Free California real estate practice exam

Answer key and explanations

Every answer, with the reasoning. Work through the ones you missed — that list is your study plan.

1. Question 1 — answer D

   Which lien attaches to all property of a debtor rather than one identified parcel?

   A judgment lien is general, reaching the debtor's property in the county. Mechanic's, tax and trust deed liens are specific to a parcel.

2. Question 2 — answer A

   A mobile home park resident owns the coach but rents the space. What governs that tenancy?

   Space rental in a mobile home park is governed by the Mobilehome Residency Law rather than ordinary landlord-tenant rules.

3. Question 3 — answer A

   A zoning change leaves an existing gas station as the only non-residential use. What is it now?

   Pre-existing lawful uses that no longer conform are 'grandfathered' as legal nonconforming.

4. Question 4 — answer C

   A naturally occurring radioactive gas seeps into a home through the foundation. Which hazard is it?

   Radon is a naturally occurring gas that enters through foundations and is measured by testing rather than by inspection.

5. Question 5 — answer C

   A recorded declaration of restrictions caps all homes at 2,800 square feet. A later buyer builds larger. Who may enforce?

   Covenants under a common plan are mutually enforceable by the benefited owners in the tract.

6. Question 6 — answer C

   Two neighbours have treated a fence line as the boundary for decades though the survey differs. Which doctrine may apply?

   Where owners have long accepted a line as the boundary in the face of uncertainty, courts may fix it by the agreed boundary doctrine.

7. Question 7 — answer A

   Which characteristic of a 'conditional use permit' distinguishes it from a variance?

   CUPs authorise listed conditional uses subject to conditions; variances relieve hardship from standards.

8. Question 8 — answer D

   A property owner grants a conservation easement to a land trust, forever barring subdivision of the parcel. The owner later sells. Is the buyer bound?

   Conservation easements are perpetual recorded interests that bind successors.

9. Question 9 — answer A

   A homeowner's CC&Rs prohibit solar panels. Under California law, what is the position?

   The Solar Rights Act voids unreasonable HOA prohibitions on solar energy systems.

10. Question 10 — answer C

    An easement holder paves and widens a dirt path beyond its historical use. What is the concern?

    An easement may not be expanded beyond its scope; excessive use burdens the servient owner.

11. Question 11 — answer B

    Which lien attaches to real property without the owner's consent?

    Judgment, tax, and mechanic's liens are involuntary; mortgages and trust deeds are voluntary.

12. Question 12 — answer B

    An owner subdivides a parcel into two lots and sells the rear lot, which has access only across the front lot. The deed says nothing about access. What does the rear lot buyer have?

    Severance by a common owner that leaves a parcel landlocked creates an easement by necessity.

13. Question 13 — answer C

    Which environmental hazard is most associated with homes built before 1978 and triggers a federal disclosure?

    Federal law requires disclosure of known lead-based paint and delivery of the approved pamphlet for housing built before 1978.

14. Question 14 — answer B

    Which power allows government to take private property for public use on payment of just compensation?

    Eminent domain is the taking power, exercised through condemnation, and it requires just compensation.

15. Question 15 — answer C

    Which common interest development gives the owner NO fee interest in land?

    Co-op residents own shares and a lease; condo and PUD owners hold fee interests.

16. Question 16 — answer C

    Which interest allows removing something of value from another's land, such as gravel?

    A profit is the right to enter another's land and take a resource, distinct from an easement which grants use rather than extraction.

17. Question 17 — answer C

    Which of these would justify granting a variance?

    A variance requires hardship arising from the property itself, not from the owner's preferences or economics.

18. Question 18 — answer A

    Two people buy investment property taking equal shares with survivorship, stated in the deed. Which unities must exist?

    Joint tenancy requires all four unities; without them the vesting defaults toward tenancy in common.

19. Question 19 — answer D

    What does CEQA require for a project with potentially significant environmental effects?

    Significant effects trigger an EIR; a negative declaration suffices only when no significant effect is found.

20. Question 20 — answer B

    What is required before a city may adopt or amend zoning that intensifies land use?

    Zoning must be consistent with the general plan and follow noticed public hearing procedures.

21. Question 21 — answer B

    Under the appropriative water rights doctrine, who has the superior claim?

    Appropriative rights follow first in time, first in right, based on beneficial use and a permit, rather than on land position.

22. Question 22 — answer D

    A married person buys a home with inheritance money during marriage. How is it characterised absent agreement?

