Louisiana Real Estate Practice Exam.
Free practice test — 61 verified questions, instant feedback.

Answer: D
Louisiana civil law uses the term "servitude" where common-law states say "easement," and a right of passage attached to the benefited land itself, so that it transfers automatically to whoever owns that land, is a predial servitude, not a personal right tied to one individual. The distractor describing a personal servitude confuses a right benefiting a person with one benefiting an estate, and a license or restriction ignores the fact the right runs with the land.

Answer: A
A subcontractor or supplier who furnishes labor or materials to improve real property and is not paid can secure that debt with a construction/mechanic's lien against the specific property improved, exactly matching the rewiring scenario. A judgment lien only arises from a separate court judgment, a tax lien comes from unpaid property taxes rather than unpaid work, and a purchase-money mortgage lien secures the owner's original acquisition loan, none of which fits an unpaid subcontractor invoice.

Answer: A
A variance is permission granted by a zoning board to deviate from the literal terms of an ordinance because strict enforcement would create unnecessary hardship for a particular parcel, which matches the garage setback scenario exactly. A nonconforming use protects a pre-existing use after a zoning change, a conditional use permit allows a listed special use subject to conditions, and a rezoning amendment changes the underlying zoning classification for an area rather than granting an individual exception.

Answer: B
The duty of confidentiality obligates an agent to protect the principal's sensitive negotiating information, such as the lowest price the seller would accept, from being disclosed to the other side without the principal's consent. Obedience concerns following lawful instructions, reasonable care concerns competent handling of the transaction, and accounting concerns properly tracking funds and documents, none of which governs whether price information may be shared.

Answer: A
An exclusive agency buyer agreement locks the buyer into working with one agent for properties that agent locates, but still allows the buyer to independently find and purchase a property without owing that agent a commission, matching the described carve-out. An exclusive right-to-represent agreement entitles the agent to a commission regardless of who finds the property, an open agreement lets the buyer work with multiple agents freely, and a net listing is a seller-side arrangement, not a buyer agreement.

Answer: B
The federal Fair Housing Act protects race, color, national origin, religion, sex, familial status, and disability, but an applicant's occupation or job title is not among the federally protected classes, even though some employers or lenders may separately consider it for unrelated reasons. Race, sex, and national origin are each explicitly listed as protected classes under the federal Act.

Answer: B
A general agent is authorized to handle a range of matters within a defined scope of business, such as ongoing property management, which is broader than a single transaction but still limited to that business area, matching the description given. A special agent (the typical real estate brokerage relationship) is authorized for only one specific transaction, universal agency would cover essentially all of the principal's affairs without limit, and ostensible agency arises from appearances rather than an actual grant of authority.

Answer: A
An open listing allows the seller to list with several agents simultaneously and pay a commission only to whichever agent actually produces the buyer, and it lets the seller sell independently without owing anyone a fee, matching the arrangement described. An exclusive right-to-sell listing pays the listing agent regardless of who finds the buyer, a net listing bases compensation on proceeds above a set amount, and "multiple listing" refers to sharing a listing through an MLS rather than a distinct compensation structure.

Answer: C
A valid contract requires mutual assent (offer and acceptance), consideration exchanged between the parties, competent parties with legal capacity, and a lawful purpose; without consideration and capacity, even a signed agreement can be void or voidable. An agent's signature, an appraisal, or a survey may be common in practice but are not themselves essential elements that make the contract legally enforceable.

Answer: D
Louisiana's civil-law system uses the term "act of sale" (executed before a notary) for the instrument transferring ownership of immovable property, rather than the common-law "deed" terminology used in most other states. Warranty, quitclaim, and bargain-and-sale deeds are common-law instruments with varying warranty levels that are not the terminology used for a standard Louisiana property transfer.

