A builder wants to construct a small detached garage that is two feet taller than the local zoning ordinance allows for accessory structures. What must the builder request from the local zoning board to proceed?

A nonconforming use designation

A real estate firm in Kokomo ends up representing both sides of one sale, the buyer and the seller, after obtaining written informed consent from each party in advance. What term describes this arrangement?

Designated agency without disclosure

A seller in Valparaiso mentions to her listing agent that a previous occupant died of natural causes in the home several years ago, and asks whether this must be disclosed to buyers. Under general real estate ethics principles, how is this type of fact usually treated compared to a physical property defect?

Many jurisdictions do not treat a past death from natural causes as a required material fact disclosure the way a physical defect would be

It must always be disclosed exactly like a structural defect

It must never be discussed under any circumstances even if asked

It automatically reduces the appraised value by law

A managing broker in Richmond supervises five affiliated licensees and reviews their transaction files, contracts, and marketing materials for compliance. What best describes the reason this oversight role exists?

To ensure affiliated licensees' conduct and paperwork meet legal and brokerage standards

To negotiate commission splits between licensees

To set the local property tax rate

To perform appraisals independently

In Plainfield, a buyer and seller settle on a purchase price for a home over the phone and the buyer wires a modest good-faith deposit that same day, but neither party signs anything in writing. Under general contract law principles, what is the main problem with this arrangement for a real estate sale?

The statute of frauds generally requires real estate contracts to be in writing to be enforceable

Verbal agreements are always void from the start

The deposit amount makes the contract automatically binding

Real estate contracts do not require consideration

A seller in Michigan City accepts a buyer's written offer exactly as presented, signs it, and it is delivered back to the buyer. At what point does a binding contract generally exist between the two parties?

When the acceptance is communicated back to the offering party

When earnest money clears the escrow account

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PRACTICE ENGINE · INDIANA REAL ESTATE

Indiana Real Estate Practice Exam.
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QUESTION 1 / 61Property Ownership, Land Use & InterestsMedium0/0

A retired teacher in Terre Haute has openly gardened and built a low fence along a section of her neighbor's unused side yard for over a decade without ever asking permission, treating it as part of her own property. Which legal doctrine could eventually give her ownership of that section?

