A restaurant tenant installed commercial ovens, a walk-in cooler, and custom booths in leased space for use in its business. The lease is about to expire, and the tenant wants to take the equipment to a new location. What is the tenant's right regarding these items?

They are trade fixtures the tenant may remove before the lease ends, repairing any damage caused by removal

They may be removed only if a court issues an order authorizing removal

They are the landlord's personal property because they were installed on the landlord's premises

The items became real property when attached and now belong permanently to the landlord

A farmer leasing cropland planted corn during the tenancy. The tenancy ends through no fault of the farmer before the corn can be harvested. Who owns the growing crop, and why?

The tenant farmer, because annually cultivated crops are emblements treated as the tenant's personal property

The landowner, because the lease ended before harvest

The county, which must sell the crop and divide the proceeds

The landowner, because crops are part of the real estate once planted

Over many years, a slow-moving river gradually deposits soil along the bank of a waterfront parcel, measurably enlarging the owner's usable land. By which process does the owner acquire title to this added land?

Reliction caused by sudden flooding

A survey ordered by a purchaser reveals that the seller's garage extends two feet across the boundary line onto the neighboring parcel. The portion of the garage crossing the line is best described as:

An encroachment on the neighboring property

An easement appurtenant benefiting the seller's land

A variance from the local zoning ordinance

A license granted by the neighbor

A homeowner tells a friend, "You can park your boat in my side yard until I change my mind." The friend receives no written agreement and pays nothing. The friend's privilege to use the yard is best classified as:

A license, a personal privilege that the owner may revoke at any time

A leasehold estate in the side yard

A restrictive covenant running with the land

An easement in gross that binds future owners

A landowner divides a parcel and sells the rear half, which has no access to any public road except across the front half that the seller kept. The deed is silent about access. What right will a court most likely recognize for the rear parcel's buyer?

An easement by necessity across the front parcel

A revocable license across the front parcel

No right at all, because the deed granted none

An easement in gross personal to the seller

A purchaser buys a unit in a residential condominium. Which statement correctly describes what the purchaser owns?

Fee simple title to the individual unit plus an undivided interest in the common elements shared with other unit owners

A fee interest in the entire building held jointly with all other residents

Shares of stock in a corporation together with a proprietary lease for the unit

A leasehold interest in the unit and a fee interest in the hallways and grounds

A buyer acquires the right to occupy apartment 4B in a building owned by a resident-controlled corporation. Instead of a deed, the buyer receives shares of the corporation's stock and a proprietary lease for the apartment. What has the buyer purchased?

A cooperative interest, which is personal property in the form of stock coupled with a lease

A tenancy in common with the other residents of the building

A timeshare estate in the apartment

A fee simple condominium interest in real property

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PRACTICE ENGINE · ILLINOIS REAL ESTATE BROKER

Illinois Real Estate Broker Practice Exam.
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QUESTION 1 / 149Property OwnershipMedium0/0

A neighbor has openly fenced, occupied, and maintained a strip of an adjoining owner's land continuously, exclusively, and without the owner's permission for the entire period required by state law. The neighbor now asks a court to declare him the owner of the strip. Which doctrine supports this claim?

