In Wildwood, two cousins co-own a vacation cottage as joint tenants with right of survivorship. When one cousin passes away, what becomes of that cousin's ownership share?

It transfers immediately to the surviving cousin by operation of law, outside probate

It passes according to instructions written in the deceased cousin's will

It splits evenly between the surviving cousin and the deceased cousin's estate

It escheats to the local municipality

A property in Perth Amboy borders the Raritan River. The buyer's agent explains that the owner's rights to use and access the adjoining water are known as?

Riparian rights tied to ownership of the riverfront land

Police power reserved by the state

Eminent domain authority over the waterway

Escheat rights held by the county

A purchase contract on a home in Freehold includes a clause stating the sale is contingent on the buyer obtaining mortgage approval within 30 days. If the buyer is denied financing within that window and properly notifies the seller, what typically happens to the deposit?

The deposit is returned to the buyer and the contract terminates

The deposit is forfeited to the seller automatically

The seller may sue for specific performance regardless of the contingency

The deposit is split evenly between buyer and seller

In Manalapan, a landowner has openly cultivated and fenced a section of a neighboring undeveloped parcel for many continuous years without ever asking the true owner's permission. What legal doctrine could eventually let that landowner claim title?

Adverse possession through open, continuous, hostile use

Eminent domain exercised by a government body

Escheat of the property to the state

Constructive eviction of the true owner

The Township of Montclair takes a strip of privately owned land to widen a public road and pays the owner fair market value for the taking. This government action is an exercise of?

Eminent domain, requiring payment of just compensation

Police power exercised through zoning regulation

Escheat of unclaimed property to the township

Enforcement of a private deed restriction

A Newark listing agent receives two offers on the same day: one from a buyer who is the agent's cousin at a lower price, and one from an unrelated buyer at a higher price. What must the agent do to fulfill fiduciary duty to the seller?

Present both offers to the seller and let the seller decide, without favoring the relative

Advise the cousin privately on how to beat the competing offer

Automatically forward only the higher offer to save the seller time

Reject the relative's offer without telling the seller it was submitted

In Ocean City, a homeowner signs a listing contract providing that the broker is owed a commission regardless of who ultimately produces the buyer, even the homeowner personally. What kind of listing is this?

Exclusive right-to-sell listing

Open listing available to any cooperating broker

Exclusive agency listing that exempts the seller

Net listing based on a set minimum price

A salesperson working under a Camden broker makes a misrepresentation to a buyer during a showing. Under agency law, who may be held liable for the salesperson's conduct?

Both the salesperson and the supervising broker, under vicarious liability

Only the salesperson personally, since the broker was not present

Only the buyer's own agent, who should have caught the error

Neither party, because misrepresentation claims require a signed contract

A listing contract between a Hoboken homeowner and a brokerage sets a term of 90 days from the signing date. If the home remains unsold on day 91 and no extension has been signed, what happens to the agency relationship?

The agency relationship has terminated by expiration of its stated term

The agreement automatically renews for another 90 days

The broker retains exclusive rights indefinitely until the property sells

The seller must pay a penalty fee to end the relationship

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PRACTICE ENGINE · NEW JERSEY REAL ESTATE

New Jersey Real Estate Practice Exam.
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QUESTION 1 / 60Contracts & Transfer of TitleMedium0/0

A title search on a home in Millburn reveals an old unreleased lien from a contractor who was never paid. This type of issue is best described as a?

