Missouri Real Estate Practice Exam.
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Answer: C
When property passes to a named third party upon the death of a life tenant, that third party holds a remainder interest, which is distinct from a reversion that instead returns the property to the original grantor. A leasehold requires an ongoing landlord-tenant relationship, which is not present in this life estate arrangement.

Answer: A
An easement appurtenant benefits an adjoining parcel of land and runs with the land, transferring automatically to new owners, which matches a shared driveway serving two lots. A license is merely a revocable personal permission, and an encroachment describes an unauthorized structural intrusion onto another's land rather than a granted right of use.

Answer: B
Riparian rights apply to owners whose land borders a flowing waterway such as a river, granting reasonable use of the adjacent water, while littoral rights instead apply to land bordering non-flowing bodies like lakes. Emblements refer to a tenant farmer's right to harvest annual crops, a concept unrelated to water access.

Answer: D
Loan-to-value ratio is calculated by dividing the loan amount by the property's value or purchase price, so $160,000 divided by $200,000 equals 80%. Dividing the down payment amount into the price instead of the loan amount would mistakenly produce a 20% figure, which represents the buyer's equity contribution rather than the loan-to-value ratio.

Answer: A
Joint tenancy includes the right of survivorship, so a deceased owner's interest automatically passes to the surviving joint tenants rather than through probate to that owner's own heirs. Tenancy in common lacks survivorship, meaning each owner's share instead passes to their own heirs or estate, the opposite of what these investors want.

Answer: B
Items installed by a commercial tenant for conducting business, such as bolted salon equipment, are trade fixtures that remain the tenant's personal property and may be removed at lease end, provided the tenant repairs any resulting damage. Ordinary fixtures installed by an owner become part of the real property, but the trade-fixture exception for business tenants applies in this scenario.

Answer: B
The fiduciary duty of disclosure requires an agent to promptly share all material information relevant to a client's decision-making, and withholding a relevant fact such as an assessed-value discrepancy breaches that duty. The duty of accounting instead concerns handling client funds and records, and confidentiality concerns protecting a client's private information rather than sharing facts that help them decide.

Answer: D
Designated agency lets a brokerage appoint separate licensees within the same firm to represent the seller and buyer individually, each providing full fiduciary representation to their own client. Undisclosed dual agency is unlawful because it hides the conflict from the parties, and subagency instead involves a cooperating broker representing the listing broker's client, not a paired designated relationship.

Answer: D
An exclusive buyer agency agreement obligates the buyer to use only that agent and entitles the agent to a commission on any qualifying purchase made during the term, regardless of who located the property. An open buyer agency agreement instead allows the buyer to work with multiple agents simultaneously and only pays the one who actually procures the purchase.

Answer: A
Secretly advising both a seller-client and a buyer without disclosing and obtaining informed consent to the dual role creates an undisclosed dual agency, breaching the duty of loyalty owed to the seller-client. A properly disclosed dual agency requires written consent from both parties acknowledging the conflict, which never occurred in this scenario.

Answer: C
Even an unrepresented customer is owed basic duties of honesty, fair dealing, and disclosure of material facts, but fiduciary duties such as loyalty, obedience, and full confidentiality are reserved for the agent's actual client. Claiming no duties at all ignores the minimum standard of conduct owed to any party in a real estate transaction.

Answer: D
An agency relationship terminates once its stated purpose is fulfilled, such as the closing of the sale specified in the listing agreement, so any actions taken afterward without a new agreement exceed the agent's authority. Some fiduciary duties like confidentiality can survive termination in limited respects, but the authority to act on the principal's behalf does not continue indefinitely.

Answer: D
Consideration is something of value exchanged between the parties, but it does not have to be cash handed over at signing; a promise to pay the purchase price at closing, along with earnest money, satisfies this requirement. Legal purpose and capacity address entirely different validity concerns unrelated to whether value was exchanged between the parties.

Answer: D
A financing contingency makes the contract's performance conditional on the buyer obtaining loan approval within a specified period, protecting the buyer's earnest money if financing falls through. A subordination clause instead addresses lien priority, and an acceleration clause lets a lender demand full loan repayment upon default, neither of which relates to loan approval timing.

Answer: B
A general warranty deed provides the broadest protection, warranting title against defects arising throughout the property's entire history, not merely during the current seller's ownership. A special warranty deed only covers defects arising while the grantor personally owned the property, and a quitclaim deed offers no warranties of title at all.