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1. A neighbor has openly fenced, occupied, and maintained a strip of an adjoining owner's land continuously, exclusively, and without the owner's permission for the entire period required by state law. The neighbor now asks a court to declare him the owner of the strip. Which doctrine supports this claim?
- A. Eminent domain
- B. Constructive eviction
- C. Easement by prescription
- D. Adverse possession
Show answer & explanation
Answer: D
Adverse possession can ripen into actual ownership when possession is open, notorious, hostile, exclusive, and continuous for the statutory period. Prescriptive use is the tempting alternative, but it creates only a right to use another's land — never title to it.
2. A restaurant tenant installed commercial ovens, a walk-in cooler, and custom booths in leased space for use in its business. The lease is about to expire, and the tenant wants to take the equipment to a new location. What is the tenant's right regarding these items?
- A. They are trade fixtures the tenant may remove before the lease ends, repairing any damage caused by removal
- B. The items became real property when attached and now belong permanently to the landlord
- C. They are the landlord's personal property because they were installed on the landlord's premises
- D. They may be removed only if a court issues an order authorizing removal
Show answer & explanation
Answer: A
Articles a tenant attaches for the conduct of a trade or business are trade fixtures, which remain the tenant's personal property and may be removed before the tenancy ends if the premises are restored. The tempting wrong view treats them like ordinary fixtures, which do pass with the realty — but the business-use exception controls here.
3. A farmer leasing cropland planted corn during the tenancy. The tenancy ends through no fault of the farmer before the corn can be harvested. Who owns the growing crop, and why?
- A. The landowner, because crops are part of the real estate once planted
- B. The landowner, because the lease ended before harvest
- C. The tenant farmer, because annually cultivated crops are emblements treated as the tenant's personal property
- D. The county, which must sell the crop and divide the proceeds
Show answer & explanation
Answer: C
Annual crops produced by a tenant's labor are emblements, classified as personal property of the tenant. When a tenancy of uncertain end terminates through no fault of the tenant, the tenant retains the right to re-enter and harvest. Treating planted crops as automatically part of the land ignores this doctrine.
4. An owner's parcel borders a small non-navigable river, and the owner uses the water for irrigation. The legal rights this owner holds by virtue of owning land along the flowing watercourse are known as what?
- A. Littoral rights
- B. Severable mineral rights
- C. Appropriative rights
- D. Riparian rights
Show answer & explanation
Answer: D
Rights of owners whose land borders a flowing watercourse such as a river or stream are riparian rights. Littoral rights are the tempting distractor, but those attach to land bordering large, generally non-flowing bodies of water such as lakes, seas, and oceans, not rivers.
5. Over many years, a slow-moving river gradually deposits soil along the bank of a waterfront parcel, measurably enlarging the owner's usable land. By which process does the owner acquire title to this added land?
- A. Reliction caused by sudden flooding
- B. Erosion
- C. Accretion
- D. Avulsion
Show answer & explanation
Answer: C
The gradual addition of soil deposited by water is accretion, and the abutting owner gains title to the new land. Avulsion is the tempting confusion — it is the sudden loss or gain of land, as when a river abruptly changes course, and it generally does not change ownership boundaries.
6. A survey ordered by a purchaser reveals that the seller's garage extends two feet across the boundary line onto the neighboring parcel. The portion of the garage crossing the line is best described as:
- A. An encroachment on the neighboring property
- B. An easement appurtenant benefiting the seller's land
- C. A license granted by the neighbor
- D. A variance from the local zoning ordinance
Show answer & explanation
Answer: A
A physical intrusion of a structure or improvement onto adjoining land is an encroachment, typically revealed by a spot survey rather than by the public records. An easement would be a tempting answer only if the neighbor had granted a legal right of use — here the intrusion is unauthorized, which is precisely what makes it an encroachment.
7. A homeowner tells a friend, "You can park your boat in my side yard until I change my mind." The friend receives no written agreement and pays nothing. The friend's privilege to use the yard is best classified as:
- A. A leasehold estate in the side yard
- B. An easement in gross that binds future owners
- C. A restrictive covenant running with the land
- D. A license, a personal privilege that the owner may revoke at any time
Show answer & explanation
Answer: D
Permission to use another's land that is personal, informal, and revocable at the owner's will is a license — it creates no interest in the real estate. An easement is the tempting choice, but easements are non-revocable property interests, typically created by writing, prescription, or implication, none of which occurred here.
8. A landowner divides a parcel and sells the rear half, which has no access to any public road except across the front half that the seller kept. The deed is silent about access. What right will a court most likely recognize for the rear parcel's buyer?
- A. No right at all, because the deed granted none
- B. An easement by necessity across the front parcel
- C. A revocable license across the front parcel
- D. An easement in gross personal to the seller
Show answer & explanation
Answer: B
When a conveyance leaves a parcel landlocked, courts imply an easement by necessity over the grantor's remaining land, because the parties are presumed not to have intended to create an inaccessible parcel. The strict no-access reading of the silent deed is tempting but wrong: necessity easements arise by operation of law precisely when the writing is silent.
9. A purchaser buys a unit in a residential condominium. Which statement correctly describes what the purchaser owns?
- A. A leasehold interest in the unit and a fee interest in the hallways and grounds
- B. Fee simple title to the individual unit plus an undivided interest in the common elements shared with other unit owners
- C. Shares of stock in a corporation together with a proprietary lease for the unit
- D. A fee interest in the entire building held jointly with all other residents
Show answer & explanation
Answer: B
Condominium ownership combines fee simple title to the airspace of the individual unit with an undivided fractional interest in common elements such as hallways, the roof, and grounds. The stock-plus-proprietary-lease structure is the tempting confusion, but that describes a cooperative, where the corporation — not the resident — owns the real estate.
10. A buyer acquires the right to occupy apartment 4B in a building owned by a resident-controlled corporation. Instead of a deed, the buyer receives shares of the corporation's stock and a proprietary lease for the apartment. What has the buyer purchased?
- A. A tenancy in common with the other residents of the building
- B. A cooperative interest, which is personal property in the form of stock coupled with a lease
- C. A timeshare estate in the apartment
- D. A fee simple condominium interest in real property
Show answer & explanation
Answer: B
In a cooperative, the corporation holds title to the real estate; a resident owns shares of stock and occupies under a proprietary lease, so the interest purchased is personal property rather than realty. The condominium answer tempts because both involve apartment-style living, but a condominium buyer receives a deed to real property, which this buyer did not.
11. A state highway authority needs a privately owned parcel for a new interchange. The owner refuses to sell, so the authority files a court action to acquire the parcel and pays the owner just compensation. This acquisition is an exercise of which governmental power?
- A. Police power, exercised through zoning
- B. Escheat
- C. Taxation through a special assessment
- D. Eminent domain, carried out through condemnation proceedings
Show answer & explanation
Answer: D
Eminent domain is the government's power to take private property for public use upon payment of just compensation, and condemnation is the legal process used. Police power is the tempting confusion, but regulations under police power — like zoning — restrict use without taking title and require no compensation.
12. A property owner dies without a will, and an exhaustive search locates no heirs entitled to inherit. What ultimately happens to the deceased owner's real estate?
- A. Title passes to the state through escheat
- B. It passes to the deceased's closest business associates
- C. Title remains permanently in the deceased's name
- D. It is sold at auction and the proceeds are destroyed
Show answer & explanation
Answer: A
Escheat transfers title to the state when an owner dies intestate and without ascertainable heirs, ensuring that land never becomes ownerless. The idea that title could simply remain in a deceased person's name is the tempting error — the law does not permit property to sit without a living or legal owner indefinitely.
13. A borrower's home loan requires equal monthly payments that include both principal and interest, with the loan balance reduced to zero by the final scheduled payment. Over the life of this loan, how does the makeup of each payment change?
- A. The principal portion shrinks while the interest portion grows each month
- B. The portions of principal and interest remain identical in every payment
- C. The interest portion shrinks and the principal portion grows as the balance declines
- D. Each payment is applied entirely to principal until the balance is halved
Show answer & explanation
Answer: C
This is a fully amortized loan: because interest is computed on the outstanding balance, early payments are interest-heavy, and as the balance falls each level payment applies less to interest and more to principal. The reverse pattern is the tempting error, but it contradicts how interest accrues on a declining balance.
14. A commercial borrower's loan calls for monthly payments calculated as if the loan would be repaid over thirty years, but the entire remaining balance is due in a single large payment at the end of year seven. What is this final payment called, and how is the loan classified?
- A. A margin payment on an adjustable-rate loan
- B. A deficiency payment on a fully amortized loan
- C. An escrow payment on a budget mortgage
- D. A balloon payment on a partially amortized loan
Show answer & explanation
Answer: D
When periodic payments do not fully retire the debt and a lump sum of the remaining balance comes due at maturity, that lump sum is a balloon payment and the loan is partially amortized. Calling the loan fully amortized tempts because payments follow an amortization schedule, but full amortization by definition leaves nothing owing at the end.
15. A homeowner sells her mortgaged property to a buyer without notifying or obtaining consent from her lender. The loan documents contain a clause permitting the lender, upon such a transfer, to declare the entire remaining balance immediately due. Which clause is this?
- A. Defeasance clause
- B. Subordination clause
- C. Escalation clause
- D. Alienation clause, also called a due-on-sale clause
Show answer & explanation
Answer: D
An alienation (due-on-sale) clause is triggered by a transfer of the property and lets the lender demand full payment, preventing an unapproved buyer from taking over the loan. It is easily confused with an acceleration clause, but acceleration responds to the borrower's default, while alienation responds to a conveyance of the property.
16. An investor purchases a home by taking title "subject to" the seller's existing mortgage rather than formally assuming it. The investor later stops making payments and the lender forecloses, leaving a shortfall. Who bears personal liability for the unpaid debt?
- A. The investor alone, because the investor took over the payments
- B. The original seller-borrower, who remains personally liable on the note
- C. The lender, which accepted the risk of transfer
- D. Neither party, because the foreclosure extinguished all liability
Show answer & explanation
Answer: B
A buyer who takes title subject to an existing loan risks losing the property in foreclosure but makes no personal promise to the lender; the original borrower remains personally liable on the note. Assuming the buyer becomes liable is the tempting error — that result follows only from a formal assumption, and full release of the seller requires a novation.
17. A first-time buyer with limited savings obtains a loan through a government program in which an agency of the federal government protects the lender against loss from borrower default, though the funds are advanced by an approved private lender. Which describes this program's structure?
- A. The agency purchases the home and resells it to the borrower on contract
- B. The agency guarantees the property's future market value for the lender
- C. The agency insures loans made by approved lenders rather than lending money itself
- D. The agency lends government funds directly to the borrower
Show answer & explanation
Answer: C
FHA-style programs operate as mortgage insurance: private approved lenders originate and fund the loans, and the federal agency insures the lender against default losses, with the borrower paying the insurance premiums. The direct-lending answer is the classic trap — the agency's role is insurer, not lender.
18. A buyer purchases a home for $300,000, making a $60,000 down payment and financing the rest with a mortgage loan. What is the loan-to-value ratio of this financing?
- A. 20 percent
- B. 85 percent
- C. 80 percent
- D. 75 percent
Show answer & explanation
Answer: C
The loan amount is the price minus the down payment: $300,000 less $60,000 equals a $240,000 loan. Dividing the $240,000 loan by the $300,000 value yields a loan-to-value ratio of 80 percent. The 20 percent figure tempts because it is the down payment percentage — the ratio measures the loan share, not the equity share.
19. After closing hundreds of home loans, a lender bundles and sells the loans to a large investor so that the lender can replenish its funds and originate new mortgages. In which market did this sale take place?
- A. The secondary mortgage market
- B. The municipal bond market
- C. The commercial paper market
- D. The primary mortgage market
Show answer & explanation
Answer: A
Loans are originated between lenders and borrowers in the primary market; existing loans are then bought and sold among lenders and investors — such as Fannie Mae and Freddie Mac — in the secondary market, which supplies liquidity for new lending. The primary-market answer tempts because the lender made the loans there, but the resale itself is a secondary-market transaction.
20. For a negotiated fee, a landowner gives a developer the exclusive right to purchase a parcel at a fixed price at any time during the next six months. The developer has not promised to buy. Which statement best describes this arrangement?
- A. It is unenforceable because the developer gave no consideration
- B. It is an option contract: the owner must sell if the developer elects to buy, but the developer is not obligated to purchase
- C. It is a bilateral contract binding both parties to close
- D. It is a right of first refusal triggered only by a third-party offer
Show answer & explanation
Answer: B
An option is a unilateral contract in which the optionor is bound to perform if the optionee exercises the right, while the optionee remains free to walk away, and the option fee is the consideration supporting it. The consideration objection fails precisely because the developer paid a fee for the privilege.
21. A buyer and seller sign a valid purchase agreement for a house, with closing set for next month. Before the deed is delivered, which interest does the buyer hold in the property?
- A. Equitable title, with legal title remaining in the seller until closing
- B. Legal title, with equitable title remaining in the seller
- C. No interest of any kind until the deed is recorded
- D. A leasehold interest pending the closing date
Show answer & explanation
Answer: A
Under a signed purchase contract the buyer acquires equitable title — an enforceable right to obtain legal ownership when the contract is performed — while the seller retains legal title until delivery of the deed. The no-interest answer tempts because no deed exists yet, but equity treats the contract buyer as having a real, protectable interest.
22. A purchase agreement states that if the buyer defaults, the seller may keep the earnest money as the seller's sole remedy, and both parties agreed to that amount when they signed. This contractual remedy is known as:
- A. An injunction against resale
- B. Specific performance
- C. Liquidated damages
- D. Punitive damages
Show answer & explanation
Answer: C
When parties agree in advance that a set sum — commonly the earnest money — will compensate for a breach, the remedy is liquidated damages. Specific performance is the tempting alternative, but it compels actual conveyance of the property rather than payment of a predetermined amount, and here the contract limits the seller to the deposit.
23. With the lender's written agreement, a home buyer formally takes over the seller's existing loan, and the lender fully releases the original borrower from any further liability, substituting the buyer as the sole obligor. This substitution of parties is called:
- A. Subrogation
- B. Assignment
- C. Novation
- D. Reformation
Show answer & explanation
Answer: C
A novation substitutes a new party or a new obligation for the old with the creditor's consent, extinguishing the original party's liability. Assignment is the tempting near-miss, but an assignment merely transfers rights or duties while leaving the original obligor secondarily liable — only novation accomplishes a complete release.
24. Weeks after signing a purchase agreement, the buyer and seller mutually agree in writing to move the closing date back by ten days. The document they sign to change the existing term of their contract is best described as:
- A. An escrow instruction to the title company
- B. A novation replacing the original contract parties
- C. A rider that was part of the offer when first made
- D. An amendment modifying a term of the existing contract
Show answer & explanation
Answer: D
