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 broker reviews a purchase agreement during file review. Which set of elements must be present for the agreement to be a valid contract?

   • a.Offer, acceptance, earnest money, and a recorded deed
   • b.A licensed broker, an appraisal, financing, and a survey
   • c.Written form, notarization, witnesses, and a closing date
   • d.Competent parties, mutual assent, lawful object, and consideration

   Answer: d

   Explanation: A contract needs competent parties, mutual assent (a valid offer and acceptance), a lawful object, and consideration; a real estate contract must also be in writing to satisfy the statute of frauds. Earnest money is customary evidence of good faith but is not an element, and a deed is the instrument that conveys title after the contract is performed. Notarization and witnesses matter for recording documents, not for contract formation. An appraisal, financing, and a survey are transaction steps a contract may require, not elements that make it enforceable.

3. 3. Contracts

   An affiliated licensee resigns and joins a competing firm while several listings she took still have months left to run. What becomes of those listing agreements?

   • a.They follow the licensee to her new brokerage automatically
   • b.They stay with her former firm, which reassigns servicing of them
   • c.They terminate at once, freeing each seller to relist anywhere
   • d.They convert to open listings until each seller signs a new one

   Answer: b

   Explanation: The listing is a contract between the seller and the brokerage, so the firm keeps it when the individual who took it departs, and the broker assigns another licensee to service the property. Moving a listing to the new firm takes both the releasing broker's agreement and the client's, which is why departures are negotiated rather than assumed. A resignation does not terminate the seller's contract, so the seller is not free to relist elsewhere while the term runs. Nor does the agreement quietly become an open listing, because changing the type of listing requires a new agreement the seller signs. A written departure policy stating what an agent may take avoids most of these fights.

4. 4. General Principles of Agency

   An affiliated licensee commits a serious violation the broker genuinely knew nothing about. The firm has no written policy manual, and the broker has never reviewed a transaction file. What is the broker's exposure?

   • a.None, because the broker had no knowledge of the violation
   • b.Limited to a civil claim brought by the injured consumer
   • c.Shared liability only if the agent is classified as an employee
   • d.Discipline for failure to supervise, apart from the agent's violation

   Answer: d

   Explanation: Failure to supervise is its own offense. A broker who maintains no written policies, provides no training, and never reviews files can be disciplined for that failure even though the underlying misconduct was the agent's and the broker never knew of it. Lack of knowledge is precisely what the supervisory duty is meant to prevent, so it is no defense. Exposure is not confined to a private lawsuit; the license authority can act separately. And employee versus independent-contractor status is a tax classification that does not switch the supervisory duty on or off.

5. 5. Practice of Real Estate

   A brokerage emails a monthly commercial newsletter to thousands of past contacts. Which requirement does the CAN-SPAM Act place on that email?

   • a.Prior written consent from every recipient
   • b.Registration of the campaign with a federal agency
   • c.Transmission only during ordinary business hours
   • d.A working opt-out link and the sender's postal address

   Answer: d

   Explanation: CAN-SPAM governs commercial email and requires a clear and conspicuous opt-out mechanism that keeps working for a period after the message is sent, a valid physical postal address, accurate header and routing information, and a subject line that is not deceptive. It uses an opt-out model rather than an opt-in one, so prior written consent is not the trigger, which is a frequent confusion with the text-message rules. No agency registration or filing exists for email campaigns. And time-of-day restrictions belong to telemarketing calls rather than to email.

6. 6. Financing

   Under the Dodd-Frank ability-to-repay rule, before making a residential mortgage loan a lender must:

   • a.Verify the borrower can repay the loan
   • b.Rely on stated income
   • c.Qualify at the teaser rate
   • d.Approve any borrower who makes a large down payment

   Answer: a

   Explanation: The ability-to-repay rule requires a reasonable, good-faith determination that the borrower can repay, based on verified income or assets, employment, debts, the resulting debt ratios, and credit history. Stated-income lending and qualifying at a discounted starting rate are precisely the practices the rule ended, since both let borrowers into payments they could not sustain. A large down payment reduces the lender's loss but does not excuse the analysis. Loans meeting the qualified mortgage standards, which bar features such as negative amortization and excessive points, receive greater legal protection for the lender.