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1. A retired teacher in Terre Haute has openly gardened and built a low fence along a section of her neighbor's unused side yard for over a decade without ever asking permission, treating it as part of her own property. Which legal doctrine could eventually give her ownership of that section?
- A. Eminent domain
- B. Escheat
- C. Riparian rights
- D. Adverse possession
Show answer & explanation
Answer: D
Adverse possession allows a person who openly, continuously, and without permission occupies and uses another's land as if it were their own to eventually gain legal title. Eminent domain instead describes the government's power to take private property for public use with compensation, which has no application to a private individual's long-term open use of a neighbor's lot.
2. A homeowner whose property borders the White River in Indianapolis wants to know what rights come with owning land along a natural waterway. Which term describes this bundle of water-related rights?
- A. Riparian rights
- B. Subjacent rights
- C. Littoral rights
- D. Lateral support rights
Show answer & explanation
Answer: A
Riparian rights apply to land bordering a flowing waterway such as a river or stream and generally include reasonable use of the water. Littoral rights instead apply to land bordering non-flowing bodies of water like lakes or oceans, so they would not be the correct term for a property along a river.
3. A builder wants to construct a small detached garage that is two feet taller than the local zoning ordinance allows for accessory structures. What must the builder request from the local zoning board to proceed?
- A. A variance
- B. A rezoning of the parcel
- C. A certificate of occupancy
- D. A nonconforming use designation
Show answer & explanation
Answer: A
A variance is permission granted by a zoning board to deviate from a specific dimensional or use requirement of an ordinance, such as a height limit, when strict enforcement would cause hardship. A nonconforming use instead protects a use that lawfully existed before a zoning change was enacted, which does not apply to new construction planned under current rules.
4. A real estate firm in Kokomo ends up representing both sides of one sale, the buyer and the seller, after obtaining written informed consent from each party in advance. What term describes this arrangement?
- A. Subagency
- B. Designated agency without disclosure
- C. Dual agency
- D. Single agency
Show answer & explanation
Answer: C
Dual agency exists when one brokerage represents both the buyer and the seller in the same transaction, and it generally requires informed written consent from both parties because the broker's duty of undivided loyalty is inherently limited when serving two principals at once. Single agency, in contrast, means the brokerage represents only one side of the transaction, which does not match a firm representing both buyer and seller.
5. A seller in Valparaiso mentions to her listing agent that a previous occupant died of natural causes in the home several years ago, and asks whether this must be disclosed to buyers. Under general real estate ethics principles, how is this type of fact usually treated compared to a physical property defect?
- A. Many jurisdictions do not treat a past death from natural causes as a required material fact disclosure the way a physical defect would be
- B. It must always be disclosed exactly like a structural defect
- C. It must never be discussed under any circumstances even if asked
- D. It automatically reduces the appraised value by law
Show answer & explanation
Answer: A
So-called stigmatized property facts, such as a past death from natural causes, are treated differently from physical material defects in many jurisdictions, and are frequently not classified as facts that must be affirmatively disclosed the way a leaky roof or foundation crack would be. This does not mean the topic can never be discussed, particularly if a buyer directly asks, but the ethical and legal disclosure obligation differs from that owed for physical defects.
6. A listing broker in Kokomo instructs a cooperating broker from another firm to show the property and represent the seller's interests during those showings, without the cooperating broker having any direct listing agreement with the seller. What relationship has been created between the cooperating broker and the seller?
- A. Dual agency
- B. Subagency
- C. Customer relationship only
- D. Designated agency
Show answer & explanation
Answer: B
Subagency arises when a cooperating broker, acting through a cooperative showing arrangement, owes the same fiduciary duties to the seller as the listing broker even without a direct contract with the seller. A customer relationship, by contrast, involves no fiduciary duties at all, which would not describe a broker instructed to actively represent the seller's interests during showings.
7. A managing broker in Richmond supervises five affiliated licensees and reviews their transaction files, contracts, and marketing materials for compliance. What best describes the reason this oversight role exists?
- A. To ensure affiliated licensees' conduct and paperwork meet legal and brokerage standards
- B. To negotiate commission splits between licensees
- C. To set the local property tax rate
- D. To perform appraisals independently
Show answer & explanation
Answer: A
A managing broker's supervisory role exists to ensure that every licensee operating under the brokerage complies with real estate law and produces properly executed, compliant transaction paperwork, since the brokerage bears responsibility for its affiliated licensees' conduct. Negotiating commission splits may happen administratively, but it is not the underlying legal purpose of the supervisory duty.
8. In Plainfield, a buyer and seller settle on a purchase price for a home over the phone and the buyer wires a modest good-faith deposit that same day, but neither party signs anything in writing. Under general contract law principles, what is the main problem with this arrangement for a real estate sale?
- A. Real estate contracts do not require consideration
- B. The deposit amount makes the contract automatically binding
- C. Verbal agreements are always void from the start
- D. The statute of frauds generally requires real estate contracts to be in writing to be enforceable
Show answer & explanation
Answer: D
The statute of frauds requires that contracts for the sale of real property be in writing and signed to be enforceable, so a purely verbal agreement, even with a handshake and a small deposit, is generally not enforceable in court. This does not mean the agreement is automatically void from inception in every sense, but rather that a party cannot compel enforcement of it without a written instrument.
9. A seller in Michigan City accepts a buyer's written offer exactly as presented, signs it, and it is delivered back to the buyer. At what point does a binding contract generally exist between the two parties?
- A. When the acceptance is communicated back to the offering party
- B. When the closing occurs
- C. When earnest money clears the escrow account
- D. When the deed is recorded
Show answer & explanation
Answer: A
A contract is generally formed once an offer is accepted and that acceptance is communicated to the party who made the offer, since mutual assent is one of the essential elements of a valid contract. Recording the deed and closing are steps that occur later in the transaction, well after the underlying purchase contract has already become binding.
10. A purchaser in Zionsville insists on the broadest possible protection against title problems that could have originated at any time in the property's past, including long before the current owner ever held it. Which type of deed would best provide that protection?
- A. Quitclaim deed
- B. General warranty deed
- C. Deed of trust
- D. Special warranty deed
Show answer & explanation
Answer: B
A general warranty deed provides the broadest protection because the grantor warrants against title defects arising during the entire history of the property, not just the grantor's own period of ownership. A special warranty deed, by contrast, only covers defects that arose while the current grantor held title, leaving the buyer unprotected against older claims.
11. Following the closing on a townhouse in Lafayette, the new owner takes the signed deed straight to the county recorder to have it entered into the public record without delay. What is the primary legal purpose of doing this?
- A. It replaces the need for title insurance