A change to the terms of a contract that the parties have already signed is an amendment, and it requires the consent of both parties. An addendum tempts as an answer in this area, but an addendum is attached at the time the contract is formed to add terms, whereas an amendment alters terms after formation — as the parties did here.
25. Before closing, a buyer and seller both conclude the transaction no longer suits them. They sign an agreement canceling the purchase contract, and the earnest money is returned so each side stands where it stood before the contract existed. This unwinding is called:
- A. Assignment of the contract
- B. Mutual rescission
- C. Forfeiture of the deposit
- D. Unilateral breach
Show answer & explanation
Answer: B
Mutual rescission is the parties' agreement to cancel their contract and restore each other to their pre-contract positions, which is why the deposit goes back to the buyer. Breach is the tempting label whenever a deal dies, but breach is a one-sided failure to perform — here both parties consented to terminate, so no one breached.
26. A consumer files a written complaint alleging that an Illinois real estate licensee mishandled a transaction. Which body has the authority to investigate the complaint and, if warranted, discipline the licensee's license?
- A. The county recorder of deeds
- B. The federal Department of Housing and Urban Development
- C. The Illinois Department of Financial and Professional Regulation
- D. The local multiple listing service
Show answer & explanation
Answer: C
Real estate licensure in Illinois is administered by the Illinois Department of Financial and Professional Regulation, which investigates complaints and may impose discipline on licensees. The recorder of deeds tempts because it handles real estate documents, but it records instruments and has no authority over professional licenses.
27. An Illinois broker sponsored by a brokerage firm completes a sale, and the grateful seller wants to hand the broker a bonus check made out to the broker personally. How must any compensation for this licensed activity be paid?
- A. Directly to the broker, since the broker performed the work
- B. Only through the broker's sponsoring broker, who may then compensate the sponsored licensee
- C. Into the transaction's escrow account for later division
- D. To the broker and sponsoring broker jointly in equal shares
Show answer & explanation
Answer: B
Under Illinois license law, a sponsored licensee may accept compensation for licensed activities only from his or her sponsoring broker; clients and other parties pay the brokerage, which then pays its licensees. Direct payment tempts as a harmless courtesy, but accepting it would violate the licensing statute's compensation structure.
28. An Illinois licensee runs an online ad for a listed home that shows attractive photos, the price, and the licensee's personal cell number — but never mentions any brokerage. Why is this advertisement improper?
- A. It is a blind ad, because advertising by a licensee must identify the sponsoring brokerage
- B. The price of a listing may never appear in an advertisement
- C. Personal phone numbers may not appear in any real estate ad
- D. Advertising residential property online is prohibited for licensees
Show answer & explanation
Answer: A
An ad that fails to disclose the identity of the sponsoring brokerage is a blind ad, which license law prohibits because the public cannot tell it is dealing with a licensee of a particular firm. The idea that prices or phone numbers are themselves forbidden tempts test-takers, but the defect here is solely the missing brokerage identification.
29. A homeowner in Illinois decides to sell her own house herself, placing a yard sign, showing the home, and negotiating directly with buyers. She holds no real estate license. Is she violating the licensing law?
- A. Yes, unless she first registers the sale with the state
- B. No, but only if she hires an attorney to conduct every showing
- C. No, because an owner acting on her own behalf regarding her own property is exempt from licensure
- D. Yes, because anyone negotiating a real estate sale must be licensed
Show answer & explanation
Answer: C
Licensing statutes regulate people who perform real estate activities for others for compensation; an owner dealing with her own property acts for herself and falls within a standard exemption. The blanket rule that all negotiation requires a license tempts many candidates, but it ignores the for-others element at the heart of license law.
30. A sponsoring broker in Illinois receives a buyer's earnest money check with an accepted offer. Under the license law's handling requirements, into what kind of account must these funds be placed?
- A. A special escrow account maintained for money belonging to others, kept separate from the firm's own funds
- B. The sponsoring broker's personal savings account until closing
- C. The brokerage's general business operating account, for accurate bookkeeping
- D. Any interest-bearing account chosen by the listing licensee
Show answer & explanation
Answer: A
License law requires a sponsoring broker to hold funds belonging to others in a dedicated escrow account, segregated from brokerage and personal money, precisely to prevent commingling and conversion. Depositing the check into the operating account tempts as administratively simple, but mixing client funds with firm funds is the very violation the escrow rules exist to stop.
31. A seller signs a listing agreement authorizing a brokerage to market one specific house and find a ready, willing, and able buyer, with no authority beyond that transaction. In agency terms, what kind of agent is the brokerage?
- A. A universal agent empowered to handle all of the seller's affairs
- B. A special agent authorized for a single, limited transaction
- C. A general agent managing the seller's ongoing business
- D. A gratuitous agent, because listing services are free to sellers
Show answer & explanation
Answer: B
A listing broker is a special agent: the authority extends only to the specific act of marketing one property and procuring a buyer. A general agent tempts because brokers seem broadly involved, but general agency involves continuing authority over a range of matters — like a property manager — which a single listing does not confer.
32. A licensee representing the seller unlocks the door for an unrepresented buyer, hands over the printed listing sheet, and answers factual questions about the school district. The buyer later claims the licensee became the buyer's agent through these actions. How should these services be characterized?
- A. As ministerial acts, which are informational services that do not create an agency relationship
- B. As an implied buyer agency created by conduct
- C. As a breach of the licensee's duty to the seller
- D. As dual agency requiring immediate written consent
Show answer & explanation
Answer: A
Routine informational assistance — unlocking doors, distributing prepared materials, answering factual questions — constitutes ministerial acts, which the law expressly says do not establish agency. Implied agency tempts because agency can arise from conduct, but it requires actions amounting to advocacy and advice, not the mere mechanical services provided here.
33. A buyer's designated agent negotiates a purchase for her client, and at closing the agent's compensation is paid out of the commission the seller agreed to pay the listing brokerage. The buyer worries this payment arrangement makes the agent represent the seller. Is the buyer correct?
- A. No — the source of compensation does not determine the agency relationship, which is set by agreement and disclosure
- B. Yes — the agent becomes a dual agent the moment seller-side funds are used
- C. Yes — whoever pays the commission is automatically the principal
- D. No — but only because compensation from a seller is illegal and must be refunded
Show answer & explanation
Answer: A
Agency is created by the parties' agreement and required disclosures, not by who funds the commission; a buyer's agent may lawfully be paid through a commission split from the listing side while owing full fiduciary duties to the buyer. The pay-equals-principal rule is the classic trap, and it has never been the law of agency.
34. A tenant signs a lease for a warehouse running from June 1 of this year through May 31 of next year. On the final day the lease simply ends, and neither party is required to give the other any advance notice of termination. Which leasehold estate does this lease create?
- A. A tenancy at will
- B. A periodic tenancy
- C. An estate for years
- D. A tenancy at sufferance
Show answer & explanation
Answer: C
A lease with a definite beginning and ending date is an estate (tenancy) for years, and it terminates automatically at the end of the stated term without notice. The periodic tenancy tempts because both are common leases, but a periodic tenancy renews automatically and ends only after proper notice — the opposite of this arrangement.
35. An item of personal property becomes so permanently attached to real estate that it is now legally treated as part of the real property. This converted item is referred to as:
- A. A chattel
- B. A fixture
- C. An emblement
- D. A trade appurtenance
Show answer & explanation
Answer: B
A fixture is an article that was once personal property but has become part of the real property through permanent attachment. A chattel is movable personal property, and emblements refer to annual crops. Courts often examine the method of attachment, adaptability, and intent to determine fixture status.
36. An owner grants her neighbor the right to cross her driveway to reach a public road. The neighbor does not own or possess the land but has a right to use it for that limited purpose. This right is best described as:
- A. A homestead
- B. An easement
- C. A freehold estate
- D. A fee simple interest
Show answer & explanation
Answer: B
An easement is a non-possessory right to use another's land for a specific purpose, such as ingress and egress. It does not convey ownership or possession. A fee simple and freehold estate are ownership interests, and a homestead is a protected residence status.
37. A life estate is granted to a person "for the duration of her life." What happens to the property interest when the life tenant dies?
- A. It converts into a tenancy in common
- B. It escheats to the state automatically in all cases
- C. It passes according to the terms of the original grant, to either a remainderman or by reversion to the grantor
- D. The life tenant may will it to her own heirs
Show answer & explanation
Answer: C
A life estate lasts only for the measuring life. Upon the life tenant's death, the interest passes as specified in the grant — to a named remainderman, or it reverts to the grantor (a reversion). A life tenant cannot devise the estate to her own heirs because her interest ends at death.
38. A charge or claim against a property that may affect its title or limit its use — such as a lien, easement, or restrictive covenant — is generally categorized as:
- A. A freehold
- B. An allodial right
- C. An encumbrance
- D. An estate in land
Show answer & explanation
Answer: C
An encumbrance is any claim, charge, or liability attached to property that may affect its title or use, including liens, easements, and restrictive covenants. It is not itself an ownership estate. Encumbrances can be monetary (liens) or non-monetary (easements, covenants).
39. Two unmarried business partners take title to an investment property as co-owners. Each holds an undivided fractional interest, they may own unequal shares, and each partner's interest passes to his own heirs upon death rather than to the other partner. Which form of co-ownership is described?
- A. Ownership in severalty
- B. Joint tenancy
- C. Tenancy in common
- D. Tenancy by the entirety
Show answer & explanation
Answer: C
Tenancy in common allows two or more owners to hold undivided interests that may be unequal, with no right of survivorship — each owner's share passes to that owner's heirs. Joint tenancy carries survivorship, tenancy by the entirety is limited to spouses, and severalty is sole ownership.
40. A homeowner holds a bundle of legal interests in her property, including the right to occupy it, sell it, lease it, and exclude others. In property law, this concept is best described as which of the following?
- A. A restrictive covenant
- B. An easement in gross
- C. The bundle of rights
- D. A lien priority
Show answer & explanation
Answer: C
Ownership is commonly conceptualized as a "bundle of rights" — a collection of legal interests such as the rights of possession, control, exclusion, enjoyment, and disposition. An easement, covenant, and lien are limitations or claims, not the ownership concept itself.
41. Two people take title to a parcel together. Their deed states that upon the death of one owner, that owner's interest automatically passes to the survivor rather than to the deceased's heirs. Which form of co-ownership does this describe?
- A. Joint tenancy with right of survivorship
- B. A leasehold estate
- C. Ownership in severalty
- D. Tenancy in common
Show answer & explanation
Answer: A
The defining feature of joint tenancy is the right of survivorship: a deceased joint tenant's interest passes automatically to the surviving joint tenant(s), bypassing probate. Tenants in common have no survivorship and their share passes to heirs. Severalty is sole ownership by one person.
42. An owner conveys land to another person "for as long as the land is used as a public library." This grant creates an estate that could end automatically if the stated condition is violated. This is an example of which category of estate?
- A. A tenancy at sufferance
- B. A life estate pur autre vie
- C. A fee simple absolute
- D. A defeasible fee
Show answer & explanation
Answer: D
A defeasible fee is an ownership estate that may be terminated upon the occurrence or non-occurrence of a specified condition. A fee simple absolute has no such conditions. A life estate is measured by a life, and a tenancy at sufferance is a holdover leasehold situation.
43. A single individual purchases a condominium unit and takes title in her name alone, with no other person holding an interest. This manner of holding title is known as:
- A. Tenancy in common
- B. Ownership in severalty
- C. Community property
- D. Tenancy by the entirety
Show answer & explanation
Answer: B
Ownership in severalty means title is held by one person or entity alone, "severed" from any other owner. Tenancy by the entirety and community property involve spouses, and tenancy in common involves two or more co-owners.
44. Which of the following best distinguishes real property from personal property?
- A. Real property is always more valuable than personal property
- B. Real property can be owned; personal property cannot
- C. Personal property is always exempt from taxation
- D. Real property includes land and things permanently affixed to it, while personal property is movable and not affixed
Show answer & explanation
Answer: D
Real property consists of land and improvements or items permanently attached to it, together with the associated rights. Personal property (chattel) is movable and not permanently affixed. Value and tax status do not define the categories.
45. A tenant's lease expired last month, yet the tenant remains in the apartment without the landlord's consent and continues to occupy it while the landlord decides whether to evict. What is the tenant's status during this holdover period?
- A. A tenant at sufferance, holding over without the landlord's consent
- B. A freeholder with equitable title
- C. A tenant at will occupying with implied permission
- D. A periodic tenant on a renewed month-to-month term
Show answer & explanation
Answer: A
A tenant who remains in possession after the lease ends without the landlord's consent holds a tenancy at sufferance — the lowest possessory status, distinguished from a trespasser only by the originally lawful entry. Tenancy at will tempts, but that estate exists with the landlord's permission, which is exactly what is missing here.
46. An apartment renter pays rent on the first of each month with no fixed end date; the arrangement simply continues month after month until either party gives proper advance notice. Which leasehold estate is this?
- A. An estate for years
- B. A tenancy at sufferance
- C. A life estate
- D. A periodic tenancy
Show answer & explanation
Answer: D
A tenancy that automatically renews for successive periods — month to month or year to year — until one party terminates it with proper notice is a periodic tenancy. The estate for years tempts as the other common lease form, but it requires a definite termination date, which this open-ended month-to-month arrangement lacks.
47. A commercial tenant with three years remaining on its lease transfers the entire remaining term and all of its rights in the space to another business, retaining no interest in the premises. What has the tenant done?
- A. Made an assignment of the lease
- B. Surrendered the premises to the landlord
- C. Granted a sublease for the remaining term
- D. Executed a novation releasing itself from the lease
Show answer & explanation
Answer: A
Transferring the entire remaining leasehold interest is an assignment; the assignee steps into the tenant's position, though the original tenant typically remains liable to the landlord absent a release. A sublease is the tempting near-miss, but subletting transfers less than the full remaining term, with the original tenant keeping a reversionary slice.
48. A landlord ignores repeated requests to restore heat and running water in an occupied apartment during winter, making the unit unlivable. The tenant finally moves out and stops paying rent, claiming the landlord's neglect ended the lease obligations. What doctrine supports the tenant?
- A. Constructive eviction, because the landlord's failure made the premises uninhabitable and the tenant vacated
- B. Actual eviction by the landlord
- C. Abandonment, which forfeits the tenant's security deposit
- D. Adverse possession of the rental unit
Show answer & explanation
Answer: A
Constructive eviction occurs when a landlord's act or failure to act renders the premises unusable for their intended purpose and the tenant actually vacates within a reasonable time; the tenant's rent obligation then ends. Actual eviction tempts by name, but that requires the landlord to physically remove or bar the tenant, which never happened here.
49. A single-tenant commercial building is leased on terms requiring the tenant to pay base rent plus the property taxes, hazard insurance premiums, and maintenance costs of the building. What type of lease is this?
- A. A percentage lease
- B. A graduated lease
- C. A net lease
- D. A gross lease
Show answer & explanation
Answer: C
A lease shifting property charges such as taxes, insurance, and maintenance to the tenant on top of rent is a net lease — in this fully loaded form, often called triple net. The gross lease is the tempting opposite: there the tenant pays a single rent figure and the owner absorbs the operating charges of the property.
