration, competent parties, and a legal purpose; without consideration flowing between capable parties, an otherwise matching offer and acceptance is not yet enforceable. Notarization, attorney review, and recording can be prudent practices, but none of them is a required element for contract formation itself.
12. A buyer offers $650,000 for a Kailua-Kona duplex. The seller responds in writing agreeing to sell but only at $665,000. What is the legal effect of the seller's response on the buyer's original $650,000 offer?
- A. It terminates the original offer and becomes a new offer
- B. It creates a binding contract at $650,000
- C. It automatically extends the original offer's deadline
- D. It has no legal effect until the buyer responds
Show answer & explanation
Answer: A
A counteroffer rejects and terminates the original offer entirely while simultaneously creating a new offer that the other party may accept, reject, or counter again. The original $650,000 offer is no longer available for the seller to accept later once the counteroffer has been made.
13. Having shaken hands at a Koloa property auction after agreeing to every term for the winning bid, the top bidder and the seller leave the deal entirely unwritten and unsigned. Why would this handshake agreement generally be unenforceable in court?
- A. There is no minimum age requirement
- B. The statute of frauds requires real estate contracts to be in writing to be enforceable
- C. A broker must be present for any agreement to be valid
- D. Verbal agreements are enforceable only for properties under a certain price
Show answer & explanation
Answer: B
The statute of frauds requires contracts for the sale of real property to be in writing and signed to be enforceable, so a purely verbal handshake agreement made at an auction generally cannot be enforced against either party. Whether a broker is present has no bearing on whether the written-contract requirement applies to a real estate sale.
14. To settle her late father's estate, an heir in Kailua takes the inherited deed to the Bureau of Conveyances for recording. Under Hawaii law, what does this act of recording formally establish?
- A. Equitable title in the property
- B. Final approval of loan underwriting
- C. A guarantee that the property is free of all liens
- D. Constructive notice of the heir's ownership to the public
Show answer & explanation
Answer: D
Recording a deed provides constructive notice to the public, including future purchasers and creditors, that the heir now holds ownership of the property. Recording does not itself guarantee the property is free of liens; a title search and title insurance address that separate concern.
15. Days before closing on a Princeville property, a title search reveals an old unreleased mortgage lien from a prior owner still attached to the property's title. This kind of defect is an example of what?
- A. Adverse possession
- B. A deed restriction
- C. An easement appurtenant
- D. A cloud on title
Show answer & explanation
Answer: D
A cloud on title is any recorded document or unresolved claim, such as an unreleased lien, that casts doubt on an owner's clear title and must typically be cleared before closing can proceed. This is distinct from adverse possession, which involves someone gaining ownership through open, hostile, and continuous use of another's land.
16. How many dollars in discount points must a homeowner in Kula pay when refinancing a $380,000 mortgage balance at 1.75 points to lower the interest rate?
- A. $66,500
- B. $6,650
- C. $7,600
- D. $3,800
Show answer & explanation
Answer: B
One discount point equals one percent of the loan amount, so 1.75 points on a $380,000 balance equals 1.75 percent of that amount, or $6,650. Using only one point instead of 1.75, using two points, or shifting a decimal place produces the other listed figures.
17. "Your down payment only covers 8 percent of the purchase price, so budget for this extra monthly cost until your equity builds up," a loan officer tells a buyer financing a Wahiawa condo with a conventional mortgage. What cost is the loan officer referring to?
- A. A prepayment penalty
- B. Private mortgage insurance
- C. A balloon payment
- D. An interest rate cap
Show answer & explanation
Answer: B
Conventional lenders typically require private mortgage insurance when a buyer's down payment is below 20 percent of the purchase price, protecting the lender against default risk until the borrower builds sufficient equity. A balloon payment and prepayment penalty are unrelated loan features tied to repayment structure, not down-payment size.
18. Settling their late mother's estate, a group of heirs closes the sale of her Hawi home on August 1, months after she had settled the full annual property tax bill in advance. How is that advance tax payment typically accounted for between the estate and the buyer at closing?
- A. Property taxes are excluded from closing entirely
- B. The estate absorbs the full cost with no reimbursement
- C. The title company pays the estate's tax bill in full
- D. The buyer credits the estate for the portion of the year after closing
Show answer & explanation
Answer: D
Prorations at closing allocate shared expenses like an advance property tax payment between the buyer and seller (or, here, the estate) based on the closing date, so the buyer reimburses the estate through a credit for the portion of the payment covering the time after ownership transfers. Leaving the estate to absorb the entire advance payment would unfairly ignore the period the buyer will actually own the home.