- B. It gives constructive notice to the public of the buyer's ownership interest
- C. It finalizes the transfer of possession
- D. It sets the final sale price for tax purposes
Show answer & explanation
Answer: B
Recording a deed provides constructive notice to the world of the new owner's interest in the property, which helps protect that interest against later claims or competing buyers. Recording does not replace the value of title insurance, since insurance protects against defects that a search of the public record might miss entirely.
12. "We're putting twenty percent down," the buyer tells her agent while finalizing a $280,000 purchase in Muncie that includes a $224,000 loan. What loan-to-value ratio does this financing represent?
- A. 50%
- B. 80%
- C. 125%
- D. 20%
Show answer & explanation
Answer: B
Loan-to-value ratio equals the loan amount divided by the property's value, so $224,000 divided by $280,000 equals 80%. Twenty percent instead represents the down payment share of the price ($56,000 of $280,000), the inverse figure a buyer would get by miscalculating what the loan-to-value ratio measures.
13. During a continuing-education workshop in Peru, an instructor asks trainees to work out a homeowner's refinance closing costs: the new lender agrees to shave a quarter point off the rate in exchange for three discount points charged against a $180,000 refinanced balance. What will those three points cost the homeowner at closing?
- A. $5,400
- B. $54,000
- C. $1,800
- D. $18,000
Show answer & explanation
Answer: A
Each discount point equals one percent of the loan amount, so three points on a $180,000 refinanced balance equal 3% of $180,000, or $5,400. $1,800 reflects only a single point rather than the three points actually charged, and $54,000 results from misplacing a decimal and treating the points as 30% instead of 3%.
14. A homeowner's monthly mortgage payment includes principal, interest, property taxes, and homeowners insurance combined into one figure collected by the lender. What is this combined payment commonly called?
- A. PITI
- B. APR
- C. ARM
- D. LTV
Show answer & explanation
Answer: A
PITI stands for principal, interest, taxes, and insurance, referring to the combined monthly housing payment that many lenders collect and hold in escrow to pay taxes and insurance on the borrower's behalf. APR instead refers to the annual percentage rate, a cost-of-credit figure required under Truth in Lending disclosures, not a monthly payment structure.
15. Early in a 30-year amortized mortgage, the majority of each monthly payment is applied to interest rather than principal. As the loan matures over the years, how does this allocation typically change?
- A. The principal portion decreases every month
- B. A larger share of each payment gradually goes toward principal and a smaller share toward interest
- C. Payments stop including interest entirely after the halfway point
- D. The interest portion stays exactly the same every month
Show answer & explanation
Answer: B
In a standard amortizing loan, the interest portion of each payment is calculated on the remaining balance, so as principal is paid down the interest owed shrinks and a growing share of the level payment is applied to principal instead. The interest and principal portions do not stay fixed month to month, since the declining balance drives the shift between them.
16. A borrower stops making mortgage payments, and the lender pursues foreclosure through the court system, obtaining a judgment before the property can be sold at a sheriff's sale. What type of foreclosure process is this?
- A. Power of sale foreclosure
- B. Strict foreclosure
- C. Judicial foreclosure
- D. Deed in lieu of foreclosure
Show answer & explanation
Answer: C
Judicial foreclosure requires the lender to file a lawsuit and obtain a court judgment before the property can be sold, which matches a process that goes through the courts before a sheriff's sale. A deed in lieu of foreclosure is an entirely different, voluntary arrangement in which the borrower transfers the deed to the lender to avoid the foreclosure process altogether.
17. An appraiser in Lafayette adjusts the sale price of a comparable home that has an extra bathroom the subject property lacks. Should the appraiser add value to the comparable, subtract it, or add value to the subject property instead?
- A. Add value to the subject property
- B. Make no adjustment at all
- C. Subtract value from the comparable because it has a feature the subject lacks
- D. Subtract value from the subject property
Show answer & explanation
Answer: C
In the sales comparison approach, adjustments are always made to the comparable property, never to the subject, and when the comparable has a superior feature the subject lacks, that value must be subtracted from the comparable to make it equivalent to the subject. Adding value to the subject property directly would violate the core rule that only comparables are adjusted during this analysis.
18. Three siblings settling their late father's estate in Muncie need to agree on a value for his rental duplex before dividing the proceeds. The duplex nets $45,000 in annual operating income, and comparable investment sales in the area support a 9% capitalization rate. What value should the siblings assign to the duplex under the income capitalization approach?
- A. $50,000
- B. $405,000
- C. $4,050
- D. $500,000
Show answer & explanation
Answer: D
Value under the income capitalization approach is found by dividing net operating income by the capitalization rate, so $45,000 divided by 0.09 equals $500,000. Multiplying net income by the rate instead of dividing by it produces $4,050, and dividing by 0.9 instead of 0.09 produces $50,000, both common decimal-placement errors.
19. If a triplex in Franklin recently sold for $300,000 after renting for a combined $2,500 per month, what gross monthly rent multiplier does that sale reflect?
- A. $2,500
- B. 120
- C. 24
- D. 12
Show answer & explanation
Answer: B
The gross rent multiplier is calculated by dividing the sale price by the monthly rent, so $300,000 divided by $2,500 equals 120. Dividing by the wrong figure, such as mistakenly treating the rent in the wrong units, would produce a much smaller multiplier like 12 or 24, which does not match how the gross rent multiplier is actually derived.
20. A listing agent in Bloomington learns during a showing that the home's basement flooded twice last year but the seller does not want this mentioned to buyers. What should the agent do regarding this known material fact?
- A. Wait until after closing to mention it
- B. Disclose it only to buyers who submit a written offer
- C. Say nothing unless a buyer directly asks about flooding
- D. Disclose the known flooding history because it is a material fact affecting the property's value and desirability
Show answer & explanation
Answer: D
A known material fact that would affect a reasonable buyer's decision, such as a documented history of flooding, generally must be disclosed regardless of whether a buyer happens to ask, because withholding known material defects can expose both the agent and seller to liability for misrepresentation. Waiting until after closing defeats the entire purpose of disclosure, since the buyer would already be bound to the purchase by then.
21. A broker in Fort Wayne deposits client earnest money directly into the brokerage's general operating account rather than a separate trust or escrow account. What ethical and legal problem does this create?
- A. It is acceptable temporarily until closing
- B. None, as long as the broker tracks it in a spreadsheet
- C. It constitutes commingling of client funds with the broker's own money, which is prohibited
- D. It is only a problem if the amount exceeds a large dollar figure
Show answer & explanation
Answer: C
Depositing client trust funds into a brokerage's general operating account is commingling, a serious violation because it mixes funds that belong to clients with the broker's own operating money, risking loss of client funds and violating fiduciary obligations. Careful spreadsheet tracking does not cure commingling, since the legal problem is the physical mixing of the funds themselves, not just how well they are recorded.
22. An agent in Terre Haute places a newspaper ad for a listing that includes only a phone number, with no mention of the brokerage name or the fact that the person answering is a licensed real estate agent. What ethical advertising problem does this create?
- A. It is a form of steering
- B. It is a 'blind ad' that fails to identify the brokerage and the advertiser's licensed status