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1. A title search on a home in Millburn reveals an old unreleased lien from a contractor who was never paid. This type of issue is best described as a?
- A. Easement appurtenant benefiting a neighboring lot
- B. Riparian right tied to nearby water
- C. Deed restriction limiting future use
- D. Cloud on title impairing marketability
Show answer & explanation
Answer: D
An unresolved lien or similar unreleased claim against a property creates a cloud on title, meaning the title is not clearly marketable until the issue is resolved or released. An easement or deed restriction describes an ongoing limitation on use rather than an unpaid debt claim, so neither matches a contractor's unreleased lien.
2. In Wildwood, two cousins co-own a vacation cottage as joint tenants with right of survivorship. When one cousin passes away, what becomes of that cousin's ownership share?
- A. It splits evenly between the surviving cousin and the deceased cousin's estate
- B. It passes according to instructions written in the deceased cousin's will
- C. It transfers immediately to the surviving cousin by operation of law, outside probate
- D. It escheats to the local municipality
Show answer & explanation
Answer: C
Joint tenancy with right of survivorship means a deceased co-owner's share passes immediately and automatically to the surviving joint tenant, entirely outside the probate process. A will cannot redirect this share because survivorship rights override testamentary instructions for property held this way.
3. A property in Perth Amboy borders the Raritan River. The buyer's agent explains that the owner's rights to use and access the adjoining water are known as?
- A. Eminent domain authority over the waterway
- B. Riparian rights tied to ownership of the riverfront land
- C. Police power reserved by the state
- D. Escheat rights held by the county
Show answer & explanation
Answer: B
Riparian rights are the rights of a landowner whose property borders a flowing waterway, such as a river, to reasonable use and access to that water. Police power and eminent domain are governmental powers rather than private ownership rights, which is why those options do not describe what the riverfront owner personally holds.
4. A purchase contract on a home in Freehold includes a clause stating the sale is contingent on the buyer obtaining mortgage approval within 30 days. If the buyer is denied financing within that window and properly notifies the seller, what typically happens to the deposit?
- A. The seller may sue for specific performance regardless of the contingency
- B. The deposit is split evenly between buyer and seller
- C. The deposit is forfeited to the seller automatically
- D. The deposit is returned to the buyer and the contract terminates
Show answer & explanation
Answer: D
A properly invoked financing contingency protects the buyer, so a timely denial of the loan and proper notice typically entitles the buyer to a full deposit refund and releases both parties from the contract. Forfeiting the deposit to the seller would defeat the very purpose of including a financing contingency in the first place.
5. In Manalapan, a landowner has openly cultivated and fenced a section of a neighboring undeveloped parcel for many continuous years without ever asking the true owner's permission. What legal doctrine could eventually let that landowner claim title?
- A. Eminent domain exercised by a government body
- B. Adverse possession through open, continuous, hostile use
- C. Escheat of the property to the state
- D. Constructive eviction of the true owner
Show answer & explanation
Answer: B
Adverse possession lets someone who occupies another's land openly, continuously, and without permission for a sufficiently long period eventually acquire legal title to it. Eminent domain is instead a government taking paired with compensation, an entirely different mechanism that has nothing to do with a private boundary dispute between neighbors.
6. The Township of Montclair takes a strip of privately owned land to widen a public road and pays the owner fair market value for the taking. This government action is an exercise of?
- A. Eminent domain, requiring payment of just compensation
- B. Police power exercised through zoning regulation
- C. Enforcement of a private deed restriction
- D. Escheat of unclaimed property to the township
Show answer & explanation
Answer: A
Eminent domain is the government's power to take private property for public use, such as road widening, provided the owner receives just compensation. Police power, by contrast, regulates how land may be used through rules like zoning, without requiring payment, so it does not describe an outright taking with compensation.
7. A Newark listing agent receives two offers on the same day: one from a buyer who is the agent's cousin at a lower price, and one from an unrelated buyer at a higher price. What must the agent do to fulfill fiduciary duty to the seller?
- A. Present both offers to the seller and let the seller decide, without favoring the relative
- B. Advise the cousin privately on how to beat the competing offer
- C. Reject the relative's offer without telling the seller it was submitted
- D. Automatically forward only the higher offer to save the seller time
Show answer & explanation
Answer: A
The fiduciary duty of loyalty requires the listing agent to present all offers to the seller and let the seller make the decision, regardless of any personal relationship with one of the buyers. Coaching the relative privately would breach loyalty to the seller, and withholding an offer entirely would violate the duty of full disclosure of material facts affecting the transaction.
8. In Ocean City, a homeowner signs a listing contract providing that the broker is owed a commission regardless of who ultimately produces the buyer, even the homeowner personally. What kind of listing is this?
- A. Exclusive agency listing that exempts the seller
- B. Open listing available to any cooperating broker
- C. Exclusive right-to-sell listing
- D. Net listing based on a set minimum price
Show answer & explanation
Answer: C
An exclusive right-to-sell listing guarantees the broker a commission no matter who actually procures the buyer, including a sale made by the homeowner alone. An exclusive agency listing is the tempting distractor because it also limits the seller to one broker, but it still lets the seller sell without owing a commission, which contradicts what is described here.
9. A salesperson working under a Camden broker makes a misrepresentation to a buyer during a showing. Under agency law, who may be held liable for the salesperson's conduct?
- A. Neither party, because misrepresentation claims require a signed contract
- B. Both the salesperson and the supervising broker, under vicarious liability
- C. Only the salesperson personally, since the broker was not present
- D. Only the buyer's own agent, who should have caught the error
Show answer & explanation
Answer: B
Because a salesperson acts as an agent of the supervising broker, the broker can be held vicariously liable for the salesperson's conduct within the scope of the agency, in addition to the salesperson's own liability. The claim that liability requires a signed contract is incorrect because misrepresentation is a tort-based claim that can arise independent of any final signed agreement.
10. A listing contract between a Hoboken homeowner and a brokerage sets a term of 90 days from the signing date. If the home remains unsold on day 91 and no extension has been signed, what happens to the agency relationship?
- A. The agency relationship has terminated by expiration of its stated term
- B. The broker retains exclusive rights indefinitely until the property sells
- C. The seller must pay a penalty fee to end the relationship
- D. The agreement automatically renews for another 90 days
Show answer & explanation
Answer: A
An agency created by a listing contract ends automatically once its stated term runs out, unless the parties sign something to extend or renew it. Assuming automatic renewal is a common but incorrect assumption, since most listing agreements require a fresh signed extension rather than continuing on their own past the expiration date.
11. A buyer represented by a Hackensack agent confides that they would pay up to $20,000 more than their opening offer if needed. What must the buyer's agent do with this information?
- A. Keep it confidential from the seller and the seller's agent