19. To help set an asking price for a small Hilo strip-mall unit, a commercial appraiser applies a 7% capitalization rate to the property's confirmed net operating income of $63,000. What value does this analysis support?
- A. $90,000
- B. $900,000
- C. $4,410
- D. $9,000
Show answer & explanation
Answer: B
Under the income capitalization approach, value equals net operating income divided by the capitalization rate expressed as a decimal, so $63,000 divided by 0.07 equals $900,000. Dividing by 0.7 or by 7 instead of 0.07, or multiplying the net operating income by 0.07, are common decimal-placement errors that produce the other listed figures.
20. Preparing a pricing recommendation for a Kailua seller, an agent starts with three nearby recently sold homes and adjusts each sale price up or down for differences in square footage and upgrades compared to the seller's home. Which valuation approach does this method reflect?
- A. Gross rent multiplier approach
- B. Cost approach
- C. Income approach
- D. Sales comparison approach
Show answer & explanation
Answer: D
The sales comparison approach estimates value by adjusting the sale prices of comparable recently sold properties for differences from the subject property. The cost approach instead estimates value based on the cost to reproduce the structure rather than by comparing it to other sales.
21. An insurance adjuster estimating the cost to rebuild a fire-damaged home in Captain Cook adds the land's estimated value to the depreciated cost of reconstructing the structure. Which valuation approach does this method reflect?
- A. Sales comparison approach
- B. Income approach
- C. Market extraction approach
- D. Cost approach
Show answer & explanation
Answer: D
The cost approach estimates value by adding land value to the depreciated cost of reproducing or replacing improvements, an approach commonly used for insurance and reconstruction valuations as well as unique properties with few comparable sales. The income approach instead relies on a property's earning potential, which does not apply to this rebuild-cost scenario.
22. "I spent $65,000 on that custom kitchen remodel, and you're telling me it only added $22,000?" a homeowner in Kalaheo asks after receiving a fresh appraisal. Which appraisal principle explains the gap between what the homeowner spent and what the improvement actually added?
- A. The principle of contribution
- B. The principle of conformity
- C. The principle of substitution
- D. The principle of anticipation
Show answer & explanation
Answer: A
The principle of contribution holds that the value an improvement adds to a property is measured by its contribution to overall market value, not by what it cost to install, which is why an expensive addition does not always raise value by an equal amount. The principle of substitution instead concerns a buyer's ceiling price based on similar available properties, which is not what this scenario tests.
23. While preparing to list a home in Kaneohe, a salesperson learns from the seller that the roof leaked significantly last winter and was only partially repaired. What is the salesperson's obligation regarding this information going forward?
- A. Disclose it only if a buyer specifically asks about the roof
- B. Disclose the known material defect to prospective buyers
- C. Withhold it because it might lower the sale price
- D. Disclose it only after closing
Show answer & explanation
Answer: B
Licensees must disclose known material facts that affect a property's value or desirability, such as a significant past roof leak, to prospective buyers rather than waiting to be asked or withholding the information to protect the sale price. Disclosing only after closing would defeat the purpose of giving buyers the information they need before deciding to purchase.
24. During a broker-training role-play in Waimanalo, a trainee agent is asked how to respond when a prospective buyer wants to know whether a previous resident of a listed home ever passed away peacefully within its walls years earlier. Absent a specific state law addressing this kind of property history, what is the generally correct response?
- A. Automatically report it to the county assessor
- B. Answer honestly if the agent has actual knowledge, since misrepresentation is prohibited
- C. Always disclose regardless of whether asked
- D. Refuse to answer any question about the property's history
Show answer & explanation
Answer: B
Psychologically impacted or stigmatized property facts are often treated differently from physical material defects under disclosure rules, but an agent still may not lie or misrepresent facts when directly asked a question they know the answer to. Refusing to answer at all is not the appropriate response when the agent actually possesses relevant knowledge and is asked directly.
25. A salesperson describes a Waimea home as having a 'stunning, breathtaking view' during a showing. Later in the same showing, the salesperson also tells the buyer the home 'has never had any water intrusion,' which turns out to be false. Which of these two statements creates a misrepresentation problem for the salesperson?
- A. The description of the view
- B. Both statements equally
- C. Neither statement, since both are opinions
- D. The statement about water intrusion
Show answer & explanation
Answer: D
Puffing consists of subjective opinion statements of praise, such as calling a view 'stunning,' which are not treated as factual claims. The false statement that the home never had water intrusion is a specific factual claim, and because it is untrue, it creates a genuine misrepresentation problem.