- C. It automatically voids the listing agreement
- D. It violates fair housing law automatically
Show answer & explanation
Answer: B
Advertising that omits the brokerage's identity and the fact that the person placing it is a licensed real estate professional is commonly called a blind ad, and most licensing rules require ads to clearly identify the brokerage to protect consumers from confusion about who they are dealing with. This omission is a truth-in-advertising and licensing issue rather than a fair housing violation, which specifically concerns discrimination against protected classes.
23. A listing agent in Marion receives three competing offers on the same day and only forwards the highest one to the seller without mentioning the other two. What ethical duty has the agent likely violated?
- A. The duty to disclose agency relationships
- B. The duty of confidentiality to the buyers
- C. The duty to present all offers to the seller
- D. The duty to verify buyer financing before showing an offer
Show answer & explanation
Answer: C
A listing agent generally owes the seller a duty to present all offers received, since the seller, not the agent, has the right to evaluate and decide among competing offers. Withholding offers deprives the seller of information needed to make an informed decision and undermines the agent's basic obligation of full disclosure to their own client.
24. A rental agent in South Bend refuses to show available units to a prospective tenant after learning the applicant practices a particular religion, even though the applicant is otherwise qualified. Which federal law most directly prohibits this conduct?
- A. The Fair Housing Act
- B. The Equal Credit Opportunity Act
- C. The Real Estate Settlement Procedures Act
- D. The Truth in Lending Act
Show answer & explanation
Answer: A
The Fair Housing Act prohibits discrimination in housing transactions based on protected characteristics, including religion, making it the law most directly violated by refusing to show units to a qualified applicant because of their faith. The Truth in Lending Act and RESPA instead govern credit cost disclosures and settlement procedures, not discriminatory treatment in housing access.
25. In New Albany, a renter with a mobility impairment who uses a wheelchair asks her landlord for permission to add a ramp, at her own cost, at the entrance of the apartment she leases. Under federal fair housing principles, how should this request generally be treated?
- A. As a request that requires a court order before it can be granted
- B. As an unreasonable request the landlord can deny outright
- C. As a reasonable modification that the landlord generally must allow, though the tenant may bear the cost
- D. As a request only available to homeowners, not renters
Show answer & explanation
Answer: C
Federal fair housing principles generally require landlords to allow a tenant with a disability to make a reasonable modification to the premises at the tenant's own expense, such as installing a ramp, because refusing to permit reasonable access-related changes constitutes disability discrimination. Denying the request outright would ignore the landlord's obligation to accommodate reasonable modification requests tied to a disability.
26. A lender in Portage provides a borrower with a disclosure showing the annual percentage rate, finance charges, and total payments before the loan is finalized. Which federal law requires this type of cost-of-credit disclosure?
- A. The Truth in Lending Act
- B. The Fair Housing Act
- C. The Equal Credit Opportunity Act
- D. RESPA
Show answer & explanation
Answer: A
The Truth in Lending Act requires lenders to disclose the true cost of credit, including the annual percentage rate and finance charges, so borrowers can compare loan offers on a consistent basis. RESPA instead focuses on disclosing settlement costs and prohibiting kickbacks in the closing process, which is a related but distinct set of consumer protections from the interest-rate cost disclosures required under Truth in Lending.
27. A real estate licensee in Indianapolis is accused of a serious violation of Indiana real estate law, including possible misuse of client funds. Which body has the authority to investigate and take disciplinary action against the licensee's real estate license?
- A. The Indiana Real Estate Commission, operating through the Indiana Professional Licensing Agency
- B. The Indiana Bar Association
- C. The local county recorder's office
- D. The buyer's title insurance company
Show answer & explanation
Answer: A
The Indiana Real Estate Commission, administered through the Indiana Professional Licensing Agency, is the regulatory body responsible for licensing real estate professionals in the state and for investigating and disciplining licensees who violate real estate law. A county recorder's office handles the recording of documents like deeds and mortgages and has no authority over professional licensing or discipline.
28. A broker in Evansville who has held an active Indiana broker license for eighteen months wants to apply immediately to become a managing broker so she can open her own brokerage. Based on Indiana's experience requirement for this upgrade, can she apply now?
- A. No, managing broker status is granted only by court order
- B. Yes, there is no minimum time requirement
- C. No, she must first hold an active broker license for a minimum number of years before qualifying
- D. Yes, as long as she passes a written test the same day
Show answer & explanation
Answer: C
Indiana requires a broker to hold an active license for a set minimum number of years before becoming eligible to apply for managing broker status, so an eighteen-month broker would need to wait significantly longer before qualifying. There is no provision allowing this experience requirement to be bypassed through a same-day written test.
29. A newly eligible broker in Carmel who meets the experience requirement wants to become a managing broker so she can supervise other licensees at her own brokerage. Beyond experience, what additional step does Indiana require before she can take on that supervisory role?
- A. Passing the state bar exam
- B. Purchasing a specific amount of errors and omissions insurance
- C. Completing an additional managing broker course covering supervisory responsibilities
- D. Filing federal tax returns for the brokerage
Show answer & explanation
Answer: C
Indiana requires an eligible broker to complete an additional managing broker course focused on supervisory and brokerage-management responsibilities before being granted managing broker status, reflecting the added duties of overseeing other licensees. Passing a bar exam is a requirement for practicing law, not real estate brokerage, and is unrelated to this licensing step.
30. A managing broker in Bloomington is responsible for a team of affiliated licensees at her brokerage. Which of the following best describes a core responsibility that comes with her managing broker status?
- A. Supervising affiliated licensees' compliance with real estate law and reviewing their transaction records
- B. Personally negotiating every offer submitted by affiliated licensees
- C. Determining zoning classifications for properties her licensees list
- D. Setting the maximum sale price for every listing in the county
Show answer & explanation
Answer: A
A managing broker's core responsibility includes supervising the affiliated licensees at the brokerage, which involves overseeing their compliance with real estate law and reviewing transaction paperwork for accuracy and completeness. Setting listing prices or personally negotiating every deal is not a legal requirement of the role and would be impractical for a broker overseeing multiple licensees.
31. A broker in Lafayette holds an Indiana real estate license and wants to know when it must be renewed to remain active and in good standing. What is the general renewal cycle for an Indiana broker license?
- A. Every 3 years
- B. Only once, for life, with no renewal needed
- C. Every 10 years
- D. Every 6 months
Show answer & explanation
Answer: A
Indiana broker licenses must be renewed on a recurring cycle every three years to remain active, which requires the licensee to stay current with any applicable renewal obligations. A license that never required renewal would be inconsistent with the ongoing regulatory oversight the Commission maintains over active licensees.
32. A broker in Noblesville wants to keep her Indiana license active between renewal cycles and understands she must complete continuing education regularly to remain in compliance. What is the general nature of this ongoing requirement?