- B. Include it in the written offer as supporting context
- C. Share it only if the seller's agent asks directly
- D. Disclose it to the listing agent so negotiations move faster
Show answer & explanation
Answer: A
The fiduciary duty of confidentiality obligates a buyer's agent to withhold information about the buyer's true negotiating limits from the seller's side, since revealing it would harm the buyer's bargaining position. Sharing it if directly asked is still a breach, because the duty of confidentiality does not disappear simply because the other side inquires.
12. A property owner in Rahway walks away from a fully signed purchase contract despite having no valid contingency, and the buyer asks a court to compel the sale rather than award money damages. What is this remedy called?
- A. Specific performance compelling the sale
- B. Rescission of the entire agreement
- C. Novation substituting a new obligation
- D. Liquidated damages set by the contract
Show answer & explanation
Answer: A
Specific performance is an equitable remedy where a court orders the breaching party to actually go through with the contract, which courts often grant in real estate cases because each parcel of land is treated as unique. Rescission, by contrast, would cancel the contract altogether rather than force it forward, which is the opposite of what the buyer is asking for here.
13. A 16-year-old attempts to sign a contract to purchase a condo in Atlantic City without a parent or guardian involved. What is the legal effect of this contract?
- A. It is automatically valid once signed by both parties
- B. It is voidable due to the minor's lack of legal capacity
- C. It is void only if the seller later objects to it
- D. It is enforceable because real estate contracts are exempt from capacity rules
Show answer & explanation
Answer: B
A valid contract requires that all parties have legal capacity, and a minor generally lacks that capacity, making the contract voidable at the minor's option. It is not automatically valid simply because both parties signed, since capacity is a required element separate from mere signatures on the document.
14. A buyer and seller in Wayne verbally agree on a purchase price for a house and shake hands, but never sign a written agreement. Under general contract law principles, what is the enforceability of this oral agreement?
- A. It is fully enforceable as long as one party can prove the terms
- B. It is enforceable only if witnessed by a notary
- C. It becomes enforceable once the buyer pays any deposit
- D. It is generally unenforceable because real estate contracts must be in writing
Show answer & explanation
Answer: D
The statute of frauds requires contracts for the sale of real property to be in writing to be enforceable, so a purely oral agreement on price generally cannot be enforced in court. Paying a deposit does not cure this defect, because the writing requirement attaches to the contract itself rather than to any partial performance like handing over money.
15. A seller in Bridgewater wants to give the buyer the strongest possible assurance of clear title, covering defects that existed even before the seller owned the property. Which deed should be used?
- A. A quitclaim deed with no title guarantees
- B. A bargain and sale deed implying no defects occurred
- C. A special warranty deed limited to the seller's period of ownership
- D. A general warranty deed covering the full chain of title
Show answer & explanation
Answer: D
A general warranty deed offers the broadest protection because the grantor warrants against title defects arising at any point in the property's history, not just during the grantor's own ownership. A special warranty deed is the tempting but incorrect choice because it only covers defects that arose while the seller personally owned the property.
16. A couple finalizing a divorce in Union City needs one spouse to give up any ownership claim to the family home in favor of the other, without making any promises about the quality of title. Which instrument fits this purpose?
- A. Quitclaim deed releasing any interest without warranties
- B. Life estate deed creating a measured interest
- C. General warranty deed with full title covenants
- D. Deed of trust securing a loan on the property
Show answer & explanation
Answer: A
A quitclaim deed conveys whatever interest the grantor happens to hold, without any promises or warranties about title quality, which suits a spouse simply giving up a claim rather than selling a purchased property. A general warranty deed would be the wrong choice here because it would obligate the releasing spouse to guarantees they have no basis or intention to make.
17. A purchaser in Sayreville is financing a property appraised at $360,000 with a loan amount of $270,000. What is the loan-to-value ratio?
- A. 80 percent
- B. 75 percent
- C. 60 percent
- D. 90 percent
Show answer & explanation
Answer: B
Loan-to-value is calculated by dividing the loan amount by the property's value, so $270,000 divided by $360,000 equals 75 percent. The 80 percent distractor would result from mistakenly using a slightly larger loan figure than the one actually stated, a calculation slip that happens when the numbers are misread.
18. Serving as executor of an estate, an heir arranges a $340,000 loan to buy out her siblings' shares of the inherited family house, and the lender charges 3 discount points to bring the note rate down. How much will those points cost at closing?
- A. $3,400
- B. $10,200
- C. $6,800
- D. $17,000
Show answer & explanation
Answer: B
Each discount point costs one percent of the loan amount, so 3 points on a $340,000 loan cost 3% of $340,000, which is $10,200. The $3,400 distractor is the cost of a single point rather than all three, and the $6,800 distractor reflects paying for only two of the three points charged.
19. "I locked in my rate for the first five years, and after that it resets every year based on a market index," a homebuyer in Hackensack tells a friend about the mortgage she just chose. What type of loan is this?
- A. Graduated payment mortgage with rising payments
- B. Fixed-rate mortgage with a constant payment
- C. Adjustable-rate mortgage tied to a financial index
- D. Balloon mortgage with a large final payment
Show answer & explanation
Answer: C
An adjustable-rate mortgage keeps one rate for an initial fixed period and then resets periodically according to a market index, exactly matching the homebuyer's description of a five-year lock followed by annual resets. A balloon mortgage instead holds one constant rate for the whole term but ends with a single large payoff payment, which is a completely different feature from a rate that periodically adjusts.
20. A first-time buyer notices her monthly mortgage bill runs higher than the loan payment alone and asks her loan servicer why. The servicer explains that a slice of every payment gets set aside so there is enough on hand to cover the yearly property tax bill and hazard insurance premium once each comes due. What is this dedicated holding account called?
- A. An escrow, or impound, account for taxes and insurance
- B. A reserve for replacement of building components
- C. A guaranty fund covering licensee fraud
- D. A trust account for commission proceeds
Show answer & explanation
Answer: A
A lender's escrow or impound account collects monthly portions of the annual property tax and insurance bill so the lender can pay those obligations for the borrower once they come due. A guaranty fund serves an entirely different purpose, compensating victims of licensee misconduct, and has nothing to do with holding ongoing tax and insurance payments.
21. While appraising a home in Chatham, an appraiser notices that a comparable sale includes a finished basement that the subject property does not have. How should the appraiser adjust for this difference?
- A. Add the value of the finished basement to the subject property's price
- B. Ignore the difference since basements rarely affect value
- C. Add the value of the finished basement to the comparable's sale price
- D. Subtract the value of the finished basement from the comparable's sale price
Show answer & explanation
Answer: D
In the sales comparison approach, adjustments are always made to the comparable rather than the subject, and when the comparable has a feature the subject lacks, its price is adjusted downward so it matches the subject more closely. Adding value to the comparable would push it further from resembling the subject property, the opposite of what an adjustment is meant to accomplish.
