Sample practice questions

A few real questions from this free bank, with full explanations. Use the practice tool above for the whole set.

1. 1. Property Ownership

   A commercial tenant bolts custom display shelving to the walls to run a retail store. Absent any agreement to the contrary, what is the usual character of that shelving?

   • a.A permanent fixture that automatically belongs to the landlord
   • b.Real property that must be conveyed with the building
   • c.A trade fixture the tenant may remove before the lease ends
   • d.An easement appurtenant to the leased space

   Answer: c

   Explanation: Items a commercial tenant installs to conduct business are trade fixtures. Even though they are attached, the law lets the tenant remove them before the lease ends (repairing any damage), because the tenant's intent was to use them in the business, not to improve the landlord's property permanently. This is an exception to the general rule that attached items become part of the realty. It is not an easement, which is a right to use another's land, not an object.

2. 2. Contracts

   A seller was adjudicated legally incompetent by a court and has a guardian. Without the guardian's involvement, the seller signs a listing agreement. That agreement is:

   • a.Enforceable as long as the broker acted in good faith
   • b.Voidable, so the guardian may choose to enforce it
   • c.Valid unless and until a court sets the agreement aside
   • d.Void, because the seller lacked legal capacity

   Answer: d

   Explanation: Once a court has adjudicated a person incompetent and appointed a guardian, that person can no longer contract, so agreements signed without the guardian are void rather than merely voidable. Voidable describes contracts a party may elect to disaffirm, such as one signed by a minor or under duress, where assent is impaired but legal capacity has not been judicially removed. Treating the listing as valid until challenged, or as rescued by the broker's good faith, ignores that the seller had no power to create it. The guardian, with any required court approval, is who can list the property.

3. 3. Contracts

   A listing expires. Two weeks later the seller sells directly to a buyer the listing broker had introduced and named in writing. Which clause may still entitle the broker to a commission?

   • a.The liquidated damages clause in the listing
   • b.The broker protection carryover clause
   • c.The contract's time is of the essence clause
   • d.The alienation clause in the seller's mortgage

   Answer: b

   Explanation: A broker protection clause, also called a safety or carryover clause, entitles the broker to a commission if the owner sells within a stated period after expiration to a buyer the broker introduced and, typically, identified in writing before the listing ended. A liquidated damages clause caps recovery when a purchase contract is breached. Time is of the essence makes contract deadlines strict. And an alienation clause is a loan provision letting a lender call the balance on transfer, which has nothing to do with commissions. Brokers must deliver the protected-buyer list on time or lose the protection.

4. 4. General Principles of Agency

   A high-volume sales team inside a brokerage uses its own team name, its own marketing budget, and its own team leader. Who remains responsible for the team's advertising and transaction files?

   • a.The broker, whose supervisory duty covers teams in the firm
   • b.The team's individual members, each for their own transactions
   • c.The team leader alone, since the team operates independently
   • d.The listing service, which approves all cooperative advertising

   Answer: a

   Explanation: A team is a marketing structure inside the brokerage, not a separate licensed entity, so the broker's supervisory duty reaches the team's advertising, files, funds, and use of a team name. Brokers typically require written team agreements and review team advertising for the firm-name and licensure requirements their state imposes. The team leader shares responsibility but does not absorb the broker's. Individual members are accountable for their own conduct without relieving the broker. The listing service enforces its own rules and does not supervise licensees for the state.

5. 5. Practice of Real Estate

   A broker claims the firm's errors-and-omissions policy makes routine file review unnecessary. Why is that reasoning unsound?

   • a.Coverage may pay some claims but never prevents violations
   • b.Such policies cover only losses that clients cause
   • c.Carriers contractually require weekly review of files
   • d.A policy shifts license discipline onto the carrier

   Answer: a

   Explanation: Errors-and-omissions coverage is a way to finance claims, not a control that stops them; it may fund a defense and a settlement but it cannot prevent a violation, and it does not answer license discipline, which is personal to the licensee and the broker. Saying such policies cover only client-caused losses inverts what the product insures. No carrier's contract substitutes a review schedule for the broker's own statutory duty to supervise. Insurers actually price on the quality of supervision, so weak oversight raises premiums or costs the firm its coverage.