26. "You only put your cell number on that flyer -- where's the brokerage name?" a broker asks a new agent in Mililani who printed yard-sign flyers for a listing showing just a personal name and phone number. What advertising requirement does this flyer fail to meet?
- A. MLS cooperation rules only
- B. Fair housing marketing standards
- C. Requirements against blind advertising that identify the responsible broker
- D. Escrow disclosure requirements
Show answer & explanation
Answer: C
Rules against blind advertising generally require real estate advertisements to identify the licensed brokerage responsible for the listing, not just the individual salesperson's name and number. Escrow disclosure requirements instead relate to closing paperwork and have nothing to do with how a yard-sign flyer is printed.
27. A listing agent in Kailua-Kona receives three separate offers on the same home on the same day. What is the agent's obligation in presenting these offers to the seller?
- A. Choose the offer that generates the highest commission for the agent
- B. Present offers only from buyers represented by the same brokerage
- C. Present only the highest offer to save the seller time
- D. Present all offers received unless the seller has given other written instructions
Show answer & explanation
Answer: D
Agents are generally obligated to present all offers received to the seller unless the seller has provided different written instructions, allowing the seller to make an informed decision among the options. Choosing to present only the highest offer, or only offers benefiting the agent's own commission, would improperly substitute the agent's judgment for the seller's right to decide.
28. A landlord in Kapolei refuses to rent a unit to a family with young children, citing a preference for quiet tenants. Under the federal Fair Housing Act, what has the landlord likely done by refusing this family?
- A. Engaged in illegal discrimination based on familial status
- B. Exercised a valid owner-occupant exemption
- C. Committed redlining
- D. Made a lawful business decision
Show answer & explanation
Answer: A
The federal Fair Housing Act prohibits housing discrimination based on familial status, meaning a landlord generally cannot refuse to rent to a family simply because it includes children. Redlining instead refers to lenders or insurers denying services based on a neighborhood's demographics, which is a different type of violation from a landlord's tenant-selection decision.
29. A buyer's agent in Honolulu only shows a couple listings in certain neighborhoods, avoiding others, based on assumptions about where they would 'fit in' because of their ethnicity. What discriminatory practice does this describe?
- A. Redlining
- B. Blockbusting
- C. Puffing
- D. Steering
Show answer & explanation
Answer: D
Steering is the illegal practice of directing homebuyers toward or away from particular neighborhoods based on a protected characteristic such as ethnicity. Redlining instead involves lenders or insurers denying services to an entire geographic area, which is a different actor and a different type of discriminatory conduct.
30. To avoid underwriting any loans in a Kalihi zip code with a predominantly minority population, a credit union imposes a blanket policy denying every mortgage application from that area regardless of individual applicants' credit history. What is this lending practice called?
- A. Redlining
- B. Blockbusting
- C. Steering
- D. Panic peddling
Show answer & explanation
Answer: A
Redlining is the illegal practice of denying loans or other services based on the racial or ethnic composition of a geographic area rather than evaluating individual applicants' qualifications. Steering instead involves directing individual buyers toward or away from neighborhoods, which is a different actor and a different mechanism of discrimination than a blanket lending policy.
31. A condo association in Kihei denies a resident's request to keep a service animal in the unit despite a building-wide no-pets policy. Under fair housing law, what should the association do instead of enforcing the no-pets rule against this resident?
- A. Charge a pet deposit as a compromise
- B. Enforce the no-pets policy uniformly regardless of disability
- C. Require the resident to move to a different unit
- D. Grant a reasonable accommodation for the service animal
Show answer & explanation
Answer: D
Fair housing law requires housing providers to grant reasonable accommodations, such as an exception to a no-pets policy, for residents with disabilities who need a service or assistance animal. Enforcing the policy uniformly without regard to disability, or requiring the resident to relocate, would fail to provide the accommodation the law requires.
32. A friend without a real estate license offers to help a Honolulu homeowner negotiate the sale price with a buyer in exchange for a fee. Under Hawaii law, what is the problem with this arrangement?
- A. A license is only required for transactions over a certain price
- B. Negotiating a real estate transaction for compensation requires a Hawaii real estate license
- C. Only listing agreements require a license, not price negotiation
- D. Nothing, since friends can assist with sales for free
Show answer & explanation
Answer: B
Hawaii law prohibits a person from acting as a real estate salesperson, broker, or instructor without first obtaining a license, and negotiating a sale price for compensation on someone else's behalf is exactly this kind of licensed activity. The fact that the helper is a friend, or that the negotiation is described informally, does not remove the licensing requirement once compensation is involved.