50. A shopping-center clothing store pays its landlord a modest fixed base rent each month plus an additional amount calculated from the store's gross sales. Which lease arrangement is being used?
- A. A percentage lease
- B. An index lease tied to inflation
- C. A net lease based on operating expenses
- D. A ground lease
Show answer & explanation
Answer: A
Rent computed as a base amount plus a share of the tenant's gross sales is the signature of a percentage lease, common for retail space because the landlord shares in the location's drawing power. The index lease tempts because both involve variable rent, but index rent tracks an economic indicator, not the tenant's own sales performance.
51. A court enters a money judgment against a debtor, and the judgment becomes a lien that can attach to any real and personal property the debtor owns in the jurisdiction, not just one parcel. How is this lien classified?
- A. A specific lien limited to the debtor's residence
- B. A voluntary lien created by agreement of the parties
- C. An equitable servitude on the debtor's land
- D. A general lien, because it affects all of the debtor's property rather than a specific parcel
Show answer & explanation
Answer: D
Liens that reach all of a debtor's property — such as judgment liens — are general liens, while liens tied to one identified parcel — such as mortgages, property tax liens, and mechanics' liens — are specific liens. The judgment is also involuntary, arising by operation of law, so the voluntary classification fails twice over.
52. A roofing contractor completes a major roof replacement on a home but is never paid. To secure the debt from the value of the property the work improved, the contractor records a claim against that specific parcel. Which lien has the contractor used?
- A. A voluntary mortgage lien
- B. A mechanic's lien against the improved property
- C. A judgment lien against all the owner's assets
- D. A general tax lien
Show answer & explanation
Answer: B
A mechanic's lien secures payment for labor or materials that improved a specific parcel, giving the unpaid contractor a claim enforceable against that property. The judgment lien tempts as another creditor remedy, but it requires first winning a lawsuit and it attaches generally — the mechanic's lien exists precisely so improvers can reach the benefited parcel directly.
53. While researching title, a buyer's attorney finds a recorded notice stating that a lawsuit is pending that could affect ownership of the parcel the buyer wants. What is this notice, and what is its effect on the buyer?
- A. A satisfaction of mortgage confirming clear title
- B. A judgment that has already transferred title to the plaintiff
- C. A writ of attachment that freezes the seller's bank accounts
- D. A lis pendens, which gives constructive notice that anyone acquiring the property takes it subject to the suit's outcome
Show answer & explanation
Answer: D
A lis pendens is a recorded notice of pending litigation affecting title; it does not itself decide anything, but it charges the world with constructive notice, so a purchaser who buys anyway is bound by the eventual judgment. Reading it as a completed judgment overstates it — the suit is unresolved, which is exactly the risk the notice communicates.
54. In a financing arrangement, a home buyer conveys bare legal title to a neutral third party as security for the lender, with the borrower keeping possession and full use of the home, and the third party empowered to sell the property if the borrower defaults. Who are the three parties, and who holds the bare title?
- A. Trustor (borrower), beneficiary (lender), and trustee — the trustee holds bare legal title
- B. Vendor, vendee, and escrowee — the vendee holds title
- C. Optionor, optionee, and broker — the broker holds title
- D. Mortgagor, mortgagee, and appraiser — the mortgagee holds title
Show answer & explanation
Answer: A
This is a deed of trust: the borrower is the trustor, the lender is the beneficiary, and a neutral trustee holds bare legal title with power to sell upon default. The mortgage vocabulary tempts because the economics are similar, but a standard two-party mortgage involves no third-party title holder, which is the defining feature described here.
55. In one state, a borrower who signs a mortgage keeps full legal title to the home, and the lender receives only a lien against it, so the lender must complete a court-supervised foreclosure to reach the property after default. Which legal theory of mortgages does this state follow?
- A. The recording-first doctrine
- B. Intermediate contract theory
- C. Title theory
- D. Lien theory
Show answer & explanation
Answer: D
In a lien theory state the mortgage creates only a security lien while the borrower retains legal title, which is why the lender must foreclose through the courts to divest the owner. Title theory is the natural contrast — there the lender holds legal title during the loan — but that is the opposite of the arrangement this state enforces.
56. Three years into a fixed-rate home loan, a borrower inherits money and pays the entire remaining balance ahead of schedule. The lender responds by charging an extra fee authorized by the loan documents for early retirement of the debt. Which provision permits this charge?
- A. A prepayment penalty clause
- B. A partial release clause
- C. The acceleration clause
- D. The defeasance clause
Show answer & explanation
Answer: A
A prepayment penalty clause compensates the lender for interest income lost when a borrower retires the loan early, and it applies only because the borrower chose to pay ahead of schedule. Acceleration tempts because it also involves the full balance, but acceleration is the lender's remedy after default — here the borrower voluntarily prepaid.
57. A landowner's existing recorded loan is in first position. To let a construction lender finance a new building on the site, the existing lender signs an agreement voluntarily allowing the new construction loan to move ahead of it in priority. What is this agreement called?
- A. A subordination agreement
- B. An assumption agreement
- C. A satisfaction of mortgage
- D. An estoppel certificate
Show answer & explanation
Answer: A
A subordination agreement is a voluntary change of lien priority in which an earlier lienholder agrees to rank behind a later lien — common where construction financing must hold first position. A satisfaction tempts as another recorded lender document, but a satisfaction extinguishes the loan entirely rather than merely rearranging priority.
58. A private lender makes a consumer loan at an interest rate that exceeds the maximum rate the state permits lenders to charge for that kind of loan. What is this practice called?
- A. Rate escalation
- B. Usury
- C. Arbitrage
- D. Discounting
Show answer & explanation
Answer: B
Charging interest above the ceiling set by state law is usury, and usurious loans can expose the lender to penalties or make interest provisions unenforceable. Discounting tempts because it also involves interest economics, but discount points are lawful prepaid interest agreed to by the borrower, not an unlawful excessive rate.
59. A mortgage applicant with steady income and strong credit is told by a loan officer that her application will be scored lower because she is recently divorced and receives part of her income from public assistance. Which federal law most directly prohibits this treatment?
- A. The Uniform Commercial Code
- B. The Real Estate Settlement Procedures Act
- C. The Truth in Lending Act
- D. The Equal Credit Opportunity Act
Show answer & explanation
Answer: D
The Equal Credit Opportunity Act forbids discrimination in credit decisions based on characteristics including marital status and lawful receipt of public assistance income. RESPA and TILA tempt because they also govern mortgage lending, but they address settlement practices and cost disclosure — neither reaches discriminatory underwriting itself.
60. A bank's internal map marks certain neighborhoods, selected because of the racial composition of their residents, as areas where the bank will not make home loans regardless of individual applicants' qualifications. What is this practice, and is it lawful?
- A. Permissible portfolio risk management, lawful if applied consistently
- B. Steering, a lawful marketing technique for lenders
- C. Redlining, an illegal lending practice under federal fair housing and fair lending laws
- D. Blockbusting, which is unlawful only when done by real estate licensees
Show answer & explanation
Answer: C
Refusing to lend, or lending on worse terms, in areas defined by the protected characteristics of their residents is redlining, prohibited by federal fair housing and fair lending law. Framing it as neutral risk management is the classic rationalization — risk must be assessed on the property and borrower, not on the racial makeup of a neighborhood.
61. In a signed real estate purchase agreement, the seller promises to convey title at closing and the buyer promises to pay the purchase price. Because each party has exchanged a promise for a promise, this contract is classified as:
- A. Implied
- B. Unilateral
- C. Voidable
- D. Bilateral
Show answer & explanation
Answer: D
A contract formed by mutual promises — each party both making and receiving a commitment — is bilateral, and the ordinary purchase agreement is the textbook example. The unilateral label tempts because it also appears in real estate (as with options), but a unilateral contract binds only one party unless and until the other performs an act.
62. A purchase agreement has been signed by both buyer and seller, but the closing is still three weeks away: the deed has not been delivered and the price has not been paid. During this interval, how is the contract classified with respect to performance?
- A. Executory, because duties remain to be performed by both parties
- B. Executed, because both signatures are on the document
- C. Void, because performance has not begun
- D. Implied, because performance is assumed
Show answer & explanation
Answer: A
A contract is executory while obligations remain unperformed and becomes executed only when both sides have fully performed — here, at closing. The signed-equals-executed assumption is the trap: signing creates the contract, but classification by performance looks at whether the promised acts, conveyance and payment, have actually occurred.
63. A buyer submits a signed written offer for a condominium but includes no earnest money deposit whatsoever. The seller signs and accepts. Later, the seller's attorney argues the contract is invalid because no deposit accompanied the offer. Is the attorney correct?
- A. Yes — but the defect is cured if a deposit is paid before closing
- B. No — because contracts require consideration only when a broker is involved
- C. No — earnest money is not required for validity, because the parties' mutual promises supply the consideration
- D. Yes — a real estate contract without a deposit lacks consideration
Show answer & explanation
Answer: C
The consideration in a purchase agreement is the exchange of promises — to convey and to pay — so a contract can be perfectly valid with no earnest money at all; the deposit merely evidences the buyer's good faith and funds a damages source. Equating the deposit with consideration is the persistent myth this question tests.
64. A purchase agreement declares that "time is of the essence." The buyer tenders performance two days after the contractual closing date, and the seller refuses to close and declares the buyer in default. What effect did the quoted clause have?
- A. It required both parties to close early if either requested it
- B. It made the stated deadlines strictly enforceable, so missing the closing date is a breach
- C. It converted the agreement into an option contract
- D. None — courts always allow a reasonable grace period for closing
Show answer & explanation
Answer: B
A time-is-of-the-essence clause makes performance by the stated dates a material term, so failing to perform on time is itself a breach entitling the other party to remedies. The reasonable-grace-period notion reflects the default rule without such a clause — which is precisely what the clause exists to override.
65. While showing a house with a history of repeated basement flooding known to him, the seller's licensee assures a buyer that the basement "has never taken on water." The buyer purchases in reliance and floods follow the first spring rain. How is the licensee's statement best characterized?
- A. Puffing, a lawful statement of opinion
- B. Permissible salesmanship because the seller authorized it
- C. A ministerial act with no legal consequence
- D. Fraudulent misrepresentation of a material fact, exposing the licensee to liability
Show answer & explanation
Answer: D
A false statement of material fact, made knowingly and relied upon by the buyer, is fraudulent misrepresentation — not puffing, which covers vague opinions like calling a view the best in town. Seller authorization is no defense: a licensee may not knowingly misstate material facts to any party, regardless of instructions.
66. A seller owns two adjacent lots. During negotiations the seller intends to sell the smaller lot, while the buyer believes the deal covers the larger one; the sloppy contract description could refer to either. When the confusion surfaces, what is the likely status of this agreement?
- A. Cured automatically once the deed is recorded
- B. Fully enforceable against the buyer as written
- C. Enforceable at the seller's election only
- D. Unenforceable, because mutual mistake about the subject matter prevented a true meeting of the minds
Show answer & explanation
Answer: D
When both parties are mistaken about which property the contract covers, there is no mutual assent to the same bargain, and the agreement fails for mutual mistake regarding its subject matter. One-sided enforcement tempts, but neither party can enforce a contract that never reflected a shared understanding of what was being sold.
67. An Illinois managing broker decides to sell a rental condo she owns personally, without listing it through any brokerage. When advertising the unit and negotiating with prospective buyers, what does Illinois license law require of her?
- A. She must hire another brokerage to conduct all negotiations
- B. She must disclose to prospective buyers that she is a licensed real estate professional
- C. She must first surrender her license to the state for the duration of the sale
- D. Nothing — license law does not apply to a licensee's personal transactions
Show answer & explanation
Answer: B
A licensee dealing in her own property must reveal her license status so the public knows it is negotiating with a trained professional who has superior market knowledge. The claim that personal deals fall wholly outside license law is the trap — licensees remain subject to disclosure and conduct rules even when acting for themselves.
68. A sponsoring broker hires an unlicensed personal assistant for a busy sales team. Which task may the unlicensed assistant lawfully perform?
- A. Negotiating the repair credit on a pending contract when the licensee is unavailable
- B. Explaining contract contingencies to a buyer and recommending changes
- C. Hosting an open house alone and discussing price and terms with visitors
- D. Preparing and mailing marketing materials and scheduling showing appointments at the licensee's direction
Show answer & explanation
Answer: D
Unlicensed assistants are limited to clerical and administrative support — assembling mailings, scheduling appointments, maintaining files — because those tasks require no exercise of licensed judgment. Negotiating terms, discussing price with prospects, and advising on contract provisions are licensed activities, and delegating them to an unlicensed person violates license law.
69. A seller tells his Illinois listing licensee that the furnace is failing but instructs the licensee to conceal it. A prospective buyer directly asks the licensee about the condition of the heating system. What must the licensee do?
- A. Refuse to answer any questions from buyers about the property's condition
- B. Decline to follow the instruction and refrain from misrepresenting the defect, because a licensee may not knowingly conceal or misstate material facts
- C. Follow the seller's instruction, because obedience to the client always controls
- D. Answer falsely but note the truth in the transaction file
Show answer & explanation
Answer: B
The duty of obedience covers only lawful instructions; a directive to hide a known material defect is unlawful, and a licensee who misrepresents or conceals it faces liability and discipline. Blind obedience is the tempting answer because loyalty runs to the client, but no agency duty ever authorizes deceiving other parties about material facts.
70. An Illinois licensee closes a sale to a buyer referred by a neighbor who holds no real estate license. As a thank-you, the licensee wants his sponsoring broker to pay the neighbor several hundred dollars in cash for the referral. May this payment be made?
- A. Yes, if the amount is reasonable and disclosed to the parties
- B. Yes, provided it is paid after closing rather than before
- C. No — compensation for brokerage activity such as referrals for pay may not be paid to unlicensed persons
- D. Yes, but only by personal check rather than cash
Show answer & explanation
Answer: C
Paying an unlicensed person for procuring or referring real estate business compensates unlicensed brokerage activity, which license law prohibits regardless of the amount, timing, or form of payment. The disclosure answer tempts because disclosure cures many problems in license law, but it cannot authorize paying someone who lacks a license altogether.
71. A prospective buyer asks an Illinois listing licensee whether anyone ever died in the home. A prior occupant did die there of natural causes years ago. What best describes the licensee's disclosure position under Illinois law?
- A. The death must be disclosed only if it occurred in the last year
- B. A death on the property is not considered a material fact that must be disclosed, because it is a psychological rather than physical condition
- C. The death must be disclosed in writing before any offer is accepted
- D. The licensee must refuse to show the property until the seller consents to disclosure
Show answer & explanation
Answer: B
Illinois treats occurrences like a prior death on the premises as psychological stigmas rather than material facts about the property's physical condition, so no affirmative disclosure duty arises. The mandatory-written-disclosure answer confuses stigma with physical defects — the disclosure regime targets conditions that affect the property itself, and a licensee still must not lie if answering.
