Real Estate national/general salesperson

85 questions/tasks. Use the approved directions below.

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Question 1

Which factor is most useful in deciding whether an installed item has become a fixture rather than remaining movable personal property?
  • ☐ A. Whether it can be sold separately on a secondhand market.
  • ☐ B. Its purchase price compared with the property's market value.
  • ☐ C. Its intended permanent attachment and adaptation to the property.
  • ☐ D. Whether the owner paid for it with cash rather than credit.
Show answer and explanation

Response: C

Final answer: Its intended permanent attachment and adaptation to the property.
Attachment matters. An item's intended use, adaptation, and manner of attachment help distinguish a fixture from a chattel, while price, payment method, and possible resale do not settle its legal character.

Question 2

What distinguishes a bilateral contract from a unilateral contract?
  • ☐ A. Each party gives a promise in exchange for the other's promise.
  • ☐ B. Only one party gives a promise, while the other accepts by performing an act.
  • ☐ C. The contract is enforceable only after an earnest-money deposit has been delivered.
  • ☐ D. The parties have completed every promised obligation before the agreement is described as bilateral.
Show answer and explanation

Response: A

Final answer: Each party gives a promise in exchange for the other's promise.
A bilateral contract exchanges mutual promises, while a unilateral contract seeks an act in return for the offeror's promise without requiring a return promise. Completion and deposits are separate questions.

Question 3

Which statement best distinguishes market value from the price paid in a particular sale?
  • ☐ A. Market value excludes improvements, while a sale price includes both land and improvements.
  • ☐ B. A sale price is an actual transaction amount, while market value is an opinion based on specified market conditions.
  • ☐ C. Market value is the asking price, while a sale price is that amount after the brokerage fee is deducted.
  • ☐ D. A sale price reflects buyer demand, while market value is the seller's original acquisition cost.
Show answer and explanation

Response: B

Final answer: A sale price is an actual transaction amount, while market value is an opinion based on specified market conditions.
Price records a transaction. Special motivations or concessions may influence that amount, whereas a market-value opinion considers the conditions of a competitive market and does not automatically equal the asking price or historical cost.

Question 4

Does radon-resistant construction establish that a newly built house does not need radon testing?
  • ☐ A. Yes. Those features certify that the indoor radon level is below EPA's action level.
  • ☐ B. No, but an exterior-air sample can establish the indoor level instead.
  • ☐ C. No. EPA recommends testing even when radon-resistant features were installed.
  • ☐ D. Yes, if houses on both sides have already received low test results.
Show answer and explanation

Response: C

Final answer: No. EPA recommends testing even when radon-resistant features were installed.
Test the particular home. Neither installed features nor neighboring results establish its indoor radon level, and EPA recommends testing new homes even when radon-resistant construction techniques were used.

Question 5

Which estate has potentially unlimited duration and the broadest ownership rights, subject to applicable public and private limitations?
  • ☐ A. A periodic tenancy.
  • ☐ B. Fee simple absolute.
  • ☐ C. An estate for years.
  • ☐ D. A life estate.
Show answer and explanation

Response: B

Final answer: Fee simple absolute.
Fee simple absolute has potentially unlimited duration and the broadest ownership rights, even though applicable restrictions still limit the owner's use. A life estate or a leasehold does not have that same potentially unlimited duration.

Question 6

A real estate license, by itself, qualifies a licensee to do which of the following?
  • ☐ A. Resolve a disputed tax liability by choosing the client's legal reporting position.
  • ☐ B. Explain transaction features within the licensee's real estate competence and refer legal interpretation outside that competence to qualified counsel.
  • ☐ C. Design a client's estate plan because the plan includes real property.
  • ☐ D. Give a binding legal opinion about a disputed inheritance provision affecting title.
Show answer and explanation

Response: B

Final answer: Explain transaction features within the licensee's real estate competence and refer legal interpretation outside that competence to qualified counsel.
Respect the professional boundary. Real estate competence supports explaining a transaction, but the license alone does not confer authority to provide specialized legal, estate-planning, or tax opinions.

Question 7

Which document contains the borrower's promise to repay a mortgage loan, as distinct from the document making the property collateral?
  • ☐ A. The security instrument.
  • ☐ B. The promissory note.
  • ☐ C. The deed conveying ownership.
  • ☐ D. The initial escrow account disclosure.
Show answer and explanation

Response: B

Final answer: The promissory note.
The promissory note sets out the borrower's agreement to repay the loan, including the repayment terms. The security instrument makes the property collateral. Conveyance deeds transfer ownership, while escrow disclosures describe a different part of the closing arrangement.

Question 8

A rectangular parcel measures 330 feet by 396 feet. How many acres does it contain?
  • ☐ A. 6 acres.
  • ☐ B. 2 acres.
  • ☐ C. 3 acres.
  • ☐ D. 4 acres.
Show answer and explanation

Response: C

Final answer: 3 acres.
Multiply the dimensions first: 330 times 396 is 130,680 square feet. Dividing that area by 43,560 square feet per acre gives 3 acres, without converting either individual side length directly to acres.

Question 9

In property terminology, what does severance describe?
  • ☐ A. Removing an attached item from the real property so that it becomes personal property.
  • ☐ B. Transferring possession to a tenant while retaining ownership of the property.
  • ☐ C. Attaching a movable item to a building so that it becomes part of the real estate.
  • ☐ D. Dividing a parcel into separately described lots for individual sale.
Show answer and explanation

Response: A

Final answer: Removing an attached item from the real property so that it becomes personal property.
Severance removes the attachment. It concerns an item becoming personal property, rather than the reverse process of attachment, the subdivision of land, or a transfer of possession under a lease.

Question 10

In a bilateral purchase contract, what can supply consideration even if no earnest-money deposit is required?
  • ☐ A. The buyer's promise to pay in exchange for the seller's promise to convey.
  • ☐ B. Both parties agreeing to the same written terms.
  • ☐ C. The agreement having a lawful purpose.
  • ☐ D. Both parties having the legal capacity to enter the agreement.
Show answer and explanation

Response: A

Final answer: The buyer's promise to pay in exchange for the seller's promise to convey.
Consideration can consist of exchanged promises. Capacity, mutual consent, and lawful purpose are other requirements, while the buyer's and seller's bargained-for promises can supply consideration without a required earnest-money deposit.

Question 11

Which valuation principle concerns the present value of benefits expected from property ownership in the future?
  • ☐ A. Contribution.
  • ☐ B. Substitution.
  • ☐ C. Anticipation.
  • ☐ D. Plottage.
Show answer and explanation

Response: C

Final answer: Anticipation.
Anticipation looks ahead. Expected future benefits influence present value, whereas contribution concerns a component's added value and plottage concerns value associated with combining parcels.

Question 12

Which statement about suspected asbestos-containing material is consistent with EPA guidance?
  • ☐ A. Sound material that will remain undisturbed often can be left alone, while planned disturbance calls for appropriate professional assessment.
  • ☐ B. The material must be removed from every home before the property can be advertised.
  • ☐ C. A homeowner should cut out a sample before contacting an asbestos professional.
  • ☐ D. A real estate licensee can confirm its composition from its color and age.
Show answer and explanation

Response: A

Final answer: Sound material that will remain undisturbed often can be left alone, while planned disturbance calls for appropriate professional assessment.
Avoid unnecessary disturbance. EPA distinguishes material left in good condition from situations involving damage or renovation, and recommends trained professionals rather than visual certainty or do-it-yourself sampling.

