Illinois Real Estate Broker Exam — All Questions

Which form of property ownership includes the right of survivorship, so that a deceased owner's interest passes automatically to the surviving co-owners?

• a.Tenancy in common
• b.Joint tenancy✓
• c.Ownership in severalty
• d.A life estate

Joint tenancy carries the right of survivorship, meaning a deceased joint tenant's share passes automatically to the surviving joint tenants rather than through probate. Tenancy in common has no survivorship right.

A bundle of rights in real property typically includes all of the following EXCEPT:

• a.The right to possess the property
• b.The right to exclude others
• c.The right to violate local zoning ordinances✓
• d.The right to sell or transfer the property

The bundle of rights includes possession, control, exclusion, enjoyment, and disposition, but ownership never confers a right to violate valid land-use or zoning laws. Government police power limits how property may be used.

A city adopts an ordinance dividing land into residential, commercial, and industrial districts. This is an exercise of the government's:

• a.Police power✓
• b.Power of eminent domain
• c.Right of escheat
• d.Power of taxation

Zoning is an exercise of police power, the government's authority to regulate land use to protect public health, safety, and welfare. Eminent domain is the separate power to take property for public use with compensation.

An appraiser valuing a single-family home in an established neighborhood would rely MOST heavily on which approach to value?

• a.Cost approach
• b.Sales comparison approach✓
• c.Income capitalization approach
• d.Gross rent multiplier approach

The sales comparison approach, which analyzes recent sales of similar nearby properties, is most reliable for single-family residences where comparable data is plentiful. The income approach is used mainly for income-producing property.

In a mortgage loan, the clause that allows the lender to demand the entire remaining balance immediately upon the borrower's default is the:

• a.Defeasance clause
• b.Subordination clause
• c.Acceleration clause✓
• d.Alienation clause

The acceleration clause lets the lender declare the full unpaid balance due if the borrower defaults. The alienation (due-on-sale) clause, by contrast, is triggered by transfer of the property, not by default.

Which federal law requires lenders to disclose the annual percentage rate (APR) and total finance charges so consumers can compare credit costs?

• a.Truth in Lending Act (Regulation Z)✓
• b.RESPA
• c.Equal Credit Opportunity Act
• d.Fair Housing Act

The Truth in Lending Act, implemented by Regulation Z, requires disclosure of the APR and finance charges so borrowers can compare the true cost of credit. RESPA governs settlement cost disclosures, not APR.

For a real estate sales contract to be enforceable, the Statute of Frauds requires that it be:

• a.Notarized by a licensed notary
• b.In writing and signed by the parties✓
• c.Recorded with the county recorder
• d.Reviewed by an attorney

The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed by the party to be charged. Notarization and recording are not required for enforceability between the parties.

A buyer makes a written offer on a home. Before the seller accepts, the buyer notifies the seller that the offer is withdrawn. This is an example of:

• a.Breach of contract
• b.Novation
• c.Acceptance
• d.Revocation of the offer✓

An offer may be revoked by the offeror at any time before it is accepted. Because no acceptance had occurred, no contract was formed and the buyer is free to withdraw.

When a buyer and seller sign a purchase agreement but the sale has not yet closed, the buyer holds what type of interest?

• a.Equitable title✓
• b.Legal title
• c.A leasehold estate
• d.A remainder interest

Once a purchase contract is signed, the buyer acquires equitable title, an interest that entitles them to obtain legal title at closing. Legal title remains with the seller until the deed is delivered.

An option contract in real estate gives the optionee:

• a.An obligation to purchase the property
• b.Immediate legal title to the property
• c.The right, but not the obligation, to buy within a set period✓
• d.A commission on the eventual sale

An option gives the optionee the right, but not the obligation, to purchase the property on agreed terms within a stated time. The optionor is bound to sell if the optionee chooses to exercise the option.

A licensee representing a seller owes the seller fiduciary duties. Which duty requires the licensee to keep the seller's confidential information private even after the transaction closes?

• a.Obedience
• b.Confidentiality✓
• c.Accounting
• d.Disclosure

The duty of confidentiality obligates the agent to protect the principal's confidential information, and this duty generally survives the end of the agency relationship. Obedience and accounting address different obligations.

A single brokerage represents both the buyer and the seller in the same transaction with informed written consent. This is known as:

• a.Single agency
• b.Designated agency by default
• c.A subagency
• d.Dual agency✓

Dual agency occurs when one brokerage represents both parties in the same transaction and requires informed written consent from both. The agent's ability to advocate fully for either side is limited.