Answer: A
Recording a deed creates constructive notice, meaning the public, future purchasers, and creditors are legally presumed to know about the recorded ownership interest even without actual knowledge of it. Title itself transfers upon proper delivery and acceptance of the deed, not upon recording, so recording protects the interest rather than creating it.

Answer: C
Earnest money demonstrates the buyer's good-faith commitment to the transaction and gives the seller some protection if the buyer defaults without a valid contingency, though it is typically applied toward the purchase price at closing. It is not a payment for the commission, the inspection, or the full down payment, each of which is a separate financial obligation.

Answer: A
A novation substitutes a new party for an original party in a contract and fully releases the original party from further obligation, which matches the seller's agreement to release the original buyer entirely. A simple assignment transfers contractual rights to a new party but typically leaves the original party still liable unless expressly released, which is not what happened here.

Answer: C
In an amortized loan, the total monthly payment stays the same, but early payments apply mostly to interest calculated on the higher remaining balance, and as that balance shrinks, an increasing share of each payment shifts toward principal reduction. The portions are never fixed or equal, and principal is paid throughout the loan term rather than being deferred entirely until the final year.

Answer: A
The Truth in Lending Act requires lenders to disclose the annual percentage rate, which incorporates certain finance charges and fees to reflect the loan's true cost so borrowers can compare offers meaningfully. Settlement procedures law instead focuses on closing costs and prohibits referral kickbacks, rather than governing how the interest-rate cost of credit must be disclosed.

Answer: D
Prorations at closing divide shared expenses like property taxes fairly between buyer and seller based on their respective periods of ownership, so when a seller has prepaid taxes covering time after closing, the buyer typically credits the seller for that unused portion. The county generally does not issue mid-year refunds for this situation, and the lender has no role in adjusting a prepaid tax credit between the two parties.

Answer: C
FHA loans are government-insured and generally allow for more flexible credit score requirements and lower minimum down payments than conventional financing, making them popular with first-time or lower-resource buyers. A jumbo loan instead exceeds conforming loan limits and typically demands stronger credit, while a blanket loan covers multiple properties under one loan rather than addressing down payment flexibility.

Answer: A
In the sales comparison approach, adjustments are always made to the comparable property rather than the subject, and a feature the comparable has that the subject lacks must be subtracted from the comparable's price to make the two properties equivalent. Adding value to the comparable, or adjusting the subject property itself, would misapply the standard adjustment methodology used in this approach.

Answer: D
The capitalization rate equals net operating income divided by property value, so $21,000 divided by $210,000 equals 10%. Dividing by a mistaken or rounded value estimate instead of the actual $210,000 figure would produce one of the other listed rates rather than the correct 10% derived directly from the given numbers.

Answer: C
A comparative market analysis is an informal pricing tool prepared by a real estate licensee to help a seller or buyer gauge market value, while an appraisal is a formal, credentialed opinion of value performed by a licensed appraiser and required by lenders for underwriting. The two documents are not interchangeable, and it is the appraisal, not the CMA, that carries the credentialed weight required for loan approval decisions.

Answer: C
Highest and best use directs an appraiser to value land based on its most profitable, legally permitted, and physically possible use, even when that use differs from how the land is currently being used. Conformity instead concerns how similar a property is to its surrounding neighborhood, and contribution measures how much a specific feature adds to overall value, neither of which addresses evaluating the optimal use of vacant land.

Answer: D
The principle of substitution holds that a buyer will not pay more for a property than the cost of acquiring an equally desirable substitute, so between two nearly identical homes, the lower-priced one effectively sets the practical ceiling on value. Anticipation instead concerns value based on expected future benefits, and progression describes a lower-value home gaining value from proximity to higher-value homes, neither of which explains a direct price comparison between two similar properties.

Answer: A
Facts about a property's history that are psychological or stigma-related, rather than physical defects affecting habitability or structural soundness, are generally treated differently from mandatory material-defect disclosures, with obligations varying by circumstance rather than being automatically required. This differs sharply from a genuine structural or physical defect, which typically must be disclosed because it directly affects the property's condition and value.

Answer: A
A latent defect is a hidden flaw not readily discoverable through ordinary observation, and a seller with actual knowledge of such a defect generally has a duty to disclose it even though a buyer's own inspection might miss it. A patent defect, by contrast, is readily observable upon reasonable inspection, which does not match a hidden foundation crack that requires specialized equipment to detect.