33. A 17-year-old who has completed all prelicensing coursework wants to sit for the Hawaii salesperson exam next month. What is the issue with this plan?
- A. Candidates must be at least 18 years old at the time of examination
- B. Candidates must be at least 21 years old
- C. There is no minimum age requirement
- D. Minors may sit for the exam with parental consent
Show answer & explanation
Answer: A
Hawaii requires candidates to be at least eighteen years of age at the time of examination, so a 17-year-old cannot yet sit for the exam regardless of having finished the coursework. There is no parental-consent exception that allows a minor under this age threshold to test early.
34. A candidate passes the Salesperson Uniform portion of the Hawaii exam but fails the State portion on the first attempt. To avoid having to retake the already-passed Uniform portion as well, what must the candidate do?
- A. Wait exactly one year before any retake is allowed
- B. Retake both portions immediately regardless of timing
- C. Retake the failed State portion within two years of passing the Uniform portion
- D. Retake the failed portion within thirty days
Show answer & explanation
Answer: C
A candidate who passes one portion of the Hawaii salesperson exam must retake any failed portion within two years of the date the passed portion was taken, or the previously passed portion no longer counts and both must be retaken. There is no mandatory one-year waiting period or thirty-day deadline governing when the failed portion may be retaken.
35. A candidate passes the Hawaii salesperson exam but does not submit a completed license application until well over two years later. What is the likely consequence of waiting this long to apply?
- A. The candidate must simply pay a late fee with no other consequence
- B. There is no deadline for submitting a license application after passing
- C. The application will likely be rejected because it exceeds the two-year window from the exam date
- D. The passing score converts automatically into a broker credential after two years
Show answer & explanation
Answer: C
Candidates must submit a complete license application within two years of the date of examination, so waiting well beyond that window puts the candidate at risk of the application being rejected on that basis alone. There is no mechanism by which a passing score quietly upgrades into a broker credential simply due to the passage of time.
36. "Can I just start listing homes on my own without a broker looking over my shoulder?" a newly licensed salesperson in Wahiawa asks during orientation. Under Hawaii license law, is this arrangement permitted?
- A. Only if the salesperson has three years of experience
- B. No, a salesperson must be affiliated with and supervised by a licensed broker
- C. Yes, salespersons may always operate independently
- D. Only for transactions under a certain price
Show answer & explanation
Answer: B
Real estate salespersons must be affiliated with and supervised by a licensed broker rather than practicing independently, since the salesperson license itself does not authorize solo operation. There is no experience-based exception or price threshold that allows a salesperson to bypass this broker-affiliation requirement.
37. An unlicensed individual in Wailuku prints business cards describing themselves as a 'Real Estate Salesperson' while their license application is still pending approval. What is the concern with this?
- A. Business cards are not considered advertising
- B. Representing oneself as a licensed salesperson before licensure is granted violates the requirement to hold a license before acting in that capacity
- C. There is no concern since the application has been submitted
- D. This is permitted as long as no transactions are completed
Show answer & explanation
Answer: B
Hawaii law prohibits a person from acting or holding themselves out as a real estate salesperson, broker, or instructor without first actually obtaining the license, so printing cards claiming that title while still pending is a problem even before any transaction occurs. Simply having submitted an application does not yet satisfy the requirement of holding an actual, issued license.
38. A real estate agent licensed only in California wants to list and sell properties located in Kaneohe, Hawaii. What must the agent do before practicing in this way?
- A. Register with the county instead of the state
- B. Nothing, since any U.S. real estate license is valid nationwide
- C. Simply partner informally with a Hawaii-licensed agent for referrals only
- D. Obtain a Hawaii real estate license before practicing in the state
Show answer & explanation
Answer: D
Real estate licensure is state-specific, so a person must hold a Hawaii license to act as a salesperson or broker for property located within Hawaii, regardless of holding a license issued by another state. An informal referral partnership with a Hawaii-licensed agent does not substitute for the California agent personally obtaining a Hawaii license to actively list and sell property there.
39. A licensed Hawaii broker with many years of experience wants to begin teaching prelicensing real estate courses at a local school. What must the broker do first under Hawaii license law?
- A. Nothing additional, since a broker license automatically authorizes teaching
- B. Obtain a separate real estate instructor license
- C. Teach under a temporary permit issued automatically after ten years of practice