22. A modest, well-maintained home in Cherry Hill sits among several much larger, higher-priced homes. The appraisal principle explaining that this modest home's value may be pulled upward by its surroundings is called?
- A. Substitution based on comparable alternatives
- B. Progression, where lesser value is increased by proximity to greater value
- C. Conformity among similar property types
- D. Regression, where greater value is pulled down by lesser value nearby
Show answer & explanation
Answer: B
Progression describes a lower-valued property gaining value from being surrounded by higher-valued homes, which fits the modest house among larger, pricier neighbors. Regression is the reverse effect, where a higher-valued property loses value from proximity to lesser ones, so it does not match a scenario where the smaller home benefits from its surroundings.
23. Producing $72,000 in annual net operating income, an apartment building in Union City is valued using an 8% capitalization rate. What is its estimated value under the income approach?
- A. $720,000
- B. $5,760,000
- C. $800,000
- D. $900,000
Show answer & explanation
Answer: D
Under the income approach, value equals net operating income divided by the capitalization rate, so $72,000 divided by 0.08 equals $900,000. The $800,000 distractor comes from mistakenly using a 9% rate instead of the stated 8%, and the $5,760,000 distractor comes from multiplying the income by the rate instead of dividing by it.
24. A home in Teaneck has an outdated layout with only one small bathroom for four bedrooms, which reduces its value compared to modern homes. This type of depreciation is known as?
- A. Curable deferred maintenance only
- B. External, or economic, obsolescence from outside influences
- C. Functional obsolescence from an outdated design
- D. Physical deterioration from wear and aging
Show answer & explanation
Answer: C
Functional obsolescence refers to a loss in value caused by an outdated or inadequate design feature within the property itself, such as too few bathrooms for the number of bedrooms. External obsolescence instead comes from factors outside the property's boundaries, like a nearby highway or declining neighborhood, which does not describe an internal layout problem.
25. A seller in Morristown knows the basement floods every spring but never mentions it because the buyer never asked directly. Under general disclosure principles, what is the seller's obligation regarding this hidden defect?
- A. The seller has no duty to disclose anything not directly asked about
- B. Only the buyer's agent has a duty to investigate hidden defects
- C. The seller must disclose known material latent defects that are not readily observable
- D. Disclosure is required only if the defect is listed in the property tax records
Show answer & explanation
Answer: C
Sellers generally have a duty to disclose known material latent defects, meaning hidden problems the seller is aware of that a buyer would not easily discover on a normal walkthrough. Waiting for the buyer to ask directly does not eliminate this duty, because disclosure obligations for known hidden defects are proactive rather than triggered only by a buyer's specific question.
26. A duplex in Camden was built in 1965. Before the seller and buyer sign a purchase agreement, federal law requires the seller to provide which disclosure?
- A. A flood zone determination only
- B. A radon testing certificate for the basement
- C. No disclosure, since lead paint rules apply only to rentals
- D. A lead-based paint disclosure and pamphlet, because the home was built before 1978
Show answer & explanation
Answer: D
Federal law requires sellers of residential property built before 1978 to disclose known lead-based paint hazards and provide an EPA-approved pamphlet before the buyer becomes obligated under a purchase contract. This requirement applies to sales, not just rentals, so the option claiming otherwise misstates the scope of the federal rule.
27. A listing agent describes a home in Bayonne as having 'a dream kitchen you'll never want to leave' during a showing. This kind of subjective sales talk is generally classified as?
- A. A violation requiring mandatory disclosure to all future buyers
- B. Fraud requiring rescission of the contract
- C. Misrepresentation of a material fact
- D. Puffing, which is not considered fraudulent misrepresentation
Show answer & explanation
Answer: D
Puffing refers to subjective, opinion-based statements of enthusiasm or exaggeration that a reasonable buyer would not take as a statement of verifiable fact, so it is not treated as fraudulent misrepresentation. Misrepresentation, by contrast, involves a false statement about an objective, verifiable fact, which is a different category of statement than a vague expression of enthusiasm about a kitchen.
28. A buyer asks whether a prior occupant of a home in Ridgewood died of natural causes inside the house years ago. How is this type of psychologically impactful, non-physical fact typically treated compared to a material physical defect?
- A. It is treated as fraud per se regardless of local rules
- B. Many disclosure frameworks treat it differently from physical defects and may not require unsolicited disclosure
- C. It automatically voids any subsequent sale if undisclosed
- D. It must always be disclosed exactly like a structural defect
Show answer & explanation
Answer: B
Stigmatized property facts, such as a prior death from natural causes, are commonly treated differently from physical material defects and often do not require unsolicited disclosure under many disclosure frameworks. Treating this the same as a structural defect overstates the typical obligation, since physical defects affecting habitability or safety are generally held to a stricter disclosure standard.
29. After the inspection contingency period in a contract for a home in Springfield has already expired and the buyer removed the contingency, the buyer discovers a cracked foundation. What is the buyer's most likely remedy at this point?
- A. Automatic right to force the seller to pay for all repairs
- B. The sale is void automatically by operation of law
- C. Limited remedy, since the contingency period has passed and the defect wasn't fraudulently concealed
- D. Automatic right to cancel the contract with a full deposit refund
Show answer & explanation
Answer: C
Once an inspection contingency period expires and the buyer has removed that protection, the buyer's remedies become limited unless the seller fraudulently concealed the defect, since the contract no longer conditions the sale on inspection results. Claiming an automatic right to cancel ignores the fact that the very purpose of removing the contingency was to give up that conditional protection.
30. A salesperson in Fair Lawn places an online ad for a listed home but does not include the name of their sponsoring brokerage anywhere in the ad. This kind of advertisement is generally considered a violation because?
- A. Ads are only required to include the property's square footage
- B. Blind ads are permitted as long as the price is accurate
- C. Only for-sale-by-owner ads need broker identification
- D. Advertising must identify the licensed brokerage responsible for the listing
Show answer & explanation
Answer: D
Real estate advertising rules generally require that any ad for a listed property identify the sponsoring brokerage, so consumers know a licensed firm stands behind the listing, which is why an ad omitting the brokerage name is considered a prohibited blind ad. Accuracy of the price alone does not satisfy this requirement, since the identification obligation is separate from whether other details in the ad are correct.
31. An agent in Newark repeatedly shows a Black homebuyer listings only in a specific part of the city, without similarly limiting where a white buyer with the same budget is shown homes. This discriminatory practice is known as?
- A. Blockbusting to induce panic selling
- B. Steering buyers toward or away from certain neighborhoods based on a protected class
- C. Redlining by denying loans based on area
- D. Puffing during a property showing
Show answer & explanation
Answer: B
Steering occurs when an agent directs homebuyers toward or away from particular neighborhoods based on a protected characteristic like race, which matches limiting where the Black buyer is shown homes compared to a similarly situated white buyer. Blockbusting instead involves inducing existing homeowners to sell in a panic by suggesting a neighborhood's racial composition is changing, which is a different scenario than steering a buyer's search.