Answer: A
Agreements among competing brokerages to fix commission rates rather than setting them independently raise serious antitrust concerns, since commission rates are expected to be individually negotiable and competitive between firms. Such coordination is not required or sanctioned by license law, and the legal risk exists from the moment the agreement is made, regardless of whether any specific client later files a complaint.

Answer: B
Depositing client trust money such as earnest deposits into the brokerage's own operating account, rather than keeping it separate in a dedicated trust or escrow account, constitutes improper commingling of client and business funds, a serious breach of fiduciary and recordkeeping obligations. Tracking the funds informally in a spreadsheet does not cure the violation, and the improper handling exists from the moment of commingling regardless of the brokerage's later financial condition.

Answer: B
Steering occurs when an agent channels buyers toward or away from certain neighborhoods based on a protected characteristic such as race, restricting the buyer's true range of housing choices in violation of fair housing law. Redlining instead refers to lenders denying services in certain geographic areas, and blockbusting involves inducing panic selling by suggesting a protected class is moving into a neighborhood, neither of which matches an agent selectively limiting which listings are shown.

Answer: A
The Fair Housing Act prohibits discrimination based on familial status, meaning a landlord cannot refuse to rent to families with children when the unit otherwise meets legitimate occupancy standards. The Truth in Lending Act and Equal Credit Opportunity Act instead govern credit disclosures and lending decisions, and RESPA concerns settlement service referral fees, none of which address rental refusals based on having children.

Answer: C
Redlining occurs when a lender denies or limits financial services within specific geographic areas, often based on the racial or ethnic makeup of residents, regardless of individual applicants' actual qualifications. Steering instead involves an agent directing buyers toward or away from neighborhoods, and blockbusting or panic peddling involves inducing fear-based selling, neither of which describes a lender's area-wide denial of credit.

Answer: D
The Equal Credit Opportunity Act prohibits lenders from discriminating against credit applicants based on marital status, among other protected characteristics, so denying an otherwise qualified applicant for being unmarried would violate this law. The Fair Housing Act instead addresses discrimination in housing sales and rentals rather than credit decisions specifically, and settlement procedures law and the Truth in Lending Act govern closing costs and rate disclosures rather than the basis for a credit denial.

Answer: B
Fair housing law prohibits advertisements that indicate a preference, limitation, or discrimination based on protected characteristics such as familial status, and explicitly discouraging families with children violates this rule regardless of whether any family later applies. The absence of race-based language does not excuse the violation, since familial status is an independently protected class under fair housing law.

Answer: B
Missouri requires applicants for a salesperson license to be at least 18 years of age, so a 17-year-old does not yet meet this basic eligibility requirement regardless of other qualifications. There is no requirement to work as an unlicensed assistant, hold a graduate degree, or obtain a co-signer, so those options misstate the actual barrier facing this student.

Answer: B
Missouri requires candidates to complete a 48-hour pre-exam salesperson course from an accredited Missouri real estate school before becoming eligible to sit for the salesperson examination. A college degree or paralegal certificate is not required for salesperson licensure, and the 24-hour figure instead corresponds to a separate practice course required after passing the exam, not before it.

Answer: A
After passing the examination, a Missouri salesperson candidate must still complete the 24-hour Missouri Real Estate Practice course prior to submitting the license application. The 48-hour figure instead refers to the earlier prelicense course required before the exam, and no broker-level coursework is required to obtain an initial salesperson license.

Answer: C
Missouri waives the standard prelicense education requirement for applicants who are licensed attorneys, provided they pass both portions of the salesperson examination, recognizing the attorney's existing legal training. Attorneys are not barred from salesperson licensure, nor are they required to complete double the standard coursework; the waiver instead reduces rather than increases their educational burden.

Answer: C
An applicant who holds a current and active real estate license in another jurisdiction generally only needs to pass the Missouri State portion of the salesperson examination, rather than retaking the National portion already demonstrated through their existing license. This candidate is not fully exempt from examination, nor required to test in another state instead of Missouri.

Answer: D
Missouri requires a complete license application to be submitted within six months of the completion date of the 48-hour pre-exam salesperson course, so a candidate who delays too long risks having to repeat the coursework. There is no unlimited window or indefinite validity for the completed course, and the actual deadline is measured in months rather than a shorter 30-day period.