- D. Simply notify the school without any licensing requirement
Show answer & explanation
Answer: B
Hawaii recognizes a distinct instructor license category separate from the salesperson and broker licenses, reflecting that teaching prelicensing courses requires its own credential rather than being automatically included with a broker license. There is no automatic permit that becomes available purely from years of practice without going through the separate instructor licensing process.
40. Two friends buy a duplex in Kaneohe, live in one unit, and rent out the other. Their deed lists them 'as tenants in common.' If one co-owner dies, what happens to that owner's share of the property?
- A. It is split evenly between the county and surviving owner
- B. It reverts to the original seller
- C. It automatically passes to the surviving co-owner
- D. It passes to the deceased owner's estate
Show answer & explanation
Answer: D
Tenancy in common carries no right of survivorship, so each co-owner's fractional interest passes according to their will or the laws of intestacy rather than automatically transferring to the co-owner. Automatic survivorship is a feature of joint tenancy, which is not what the deed created here.
41. A vacant parcel near Volcano has no direct road frontage, so its owner uses a gravel path across a neighbor's land to reach the highway. If this right was created to serve the landlocked parcel and transfers automatically with the land, what type of easement is this?
- A. License
- B. Easement appurtenant
- C. Encroachment
- D. Easement in gross
Show answer & explanation
Answer: B
An easement appurtenant benefits a specific parcel of land, known as the dominant estate, and automatically transfers to future owners of that parcel along with the deed. An easement in gross instead benefits a person or company directly rather than another piece of land, so it would not run with the landlocked parcel in the same way.
42. A survey ordered before closing on a Pearl City home reveals the neighbor's fence sits eighteen inches onto the seller's lot. This physical intrusion of a structure onto the neighboring property is known as what?
- A. A license
- B. A variance
- C. An encroachment
- D. An easement by necessity
Show answer & explanation
Answer: C
An encroachment occurs when a structure or improvement, such as a fence, physically extends onto a neighboring owner's land without permission. An easement by necessity instead grants a legal right of access to a landlocked parcel, which is a different concept from an unauthorized physical intrusion.
43. A corporate buyer relocating to Kailua chooses a mortgage whose interest rate stays fixed for an initial period and then can change periodically afterward based on a market index. Which loan type did the buyer select?
- A. A fixed-rate mortgage
- B. A balloon mortgage
- C. A wraparound mortgage
- D. An adjustable-rate mortgage
Show answer & explanation
Answer: D
An adjustable-rate mortgage has an interest rate that changes periodically based on a market index after an initial fixed period, unlike a fixed-rate mortgage whose rate never changes for the life of the loan. A balloon mortgage instead requires a large lump-sum payment at the end of a shorter term, which is a different structure altogether.
44. What ethical and legal problem arises when a property manager in Kalihi deposits tenants' security deposits into the same account used to pay contractor invoices and staff payroll?
- A. Steering
- B. Blockbusting
- C. Commingling of trust funds with operating funds
- D. Redlining
Show answer & explanation
Answer: C
Commingling occurs when client trust funds, such as security deposits, are mixed together with a property manager's operating funds instead of being kept in a separate trust or escrow account. Steering and redlining instead involve discriminatory treatment of clients or neighborhoods, which is unrelated to how funds are physically deposited and held.
45. "Between us, the owner would take two hundred dollars less a month if a tenant pushed back," a property manager in Kapolei tells a colleague during broker training. Which fiduciary duty would be violated by repeating this to a prospective tenant?
- A. Duty of obedience
- B. Duty of accounting
- C. Duty of reasonable care
- D. Duty of confidentiality
Show answer & explanation
Answer: D
The duty of confidentiality protects a principal's negotiating position and prevents an agent from revealing information that could weaken that position, such as a landlord's willingness to accept lower rent. Accounting relates to properly handling client funds, and reasonable care relates to competence, neither of which governs this disclosure question.
46. An agent who shows a Wailuku home to a buyer, but who legally still represents only the seller's interests throughout the showing, is functioning under which arrangement?
- A. Designated agency
- B. Dual agency
- C. Subagency
- D. Buyer's agency
Show answer & explanation
Answer: C
A subagent works with a buyer but owes fiduciary duties to the listing broker's client, the seller, rather than to the buyer being shown the property. This differs from buyer's agency, where the agent representing the buyer owes that buyer the fiduciary duties instead.
47. A Kihei listing agreement expires on June 30. On July 15, a buyer who toured the home in June while the listing was still active submits an offer directly to the seller, and the former listing agent claims a commission is still owed. This dispute centers on which concept?
- A. Puffing
- B. Procuring cause