An agency relationship in real estate is most commonly created by:

• a.An express agreement such as a listing or buyer-representation agreement✓
• b.Recording a deed
• c.Payment of a commission
• d.The multiple listing service

Agency is typically created by an express agreement, such as a signed listing or buyer-representation agreement, that authorizes the licensee to act on the client's behalf. Payment of commission alone does not create agency.

Under federal law, a seller of a home built before 1978 must provide the buyer with a disclosure regarding:

• a.Radon gas
• b.Asbestos insulation
• c.Lead-based paint✓
• d.Underground storage tanks

The federal Residential Lead-Based Paint Hazard Reduction Act requires sellers of pre-1978 housing to disclose known lead-based paint hazards and provide an EPA pamphlet. The rule targets pre-1978 homes because lead paint was banned in 1978.

Which type of deed offers the grantee the greatest protection by warranting clear title against all defects, even those arising before the grantor owned the property?

• a.Quitclaim deed
• b.General warranty deed✓
• c.Special warranty deed
• d.Bargain and sale deed

A general warranty deed provides the broadest protection, warranting the title against all defects, including those predating the grantor's ownership. A quitclaim deed offers no warranties at all.

A licensee tells prospective buyers that a neighborhood is 'changing' and encourages owners to sell quickly based on the race of incoming residents. This illegal practice is called:

• a.Redlining
• b.Steering
• c.Blockbusting✓
• d.Puffing

Blockbusting is inducing owners to sell by suggesting that people of a particular protected class are moving into the area. It violates the federal Fair Housing Act, as do steering and redlining.

Commingling in real estate practice refers to:

• a.Mixing client or escrow funds with the broker's personal or business funds✓
• b.Representing two clients in one deal
• c.Combining two parcels of land
• d.Advertising without the broker's name

Commingling is improperly mixing client trust or escrow funds with the broker's own funds, and it is prohibited. Client funds must be held in a separate trust or escrow account.

A property manager who enters into a management agreement with an owner is acting as the owner's:

• a.Trustee
• b.Fiduciary agent✓
• c.Independent buyer
• d.Lienholder

A property manager is a fiduciary agent of the owner and must manage the property in the owner's best interest, including accounting for funds and maximizing return. This creates the same core duties as other agency relationships.

A home sells for $250,000 and the total commission is 6%, split equally between the listing and selling brokerages. How much does the listing brokerage receive?

• a.$15,000
• b.$7,500✓
• c.$3,750
• d.$12,500

The total commission is 6% of $250,000 = $15,000. Split equally, the listing brokerage receives half, or $7,500.

A parcel measures 435,600 square feet. How many acres is this? (1 acre = 43,560 sq ft)

• a.5 acres
• b.100 acres
• c.10 acres✓
• d.1 acre

Dividing 435,600 by 43,560 square feet per acre equals 10 acres. Knowing that one acre equals 43,560 square feet is essential for these conversions.

The principle that a property's maximum value is set by the cost of acquiring an equally desirable substitute is the principle of:

• a.Substitution✓
• b.Conformity
• c.Contribution
• d.Anticipation

The principle of substitution holds that a buyer will pay no more for a property than the cost of an equally desirable substitute. It underlies the sales comparison approach to value.

Under the Illinois Real Estate License Act, real estate licensees are regulated by which agency?

• a.The Illinois Association of Realtors
• b.The county recorder of deeds
• c.The Illinois Department of Financial and Professional Regulation (IDFPR)✓
• d.The Attorney General's consumer division

The Illinois Department of Financial and Professional Regulation (IDFPR) administers and enforces the Real Estate License Act and issues licenses. Trade associations do not regulate licensure.

In Illinois, a person who wishes to independently operate a real estate brokerage and hold others' licenses must hold what type of license?

• a.Broker license
• b.Managing broker license✓
• c.Leasing agent license
• d.Residential appraiser license

In Illinois a managing broker license is required to operate a brokerage and supervise sponsored brokers. The entry-level broker license must be sponsored by a managing broker.

The Illinois Residential Real Property Disclosure Act generally requires a seller of residential property to:

• a.Complete a written disclosure report of known material defects✓
• b.Provide a lender's appraisal to the buyer
• c.Guarantee the property is free of all defects
• d.Obtain a certificate of occupancy before listing

The Illinois Residential Real Property Disclosure Act requires sellers of most residential property to complete a disclosure report of known material defects. The seller discloses known conditions but does not guarantee the property is defect-free.