32. An agent tells homeowners in a Willingboro neighborhood that property values will soon fall because families of a different race are moving in, encouraging quick, panic-driven sales. This illegal practice is called?
- A. Redlining based on geographic area
- B. Reasonable accommodation for a disability
- C. Blockbusting to induce panic selling based on racial change
- D. Steering homebuyers to specific areas
Show answer & explanation
Answer: C
Blockbusting is the illegal practice of encouraging owners to sell quickly, often at a reduced price, by suggesting that a change in a neighborhood's racial or ethnic composition will hurt property values. Steering describes limiting where buyers are shown homes, which is a different violation than pressuring existing owners in a neighborhood to sell out of fear.
33. A tenant with a mobility impairment in a Clifton apartment building asks the landlord for permission to install a ramp at the tenant's own expense. Under fair housing law, the landlord's obligation regarding this request is best described as?
- A. The landlord may deny any modification request without explanation
- B. The request may be denied solely because the building is privately owned
- C. The landlord generally must allow reasonable modifications for a tenant with a disability
- D. The landlord must pay for the ramp regardless of who requested it
Show answer & explanation
Answer: C
Fair housing law generally requires landlords to permit reasonable modifications, such as a ramp, requested by a tenant with a disability, even though the tenant typically bears the cost of the modification. Simply being a private building does not exempt a landlord from this obligation, since fair housing protections broadly apply to most private rental housing as well.
34. A settlement agent in Hoboken offers to pay a referring real estate agent a fee simply for sending title insurance business their way, with no additional service performed by the agent. This arrangement is prohibited by?
- A. The Fair Housing Act's protected class provisions
- B. The statute of frauds
- C. RESPA's prohibition on unearned kickbacks and referral fees
- D. The Truth in Lending Act's advertising rules
Show answer & explanation
Answer: C
RESPA prohibits paying or accepting unearned fees or kickbacks in connection with referrals of settlement service business, such as paying an agent purely for sending title insurance business without performing any actual service. The Fair Housing Act instead addresses discrimination based on protected classes, which is an unrelated concern from a referral fee arrangement between businesses.
35. A 17-year-old New Jersey high school senior wants to apply for a real estate salesperson license immediately after finishing the required prelicensure coursework. Based on NJREC eligibility rules, can this applicant be licensed?
- A. No, because New Jersey requires applicants to be at least 18 years old
- B. Yes, but only for a probationary one-year license
- C. Yes, as long as a parent co-signs the application
- D. No, because New Jersey requires applicants to be at least 21 years old
Show answer & explanation
Answer: A
New Jersey requires a real estate salesperson applicant to be at least 18 years of age, so a 17-year-old cannot be licensed regardless of finishing the coursework or having parental involvement. The 21-years-old distractor overstates the actual minimum age requirement, which is a common confusion with age minimums used for other types of state licenses.
36. A salesperson already licensed in Pennsylvania moves to Cherry Hill and wants to sell real estate in New Jersey. Because New Jersey does not have reciprocity agreements with other states, this salesperson must?
- A. Complete New Jersey's own licensing process, including its prelicensure and examination requirements
- B. Automatically receive a New Jersey license valid for one year
- C. Simply file a reciprocal license transfer form with the NJREC
- D. Only pay a transfer fee to activate a New Jersey license
Show answer & explanation
Answer: A
Because New Jersey does not have reciprocity with any other state, a licensee moving from another jurisdiction must go through New Jersey's own full licensing process rather than simply transferring an out-of-state license. Assuming a simple transfer form or automatic license would apply is incorrect precisely because reciprocity, which would normally allow that kind of shortcut, does not exist for New Jersey.
37. A New Jersey salesperson has been licensed and actively practicing for two years and wants to apply for a broker's license this year. Based on NJREC eligibility rules for broker licensure, is this candidate currently eligible?
- A. No, because NJREC requires the equivalent of three years of approved work experience as a salesperson
- B. Yes, two years of experience satisfies the broker experience requirement
- C. Yes, as long as the candidate is at least 25 years old
- D. No, because brokers must first become instructors before applying
Show answer & explanation
Answer: A
New Jersey generally requires a broker applicant to have approximately three years of NJREC-approved work experience as a licensed salesperson, so a candidate with only two years would not yet meet that eligibility threshold. There is no requirement to first become an instructor before applying for a broker license, which makes that option an unrelated and incorrect pathway.
38. A recently licensed salesperson in Roselle wants to begin listing and selling homes on their own, without affiliating with any supervising broker. Does New Jersey license law permit this?
- A. Yes, after the first year of licensure
- B. No, because only instructors may practice without a sponsoring broker
- C. No, a salesperson's license must be held and supervised by a sponsoring broker
- D. Yes, if three years of experience have been completed
Show answer & explanation
Answer: C
A New Jersey salesperson's license must be affiliated with, and supervised by, a sponsoring broker, so the salesperson cannot legally list or sell property on their own no matter how much experience has accumulated. The instructor-related distractor confuses an entirely different license category with the salesperson license, which always requires broker affiliation by design.
39. A licensed salesperson in Passaic is found by the NJREC to have committed fraud in a transaction. As the regulatory body governing real estate licensees, what authority does the NJREC generally have in response?
- A. Only the authority to send a warning letter with no further action
- B. The authority to discipline the licensee, including suspending or revoking the license
- C. Only the authority to require additional continuing education
- D. No authority, since only a civil court can penalize licensees
Show answer & explanation
Answer: B
The NJREC has statutory authority to discipline licensees found to have violated license law, which can include suspending or revoking a license for serious misconduct such as fraud. Claiming the commission has no authority ignores its role as the regulatory body specifically empowered to police licensee conduct, separate from any civil lawsuit a harmed party might also bring.
40. During a continuing-education ethics seminar, the instructor describes a hypothetical: a licensee defrauds a client, the client sues and wins a judgment, but the licensee has no money or assets left to satisfy it. She asks the class which fund the client might still be able to turn to for possible recovery.
- A. The NJREC General Operating Budget
- B. The Real Estate Guaranty Fund
- C. The Escrow Reserve Account
- D. The Broker's Errors and Omissions Fund
Show answer & explanation
Answer: B
New Jersey maintains a real estate Guaranty Fund, funded through contributions collected as part of licensing fees, that can potentially compensate victims of licensee fraud when a judgment against the licensee proves uncollectible. An escrow reserve account is a different concept tied to holding transactional deposits, not a statewide victim compensation fund.
41. A salesperson in Vineland leaves their sponsoring broker to take a break from the industry but does not affiliate with a new broker. What is the status of that salesperson's ability to practice real estate during this gap?
- A. The license transfers automatically to the NJREC's own brokerage
