CALIFORNIA REAL ESTATE – Chapter 11 (Practice of Real Estate) – Questions

#1. Under the California DRE Code of Conduct (B&P Code §10177), which of the following is a core ethical requirement for real estate professionals?

Maximizing commission income on every transaction

Providing accurate, truthful information and revealing all material facts

Recommending the most expensive property to each client

Withholding negative information about a property to facilitate sales

#2. Under the federal Fair Housing Act, which of the following is a protected class?

Source of income

Familial status

Marital status

Gender identity

#3. California’s Fair Employment and Housing Act (FEHA) adds which protected class NOT covered by the federal Fair Housing Act?

Race

National origin

Religion

Sexual orientation

#4. A real estate agent directs prospective minority buyers away from predominantly white neighborhoods and toward more diverse areas. This practice is called:

Steering

Redlining

Blockbusting

Discriminatory financing

#5. Which prohibited practice involves denying financial services to residents of specific geographic areas based on the demographics of those areas?

Steering

Blockbusting

Discriminatory advertising

Redlining

#6. Blockbusting occurs when a real estate agent:

Refuses to show properties to minority buyers

Charges higher commission rates to minority sellers

Advertises properties exclusively in minority publications

Encourages property owners to sell by implying that members of a protected class are moving into the neighborhood

#7. Under California B&P Code §10140, truth in advertising requires that all advertisements:

Include the property’s assessed value

Display the agent or broker’s license number to allow consumers to verify credentials

Be approved by the DRE before publication

Include a minimum of 5 photographs

#8. A real estate advertisement states ‘Invest now and earn guaranteed 20% returns!’ Without supporting data or disclaimers, this advertisement violates:

No regulations because investment returns are the buyer’s responsibility

Truth in advertising requirements by making unsubstantiated financial return claims

Only FINRA regulations

Only federal securities laws

#9. Under California’s AB5 (ABC test), a real estate agent is classified as an independent contractor ONLY if all three prongs are satisfied. Which is NOT a prong of the ABC test?

The worker controls how the work is performed

The work falls outside the usual course of the hiring entity’s business

The worker has at least 5 years of experience in real estate

The worker is engaged in an independently established trade or business

#10. Under California B&P Code §10148, the minimum retention period for real estate transaction documents is:

1 year

3 years

5 years

7 years

#11. A broker fails to conduct transaction audits for over a year while agents commingle trust funds. Under B&P Code §10168, the broker:

Has no liability because agents are independent contractors

Is only liable if they personally commingled funds

Can delegate supervisory responsibility to the office manager

Bears primary liability because supervision is a non-delegable legal duty

#12. Under California law, commingling of trust funds occurs when:

A broker deposits trust funds into the broker’s trust account

A broker maintains separate records for each client’s funds

A broker mixes client trust funds with personal or business operating funds

A broker issues receipts for all trust fund transactions

#13. Which of the following statements about fair housing violations is TRUE?

Fair housing violations can occur even without discriminatory intent if actions have a disparate impact on protected classes

Only intentional discrimination constitutes a fair housing violation

Fair housing violations only apply to rental properties

Fair housing violations can only be proven with written evidence

#14. Under California’s truth in advertising laws, which of the following is a COMPLIANT advertisement?

‘Best investment in town! Guaranteed returns within 6 months!’

‘Charming 3-bedroom home with updated kitchen and spacious backyard. Contact us for details. DRE# 01234567’

‘Perfect neighborhood for young professionals only’

‘Priced below market—won’t last! No license number needed.’

#15. A broker classifies a real estate agent as an independent contractor. The agent must follow the brokerage’s mandatory office hours, use the brokerage’s systems, and cannot set their own commission rate. Under AB5:

The agent is properly classified as an independent contractor

AB5 does not apply to real estate agents

The agent is likely an employee because the broker exercises substantial control over how work is performed, failing Prong A

The classification depends solely on the agent’s preference

#16. The California DFEH investigates complaints of housing discrimination. If discrimination is found, remedies may include:

Monetary compensation, mandatory policy changes, and required fair housing training for the violating party

Only a verbal warning

Only a fine of $100

Referral to the local police department

#17. Under the DRE Code of Conduct, an agent’s duty of due diligence includes:

Only presenting information the seller provides

Guaranteeing the property will appreciate in value

Verifying the accuracy of all information before presenting it to clients

Providing legal advice about contract terms

#18. A real estate agent uses different screening criteria for rental applicants based on their national origin. This practice violates:

Only California FEHA

Only local ordinances

Both the federal Fair Housing Act and California FEHA

No laws if the criteria are not written down

#19. Under California law, the DRE investigates complaints against licensees through which process?