Question 13

An estate whose duration is measured by a person's lifetime is classified as what?
  • ☐ A. An estate for years.
  • ☐ B. A remainder interest.
  • ☐ C. A life estate.
  • ☐ D. A tenancy in common.
Show answer and explanation

Response: C

Final answer: A life estate.
A life estate is measured by a life. An estate for years has a fixed lease term, tenancy in common describes a form of co-ownership, and a remainder is a future interest rather than the present possessory estate.

Question 14

A buyer asks a salesperson to interpret a disputed custom indemnity clause. The salesperson lacks legal training. An inspection notice deadline expires tomorrow, and the contract permits an extension only by both parties' signed agreement. The buyer wants legal advice before deciding whether to give notice. Which sequence best addresses the buyer's needs within the salesperson's authority?
  • ☐ A. Arrange prompt legal advice, discuss timely contract options with the buyer, and seek a signed extension if the buyer directs it.
  • ☐ B. Ask the seller for an extension and treat a favorable verbal reply as preserving the buyer's contractual rights.
  • ☐ C. Explain the clause using a standard-form summary, then submit a termination notice unless the buyer objects.
  • ☐ D. Request legal advice and tell the buyer that this request suspends the notice deadline until counsel responds.
Show answer and explanation

Response: A

Final answer: Arrange prompt legal advice, discuss timely contract options with the buyer, and seek a signed extension if the buyer directs it.
The legal question and the deadline both need attention. Counsel can interpret the custom clause while the salesperson helps the buyer address available options, and any extension must satisfy the stated agreement requirement rather than arising automatically from a request for advice.

Question 15

What is the basic difference between fixed-rate and adjustable-rate mortgage loans?
  • ☐ A. A fixed-rate loan changes its rate only at the lender's discretion, while an adjustable-rate loan changes only when the borrower requests it.
  • ☐ B. A fixed-rate loan keeps the entire payment, including taxes and insurance, unchanged, while an adjustable-rate loan reflects changes in those costs.
  • ☐ C. A fixed-rate loan's rate changes with the principal balance, while an adjustable-rate loan's rate remains constant for its whole term.
  • ☐ D. A fixed-rate loan keeps its stated interest rate, while an adjustable-rate loan can change its rate under the loan's terms.
Show answer and explanation

Response: D

Final answer: A fixed-rate loan keeps its stated interest rate, while an adjustable-rate loan can change its rate under the loan's terms.
The interest-rate terms are decisive. A fixed rate does not freeze taxes or insurance expenses, and adjustable rates change under agreed loan terms rather than simply at either party's discretion.

Question 16

An owner proposes a $960,000 value by dividing $76,800 by an 8% capitalization rate. The $76,800 was calculated from $108,000 scheduled annual rent, less $7,200 expected vacancy, $24,000 operating expenses, and nothing else. Records also show $12,000 annual mortgage interest and $8,400 principal payments. Using effective income less operating expenses as NOI, which review conclusion is supported?
  • ☐ A. The indication should be $810,000 because mortgage interest must also be deducted from NOI.
  • ☐ B. The $960,000 indication is supported because the stated NOI properly excludes debt service.
  • ☐ C. The indication should be $1,050,000 because vacancy is a financing expense and belongs outside NOI.
  • ☐ D. The indication should be $705,000 because both mortgage interest and principal must be deducted from NOI.
Show answer and explanation

Response: B

Final answer: The $960,000 indication is supported because the stated NOI properly excludes debt service.
Scheduled rent less expected vacancy gives $100,800 in effective annual income, and subtracting the $24,000 operating expenses leaves $76,800 NOI. Divide that NOI by 0.08 to obtain $960,000. The owner's mortgage interest and principal affect cash flow after debt service, but neither belongs among the operating expenses in the valuation method stated here. The categories are consistent.

Question 17

A leasehold that begins on a specified date and ends on another specified date is generally called what?
  • ☐ A. A periodic tenancy.
  • ☐ B. An estate for years.
  • ☐ C. A fee simple estate.
  • ☐ D. A life estate.
Show answer and explanation

Response: B

Final answer: An estate for years.
The fixed ending date is decisive. An estate for years need not last several years, and it differs from a periodic tenancy that continues through successive rental periods.

Question 18

A shop lease permits the tenant to remove business equipment before the term ends if removal does not damage the premises. The tenant installed a freestanding display unit secured by removable brackets. Removing it will leave no damage. Under these stated terms, how should its removal be treated?
  • ☐ A. It may be removed only if the landlord first reimburses the tenant's purchase cost.
  • ☐ B. It must remain because any bracketed item automatically belongs to the landlord.
  • ☐ C. It may be removed after the term ends but not while the lease remains in effect.
  • ☐ D. The tenant may remove it before the lease ends.
Show answer and explanation

Response: D

Final answer: The tenant may remove it before the lease ends.
Apply the lease's conditions. The equipment meets the stated removal and damage requirements, so neither its use of brackets nor its cost reverses the permission granted during the lease term.

Question 19

Which requirement concerns the parties' agreement to the same material contract terms?
  • ☐ A. Capacity.
  • ☐ B. Lawful purpose.
  • ☐ C. Mutual consent.
  • ☐ D. Consideration.
Show answer and explanation

Response: C

Final answer: Mutual consent.
Mutual consent concerns agreement to the same material terms. Consideration, lawful purpose, and capacity are other contract requirements, but none is a substitute for the parties agreeing to those terms.

Question 20

In a market, the number of comparable homes offered for sale falls substantially while the number of qualified buyers stays the same. Other influences are unchanged. Which conclusion best applies supply-and-demand principles?
  • ☐ A. The reduced supply tends to lower prices because fewer sellers can compete for buyers.
  • ☐ B. Market values remain unchanged because only buyer numbers determine value.
  • ☐ C. Sale prices must rise by the same percentage that the number of listings fell.
  • ☐ D. The reduced supply tends to put upward pressure on prices, without establishing a specific percentage increase.
Show answer and explanation

Response: D

Final answer: The reduced supply tends to put upward pressure on prices, without establishing a specific percentage increase.
Fewer available homes can increase price pressure. The principle indicates a tendency under the stated conditions, but it supplies neither an exact percentage change nor a guarantee for every sale.

Question 21

What feature is central to the federal brownfield-site concept?
  • ☐ A. Potential or actual contamination that may complicate a property's expansion, redevelopment, or reuse.
  • ☐ B. A requirement that the land has no current owner or tenant.
  • ☐ C. A confirmed finding of current contamination as a necessary condition before the term can apply.
  • ☐ D. A requirement that the property previously contained a manufacturing plant.
Show answer and explanation

Response: A

Final answer: Potential or actual contamination that may complicate a property's expansion, redevelopment, or reuse.
Potential contamination is enough for the concept. A brownfield need not be an ownerless industrial site, and its reuse can be complicated by potential contamination before current contamination has been confirmed.

Question 22

Which description characterizes a periodic tenancy rather than an estate for years?
  • ☐ A. Possession continues through successive rental periods until it is properly terminated.
  • ☐ B. Possession conveys an undivided permanent ownership share.
  • ☐ C. Possession ends on a fixed date stated at the outset.
  • ☐ D. Possession lasts for the tenant's lifetime.
Show answer and explanation

Response: A

Final answer: Possession continues through successive rental periods until it is properly terminated.
A periodic tenancy renews by periods. That structure differs from a fixed lease ending date, a life estate, and an ownership share, without implying a single nationwide notice period for termination.

Question 23

Which agreement grants one broker exclusive listing authorization while generally reserving the owner's ability to sell personally without a commission, subject to the agreement's terms?
  • ☐ A. An open listing.
  • ☐ B. An exclusive-right-to-sell listing.
  • ☐ C. An exclusive buyer-representation agreement.
  • ☐ D. An exclusive-agency listing.
Show answer and explanation

Response: D

Final answer: An exclusive-agency listing.
Exclusive agency reserves the owner's sale exception while granting one broker listing authorization. An open listing permits multiple brokers, an exclusive right to sell generally covers an owner-produced sale, and a buyer-representation agreement serves a different principal.