72. A seller lists her home under an agreement providing that the listing brokerage earns the commission no matter who procures the buyer during the term — even if the seller finds the buyer entirely on her own. Which type of listing did she sign?
- A. An exclusive-right-to-sell listing
- B. An exclusive-agency listing
- C. An open listing
- D. A net listing
Show answer & explanation
Answer: A
Under an exclusive-right-to-sell listing, the brokerage is paid regardless of who produces the buyer, including the seller herself. The exclusive-agency listing is the tempting neighbor: it also names one brokerage, but it lets the seller escape the commission by selling through her own efforts — precisely the outcome this agreement forecloses.
73. A seller signs a deed and hands it to the buyer, who accepts it, but the deed does not name the buyer as a party. Under the required elements of a valid deed, what is the effect of this omission?
- A. The deed is automatically converted into a quitclaim deed
- B. The omission is cured automatically once the deed is recorded
- C. The deed remains fully effective because delivery and acceptance occurred
- D. The deed fails to satisfy the requirement that a deed name the parties
Show answer & explanation
Answer: D
A deed must be in writing, name the parties, contain a legal description, include a granting clause, and be signed by the grantor and delivered and accepted; failing to name the parties means a required element is missing, regardless of delivery and acceptance.
74. A seller gives nonexclusive authorization to several different brokerages to market his property, promising to pay only the brokerage that actually produces the buyer, and reserving the right to sell it himself and pay no one. Which listing arrangement is this?
- A. An exclusive-right-to-sell listing
- B. A multiple listing service placement
- C. A designated-agency listing
- D. An open listing
Show answer & explanation
Answer: D
An open listing may be given to any number of brokerages at once; only the one that is the procuring cause of the sale earns a commission, and a sale by the owner cuts everyone out. The MLS answer tempts by association, but the MLS is a cooperative marketing platform among brokers, not a category of listing agreement between seller and broker.
75. A seller tells a broker, "Get me $200,000 for the house, and anything you sell it for above that is yours to keep as your fee." What is the fundamental problem with this compensation arrangement?
- A. It fails because commissions must always be a fixed percentage of price
- B. It is unobjectionable so long as the seller receives the target amount
- C. It creates a net listing, in which the broker's personal profit motive conflicts with the fiduciary duty to obtain the best price for the seller
- D. It is enforceable only if the excess is shared with the buyer
Show answer & explanation
Answer: C
This is a net listing: the broker keeps everything above a set net figure, so the broker profits most by holding the seller to the lowest acceptable number — a direct collision with the duty of loyalty. The idea that the seller's satisfaction with the net amount cures the conflict misses the point: fiduciaries must not put themselves in positions where self-interest opposes the client's.
76. Midway through a listing term, the seller — an individual owner — dies unexpectedly. No buyer has been found. What happens to the listing brokerage's agency relationship with the seller?
- A. It terminates by operation of law upon the principal's death
- B. It remains in force until the stated expiration date regardless of the death
- C. It converts to a buyer-agency relationship
- D. It continues automatically with the seller's heirs as the new principals
Show answer & explanation
Answer: A
Agency is a personal relationship, so the death of the principal terminates it automatically by operation of law, along with events like destruction of the property. Automatic continuation with the heirs is the tempting answer, but heirs are bound only if they choose to create a new agency — the old authority died with the principal.
77. Two licensees sponsored by the same Illinois brokerage are involved in one transaction: the sponsoring broker appoints one to represent the seller and a different one to represent the buyer, each owing full duties to their own client. What is this arrangement called?
- A. Subagency between the two licensees
- B. Designated agency, the standard Illinois approach when one brokerage serves both sides
- C. A transactional brokerage with no client duties
- D. Illegal undisclosed dual agency
Show answer & explanation
Answer: B
Designated agency lets a sponsoring broker appoint separate sponsored licensees to represent opposing parties, each providing full representation to a single client — the default framework Illinois uses for in-house transactions. Dual agency tempts because one firm touches both sides, but dual agency means one agent serving both parties, which designation is designed to avoid.
78. A rural deed describes the land by starting at a marked point of beginning, then reciting a series of compass directions and distances that trace the boundary until the description returns to the starting point. Which method of legal description is being used?
- A. The rectangular government survey system
- B. The lot-and-block system
- C. Metes and bounds
- D. A street-address description
Show answer & explanation
Answer: C
A description that runs courses and distances from a point of beginning around the perimeter and back is metes and bounds, the oldest survey method and one that must close on its starting point to be valid. The government survey answer tempts for rural land, but that system describes land by townships and sections, not by traced boundary calls.
79. A deed for a suburban home describes the property simply as "Lot 12 in Block 3 of the Sunny Meadows Subdivision, as shown on the plat recorded in the county records." Which method of legal description does this deed use?
- A. Metes and bounds
- B. A monument-based description
- C. The rectangular survey system
- D. The lot-and-block (recorded plat) system
Show answer & explanation
Answer: D
References to a numbered lot and block within a recorded subdivision plat are the lot-and-block method, which incorporates the surveyed plat map by reference. Metes and bounds tempts as the other common method, but no courses or distances appear here — the recorded plat supplies all boundary detail, which is the system's whole convenience.
80. A lender fails to disclose the annual percentage rate and total finance charge to a borrower refinancing their principal residence. Which law and implementing regulation require this disclosure?
- A. The Fair Housing Act, implemented by HUD guidelines
- B. The Truth in Lending Act, implemented by Regulation Z
- C. The Statute of Frauds, implemented by state licensing law
- D. RESPA, implemented by Regulation X
Show answer & explanation
Answer: B
TILA, implemented by Regulation Z, requires disclosure of the APR and total finance charge so borrowers can compare the true cost of credit.
81. A buyer and seller entered into a purchase agreement for a home, but the buyer's loan application is later denied and the financing contingency was not satisfied. What is the effect of an unsatisfied contingency on the parties' obligations?
- A. The buyer forfeits the earnest money automatically with no recourse
- B. The seller may sue for specific performance regardless of the contingency
- C. The buyer's performance obligation does not arise, since contingencies must be satisfied before a party is obligated to perform
- D. The contract becomes void immediately regardless of the contingency terms
Show answer & explanation
Answer: C
Contingencies are conditions that must be satisfied before a party is obligated to perform, commonly financing, inspection, and appraisal contingencies; an unsatisfied financing contingency means the buyer is not yet obligated to perform.
82. A seller signed a contract to sell a parcel of land but later refuses to convey title. The buyer wants the actual property, not money damages. What remedy is most appropriate, and why?
- A. Rescission, because land disputes are always voidable
- B. Reformation, because the deed lacked a legal description
- C. Liquidated damages, because earnest money covers any breach
- D. Specific performance, because land is deemed unique and compels conveyance
Show answer & explanation
Answer: D
Specific performance compels conveyance because land is deemed unique, making it the appropriate remedy when the buyer wants the actual property rather than damages.
83. A seller entered into an oral agreement to sell a house, and later refuses to close, claiming the agreement cannot be enforced because it was never put in writing. How should this contract be classified?
- A. Unenforceable, because it is otherwise valid but the Statute of Frauds requires land-sale contracts to be in writing
- B. Voidable, because either party may disaffirm it
- C. Void, because it lacked a required element
- D. Fully enforceable, because oral agreements bind real estate sales
Show answer & explanation
Answer: A
The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed by the party to be charged; an otherwise valid but unwritten land-sale agreement is unenforceable rather than void or voidable.
84. A party makes an offer and the other party responds with different terms rather than accepting the original terms as stated. In general contract principles, how is this response best characterized?
- A. A ratification of the original offer
- B. A counteroffer that rejects the original offer
- C. An automatic extension of the original offer's deadline
- D. A binding acceptance regardless of the changed terms
Show answer & explanation
Answer: B
When a party responds to an offer by proposing different terms, that response operates as a counteroffer, which rejects and terminates the original offer rather than accepting it.
85. During a review session, a student asks what 'consideration' means in the context of contract law. Which statement best describes consideration?
- A. Something of value exchanged between the parties
- B. A government fee paid to register the agreement
- C. The physical location where the contract is signed
- D. The emotional motive of one party
Show answer & explanation
Answer: A
Consideration refers to the bargained-for exchange of something of value between the parties, and it is what distinguishes an enforceable contract from a gratuitous promise.
86. A licensing candidate is asked about the general purpose of a 'statute of frauds' concept in contract law. Which statement best captures its general purpose?
- A. To criminalize all oral agreements
- B. To require that certain types of contracts be in writing to be enforceable
- C. To make every contract automatically renewable
- D. To eliminate the need for consideration
Show answer & explanation
Answer: B
A statute of frauds generally requires that certain categories of contracts be evidenced by a writing to be enforceable, serving to prevent fraudulent claims about the existence of agreements.
87. After a valid contract is formed, both parties fully perform every obligation they owe. In contract terms, the contract is then said to be:
- A. Voided for lack of capacity
- B. Rescinded for fraud
- C. Breached
- D. Discharged by performance
Show answer & explanation
Answer: D
When both parties completely fulfill their contractual obligations, the contract is discharged by performance, meaning the duties under it are satisfied and extinguished.
88. A person who has not yet reached the age of legal majority signs an agreement. Under general contract principles, how is a contract entered into by a minor typically treated?
- A. Generally voidable at the option of the minor
- B. Fully binding and non-cancelable like an adult's contract
- C. Automatically void from the moment of signing in all cases
- D. Converted into a criminal matter
Show answer & explanation
Answer: A
A minor generally lacks full capacity to contract, so contracts entered into by a minor are typically voidable at the minor's option rather than automatically void or fully binding.
89. An agreement is formed for a purpose that the law prohibits. What is the general effect of an illegal purpose on the enforceability of the contract?
- A. It has no effect on enforceability
- B. It makes the contract enforceable only against the buyer
- C. It doubles the damages available to each party
- D. It renders the contract generally unenforceable
Show answer & explanation
Answer: D
A contract formed for an illegal purpose is generally unenforceable, because courts will not lend their aid to enforce an agreement whose object violates the law.
90. An examinee is asked which element must be present for a contract to be legally enforceable. The instructor emphasizes that this is one of the foundational requirements. Which of the following is a required element of a valid contract?
- A. A witness present at signing
- B. Payment made in full before formation
- C. Mutual assent between the parties
- D. A notarized signature on every page
Show answer & explanation
Answer: C
Mutual assent — a meeting of the minds evidenced by offer and acceptance — is a core element required to form a valid contract. Notarization, witnesses, and prepayment are not universally required elements of contract formation.
91. Two parties dispute whether a valid contract exists because one claims there was never a true 'meeting of the minds.' What does the phrase 'meeting of the minds' most directly refer to?
- A. That a judge has pre-approved the agreement
- B. That the parties are related to one another
- C. That the parties mutually understand and agree to the essential terms
- D. That both parties are physically present in the same room
Show answer & explanation
Answer: C
'Meeting of the minds' refers to mutual understanding and agreement between the parties on the essential terms of the contract, reflecting genuine mutual assent.
92. One party fails to perform its obligations under a valid contract without a legal excuse. This failure to perform is best described by which term?
- A. Ratification
- B. Novation
- C. Breach of contract
- D. Consideration
Show answer & explanation
Answer: C
An unexcused failure by a party to perform its contractual obligations constitutes a breach of contract. Novation and ratification refer to other contract concepts, and consideration is an element of formation.
93. A contract is signed only because one party threatened the other with harm unless they signed. Which contract-law concept most directly describes this situation?
- A. Duress
- B. Consideration
- C. Performance
- D. Assignment
Show answer & explanation
Answer: A
Duress occurs when a party is forced to enter a contract through improper threats or coercion, which can undermine the genuine assent required and make the contract voidable.
94. A title search reveals a decades-old mortgage against a parcel that appears to have been paid off long ago, but no release was ever recorded. The stale lien makes buyers and title insurers nervous. What is this defect called, and how is it typically removed?
- A. A deed restriction, removable by rezoning
- B. A cloud on title, removable through a quiet title action or a recorded release
- C. An encroachment, removable by moving the improvement
- D. A latent physical defect, removable by inspection
Show answer & explanation
Answer: B
An apparent but likely invalid claim that impairs marketability is a cloud on title, and the cure is a recorded release from the old lienholder or a court judgment quieting title. The physical-defect answer confuses title condition with property condition — inspections find cracked foundations, not unreleased mortgages in the records.
95. A listing agent learns that the seller would accept a price well below the listed price. After the listing expires, a former customer of the agent asks what the seller would have accepted. Which fiduciary duty prevents the agent from disclosing this?
- A. Confidentiality, because it survives termination and forbids revealing information that would harm the principal's bargaining position
- B. Reasonable care, because the agent must protect their own reputation
- C. Accounting, because the information relates to trust funds
- D. Obedience, because the seller never instructed disclosure
Show answer & explanation
Answer: A
Confidentiality survives termination of the agency and forbids revealing information that would harm the principal's bargaining position, so the agent cannot disclose the seller's bottom-line price even after the listing ends.
96. A buyer working directly with the listing agent (without representation) discovers after closing that the agent knew of a hidden foundation crack but said nothing. What is the agent's liability exposure based on the duties owed to customers?
- A. None, because only fiduciary duties apply to customers
- B. Liability, because agents must disclose known material latent defects to customers even without owing them fiduciary duties
- C. Liability, but only because of the accounting duty
- D. None, because agents owe customers no duties at all
Show answer & explanation
Answer: B
Agents owe third parties, including customers, honesty and fair dealing and must disclose known material latent defects, even though they do not owe customers full fiduciary duties.
97. A buyer submits a written offer to purchase a home. Before the seller communicates acceptance, the buyer's financial situation changes and the buyer wants out. Can the buyer withdraw the offer?
- A. No, only the seller's agent can withdraw an offer
- B. Yes, an offer may be revoked any time before acceptance is communicated
- C. Yes, but only if the seller has not yet reviewed it
- D. No, once submitted in writing an offer is irrevocable
Show answer & explanation
Answer: B
An offer may be revoked any time before acceptance is communicated, so the buyer may withdraw the offer up until that point.
98. An owner holds title in fee simple absolute. Which statement correctly describes this estate?
- A. It is the highest and most complete form of ownership, freely inheritable and transferable
- B. It requires the grantor's consent before any resale
- C. It terminates automatically upon the owner's death and cannot be inherited
- D. It reverts to a remainderman when a named person dies
Show answer & explanation
Answer: A
The fee simple absolute is the highest and most complete form of ownership, freely inheritable and transferable, unlike a life estate which ends at death and passes to a remainderman or reverts to the grantor.
99. A woman is granted the right to occupy and use a home for as long as she lives; upon her death the property is to pass to her nephew. What is the nephew's interest called?
- A. Life tenant
- B. Remainderman
- C. Reversion
- D. Grantor
Show answer & explanation
Answer: B
A life estate lasts for the duration of a named person's life, after which title passes to a remainderman (here, the nephew) or reverts to the grantor.
