Virginia 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.

Two people own a property as joint tenants with right of survivorship. When one owner dies, that owner's share:

• a.Automatically passes to the surviving joint tenant✓
• b.Reverts to the state through escheat
• c.Passes to the deceased owner's heirs through probate
• d.Is divided among all creditors first

Joint tenancy includes the right of survivorship, so a deceased joint tenant's interest passes automatically to the surviving joint tenant(s) outside of probate. In a tenancy in common, by contrast, a share passes to the deceased owner's heirs.

A landowner wants to build a structure that does not comply with the current zoning setback requirements. To obtain permission for this specific deviation, the owner would typically apply for a:

• a.Variance✓
• b.Certificate of occupancy
• c.Conditional use permit
• d.Building permit

A variance permits a specific deviation from zoning requirements, usually because strict application would cause an unnecessary hardship. A conditional use permit allows a use otherwise not permitted in a zone; a building permit and certificate of occupancy address construction and readiness for use.

Which appraisal principle holds that the value of a property tends to be set by the cost of acquiring an equally desirable substitute?

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

The principle of substitution states that a buyer will pay no more for a property than the cost of an equally desirable substitute. It underlies the sales comparison approach. Anticipation relates to expected future benefits; conformity to compatibility with surroundings; contribution to the value added by a component.

An appraiser estimates value by subtracting accrued depreciation from the current cost to rebuild the improvements, then adding land value. This is the:

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

The cost approach estimates value as land value plus the current cost to build the improvements new, minus accrued depreciation. It is most useful for new or special-purpose properties where comparable sales are scarce.

In a deed of trust, which party holds legal title to the property as security until the loan is repaid?

• a.The county recorder
• b.The trustee✓
• c.The trustor (borrower)
• d.The beneficiary (lender)

In a deed of trust there are three parties: the trustor (borrower), the beneficiary (lender), and a neutral trustee who holds legal title as security and can conduct a nonjudicial foreclosure sale if the borrower defaults.

A federal law requiring lenders to disclose the annual percentage rate and total finance charges so consumers can compare credit costs is the:

• a.Real Estate Settlement Procedures Act (RESPA)
• b.Fair Credit Reporting Act (FCRA)
• c.Truth in Lending Act (TILA)✓
• d.Equal Credit Opportunity Act (ECOA)

The Truth in Lending Act (Regulation Z) requires lenders to disclose the annual percentage rate (APR), finance charges, and other credit terms so borrowers can compare loans. RESPA governs settlement costs; ECOA prohibits credit discrimination.

A seller receives an offer and responds by changing the closing date and price, then signing. This response is a:

• a.Binding acceptance of the original offer
• b.Counteroffer that terminates the original offer✓
• c.Void contract
• d.Unilateral contract

Changing terms and returning the document is a counteroffer, which rejects and terminates the original offer and creates a new offer that the original offeror may accept or reject. Acceptance must match the offer exactly to form a contract.

The legal requirement that contracts for the sale of real estate be in writing to be enforceable comes from the:

• a.Statute of frauds✓
• b.Rule against perpetuities
• c.Doctrine of laches
• d.Parol evidence rule

The statute of frauds requires certain contracts, including those for the sale of an interest in real estate, to be in writing and signed to be enforceable. The parol evidence rule limits use of outside evidence to change a written contract.

An agent learns that the seller-client is willing to accept far less than the listing price. Which fiduciary duty requires the agent to keep this from the buyer?

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

The duty of confidentiality requires the agent to protect the client's private information, such as the lowest price the seller will accept. Disclosing that to the buyer would harm the client's bargaining position and breach the agent's duty.

A licensee assists a buyer and a seller in a transaction but does not represent either as a fiduciary. This arrangement is best described as:

• a.A standard agency relationship with full fiduciary duty
• b.An independent or transaction relationship, not agency
• c.A dual agency requiring written consent from everyone✓
• d.A designated agency assigned by the supervising broker

When a licensee helps parties complete a transaction without representing either as an agent, the licensee acts as an independent or transaction-type intermediary, providing services without owing full fiduciary duties. Dual agency, by contrast, means representing both parties as clients.