Question 24

A lender permits a loan of no more than 80% of the lower of the purchase price or appraised value. The purchase price is $310,000 and the appraisal is $300,000. What is the maximum loan under this rule?
  • ☐ A. $248,000.
  • ☐ B. $300,000.
  • ☐ C. $250,000.
  • ☐ D. $240,000.
Show answer and explanation

Response: D

Final answer: $240,000.
The lender's rule selects the $300,000 appraisal because it is lower than the purchase price. Multiplying $300,000 by 0.80 gives the maximum $240,000 loan. Use the specified lower value.

Question 25

A signed agreement sets a brokerage fee at 4% of a $425,000 sale price. The salesperson receives 60% of that fee. With no other deductions or splits, how much does the salesperson receive?
  • ☐ A. $17,000.
  • ☐ B. $6,800.
  • ☐ C. $25,500.
  • ☐ D. $10,200.
Show answer and explanation

Response: D

Final answer: $10,200.
The brokerage fee is 4% of $425,000, or $17,000, before applying the salesperson's share. The salesperson receives 60% of $17,000, which is $10,200, leaving $6,800 as the other part of the fee. Apply the split last.

Question 26

Which physical characteristic of land means that the parcel cannot be moved to a different geographic location?
  • ☐ A. Area preference.
  • ☐ B. Immobility.
  • ☐ C. Permanence of investment.
  • ☐ D. Scarcity.
Show answer and explanation

Response: B

Final answer: Immobility.
Immobility concerns physical location. Scarcity, area preference, and the lasting commitment of an investment describe different economic considerations rather than the ability to move the parcel.

Question 27

A buyer offers $286,000 with closing on May 20. The seller signs a response changing the price to $292,000 while retaining the closing date. The offer requires acceptance of all material terms. What is the seller's response?
  • ☐ A. An acceptance subject only to a price adjustment at closing.
  • ☐ B. A counteroffer that requires the buyer's acceptance.
  • ☐ C. An acceptance because the closing date stayed the same.
  • ☐ D. A completed contract because the seller signed the buyer's document.
Show answer and explanation

Response: B

Final answer: A counteroffer that requires the buyer's acceptance.
The price was changed. Under the stated requirement, that material change proposes different terms rather than accepting the buyer's offer, and the seller's signature alone does not establish the buyer's assent.

Question 28

A seller can spend no more than $18,000 before marketing a home and wants the greatest supported increase in net proceeds. Current local evidence indicates that Project A costs $12,000 and adds $20,000 to sale value. Project B costs $17,000 and adds $21,000. Project C costs $24,000 and adds $33,000. Other sale costs are unchanged. Which recommendation follows both the budget and the evidence?
  • ☐ A. Either A or B, because spending within budget makes their contributions equivalent.
  • ☐ B. Project A, because its $8,000 net contribution exceeds Project B's within the available budget.
  • ☐ C. Project B, because it produces the highest sale-value increase among projects within budget.
  • ☐ D. Project C, because its $9,000 net contribution is the largest of all three projects.
Show answer and explanation

Response: B

Final answer: Project A, because its $8,000 net contribution exceeds Project B's within the available budget.
Compare net contributions and feasibility. Project A adds $8,000 after cost, Project B adds $4,000, and Project C exceeds the available funds, so the largest gross value increase is not the deciding figure.

Question 29

A seller is offering an ordinary single-family home built in 1972 that is covered by the federal lead disclosure rule. The seller has a prior lead inspection report. Before the buyer becomes bound by the purchase contract, what must the seller do about that report?
  • ☐ A. Provide the report only if it confirms that a child currently lives in the home.
  • ☐ B. Provide a summary after closing because the buyer can then arrange remediation.
  • ☐ C. Provide the available report along with the required known-information disclosures and lead pamphlet.
  • ☐ D. Keep the report until the buyer separately orders a new lead inspection.
Show answer and explanation

Response: C

Final answer: Provide the available report along with the required known-information disclosures and lead pamphlet.
Available records belong in the disclosure process. For this covered sale, the prior report is not replaced by a future buyer inspection, and the required information must be supplied before the buyer becomes obligated under the contract.

Question 30

Dana and Ellis own a parcel as tenants in common. Dana owns a 40% undivided interest and transfers that interest to Fran in a valid conveyance. There is no agreement restricting transfer. What does Fran acquire?
  • ☐ A. A right to use the parcel without any ownership interest.
  • ☐ B. A 40% interest that automatically expires when Ellis dies.
  • ☐ C. Exclusive ownership of a physically separated 40% portion of the parcel.
  • ☐ D. Dana's 40% undivided interest in the entire parcel.
Show answer and explanation

Response: D

Final answer: Dana's 40% undivided interest in the entire parcel.
The share remains undivided. Fran acquires Dana's ownership percentage across the parcel, rather than a carved-out physical area or a right limited by the other owner's lifetime.

Question 31

An exclusive-agency listing requires a 5% commission if the listing broker or another broker produces the buyer. It expressly provides no commission if the owner alone finds and completes a sale to the buyer without broker involvement. The owner does exactly that. What compensation is due under this agreement?
  • ☐ A. A 5% commission because every exclusive listing requires it.
  • ☐ B. Half the 5% commission because the listing broker did not produce the buyer.
  • ☐ C. No brokerage commission under the stated owner-sale exception.
  • ☐ D. A 5% commission less the owner's advertising expenses.
Show answer and explanation

Response: C

Final answer: No brokerage commission under the stated owner-sale exception.
Read the express exception. This completed owner-produced sale satisfies it, so neither the word exclusive nor a presumed split supplies a commission that the agreement does not require.

Question 32

Under RESPA Section 8, which distinction is central when reviewing a payment connected with a covered real estate settlement service?
  • ☐ A. A payment is prohibited whenever it passes between two settlement-service providers.
  • ☐ B. A payment becomes permissible when it is smaller than the usual settlement charge.
  • ☐ C. A payment is permissible whenever it is disclosed to the borrower.
  • ☐ D. A payment for actual services must be distinguished from a fee for referring settlement-service business.
Show answer and explanation

Response: D

Final answer: A payment for actual services must be distinguished from a fee for referring settlement-service business.
Actual services and referrals differ. Disclosure or a small amount does not make a prohibited referral fee permissible, while RESPA recognizes specified payments for services actually performed and other limited exceptions.

Question 33

A buyer pays 1.5 discount points on a $272,000 mortgage loan for a home priced at $340,000. How much are the points?
  • ☐ A. $40,800.
  • ☐ B. $2,720.
  • ☐ C. $5,100.
  • ☐ D. $4,080.
Show answer and explanation

Response: D

Final answer: $4,080.
One point equals 1% of the loan amount. For 1.5 points, multiply $272,000 by 0.015 to get $4,080, rather than using the home's $340,000 purchase price. Use the loan principal.

Question 34

For a covered sale of a 1968 home, the seller possesses two lead inspection reports. The older report addresses the kitchen, and the newer report addresses the bedrooms. The seller believes that the newer report is more useful. Which available records must be provided before the buyer is bound by the contract?
  • ☐ A. Both reports, along with the required known-information disclosure.
  • ☐ B. A newly commissioned report instead of either existing report.
  • ☐ C. Only the newer report because its date supersedes the older one.
  • ☐ D. Only the kitchen report unless the buyer specifically asks about bedrooms.
Show answer and explanation

Response: A

Final answer: Both reports, along with the required known-information disclosure.
Provide the available records. The newer report's date and different room coverage do not replace the other available report, and the disclosure obligation does not require commissioning a new test instead of supplying records already held.