- C. Novation
- D. Estoppel
Show answer & explanation
Answer: B
Procuring cause disputes arise when an agency relationship has ended, but the agent's earlier efforts arguably set in motion the chain of events that led to the eventual sale. Puffing refers to exaggerated opinion statements in marketing and has nothing to do with commission entitlement after a listing expires.
48. To protect against being unable to obtain financing, a corporate relocation buyer's purchase contract on a Lahaina home includes a clause allowing the buyer to cancel if mortgage approval is not secured by a stated date. What is this clause called?
- A. A financing contingency
- B. An escalation clause
- C. An acceleration clause
- D. A subordination clause
Show answer & explanation
Answer: A
A financing contingency lets a buyer cancel a purchase contract without penalty if they cannot secure loan approval by a specified deadline. An acceleration clause instead deals with a lender demanding full loan repayment after default, which is unrelated to a buyer's ability to exit a purchase agreement before closing.
49. A father transfers property to his son in Hanalei using a deed that makes no warranties about the title's condition and conveys only whatever interest the father actually holds, if any. Which type of deed is this?
- A. General warranty deed
- B. Quitclaim deed
- C. Grant deed
- D. Special warranty deed
Show answer & explanation
Answer: B
A quitclaim deed conveys only whatever interest the grantor holds at the time, with no warranties or guarantees about the quality of that title, making it common for transfers between family members. A general warranty deed, by contrast, warrants against title defects arising both before and during the grantor's ownership.
50. An investor signs a purchase contract on a Kapolei duplex intending to house-hack it, then before closing transfers all of the contractual rights and obligations to another buyer in exchange for a fee. This transfer of the existing contract is known as what?
- A. Escrow substitution
- B. Assignment of contract
- C. Novation
- D. Subordination
Show answer & explanation
Answer: B
Assignment of contract transfers the assignor's contractual rights and obligations under the existing purchase agreement to a new party, which is what the investor did here. Novation would instead require all original parties' consent to substitute an entirely new contract that fully releases the investor, which is a different and more formal process.
51. A duplex house-hacker purchasing a Waipahu property makes a $72,000 down payment on a $360,000 purchase price. What loan-to-value ratio results from this down payment?
- A. 88%
- B. 72%
- C. 80%
- D. 20%
Show answer & explanation
Answer: C
The loan amount is the purchase price minus the down payment, or $288,000, and dividing that loan amount by the $360,000 purchase price yields a loan-to-value ratio of 80 percent. Twenty percent is actually the down payment ratio rather than the loan-to-value ratio, a common point of confusion in this type of calculation.
52. A struggling homeowner in Pahoa voluntarily transfers the deed to the property directly to the lender in order to avoid a lengthy foreclosure process. This alternative arrangement is known as what?
- A. A short sale
- B. A deficiency judgment
- C. A power-of-sale clause
- D. A deed in lieu of foreclosure
Show answer & explanation
Answer: D
A deed in lieu of foreclosure is a voluntary transfer of title from a defaulting borrower directly to the lender, allowing both parties to avoid the time and expense of a formal foreclosure proceeding. A short sale is different because it involves selling the home to an outside third-party buyer for less than what is owed, with the lender's approval, rather than transferring title straight to the lender.
53. A small rental building in Wailuku sold for $294,000 and produces $2,100 in monthly gross rental income. What gross rent multiplier does this recent sale indicate?
- A. 14
- B. 140
- C. 700
- D. 1,400
Show answer & explanation
Answer: B
The gross rent multiplier is calculated by dividing a property's sale price by its monthly gross rental income, so $294,000 divided by $2,100 equals 140. Shifting the decimal place in either direction during the division produces the smaller and larger wrong-step figures among the other choices.
54. A vacant lot in Kapolei zoned for mixed use could be developed as a small retail building, a single-family home, or left vacant. An appraiser determines the retail building would produce the greatest legally permissible return on the land. What appraisal concept does this analysis represent?
- A. Plottage
- B. Functional obsolescence
- C. Highest and best use
- D. Effective gross income
Show answer & explanation
Answer: C
Highest and best use is the reasonably probable and legal use of a property that produces the greatest value, and comparing the retail, residential, and vacant scenarios is exactly this type of analysis. Functional obsolescence instead refers to a loss in value from an outdated design feature, which is unrelated to comparing alternative development options.
55. A salesperson wants to purchase a Kihei listing personally through a shell LLC without informing the seller that the buyer is actually the listing agent. What is the ethical problem with proceeding this way?
- A. The agent must disclose their personal interest in the transaction to the seller
- B. The transaction must go through a different escrow company
- C. LLCs are prohibited from purchasing listed property
- D. The seller's consent is not required if the price is fair