- B. The salesperson may continue working independently for up to a year
- C. The salesperson may still list new properties but not close on sales
- D. The salesperson cannot legally perform licensed activities until affiliated with a sponsoring broker again
Show answer & explanation
Answer: D
Because a New Jersey salesperson's license must be held under a sponsoring broker, a salesperson who leaves without affiliating with a new broker cannot legally perform licensed real estate activities during that gap. There is no allowance to continue working independently for a period of time, since the affiliation requirement applies continuously rather than only after some grace period expires.
42. During a routine review, the NJREC requests to inspect a Wayne brokerage's trust account records for client deposits. What is the basis for this kind of regulatory action?
- A. The NJREC has authority under state license law to oversee and audit licensee trust fund handling
- B. Only if a criminal indictment already exists
- C. Trust account records are private and never subject to NJREC review
- D. Only the IRS has authority to review a brokerage's trust accounts
Show answer & explanation
Answer: A
The NJREC has regulatory authority under New Jersey license law to oversee and audit how licensees handle client trust funds, including reviewing trust account records during routine compliance checks. Claiming these records are entirely private from the commission misunderstands that trust fund oversight is a core part of the commission's regulatory mandate over licensees.
43. An individual in Bloomfield wants to operate as a New Jersey real estate broker entirely from a personal vehicle, with no fixed office location. Under New Jersey license law, is this arrangement acceptable?
- A. No, brokers are generally required to maintain a definite, fixed place of business
- B. Yes, because NJREC eliminated the office requirement
- C. No, because brokers must operate exclusively from a personal home
- D. Yes, as long as the broker has a cell phone for client contact
Show answer & explanation
Answer: A
New Jersey license law generally requires a broker to maintain a definite, fixed place of business, so operating entirely out of a vehicle without any office does not satisfy this requirement. Requiring the office to be exclusively a personal home is also incorrect, since a licensed office simply needs to be a fixed location, not necessarily the broker's residence.
44. "Just divide the sale price by the monthly rent," an appraiser explains to a trainee looking at a Bayonne rental that sold for $245,000 after renting for $1,750 a month. What is the property's gross rent multiplier?
- A. 140
- B. 1,400
- C. 14
- D. 175
Show answer & explanation
Answer: A
The gross rent multiplier equals the sale price divided by the monthly rent, so $245,000 divided by $1,750 equals 140. The 175 distractor results from mistakenly using $1,400 as the monthly rent instead of the actual $1,750 figure, a slip that can happen when the digits are misread.
45. In Egg Harbor City, one broker represents both the purchaser and the seller in the same deal after securing informed, written consent from each party. What is this arrangement called?
- A. Subagency owed to the listing broker
- B. Disclosed dual agency with both parties' written consent
- C. Designated agency using two separate licensees
- D. Undisclosed dual agency lacking client awareness
Show answer & explanation
Answer: B
Disclosed dual agency exists when a single broker represents both sides of a deal after every party has been informed and has consented to the arrangement. Designated agency is the closely related distractor, but it involves two different affiliated licensees each representing one side, which is not what happens when one broker personally represents both parties.
46. Frank conveys his shore property in Point Pleasant to his sister Diane 'for the life of their uncle Carl.' What type of estate does Diane hold?
- A. A life estate pur autre vie, measured by Carl's lifetime
- B. A remainder interest that vests only after Frank's death
- C. An estate for years measured by a lease term
- D. A fee simple absolute that Diane can pass to her own heirs
Show answer & explanation
Answer: A
A life estate measured by the life of someone other than the life tenant is a life estate pur autre vie; Diane's right to the property ends when Carl dies, not when she dies. The tempting distractor of a fee simple absolute is wrong because that estate would last forever and pass through Diane's own estate, which contradicts a grant limited to a third person's lifespan.
47. A Cherry Hill homeowner allows a neighbor to cross a strip of the homeowner's yard to reach a shared driveway, with the right recorded and running with both properties' deeds. This arrangement is best classified as a?
- A. Easement appurtenant benefiting the neighboring parcel
- B. Personal license that ends when either owner sells
- C. Encroachment onto the homeowner's land
- D. Easement in gross held by an individual rather than a parcel
Show answer & explanation
Answer: A
Because the right is recorded and attaches to the land itself, benefiting one parcel and burdening another, it is an easement appurtenant that transfers automatically with each deed. A license, by contrast, is a revocable personal permission that does not run with the land, which is why that distractor fails once the facts describe a recorded right tied to the properties.
48. In Hillsborough, a property owner wants to add a covered porch that would sit nearer to the side yard boundary than the local zoning code permits. What should the owner request in order to proceed despite the setback restriction?
- A. A conditional use permit for a commercial operation
- B. A variance excusing the specific setback requirement
- C. Legal nonconforming status covering the entire parcel
- D. A full rezoning of the surrounding residential block
Show answer & explanation
Answer: B
A variance provides individualized relief from a single dimensional rule, such as a setback, based on a hardship unique to that lot. Legal nonconforming status instead protects a use or structure that predates the current ordinance, which does not fit an owner asking for permission to build something brand new.
49. A brokerage firm in Bergenfield has ten affiliated salespersons. Under New Jersey license law, who is ultimately responsible for supervising the daily real estate activities of those salespersons?
- A. Each salesperson supervises themselves once licensed
- B. The broker of record for the firm
- C. The title company handling the firm's closings
- D. The NJREC directly supervises each salesperson
Show answer & explanation
Answer: B
New Jersey license law places responsibility for supervising affiliated salespersons on the broker of record for the firm, since salespersons are licensed to operate only under a sponsoring broker's oversight. The NJREC regulates and disciplines licensees statewide but does not perform the day-to-day supervisory role that belongs to the broker of record.
50. A Jersey City buyer works with Agent Lopez for weeks touring homes, then contacts the listing agent directly to write an offer on a property Lopez had shown. A dispute later arises over which agent is entitled to the commission. This dispute centers on the concept of?
- A. Puffing made during a showing
- B. Novation of the purchase contract
- C. Promissory estoppel against the buyer
- D. Procuring cause of the eventual sale
Show answer & explanation
Answer: D
Procuring cause disputes arise when more than one agent contributed to a sale and each claims to be the effective, direct cause of bringing the buyer and property together. Novation refers to substituting a new party or contract obligation entirely, which has nothing to do with which agent's efforts actually produced the sale.
51. During new-hire orientation at a Lambertville firm, the training manager poses a puzzle: the office has taken in both sides of the same sale, so she puts one veteran under contract to look out solely for the seller and puts a second veteran under contract to look out solely for the buyer, and neither owes the other's client any duty at all. Trainees are asked to name what she just set up.
- A. Firmwide single agency serving only one side of every deal
- B. Neutral transactional brokerage owing no fiduciary duty to either side
- C. Cooperating subagency running back to the listing broker
- D. Designated agency, splitting the two sides between separate licensees