Answer: D
When a party is induced to enter a contract based on a knowingly false statement about a material fact, such as a fabricated roof replacement, the injured party may seek rescission (undoing the contract) or damages for fraudulent misrepresentation. Assignment moves contractual rights to a third party and has nothing to do with fraud, criminal prosecution is a matter for the state rather than a private civil remedy the buyer directly pursues, and specific performance compels completion of the original deal rather than addressing a fraud-based objection to it.

Answer: A
The APR is designed to give borrowers a more complete picture of borrowing cost by folding in certain finance charges, such as discount points and some fees, in addition to the base note rate, which is why it is usually higher than the note rate rather than lower. APR is a federally standardized disclosure under Truth in Lending, not an arbitrary marketing figure, and it applies to fixed-rate loans just as much as adjustable-rate ones.

Answer: A
The statute of frauds requires contracts for the sale of real property to be in writing and signed to be enforceable, so a purely verbal agreement, no matter how sincere the handshake, generally cannot be enforced in court. A broker's witnessing does not cure the lack of a written instrument, and there is no rule making an oral real estate agreement enforceable for a temporary one-year period before requiring writing.

Answer: C
An inspection contingency typically gives the buyer the right to request repairs or a credit, renegotiate, or cancel the contract and recover earnest money if significant defects like termite damage are found, rather than forcing any single automatic outcome. Suing for fraud requires proof of a knowing misrepresentation (not merely an undisclosed defect the seller may not have known about), and inspection findings have no bearing on the listing agent's license status.

Answer: D
A fully amortized loan has level payments that cover both interest and enough principal so that the exact balance is paid off by the final scheduled payment, which matches the description of the balance reaching zero at term's end. An interest-only loan pays no principal during the interest-only period, a balloon mortgage leaves a large lump sum due before full amortization occurs, and a graduated payment mortgage starts with lower payments that increase over time rather than staying level.

Answer: D
Because Louisiana does not use the deed-of-trust/power-of-sale structure common in many other states, a lender seeking to foreclose on a defaulted mortgage generally must go through the courts to obtain the legal authority to seize and sell the property, rather than exercising a private, out-of-court power of sale. There is no automatic non-judicial title transfer, a purely private lender-run auction without court involvement is not how Louisiana foreclosure works, and mediation does not permanently prevent foreclosure.

Answer: D
Prorations divide ongoing expenses like property taxes between buyer and seller based on how much of the tax period each party actually owned the home, which is exactly the $1,800 seller-side adjustment described. An escrow shortage relates to an existing loan's reserve account falling below the required amount, a loan origination fee is a lender charge for processing the new loan, and a recording fee is a government charge to record documents, none of which describes splitting a shared expense by ownership period.

Answer: D
Federal mortgage disclosure rules require lenders to provide a Loan Estimate within three business days of a completed application, summarizing projected interest rate, payment, and closing costs so the borrower can compare offers before committing. The Closing Disclosure is a related but separate document delivered closer to closing with final figures, while an appraisal report and an insurance binder serve entirely different purposes unrelated to early cost disclosure.

Answer: B
The sales comparison approach estimates value by analyzing recent sales of similar nearby properties and adjusting for differences in features, condition, and location, which is exactly the method described. The cost approach instead estimates land value plus depreciated reproduction cost of improvements, the income approach capitalizes a property's net income, and the gross rent multiplier is a simplified income-based shortcut rather than a comparable-sales method.

Answer: A
Applying the formula Value = NOI ÷ Cap Rate gives $24,000 ÷ 0.08 = $300,000, which is the correct capitalized value. The $192,000 figure mistakenly multiplies NOI by the cap rate instead of dividing, $24,800 results from simply adding a small percentage to NOI rather than performing the capitalization calculation, and $270,000 comes from using an incorrect cap rate assumption rather than the stated 8%.

Answer: C
Multiplying the monthly rent by the gross rent multiplier gives $1,600 × 150 = $240,000, the estimated value under this method. The $1,600,000 figure mistakenly treats the GRM as a multiplier of 1,000 rather than 150, $19,200 is simply the annual rent with no multiplier applied at all, and $150,000 confuses the GRM number itself with the final dollar value.

