New Hampshire Real Estate Salesperson Exam — All Questions

The principle of contribution states that the value of a component or improvement is measured by:

• a.The raw number of square feet of floor area or land area that the improvement happens to occupy
• b.The owner's personal emotional attachment to and sentimental feelings about that improvement
• c.Its original construction or installation cost in every case, dollar for dollar, with no exception
• d.How much it adds to the overall value of the property, not its cost✓

Under contribution, an improvement is worth the amount it adds to the whole property's market value, which may be more or less than its cost. This principle explains why some renovations do not fully return their expense, a key point in over-improvement analysis.

Under Internal Revenue Code Section 121, a qualifying homeowner may generally EXCLUDE from taxable capital gain:

• a.Up to $250,000 of gain if single, or $500,000 if married filing jointly✓
• b.Up to a full one million dollars of gain on any property at all, at any time and any frequency
• c.All gain on any and every investment or rental property the taxpayer happens to own and sell
• d.Absolutely nothing, because gain on the sale of a home is always fully and entirely taxable

Section 121 lets homeowners who owned and used the home as their principal residence for at least two of the prior five years exclude up to $250,000 of gain (single) or $500,000 (married filing jointly). It applies to a primary residence, not to investment property.

Depreciation recapture on the sale of investment real estate means that:

• a.All of the depreciation deductions previously claimed are simply refunded to the investor in cash
• b.The investor is legally required to physically restore and rebuild the depreciated building itself
• c.Gain from prior depreciation may be taxed, often at a special rate✓
• d.No income tax is ever owed at all on the sale of a property that has previously been depreciated

When depreciated property is sold at a gain, the portion of gain due to depreciation deductions is 'recaptured' and taxed under special rules, reflecting the earlier tax benefit. It is a tax concept, not a requirement to rebuild, and it increases, not eliminates, tax on sale.

Which appraisal approach is generally MOST reliable for a special-purpose property, such as a church or public school, that rarely sells and earns no market income?

• a.The sales comparison approach, which depends on recent sales of similar comparable properties
• b.The income approach, which converts a property's market rental income into an indicated value
• c.The gross rent multiplier method, which relies on typical market rents that these lack entirely
• d.The cost approach✓

Special-purpose properties have few or no comparable sales and generate no market rent, so the cost approach (replacement cost new, less depreciation, plus land) is typically most reliable. Sales comparison lacks comparables and the income/GRM methods need market income these properties do not produce.

The four characteristics an item must have to possess value in the market, often remembered as DUST, are:

• a.Debt, Utility, Supply, and Taxes, a mix of unrelated financing and cost terms rather than value
• b.Demand, Utility, Scarcity, and Transferability✓
• c.Depreciation, Use, Sale, and Title, which describe stages of ownership rather than value itself
• d.Demand, Ownership, Scarcity, and Time, which swaps in two terms that are not part of the concept

For something to have market value it must have Demand (buyers who want it), Utility (usefulness), Scarcity (limited supply), and Transferability (the ability to convey it). The DUST acronym captures these four essentials of value.

Real estate salespersons in New Hampshire are licensed and regulated under RSA 331-A by:

• a.The county registry of deeds
• b.The New Hampshire Association of Realtors
• c.The New Hampshire Real Estate Commission✓
• d.The New Hampshire Secretary of State

The New Hampshire Real Estate Commission administers RSA 331-A, licensing brokers and salespersons and disciplining violations. A trade association is a private membership organization and does not license practitioners.

Under New Hampshire license law, a real estate salesperson must:

• a.Hold a broker license to list property
• b.Practice independently once licensed
• c.Be associated with and supervised by a licensed broker✓
• d.Register directly with the town where they work

A New Hampshire salesperson holds an entry-level license and must be associated with and supervised by a licensed broker. The salesperson may not operate independently; the broker is responsible for supervising the salesperson's activities and the office's trust accounts.

A New Hampshire salesperson may lawfully accept a commission for brokerage services from:

• a.The buyer directly at closing
• b.The broker with whom the salesperson is associated✓
• c.Any cooperating broker in the transaction
• d.The seller directly upon listing

A New Hampshire salesperson may accept compensation for brokerage services only from the associated broker, not directly from a buyer, seller, or another broker. The broker is responsible for supervision and for paying affiliated salespersons.