    Property acquired with separate funds by gift or inheritance keeps its separate character if traceable.

23. Question 23 — answer B

    A seller's agent knows the seller is considering bankruptcy. A buyer's agent asks 'is the seller motivated?' What is the compliant answer?

    Neither revealing nor misstating the seller's position is permitted; decline to characterise.

24. Question 24 — answer B

    Which is TRUE of a 'net listing' in California?

    Net listings are lawful but disfavoured; the broker must disclose the amount of compensation before acceptance.

25. Question 25 — answer B

    When must a licensee give a party a copy of a listing agreement that party has just signed?

    A licensee must deliver a copy of any agreement to the person signing it at the time the signature is secured.

26. Question 26 — answer D

    Which situation creates an agency by ratification?

    Ratification occurs when the principal, knowing the facts, adopts an act done without authority.

27. Question 27 — answer A

    A property manager handling an owner's portfolio over years is best described as which kind of agent?

    Ongoing authority across a continuing series of transactions makes a property manager a general agent, unlike the single-transaction special agency of a listing.

28. Question 28 — answer C

    A buyer's agent receives a counteroffer by email at 11 p.m. on the night before it expires at noon. The agent does not check email until 1 p.m. the next day. What duty is implicated?

    Diligent representation includes timely handling of time-sensitive communications.

29. Question 29 — answer C

    An agent presents an offer and the seller says 'I'll think about it.' What is the offer's status?

    Silence or deliberation is neither acceptance nor rejection; the offer remains open until one of the terminating events occurs.

30. Question 30 — answer A

    An agent represents a seller. A prospective buyer shares that they 'just lost a bidding war and will pay anything.' What should the agent do?

    A seller's agent owes no confidentiality to the buyer; information benefiting the principal may be relayed.

31. Question 31 — answer A

    What does the duty of 'utmost care, integrity, honesty and loyalty' describe in the agency statute?

    That phrase states the fiduciary duty to the principal; third parties are owed honesty and fair dealing, not loyalty.

32. Question 32 — answer B

    A listing agent learns the buyer is a licensed agent buying for their own account. What must the buyer disclose?

    A licensee acting as a principal must disclose their licence status to the other party.

33. Question 33 — answer A

    Which agent has authority limited to one specific act or transaction?

    A real estate licensee is normally a special agent, authorised for one transaction, rather than a general agent managing ongoing affairs.

34. Question 34 — answer D

    A broker's salesperson signs a listing in the salesperson's own name rather than the broker's. Who holds the agency?

    Listings belong to the broker whatever name is signed. A salesperson cannot hold an agency in their own right.

35. Question 35 — answer A

    A buyer asks their agent to write an offer with a 'love letter' mentioning the buyer's family and religion. What should the agent advise?

    Buyer letters revealing protected characteristics can taint the seller's decision; many brokerages discourage them.

36. Question 36 — answer C

    A buyer's agent's commission comes from the seller through the MLS offer of compensation. Does this change whom the agent represents?

    California law explicitly separates compensation from representation.

37. Question 37 — answer D

    A seller rejects a full-price offer from a buyer of a protected class and accepts a lower offer days later. Beyond fair-housing liability, what about the commission?

    Producing a full-price, able buyer generally earns the fee even if the seller refuses — and a discriminatory refusal adds separate liability.

38. Question 38 — answer B

    A buyer asks their agent to submit an offer the agent believes is far too low. What should the agent do?

    Obedience requires following lawful instructions. The agent may advise against it, but the decision belongs to the client.

39. Question 39 — answer D

    An agent accepts an undisclosed bonus from a contractor for steering the client's repair work. What has occurred?

    Taking an undisclosed benefit arising from the agency is a secret profit and breaches the duty of loyalty. Disclosure and consent are required beforehand.

40. Question 40 — answer D

    Which is TRUE regarding a buyer representation agreement's termination date?

    Exclusive agreements — listings or buyer representation — must contain a definite end date.

41. Question 41 — answer C

    What is 'agency by estoppel'?

    Estoppel prevents a principal from denying an agency their own conduct suggested.

42. Question 42 — answer D

    Which best describes the term 'principal' in agency law?

    The principal is the party the agent represents.

43. Question 43 — answer B

    What is the agency consequence when a salesperson's licence hangs under Broker A but they negotiate a deal 'on the side' through Broker B?

    A salesperson has exactly one employing broker; acting through another is unlicensed conduct for both salesperson and the accepting broker.