Answer: B
A comparative market analysis is the standard tool licensees use to help sellers set a listing price by examining recently sold, active, and expired comparable listings, and it is distinct from a formal, licensed appraisal performed by a certified appraiser. A tax assessment report reflects a taxing authority's valuation for property tax purposes, not a market pricing tool, and while broker price opinions exist, they are not a federally mandated substitute for a CMA in this context.

Answer: D
Known material defects that could affect a buyer's decision or the property's value, such as documented foundation settling, generally must be disclosed on the seller's property disclosure form regardless of whether the buyer specifically asked, because failing to disclose known material facts can expose the seller to liability for misrepresentation. Staying silent, hoping an inspector finds it, or disclosing only after closing all leave the seller exposed and deprive the buyer of information needed to make an informed decision before committing to the purchase.

Answer: B
Even when representing only the seller, a licensee still owes any non-client party, including the buyer, basic honesty and fair dealing, meaning no fraud, no material misrepresentation, and no deceptive practices, despite not owing that buyer the full fiduciary duties reserved for an actual client. Claiming no obligation at all overstates how little duty exists, while owing full fiduciary duties or negotiating exclusively for the buyer would contradict the licensee's actual representation of the seller.

Answer: A
Advertising rules generally require that real estate advertisements, including on social media, clearly identify that the person is acting as a licensed real estate professional and typically reference the firm, so consumers are not misled into thinking they are dealing with an unlicensed private seller. Social media is not exempt from these rules, price negotiability is not a required disclaimer, and revealing the seller's personal contact information would actually undermine the agent's role and the seller's privacy.

Answer: C
Real estate licensees who handle other people's money, such as tenant security deposits, are obligated to safeguard those funds through proper trust accounting practices, keeping them separate and accurately tracked rather than mixed with personal or business funds. There is no obligation (or general permission) to invest tenant deposits for returns, disclosure of sales history to tenants is unrelated to deposit handling, and commingling funds for "efficiency" is precisely the prohibited practice, not a legitimate goal.

Answer: A
Steering occurs when an agent guides prospective buyers or renters toward or away from particular neighborhoods based on race, national origin, or another protected characteristic, rather than presenting the full range of listings that meet a buyer's stated criteria, exactly what is described. Redlining is a related but distinct violation typically associated with lenders or insurers denying services by geographic area, blockbusting specifically involves inducing panic selling by predicting neighborhood change, and this practice is unlawful, not a legitimate marketing approach.

Answer: C
RESPA specifically prohibits undisclosed kickbacks and referral fees between settlement service providers in connection with a federally related mortgage loan, precisely the type of arrangement described. The Fair Credit Reporting Act governs credit report accuracy and use, the Fair Housing Act addresses discrimination rather than settlement kickbacks, and the Servicemembers Civil Relief Act protects active-duty military members in unrelated contexts.

Answer: A
State real estate commissions, including Louisiana's, exist primarily to license real estate professionals and to discipline them, including denying, suspending, or revoking licenses, when license law or commission rules are violated, which is the core regulatory function described. Commissions do not set individual property sale prices, approve private purchase contracts before they are signed, or negotiate commission splits on behalf of licensees, since those are private business and contractual matters outside the Commission's regulatory role.

Answer: D
Louisiana license law defines certain activities, such as negotiating the sale of real property for a fee, as requiring licensure, and performing these activities for compensation without holding a license is an unlicensed practice violation that the Louisiana Real Estate Commission has authority to pursue. Simply disclosing that one is unlicensed, or assuming a dollar threshold creates an exemption, does not excuse engaging in licensed activity for compensation without the required license.