In New Hampshire, a licensee who assists a party in a transaction without representing either the buyer or the seller as a client is acting as a:

• a.Designated agent
• b.Facilitator✓
• c.Dual agent
• d.Subagent

New Hampshire recognizes the facilitator (non-agency) role, in which the licensee helps a party in a transaction without representing either as a client and owes no fiduciary duties. A facilitator must still act honestly and disclose known material defects in the property.

In New Hampshire, disclosed dual agency, where one licensee represents both the buyer and the seller, is permitted only when:

• a.Both parties give informed written consent✓
• b.The property is newly constructed
• c.The managing broker approves verbally
• d.The transaction is all cash

Disclosed dual agency is allowed in New Hampshire only with the informed written consent of both the buyer and the seller. A dual agent may not reveal one party's confidential information to the other. New Hampshire also recognizes designated agency, where separate affiliated agents represent each side within the same firm.

Under RSA 477:4-a, the sale of certain New Hampshire residential property must include notices addressing the potential presence of:

• a.Homeowners association fees
• b.Property taxes and school districts
• c.Radon, arsenic in well water, and lead-based paint✓
• d.Flood zones and earthquakes only

New Hampshire's RSA 477:4-a requires the purchase and sale of certain residential property to include notices about the potential presence of radon, arsenic in well water, and, for older homes, lead-based paint. These notices alert buyers to health-related conditions they may wish to investigate.

Earnest money that a New Hampshire salesperson receives from a buyer must be:

• a.Sent to the Real Estate Commission for safekeeping
• b.Held by the salesperson in a personal account until closing
• c.Given directly to the seller when the offer is made
• d.Promptly delivered to the associated broker for deposit in the broker's trust account✓

Client funds such as earnest money must be handled through the broker's trust (escrow) account and kept separate from personal and business funds. A salesperson who receives the money must promptly deliver it to the associated broker. Commingling or converting trust money is a serious violation of RSA 331-A.

A New Hampshire salesperson license authorizes brokerage activity:

• a.Only while the salesperson is associated with a licensed broker✓
• b.Only after registering with the town clerk
• c.As soon as the exam is passed, with no further steps
• d.Only after four years of college

A New Hampshire salesperson may perform brokerage activity only while associated with a licensed broker. The license is inactive for practice until the salesperson is placed under a broker, and the salesperson must re-associate with another broker before continuing after leaving one.

New Hampshire rules require a licensee to give a consumer the written brokerage relationship disclosure:

• a.before the consumer's offer is accepted
• b.at the closing of the transaction itself
• c.within 5 days after showing a property
• d.at the time of the first business meeting✓

The New Hampshire Real Estate Commission's rule fixes the trigger at the first business meeting, and licensees must use the commission's adopted Brokerage Relationship Disclosure Form. A licensee showing another firm's listing also discloses the relationship to that agent before showing and in writing on the offer. Cite: N.H. Admin. R. Rea 701.01(a)-(c).

The New Hampshire brokerage relationship disclosure form need not be handed to visitors at an open house if:

• a.a sign or poster conspicuously states the relationship✓
• b.the licensee is acting only as a transaction facilitator
• c.the visitors already work with another brokerage firm
• d.the seller is personally present in the house that day

New Hampshire's rule waives the form for open house attendees where the broker or salesperson discloses the licensee's relationship with the seller by sign, poster, pamphlet, or other conspicuous means. Cite: N.H. Admin. R. Rea 701.01(d).

When a New Hampshire consumer will not sign the brokerage relationship disclosure form, the licensee must:

• a.decline to show that consumer any property
• b.have the principal broker sign the form instead
• c.note that on a copy and keep it for three years✓
• d.mail the unsigned form in to the commission

If a buyer or seller chooses not to enter a relationship and will not sign the disclosure form, the licensee notes that fact on a copy of the form and keeps the copy for three years. Cite: N.H. Admin. R. Rea 701.01(f).