Question 35

Why is buyer preference for a particular neighborhood considered an economic influence on land value?
  • ☐ A. It changes the parcel's physical dimensions.
  • ☐ B. It eliminates the need to consider permitted uses.
  • ☐ C. It determines whether the land can be moved.
  • ☐ D. It affects demand for property in that location.
Show answer and explanation

Response: D

Final answer: It affects demand for property in that location.
Preference affects demand. Convenience, reputation, and other location-related attractions can influence value without altering the parcel's dimensions, physical immobility, or applicable use restrictions.

Question 36

A contract remains executory when which condition applies?
  • ☐ A. The parties have never agreed to its material terms.
  • ☐ B. One or more promised obligations remain to be performed.
  • ☐ C. Every promised obligation has been completed.
  • ☐ D. The parties have agreed to cancel it and restore their prior positions.
Show answer and explanation

Response: B

Final answer: One or more promised obligations remain to be performed.
Executory means performance remains. A fully performed contract is executed, while cancellation and a lack of agreement concern different questions from the extent of completed performance.

Question 37

Before selecting valuation methods, why should an appraiser identify the value sought and the assignment's intended use?
  • ☐ A. The assignment's purpose and value concept affect which methods and evidence are relevant.
  • ☐ B. They establish the seller's preferred figure as the required appraisal result.
  • ☐ C. They determine that every assignment must use all three approaches equally.
  • ☐ D. They eliminate the need to analyze market information after the client states a purpose.
Show answer and explanation

Response: A

Final answer: The assignment's purpose and value concept affect which methods and evidence are relevant.
Define the assignment first. A relevant method depends on the value question and intended use, while the client's preferred figure cannot replace analysis or make equal weighting of every approach appropriate.

Question 38

A prospective purchaser reviews a Phase I environmental report. Current database records show no listed release, but historic records suggest a fuel operation, part of the site was inaccessible, and the environmental professional identifies those missing observations as a significant data gap affecting the conclusion. The purchase agreement allows additional environmental inquiry before commitment. Which conclusion and next action are best supported?
  • ☐ A. The current database result outweighs the older use records, so proceed without further inquiry unless contamination is visible.
  • ☐ B. The absence of a listed release does not resolve the gap, so seek the professional's recommended further inquiry before relying on a clean-site conclusion.
  • ☐ C. The historic fuel use establishes present contamination, so treat cleanup costs as known without additional investigation.
  • ☐ D. The access limitation makes the entire report unusable, so replace environmental inquiry with the seller's written statement.
Show answer and explanation

Response: B

Final answer: The absence of a listed release does not resolve the gap, so seek the professional's recommended further inquiry before relying on a clean-site conclusion.
A clean database search is limited evidence. The unresolved use and access information affect the professional's assessment, making further appropriate inquiry supported without proving either that contamination exists or that it is absent.

Question 39

A tenant has an annual occupancy budget of $31,000. Lease A requires $24,000 rent and $5,000 fixed expense reimbursement, with structural repairs paid by the landlord. Lease B requires $21,000 rent, $4,000 fixed reimbursement, and all structural repairs. A contractor identifies a roof repair likely to cost $9,000 during the year. The tenant wants an agreement whose stated obligations fit the budget without depending on the roof repair being postponed. Which conclusion is supported?
  • ☐ A. Lease A fits at $29,000, while Lease B exposes the tenant to a likely $34,000 total.
  • ☐ B. Both leases fit because roof repairs are separate from ordinary occupancy costs.
  • ☐ C. Lease B is preferable because its $25,000 rent and reimbursement total is lower.
  • ☐ D. Lease A exceeds the budget because the landlord's structural obligation must be added to the tenant's rent.
Show answer and explanation

Response: A

Final answer: Lease A fits at $29,000, while Lease B exposes the tenant to a likely $34,000 total.
Compare the allocated obligations. Lease A leaves structural repairs with the landlord, while Lease B's lower fixed charges do not offset the likely roof cost assumed by the tenant under its express terms.

Question 40

A manager's trust account holds $11,600: $4,500 belonging to Owner A, $4,100 belonging to Owner B, and $3,000 in tenant security deposits that must remain restricted. A's authorized $1,200 repair bill is unpaid. B has no unpaid charges. An assistant proposes distributing $5,000 to A and $3,600 to B, leaving the deposit total intact. Which instruction properly reconciles the records?
  • ☐ A. Pay A's bill from the security deposits, then distribute $4,500 to A and $4,100 to B.
  • ☐ B. Distribute the proposed amounts because the combined bank balance will still cover the deposits.
  • ☐ C. Pay A's authorized bill, distribute $3,300 to A and $4,100 to B, and retain the $3,000 deposits.
  • ☐ D. Distribute $4,050 to each owner after paying A's bill because the remaining funds belong to the owners collectively.
Show answer and explanation

Response: C

Final answer: Pay A's authorized bill, distribute $3,300 to A and $4,100 to B, and retain the $3,000 deposits.
A's $4,500 balance supports the $1,200 repair payment and a $3,300 distribution, while B's separate $4,100 remains available for B. The $3,000 tenant deposits stay restricted. Keeping the combined reserve intact would not excuse overpaying A with funds recorded for B or ignoring A's unpaid bill.

Question 41

For a mortgage transaction covered by the Closing Disclosure requirement, the borrower generally must receive the disclosure at least how long before closing?
  • ☐ A. Three business days.
  • ☐ B. Three calendar days.
  • ☐ C. One business day.
  • ☐ D. Seven calendar days.
Show answer and explanation

Response: A

Final answer: Three business days.
The interval uses business days. The general covered-transaction requirement is receipt at least three business days before closing, rather than simply three consecutive calendar days.

Question 42

A sale closes for $384,000. The seller owes a 4% commission, a $215,000 loan payoff, and a $3,200 buyer credit. Annual property tax of $3,600 is unpaid. Use a 360-day year, with the seller responsible for 135 days and the closing day assigned to the buyer. A draft statement adds the seller's tax share to the seller's proceeds and shows net proceeds of $151,790. Which correction and net amount are right?
  • ☐ A. Remove the tax adjustment entirely, producing $150,440 net proceeds.
  • ☐ B. Keep the tax credit and subtract the buyer's credit a second time, producing $148,590 net proceeds.
  • ☐ C. Subtract the $1,350 seller tax share instead of adding it, producing $149,090 net proceeds.
  • ☐ D. Subtract the entire $3,600 annual tax bill instead of the proration, producing $146,840 net proceeds.
Show answer and explanation

Response: C

Final answer: Subtract the $1,350 seller tax share instead of adding it, producing $149,090 net proceeds.
The annual tax produces a $10 daily charge on the stated 360-day basis, so the seller owes $1,350 for 135 days. It is a debit. Subtract that amount, the $15,360 commission, $215,000 payoff, and $3,200 buyer credit from $384,000 to obtain $149,090, which is $2,700 below the incorrect draft using a tax credit.

Question 43

A legal description identifies a numbered lot within a numbered block of a named subdivision and cites a recorded plat. Which description method is being used?
  • ☐ A. Street-address identification alone.
  • ☐ B. Metes and bounds.
  • ☐ C. Lot and block.
  • ☐ D. Government rectangular survey.
Show answer and explanation

Response: C

Final answer: Lot and block.
The recorded plat supplies the reference. Lot and block descriptions identify parcels within a subdivision, unlike a boundary-course description or a government survey designation.