Answer: D
Under Louisiana license law, a salesperson's license is not a standalone independent license; a salesperson must at all times be sponsored by, and conduct licensed activities under the supervision of, a licensed broker, rather than practicing entirely on their own. There is no experience-based exception allowing independent practice, no value-based carve-out permitting unsupervised transactions, and the salesperson is certainly permitted to assist with transactions, just always under a broker's sponsorship, not entirely alone.

Answer: C
The Louisiana Real Estate Commission has a range of disciplinary tools for statutory violations like repeated trust accounting failures, including administrative fines, mandated additional education, license suspension, or outright revocation, calibrated to the severity and pattern of the violations found. A mere verbal warning understates the Commission's actual enforcement powers, automatic imprisonment confuses administrative discipline with a separate criminal process, and trust accounting failures are squarely within the Commission's regulatory concern, not merely a private banking matter.

Answer: A
Negotiating the sale of someone else's real property in exchange for compensation is a core licensed activity under state real estate license law, unlike selling one's own property, which requires no license at all. Attorneys acting within the scope of their legal practice and court-appointed trustees or similar fiduciaries acting under court authority are typically recognized exemptions from real estate licensure for those specific incidental activities.

Answer: C
License law generally requires that any branch office where real estate brokerage activity occurs have a licensed broker responsible for supervising the licensees and activity conducted there, ensuring accountability regardless of how many locations a firm operates. There is no exemption based on a short operating period, no branch can lawfully run entirely without broker oversight, and supervision cannot be left to informal agreement among unsupervised salespersons.

Answer: A
Because a salesperson always operates under a sponsoring broker, advertising rules generally require that the broker's or firm's name appear in advertisements rather than allowing a salesperson to advertise as though operating independently, which protects consumers and preserves the broker's supervisory accountability. Including the property address does not satisfy the firm-identification requirement, salespersons are not permitted to advertise as fully independent operators, and salespersons certainly may appear in advertising, just not without the required broker or firm identification.

Answer: B
The Louisiana Real Estate Commission is the state body with statutory authority to investigate consumer complaints against licensees and, where warranted, impose discipline for violations of license law such as misrepresentation, which matches exactly the scenario of a square-footage misrepresentation complaint. A title insurance company, a sheriff's department, and an MLS administrator all lack the regulatory authority to adjudicate license law violations, even though they may play unrelated roles elsewhere in a transaction.

Answer: D
Because Louisiana's civil-law system uses different terminology and legal frameworks, like "immovable property" instead of "real property" or "usufruct" instead of "life estate," licensees practicing there need to understand these civil-law-specific concepts even while the underlying transaction goals resemble those in common-law states. Terminology is not identical nationwide, federal fair housing law applies regardless of a state's civil- or common-law tradition, and the civil-law system does not eliminate the statute of frauds' writing requirement for real estate contracts.

Answer: C
Agency law governs the legal relationship created when a licensee represents a client, defining the fiduciary duties (like loyalty, confidentiality, and reasonable care) owed to that principal as well as the honesty and disclosure obligations owed to other parties in the transaction. Construction standards, tax appeal procedures, and federal flood determinations are governed by entirely different bodies of law unrelated to the agent-principal relationship at the heart of agency law.

Answer: D
Licensees disciplined by a state real estate commission generally have the right to pursue an administrative appeal process and, if that is exhausted, seek judicial review in the courts to challenge whether the decision was properly supported and lawfully reached. There is no role for the U.S. Congress in reviewing a state licensing decision, licensees are not without any recourse at all, and suing individual commissioners personally is not the standard or appropriate channel for contesting an agency's disciplinary finding.

Answer: D
Because a salesperson's license only authorizes activity conducted under, and accounted for by, the sponsoring broker, running real estate transactions through an unrelated personal entity outside the broker's knowledge and records bypasses the required supervisory and recordkeeping structure and constitutes a statutory violation. Claiming there is no issue, treating it as purely a tax matter, or assuming the concern only arises if the LLC is out-of-state all miss the core license law problem of unsupervised activity outside the broker's oversight.