- A. An annual continuing education obligation that must be met each CE year to stay in compliance
- B. A one-time course taken only when first licensed
- C. A course required only for managing brokers, never for brokers
- D. A requirement that only applies if the broker changes brokerages
Show answer & explanation
Answer: A
Indiana requires licensees to complete continuing education on a recurring annual basis to remain in good standing, which is distinct from the one-time pre-licensing coursework completed before initial licensure. This ongoing obligation applies broadly to active licensees, not merely to those who switch brokerages or hold managing broker status.
33. A licensee in Westfield just received her first Indiana broker license and wants to know about any additional education she must complete during her early years of practice, beyond the initial pre-licensing coursework. What applies to newly licensed brokers in Indiana?
- A. Nothing further is required until the first renewal cycle
- B. New licensees must complete post-licensing education within a set period after initial licensure
- C. Only brokers who fail their first transaction must complete extra coursework
- D. Post-licensing education is optional and has no deadline
Show answer & explanation
Answer: B
Indiana requires newly licensed brokers to complete post-licensing education within a defined window after the license is first issued, recognizing that new licensees benefit from additional practical training early in their careers. This obligation applies to all new licensees generally, not just those who experience a failed transaction, and it is not optional.
34. A broker in Gary let her Indiana license expire four years ago and now wants to return to active practice. Based on Indiana's reinstatement structure for a lapse of this length, what is she generally required to do?
- A. Complete the full pre-licensing course again and retake both exam portions
- B. Complete a set amount of continuing education and retake only the state portion of the exam
- C. Immediately reapply with no additional education or testing
- D. Nothing, licenses in Indiana never expire
Show answer & explanation
Answer: B
For a license expired in the multi-year range that Indiana treats as a mid-length lapse, the licensee generally must complete a defined amount of continuing education and retake only the state-specific portion of the exam, rather than starting over entirely. Requiring the full pre-licensing course and both exam portions applies to much longer lapses, not a four-year gap.
35. A former broker in Richmond let his Indiana license lapse more than nine years ago and now wants to practice again. What does Indiana generally require for a lapse of this length compared to a shorter lapse of just a few years?
- A. Only a brief refresher webinar with no exam
- B. Completing the full pre-licensing course again and retaking both the national and state portions of the exam
- C. Automatic reinstatement without any additional education
- D. The exact same requirements as someone whose license lapsed for one year
Show answer & explanation
Answer: B
A lapse of nine or more years triggers Indiana's most extensive reinstatement path, requiring the applicant to complete the full pre-licensing course again and retake both the national and state portions of the exam, treating the applicant much like a brand-new candidate. This is significantly more demanding than the requirements for a shorter multi-year lapse, which typically only requires continuing education and retaking the state portion.
36. The Indiana Real Estate Commission grants two distinct types of real estate licenses to individuals who meet the applicable requirements. Which two license types does the Commission issue?
- A. Real Estate Broker and Real Estate Managing Broker
- B. Realtor and Non-Realtor Broker
- C. Agent and Sub-Agent
- D. Salesperson and Associate Broker
Show answer & explanation
Answer: A
Indiana's licensing structure grants two license types: Real Estate Broker, the entry-level license, and Real Estate Managing Broker, an advanced designation requiring additional experience and education for those who supervise a brokerage. Indiana does not use a separate 'salesperson' entry-level license title the way some other states do, since the entry-level license itself is called 'Broker.'
37. A newly licensed individual in Anderson holds an active Indiana real estate broker license but has not yet joined any brokerage. Can this person legally conduct real estate transactions for members of the public on their own?
- A. No, brokers in Indiana can never affiliate with a brokerage
- B. Yes, but only for transactions under a small dollar amount
- C. Yes, an Indiana broker license allows independent practice from day one
- D. No, a broker must be affiliated with a managing broker or brokerage to actively practice
Show answer & explanation
Answer: D
An entry-level Indiana broker license generally must be affiliated with a managing broker or brokerage in order to actively engage in real estate transactions with the public, since the managing broker provides required supervision over newer licensees. A newly licensed broker practicing entirely independently, with no brokerage affiliation, would not meet this supervisory structure that Indiana's license law is built around.
38. A managing broker in Kokomo is legally responsible for how client trust funds, such as earnest money deposits, are handled by the brokerage's affiliated licensees. What does this responsibility generally require of the managing broker?
- A. Transferring all trust funds into the managing broker's personal account for safekeeping
- B. Overseeing proper handling and recordkeeping of client trust funds to prevent misuse or commingling
- C. Personally spending trust funds on brokerage marketing expenses
- D. Ignoring trust account records unless a client complains
Show answer & explanation
Answer: B
A managing broker bears ultimate responsibility for ensuring that client trust funds handled by the brokerage's affiliated licensees are properly maintained, accurately recorded, and never commingled with brokerage or personal funds. Transferring trust funds into a personal account would itself be a serious violation, not a legitimate form of safekeeping.
39. Marcus owns a home in Fort Wayne with a deed that grants ownership for the remainder of his life, after which the property will pass to his daughter. What type of estate does Marcus hold?
- A. Estate for years
- B. Life estate
- C. Tenancy at will
- D. Fee simple absolute
Show answer & explanation
Answer: B
Marcus holds a life estate, which grants full possessory rights only for the duration of a named life, with the property automatically passing to a designated remainderman (his daughter) at death. A fee simple absolute would give him unlimited duration and full inheritable rights, which does not match the deed's limitation to his lifetime.
40. A property owner in Bloomington grants a neighbor the right to cross her backyard to reach a shared alley, and the right is recorded to run with the land regardless of who owns either parcel. What kind of easement has been created?
- A. Encroachment
- B. Easement in gross
- C. Easement appurtenant
- D. License
Show answer & explanation
Answer: C
An easement appurtenant benefits a specific parcel of land and transfers automatically with the land to future owners, matching a right recorded to run with the land. An easement in gross benefits a person or entity rather than an adjoining parcel and typically does not transfer with land ownership, so it would not fit this recorded, land-tied right.
41. A pair of cousins in South Bend buy a small strip mall together and hold title as joint tenants with right of survivorship. One cousin later dies. What happens to that cousin's ownership share?
- A. It passes automatically to the surviving joint tenant
- B. It is divided equally among the deceased's creditors
- C. It converts automatically to a tenancy in common
- D. It passes through probate to the deceased's heirs
Show answer & explanation
Answer: A
The defining feature of joint tenancy with right of survivorship is that a deceased owner's interest passes automatically and immediately to the surviving joint tenant, bypassing probate entirely. Tenancy in common does not include survivorship rights, so an interest held that way would instead pass through the deceased's estate to heirs.