Question 44

Two parties agree to unwind their purchase contract and return the money and property each received, restoring their positions before the transaction. What process does this describe?
  • ☐ A. Assignment.
  • ☐ B. Rescission.
  • ☐ C. Ratification.
  • ☐ D. Modification.
Show answer and explanation

Response: B

Final answer: Rescission.
Rescission restores the prior positions. Assignment transfers rights, ratification adopts an earlier act, and modification changes the agreement rather than unwinding the entire transaction as described here.

Question 45

Why should a lender's appraisal come from an independent professional rather than be treated as the loan officer's preferred purchase-price opinion?
  • ☐ A. The appraisal is a supported opinion of the property's value, separate from the loan officer's desired financing result.
  • ☐ B. The appraisal replaces the buyer's need to review the property's physical condition.
  • ☐ C. The appraisal guarantees that the buyer can resell the property for the contract price.
  • ☐ D. The appraisal establishes the seller's minimum legally acceptable sale price.
Show answer and explanation

Response: A

Final answer: The appraisal is a supported opinion of the property's value, separate from the loan officer's desired financing result.
Independence supports the valuation process. An appraisal does not guarantee resale proceeds, set a seller's legal minimum price, or substitute for a condition inspection merely because it informs financing.

Question 46

Which fact is most directly a material property-condition issue for disclosure review?
  • ☐ A. A broker's preferred advertising schedule.
  • ☐ B. A seller's preferred closing agent.
  • ☐ C. A buyer's desired paint color.
  • ☐ D. A documented recurring basement water intrusion.
Show answer and explanation

Response: D

Final answer: A documented recurring basement water intrusion.
Recurring intrusion concerns the property itself. Preferences about a service provider, decor, or marketing schedule do not describe an existing physical condition that may affect its value or use.

Question 47

What does a quitclaim deed generally convey?
  • ☐ A. An ownership interest created by the deed even if the grantor had none.
  • ☐ B. A guaranteed fee simple title free from every recorded encumbrance.
  • ☐ C. Whatever interest the grantor has, without warranting that the grantor holds a particular title.
  • ☐ D. Only the grantor's mortgage debt, leaving ownership unchanged.
Show answer and explanation

Response: C

Final answer: Whatever interest the grantor has, without warranting that the grantor holds a particular title.
A quitclaim does not create a guarantee. It transfers the grantor's existing interest, if any, rather than manufacturing ownership or promising that the title is free of encumbrances.

Question 48

Which characteristic is a protected class under the federal Fair Housing Act?
  • ☐ A. Credit-score range.
  • ☐ B. Preferred lease length.
  • ☐ C. Familial status.
  • ☐ D. Employment profession.
Show answer and explanation

Response: C

Final answer: Familial status.
Familial status is federally protected. The other listed characteristics are not named federal Fair Housing Act classes, although a policy involving them can raise other legal questions or operate discriminatorily in a particular case.

Question 49

Before closing, a seller pays the full annual charge for a service that benefits the property. The agreement requires the buyer to reimburse the portion covering the buyer's ownership period. How is that portion treated at closing?
  • ☐ A. A credit to the seller and a charge to the buyer.
  • ☐ B. A credit to both parties because the service provider has already been paid.
  • ☐ C. A charge to the seller and a credit to the buyer.
  • ☐ D. A reduction of the seller's loan payoff only.
Show answer and explanation

Response: A

Final answer: A credit to the seller and a charge to the buyer.
The seller paid the buyer's portion in advance. Reimbursement therefore credits the seller and charges the buyer, rather than treating the prepaid amount like an unpaid seller obligation.

Question 50

An owner invested $80,000 cash in a rental. This year's effective rental income is $48,000, operating expenses are $18,000, and debt service is $20,000, including $5,000 principal repayment. The property also appreciated by $12,000. Define before-tax cash-on-cash return here as annual cash flow after debt service divided by initial cash invested. Which review of the owner's claimed 33.75% return is correct?
  • ☐ A. The claim combines cash flow, principal reduction, and appreciation, while the requested cash-on-cash return is 12.5%.
  • ☐ B. The claim is the requested cash-on-cash return because all three components increase the owner's wealth.
  • ☐ C. The requested return is 18.75% because principal repayment must be added back to spendable cash flow.
  • ☐ D. The requested return is 37.5% because the property's NOI is the owner's cash distribution.
Show answer and explanation

Response: A

Final answer: The claim combines cash flow, principal reduction, and appreciation, while the requested cash-on-cash return is 12.5%.
The property has $30,000 NOI before financing, but the $20,000 debt service leaves only $10,000 annual cash flow. Dividing $10,000 by the $80,000 cash investment gives the requested 12.5% return. Adding $5,000 principal reduction and $12,000 appreciation produces the claimed 33.75%, but those additional wealth changes are not spendable cash under the question's definition. Keep the measures separate.

Question 51

Which document reference most directly supports identifying a specific lot in a recorded subdivision?
  • ☐ A. The property's postal route and the neighborhood's name.
  • ☐ B. The property's street address and the owner's mailing address.
  • ☐ C. The tax bill's assessed value and the owner's name.
  • ☐ D. The subdivision plat's recording reference and the lot designation.
Show answer and explanation

Response: D

Final answer: The subdivision plat's recording reference and the lot designation.
The recorded reference identifies the lot. Addresses, a tax assessment, and postal routing do not provide the same identification within the subdivision's recorded legal plan.

Question 52

Assume a regular government-survey section contains exactly 640 acres. How many acres are in the northeast quarter of the southwest quarter of that section?
  • ☐ A. 40 acres.
  • ☐ B. 160 acres.
  • ☐ C. 320 acres.
  • ☐ D. 80 acres.
Show answer and explanation

Response: A

Final answer: 40 acres.
A quarter section contains 160 acres under the stated 640-acre assumption. Taking a quarter of that area gives 40 acres. The directional designations locate the quarter within the quarter, while the question's regular-section assumption supplies the area rather than requiring an inference about an irregular government lot.

Question 53

A contract makes both an inspection notice deadline of June 8 and a closing deadline of June 22 essential, and changes require both parties' signed agreement. On June 7, both parties sign an amendment extending only the inspection notice deadline to June 12. On June 9, the buyer proposes a June 28 closing, but the seller has not agreed. Which conclusion follows from the documents?
  • ☐ A. Inspection notice is due June 12, while closing remains due June 22 unless both parties agree to another change.
  • ☐ B. The inspection deadline remains June 8 because a change to one essential date must also change the closing date.
  • ☐ C. Inspection notice and closing both move four days because the signed extension changes the contract's overall schedule.
  • ☐ D. Inspection notice is due June 12 and closing is due June 28 because the buyer proposed that date before closing.
Show answer and explanation

Response: A

Final answer: Inspection notice is due June 12, while closing remains due June 22 unless both parties agree to another change.
Check what was actually amended. The signed document changes one deadline, and the buyer's later proposal does not supply the mutual agreement required to change the separate closing obligation.

Question 54

Which cost concept estimates a building with equivalent utility using current materials and design, rather than an exact duplicate of the existing building?
  • ☐ A. Replacement cost.
  • ☐ B. Historical acquisition cost.
  • ☐ C. Reproduction cost.
  • ☐ D. Accrued depreciation.
Show answer and explanation

Response: A

Final answer: Replacement cost.
Replacement focuses on utility. Reproduction instead estimates an exact duplicate, and neither historical purchase cost nor accrued depreciation defines the cost of a contemporary equivalent.

Question 55

For a covered sale, what is required of the seller's agent under the federal lead disclosure agent-responsibility rule?
  • ☐ A. Order a new lead inspection for every covered sale regardless of known information.
  • ☐ B. Inform the seller of the required obligations and ensure that the required activities are performed.
  • ☐ C. Replace the seller's disclosure with the agent's visual opinion that paint appears sound.
  • ☐ D. Provide the pamphlet only if the seller's existing report identifies a lead hazard.
Show answer and explanation

Response: B

Final answer: Inform the seller of the required obligations and ensure that the required activities are performed.
The agent has compliance duties. Informing the seller and ensuring the required activities occur is distinct from guaranteeing the paint's composition or imposing a new inspection in every covered sale.