Under federal law, for a home built in 1975 the seller must provide the buyer with:

• a.A flood insurance policy
• b.A radon mitigation certificate
• c.A termite bond
• d.A lead-based paint disclosure and EPA pamphlet✓

Federal law requires that sellers and landlords of target housing built before 1978 provide a lead-based paint disclosure, the EPA lead hazard pamphlet, and an opportunity for the buyer to conduct a lead inspection. A 1975 home is covered.

Recording a deed in the public land records primarily serves to:

• a.Give constructive notice and establish priority of title
• b.Transfer equitable title to the purchaser at settlement✓
• c.Satisfy the statute of frauds for an oral agreement
• d.Create a marketable title free of every encumbrance

Recording gives constructive notice to the world of the grantee's interest and establishes priority against later claims. Title actually transfers when the deed is delivered and accepted; recording protects that interest but is not what creates the transfer.

A licensee tells prospective buyers of a particular background that a certain neighborhood 'would be a better fit for them' and steers them away from others. This practice is called:

• a.Farming
• b.Steering✓
• c.Puffing
• d.Novation

Steering is directing prospective buyers toward or away from particular neighborhoods based on a protected characteristic. It violates fair housing law. Puffing is nonfactual sales talk; novation substitutes a new contract or party.

A broker must generally keep a client's earnest money deposit in a:

• a.Petty cash box at the office
• b.Separate escrow or trust account✓
• c.Joint account with the seller
• d.Personal money market fund

Client funds such as earnest money must be held in a separate escrow or trust account, kept apart from the broker's own operating and personal funds. Mixing them (commingling) is a serious license law violation.

A lease in which the tenant pays a base rent plus a share of the property taxes, insurance, and maintenance is known as a:

• a.Gross lease
• b.Net lease✓
• c.Percentage lease that ignores expenses
• d.Ground lease

In a net lease the tenant pays base rent plus some or all of the property's operating expenses such as taxes, insurance, and maintenance. In a gross lease the landlord pays those operating expenses out of the rent.

A parcel measures 200 feet by 218 feet. Approximately how many acres is this parcel (1 acre = 43,560 square feet)?

• a.0.75 acres
• b.2.0 acres
• c.0.5 acres
• d.1.0 acre✓

Area = 200 x 218 = 43,600 square feet. Dividing by 43,560 square feet per acre gives about 1.0 acre.

Real estate licensees in Virginia are regulated by the Virginia Real Estate Board, which operates under which state department?

• a.The Virginia Association of REALTORS membership board
• b.The Department of Professional and Occupational Regulation✓
• c.The Office of the Attorney General, consumer protection
• d.The Virginia Department of Housing and Community Development

The Virginia Real Estate Board is one of the regulatory boards within the Department of Professional and Occupational Regulation (DPOR). The Board licenses salespersons and brokers and enforces Virginia real estate law and regulations.

In Virginia, a real estate salesperson must conduct licensed activity:

• a.Under the supervision of a licensed supervising broker
• b.As a wholly independent contractor with no supervision✓
• c.Only after two years of documented sales experience
• d.Under the direct supervision of the Real Estate Board

A Virginia salesperson must be affiliated with and supervised by a principal or supervising broker. The broker is responsible for the salesperson's activity and for handling escrow funds and records; a salesperson may not operate independently.

Virginia law generally requires that a brokerage relationship between a licensee and a client be:

• a.Free of any disclosure
• b.Automatically dual agency
• c.Only oral to be valid
• d.Established in a written brokerage agreement✓

Virginia requires brokerage (agency) relationships to be set out in a written agreement specifying the services and duties. Licensees must also disclose their brokerage relationship to the other party in a transaction so everyone understands who represents whom.

Virginia's Residential Property Disclosure Act is best described as a system in which:

• a.The seller gives a disclosure statement; buyers beware
• b.The seller warrants the condition of the property fully
• c.The seller must repair all defects found by inspection✓
• d.The seller must supply a professional inspection report

Virginia follows a buyer-beware approach: under the Residential Property Disclosure Act the seller provides a disclosure statement notifying buyers that the property is sold as is with respect to certain matters and that buyers should exercise due diligence, including obtaining inspections.