42. During a survey ahead of closing, it is discovered that a homeowner's storage shed in South Bend extends eighteen inches over the property line onto the neighbor's lot. What term describes this situation?
- A. Lien
- B. Deed restriction
- C. Encroachment
- D. Easement by necessity
Show answer & explanation
Answer: C
An encroachment occurs when a structure or improvement physically extends onto an adjoining owner's land without legal right, exactly as described by the shed crossing the property line. A deed restriction, by contrast, is a private limitation on how land may be used that is written into the deed itself, not a physical intrusion discovered by survey.
43. A buyer's agent in Lafayette learns that her client is willing to pay well above the listing price but tells the seller's agent only that her client 'might go a little higher.' Which fiduciary duty is the agent violating toward her own client?
- A. Duty of accounting
- B. Duty of disclosure to the public
- C. Duty of confidentiality
- D. Duty of reasonable care
Show answer & explanation
Answer: C
A buyer's agent owes her client confidentiality regarding sensitive negotiating information, such as the maximum price the client is willing to pay, because revealing it undermines the client's bargaining position. Duty of accounting concerns handling of client funds and documents, not the disclosure of negotiation strategy, so it does not describe this violation.
44. A homeowner in Valparaiso enters into a listing contract under which the broker is owed a commission regardless of who actually procures the buyer, even if the homeowner finds the buyer without any help. What kind of listing is this?
- A. Net listing
- B. Open listing
- C. Exclusive agency listing
- D. Exclusive right to sell
Show answer & explanation
Answer: D
An exclusive right to sell listing guarantees the broker a commission regardless of who procures the buyer, including the seller, which distinguishes it from an exclusive agency listing where the seller can still sell the property without owing a commission if the seller personally finds the buyer. An open listing allows multiple brokers to compete and pays only the one who produces the buyer, which does not match a guarantee that survives even a seller-found sale.
45. Two cooperating agents both showed the same buyer a home in Gary before the buyer eventually purchased it through one of them. In a commission dispute, what standard determines which agent earned the commission?
- A. Which agent held the listing agreement
- B. Which agent showed the property first
- C. Which agent has more years of experience
- D. Which agent was the procuring cause of the sale
Show answer & explanation
Answer: D
Procuring cause looks at which agent's efforts were the primary, uninterrupted force that led to the buyer's decision to purchase, not simply who showed the home earliest. Showing a property first does not by itself establish procuring cause if the buyer's eventual purchase decision resulted mainly from another agent's continued negotiation and follow-through.
46. A seller in Anderson signs a six-month exclusive listing agreement, but after four months decides she no longer wants to sell and asks the broker to cancel it. What is generally required to properly end the agency relationship before its stated expiration?
- A. Nothing, listing agreements expire automatically on request
- B. The buyer must consent to the termination
- C. Mutual agreement or release by both parties
- D. The seller simply stops answering calls
Show answer & explanation
Answer: C
A listing agreement is a contract between broker and seller, so ending it before the stated term generally requires mutual agreement, such as a signed release, rather than one party unilaterally walking away. Simply stopping communication does not legally terminate the contractual agency relationship and could leave obligations, such as a commission if a ready buyer was already procured, unresolved.
47. A buyer represented by an agent under a buyer agency agreement decides to make an offer on a home that the buyer's own agent has listed for a different seller client. What has occurred?
- A. A potential dual agency conflict of interest
- B. Subagency
- C. Steering
- D. Redlining
Show answer & explanation
Answer: A
When the same agent represents both the buyer making the offer and the seller of that specific listed property, the agent now owes fiduciary duties to two principals with competing interests, creating a dual agency conflict of interest that typically requires informed consent from both parties. Steering and redlining instead describe discriminatory fair-housing violations involving protected classes, which has nothing to do with an agent representing both sides of one transaction.
48. A purchase contract for a home in Greenwood makes closing conditional on the buyer securing loan approval within 21 days of signing. The buyer submits a complete, good-faith application, but the lender denies the loan before the deadline. What is the typical result?
- A. The seller can sue for specific performance
- B. The contract remains binding regardless of the denial
- C. The buyer may terminate the contract and typically recover the earnest money
- D. The buyer forfeits the earnest money automatically
Show answer & explanation
Answer: C
A financing contingency protects the buyer by making the contract's performance conditional on obtaining loan approval, so a good-faith denial within the stated window typically allows the buyer to terminate without penalty and recover the earnest money deposit. Automatic forfeiture would defeat the entire purpose of including a financing contingency in the agreement.
49. In Anderson, a grantor transfers a property using a deed that guarantees clear title only for the period during which the grantor personally held the property, without covering any defects that may have arisen earlier in the chain of title. What type of deed is this?
- A. General warranty deed
- B. Bargain and sale deed without covenants
- C. Special warranty deed
- D. Quitclaim deed
Show answer & explanation
Answer: C
A special warranty deed limits the grantor's warranty of clear title to the period during which the grantor personally held ownership, offering less protection than a general warranty deed, which warrants against title defects arising at any point in the property's history. A quitclaim deed offers even less protection, conveying only whatever interest the grantor may have with no warranty at all.
50. An elderly property owner in Brownsburg signs a deed naming her nephew as grantee, but she simply files it away in a home safe and dies before ever handing it over, mailing it, or otherwise transferring it to him. Has title to the property legally passed to the nephew?
- A. No, because delivery of the deed to the grantee is required for a valid transfer
- B. No, but only because the deed was not recorded
- C. Yes, because the deed only needs to be notarized
- D. Yes, because signing alone completes the transfer
Show answer & explanation
Answer: A
A deed must be delivered to and accepted by the grantee to effectively transfer title; a signed deed that is never delivered has not completed the legal transfer, regardless of the grantor's intent. Recording is a separate step that provides public notice of an already-completed transfer, but its absence is not the reason this transfer failed here.
51. In Crown Point, a seller who signed a binding purchase contract suddenly refuses to close on the sale, despite the buyer standing ready, willing, and able to complete the purchase. Rather than accept monetary damages, the buyer asks the court to order the seller to go through with the sale. What remedy is the buyer seeking?
- A. Liquidated damages
- B. Rescission
- C. Specific performance
- D. Compensatory damages only
Show answer & explanation
Answer: C
Specific performance is an equitable remedy in which a court orders the breaching party to actually complete the contract as agreed, which fits a buyer who wants the sale finalized rather than just monetary compensation. Rescission instead cancels the contract and returns both parties to their pre-contract positions, which is the opposite of forcing the sale to close.
52. A general contractor performs unpaid work on a home in Hammond and records a mechanic's lien against the property after the first mortgage was already recorded. In a foreclosure, which lien generally gets paid first from sale proceeds?
- A. The mechanic's lien, because labor claims always come first
- B. Whichever lien is smaller in dollar amount
- C. The first mortgage, because it was recorded earlier and has priority
- D. The IRS automatically takes priority over both
Show answer & explanation