Question 56

What does constructive notice from proper recording generally mean?
  • ☐ A. The document takes priority regardless of applicable recording rules or other agreements.
  • ☐ B. A person personally received and read the document.
  • ☐ C. A person is treated as having notice available through the public record, even without actually reading it.
  • ☐ D. The recorded document guarantees that no conflicting interest exists.
Show answer and explanation

Response: C

Final answer: A person is treated as having notice available through the public record, even without actually reading it.
Recording supplies public notice. Constructive notice differs from actual awareness and does not by itself guarantee title quality or override every other rule affecting priority.

Question 57

An advertisement concerns an ordinary rental dwelling that is not housing for older persons. Which phrase most directly indicates a prohibited familial-status preference?
  • ☐ A. "Applications assessed under the same stated screening criteria."
  • ☐ B. "Adults only, no families with children."
  • ☐ C. "Two bedrooms with an enclosed laundry area."
  • ☐ D. "Lease begins August 1 for a twelve-month term."
Show answer and explanation

Response: B

Final answer: "Adults only, no families with children."
Describe the dwelling and legitimate terms. An adults-only preference excludes families with children in the stated setting, while the other phrases describe features, consistent screening, or lease timing without that expressed limitation.

Question 58

A buyer has at most $18,000 available for closing and can afford a total monthly mortgage-related payment of no more than $1,950. For otherwise comparable loans, Offer A requires $20,000 cash and a $1,820 total payment. Offer B requires $16,000 cash and a $1,980 total payment. Offer C requires $18,000 cash and a $1,920 total payment. B's lower closing cash comes from a lender credit tied to a higher rate. Which offer meets both stated limits?
  • ☐ A. Offers B and C, because both meet the closing-cash limit.
  • ☐ B. Offer A only, because its monthly payment is lowest.
  • ☐ C. Offer C only.
  • ☐ D. All three, because the lender credit can be applied to any offer.
Show answer and explanation

Response: C

Final answer: Offer C only.
C meets both limits. It requires $18,000 cash and a $1,920 total monthly payment, keeping both amounts within the buyer's stated budgets. A needs $2,000 more cash than the buyer has, while B exceeds the monthly budget despite its lower cash requirement. The credit has a tradeoff.

Question 59

A management agreement pays the manager 6% of rent actually collected. Scheduled rent for the month is $12,500. The manager collects $11,200 in rent and a separate $1,000 refundable security deposit. What is the management fee under the stated agreement?
  • ☐ A. $672.
  • ☐ B. $810.
  • ☐ C. $732.
  • ☐ D. $750.
Show answer and explanation

Response: A

Final answer: $672.
The fee base is the $11,200 rent actually collected, and multiplying it by 6% produces $672. The scheduled rent includes money not collected, while the refundable deposit is separately held for a different purpose rather than included as rent under the stated provision. Follow the agreed base.

Question 60

A recorded parcel description and a current survey both place the east boundary 150 feet east of the west monument. A neighbor's new fence stands 147 feet east of that monument, inside the described parcel. The last 10 feet along the parcel's east edge are subject to a utility easement that permits utility access but gives the neighbor no fencing right. No other agreement is shown. Which conclusion best fits these records?
  • ☐ A. The fence is three feet inside the parcel, and the utility easement does not resolve that physical encroachment.
  • ☐ B. The fence is seven feet outside the parcel because the easement moves the ownership boundary west.
  • ☐ C. The fence defines the new east boundary because a visible improvement supersedes the recorded description.
  • ☐ D. The fence is authorized because any easement permits neighboring owners to install improvements within it.
Show answer and explanation

Response: A

Final answer: The fence is three feet inside the parcel, and the utility easement does not resolve that physical encroachment.
Keep the interests distinct. The survey identifies a three-foot intrusion, while the stated utility right neither relocates the parcel boundary nor grants the neighbor a fencing right, and resolving title or remedies would require additional inquiry.

Question 61

For this transaction, a material counteroffer terminates the original offer when communicated to its maker, unless the maker later renews it. A buyer sends a purchase offer. The seller communicates a signed price counteroffer, which the buyer declines. To form a contract on the buyer's original terms, what is needed?
  • ☐ A. Only the listing broker's confirmation that the original price was advertised.
  • ☐ B. Only the buyer's declaration that the seller's counteroffer has been withdrawn.
  • ☐ C. Renewed mutual assent to those terms by the seller and buyer.
  • ☐ D. Only the buyer's signature because the original offer already bound the seller.
Show answer and explanation

Response: C

Final answer: Renewed mutual assent to those terms by the seller and buyer.
The supplied rule governs. The communicated counteroffer ended the original offer, so rejecting the counteroffer does not itself create an agreement on the former terms without renewed mutual assent.

Question 62

Which condition is an example of external obsolescence rather than a functional problem within the building?
  • ☐ A. The building's inefficient floor plan reduces the usable space available to occupants.
  • ☐ B. An obsolete heating system fails to provide adequate indoor comfort.
  • ☐ C. An overbuilt interior feature costs more than buyers are willing to pay for it.
  • ☐ D. A neighboring industrial operation creates persistent noise that reduces demand for the property.
Show answer and explanation

Response: D

Final answer: A neighboring industrial operation creates persistent noise that reduces demand for the property.
The source lies outside the property. Neighboring noise differs from a layout, heating system, or over-improvement within the building, even though each can influence its value.

Question 63

In this transaction, the applicable disclosure duty requires the seller's agent to disclose a known material defect. The purchase contract says as-is means the seller will not undertake repairs, and it expressly preserves required disclosures. The agent learns of a recurring roof leak that the buyer does not know about. What should the agent do?
  • ☐ A. Disclose the known leak while explaining that the stated as-is provision does not promise a seller repair.
  • ☐ B. Wait for the buyer's inspection because as-is shifts both discovery and disclosure to the buyer.
  • ☐ C. Replace the specific leak disclosure with a general statement that the house is sold in its present condition.
  • ☐ D. Disclose the leak only if the seller first agrees to credit its estimated repair cost.
Show answer and explanation

Response: A

Final answer: Disclose the known leak while explaining that the stated as-is provision does not promise a seller repair.
The terms preserve disclosure. Reporting the known leak meets the stated duty without inventing a repair promise, while a general as-is statement does not communicate the particular defect.

Question 64

For this question, effective deed delivery requires a present intent to transfer title. An owner hands a signed deed to the intended grantee but expressly says that it is to have no effect until the owner dies. Both understand that title is not to pass now. What follows under the stated rule?
  • ☐ A. Handing over the paper does not establish effective delivery with a present intent to transfer title.
  • ☐ B. Title passes now only if the grantee pays a recording fee that same day.
  • ☐ C. Title passes immediately because physical possession of any signed deed is conclusive.
  • ☐ D. Title passes immediately because an expressed future effective date is always disregarded.
Show answer and explanation

Response: A

Final answer: Handing over the paper does not establish effective delivery with a present intent to transfer title.
Intent is part of delivery. The stated understanding excludes a present transfer, so possession of the paper or payment of a recording fee cannot alone supply the missing intent under this question's rule.

Question 65

Which federal agency administers and enforces the Fair Housing Act through its fair housing program?
  • ☐ A. The Federal Trade Commission.
  • ☐ B. The U.S. Department of Housing and Urban Development.
  • ☐ C. The Environmental Protection Agency.
  • ☐ D. The Consumer Financial Protection Bureau.
Show answer and explanation

Response: B

Final answer: The U.S. Department of Housing and Urban Development.
HUD administers the fair housing program. The other agencies have distinct responsibilities concerning competition, environmental matters, or consumer finance rather than this federal housing-discrimination program.