Show answer & explanation
Answer: D
Designated agency is what the manager describes: the firm names two different affiliated licensees to opposite sides of one transaction, and each owes full fiduciary duties solely to the party assigned to them. It is not dual agency, because dual agency puts a single licensee in the middle representing both sides at once rather than splitting the file between two separate agents.
52. In Bound Brook, an attorney for the buyer files the deed with the county clerk's office shortly after the transaction closes. What is the main reason for recording the deed right away?
- A. To give public notice of the ownership transfer and protect the buyer's interest against later claims
- B. To satisfy the buyer's lender that the loan has closed
- C. To calculate the property's new assessed tax value
- D. To transfer equitable title to the buyer for the first time
Show answer & explanation
Answer: A
Recording a deed puts the transfer into the public record, giving constructive notice to the world and protecting the new owner's priority against later claims or a fraudulent second sale by the prior owner. Recording does not itself create equitable title, which typically arises earlier once a valid purchase contract is signed, so that option misstates the deed's actual function.
53. A lender in Egg Harbor Township requires a buyer who is putting down only 5% to purchase private mortgage insurance. What risk is this coverage primarily designed to protect against?
- A. The title company's loss from a defective title search
- B. The lender's loss if the borrower defaults on a high loan-to-value loan
- C. The seller's loss if the closing is delayed past the contract date
- D. The buyer's loss if the home's value declines after purchase
Show answer & explanation
Answer: B
Private mortgage insurance shields the lender from loss if a borrower defaults on a loan carrying a relatively high loan-to-value ratio, such as one made with only 5% down. It does not protect the buyer's own equity or guard against a market decline in the home's value, which is why the second option misidentifies who actually benefits from the coverage.
54. While mentoring a new licensee, a broker pulls two forms from a closed file and quizzes her: one is nothing more than the borrower's personal pledge to repay the lender, while the other gives the lender an actual claim against the real property if that pledge is broken. She asks which of the two is the instrument that pledges the property itself as security.
- A. The deed conveying title
- B. The mortgage, which serves as the security instrument
- C. The promissory note
- D. The purchase agreement
Show answer & explanation
Answer: B
The mortgage is the security instrument that gives the lender a claim against the real property, while the promissory note is a separate, personal promise from the borrower to repay the debt. The purchase agreement is unrelated to financing security since it only governs the sale terms between buyer and seller and creates no lien for the lender.
55. A vacant lot in Hackensack zoned for mixed use could support a small retail building, a parking lot, or a residential duplex. The appraisal concept used to determine which of these uses would generate the greatest return to the land is?
- A. Principle of substitution among comparable properties
- B. Principle of conformity among neighboring uses
- C. Highest and best use of the land
- D. Functional obsolescence of the existing structure
Show answer & explanation
Answer: C
Highest and best use identifies which legally permissible, physically possible, and financially feasible use of a site produces the greatest net return, which is exactly the comparison being made among the retail, parking, and residential options. Functional obsolescence instead refers to a design flaw reducing an existing structure's value, which does not apply to an appraiser comparing potential future uses of vacant land.
56. A buyer's earnest money deposit on a home in Denville is collected by the broker. Consistent with standard trust fund handling practices, the broker should?
- A. Deposit the funds directly into the broker's personal checking account for convenience
- B. Immediately release the funds to the seller before closing
- C. Hold the funds as uncashed cash in the office safe indefinitely
- D. Deposit the funds into a separate trust or escrow account, not the broker's personal account
Show answer & explanation
Answer: D
Standard trust fund handling requires brokers to keep client deposit money in a separate trust or escrow account, kept apart from the broker's own personal or general business funds, to prevent commingling. Releasing the deposit to the seller before closing is also improper, because those funds must generally be held until the transaction closes or a dispute is properly resolved.
57. A rental property owner in Woodbridge declines to lease a unit to an applicant family because they have three young children, despite the home meeting all applicable occupancy limits. Which Fair Housing Act protected class does this refusal most likely violate?
- A. Familial status
- B. Marital status
- C. Source of income
- D. Sexual orientation
Show answer & explanation
Answer: A
The federal Fair Housing Act protects familial status, meaning an owner generally cannot decline to rent to a household simply because it includes children, as long as the unit meets applicable occupancy standards. Source of income and marital status are not federally protected classes under the Fair Housing Act, so those options mislabel which protection actually applies to this refusal.
58. An ad for a home for sale in New Brunswick states 'only 5% down' but does not include the annual percentage rate, finance charge, or other required credit terms. Under the Truth in Lending Act's advertising rules, this ad is problematic because it uses a?
- A. Fair housing violation based on familial status
- B. RESPA-prohibited kickback arrangement
- C. Trigger term that requires additional required credit disclosures
- D. Puffing statement that requires no further disclosure
Show answer & explanation
Answer: C
Under the Truth in Lending Act's Regulation Z, specific credit terms like a down payment percentage are considered trigger terms that require the ad to also include additional information, such as the annual percentage rate and finance charge. This is unrelated to fair housing familial status protections, which govern discrimination based on the presence of children rather than credit advertising content.
59. A friend without any real estate license helps a homeowner in Rahway find a buyer and accepts a cash payment for the introduction. Under New Jersey license law, what is problematic about this arrangement?
- A. It is fine as long as the payment is under a certain small amount
- B. Nothing, because friends are exempt from licensing requirements
- C. Performing licensed brokerage activities for compensation generally requires a real estate license
- D. It is fine as long as no written contract was signed
Show answer & explanation
Answer: C
Acting as a broker or salesperson, including finding a buyer for compensation, generally requires a real estate license, and there is no blanket exemption simply because the person helping is a friend. The absence of a written contract does not cure the problem, because the licensing requirement is triggered by performing licensed activity for pay, not by whether the arrangement was documented.
60. A salesperson working under a Toms River broker is offered a cash bonus directly by the buyer for helping close the deal quickly, paid outside of the regular commission structure. Under New Jersey license law, how should this compensation be handled?
- A. Any compensation for licensed activity must be paid through the salesperson's sponsoring broker, not accepted directly
- B. The salesperson must forward the bonus directly to the NJREC
- C. The salesperson may keep it only if it is under a certain dollar amount
- D. The salesperson may keep the cash bonus without informing the broker
Show answer & explanation
Answer: A
New Jersey license law generally requires that compensation for licensed real estate activity flow through the salesperson's sponsoring broker rather than being accepted directly from a client, which prevents unsupervised side payments. There is no dollar threshold under which direct compensation becomes acceptable, since the requirement is based on the nature of the payment as compensation for licensed activity, not its size.