Answer: D
In Louisiana's civil law tradition, gradual, imperceptible deposits of soil along a running water body are called alluvion, and the accretion belongs to the owner of the bank it attaches to, since it forms so slowly that no distinct boundary event occurs. The tempting wrong choice confuses this with avulsion, which is a sudden, visible shift in a watercourse or riverbank that does not automatically transfer ownership of the affected land the way gradual accretion does.

Answer: D
When a conventional loan's down payment is below the threshold lenders consider low-risk, borrowers typically pay private mortgage insurance, which protects the lender (not the borrower) against loss if the loan defaults. Hazard and flood insurance protect against property damage from covered perils, and title insurance protects against title defects, none of which is the coverage tied to a low down payment on a conventional loan.

Answer: A
Louisiana's civil code uses usufruct rather than the common-law life estate; the usufructuary (here, the son) enjoys the use and revenue of the property for a set period or life, while the naked owner (the granddaughter) holds the underlying title that becomes full ownership when the usufruct ends. Calling this a fee-simple life estate or joint tenancy borrows common-law terminology that Louisiana's civil-law property system does not use in this context.

Answer: A
When a permanent improvement such as a fence, wall, or building physically crosses onto a neighboring parcel, it is an encroachment, a title problem a survey is specifically designed to reveal before closing. An easement by necessity involves landlocked access rather than a physical structure crossing a line, and a covenant violation involves breaking a private deed restriction rather than a physical boundary intrusion.

Answer: C
A description that starts at a fixed point of beginning and traces the parcel's boundary using courses (directions) and distances is a metes-and-bounds description, exactly the format shown. Lot-and-block descriptions instead reference a plat map by lot number, and the government/rectangular survey system uses townships, ranges, and sections rather than directional courses from a starting point.

Answer: D
Designated agency occurs when a broker assigns different licensees within the same firm to represent the buyer and seller separately, so each client still receives full fiduciary representation from their own designated agent rather than one person trying to serve both sides. Subagency instead involves a cooperating broker from another firm acting on behalf of the listing broker's client, and undisclosed dual agency is the unlawful failure to disclose that one agent represents both parties.

Answer: B
Loyalty requires an agent to act solely in the best interest of the principal and never let a personal preference for a different buyer, or any other side interest, compromise the advice given to that principal, exactly what happened when the agent misrepresented buyer interest to steer the outcome. The other duties listed concern following lawful instructions, cooperating with cooperating brokers, and truthful advertising, none of which addresses an agent secretly favoring an outcome against the principal's own interest.

Answer: B
When one broker or firm ends up representing both sides of the same transaction without designated agency, disclosure of the dual role and informed consent from both parties is required before the broker can lawfully continue, since undisclosed dual agency is a serious breach of fiduciary duty. Terminating the listing, picking a side based on timing, or silently referring the buyer elsewhere without explanation all fail to address the actual disclosure-and-consent obligation created by representing both sides.

Answer: B
Depositing a client's earnest money into the broker's own operating account rather than keeping it in a dedicated trust/escrow account is commingling, a serious violation regardless of how quickly the transaction is expected to close, because client funds must be kept separately identifiable and protected at all times. None of the other options describes a lawful practice; the timing of the closing has no bearing on whether mixing the funds was proper.

Answer: C
A financing contingency is a condition that, if diligently pursued but not satisfied, allows the buyer to terminate the agreement and recover the earnest money deposit without penalty, since the buyer's obligation to purchase was conditioned on obtaining that financing. Forfeiting the deposit despite good-faith diligence, forcing specific performance despite the unmet condition, or converting the deal into a lease-purchase are not the standard legal effects of a properly invoked financing contingency.

Answer: D
Title insurance protects a buyer (and lender) against financial loss from covered title defects, including liens or boundary problems that existed before closing but were not resolved, making it the standard protective step attorneys recommend when a search turns up unresolved issues. Skipping the search, assuming recording alone cures defects, or waiting for problems to "expire" all leave the buyer exposed rather than protected.