Question 66

A city imposes a building-code requirement to protect public safety. In a separate project, it uses governmental authority to take a privately owned strip of land for a public road with compensation. Which pairing correctly identifies these powers?
  • ☐ A. Eminent domain for both actions because both affect real property.
  • ☐ B. Police power for the code requirement and eminent domain for the acquisition.
  • ☐ C. Escheat for the code requirement and taxation for the acquisition.
  • ☐ D. Taxation for the code requirement and police power for the acquisition.
Show answer and explanation

Response: B

Final answer: Police power for the code requirement and eminent domain for the acquisition.
The actions use different powers. Safety regulation is a police-power example, while the public acquisition invokes eminent domain and its compensation principle, without implying that every regulatory restriction is immune from a takings challenge.

Question 67

A contract permits termination for an unsatisfactory inspection only if the seller receives a signed termination notice identifying the inspection objection by 5 p.m. on July 10. Repair requests do not terminate the contract or extend that deadline. At noon that day the buyer emails a signed repair request about foundation movement. The buyer later decides to terminate, and at 4:30 p.m. the seller receives a signed termination notice identifying that objection. No waiver or amendment exists. Which assessment is supported?
  • ☐ A. The repair request automatically extended the termination deadline until the seller answered it.
  • ☐ B. The repair request already terminated the contract at noon, making the later notice unnecessary.
  • ☐ C. The repair request waived termination, so the later notice cannot meet the stated conditions.
  • ☐ D. The later notice satisfies the stated termination conditions, even though the earlier repair request did not.
Show answer and explanation

Response: D

Final answer: The later notice satisfies the stated termination conditions, even though the earlier repair request did not.
Evaluate each communication separately. The timely signed termination notice states the inspection objection and reaches the seller before the deadline, while the earlier request neither terminates the contract nor creates a waiver or extension under the supplied terms.

Question 68

A seller considers installing a feature that costs $7,000. Reliable local evidence indicates that otherwise comparable homes with that feature sell for $4,500 more. Other influences are unchanged. What amount represents the feature's supported market contribution?
  • ☐ A. $4,500.
  • ☐ B. $2,500.
  • ☐ C. $7,000.
  • ☐ D. $11,500.
Show answer and explanation

Response: A

Final answer: $4,500.
Contribution measures added market value. The $4,500 difference is the supported contribution, while cost and the difference between cost and contribution answer other questions.

Question 69

A comparable home sold for $358,000 and has a garage that the subject property lacks. Market evidence supports a $14,000 value contribution for that garage, with no other differences requiring adjustment. What adjusted indication does this comparable provide for the subject?
  • ☐ A. $372,000.
  • ☐ B. $330,000.
  • ☐ C. $344,000.
  • ☐ D. $358,000.
Show answer and explanation

Response: C

Final answer: $344,000.
The comparable has a garage worth $14,000 that the subject lacks, making it superior on the only stated difference. Subtract $14,000 from the comparable's $358,000 price to obtain $344,000. Adjust the comparable.

Question 70

An inspection contingency permits the buyer to arrange a specialist assessment before its deadline. The general inspector's report identifies suspect floor material and states that asbestos identification is outside the inspection's scope. The buyer wants to know whether planned removal could create an asbestos exposure. Which action best uses the remaining contingency opportunity?
  • ☐ A. Treat the lack of a confirmed asbestos finding as proof that removal is safe.
  • ☐ B. Ask the general inspector to identify the material from the listing photographs alone.
  • ☐ C. Seek an appropriate asbestos professional's assessment before deciding about removal and the contingency.
  • ☐ D. Remove a small portion during the contingency period to see whether it breaks into fibers.
Show answer and explanation

Response: C

Final answer: Seek an appropriate asbestos professional's assessment before deciding about removal and the contingency.
A scope limitation is not a negative test. Appropriate professional assessment addresses the buyer's actual renovation question, while unconfirmed appearance and do-it-yourself disturbance do not establish safe removal.

Question 71

Under the recording rule supplied here, three valid mortgage liens initially rank A, B, then C in order of recording. A later signs an enforceable agreement subordinating A to C only. B does not consent, and the agreement expressly preserves B's priority over C. Which order follows these stated terms?
  • ☐ A. B, then C, then A.
  • ☐ B. C, then B, then A.
  • ☐ C. A, then C, then B.
  • ☐ D. C, then A, then B.
Show answer and explanation

Response: A

Final answer: B, then C, then A.
B's preserved priority requires B to stay ahead of C, and the signed subordination requires C to rank ahead of A. Those relationships give B-C-A. The agreement changes the specified relationship without authorizing a general reversal of all original recording positions.

Question 72

What type of insurance is most directly intended to address claims arising from errors in the performance of professional services, subject to the policy's terms?
  • ☐ A. Commercial general liability insurance.
  • ☐ B. Fidelity coverage for employee dishonesty.
  • ☐ C. Property hazard insurance.
  • ☐ D. Errors and omissions insurance.
Show answer and explanation

Response: D

Final answer: Errors and omissions insurance.
Professional-service errors are the focus. Errors and omissions coverage differs from general liability for bodily injury or property damage, property hazard coverage, and coverage directed to dishonest acts, and an actual claim still depends on the policy.

Question 73

Parcel North has an appurtenant right to cross Parcel South to reach a public road. Which description correctly identifies the two parcels in that easement?
  • ☐ A. Neither parcel is dominant because a road is the destination.
  • ☐ B. North is dominant and South is servient.
  • ☐ C. South is dominant and North is servient.
  • ☐ D. Both parcels are servient because each remains privately owned.
Show answer and explanation

Response: B

Final answer: North is dominant and South is servient.
The benefited parcel is dominant. North receives the access benefit and South bears the crossing burden, regardless of the fact that both parcels remain privately owned.

Question 74

An agent authorized to carry out a defined transaction, rather than a continuing range of the principal's business activities, is generally what type of agent?
  • ☐ A. A universal agent.
  • ☐ B. A general agent.
  • ☐ C. A dual agent.
  • ☐ D. A special agent.
Show answer and explanation

Response: D

Final answer: A special agent.
The authority is task-specific. That distinguishes special agency from broader continuing or universal authority, while dual agency concerns whom the agent represents rather than the breadth of the task.

Question 75

A property's annual net operating income is $54,600. Using direct capitalization at 7%, what value is indicated?
  • ☐ A. $780,000.
  • ☐ B. $54,600.
  • ☐ C. $382,200.
  • ☐ D. $3,822.
Show answer and explanation

Response: A

Final answer: $780,000.
Direct capitalization divides annual NOI by the capitalization rate. Using $54,600 divided by 0.07 gives $780,000, while multiplying by 7% would calculate a fraction of income rather than a value indication. Convert the percentage correctly.

Question 76

A broker independently sets a fee after reviewing the firm's own costs and publicly available competitor advertisements. Later, competing brokers propose an agreement that none of them will charge below a common minimum. Which action creates the price-fixing concern described here?
  • ☐ A. Agreeing with the competitors to the common minimum fee.
  • ☐ B. Independently choosing a fee that happens to match a competitor's advertised fee.
  • ☐ C. Changing the firm's fee solely because its own operating costs increased.
  • ☐ D. Reviewing publicly available competitor advertisements without coordinating fees.
Show answer and explanation

Response: A

Final answer: Agreeing with the competitors to the common minimum fee.
Coordination is the critical difference. Similar fees or an independent response to market information do not alone establish an agreement, whereas competing firms agreeing to a common minimum replace independent pricing decisions.