Notification, evidence gathering, investigation, determination of violation, and disciplinary measures

Only random audits conducted annually

Only complaints from other licensees

Only complaints submitted by attorneys

#20. A broker’s supervision duties under B&P Code §10168 include all of the following EXCEPT:

Conducting regular audits and reviews of transactions

Providing continuing education and training

Distributing clear policy manuals and ethical guidelines

Personally attending every property showing conducted by agents

#21. Which of the following is TRUE about the DRE audit process?

Audits are conducted randomly without advance notice

Audits follow a formal process: initial notification, examination of records, detailed review, and final report

Only brokers with complaints are audited

Audits only review commission records

#22. Under California law, a real estate agent’s continuing education requirement is:

30 hours every 2 years

60 hours every 5 years

10 hours annually

45 hours every 4 years covering ethics, legal updates, and compliance

#23. A real estate advertisement uses virtual staging to show furniture in an empty property. Under truth in advertising:

Virtual staging never needs to be disclosed

Virtual staging is prohibited in California

Virtual staging is only permitted for commercial properties

The advertisement must clearly disclose that virtual staging was used

#24. Under California FEHA, which of the following is TRUE about reasonable accommodations for disabled tenants?

Landlords must make reasonable accommodations including allowing service animals and modifying living spaces

Landlords may charge additional fees for accommodations

Accommodations are only required for tenants with physical disabilities

Landlords may refuse accommodations if the property is older than 30 years

#25. An agent’s failure to disclose a known material defect violates which DRE Code of Conduct principle?

Consistency

Due diligence

Profitability

Full disclosure

#26. Under California law, which of the following is TRUE about trust fund reconciliation?

Trust accounts must be reconciled at least monthly by comparing the account ledger with bank statements

Trust accounts are reconciled annually

Reconciliation is optional if the balance is under $10,000

Only the bank performs reconciliation

#27. A real estate agent advertises a property using language that says ‘ideal for mature adults seeking a quiet lifestyle.’ Under fair housing law:

This is acceptable because it describes the neighborhood atmosphere

This language is only problematic if it uses the word ‘no children’

This language is protected as the agent’s personal opinion

This language may discourage families with children from applying and could constitute discriminatory advertising

#28. Under California’s AB5, the B prong of the ABC test requires that:

The worker has a college degree

The work performed falls outside the usual course of the hiring entity’s business

The worker pays their own health insurance

The worker has been in the industry for 5 years

#29. A broker discovers that an agent has been making misleading statements to clients about property appreciation. The broker’s obligation is:

Ignore it because agents are responsible for their own statements

Immediately terminate the agent without investigation

Report the agent to the local police

Investigate, address the violation, document corrective action, and ensure compliance

#30. Under the federal Fair Housing Act, discriminatory financing occurs when:

A lender requires a credit check for all applicants

A lender offers different terms, rates, or conditions based on the borrower’s protected class status

A lender denies a loan based on the borrower’s poor credit history

A lender requires a larger down payment for a higher-priced property

#31. A broker who fails to maintain organized records and is found noncompliant during a DRE audit may face:

Only a recommendation for improvement

No consequences for a first-time violation

Fines, license suspension, and mandatory corrective action

A warning letter with no further action

#32. Under California law, which of the following practices is prohibited under fair housing laws?

Requiring all applicants to complete a rental application

Refusing to rent to a family because the applicant receives Section 8 housing vouchers (source of income discrimination)

Verifying employment for all applicants

Checking references from previous landlords

#33. A real estate advertisement that states ‘Walking distance to the Catholic church!’ may violate fair housing laws because:

Mentioning landmarks is always prohibited

All religious references in advertisements are illegal

It only violates fair housing if the church is within 100 feet

It could be interpreted as indicating a preference for individuals of a specific religion

#34. Under California law, the DRE Code of Conduct principle of consistency requires:

All communications throughout a transaction must align with initial representations

Agents must use the same advertising format for all listings

All agents in a brokerage must charge the same commission

Agents must show the same properties to all clients

#35. A broker’s transaction review should include:

Only a review of the final closing statement

Examination of signed contracts, disclosures, correspondence, and documentation for completeness and accuracy

Only verification of the commission amount

Only a check of the listing agreement

#36. Under California law, which of the following is NOT a protected class under FEHA?