Answer: B
A binding contract generally forms once an offer is accepted and that acceptance is properly communicated back to the offeror; once formed, the seller is bound to the first buyer and cannot unilaterally sell to someone else for a better price without breaching that contract. The other choices misstate contract formation: acceptance does require communication, a later sale to a third party does not erase the seller's liability, and payment timing does not determine who has enforceable rights.

Answer: A
On a fixed-rate amortizing loan, interest is charged on the remaining balance, which is largest early in the loan, so early payments are weighted heavily toward interest; as the balance shrinks, the interest dollar amount drops and a growing share of each level payment goes toward principal. The reverse pattern, an equal split every month, and a fixed dollar interest amount all misdescribe how amortization schedules actually shift over the life of the loan.

Answer: B
The cost approach estimates value by adding the land's value to the depreciated cost of reproducing or replacing the improvements, and it is especially useful for unique or new properties lacking comparable sales, matching the scenario exactly. The sales comparison approach instead relies on adjusting comparable sales prices, the income approach values a property based on income it generates, and the GRM is a simplified income-based shortcut, none of which fits a scenario built around construction cost and depreciation.

Answer: B
Functional obsolescence refers to a loss in value caused by outdated design or layout features that reduce desirability, even when the physical condition of the home is otherwise fine, which matches the described non-functional floor plan. Physical deterioration involves actual wear and tear on the structure, economic obsolescence stems from negative factors outside the property such as a declining surrounding area, and deferred maintenance is specifically about neglected repairs rather than design or layout issues.

Answer: B
A known neighbor dispute that could reasonably affect a buyer's decision is material information that should be disclosed rather than concealed, since agents have a duty of honesty and fair dealing toward all parties, and deliberately denying known facts can constitute misrepresentation. Refusing to answer or conditioning disclosure on a buyer signing paperwork does not satisfy the underlying obligation to be truthful about known material facts when directly asked.

Answer: C
Federal law requires sellers and agents of housing built before 1978 to disclose known lead-based paint hazards and provide an EPA-approved information pamphlet before the buyer is obligated under the contract, and a 1965 build clearly falls within that pre-1978 window. There is no federal requirement to disclose the identity of the original contractor, no blanket federal mandate for a radon test regardless of local risk, and no universal requirement for a recent termite inspection tied to a home's age.

Answer: B
The duty of obedience only extends to lawful instructions, and an agent must refuse to participate in fraud, such as knowingly submitting a false employment statement to a lender, even when a client directs it, because facilitating fraud exposes the agent to serious legal and license liability. Obeying blindly, submitting it while quietly warning the lender afterward, or making it contingent on the other agent's agreement all still involve participating in the fraudulent act rather than refusing it outright.

Answer: D
Rejecting an applicant because they are expecting or have children directly discriminates based on familial status, one of the seven classes protected under the federal Fair Housing Act, and marketing a complex toward childless renters is exactly the kind of policy the Act was amended to prohibit outside of qualifying senior housing exemptions. National origin, disability, and religion are separate protected classes that are not implicated by a policy targeted specifically at households expecting or raising children.

Answer: A
The Equal Credit Opportunity Act requires creditors to notify applicants of adverse action and either provide the specific reasons for denial or clearly inform the applicant of their right to request those reasons within a set time, ensuring transparency and a way to check for discriminatory decision-making. Providing no explanation at all, a verbal-only statement with no written record, or the full internal credit scoring methodology are not what the law actually requires.

Answer: C
The Fair Housing Act generally requires housing providers to allow reasonable accommodations in policies or reasonable modifications to the physical space (often at the tenant's expense for modifications) so a person with a disability can have equal access, rather than denying housing outright based on a disability-related need. Requiring the applicant alone to fund building-wide renovations, denying all applicants with mobility disabilities, or redirecting them exclusively to subsidized housing all fail to meet the actual reasonable-accommodation standard.