Question 77

For this parcel, zoning allows a house up to 35 feet high and permits a home office with client visits. A lawful enforceable private covenant limits structures to 28 feet and prohibits client visits but permits office work without visitors. No exception or release has been granted. Which proposal complies with both sets of stated restrictions?
  • ☐ A. A 32-foot house with an office that receives no client visits.
  • ☐ B. A 34-foot house with client visits because both uses have zoning approval.
  • ☐ C. A 27-foot house with an office that receives no client visits.
  • ☐ D. A 27-foot house with an office that receives client visits.
Show answer and explanation

Response: C

Final answer: A 27-foot house with an office that receives no client visits.
Both applicable limits matter. The 27-foot house without client visits satisfies their overlap, while zoning permission alone does not release either distinct private restriction supplied in the facts.

Question 78

For this transaction, dual agency is permitted after informed consent from both parties, which has been obtained. The agreement requires the agent to keep each client's undisclosed price limits confidential without express permission. The seller privately says a lower price would be accepted. The buyer asks whether that lower amount would work. What should the agent do under these terms?
  • ☐ A. Promise the buyer that the seller will accept the lower amount without revealing its source.
  • ☐ B. Disclose the lower amount because both parties consented to dual agency.
  • ☐ C. Keep the seller's confidential limit private and invite the buyer to make an offer for the seller to consider.
  • ☐ D. Reveal the lower amount only to the buyer's lender because it concerns financing.
Show answer and explanation

Response: C

Final answer: Keep the seller's confidential limit private and invite the buyer to make an offer for the seller to consider.
Consent does not waive the stated confidentiality. Inviting an offer preserves the parties' decisions without disclosing a private limit or guaranteeing an acceptance the agent has no authority to promise.

Question 79

For an owner-occupied home, an appraiser has three adjusted sales indications. Two recent, similar homes in ordinary market sales indicate $402,000 and $407,000. A substantially different home sold under unusual family-related terms indicates $455,000, with large uncertain adjustments. A cost indication is $440,000 but relies on weak depreciation evidence. Which reconciliation method is best supported?
  • ☐ A. Give greater weight to the recent similar market sales after reviewing the other evidence and its limitations.
  • ☐ B. Average all four indications because equal weighting prevents appraiser judgment from influencing the result.
  • ☐ C. Use $440,000 because a cost calculation should override sales evidence for any improved property.
  • ☐ D. Use $455,000 because the highest closed sale is the strongest available proof of value.
Show answer and explanation

Response: A

Final answer: Give greater weight to the recent similar market sales after reviewing the other evidence and its limitations.
The two recent, similar ordinary market sales provide stronger stated evidence than the unusually influenced sale with uncertain adjustments or the cost indication with weak depreciation support. Reconciliation weighs those differences in quality and relevance, rather than treating all indications as equally persuasive. Do not simply average them.

Question 80

A principal learns the material facts of an act taken without prior authority and knowingly adopts that act. What agency concept does this describe?
  • ☐ A. Delegation of authority.
  • ☐ B. Ratification.
  • ☐ C. Revocation of authority.
  • ☐ D. Prior authorization.
Show answer and explanation

Response: B

Final answer: Ratification.
Ratification follows the act. Knowing adoption of an initially unauthorized act differs from granting permission in advance, delegating a task, or withdrawing authority.

Question 81

A written agency agreement authorizes representation through September 30. It provides that any extension must be signed by both parties. On September 28, the client asks a question about next month's market, but no extension is proposed or signed. Under these stated terms, when does the granted authority expire?
  • ☐ A. At the end of October because the client mentioned next month's market.
  • ☐ B. When the client asks the September 28 question.
  • ☐ C. At the end of September 30.
  • ☐ D. When the agent decides to stop answering the client's questions.
Show answer and explanation

Response: C

Final answer: At the end of September 30.
Apply the stated ending date. A question about future market conditions is not the signed extension required by this agreement, nor does it end the current authority early.

Question 82

A broker holds a client's $8,000 deposit under instructions restricting it to the purchase transaction. No brokerage fee has yet been earned, and there is no authority to use the deposit for a fee. A $2,000 expected commission is shown in the broker's forecast. What should the broker do with the deposit?
  • ☐ A. Keep the full $8,000 accounted for under the client's instructions.
  • ☐ B. Use the deposit for operating expenses temporarily and replenish it before closing.
  • ☐ C. Transfer $2,000 to the operating account because the forecast establishes an earned fee.
  • ☐ D. Retain $6,000 for the client and record the rest as a loan to the brokerage.
Show answer and explanation

Response: A

Final answer: Keep the full $8,000 accounted for under the client's instructions.
An expected fee is not an earned fee. The supplied restrictions leave the entire deposit entrusted to the broker for the transaction, so a forecast does not authorize diversion or temporary borrowing.

Question 83

The applicable duties require a seller's agent to protect confidential negotiating information and disclose known material defects. The seller privately sets a minimum acceptable price and provides a report documenting concealed water damage that the buyer has not seen. Which response follows both duties?
  • ☐ A. Keep both matters confidential because both came from the seller.
  • ☐ B. Share the price limit but wait for the buyer to discover the damage during inspection.
  • ☐ C. Disclose the known damage while keeping the seller's price limit confidential unless authorized to share it.
  • ☐ D. Share both matters because full disclosure extends to all private negotiating information.
Show answer and explanation

Response: C

Final answer: Disclose the known damage while keeping the seller's price limit confidential unless authorized to share it.
The stated duty distinguishes a property's material defect from a client's private negotiating position. Disclose the known water damage, but keep the seller's price limit confidential unless the seller authorizes sharing it, because the disclosure obligation does not make every private communication public. Report the specific defect.

Question 84

A seller wants at least $260,000 net, closing within 30 days, and no sale-of-buyer's-home contingency. Offer A yields $270,000 net, closes in 45 days, and has no such contingency. Offer B yields $265,000 net, closes in 25 days, and has no such contingency. Offer C yields $278,000 net, closes in 20 days, but depends on selling the buyer's home. The broker would receive an extra lawful, disclosed incentive if A is accepted. Which advice best follows the seller's priorities and the agent's duty of loyalty?
  • ☐ A. Explain that B meets all stated priorities, present the tradeoffs and incentive, and leave acceptance to the seller.
  • ☐ B. Treat all offers as equally consistent with the seller's priorities because each exceeds $260,000 net.
  • ☐ C. Recommend A because its net exceeds the minimum and the broker's incentive supports prioritizing it.
  • ☐ D. Recommend C as meeting all priorities because its highest net offsets the sale contingency automatically.
Show answer and explanation

Response: A

Final answer: Explain that B meets all stated priorities, present the tradeoffs and incentive, and leave acceptance to the seller.
Evaluate the seller's criteria together. B meets all three, while A misses the timing requirement and C includes the unwanted contingency, and the broker's separate incentive cannot silently replace the seller's priorities.

Question 85

Why can a borrower's cash to close differ from the transaction's total closing costs?
  • ☐ A. Cash to close is the home's purchase price without regard to the loan amount.
  • ☐ B. Cash to close also reflects amounts such as down payment, earlier deposits, and applicable credits or adjustments.
  • ☐ C. Cash to close always equals the down payment because other costs are paid after closing.
  • ☐ D. Cash to close always excludes every lender fee included in closing costs.
Show answer and explanation

Response: B

Final answer: Cash to close also reflects amounts such as down payment, earlier deposits, and applicable credits or adjustments.
They measure different amounts. Closing costs describe transaction charges, while cash to close incorporates those charges and other amounts needed or credited at settlement rather than being identical to the purchase price or down payment.