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

   Which type of estate gives an owner the fullest bundle of rights, is of potentially unlimited duration, and is freely inheritable?

   • a.Estate for years
   • b.Fee simple absolute
   • c.Life estate
   • d.Estate at will

   Answer: b

   Explanation: A fee simple absolute is the highest and most complete estate in land, lasting indefinitely and passing to heirs. Life estates and leasehold estates confer only limited rights. Under California law it is presumed a grant conveys fee simple unless a lesser estate is stated.

   Source: CA Civil Code

2. 2. Laws & Agency

   The California Real Estate Commissioner has the authority to:

   • a.Issue building permits
   • b.Suspend or revoke a real estate license
   • c.Set property tax rates
   • d.Approve local zoning

   Answer: b

   Explanation: The Real Estate Commissioner enforces the Real Estate Law and may investigate complaints and suspend or revoke licenses for violations. The Commissioner also issues regulations and public reports. These powers protect the public from dishonest or incompetent licensees.

   Source: CA Business & Professions Code

3. 3. Financing

   A buyer makes a $90,000 down payment on a $450,000 home and finances the rest. The loan-to-value ratio is:

   • a.75%
   • b.70%
   • c.80%
   • d.20%

   Answer: c

   Explanation: The loan amount is $450,000 minus $90,000, which equals $360,000, and $360,000 / $450,000 equals 0.80, or 80 percent LTV. The down payment represents 20 percent equity. A 20 percent down payment often avoids private mortgage insurance on conventional loans.

4. 4. Laws & Agency

   Before a real estate license is issued, every California applicant must submit:

   • a.Fingerprints for a criminal background check
   • b.A notarized statement of the applicant's net worth and financial condition
   • c.Proof of errors and omissions insurance covering at least one million dollars
   • d.Three broker letters of recommendation

   Answer: a

   Explanation: All license applicants must submit fingerprints, usually through Live Scan, so the DRE can obtain a criminal history report. A record of certain crimes or prior discipline can bar licensure. This screening helps protect the public.

5. 5. Laws & Agency

   An advertisement guaranteeing a home 'will double in value in five years' is problematic because it is:

   • a.Protected commercial speech fully exempt from license regulation
   • b.A misleading statement of a fact that cannot be assured
   • c.Acceptable puffing that no reasonable buyer would ever believe
   • d.Required disclosure of the property's future investment potential

   Answer: b

   Explanation: Promising specific future appreciation states a fact that cannot be guaranteed and can mislead consumers, exposing the licensee to liability and discipline. Opinions clearly framed as such may be puffing, but guarantees of future value are deceptive. Advertising must be truthful.

6. 6. Property Ownership

   A prejudgment writ of attachment recorded against real property creates:

   • a.A super-priority claim ranking ahead of property taxes
   • b.A voluntary security interest chosen by the owner
   • c.A permanent easement running across the property
   • d.A temporary lien pending the lawsuit's outcome

   Answer: d

   Explanation: An attachment lien is a prejudgment remedy that holds the debtor's property as security while a lawsuit is pending, becoming meaningful if the plaintiff prevails. It is involuntary. If the plaintiff loses, the attachment is released.

7. 7. Transfer of Property

   Possession under a document that appears to give title but is actually defective is known as holding under:

   • a.Good title
   • b.A perfected security interest in the property
   • c.Equitable title held while awaiting a closing
   • d.Color of title

   Answer: d

   Explanation: Color of title exists when a person holds under a written instrument that seems valid but is legally defective, which can affect adverse possession claims. It is not the same as good title. The concept matters in disputes over ownership and prescriptive claims.

8. 8. Financing

   TRID requires the borrower to receive the Closing Disclosure at least how long before loan consummation?

   • a.30 days before consummation
   • b.3 business days before consummation
   • c.At the closing table itself
   • d.7 calendar days after closing

   Answer: b

   Explanation: The Closing Disclosure must reach the borrower at least three business days before consummation, giving time to compare final terms with the Loan Estimate. Certain significant changes restart the three-day waiting period. It replaced the HUD-1 settlement statement for most consumer mortgages.

   Source: Truth in Lending Act

9. 9. Practice & Contracts

   A California landlord seeking to evict a tenant for nonpayment of rent generally must first serve a:

   • a.30-day no-cause notice
   • b.60-day termination notice
   • c.Immediate lockout notice
   • d.3-day notice to pay rent or quit

   Answer: d

   Explanation: For nonpayment, the landlord serves a 3-day notice to pay rent or quit before filing an unlawful detainer. If the tenant pays within the period, the tenancy continues. Self-help lockouts are illegal; eviction must go through the court.

   Source: CA Code of Civil Procedure

10. 10. Valuation & Appraisal

    A comparable sold for $500,000 but has an extra bathroom worth $10,000, and it lacks a $5,000 fireplace the subject has. The adjusted value indication for the subject is:

    • a.$505,000
    • b.$495,000
    • c.$485,000
    • d.$515,000

    Answer: b

    Explanation: Adjust the comparable to the subject: subtract $10,000 because the comparable's extra bath makes it superior, then add $5,000 because it lacks the subject's fireplace, giving $500,000 minus $10,000 plus $5,000, which equals $495,000. Superior features in the comp are subtracted; missing features are added. Adjustments are always made to the comparable.