Race

Political affiliation

Gender identity

Marital status

#37. An agent publishes an advertisement that includes the broker’s name but omits the agent’s license number. Under B&P Code §10140:

The advertisement is compliant because the broker’s name is sufficient

License numbers are only required for online advertisements

Only the broker’s license number is needed, not the agent’s

The advertisement violates truth in advertising requirements because the license number must be included

#38. Under California law, the DRE may take disciplinary action against a licensee for all of the following EXCEPT:

Successfully negotiating a price reduction for a buyer client

Making material misrepresentations to clients

Commingling trust funds with personal accounts

Conducting business in a dishonest manner

#39. A real estate agent refuses to show properties in a certain neighborhood to clients because of the neighborhood’s ethnic composition. This practice is:

Legal if the agent is trying to protect the client

Steering, which violates both federal and California fair housing laws

Only illegal if the client complains

Legal if the agent has a valid reason

#40. Under the ABC test (AB5), the C prong requires that:

The worker receives health insurance from the hiring entity

The worker is engaged in an independently established trade, occupation, or business of the same nature as the work performed

The worker reports to a single supervisor

The worker has a fixed schedule

#41. A broker’s obligation for legislative monitoring means:

Staying informed about amendments to civil code, zoning laws, and regulations that affect practice, and ensuring agents are aware

Only reading industry newsletters

Attending one legislative hearing per year

Only monitoring laws related to commission rates

#42. Under California law, a real estate agent who inadvertently misrepresents a property’s square footage may be liable for:

Nothing, because inadvertent errors are always excused

Only a fine of $50

Negligent misrepresentation, even without intentional deceit

Criminal fraud charges automatically

#43. The DRE can impose which of the following disciplinary measures on a licensee who violates the code of conduct?

Only verbal warnings

Only monetary fines under $100

Fines, license suspension, license revocation, and required additional education

Only a letter of reprimand

#44. Under California law, which statement about trust fund handling is TRUE?

Trust funds may be temporarily placed in the broker’s personal account

Trust fund records only need to be kept for 1 year

Brokers must deposit trust funds into a trust account, maintain separate records, and never commingle with personal or business funds

Commingling is permitted if the broker promptly separates the funds

#45. A real estate agent shows a prospective tenant only properties in predominantly African American neighborhoods because the tenant is African American. This is an example of:

Steering based on race, violating fair housing laws

Providing excellent customer service

Matching the client to their comfort zone

Legal real estate practice

#46. Under California’s truth in advertising laws, an agent who guarantees specific investment returns without data-backed analysis may face:

DRE fines, legal action, reputational damage, and potential license suspension or revocation

Only a verbal warning from the broker

No consequences if the client does not complain

A maximum fine of $25

#47. A broker’s risk management responsibilities include:

Only purchasing errors and omissions insurance

Only reviewing closed transactions

Establishing protocols to address issues promptly and conducting pre-transaction risk assessments

Only handling client complaints after they are filed

#48. Under California law, which of the following is TRUE about implicit bias in real estate practice?

Agents should receive regular training on implicit bias to ensure fair housing compliance even when discrimination is unintentional

Implicit bias is not a concern in real estate

Only agents with documented bias complaints need training

Implicit bias training is only required for new agents

#49. A real estate advertisement states ‘No children allowed.’ Under fair housing law:

This is acceptable for adult-only communities

This is only illegal in buildings with more than 10 units

This statement violates fair housing laws because familial status is a protected class under both federal and California law

This is legal if the building has no playground

#50. Under California B&P Code §10177, which of the following may result in disciplinary action against a licensee?

Making substantial misrepresentations or acting dishonestly in a real estate transaction

Recommending a home inspection to a buyer

Providing comparable sales data to a client

Advertising a property on multiple platforms

#51. A real estate agent receives a referral fee from a home inspector for recommending the inspector to clients. Under California law:

Referral fees are always prohibited

The agent must disclose the referral fee arrangement to the client

Referral fees only need to be disclosed if over $500

The agent may keep the fee without disclosure

#52. Under the DRE’s audit procedures, which documents are typically examined?