44. Question 44 — answer D

    Which claim against an agent requires proving the agent KNEW a statement was false?

    Deceit requires knowledge of falsity or reckless disregard; negligent misrepresentation needs only an unreasonable belief in truth.

45. Question 45 — answer C

    An undisclosed dual agency is discovered after closing. What is a likely consequence for the broker?

    Acting for both sides without informed written consent is a breach of loyalty. Courts commonly order forfeiture of commission alongside damages and discipline.

46. Question 46 — answer B

    A seller signs a 6-month exclusive listing. After 2 months the seller accepts a job transfer and asks to cancel. What governs?

    A listing is a contract; early termination follows its terms or mutual agreement.

47. Question 47 — answer A

    A broker holds a buyer's deposit while also representing the seller. What is the broker's role as to those funds?

    Deposit money is trust funds held for whoever is entitled to it. The broker's agency role does not change that duty.

48. Question 48 — answer A

    What must a licensee do before representing a client in a language the client does not read well?

    Informed consent requires actual understanding, and California requires a translated copy of certain agreements negotiated primarily in another language.

49. Question 49 — answer D

    An income property's value rises while its NOI is unchanged. What happened to the implied capitalisation rate?

    Rate = income ÷ value; with income fixed and value up, the rate must fall.

50. Question 50 — answer C

    A subject has three bedrooms and the comparable has four, with the extra worth $25,000. What is the adjusted comparable price if it sold for $640,000?

    The comparable is superior, so it is adjusted downward by $25,000 to $615,000.

51. Question 51 — answer B

    A comparable sold with the seller paying unusually large buyer concessions. What adjustment is needed?

    Atypical concessions distort the effective price, so a conditions-of-sale adjustment restores comparability.

52. Question 52 — answer D

    A property generates $8,000 monthly gross rent and sells for $1,152,000. What is the monthly GRM?

    1,152,000 ÷ 8,000 = 144.

53. Question 53 — answer B

    A seller's home has a foundation crack repair estimated at $40,000 and comparable homes without the issue sell for $900,000. The seller lists at $895,000. What does the principle of contribution suggest?

    A curable defect reduces value at least by its cost to cure.

54. Question 54 — answer B

    An appraiser is asked by the lender to 'hit the number.' What should the appraiser do?

    Influencing appraisal value violates independence requirements and USPAP ethics.

55. Question 55 — answer C

    An investor's property has an adjusted basis of $500,000 after $150,000 of depreciation. It sells for $900,000. How much of the gain is subject to depreciation recapture?

    Depreciation previously taken ($150,000) is recaptured; the remaining gain is capital gain.

56. Question 56 — answer B

    Which risk does a longer projected holding period most directly add to a discounted cash flow analysis?

    Distant projections and the resale estimate carry compounding forecast risk.

57. Question 57 — answer B

    A building has an estimated useful life of 40 years and cost $400,000. Using straight-line, what is one year of depreciation?

    Straight-line depreciation divides cost by useful life. Dividing $400,000 by 40 gives $10,000 a year.

58. Question 58 — answer C

    Who is authorised to perform an appraisal for a federally related mortgage transaction?

    Federally related transactions require an appraisal by a licensed or certified appraiser, which a real estate licence alone does not authorise.

59. Question 59 — answer B

    A property's expected NOI is $96,000. Market cap rates are 6% for low-risk and 8% for high-risk properties. The subject has a single tenant on a short lease. What value range is most defensible?

    Higher risk demands a higher cap rate: 96,000 / 0.08 = 1,200,000.

60. Question 60 — answer B

    Why might a licensee's CMA differ from an appraiser's value?

    A CMA is a marketing tool estimating likely sale price; an appraisal is a formal opinion of value under standards.

61. Question 61 — answer A

    How much gain may a married couple filing jointly exclude on the sale of a principal residence?

    A qualifying couple may exclude up to $500,000, and a single filer up to $250,000, having owned and occupied two of five years.

62. Question 62 — answer C

    Two identical buildings: one leased to a national tenant, one to a start-up. Which has the lower cap rate and why?

    Cap rates rise with risk; credit tenants lower risk and rate.

63. Question 63 — answer D

    A structure cost $500,000 new, has an economic life of 50 years, and is 12 years old. What is the accrued depreciation using the age-life method?

    Annual depreciation is $500,000 divided by 50, or $10,000. Over 12 years that is $120,000.