Answer: C
Lien priority generally follows the rule of 'first in time, first in right,' meaning a mortgage recorded before a later mechanic's lien is typically paid first from foreclosure sale proceeds. Some jurisdictions grant certain mechanic's liens special priority dating back to when work began, but as a general default rule, the earlier-recorded mortgage retains priority over a later-recorded lien.
53. "I already paid the whole year's property taxes," the seller in Shelbyville tells the buyer's agent ahead of a closing set for October 1, referring to a $4,800 tax bill covering the full year. How is this typically handled between the parties at settlement?
- A. The buyer credits the seller for the portion of prepaid taxes covering the time after closing
- B. The seller receives no adjustment because taxes are never prorated
- C. The seller forfeits the prepaid amount entirely
- D. The buyer pays the full $4,800 again directly to the county
Show answer & explanation
Answer: A
Because the seller prepaid taxes covering a period that extends past the closing date, the buyer reimburses the seller through a proration credit for the days of ownership after closing that the prepayment already covers. Property taxes are a classic prorated item at closing precisely because ownership, and the benefit of a prepayment, changes hands mid-period.
54. While valuing a property in Mishawaka, an appraiser starts with the value of the land alone, adds what it would cost today to rebuild the existing improvements from scratch, and then deducts accumulated depreciation from that construction figure. Which valuation approach is being used?
- A. Gross rent multiplier approach
- B. Cost approach
- C. Sales comparison approach
- D. Income capitalization approach
Show answer & explanation
Answer: B
The cost approach values a property by adding the land value to the current reproduction or replacement cost of the improvements and then subtracting depreciation, which matches this exact sequence of steps. The income capitalization approach instead derives value from a property's income-producing potential, which has no role in a calculation built from land value, construction cost, and depreciation.
55. A vacant commercial lot in Indianapolis sits at the corner of two busy streets and is currently used as a single-family residence, even though zoning and market conditions would support a much more profitable retail use. What appraisal concept addresses what the site should ideally be used for?
- A. Economic obsolescence
- B. Substitution
- C. Functional obsolescence
- D. Highest and best use
Show answer & explanation
Answer: D
Highest and best use identifies the legally permissible, physically possible, financially feasible, and maximally productive use of a site, which is exactly the question of whether the residential use is the ideal use given the location's retail potential. Functional obsolescence instead refers to a loss in value from an outdated design or feature within an existing structure, not a broader question about the site's optimal use.
56. A homeowner in Richmond believes her property's assessed value for tax purposes should equal exactly what a buyer would pay for it on the open market today. Is assessed value the same thing as market value?
- A. Yes, they are always identical by law
- B. No, market value is always higher than assessed value
- C. No, assessed value is set by a taxing authority for tax purposes and may differ from current market value
- D. Yes, because both are set by licensed appraisers exclusively
Show answer & explanation
Answer: C
Assessed value is a figure determined by a local taxing authority for property tax purposes, often based on a mass appraisal cycle, and it can differ meaningfully from current market value, which reflects what a willing buyer would pay a willing seller today. There is no fixed rule that market value is always higher than assessed value, since the relationship between the two varies by jurisdiction and timing of reassessment.
57. In Columbus, Indiana, an escrow company proposes paying a real estate agent a flat fee for each new client the agent sends their way, even though the agent performs no actual work on the escrow company's behalf in exchange. What federal concern does this arrangement raise?
- A. It is a truth-in-lending violation
- B. It only matters if the payment is very large
- C. It violates the Fair Housing Act
- D. It resembles a prohibited kickback for referrals under settlement services law
Show answer & explanation
Answer: D
Accepting payment for referring settlement service business, such as title work, without providing any actual service in exchange resembles the type of unearned kickback that consumer settlement laws are designed to prevent, since such arrangements can inflate closing costs without benefiting the consumer. The Fair Housing Act instead addresses discrimination based on protected classes in housing transactions, which is a separate legal concern from referral-fee kickbacks.
58. A licensed agent in Hammond wants to personally purchase a home that a colleague at the same brokerage has listed for a seller client. What must the agent do before submitting a personal offer on this listing?
- A. Nothing, since the seller is a different agent's client
- B. Automatically forfeit the right to buy any brokerage listing
- C. Disclose in writing that the agent is a licensee with a personal interest in the purchase
- D. Wait until the license renews before making an offer
Show answer & explanation
Answer: C
When a licensee wants to purchase property listed by their own brokerage, ethical and legal standards generally require written disclosure of the licensee's status and personal interest in the transaction, because the seller deserves to know that the buyer has professional insight and access the average buyer does not. Assuming no disclosure is needed simply because a different agent holds the listing ignores that the brokerage, and often the individual licensee, still has knowledge and obligations tied to that listing.
59. An agent in Gary consistently tells home-seeking families with children about listings only in one particular neighborhood, while steering childless buyers toward a wider range of neighborhoods across the city. What discriminatory practice does this describe?
- A. Blockbusting
- B. Redlining
- C. Steering
- D. A bona fide occupational qualification
Show answer & explanation
Answer: C
Steering describes the practice of limiting or directing a home seeker's choices toward or away from certain neighborhoods based on a protected characteristic, such as familial status, rather than presenting the full range of otherwise-appropriate options. Redlining instead refers to lenders or insurers denying services to entire geographic areas, typically based on the demographic composition of the area, which is a distinct practice from an agent's individualized steering of buyers.
60. A mortgage lender in Elkhart denies a loan applicant and cites the applicant's receipt of public assistance income as the reason, even though the applicant's income is verifiable and sufficient. What federal law most directly addresses this potential violation?
- A. The Fair Housing Act
- B. The Interstate Land Sales Full Disclosure Act
- C. RESPA
- D. The Equal Credit Opportunity Act
Show answer & explanation
Answer: D
The Equal Credit Opportunity Act prohibits creditors from discriminating against applicants based on factors including the receipt of public assistance income, making it the law most directly relevant to a lender denying credit specifically because of that income source. RESPA instead governs settlement service disclosures and prohibits kickbacks, which does not address discriminatory lending decisions based on income source.
61. A title company in Warsaw provides the buyer with a standardized form at closing that itemizes all settlement charges, including title fees and recording costs, to promote transparency in the closing process. Which federal law is most directly associated with requiring this kind of settlement cost disclosure?
- A. The Equal Credit Opportunity Act
- B. The Fair Housing Act
- C. The Americans with Disabilities Act
- D. RESPA
Show answer & explanation
Answer: D
The Real Estate Settlement Procedures Act requires clear disclosure of settlement costs to homebuyers and prohibits kickbacks or unearned fees among settlement service providers, which matches an itemized closing cost disclosure. The Americans with Disabilities Act instead addresses accessibility in public accommodations and has no connection to settlement cost disclosure requirements.