Transaction records, trust fund accounts, and all pertinent documentation for accuracy and compliance

Only the broker’s personal tax returns

Only commission records for the past year

Only listing agreements

#53. A property management company uses an AI-powered screening tool that disproportionately rejects applicants of a certain national origin. Under fair housing law:

There is no violation because the AI tool is neutral

Disparate impact does not apply to AI tools

Only intentional discrimination violates fair housing

This constitutes potential disparate impact discrimination even if the tool was not designed to discriminate

#54. Under California law, a broker who delegates all supervisory duties to an office manager:

Is relieved of all supervisory liability

Is only liable for the manager’s personal actions

May delegate without any legal consequence

Still bears primary responsibility because supervision is a non-delegable legal duty

#55. An agent advertises a rental property as ‘great for couples’ without mentioning families. Under fair housing:

This could be considered discriminatory advertising that discourages families with children from applying

This is acceptable because it describes the target market

This is only illegal for sale listings, not rentals

This is legal in California but not under federal law

#56. Under California’s DRE Code of Conduct, the principle of honesty requires:

Sharing only positive information about a property

Telling clients what they want to hear

Providing accurate, truthful information about properties, transactions, and market conditions based on verifiable facts

Avoiding discussions about property defects

#57. A broker discovers during an internal audit that an agent has been using the trust account for personal expenses. The broker must:

Immediately address the violation, reimburse the trust account, report to the DRE if required, and take corrective action

Wait for the DRE to discover the issue

Deduct the amount from the agent’s future commissions

Ignore it if the amount is under $1,000

#58. Under California law, which of the following best describes the independent contractor model in real estate?

Agents receive a salary and health benefits from the brokerage

Agents work set hours determined by the broker

Agents set their own schedules, select clients, and determine work methods, paying their own self-employment taxes

Agents have no tax obligations

#59. The California DFEH (now CRD) investigates fair housing complaints. Complaints must be filed within:

30 days of the alleged act

One year of the alleged discriminatory act

5 years of the alleged act

There is no filing deadline

#60. Under California law, a broker’s policy manual should cover:

Only commission structures

Client interactions, transaction processes, ethical guidelines, and conflict resolution procedures

Only office hours and dress code

Only marketing strategies

#61. A real estate agent consistently shows white clients properties in affluent neighborhoods and minority clients properties in less expensive areas. This pattern demonstrates:

Good market knowledge and client matching

Standard real estate practice

Steering based on race, violating both federal Fair Housing Act and California FEHA

Legal behavior if clients don’t complain

#62. Under California’s truth in advertising regulations, a real estate agent who uses altered photos of a property (making rooms appear larger) may face:

No consequences because photo enhancement is common

Only a warning from the MLS

DRE disciplinary action for misleading advertising and potential civil liability

A fine only if the buyer complains

#63. A broker conducts quarterly transaction reviews. During a review, the broker discovers incomplete disclosure documents. The broker must:

Wait until the next quarterly review to address it

Only note the issue in the agent’s file

Ensure the documents are completed immediately and implement corrective training for the responsible agent

Delegate the correction to the office administrator

#64. Under California law, which statement about real estate employee vs. independent contractor taxation is TRUE?

Independent contractors must pay self-employment taxes including both employer and employee portions of Social Security and Medicare

Independent contractors have their taxes withheld by the broker

Employees pay higher taxes than independent contractors

There is no tax difference between the two classifications

#65. An agent advertises a property in a predominantly Spanish-speaking neighborhood using only English-language media. Under fair housing law:

This is standard practice and not discriminatory

Advertisements must always be in English only

Language-specific advertising is never relevant to fair housing

This could constitute discriminatory advertising if it has the effect of limiting housing information to certain groups based on national origin

#66. Under California law, trust funds received by a broker must be deposited into the trust account within:

24 hours of receipt

Five business days of receipt

10 calendar days of receipt

Three business days of receipt

#67. A broker’s conflict resolution duties include:

Automatically firing any agent involved in a dispute

Acting as mediator between agents, clients, and other parties to maintain harmonious working relationships

Referring all disputes to the DRE

Ignoring disputes between agents and clients

#68. Under California law, which of the following is TRUE about the consequences of employment misclassification under AB5?