When a Virginia broker holds earnest money in escrow, the broker must:

• a.Keep it in cash at the closing table
• b.Place it in a separate escrow account and account for it accurately✓
• c.Deposit it into the broker's personal account
• d.Give it to the seller immediately

Virginia licensees must place client escrow funds, such as earnest money, into a separate escrow account and maintain accurate records, disbursing the funds only as the contract and law allow. Commingling or converting these funds is prohibited.

In many Virginia residential closings, the settlement is conducted by:

• a.A settlement agent or attorney who handles the closing
• b.The listing broker, who must disburse all closing funds
• c.The lender's underwriter, who approves the final figures
• d.The commissioner of accounts for the circuit court there✓

Virginia closings are commonly handled by a licensed settlement agent or a real estate attorney who prepares documents, handles the escrow and title work, and disburses funds. This neutral party helps ensure the transaction is completed correctly.

How many hours of approved prelicensing education must a Virginia real estate salesperson applicant complete?

• a.90 hours
• b.60 hours✓
• c.No education is required
• d.24 hours

Virginia requires 60 hours of approved prelicensing education for salesperson applicants. Applicants must also be at least 18, pass the licensing exam, and meet character requirements.

A newly licensed Virginia salesperson is generally required to complete additional post-license education within the first year of licensure. This requirement helps ensure new licensees:

• a.Never have to renew
• b.Become brokers automatically
• c.Can skip all future continuing education
• d.Gain practical knowledge shortly after entering the profession✓

Virginia requires new salespersons to complete post-license education (30 hours) during their first year of licensure. This builds on prelicensing education with practical, current knowledge. It is separate from the ongoing continuing education required at each renewal.

Virginia's prelicense education requirement for an initial salesperson license is a principles of real estate course of at least how many hours?

• a.45 hours of classroom or distance instruction
• b.60 hours of classroom or distance instruction✓
• c.90 hours of classroom or distance instruction
• d.75 hours of classroom or distance instruction

The course must carry at least four semester hours of academic credit but not less than 60 hours of classroom, correspondence or other distance learning instruction. The board regulation repeats the same 60-class-hour floor and lists the subjects the course must cover. Cite: Code of Virginia 54.1-2105 B 1 b; 18 VAC 135-20-400.

Beyond a high school diploma, what education does Virginia require of an applicant for an initial broker license?

• a.Sixty class hours of real estate principles
• b.Eight semester hours of real estate courses
• c.Forty-five class hours of brokerage practice
• d.Twelve semester hours of real estate coursework✓

A broker applicant must have completed not less than 12 semester hours of classroom, correspondence or other distance learning instruction in real estate courses. The 60-hour principles course is the salesperson requirement, not the broker requirement. Cite: Code of Virginia 54.1-2105 B 2 b.

Which pair of qualifications must every applicant for an individual Virginia salesperson or broker license meet?

• a.At least 18 years old and a high school diploma✓
• b.At least 21 years old and a high school diploma
• c.At least 18 years old and an associate's degree
• d.At least 21 years old and one year of residency

The board's entry regulation requires that the applicant be at least 18 years of age and hold a high school diploma or its equivalent. Virginia sets no minimum age of 21 and no residency requirement for licensure. Cite: 18 VAC 135-20-30 (1) and (2).

How recently must an applicant for initial Virginia licensure have passed the licensing examination?

• a.Within six months before a complete application
• b.Within 24 months before a complete application
• c.Within 12 months before a complete application✓
• d.Within 36 months before a complete application

An applicant for initial licensure must, within 12 months prior to submitting a complete application, have passed the written examination given by the board or its testing service. The same 12-month window applies to applicants by reciprocity. Cite: 18 VAC 135-20-35 D and E 1.

What active salesperson experience must an applicant for a Virginia broker license show?

• a.24 of the 36 months immediately preceding application
• b.48 of the 60 months immediately preceding application
• c.12 of the 24 months immediately preceding application
• d.36 of the 48 months immediately preceding application✓

The applicant must have been actively engaged as a salesperson for 36 of the 48 months immediately preceding application, and that experience must be verified by the principal or supervising broker for whom the applicant worked at the time. Cite: 18 VAC 135-20-35 C.