Show answer & explanation
Answer: A
An agent who wants to purchase property they have personally listed must disclose their personal interest in the transaction to the seller, since buying through an undisclosed shell entity conceals a conflict of interest and breaches the duty of loyalty. A fair price alone does not excuse the failure to disclose the agent's self-interest before the seller decides whether to accept the offer.
56. After a Filipino family moves into a long-established Waianae neighborhood, a real estate investor cold-calls longtime homeowners warning that property values are about to fall and urging them to sell immediately. What is this practice called?
- A. Disparate impact
- B. Blockbusting
- C. Steering
- D. Redlining
Show answer & explanation
Answer: B
Blockbusting is the illegal practice of inducing owners to sell by suggesting that the entry of a protected class into the neighborhood will cause property values to decline. Steering instead involves directing buyers toward or away from neighborhoods, which is a related but distinct violation from pressuring existing owners to sell.
57. Which statement about federal Fair Housing Act coverage is most accurate when a Keaau property owner who lives on one side of a compact duplex leases the other side directly to a tenant, without an agent and without any discriminatory advertising?
- A. Duplexes are always fully exempt from all fair housing law
- B. Certain owner-occupied small dwellings can qualify for a limited exemption, but discriminatory advertising is still prohibited
- C. Only single-family detached homes are ever exempt
- D. All rental transactions are covered identically with no exemptions
Show answer & explanation
Answer: B
The Fair Housing Act contains limited exemptions for certain small owner-occupied dwellings, but even in those exempt situations, discriminatory advertising remains prohibited at all times. Claiming that duplexes are always fully exempt from every fair housing provision overstates how narrow and conditional this exemption actually is.
58. A salesperson in Hilo is found to have deposited a client's earnest money into a personal account rather than a trust account. Which state entity has authority to investigate this complaint and discipline the salesperson's license?
- A. The Hawaii Real Estate Commission
- B. The local Board of Realtors
- C. The county planning department
- D. The escrow company's compliance officer
Show answer & explanation
Answer: A
The Hawaii Real Estate Commission is the state governing body responsible for licensing and regulating real estate salespersons and brokers, including investigating complaints and imposing discipline. A local Board of Realtors is a private trade association rather than the government body with authority over license discipline.
59. A broker in Kahului routinely handles earnest money deposits on behalf of clients during pending transactions. Under real estate license law, how must these client funds generally be maintained by the broker?
- A. In cash in a locked office drawer
- B. In a separate trust or escrow account apart from the broker's own funds
- C. In the broker's personal checking account for convenience
- D. Funds may be immediately disbursed to the broker as an advance commission
Show answer & explanation
Answer: B
Real estate license law generally requires brokers to hold client trust funds, such as earnest money, in a separate trust or escrow account rather than mixing them with personal or operating funds. Treating the deposit as an advance commission the broker can immediately keep would improperly convert client funds before the transaction has even closed.
60. The Hawaii Real Estate Commission adopts an administrative rule updating certain requirements tied to license renewal for salespersons and brokers. What best describes the Commission's role in taking this action?
- A. The Commission has no authority to create rules, only the legislature does
- B. The Commission's rules apply only to brokers, never to salespersons
- C. The Commission exercises its regulatory authority to administer and enforce real estate licensing requirements
- D. The Commission may only make recommendations that require a public referendum
Show answer & explanation
Answer: C
The Hawaii Real Estate Commission is empowered to administer and enforce licensing requirements for real estate professionals in the state, which includes adopting administrative rules governing licensees. Its rules are not limited to brokers alone, since salespersons are also licensees subject to the Commission's regulatory authority.
61. A dissatisfied buyer in Kihei files a written complaint with the state alleging that a salesperson misrepresented a property's square footage before the sale. What is the general first step in how such a licensing complaint is typically handled?
- A. The complaint is automatically dismissed unless filed by another licensee
- B. The salesperson's license is immediately revoked without investigation
- C. The regulatory body investigates the complaint before any disciplinary action is taken
- D. The complaint must go directly to civil court and cannot involve the licensing body
Show answer & explanation
Answer: C
Licensing complaints against real estate professionals are generally investigated by the regulatory body before any disciplinary action is taken, giving the salesperson an opportunity to respond before a penalty is imposed. Immediate revocation without any investigation would skip the fact-finding process that licensing complaints are designed to go through first.