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Key facts: New Jersey Real Estate exam

110

MCQ questions

70% (77 of 110 correct…

To pass

Time limit

$38

Exam fee

The New Jersey Real Estate is administered by New Jersey Real Estate Commission, with 110 scored questions, a 4 hours time limit and a 70% (77 of 110 correct — single combined exam) result.

This free New Jersey Real Estate practice test has 60 original questions written to New Jersey 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 New Jersey Real Estate exam fee is $38 (PSI exam fee; $160 initial salesperson license fee is separate).

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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.

State of New Jersey Real Estate Salesperson, Broker and Instructor Examination Candidate Information Bulletin (PSI Services LLC)New Jersey Real Estate Commissiontest-takers.psiexams.com
NJDOBI | Real Estate License FeesNew Jersey Real Estate Commissionnj.gov
NJDOBI | Requirements for Licensure as a NJ Real Estate Salesperson or BrokerNew Jersey Real Estate Commissionnj.gov
NJDOBI | NJ Real Estate Commission - Licensing and EducationNew Jersey Real Estate Commissionnj.gov

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

Frequently asked questions

How many questions are on the New Jersey real estate salesperson exam?

The salesperson exam has 110 scored questions and a 4-hour time limit, so practicing with a similarly sized test helps you build the right pacing.

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

The real exam requires 70% correct, which is 77 of the 110 questions, so aim to consistently clear that mark on practice sets before scheduling your test date.

Do I need to finish the prelicensing course before I start practicing for the exam?

New Jersey requires a 75-hour prelicensure course before you can sit for the exam, so most of your foundational practice naturally happens during that coursework.

What topics make up most of the practice questions I should focus on?

Contracts account for 19% of the exam and Agency for 13%, with Statutes and Rules Governing Licensee Activities covering 22 items for salespersons, so weighting your practice toward those areas mirrors the real content mix.

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

You can work through this practice test at no cost and without creating an account.

What is the best way to use a practice test to actually get ready?

Take a full timed practice run to simulate the 4-hour format, review every missed question against the correct rule or concept, then retest the weak domains until your score stays comfortably above the passing line.