A Virginia salesperson renewing a license for the first time must complete post-license education on what schedule?

• a.30 hours within one year of licensure✓
• b.45 hours within two years of licensure
• c.30 hours within two years of licensure
• d.16 hours within one year of licensure

The 30-hour post-license curriculum is due within one year from the last day of the month in which the license was issued, and it is owed whether the license is active or inactive. Missing the deadline places the license on inactive status until the curriculum is finished. Cite: 18 VAC 135-20-95 A; Code of Virginia 54.1-2105.01 A.

Within Virginia's 30-hour post-license curriculum, which two subjects carry six hours each?

• a.Agency law and risk management
• b.Ethics and escrow requirements
• c.Real estate law and contract writing✓
• d.Current industry issues and agency law

Real estate law and regulations takes six hours and contract writing takes six hours. Agency law, ethics, risk management and escrow requirements are three hours each; fair housing and current industry issues are two hours each. Cite: 18 VAC 135-20-95 B.

How much continuing education must an active Virginia salesperson complete during each two-year licensing term?

• a.8 hours, of which 6 are mandatory topics
• b.16 hours, of which 11 are mandatory subjects✓
• c.24 hours, of which 19 are mandatory topics
• d.30 hours, of which 15 are mandatory topics

An active salesperson owes 16 hours per licensing term, 11 of which are board-mandated subjects and the rest electives drawn from the regulation's list. The 24-hour, 19-mandatory figure is the broker requirement. Cite: 18 VAC 135-20-101 A 1 and A 2.

Of a Virginia salesperson's 11 mandatory continuing education hours, which subject requires three hours rather than two?

• a.Legal updates and emerging trends
• b.Real estate agency
• c.Real estate contracts
• d.Ethics and standards of conduct✓

The mandatory block is two hours fair housing, three hours ethics and standards of conduct, two hours agency, two hours contracts, and two hours legal updates and emerging trends. Only ethics carries three hours. Cite: 18 VAC 135-20-101 A 1.

An active Virginia broker's 24 continuing education hours include a block of how many hours on supervision and management?

• a.Eight hours, two of them on supervision rules✓
• b.Four hours, two of them on supervision rules
• c.Six hours, three of them on supervision rules
• d.Twelve hours, two of them on supervision rules

Brokers owe eight hours in supervision and management of agents and brokerage firms, two of which must overview the broker supervision requirements of the board's chapter and Chapter 21 of Title 54.1. Cite: 18 VAC 135-20-101 A 2 a.

What continuing education must an inactive Virginia broker or salesperson complete as a condition of renewal?

• a.The 11 mandatory hours, but no elective hours
• b.The full 16 hours, the same as active licensees
• c.None; inactive licensees are exempt✓
• d.Two hours of fair housing law and nothing more

Inactive brokers and salespersons are not required to complete the continuing education course to renew. Reinstating an inactive license also does not trigger continuing education, but activating a license does. Cite: 18 VAC 135-20-101 A 4; 18 VAC 135-20-140 A.

When does a Virginia salesperson, broker, or firm license expire?

• a.One year from the last day of its issue month
• b.Two years from the last day of the month it was issued✓
• c.Two years from the exact date the board issued it
• d.On June 30 of each even-numbered year for everyone

Licenses expire two years from the last day of the month in which they were issued, as shown on the license; a concurrent broker license instead tracks the original broker license. June 30 of each even-numbered year is the Recovery Fund's biennial period, not the license term. Cite: 18 VAC 135-20-90.

A Virginia licensee misses the license expiration date. When does a reinstatement fee become payable?

• a.If renewal is not complete within 30 days of expiry✓
• b.The moment the expiration date on the license passes
• c.If renewal is not complete within 60 days of expiry
• d.If renewal is not complete within 90 days of expiry

The regulation gives a 30-day window after the expiration date in which the ordinary renewal fee still works; after that the reinstatement fee is required. Cite: 18 VAC 135-20-140 B.

How long after expiration may a Virginia license still be reinstated?