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Key facts: Hawaii Real Estate exam

130

MCQ questions

70%

To pass

Time limit

$61

Exam fee

The Hawaii Real Estate is administered by Hawaii Real Estate Commission, with 130 scored questions, a 4 hours time limit and a passing score of 70%.

This free Hawaii Real Estate practice test has 61 original questions written to Hawaii Real Estate Commission'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 Hawaii Real Estate exam fee is $61.

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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.

Hawaii Real Estate Salesperson, Broker, and Instructor Examination — Candidate Information Bulletin (PSI Services LLC)Hawaii Real Estate Commissiontest-takers.psiexams.com
Hawaii Real Estate Candidate Information Bulletin — Description of Examinations & Content Outlines (mirrored by DCCA Real Estate Branch)Hawaii Real Estate Commissioncca.hawaii.gov
Application/Registration Fees — DCCA Hawaii Real Estate BranchHawaii Real Estate Commissioncca.hawaii.gov
Hawaii Real Estate Salesperson Pre-Licensing Curriculum (DCCA Real Estate Branch)Hawaii Real Estate Commissioncca.hawaii.gov

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

Frequently asked questions

How many questions are on the real Hawaii salesperson exam?

The full Salesperson Combo exam has 130 scored items across both portions and runs 240 minutes: 80 items (150 minutes) cover general real estate principles and 50 items (90 minutes) cover Hawaii-specific law. A practice test that mirrors this split and pacing gives you the most realistic rehearsal.

What score should I be hitting on practice tests before sitting the real exam?

Salespersons need 70% to pass. Treat any practice test score below that as a signal to keep studying, and aim for a comfortable buffer above 70% since real testing conditions add pressure that practice sessions don't.

What topics should a Hawaii salesperson practice test focus on?

Professional Practices and Conduct carries the heaviest weight on the state portion at 14 items, followed by Ascertaining and Disclosing Material Facts at 8 items and Types of Ownership and Contracts and Addenda at 6 items each. A good practice bank should mirror that emphasis rather than spreading questions evenly.

Does the 60-hour prelicensing course map to what's tested?

Yes, broadly. The Hawaii salesperson curriculum totals 60 estimated hours, including dedicated sections like Hawaii Standard Forms at 7 hours and Real Estate Licensing Laws at 5 hours, and Hawaii's state-law exam portion is built from related state-specific subject matter covered in that same curriculum. Practicing questions from each curriculum section is a reasonable way to cover the material proportionally.

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

Yes, you can take the practice questions here without creating an account or paying anything. It's meant as a low-friction way to check your readiness before booking the real PSI exam.

How should I split practice time between the general and state-specific portions?

Since the state portion carries a tighter 90-minute window for 50 items, it's worth practicing that section under its own timer separately from the 150-minute general portion, then combining both once you're comfortable with each pace individually.