100. A document purporting to be a deed omits a legal description of the property but is otherwise in writing, names the parties, includes a granting clause, and is signed by the grantor and delivered and accepted. Is this deed effective?
- A. Yes, because a granting clause substitutes for a legal description
- B. Yes, because delivery and acceptance are the only requirements
- C. No, because only a notary's signature can cure the omission
- D. No, because a legal description is one of the required elements of an effective deed
Show answer & explanation
Answer: D
A deed must be in writing, name the parties, contain a legal description, include a granting clause, and be signed by the grantor and delivered and accepted to be effective; omitting the legal description means a required element is missing.
101. A buyer wants the strongest possible protection against title defects, including those that arose before the current seller ever owned the property. Which deed type should the buyer insist on?
- A. Quitclaim deed
- B. General warranty deed
- C. Deed of trust
- D. Bargain and sale deed
Show answer & explanation
Answer: B
A general warranty deed offers the greatest protection because the grantor warrants title against all defects arising at any time, including the covenants of seisin, quiet enjoyment, and warranty forever.
102. After closing, a buyer promptly records the deed in the public land records. What is the primary legal effect of recording?
- A. It automatically extinguishes any existing property tax liens
- B. It gives constructive notice to the world and establishes priority
- C. It converts a quitclaim deed into a general warranty deed
- D. It creates an easement appurtenant benefiting the buyer's neighbor
Show answer & explanation
Answer: B
Recording the deed in the public land records gives constructive notice to the world and establishes priority among competing claims.
103. A homeowner fails to pay property taxes, and the county later records a tax lien. A mortgage lender recorded its mortgage lien years earlier. In a foreclosure, how is priority between these two liens determined?
- A. The tax lien generally has priority regardless of when it was recorded
- B. The two liens are paid in equal shares regardless of recording date
- C. The mortgage lien always has priority because it was recorded first
- D. Priority is decided by which lienholder forecloses first
Show answer & explanation
Answer: A
Property tax liens and special assessments generally take priority over all other liens regardless of when they were recorded, so the tax lien would be paid ahead of the earlier-recorded mortgage.
104. Two neighboring lots exist: Lot A has no direct road access, so its owner uses a paved path across Lot B to reach the street. This right was created in the deeds and passes automatically to future owners of Lot A. Which best describes Lot A's interest?
- A. An easement in gross held personally by the current owner
- B. An easement appurtenant, with Lot A as the dominant tenement
- C. A general warranty running with Lot B only
- D. A life estate in Lot B
Show answer & explanation
Answer: B
An easement appurtenant benefits an adjoining dominant tenement (Lot A) and burdens the servient tenement (Lot B), and it runs with the land, meaning it transfers automatically to successive owners.
105. An owner grants a neighbor an easement appurtenant across a strip of land to access a lake. The owner later sells the burdened parcel to a new buyer. Does the easement continue to bind the new buyer's parcel?
- A. Yes, but only if the new buyer is also the dominant tenement owner
- B. No, because only the original grantor remains bound personally
- C. Yes, because an easement appurtenant runs with the land and continues to burden the servient tenement
- D. No, because easements terminate automatically upon any sale of the servient tenement
Show answer & explanation
Answer: C
An easement appurtenant benefits the dominant tenement and burdens the servient tenement, and it runs with the land, so it continues to bind successive owners of the servient parcel.
106. In a mortgage transaction, which document is the borrower's personal promise to repay the debt?
- A. The mortgage
- B. The promissory note
- C. The deed of trust
- D. The title insurance policy
Show answer & explanation
Answer: B
A mortgage loan involves a promissory note that evidences the debt and the borrower's promise to pay, plus a mortgage or deed of trust that pledges the property as security for that promise.
107. A borrower defaults on a loan in a state where the lender holds legal title to the property until the debt is fully paid. This state follows which theory of mortgage law?
- A. Escrow theory
- B. Lien theory
- C. Equity theory
- D. Title theory
Show answer & explanation
Answer: D
In a title-theory arrangement, the lender holds legal title until the debt is paid, whereas in a lien-theory state the borrower holds title and the lender holds only a lien.
108. A borrower stops making payments, and the lender wants to demand immediate payment of the entire outstanding loan balance rather than waiting for each missed installment separately. Which clause in the loan documents allows this?
- A. The alienation clause
- B. The acceleration clause
- C. The subordination clause
- D. The defeasance clause
Show answer & explanation
Answer: B
The acceleration clause lets the lender declare the entire loan balance due immediately upon the borrower's default, rather than pursuing each missed payment individually.
109. A borrower is quoted a loan of $250,000 with a charge of 2 discount points to reduce the interest rate. How much will the borrower pay in discount points at closing?
- A. $500
- B. $25,000
- C. $2,500
- D. $5,000
Show answer & explanation
Answer: D
One discount point equals one percent of the loan amount, so two points equal two percent of $250,000, which is $5,000 in prepaid interest to buy down the rate.
110. A veteran who qualifies for VA financing wants to purchase a home with the smallest possible upfront cash outlay for a down payment. Which loan type is designed to allow this?
- A. VA loan
- B. FHA loan
- C. Jumbo loan
- D. Conventional loan
Show answer & explanation
Answer: A
VA loans are guaranteed for eligible veterans and can permit no down payment, unlike conventional loans, which are not government-backed.
111. A buyer is obtaining a conventional loan and plans to put down 10 percent of the purchase price. Based on typical conventional loan requirements, what will the lender most likely require?
- A. A VA funding fee
- B. No additional insurance, since 10 percent is sufficient
- C. Private mortgage insurance
- D. An FHA insurance premium
Show answer & explanation
Answer: C
Private mortgage insurance is typically required on conventional loans when the down payment is less than twenty percent, and 10 percent falls below that threshold.
112. A loan officer refers a borrower to a title company in exchange for an undisclosed cash payment with no service actually rendered for that payment. Which federal law is most directly violated by this arrangement?
- A. Fair Housing Act
- B. Real Estate Settlement Procedures Act
- C. Civil Rights Act of 1866
- D. Truth in Lending Act
Show answer & explanation
Answer: B
RESPA governs federally related mortgage loans and prohibits kickbacks and unearned referral fees, which is exactly what an undisclosed payment for no actual service represents.
113. Which two disclosure documents does RESPA require to be provided to borrowers on federally related mortgage loans?
- A. The appraisal report and the title commitment
- B. The Loan Estimate and the Closing Disclosure
- C. The purchase agreement and the seller's disclosure
- D. The promissory note and the deed of trust
Show answer & explanation
Answer: B
RESPA requires the Loan Estimate and Closing Disclosure to be provided in connection with federally related mortgage loans.
114. A homeowner refinances the mortgage on their principal residence with a new lender. Under the Truth in Lending Act, what right does the homeowner have regarding this transaction?
- A. A thirty-day right to shop for a better rate
- B. A three-day right of rescission
- C. An unlimited right to cancel before closing
- D. No cancellation rights once documents are signed
Show answer & explanation
Answer: B
TILA, implemented by Regulation Z, grants a three-day right of rescission on certain refinances of a principal residence.
115. A seller receives a buyer's offer and responds by signing it but changing the closing date and lowering the requested repair credit. What is the legal effect of the seller's response?
- A. It is a valid acceptance, since the seller signed the document
- B. It has no legal effect until recorded
- C. It is unenforceable because acceptance must be verbal
- D. It is a counteroffer that rejects and extinguishes the buyer's original offer
Show answer & explanation
Answer: D
Acceptance must be unqualified, so any material change to the terms operates as a counteroffer that rejects and extinguishes the original offer.
116. A grantor conveys a parcel to a buyer using a deed that carries no warranties and transfers only whatever interest the grantor happened to hold. Which type of deed was used?
- A. General warranty deed
- B. Special warranty deed
- C. Quitclaim deed
- D. Grant deed
Show answer & explanation
Answer: C
A quitclaim deed carries no warranties and conveys only whatever interest the grantor may have, making it distinct from warranty deeds that guarantee title.
117. A real estate broker manages a rental property under a property management agreement. Under agency law, what type of agent is the property manager, and what duties does this create toward the owner?
- A. A general agent, owing fiduciary duties including obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care
- B. A customer, owing only honesty and fair dealing
- C. A special agent, owing only the duty of confidentiality
- D. A sub-agent, owing duties solely to the tenant
Show answer & explanation
Answer: A
A property manager is a general agent because the role involves a range of matters rather than a single transaction, and general agents owe the full set of fiduciary duties summarized by OLD CAR.
118. A buyer's agent and seller's agent are actually the same licensee representing both parties in one transaction. Under what condition is this arrangement permitted?
- A. It is never permitted under any circumstances
- B. Only if the buyer waives all fiduciary duties orally
- C. Only with the informed written consent of both parties
- D. Only if the broker charges no commission
Show answer & explanation
Answer: C
Dual agency, representing both buyer and seller in the same transaction, is permitted only with the informed written consent of both parties.
119. A broker deposits earnest money from a purchase contract directly into the brokerage's general operating account alongside commission income. Which fiduciary duty has been violated?
- A. Obedience, because the seller did not authorize a deposit
- B. Accounting, because client funds must be kept in a separate trust or escrow account and never commingled
- C. Disclosure, because the buyer was not told where funds were held
- D. Loyalty, because the broker favored their own interests
Show answer & explanation
Answer: B
Accounting requires depositing client funds in a separate trust or escrow account and never commingling them with the broker's own funds; depositing earnest money into the general operating account violates this duty.
120. A buyer purchases land without searching the public records. A previously recorded easement burdens the parcel, and the buyer claims he cannot be bound because he never actually knew of it. Why does the easement bind him anyway?
- A. Because easements bind all buyers whether recorded or not
- B. Because an unrecorded survey mentioned the easement
- C. Because recording gave constructive notice, and buyers are charged with knowledge of properly recorded documents regardless of actual knowledge
- D. Because the seller's knowledge is automatically imputed to the buyer
Show answer & explanation
Answer: C
Properly recorded instruments give constructive notice to the world; a purchaser is legally charged with knowing whatever the records disclose, whether or not he looked. The everything-binds-everyone answer overshoots — an unrecorded interest generally does not bind a bona fide purchaser without notice, which is exactly why recording matters.
121. At closing, a home buyer pays a single one-time premium for an owner's title insurance policy. Years later, a forged deed from before her purchase surfaces in her chain of title. How does the policy respond?
- A. It covers only defects that arise after the date she purchased
- B. It covers the loss only if she renewed the policy annually
- C. It does not apply, because forgery is never a covered risk
- D. It defends her title and covers the loss, because the policy insures against covered defects that arose before the policy date
Show answer & explanation
Answer: D
Owner's title insurance is retrospective: for a single premium it protects against covered title defects existing as of the policy date — hidden problems like forgery in the chain being classic covered risks — and it lasts as long as the insured or heirs hold an interest. The after-acquired-defects reading reverses how the coverage actually runs.
122. A grantor conveys investment property using a deed in which she warrants the title only against defects and encumbrances that arose during her own period of ownership, making no promises about anything that happened before she acquired it. Which deed did she deliver?
- A. A trustee's deed
- B. A general warranty deed
- C. A special warranty deed
- D. A quitclaim deed
Show answer & explanation
Answer: C
A special warranty deed limits the grantor's covenants to the grantor's own tenure — she answers for defects she created or allowed, but not for her predecessors'. The general warranty deed is the tempting stronger cousin, warranting title against all defects back through the entire chain, which this grantor expressly declined to do.
123. A small grocery store has operated at a corner location for decades. The municipality then rezones the entire area to single-family residential. The store continues operating exactly as before. Under zoning principles, the store is best described as:
- A. A special (conditional) use approved by ordinance
- B. An illegal use that must close immediately
- C. A variance granted by the zoning board
- D. A legal nonconforming use permitted to continue despite the new zoning
Show answer & explanation
Answer: D
A use lawfully established before a zoning change may generally continue as a legal nonconforming use — often called grandfathered — though expansion or rebuilding is typically restricted. The variance answer tempts because both allow deviation from current zoning, but a variance is affirmative relief granted on application, not automatic protection for a pre-existing use.
124. An owner of an oddly shaped, steeply sloped lot cannot place a home on it without building closer to the side line than the zoning ordinance's setback allows. She applies to the zoning board for relief, citing the unusual physical hardship unique to her parcel. What is she seeking?
- A. Recognition as a nonconforming use
- B. A building moratorium
- C. A variance excusing strict compliance with the setback because of hardship unique to the lot
- D. A rezoning of the entire neighborhood
Show answer & explanation
Answer: C
A variance is individualized relief from strict application of a zoning requirement, granted where unique physical circumstances of the parcel create hardship and the deviation will not harm the area. Rezoning tempts as another route around the ordinance, but it changes the law for a whole district — vastly broader than the single-lot relief sought here.
125. A mortgage applicant is quoted both a loan origination fee and optional discount points. She asks her broker to explain the difference between the two charges. Which explanation is accurate?
- A. The origination fee compensates the lender for processing and making the loan, while discount points are prepaid interest paid to reduce the interest rate
- B. Both charges are refundable deposits returned at closing
- C. The origination fee lowers the interest rate, while points cover processing costs
- D. Points are paid by the seller by law, while origination fees are paid by the buyer
Show answer & explanation
Answer: A
Origination fees are the lender's charge for the administrative work of making the loan; discount points are optional prepaid interest that buy the rate down. The reversed definition is the classic trap answer, and the seller-pays rule is invented — who pays which charge is a matter of negotiation and loan program, not a legal mandate.
126. A borrower's mortgage has a current balance of $200,000 at an annual interest rate of 6 percent. Interest is paid monthly on the outstanding balance. How much of this month's payment goes to interest?
- A. $1,000
- B. $12,000
- C. $2,000
- D. $600
Show answer & explanation
Answer: A
Annual interest is $200,000 multiplied by 6 percent, or $12,000; dividing by twelve months yields $1,000 of interest for the month. The $12,000 figure tempts because it is the correct yearly amount, but the question asks for one month — forgetting the final division by twelve is the most common error on this calculation.
127. A financing intermediary meets with borrowers, shops their applications among many different wholesale lenders, and earns a fee for arranging each loan — but never funds any loan with its own money and never services the loans afterward. What is this intermediary?
- A. A mortgage banker
- B. A savings and loan association
- C. A mortgage broker
- D. A secondary-market investor
Show answer & explanation
Answer: C
A mortgage broker is a matchmaker: it originates applications and places them with lenders for a fee, without lending its own funds or servicing loans. The mortgage banker is the tempting near-twin, but bankers actually fund loans with their own or borrowed capital and frequently service them — the two activities this intermediary specifically avoids.
128. Along with principal and interest, a homeowner's monthly mortgage payment includes one-twelfth of the estimated annual property taxes and hazard insurance premium. Where does the lender hold these tax and insurance funds until the bills come due?
- A. In the borrower's personal checking account
- B. In a certificate of deposit owned by the loan servicer
- C. In the lender's general revenue account
- D. In an escrow or impound account maintained for the borrower
Show answer & explanation
Answer: D
Budget mortgage payments covering principal, interest, taxes, and insurance route the tax and insurance portions into an escrow or impound account, from which the servicer pays those bills when due. Holding client-destined funds in the lender's general revenue account is the trap — those funds belong to the borrower's obligations, not to the lender.