Unless the parties agree otherwise, a New Hampshire facilitator:

• a.may not present offers between the two parties
• b.owes the same confidentiality that a buyer agent owes a client
• c.must keep the seller's price flexibility secret
• d.has no duty to keep either side's information secret✓

A New Hampshire facilitator assists without representing either side. Unless otherwise agreed the facilitator has no duty to keep information received from the seller or the buyer confidential, though the facilitator must still treat everyone honestly, present all offers in a timely way, and disclose known material conditions. Cite: RSA 331-A:25-f, III.

New Hampshire presumes conclusively that a client consented to designated agency when the client:

• a.was shown a property listed by that same firm
• b.attended the firm's buyer education seminar
• c.paid a retainer fee to the appointing agent
• d.signed a brokerage agreement that explains it✓

Appointment of a designated agent requires the party's written consent at the start of the agency relationship, and the statute creates a conclusive presumption of consent where the party signed a brokerage agreement containing an explanation of designated agency. Cite: RSA 331-A:25-e, II.

When a New Hampshire appointing agent has appointed designated agents for both sides of one transaction, that appointing agent:

• a.becomes a facilitator by operation of the law
• b.is a dual agent, neutral between the two✓
• c.represents whichever side signed the firm on first
• d.must withdraw from that transaction entirely

The appointing agent who has designated agents on both sides is a dual agent, exclusively representing neither party and neutral as to their conflicting interests, but still owing both sides the duties of confidentiality, disclosure of material information, and accounting for funds. Cite: RSA 331-A:25-e, VI.

Under New Hampshire's designated agency statute, information a designated agent knows:

• a.is imputed only to the firm's managing broker
• b.must be reported weekly to the principal broker
• c.is imputed to every other licensee in that firm
• d.is not imputed to the appointing agent or the firm✓

Once a designated agent is appointed, the duties owed to that party belong to the designated agent rather than to other licensees in the firm, and information known or acquired by the designated agent is not imputed to the appointing agent or to other firm licensees. Cite: RSA 331-A:25-e, III, V.

Substituting one New Hampshire designated agent for another requires:

• a.written notice to the state real estate commission
• b.the approval of the other side of the transaction
• c.the informed written consent of the represented party✓
• d.an entirely new brokerage agreement signed with the client

New Hampshire allows substitution of designated agents only with the informed written consent of the party being represented, and appointment of a designated agent never limits the appointing agent's or principal broker's responsibility for a breach of duty. Cite: RSA 331-A:25-e, IV, VIII.

When both sides of a New Hampshire transaction have consented to designated agency, written notice that this has happened must be given:

• a.before the purchase and sale agreement is executed✓
• b.at the closing table, before funds change hands
• c.within 10 days after the offer has been accepted
• d.only when one of the parties asks to see the notice

Where the seller or landlord and the buyer or tenant have each consented to designated agency, written notice that designated agency has occurred with both sides in the transaction must reach both parties before the purchase and sale or lease agreement is executed. Cite: RSA 331-A:25-e, VII(a).

Which of these is NOT one of the duties RSA 331-A:25-a imposes under a brokerage agreement?

• a.diligence in pursuing the client's objectives
• b.confidentiality about the client's information
• c.guaranteeing the property's future resale value✓
• d.accounting for the client's funds and property

RSA 331-A:25-a binds a licensee serving under a brokerage agreement to seven duties: loyalty, obedience, disclosure, confidentiality, reasonable care, diligence, and accounting. Guaranteeing future profits or income from a resale is separately listed as prohibited conduct. Cite: RSA 331-A:25-a, I; 331-A:26, XXX.

A New Hampshire licensee's duty to preserve a client's confidential information:

• a.continues after the relationship ends✓
• b.covers only the client's price information
• c.ends when the brokerage agreement itself ends
• d.runs for three years after the transaction closes

The confidentiality duty survives termination, expiration, completion, or performance of the fiduciary relationship. It yields only to the client's written consent, information made public by another source, defense against an accusation of wrongful conduct, or a requirement of law. Cite: RSA 331-A:25-b, I(c); 331-A:25-c, I(c).