64. Question 64 — answer C

    A lot's value is $200,000 and the total property value is $800,000. What is the land-to-value ratio?

    200,000 ÷ 800,000 = 25%.

65. Question 65 — answer C

    Which approach is most appropriate for valuing a newly built public library with no sales or rental market?

    Special-purpose properties with no comparable sales or income stream are best valued by the cost approach.

66. Question 66 — answer D

    Which sale would normally be excluded from a set of comparables?

    Comparables must be arm's length. A sale between related parties may not reflect market value.

67. Question 67 — answer D

    Why is external (economic) obsolescence almost always incurable?

    The owner cannot fix what originates off-site — a freeway, oversupply, or neighbourhood decline.

68. Question 68 — answer C

    A building's gross income is $240,000 and it sold for $2,040,000. A similar building produces $270,000 gross. Using the GIM, what is its indicated value?

    GIM = 2,040,000 / 240,000 = 8.5; 270,000 x 8.5 = 2,295,000.

69. Question 69 — answer B

    Which technique values land by deducting the income attributable to the building first?

    The land residual technique assigns the building its required return, then capitalises the income left over into land value.

70. Question 70 — answer A

    Which party in a deed of trust is the lender?

    Trustor = borrower, beneficiary = lender, trustee = neutral third party.

71. Question 71 — answer C

    A borrower pays $6,000 in points to reduce a $400,000 30-year loan's rate from 7% to 6.5%, lowering the payment by about $133/month. If the borrower sells in year 3, did the buydown pay off?

    6,000 / 133 = 45 months; selling at 36 months means the points were not fully recovered.

72. Question 72 — answer A

    A borrower's loan has a prepayment penalty of 6 months' interest on amounts prepaid over 20% of the balance in a year. The balance is $300,000 at 6%. The borrower pays off $120,000 in year 2. What is the penalty?

    Excess over 20% of 300,000 (60,000) is 60,000; 60,000 x 0.06 / 2 = 1,800.

73. Question 73 — answer D

    Which law requires a good faith estimate of settlement costs and prohibits kickbacks for referrals?

    The Real Estate Settlement Procedures Act governs settlement cost disclosure and prohibits kickbacks or unearned fees for referrals.

74. Question 74 — answer A

    What is the 'secondary mortgage market'?

    The secondary market provides liquidity by purchasing originated loans.

75. Question 75 — answer A

    One loan covers several parcels and allows individual lots to be released as they sell. What is it?

    A blanket loan covers more than one parcel and typically contains a release clause so individual parcels can be freed as sold.

76. Question 76 — answer C

    A $300,000 loan at 6% interest-only. What is the annual interest?

    300,000 × 0.06 = 18,000 per year.

77. Question 77 — answer C

    A lender chooses judicial foreclosure instead of a trustee's sale. What does the borrower gain?

    Judicial foreclosure preserves a post-sale redemption right for the borrower, which a trustee's sale does not.

78. Question 78 — answer A

    Which practice does RESPA specifically prohibit between settlement service providers?

    RESPA bars unearned fees and kickbacks for referrals, while payment for services actually performed remains lawful.

79. Question 79 — answer A

    A borrower locks a rate for 30 days; closing is delayed to day 35. What typically happens?

    Locks are time-limited; extensions usually cost money.

80. Question 80 — answer B

    Which right does the Truth in Lending Act give a borrower refinancing their principal residence with a new lender?

    Certain refinances of a principal residence carry a three-business-day right of rescission. Purchase-money loans do not.

81. Question 81 — answer C

    Which loan feature does California's usury law NOT reach for most real estate loans?

    The broker-arranged exemption is why hard money lending routes through licensees; private unarranged loans face the cap.

82. Question 82 — answer D

    Which Federal Reserve tool involves buying and selling government securities?

    Open market operations expand or contract the money supply, indirectly moving mortgage rates.

83. Question 83 — answer A

    A borrower receives a loan estimate with a $3,000 origination fee, then the closing disclosure shows $4,500. What rule applies?

    TRID tolerance limits increases in lender-controlled fees.

84. Question 84 — answer B

    A decedent's home was bought for $100,000 and is worth $900,000 at death. The heir sells for $920,000. Taxable gain?

    Stepped-up basis to 900,000; gain = 920,000 − 900,000.

85. Question 85 — answer A

    Buyer and seller both demand the deposit and neither will sign a release. What may escrow do?