6. 6. Financing

   An underwriter compares the proposed housing payment to gross monthly income, then compares all monthly debt payments to that same income. These two measures are:

   • a.The capitalization rate and the cash-on-cash return
   • b.The loan-to-value and combined loan-to-value ratios
   • c.The front-end and back-end debt-to-income ratios
   • d.The borrower's credit utilization and score

   Answer: c

   Explanation: The housing-only comparison is the front-end ratio and the all-debts comparison is the back-end ratio, and together they measure capacity, one of the four Cs of underwriting. Loan-to-value measures the loan against the property's value rather than against income, and a combined figure adds junior liens. Capitalization rate and cash-on-cash return are investment yardsticks applied to income property, not to a borrower's paycheck. Credit utilization and score describe the credit report, which underwriters review separately. A broker who understands the ratios can tell early which buyers will need to retire debt to qualify.

7. 7. Property Ownership

   An owner sells the mineral rights under a ranch to an energy company but keeps the surface. What is the position of a buyer who later purchases the surface estate?

   • a.The buyer acquires the minerals because they pass with the surface
   • b.The severance is void unless the state approves the split estate
   • c.The buyer may block all drilling by refusing to sign a lease
   • d.The buyer takes subject to the mineral owner's right of reasonable access

   Answer: d

   Explanation: Subsurface and mineral rights, like air rights, can be severed from the surface and sold separately, creating what is called a split estate. Once severed, the mineral estate is generally dominant: its owner retains an implied right to make reasonable use of the surface to reach the minerals, so a later surface buyer takes subject to that burden. Minerals do not quietly reattach to the surface on a subsequent sale. The surface owner cannot veto extraction by withholding a lease, because the mineral owner already holds that interest. No state approval creates the split; a deed or reservation does, which is why the title search must reveal it.

8. 8. Real Estate Calculations

   An investor bought a rental for $320,000 with $64,000 down and a $256,000 loan. Five years later the property is worth $395,000 and the loan balance is $232,000. How much has the owner's equity grown?

   • a.$163,000
   • b.$99,000
   • c.$75,000
   • d.$24,000

   Answer: b

   Explanation: Equity is value minus debt. Today that is $395,000 - $232,000 = $163,000. At purchase, equity equaled the $64,000 down payment, so the growth is $163,000 - $64,000 = $99,000. Reporting $163,000 gives total equity rather than the increase the question asks for. Counting appreciation alone gives $75,000 and ignores amortization; counting principal paydown alone gives $24,000 and ignores the market. Check the two sources: appreciation of $395,000 - $320,000 = $75,000 plus paydown of $256,000 - $232,000 = $24,000 equals $99,000. Showing owners both engines of equity build is routine investor-listing work.

9. 9. Property Disclosures

   While previewing a listing, an agent sees dark staining and smells a musty odor in the basement, and notices an old fill pipe suggesting a buried heating oil tank. The agent should:

   • a.Say nothing, since neither observation has been confirmed
   • b.Arrange remediation and tank removal before any showings
   • c.Describe the staining as harmless mildew in the listing
   • d.Disclose both observations and refer the parties to specialists

   Answer: d

   Explanation: A licensee is expected to recognize the signs of a possible environmental problem, disclose what was observed, and refer the parties to qualified professionals; the licensee is not qualified to identify mold, judge whether an underground storage tank has leaked, or reassure anyone that a condition is harmless. Calling the staining mildew in the listing is an affirmative misrepresentation. Ordering remediation and tank removal casts the agent as the contractor, creating liability for the work itself and for destroying evidence of the condition. Suspected asbestos is handled the same way: note it, leave it undisturbed, and let a qualified inspector decide whether it is friable and how to manage it.

10. 10. Licensee Duties and Disclosures to the Public

    Under AS 08.88.615 and 12 AAC 64.118, an Alaska licensee must give a consumer the commission's Consumer Disclosure:

    • a.before giving specific assistance, or on contracting to give it
    • b.at the first telephone call or e-mail the consumer sends in
    • c.when the consumer signs an offer to purchase or to lease
    • d.at closing, along with the settlement statement and deed

    Answer: a

    Explanation: AS 08.88.615(a)(6) makes it a duty owed in every licensee relationship to provide the pamphlet “before the licensee provides specific assistance to the person, or when entering into a contract with the person to provide specific assistance,” and 12 AAC 64.118 identifies the document as the commission's “Alaska Real Estate Commission Consumer Disclosure, dated April 2024.” The trigger is specific assistance, which AS 08.88.695(8) defines narrowly — asking about confidential information, showing property selected for the person's needs, preparing a written offer, or entering a personal services contract — and which expressly excludes hosting an open house, casual conversation about real estate, answering an inquiry from a sign or website, providing information about a property, and setting a first appointment. So a first call or e-mail does not by itself start the clock, and the offer or the closing is far too late.