A New Hampshire seller agent who prepares an offer for an unrepresented buyer:

• a.creates a buyer agency relationship by doing so
• b.breaches the listing agreement with the seller
• c.performs a ministerial act, forming no agency✓
• d.becomes a disclosed dual agent automatically

Showing property, preparing offers, and conveying them are ministerial acts. Performing them for the other side does not breach the brokerage agreement and does not create an agency relationship, provided agency disclosure has been given to that person in writing. Cite: RSA 331-A:25-b, II(b); 331-A:2, VI-a.

A New Hampshire licensee must disclose a known material on-site environmental condition:

• a.any time before the buyer's written offer✓
• b.after the inspection contingency period has ended
• c.within 24 hours of the scheduled closing date
• d.only if the buyer raises the subject first in writing

A licensee must disclose to a prospective buyer or tenant any material physical, regulatory, mechanical, or on-site environmental condition affecting the property of which the licensee has actual knowledge, at any time prior to the written offer. The statute creates no duty to investigate for defects. Cite: RSA 331-A:25-b, II(c).

A New Hampshire listing agreement clause giving the broker power to sign the sale contract for the owner is:

• a.valid for the first 90 days of a listing
• b.null and void and of no legal effect✓
• c.permitted for commercial property only
• d.enforceable once the clause is notarized

New Hampshire voids any listing provision purporting to give the broker or agent power to execute contracts for the sale of the property. The sale contract must be executed by the owner, or by an attorney-in-fact under a written power of attorney the owner properly executed. Cite: RSA 331-A:25-g.

A New Hampshire principal broker's escrow account must be:

• a.opened in the name of the depositing buyer alone
• b.a money market fund of the broker's own choosing
• c.at the office of the closing attorney for the deal
• d.in an insured financial institution within the state✓

The principal broker maintains an escrow account separate from the individual or office account, in an insured financial institution within New Hampshire, into which all deposits on fully executed contracts are promptly deposited, and signs a permit letting the commission audit it. Cite: RSA 331-A:13, I, V.

A New Hampshire principal broker has held a contract deposit more than 90 days past the closing date with no performance, agreement, or court order. The broker may:

• a.notify all parties by certified mail and wait 60 days✓
• b.keep the entire deposit as compensation the broker has earned
• c.turn the deposit over to the real estate commission
• d.return it to the buyer without notifying the seller

New Hampshire's release process starts after 90 days: certified mail to all parties saying the deposit will be distributed as specified unless they perform, sign a mutual release, or start litigation within 60 days of the mailing date. Releasing it then frees the broker from liability under the chapter only. Cite: RSA 331-A:13, VI.

A New Hampshire principal broker may put business or personal funds into the escrow account:

• a.to cover bank service charges or a minimum balance✓
• b.to lend a buyer the money for an earnest deposit
• c.whenever the broker keeps a separate ledger sheet
• d.to make up a shortage in a client's own deposit

The statute permits the broker's own funds in escrow for two narrow purposes: covering service charges the depository assesses to the account, and maintaining a minimum balance the depository's regulations require. Cite: RSA 331-A:13, VII.

New Hampshire escrow rules forbid a principal broker from:

• a.holding more than one separate escrow account at once
• b.forwarding a deposit to the closing agent early
• c.placing deposits in an interest-bearing escrow account
• d.drawing checks against uncollected contract deposits✓

No checks may be drawn against uncollected contract deposits. Interest-bearing escrow is allowed with the interest accruing to the depositing party unless otherwise agreed in writing, and deposits may be forwarded to the closing agent, title company, or attorney for purposes of performance. Cite: RSA 331-A:13, II, III, IV.

Before a New Hampshire principal or managing broker license is issued or renewed, the applicant must file a surety bond of not less than:

• a.$10,000
• b.$25,000✓
• c.$50,000
• d.$100,000

The bond runs to the state for the benefit of any aggrieved person and is conditioned on faithful accounting for funds entrusted to the broker. The commission may revoke a principal or managing broker's license if the bond stops being in full force. Cite: RSA 331-A:14.

Failing to reconcile trust account records monthly is, in New Hampshire:

• a.prohibited conduct carrying disciplinary action✓
• b.the depository bank's job, not the broker's
• c.a bookkeeping preference, not a legal duty
• d.excused whenever the account had no activity

RSA 331-A:26 lists failing to promptly place trust funds in a proper trust account, or failing to reconcile records monthly, among the acts for which a licensee may be disciplined after a hearing. Cite: RSA 331-A:26, VIII.