    Interpleader lets the stakeholder deposit disputed funds with the court and withdraw from the dispute.

86. Question 86 — answer C

    A seller's obligations under the purchase contract are generally absorbed at closing. What is that doctrine called?

    On delivery of the deed the contract generally merges into it, though fraud and collateral promises can survive.

87. Question 87 — answer B

    Which item normally appears as a debit to the buyer at closing?

    The purchase price is what the buyer owes, so it is a debit to the buyer and a credit to the seller.

88. Question 88 — answer A

    When does the escrow holder's agency change from dual to separate?

    During escrow the holder is a limited dual agent; on close it becomes separate agent of each party for delivery.

89. Question 89 — answer A

    New construction is completed mid-year. What tax event does that trigger?

    Completed new construction triggers reassessment of the addition and a prorated supplemental bill.

90. Question 90 — answer D

    A deed names the grantee as 'John Smith, a single man.' What does that vesting indicate?

    A single individual takes title in severalty.

91. Question 91 — answer A

    Which vesting must be shown on a deed for a married couple to hold with survivorship as community property?

    The survivorship feature must be expressly stated. Community property alone passes by will or succession rather than automatically.

92. Question 92 — answer D

    By how much does California's homeowner exemption reduce the assessed value of a principal residence?

    The homeowner exemption removes $7,000 of assessed value for an owner-occupied principal residence.

93. Question 93 — answer B

    A buyer receives an extra tax bill shortly after purchase reflecting the new assessed value. What is it?

    A supplemental assessment bills the difference between the old and new assessed values for the remainder of the tax year.

94. Question 94 — answer D

    A married seller insists their spouse need not sign the deed to community property. What should escrow require?

    Both spouses must join in conveying or encumbering community real property; one signature is voidable by the other spouse.

95. Question 95 — answer D

    Which transfer avoids probate entirely?

    Survivorship transfers by operation of law outside probate.

96. Question 96 — answer D

    An advertisement reads 'perfect for a young professional couple.' What is the fair housing concern?

    Language signalling preferences for household type or age can violate fair housing advertising rules.

97. Question 97 — answer D

    What must appear on a licensee's solicitation materials at first point of contact with a consumer?

    First-contact materials must carry the licensee's name, number, and the identity of the employing broker.

98. Question 98 — answer C

    A seller tells the listing agent the roof was replaced 'two years ago' and produces no receipt. The agent advertises 'new roof.' The roof is twelve years old. Who bears responsibility?

    Agents who repeat unverified claims as fact share liability for the misrepresentation.

99. Question 99 — answer A

    Which conduct would most likely support a finding of fraud rather than negligence against a licensee?

    Fraud requires knowledge of falsity and intent to induce reliance. An honest mistake is negligence at most.

100. Question 100 — answer A

     Which trust fund record must show the balance for each beneficiary at all times?

     A separate record per beneficiary shows each person's balance, which reconciliation compares against the control record.

101. Question 101 — answer D

     Which account record does the DRE require a broker to maintain for ALL trust funds received?

     The control record of all trust funds received and paid out is required regardless of amount.

102. Question 102 — answer D

     A licensee learns from a neighbour that the listed home flooded twice. The seller denies it. What should the licensee do?

     Information suggesting a material defect must be disclosed even where the seller disputes it. The licensee discloses what is known and where it came from rather than adjudicating it.

103. Question 103 — answer C

     Which person is exempt from real estate licensing when negotiating the sale of a property?

     Attorneys acting within their practice, trustees, and owners dealing with their own property are exempt; paid finders are not.

104. Question 104 — answer B

     An owner of a 30-unit building asks the property manager to screen out applicants 'with kids because of the pool.' What should the manager do?

     Familial status discrimination is unlawful; legitimate safety concerns are addressed through neutral rules.

105. Question 105 — answer C

     A brokerage wants to pay a retired licensee a fee for referrals only. What determines legality?

     Compensation for licensed activity, including referrals of real estate business, may be paid only to actively licensed persons.

106. Question 106 — answer A

     Which statement about the Natural Hazard Disclosure statement is accurate?

     The NHD statement discloses whether the property sits within designated statutory hazard zones such as flood, fire or seismic areas. It makes no promise of safety.

107. Question 107 — answer D

     A broker wishes to operate under a fictitious business name. What is required?

     A fictitious business name used for licensed activity must be reported to and reflected by the Department, not merely filed locally.