Answer: D
Missouri's current statewide fingerprinting vendor for real estate license applicants is IDEMIA, operating under the IDENTOGO brand, and applicants must register with this vendor to complete the required background check. PSI Services is instead the vendor that administers the licensing examination itself, not the fingerprinting process, so it does not answer this specific question.

Answer: C
A discount point is an upfront fee, typically equal to one percent of the loan amount, paid at closing to buy down the interest rate for the life of the loan. An origination fee instead compensates the lender for processing and underwriting the loan and does not itself function to reduce the interest rate charged.

Answer: C
Fee simple absolute is the greatest ownership interest recognized in real property because it has no attached conditions and continues forever, passing freely to heirs. A life estate is limited to someone's lifetime, and a fee simple determinable automatically ends once a stated condition occurs, so neither matches an unrestricted, perpetual interest.

Answer: A
A legal nonconforming use exists when a lawful use predates a later zoning change and is grandfathered in to continue, which differs from a variance that is a case-by-case exception granted going forward for hardship reasons. Spot zoning improperly singles out one parcel for different treatment, which does not describe a preexisting use simply continuing under old rules.

Answer: D
Subagency occurs when a cooperating broker who has no representation agreement with the buyer works through the listing broker's offer of cooperation and thereby owes fiduciary duties to the seller rather than the buyer. Buyer agency would instead require a direct representation agreement between the cooperating broker and the buyer, which is absent in this scenario.

Answer: C
Under the principal-agent relationship, a broker can be held vicariously liable for the acts of a supervised salesperson performed within the scope of that salesperson's duties, since the broker is responsible for oversight of licensed activity conducted under the firm. Liability is not limited to the individual salesperson, nor does responsibility shift to an unrelated party such as the multiple listing service.

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 to sell a home generally cannot be enforced in court. The parol evidence rule instead governs how outside statements affect the interpretation of an existing written contract, which does not apply since no written contract exists here.

Answer: B
Marketable title must be free of undisclosed liens, encumbrances, or defects that would make a reasonable buyer question ownership, so an unresolved contractor's lien typically must be satisfied, bonded around, or otherwise resolved before or at closing. Cancelling the sale outright isn't required if the seller can clear the defect, and the listing agent has no personal obligation to pay a third party's debt.

Answer: C
Federal settlement law prohibits giving or accepting a fee, kickback, or thing of value in exchange for referrals of business involving mortgage settlement services, regardless of how large or small the payment is. Later disclosure does not cure the violation, and the fact that both parties hold professional licenses does not create an exception to the referral-fee prohibition.

Answer: B
Depreciation in the cost approach represents the accumulated loss in value a structure experiences from physical wear, functional obsolescence, or external factors, and it is subtracted from the estimated cost to reproduce the building new. Capitalization and amortization instead relate to income valuation and loan repayment concepts, not to physical value loss in the cost approach.

Answer: B
Sellers generally have a duty to disclose known material defects, such as a recurring flooding issue, that would affect a reasonable buyer's decision or the property's value, regardless of whether the buyer later hires an inspector. There is no duty to remodel or otherwise fix the defect before selling, and disclosure obligations are not limited only to problems an inspector happens to miss.

Answer: C
Real estate salespersons are frequently classified as independent contractors for federal tax purposes, but this classification does not remove the employing broker's ongoing supervisory and licensing oversight responsibilities over the salesperson's licensed real estate activities. A salesperson operating under a broker does not hold a separate brokerage license and remains subject to that broker's oversight regardless of the applicable tax classification.

Answer: B
Advertising rules generally prohibit blind ads that fail to identify the licensed brokerage responsible for the listing, since consumers and regulators need to know which firm is accountable for the marketing and representation involved. There is no requirement dictating bold pricing text, restricting ads to print media, or barring photos, so those options misstate the actual advertising concern raised by this scenario.

Answer: B
Fair housing law requires landlords to grant reasonable accommodations for tenants with disabilities, including permitting a necessary assistance animal even where a general no-pets policy exists, because assistance animals are treated as a disability accommodation rather than an ordinary pet. Landlords generally cannot charge a pet deposit for an assistance animal or force the tenant to relocate, since doing so would undermine the required accommodation.

Answer: A
The Missouri Real Estate Commission is the state governing body with primary authority over real estate licensing and disciplinary proceedings, including investigating and acting on complaints against licensees. A trade association like the Missouri Association of Realtors has no regulatory or disciplinary authority, and a county recorder or the Secretary of State's business division handle unrelated administrative functions rather than license discipline.