7. 7. Property Ownership

   A buyer and seller dispute whether a custom wine rack screwed into a dining room wall conveyed with the house. Which factor do courts usually weigh most heavily?

   • a.The dollar value of the item at the time of installation
   • b.The intent of the party who annexed it, judged by objective evidence
   • c.Whether the buyer noticed the item during the walkthrough
   • d.Whether the seller paid a contractor to install the item

   Answer: b

   Explanation: The classic fixture tests are method of annexation, adaptation to the realty, the relationship of the parties, and any agreement between them, but the thread running through all of them is intent, measured objectively rather than by what someone later claims to have meant. A rack screwed in and built for that wall signals an intent to make it permanent. Cost tells a court little, since expensive items are often personal property and cheap ones often fixtures. What a buyer happened to notice at a walkthrough does not change an item's legal character. Who performed the work is beside the point, because the annexer's intent controls.

8. 8. Real Estate Calculations

   A broker reports that comparable sales support a 6.25% capitalization rate. The seller of an office building is asking $1,600,000. What annual net operating income must the building produce to justify that asking price?

   • a.$256,000
   • b.$160,000
   • c.$96,000
   • d.$100,000

   Answer: d

   Explanation: Rearranging Value = NOI / cap rate gives NOI = value x cap rate = $1,600,000 x 0.0625 = $100,000. Dividing the price by 6.25 instead of multiplying by 0.0625 produces $256,000 and badly inflates the income the property would need. Slipping the decimal and using 10% gives $160,000. Rounding the cap rate down to 6% gives $96,000, which understates the requirement. Check: $100,000 / 0.0625 = $1,600,000. Knowing all three directions of this formula lets a broker show an investor precisely how far the building's actual income falls short of the price being asked.

9. 9. Property Disclosures

   An agent repeats the seller's statement that the room addition was fully permitted, without checking anything, and the county's records show no permit was ever issued. This conduct is best classified as:

   • a.Puffing, an opinion only
   • b.Intentional fraud, which requires proof of actual knowledge
   • c.Negligent misrepresentation of a material fact
   • d.Passive concealment of a defect the agent hid on purpose

   Answer: c

   Explanation: Asserting a material fact carelessly, with no idea whether it is true, is negligent misrepresentation, and the agent can be liable without any bad intent because permit status was verifiable in public records the agent chose not to check. Fraud sets a higher bar: a knowing or reckless false statement, or deliberate concealment, made to induce reliance, which these facts do not establish. Passive concealment means staying silent about a known problem, not repeating someone else's claim. Permit status is a verifiable fact rather than sales opinion, so puffing does not apply. The safe practice is to attribute the statement to its source and direct the buyer to verify it independently.

10. 10. Georgia State Laws and Rules

    A buyer and seller are in dispute over earnest money. The Georgia broker disburses it to the seller on a reasonable interpretation of the contract, one of the grounds GREC recognizes. Rule 520-1-.08(3)(c) then requires the broker to:

    • a.Immediately obtain the Commission’s written approval of the disbursal
    • b.Immediately file an interpleader action so a court can confirm the disbursal
    • c.Immediately deliver the firm’s trust account reconciliation to both parties
    • d.Immediately notify all parties to the contract in writing of the disbursal

    Answer: d

    Explanation: Rule 520-1-.08(3)(b) lists the circumstances in which a broker is deemed to have properly accounted for trust funds, including a written agreement signed by all parties, an interpleader action, a court order, and “upon a reasonable interpretation of the contract which directed the broker to deposit the funds.” Subparagraph (c) attaches the condition: “When a broker makes a disbursal to which all parties to the contract do not expressly agree, the broker must immediately notify all parties in writing of the disbursal.” GREC does not pre-approve disbursals. Interpleader is one of the alternative grounds in (b), not a step that must follow a disbursal already made on another ground, and the reconciliation statement is an internal record under paragraph (6).