108. Question 108 — answer C

     A buyer waives the right to receive the Transfer Disclosure Statement in writing. What is the effect?

     The TDS requirement for covered residential sales cannot be waived, so an attempted waiver does not excuse delivery.

109. Question 109 — answer C

     A broker intends to collect an advance fee for a marketing programme. What must happen first?

     Advance fee agreements and accompanying materials must be filed with the Commissioner before use, and the funds are trust funds.

110. Question 110 — answer C

     A broker discovers that a former salesperson, now at another firm, is still using the broker's branded email signature in solicitations. What is the concern?

     Advertising must accurately identify the responsible broker; stale affiliations mislead.

111. Question 111 — answer A

     A salesperson is hired as an 'employee' with a salary. What supervision applies compared with an independent contractor?

     Tax classification never reduces the broker's statutory duty to supervise licensed activity.

112. Question 112 — answer B

     What must a broker do with a property management agreement's trust funds when the owner terminates the arrangement?

     On termination the broker must render a full accounting and deliver funds to whoever is entitled, less only agreed and earned fees.

113. Question 113 — answer B

     A salesperson's licence is held by Broker A. The salesperson wants to work weekends for Broker B. What is required?

     A salesperson may be licensed under only one broker; working for another is unlicensed activity.

114. Question 114 — answer C

     A broker's trust account holds client funds. How much of the broker's own money may sit in that account to cover bank service charges?

     A broker may keep a limited amount of personal funds in a trust account solely to cover bank service charges. Anything beyond that is commingling.

115. Question 115 — answer B

     A licensee's licence is revoked. When may they generally apply for reinstatement?

     Revocation is not always permanent. Reinstatement may be sought after the period the Commissioner sets, with the burden on the applicant.

116. Question 116 — answer B

     Which time limit applies to a buyer's TDS-based right to terminate after in-person delivery?

     In-person delivery gives three days; delivery by mail gives five.

117. Question 117 — answer A

     A licensee wishes to pay a finder's fee to a past client who referred a buyer. What is the safest position?

     Compensation for acts requiring a licence is prohibited, and a bare introduction can shade into licensed activity depending on what the person did.

118. Question 118 — answer C

     A property was used as a methamphetamine laboratory and remains under a health order. What follows for the seller?

     A pending order prohibiting occupancy for contamination must be given to a prospective buyer, who may cancel if it is not.

119. Question 119 — answer C

     How many hours of continuing education does a California licensee complete for renewal?

     Renewal requires 45 clock hours of approved continuing education within the renewal period.

120. Question 120 — answer A

     An owner instructs the property manager to refuse applicants receiving housing assistance. How should the manager respond?

     California protects source of income, so refusing an applicant because assistance forms part of their income is unlawful discrimination.

121. Question 121 — answer D

     A listed home lies within a state responsibility area for wildfire. What does the seller disclose?

     Sellers in state responsibility areas must disclose defensible space compliance and provide documentation of it.

122. Question 122 — answer A

     An hoarding tenant's unit becomes a health hazard affecting neighbours. What is the property manager's proper course?

     The manager must proceed through proper notice and legal process; self-help evictions and lockouts are unlawful.

123. Question 123 — answer C

     A team of two salespersons shares compensation on a deal they co-listed under the same broker. How is the split handled?

     All compensation flows through the employing broker, who pays each salesperson per their employment agreements.

124. Question 124 — answer C

     A lender declines applications from one neighbourhood regardless of individual creditworthiness. What is the term for this?

     Refusing to lend in a geographic area irrespective of the applicant's own qualifications is redlining.

125. Question 125 — answer C

     A distressed homeowner is asked to prepay a licensee for a loan modification service. What is the position?

     California prohibits collecting compensation in advance for residential loan modification or forbearance services.

126. Question 126 — answer A

     A broker delegates review of contracts to an unlicensed office manager. What is the problem?

     Supervisory review of transaction documents must be done by the broker or a delegated licensee meeting experience requirements.

127. Question 127 — answer B

     A licensee allows the licence to expire. What is the position during the two-year late renewal window?

     A licence may be renewed late for two years with a penalty fee, but no licensed activity may be conducted while it is expired.

128. Question 128 — answer D

     A seller refuses to complete the TDS and instructs the agent to tell buyers 'as-is'. What must the agent do?

     An as-is clause does not excuse the TDS; the agent must explain the requirement and its own inspection duty remains.