In New Hampshire, a licensee's failure to return money or documents within 30 days after a rightful demand is:

• a.excused when a commission is still owed
• b.a matter for the Attorney General
• c.prima facie proof of conversion✓
• d.a fee dispute for small claims court

Conversion of money, a deed, note, mortgage, abstract, or other evidence of title delivered in trust is prohibited conduct, and failure to return it within 30 days after the owner is entitled to and demands it is prima facie evidence of that conversion. Cite: RSA 331-A:26, VII.

A New Hampshire licensee may accept something other than cash or its equivalent as earnest money only if:

• a.the buyer signs a promissory note for the balance
• b.the owner is told in writing and acknowledges it✓
• c.the principal broker gives verbal approval of it
• d.the amount involved is less than $1,000 total

The fact must be communicated in writing to the owner before the owner accepts the offer, shown in the earnest money receipt, and acknowledged in writing by the owner. Otherwise accepting non-cash earnest money is prohibited conduct. Cite: RSA 331-A:26, XI.

A New Hampshire principal broker must preserve records relating to a real estate transaction for:

• a.one full year
• b.three years✓
• c.five years
• d.seven years

New Hampshire sets three years both for transaction records a principal broker keeps following consummation and for the escrow and trust account records showing dates deposited and withdrawn, to whom paid, and other required detail. Cite: RSA 331-A:26, XVIII, XIX.

A New Hampshire salesperson may accept a commission for licensed activity from:

• a.the principal broker the salesperson is licensed with✓
• b.the seller, paid directly at the closing table itself
• c.the cooperating brokerage firm on the other side of the deal
• d.the closing attorney's own client trust account

Accepting a commission or other valuable consideration from anyone except the licensed principal broker with whom the salesperson or broker is licensed is prohibited conduct. A former affiliate may still be paid by the previous responsible broker for deals worked while supervised there. Cite: RSA 331-A:26, XX, XXIV.

A New Hampshire licensee convicted of embezzlement must inform the commission in writing:

• a.at the next license renewal date
• b.within 30 days of the conviction✓
• c.within 10 business days of conviction
• d.only after the sentencing concludes

The licensee must notify the commission in writing within 30 days of conviction for forgery, embezzlement, obtaining money under false pretenses, bribery, larceny, extortion, conspiracy to defraud, or similar offenses, including pleas of guilty or nolo contendere and deferred or suspended sentences. Cite: RSA 331-A:26, XXXVII.

Submitting a New Hampshire property owner's name to an electronic database others can access requires:

• a.a written waiver issued by the commission
• b.nothing at all, since the listing is public
• c.the owner's express written permission✓
• d.the listing broker's approval and nothing more

Submitting a property owner's name to any electronic database or multiple listing service that may be accessed by anyone other than the owner's own broker, without the owner's express written permission, is prohibited conduct. Cite: RSA 331-A:26, XXXVIII.

A New Hampshire advertisement carrying a salesperson's cell phone number must also include:

• a.the individual salesperson's own license number
• b.the brokerage office's regular business hours
• c.the property's assessed value for the tax year
• d.the principal broker's or firm's name and phone✓

Any advertising with a home, cell, pager, fax, or direct office number, an email address, or another way to reach a licensee or team directly must also carry the individual principal broker's or firm's name and telephone number, with each number clearly identified. Cite: RSA 331-A:16, IV(b).

A New Hampshire principal broker may pay a licensee's commission to that licensee's limited liability company only if:

• a.the LLC registers separately with the commission
• b.every member of the LLC holds an active license✓
• c.the LLC is owned entirely by family members
• d.the payment does not exceed $10,000 per deal

All partners, members, officers, or shareholders of the unlicensed entity must hold valid active licenses, at least one must be the licensee who earned the money, the entity must avoid prohibited acts and be registered to do business in New Hampshire, and the broker must keep records for three years. Cite: RSA 331-A:16-b, I.

