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 buyer and seller sign a contract, each genuinely believing it covers a different one of the seller's two adjacent lots. What is the most likely legal result?

   • a.No meeting of the minds occurred, so either party may rescind
   • b.The buyer must accept whichever lot the seller intended
   • c.The seller may choose which of the two lots to convey
   • d.A court will order the sale of both lots at the stated price

   Answer: a

   Explanation: When each side attaches a different meaning to a basic term, here which parcel is being sold, there is no meeting of the minds. This mutual mistake of material fact means either party may rescind, and courts commonly grant that relief. Letting the seller pick a lot, or forcing the buyer to take the lot the seller had in mind, would enforce terms one party never agreed to. Ordering both lots sold rewrites the bargain entirely. Contrast unilateral mistake, where only one party is mistaken; that ordinarily does not excuse performance unless the other side knew of and exploited the error.

3. 3. Contracts

   During file review a broker finds a contract whose addendum sets a different closing date than the contract body, and one page is unsigned. The broker should:

   • a.Close the file, since the parties signed elsewhere
   • b.Have the parties resolve and initial the conflict promptly
   • c.Direct the agent to pick the later of the two dates
   • d.Void the contract and require an entirely fresh offer

   Answer: b

   Explanation: An unsigned page and two conflicting closing dates make the file ambiguous, and ambiguity is what produces litigation later. The broker's job in file review is to have the parties resolve the conflict and initial or amend the correct document promptly, while everyone still agrees on what was intended. Closing the file because other pages were signed leaves the defect sitting there. Letting the agent choose which date governs substitutes a licensee's guess for the parties' actual agreement. And declaring the contract void exceeds the broker's authority and could needlessly cost the client the transaction.

4. 4. General Principles of Agency

   A seller signs a written instruction directing the listing broker not to present any offer below $600,000. How should the broker treat that instruction?

   • a.Disregard it, since a seller may never restrict which offers are presented
   • b.Honor the written instruction, unless state law makes presentation non-waivable
   • c.Honor it, and screen offers this way on the seller's oral word alone
   • d.Honor it, and let it cover an offer competing with the firm's own buyer

   Answer: b

   Explanation: A client may narrow the broker's marketing instructions, and a broker may follow a limit on which offers to bring forward, provided the limit is in writing, sits in the file, and does not collide with a state rule making presentation of written offers a duty the seller cannot waive. Treating any such instruction as void overstates the law, since the seller controls the terms of the sale. An oral limitation leaves the broker nothing to show a regulator or a court later. And the instruction cannot be stretched to bury an outside offer that competes with one from the firm's own buyer, which turns the seller's convenience into the firm's self-dealing.

5. 5. Practice of Real Estate

   Long after a file closed, a broker discovers that a required disclosure was never delivered. The licensee who handled the transaction left the firm months ago. What is the broker's responsibility?

   • a.The broker remains responsible for the closed file and must act on it
   • b.Responsibility moved with the licensee to whichever firm now holds her license
   • c.Nothing is required, because the sale closed and the funds were disbursed
   • d.The firm should insert the missing form now and consider the file complete

   Answer: a

   Explanation: A transaction file belongs to the brokerage, and the duty to keep it complete and to answer for what it contains survives both the closing and the licensee's departure. The firm cannot hand a compliance failure to a former agent's new broker, who supervised none of this work. Sound practice is to notify the affected party, deliver what was missed, take counsel's advice on any resulting harm, and make whatever report state law requires of the firm. Treating a closed file as beyond reach ignores that regulators examine files for the period the state prescribes. Slipping the form in now papers over the gap rather than curing it.

6. 6. Valuation and Market Analysis

   An investor plans to build a 6,000-square-foot luxury home in a neighborhood of 1,800-square-foot houses, and a broker warns the finished home will not appraise near its construction cost. Which principle applies?

   • a.Progression, because the finest home in an area gains value
   • b.Regression, because surrounding lesser properties drag the value down
   • c.Anticipation, because buyers pay for expected future benefits
   • d.Plottage, because combining features increases total value

   Answer: b

   Explanation: Regression is the loss a superior property suffers from being surrounded by lesser ones, and it is the classic explanation for an over-improvement that cannot recover its cost. Progression works the other direction, lifting a modest property in a superior area, so it predicts the opposite outcome here. Anticipation concerns the present worth of expected future benefits and does not address neighborhood mismatch. Plottage is the increment created when adjoining parcels are assembled under one ownership, an entirely different concept. Advising an investor about regression before construction begins is far more useful than explaining it after the appraisal comes in low.