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Key facts: Indiana Real Estate exam

145

MCQ questions

Scaled 75

To pass

Time limit

$55

Exam fee

The Indiana Real Estate is administered by Indiana Professional Licensing Agency (Indiana Real Estate Commission), with 145 scored questions, a 4 hours time limit and a Scaled 75 result.

This free Indiana Real Estate practice test has 61 original questions written to Indiana Professional Licensing Agency (Indiana Real Estate Commission)'s official content outline, last checked against it on August 10, 2026. Every question shows a worked explanation, and nothing here requires a signup.

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

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Official sources

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

Indiana Real Estate Candidate Handbook (Pearson VUE)Indiana Professional Licensing Agency (Indiana Real Estate Commission)pearsonvue.com
PLA: Real Estate Licensing Information - IN.govIndiana Professional Licensing Agency (Indiana Real Estate Commission)in.gov
Indiana Real Estate Content Outlines (Pearson VUE)Indiana Professional Licensing Agency (Indiana Real Estate Commission)pearsonvue.com
PLA: Real Estate Commission - IN.govIndiana Professional Licensing Agency (Indiana Real Estate Commission)in.gov
Indiana Real Estate | Pearson VUEIndiana Professional Licensing Agency (Indiana Real Estate Commission)pearsonvue.com

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

Frequently asked questions

How many questions will I see on the Indiana real estate broker exam?

The Indiana broker exam totals 145 questions administered within a single 240-minute session — 80 scored items on the national/general portion and 50 scored items on the state-specific portion, plus a handful of unscored pretest items included in that total.

What score do I need to pass?

Indiana requires a scaled score of 75 on each portion of the exam, so use that as your practice-test target before scheduling test day.

How should I use a practice test to prepare for the Indiana broker exam?

Work through timed practice sets that mirror the real exam's item counts and topic split, review every missed question against the official content outline, and keep repeating until you're consistently scoring above the 75 passing threshold.

Is this practice test free and does it require signing up?

Yes — this practice test is free to use and doesn't require creating an account or entering payment information.

What does the pre-licensing course cover before I can sit for the exam?

Indiana requires a 90-hour pre-licensing course before you're eligible to test, and it covers the licensing rules, office procedures, and statutes that later appear on the state-specific portion of the exam.

How much time do I have to pass both parts of the exam?

You must take and pass both the national and state portions within one year of completing your pre-licensing course.