129. A borrower's home loan provides that the interest rate will change periodically, computed each adjustment period by adding a fixed percentage set in the note to a published market indicator. In adjustable-rate loan terminology, what are these two components?
- A. The principal and the equity
- B. The index (the market indicator) and the margin (the lender's fixed add-on)
- C. The ceiling and the floor
- D. The origination fee and the annual percentage rate
Show answer & explanation
Answer: B
An adjustable-rate mortgage resets its rate to a published index plus a constant margin fixed in the note for the loan's life. Caps — ceilings and floors — tempt because they are also ARM vocabulary, but they merely limit how far the computed rate may move; the rate itself is always generated by the index-plus-margin formula.
130. A homeowner's property has a current market value of $350,000, and the only debt against it is a mortgage balance of $210,000. What is the homeowner's equity in the property?
- A. $140,000
- B. $210,000
- C. $560,000
- D. $350,000
Show answer & explanation
Answer: A
Equity is the owner's unencumbered interest: market value minus all debt secured by the property. Here $350,000 less the $210,000 mortgage balance leaves $140,000 of equity. Adding value and debt together is the arithmetic trap — equity measures what would remain for the owner after the debt is paid, never the sum of the two figures.
131. A tenant's lease provides that if the owner ever decides to sell the building, the tenant must first be given the chance to buy it by matching the terms of any bona fide offer the owner is prepared to accept. The tenant cannot force a sale at any time. What right does the tenant hold?
- A. An option to purchase at a fixed price
- B. A reversionary interest in the property
- C. An equitable lien on the building
- D. A right of first refusal
Show answer & explanation
Answer: D
A right of first refusal is triggered only when the owner elects to sell, letting the holder match a third-party offer; it gives no power to compel a sale. The option tempts as the sibling concept, but an option lets its holder force a sale at predetermined terms during the option period regardless of whether the owner wishes to sell.
132. A buyer under a valid purchase contract assigns his rights in the contract to an investor before closing. The contract contains no prohibition on assignment, and no novation is executed. If the investor fails to close, what is the original buyer's position?
- A. He is liable only if the assignment was recorded
- B. He remains liable on the contract, because assignment transfers rights but does not release the assignor absent a novation
- C. He is fully released, because assignment always extinguishes the assignor's duties
- D. He automatically regains the contract and must close personally within ten days
Show answer & explanation
Answer: B
Assignment transfers the assignor's rights, but the assignor stays secondarily liable for performance unless the other party agrees to a novation releasing him. The automatic-release answer is the standard trap — it grants the effect of a novation without the seller's consent, which the law of contracts does not permit.
133. An elderly, isolated homeowner depends entirely on a live-in caretaker. The caretaker persistently pressures her, exploiting the dependency, until she signs a contract selling the home to the caretaker's cousin at a fraction of its value. On what ground can this contract most likely be set aside?
- A. The statute of frauds
- B. Mutual mistake about the property's value
- C. Impossibility of performance
- D. Undue influence exercised over the seller
Show answer & explanation
Answer: D
Undue influence arises when someone in a position of trust or dominance overcomes another's free will, making the resulting contract voidable by the victim. Duress is the neighboring concept involving threats, but here the lever was exploitation of dependency and trust rather than threatened harm — the hallmark of undue influence.
134. A buyer delivers a written offer to a seller stating it will remain open for five days. On day two, before the seller has accepted or rejected, the buyer dies in an accident. On day four, the seller signs the offer. Is there a contract?
- A. No — the offeror's death before acceptance terminated the offer by operation of law
- B. Yes, but only the buyer's estate can enforce it
- C. Yes, because acceptance occurred within the stated period
- D. Yes, because the offer stated it would stay open for five days
Show answer & explanation
Answer: A
An ordinary offer terminates automatically upon the death of the offeror before acceptance, so nothing remained for the seller to accept on day four. The stated five-day window tempts, but a promised open period in a plain offer is not binding without consideration — only a paid option would have survived the offeror's death.
135. A seller mails a prospective buyer a written offer to sell a lot, adding: "If I do not hear from you within ten days, I will consider the lot sold to you." The buyer never responds in any way. After ten days, is the buyer bound to purchase?
- A. No — because offers to sell land can never be made by mail
- B. Yes — but the buyer may rescind within a reasonable time
- C. Yes — the offer's terms made silence an effective acceptance
- D. No — silence generally does not constitute acceptance, so no contract was formed
Show answer & explanation
Answer: D
Acceptance must be a manifestation of assent communicated to the offeror; an offeror cannot impose contractual liability by declaring that the offeree's silence will count as agreement. The offer-controls answer tempts because offerors do dictate the manner of acceptance, but that power does not extend to conscripting inaction as consent.
136. A seller lists a home "as is." Before showings, the seller patches and paints over a large foundation crack specifically so buyers will not see it, and says nothing. The buyer closes, discovers the crack, and sues. Does the "as is" clause protect the seller?
- A. No — because as-is clauses are unenforceable in residential sales
- B. Yes — an as-is clause shifts every risk of defects to the buyer
- C. No — an as-is clause does not shield a seller who actively conceals a known material defect
- D. Yes — provided the buyer had the right to inspect before closing
Show answer & explanation
Answer: C
An as-is clause allocates the risk of unknown defects and negates implied warranties, but it never licenses fraud: active concealment of a known material defect defeats the clause and supports liability. The inspection-rights answer tempts because inspections matter, but the deliberate cover-up was designed to make inspection fail — courts do not reward that.
137. An audit reveals that an Illinois sponsoring broker repeatedly moved earnest money out of the escrow account to cover the brokerage's payroll shortfalls, replacing it before closings. What exposure does the sponsoring broker face?
- A. Only a civil suit by the affected buyers
- B. Professional discipline by the state regulator, which may include suspension or revocation of the license, in addition to civil liability
- C. Automatic transfer of the escrow account to the local association of brokers
- D. None, because the funds were always replaced before anyone was harmed
Show answer & explanation
Answer: B
Using escrowed funds belonging to others for business expenses is conversion of trust funds, among the most serious license-law violations, and the state regulator may suspend or revoke the license and impose other sanctions regardless of eventual repayment. The no-harm-no-foul answer fails because the violation is the unauthorized use itself, not merely a resulting loss.
138. A newly licensed Illinois broker wants to begin practicing immediately — taking listings and writing offers on her own, with no affiliation with any brokerage. May she lawfully practice this way?
- A. Yes, if she carries her own errors-and-omissions insurance
- B. Yes, any licensed broker may practice independently at once
- C. No — a broker must be sponsored by a sponsoring broker, who is responsible for supervising the licensee's activities
- D. No, she must first complete a probationary year with the state
Show answer & explanation
Answer: C
Illinois structures licensure around sponsorship: a broker practices only under a sponsoring broker, whose duties include supervision of sponsored licensees' brokerage activities. The independent-practice answer describes the privileges of operating as one's own sponsoring broker or managing broker — a status this new licensee has not attained.
139. A lender making a federally related mortgage loan needs an opinion of a home's value. The listing broker offers to supply his comparative market analysis in place of any other valuation. Why is the broker's CMA insufficient for the lender's purpose?
- A. Because a CMA becomes an appraisal once a lender reads it
- B. Because brokers are barred from ever expressing opinions of value
- C. Because CMAs may only be prepared by attorneys
- D. Because valuations for federally related loan transactions must be performed by a state licensed or certified appraiser, while a CMA is only a pricing tool
Show answer & explanation
Answer: D
Federally related mortgage transactions require an appraisal by a state licensed or certified appraiser; a broker's comparative market analysis is a marketing and pricing aid for clients, not a substitute appraisal. Brokers may lawfully opine on value when pricing listings — the prohibition is on holding such work out as an appraisal for lending purposes.
140. A licensee working with a young family repeatedly shows them homes only in neighborhoods where most residents share the family's ethnicity, quietly skipping equally suitable listings elsewhere, believing they will be "more comfortable." What has the licensee done?
- A. Engaged in redlining by limiting the family's loan options
- B. Engaged in blockbusting to induce panic selling
- C. Engaged in steering, an illegal practice of channeling buyers toward or away from areas based on protected characteristics
- D. Provided lawful customized service based on client preferences
Show answer & explanation
Answer: C
Directing buyers toward or away from neighborhoods because of race, ethnicity, or another protected characteristic is steering, and the licensee's benevolent motive is irrelevant under fair housing law. The customized-service answer tempts because agents do tailor searches — but lawful tailoring follows the client's own stated criteria, not the agent's assumptions about where they belong.
141. Hoping to generate listings, a licensee canvasses a neighborhood telling homeowners that members of a particular racial group are moving in and that property values will soon collapse, urging owners to sell quickly through him. Which illegal practice is this?
- A. Steering
- B. Lawful farming of a geographic area
- C. Redlining
- D. Blockbusting, also known as panic peddling
Show answer & explanation
Answer: D
Soliciting listings by predicting the entry of members of a protected class and forecasting falling values is blockbusting — profiting from induced panic — and it is squarely illegal. Ordinary geographic farming tempts as the innocent cousin, but farming solicits business without invoking protected-class fears, which is the element that makes this conduct unlawful.
142. The owner of a twelve-unit apartment building, which qualifies for no exemption, refuses to rent an available unit to an otherwise qualified couple solely because they have two young children. Which fair housing violation has occurred?
- A. None, because owners may set occupancy preferences freely
- B. Discrimination based on familial status under the federal Fair Housing Act
- C. A violation only of local ordinance, not federal law
- D. Discrimination based on marital status under federal law
Show answer & explanation
Answer: B
Familial status — the presence of children under the age of majority in a household — is a protected class under the federal Fair Housing Act, so refusing tenants because they have children is unlawful in non-exempt housing. Marital status tempts as a near-miss, but the refusal here targeted the children, not whether the couple was married.
143. A seller's closing is delayed, and the seller demands to know exactly where the buyer's earnest money is being held, what has been received, and what disbursements have occurred. Which fiduciary duty obligates the listing brokerage to provide this information and to safeguard those funds?
- A. The duty of obedience
- B. The duty of accounting
- C. The duty of self-dealing
- D. The duty of confidentiality
Show answer & explanation
Answer: B
Accounting requires an agent to keep accurate records of all money and property received on behalf of others, to safeguard them, and to report on them to the principal. Obedience tempts because the seller made a demand, but obedience concerns following lawful instructions about the transaction — the record-keeping and reporting obligation exists independently of any request.
144. A seller instructs her Illinois listing licensee not to show the home to prospective buyers of a particular national origin. The licensee values the client relationship and does not want to lose the listing. What must the licensee do?
- A. Comply, because the duty of obedience requires following the client's instructions
- B. Refuse to follow the instruction, because obedience extends only to lawful instructions and this one violates fair housing law
- C. Comply, but keep written records showing the instruction came from the seller
- D. Show the home to all buyers but quietly discourage the disfavored group from making offers
Show answer & explanation
Answer: B
The fiduciary duty of obedience is expressly limited to lawful instructions; an order to discriminate on the basis of national origin violates fair housing law, and the licensee must refuse — and should withdraw if the seller insists. The document-and-comply answer fails because paperwork cannot legalize discrimination, and discouraging offers is simply discrimination by subtler means.
145. A listing licensee persuades a seller that her home is worth far less than its true market value, then arranges for his own brother to buy it without revealing the relationship. Months later the brother resells at a large profit that he splits with the licensee. Which duties did the licensee breach?
- A. Loyalty and disclosure — this is undisclosed self-dealing, putting the agent's secret personal interest ahead of the client's
- B. Only the duty of reasonable care in pricing
- C. Only the duty of confidentiality toward the brother
- D. None, because the seller voluntarily accepted the price
Show answer & explanation
Answer: A
An agent who secretly acquires the client's property through a straw buyer for personal profit commits self-dealing, violating the duties of loyalty and disclosure at their core; the transaction is voidable and discipline is warranted. The voluntary-acceptance answer fails because the seller's consent was procured by the very deception the fiduciary duties prohibit.
146. A cooperating licensee from another brokerage brings buyers to a listed home while acting, with the seller's consent, as a subagent of the seller. The buyers assume this friendly licensee is "their agent." What is the true structure of representation?
- A. The cooperating licensee represents the buyers because he works with them daily
- B. The cooperating licensee owes fiduciary duties to the seller and only honesty and fair dealing to the buyers
- C. No one in the transaction represents the seller
- D. The cooperating licensee represents both parties equally as a matter of law
Show answer & explanation
Answer: B
A subagent of the seller works with buyers but for the seller, owing the seller full fiduciary duties while owing buyers honesty and disclosure of material facts. The daily-contact assumption is precisely the consumer confusion agency-disclosure rules target: working with a party and representing that party are legally different relationships.
147. Broker X introduces a buyer to a property, conducts two showings, and begins negotiations that continue without interruption. Days before agreement, the buyer quietly writes the offer through Broker Y, hoping for a discount. Both brokers claim the commission. On what basis will this dispute be decided?
- A. The brokers must always split the commission equally
- B. Procuring cause — which broker began and carried forward the unbroken chain of events that produced the sale
- C. The buyer decides which broker is paid
- D. Whichever broker holds the older license
Show answer & explanation
Answer: B
Commission disputes between cooperating brokers turn on procuring cause: the broker who originated and sustained the uninterrupted chain of events leading to the transaction. Mechanical rules like automatic splits or seniority tempt by their simplicity, but the doctrine looks at the actual causal history — introductions, showings, and continuous negotiations.
148. A licensee never signs any agreement with a prospective buyer but spends weeks advising her on negotiating strategy, telling her what to offer, and drafting offers tailored to her interests. The buyer reasonably believes the licensee is her advocate. What risk has the licensee created?
- A. An implied agency may have been created by conduct, carrying fiduciary duties the licensee may already be breaching
- B. The buyer automatically became the licensee's subagent
- C. The conduct converted the licensee into a transaction coordinator with no duties to anyone
- D. None, because agency can arise only from a signed writing
Show answer & explanation
Answer: A
Agency can be created by the parties' conduct: advising on strategy, recommending offer terms, and advocating for a party are the actions of an agent, and courts may find an implied agency with full fiduciary duties despite the absence of a writing. The writing-only answer tempts because listings are typically written, but formation of agency itself does not require one.
149. A buyer tells her agent that she is purchasing a house specifically to rent it out for income. The agent, without checking, assures her rentals are permitted; in fact, a recorded restriction prohibits leasing in the subdivision, which a routine review would have revealed. Which duty did the agent breach?
- A. The duty of accounting
- B. No duty, because agents are never responsible for researching restrictions
- C. The duty of confidentiality
- D. The duty of reasonable care and diligence, by failing to verify information critical to the client's known purpose
Show answer & explanation
Answer: D
The duty of care requires an agent to exercise the competence and diligence of a professional, including verifying facts material to the client's stated objective before offering assurances. Knowing the buyer's rental purpose made the leasing restriction critical, so the casual, unverified assurance was negligent. The no-responsibility answer understates what professional competence demands.