7. 7. Property Ownership

   A neighbor has openly driven across a corner of an adjoining lot for many years without permission, and the owner never objected. What claim does the neighbor have?

   • a.An easement by implication created when the lots were divided
   • b.Fee title to the strip crossed, under adverse possession
   • c.Nothing, because using land without permission is trespass
   • d.An easement by prescription, if the statutory period is met

   Answer: d

   Explanation: Use that is open, notorious, continuous, and hostile, meaning without the owner's permission, can ripen into an easement by prescription once it continues for the period the state sets, giving the neighbor a right to keep crossing. It does not convey ownership: adverse possession requires exclusive possession and passes title, while prescription passes only a use right, and driving across a corner is plainly not exclusive. Dismissing the conduct as bare trespass ignores the doctrine that converts long unchallenged use into a legal right. Implication arises from prior apparent use at the moment a single parcel is severed, which did not occur here.

8. 8. Real Estate Calculations

   An investor paid $260,000 for a duplex and spent $40,000 on improvements, then sold it for $375,000. Ignoring transaction costs, what was the profit as a percentage of the investor's total cost? Round to the nearest tenth.

   • a.20.0%
   • b.28.8%
   • c.25.0%
   • d.44.2%

   Answer: c

   Explanation: Percentage of profit divides profit by total cost, not by the sale price. Total cost = $260,000 + $40,000 = $300,000, and profit = $375,000 - $300,000 = $75,000, so $75,000 / $300,000 = 0.25, or 25.0%. Dividing the same $75,000 by the $375,000 sale price gives 20.0%, the single most common error, because the base must be what the investor put in. Leaving the improvements out of the base gives $75,000 / $260,000 = 28.8%. Leaving them out of both the profit and the base gives $115,000 / $260,000 = 44.2%. Check: $300,000 x 1.25 = $375,000.

9. 9. Land Use Controls and Regulations

   A council rezones one lot in the middle of a residential block to commercial use for a single owner's benefit, with no support in the comprehensive plan. This is most vulnerable to attack as:

   • a.Downzoning, which reduces the density a district allows
   • b.Inverse condemnation claimed by the neighboring owners
   • c.A regulatory taking requiring payment to the neighbors
   • d.Spot zoning, which is inconsistent with the overall plan

   Answer: d

   Explanation: Singling out a small parcel for treatment different from the surrounding land, chiefly for the owner's private benefit and without support in the comprehensive plan, is spot zoning, and courts frequently invalidate it. Downzoning is a legitimate legislative act that lowers permitted density or intensity across an area, and it is not limited to one owner. Inverse condemnation is an owner's suit for compensation after government action has effectively taken property without a formal case being filed. A regulatory taking requires loss of economically viable use; neighbors who merely dislike a rezoning have suffered nothing of the kind.

10. 10. Advanced Fair Housing, Fair Lending & Mortgage Brokerage

    For a violation of Executive Law article 15 committed as a licensee, Real Property Law § 441-c allows the Department of State to impose:

    • a.a fine of up to $1,000, all of which goes to the general fund of the state
    • b.a fine of up to $5,000, half of which goes to the complaining party's costs
    • c.a fine of up to $2,000, half of which goes to the anti-discrimination fund
    • d.a fine of up to $500, all of which goes to the licensee's continuing education

    Answer: c

    Explanation: Section 441-c(1)(a) lets the Department revoke or suspend a license, or “in lieu thereof may impose a fine not exceeding two thousand dollars payable to the department of state, provided that fifty percent of all moneys received by the department of state for such fines shall be payable to the anti-discrimination in housing fund.” The same sentence lists what the Department may act on, and it now includes “a violation of article fifteen of the executive law committed in their capacity as a real estate broker or salesperson” alongside fraud, dishonest or misleading advertising, untrustworthiness and incompetency. Older material quoting a $1,000 ceiling predates the increase. Subdivision 4 adds a consequence beyond the fine: a licensee whose license is revoked is ineligible to be relicensed for one year.