• a.Up to two years, after which reapplication is required
• b.Up to six months, after which reapplication is required
• c.Indefinitely, provided all back fees are finally paid
• d.Up to one year, after which reapplication is required✓

A license may be reinstated for up to one year following the expiration date; the reinstated license keeps the same number and is dated two years from the previous expiration. After one year it cannot be reinstated at all and the person applies as a new applicant under current education and examination rules. Cite: 18 VAC 135-20-140 C.

Within what period must a Virginia salesperson report a change of name or home address to the board?

• a.10 calendar days of the change, in writing
• b.60 calendar days of the change, in writing
• c.30 calendar days of the change, in writing✓
• d.At the next renewal of the license, in writing

Salespersons and individual brokers must report name and address changes in writing within 30 calendar days. The 10-day deadline belongs to a different duty: notifying the board that a licensee's active status with the firm has ended. Cite: 18 VAC 135-20-170 A 1.

A salesperson leaves a Virginia firm. Who must notify the board, and how quickly?

• a.The salesperson, within 30 calendar days
• b.The principal broker, within 10 calendar days✓
• c.The principal broker, within 30 calendar days
• d.The salesperson, within 10 business days

The duty falls on the sole proprietor or principal broker, who must give the board the licensee's name, license number and termination date within 10 calendar days of the termination or of learning of the status change. Cite: 18 VAC 135-20-170 B 1.

How long does a Virginia licensee have to produce transaction records the board has requested?

• a.21 days, extendable for extenuating circumstances
• b.30 days, extendable for extenuating circumstances
• c.5 business days, with no extension ever available
• d.10 days, extendable for extenuating circumstances✓

Records, bank records and signature cards must be produced within 10 days of the request, though the board may extend that on a showing of extenuating circumstances. A licensee has 21 days to answer any other board inquiry. Cite: 18 VAC 135-20-240 A and B.

A Virginia licensee is convicted of a felony. What does board regulation require of the licensee?

• a.Written notice to the board within 30 days✓
• b.Written notice to the board within 90 days
• c.Written notice to the board within 10 days
• d.Disclosure at the licensee's next renewal

Failing to inform the board in writing within 30 days of a felony conviction, or of a qualifying misdemeanor conviction, is itself a prohibited act. The same 30-day written notice applies to disciplinary action taken against any professional or occupational license. Cite: 18 VAC 135-20-260 (4), (5), (6) and (7).

What is the most a single claimant may recover from the Virginia Real Estate Transaction Recovery Fund on one transaction?

• a.$50,000, whatever the unpaid judgment may be
• b.$10,000, whatever the unpaid judgment may be
• c.$20,000, whatever the unpaid judgment may be✓
• d.$100,000, whatever the unpaid judgment may be

One claimant is capped at $20,000 for a single transaction regardless of the number of claimants or the size of the unpaid judgment. The $50,000 figure is the aggregate for all claimants arising out of that one transaction. Cite: Code of Virginia 54.1-2116 A and B.

Claims against the Recovery Fund from one Virginia regulant's conduct across several transactions are capped at what amount per biennial license period?

• a.$50,000, prorated among claimants if exceeded
• b.$100,000, prorated among claimants if exceeded✓
• c.$250,000, prorated among claimants if exceeded
• d.$20,000, prorated among claimants if exceeded

The multi-transaction aggregate for one regulant is $100,000 per biennial license period, the periods expiring June 30 of each even-numbered year. If claims exceed it, the board prorates the $100,000 in proportion to the unpaid judgments. Cite: Code of Virginia 54.1-2116 C.

When must a verified Recovery Fund claim be filed with the Director after a final judgment against a Virginia regulant?

• a.No later than 12 months after entry of judgment✓
• b.No later than six months after entry of judgment
• c.No later than 24 months after entry of judgment
• d.At any time before the judgment debtor dissolves

The verified claim must reach the Director no later than 12 months after entry of the final judgment from which no further right of appeal exists. Where the debtor went bankrupt, the claim is due within 12 months of the discharge or dismissal. Cite: Code of Virginia 54.1-2114 B 3 and B 5.