A New Hampshire salesperson suing for an unpaid commission may sue:

• a.the cooperating brokerage on the other side
• b.the seller who benefited from the agent's work
• c.the broker the salesperson worked under✓
• d.the buyer's mortgage lender at the closing

No salesperson may sue in the salesperson's own capacity for a fee or commission unless the action is against the broker with whom the person is or was licensed when the service was performed. No unlicensed person may sue for compensation at all. Cite: RSA 331-A:32.

New Hampshire's real estate transfer tax rate is:

• a.$.50 per $100 of price or consideration
• b.$.75 per $100 of price or consideration✓
• c.$1.50 per $100 of price or consideration
• d.$2.00 per $100 of price or consideration

The statutory rate is $.75 per $100, or fractional part, of the price or consideration, computed to the nearest whole dollar. Because the same rate falls on each side of the deal, the combined burden on a transfer is $1.50 per $100. Cite: RSA 78-B:1, I(b).

The New Hampshire real estate transfer tax is:

• a.divided between them by local town ordinance
• b.imposed at the same rate on buyer and seller✓
• c.paid by the buyer alone out of the loan funds
• d.paid by the seller alone at the closing table

Both sides buy and attach indicia of tax paid to the instrument, and the statute says the rate established in RSA 78-B:1 applies to the purchaser, grantee, assignee or transferee and to the seller, grantor, assignor or transferor alike. Cite: RSA 78-B:4, I-III.

Where the New Hampshire price or consideration is $4,000 or less, the transfer tax is:

• a.half of the usual rate
• b.a minimum tax of $50
• c.waived by the statute
• d.a minimum tax of $20✓

The statute sets a floor: where the price or consideration is $4,000 or less there is a minimum tax of $20. That floor applies to each party, since the rate provision reaches buyer and seller alike. Cite: RSA 78-B:1, I(b).

Before a New Hampshire contract for the purchase and sale of property with a building is executed, the seller must disclose:

• a.the private water supply and the sewage system✓
• b.the names of all of the prior owners of it
• c.the current balance of the seller's mortgage
• d.the property's most recent appraisal value

RSA 477:4-c requires disclosure of the private water supply type, location, malfunctions, installation date, most recent water test and any problem with it, and sewage system tank size, type, location, malfunctions, age, service date, and servicing contractor, with the buyer signing a copy. Cite: RSA 477:4-c.

For a New Hampshire one- to four-family dwelling, the seller's written disclosure covers water supply, sewage disposal, insulation, flood hazard zone, and:

• a.a residential heating oil underground storage tank✓
• b.the year the roof covering was last fully replaced
• c.any homeowners association dues and assessments
• d.the most recent annual property tax bill amount

RSA 477:4-d requires this disclosure prior to or during preparation of an offer on property used or proposed to be used as a one to four family dwelling, and the buyer acknowledges receipt by signing a copy. Cite: RSA 477:4-d, I.

If a New Hampshire seller does not know the required water supply or insulation information:

• a.the sale may not proceed until it is obtained
• b.the licensee must research and supply the data
• c.the buyer is treated as waiving the disclosure
• d.the unavailability must be conveyed in writing✓

Where information required about the private water supply system, private sewage disposal system, or insulation is not available, that fact must itself be conveyed in writing. Cite: RSA 477:4-d, II.

New Hampshire law about a property that was the site of a homicide or a suicide provides that the owner or agent:

• a.may never disclose the fact to any person
• b.need not disclose it unless the buyer asks✓
• c.must disclose the fact to the buyer's lender
• d.must disclose the fact in every listing run

RSA 477:4-e relieves the owner and the owner's agent of any duty to disclose that the property was the site of a homicide, other felony, or suicide unless the buyer requests the information and the owner or agent knows it. No cause of action arises from disclosing at the buyer's request. Cite: RSA 477:4-e, I.

Before or during preparation of an offer on a New Hampshire condominium unit, the seller must give the buyer written notice of:

• a.the developer's original sale price for the unit
• b.any litigation now pending against the association
• c.the right to obtain association documents✓
• d.the unit's share of the master insurance bill

The notice tells the buyer of the right to obtain RSA 356-B:58, I information from the unit owners' association, including the declaration, by-laws, formal rules, monthly and annual fee amounts, and special assessments made in the last three years. The buyer signs a copy. Cite: RSA 477:4-f.