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Key facts: Illinois Real Estate Broker exam

140

MCQ questions

75 (scaled, each…

To pass

3h 30m

Time limit

$55

Exam fee

The Illinois Real Estate Broker is administered by Illinois IDFPR, with 140 scored questions, a 3 hours 30 minutes time limit and a 75 (scaled, each portion) result.

This free Illinois Real Estate Broker practice test has 149 original questions written to Illinois IDFPR's official content outline, last checked against it on July 18, 2026. Every question shows a worked explanation, and nothing here requires a signup.

As of 2026, the Illinois Real Estate Broker exam fee is $55.

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Official sources

Primary documents used to verify the exam details shown on this page.

Illinois Real Estate Examination Program Candidate HandbookPSI Services (Illinois Real Estate Examination Program)illinoisrealtors.org
Continuing Education (CE) Fact Sheet — 2026 Real Estate Broker License RenewalIllinois Department of Financial and Professional Regulation (IDFPR)idfpr.illinois.gov
Real Estate BrokerageIllinois Department of Financial and Professional Regulation (IDFPR)idfpr.illinois.gov
Continuing Education (CE) Fact Sheet for 2024 Real Estate Broker License RenewalIllinois Department of Financial and Professional Regulation (IDFPR)idfpr.illinois.gov
Illinois Real Estate License (ILREP) ExamPSI Servicespsiexams.com

Last verified against the official exam content outline: July 18, 2026

Frequently asked questions

Do these practice questions match the real Illinois broker exam?

They are written to mirror the style and topic coverage of the real exam: multiple-choice questions on agency, contracts, ownership, finance, valuation, and fair housing. For example, you will see scenario questions testing whether you know that dual agency requires the informed written consent of both parties, or that an offer can be revoked any time before acceptance is communicated — exactly the kind of distinctions the state exam tests. They are a study tool, not leaked exam content, so expect the real test to word things differently.

How many practice questions should I do, and how often?

Aim for a steady daily habit rather than one marathon session — short sets most days of the week beat cramming. Early on, focus on covering every topic area at least once so you can find weak spots; later, drill your weakest areas and take longer mixed sets to build stamina. Keep practicing until your accuracy is consistently strong across all topics, not just your favorites.

How should I use the answer explanations?

Read the explanation for every question, including the ones you got right, because guessing correctly hides gaps. The explanations teach the rule behind the answer — for instance, why a material change to an offer's terms operates as a counteroffer that extinguishes the original offer, not just which letter was correct. When you miss a question, restate the rule in your own words before moving on; that is what makes it stick.

How do I know when I'm ready for the real exam?

You are close to ready when you score consistently well on full mixed practice sets across several sessions, with no single topic dragging you down. A good self-test: can you instantly distinguish concepts the exam loves to pair, like a special agent with authority for a single transaction versus a general agent who can bind the principal in a range of matters? If those contrasts feel automatic and your scores are stable rather than lucky, schedule the exam.

Are these Illinois broker practice questions really free?

Yes — the practice questions on this page are free and you do not need to create an account or enter an email to use them. You can start answering immediately, check explanations as you go, and come back as many times as you like. Free unlimited practice removes any excuse not to get your reps in before test day.