129. Question 129 — answer B

     A licensee's personal website shows listings but no licence number anywhere. What does California require?

     Licence numbers must appear on solicitation materials including websites, alongside the responsible broker's identity.

130. Question 130 — answer B

     A licensee posts a client's confidential financial details in a public online forum seeking advice. Which duty is breached?

     Client financial information is confidential regardless of the licensee's purpose in sharing it, and anonymity does not cure the breach.

131. Question 131 — answer A

     A buyer asks the listing agent to recommend a lender. The agent's brokerage owns a mortgage company. What must the agent do when recommending it?

     RESPA requires an affiliated business arrangement disclosure and prohibits requiring the use of the affiliate.

132. Question 132 — answer B

     What must be disclosed about a property adjacent to farmland in many California counties?

     Right-to-farm notices warn buyers that agricultural operations can bring noise, dust and odours.

133. Question 133 — answer C

     A buyer signs an offer but dies before the seller accepts. What happens to the offer?

     The death or incapacity of the offeror before acceptance terminates the offer by operation of law.

134. Question 134 — answer D

     A lease says rent is due on the 1st with a 5-day grace period. On the 7th, what may the landlord serve?

     After default, the first step is the three-day notice; unlawful detainer follows if unpaid.

135. Question 135 — answer D

     A landlord's failure to repair makes the unit uninhabitable and the tenant leaves. What has occurred?

     Constructive eviction occurs where the landlord's breach makes the premises unusable and the tenant vacates as a result.

136. Question 136 — answer A

     Which landlord action is prohibited self-help in California?

     Lockouts, utility shutoffs, and removing doors are unlawful; eviction requires court process.

137. Question 137 — answer B

     An option to purchase is recorded. The optionor sells to a third party during the option period. What is the result?

     Recording gives notice; purchasers take subject to recorded interests.

138. Question 138 — answer D

     What distinguishes a novation from an assignment?

     A novation substitutes a new obligation or party with the creditor's consent and discharges the original party, which an assignment does not do.

139. Question 139 — answer D

     A landlord and tenant agreed orally to a nine-month lease. The tenant leaves after three months and the landlord sues thirty months later. What is the likely result?

     A nine-month lease is enforceable orally, but claims on oral contracts must be brought within two years.

140. Question 140 — answer B

     What does a 'time is of the essence' clause make of a one-day delay in tendering closing funds?

     The clause elevates deadlines to material terms, so even short delays can constitute breach.

141. Question 141 — answer B

     Which requirement applies for a liquidated damages clause to bind in a residential purchase?

     The clause must be separately signed or initialled in the statutory format to be enforceable.

142. Question 142 — answer C

     Which clause states that the written document contains the parties' entire agreement?

     An integration or merger clause confirms the writing is complete, reinforcing the parol evidence rule.

143. Question 143 — answer A

     Which contract is enforceable despite no writing?

     Leases of one year or less fall outside the statute of frauds.

144. Question 144 — answer D

     A seller and buyer agree to extend closing by 10 days but never sign an extension. Closing day passes. What is the position?

     Modifications should be in writing; relying on oral extensions invites dispute.

145. Question 145 — answer B

     A tenant assigns the lease with landlord consent and the assignee defaults. Who is liable?

     Assignment transfers the interest but not the original tenant's liability without a novation/release.

146. Question 146 — answer A

     A buyer makes an offer with a 3 p.m. Friday expiration. The seller signs at 2 p.m. Friday but the listing agent does not deliver the acceptance to the buyer's agent until Saturday. Is there a contract?

     Acceptance is effective on communication to the offeror; signing alone is insufficient.

147. Question 147 — answer A

     A purchase agreement provides that the buyer's deposit is retained if the buyer defaults. What is that clause?

     A clause fixing damages in advance is a liquidated damages provision, enforceable where the amount is a reasonable pre-estimate rather than a penalty.

148. Question 148 — answer D

     A contract for an illegal purpose is best described as which of these?

     A contract with an unlawful object is void from the outset and cannot be enforced by either party.

149. Question 149 — answer B

     A buyer transfers contract rights to a friend but stays liable if the friend defaults. What has occurred?

     An assignment transfers rights but leaves the assignor liable. A novation substitutes a new party and releases the original.

150. Question 150 — answer A

     Which agreement must be in writing to be enforceable under the statute of frauds?

     Agreements for the sale of real property, and agreements to pay compensation for such a sale, must be in writing to be enforceable.

Common questions