There are no legal consequences for misclassification

Only the worker faces penalties

Misclassification is only a problem if the worker complains

The brokerage may face back taxes, penalties, and labor law violation claims

#69. A real estate agent places an advertisement that says ‘beautiful view, perfect for retirees.’ Under fair housing law:

This is acceptable because it describes the property’s features

This is only problematic in rent-controlled areas

Age is not a protected class in California

This language may violate fair housing laws by indicating a preference based on age, discouraging younger buyers or families

#70. Under the DRE Code of Conduct, avoiding misrepresentation means:

Not providing false or misleading information, whether intentional or inadvertent, including exaggerating features or underestimating costs

Only avoiding intentional lies

Only avoiding misrepresentations about price

Only providing written disclaimers

#71. Under California law, a broker who has not reviewed their agents’ advertisements may be liable for:

Non-compliant advertising because broker oversight of promotional materials is mandatory

Nothing, because agents are responsible for their own advertisements

Only if the advertisement is published in print media

A maximum fine of $50 per violation

#72. A real estate agent who learns that the DRE has changed a regulation affecting trust fund handling must:

Wait for the next continuing education cycle to learn about the change

Only comply when audited

Ignore the change if it does not affect current transactions

Inform their agents and ensure compliance with the new regulation as part of their legislative monitoring duty

#73. Under California law, which of the following fair housing practices is required of all real estate professionals?

Providing different levels of service based on the client’s neighborhood

Recommending neighborhoods based on the client’s ethnicity

Steering clients to areas where they would ‘feel comfortable’

Applying objective criteria consistently to all clients regardless of protected class status

#74. A DRE audit reveals that a broker has not conducted any agent training on fair housing for 3 years. The audit finding may result in:

Disciplinary action including fines and required corrective training, as ongoing training is a supervisory obligation

A recommendation for improvement with no penalties

No consequences because training is optional

Only a warning for a first-time finding

#75. Under California law, which statement about broker supervision is CORRECT?

Broker supervision is a mandatory legal duty that cannot be delegated, and failure to supervise results in DRE discipline

Supervision is optional for brokers with fewer than 5 agents

Brokers are only required to supervise new agents

Supervision duties end after the agent’s first year

#76. A real estate agent who provides a higher level of service to white clients compared to minority clients violates:

Fair housing laws because all clients must receive equal service regardless of race or other protected characteristics

No laws because service levels are at the agent’s discretion

Only ethical guidelines

Only the MLS code of conduct

#77. Under California’s DRE Code of Conduct, which of the following constitutes a potential violation?

An agent who recommends a licensed home inspector

An agent who provides comparable sales data to support a listing price

An agent who fails to verify the square footage of a property before listing it, resulting in an inaccurate listing

An agent who advertises on social media

#78. A broker who conducts regular internal audits of trust fund accounts is:

Wasting time because the DRE conducts all necessary audits

Following best practices for audit preparedness and compliance with DRE regulations

Only required to audit if a complaint is filed

Going beyond the legal requirements

#79. Under California law, which of the following constitutes discriminatory advertising?

An advertisement that includes the agent’s license number

An advertisement that accurately describes the property’s features

An advertisement that lists the asking price

An advertisement featuring only images of one racial group in a diverse community

#80. A real estate agent who operates as an independent contractor fails to file quarterly estimated taxes. Under AB5:

The brokerage is responsible for the agent’s taxes

The DRE pays the agent’s taxes

The agent is personally responsible for their own tax obligations as an independent contractor

No taxes are owed by independent contractors

#81. Under California law, a broker’s failure to maintain proper trust fund records may result in:

Only a recommendation to improve recordkeeping

No consequences if the trust account balance is correct

A 30-day grace period to correct the records

Fines, license suspension or revocation, and potential criminal charges for trust fund violations

#82. A real estate agent applies a minimum income requirement of $80,000 for all rental applicants. If this requirement disproportionately excludes applicants of a certain race, it may constitute:

Legal screening because income requirements are always permissible

Only a violation if the agent intended to discriminate

A best practice for property management

Disparate impact discrimination under fair housing law, even though the requirement appears neutral

#83. Under California law, the distinction between steering and redlining is:

They are the same practice with different names

Steering is legal; redlining is illegal

Steering directs individuals toward or away from areas based on protected class status; redlining denies services to geographic areas based on demographics

Redlining involves physical properties; steering involves loans

#84. A broker’s fair housing enforcement responsibilities include:

Ensuring all agents comply with fair housing through regular training on implicit bias and fair lending practices

Only responding to fair housing complaints after they are filed

Only training agents who have had fair housing violations

Delegating all fair housing training to an outside organization

#85. Under California B&P Code §10168, broker supervision must include:

Only annual reviews of closed transactions

Only supervision of agents with less than 2 years of experience

Regular audits and reviews of transactions, typically conducted quarterly

Only reviewing the broker’s personal transactions

#86. An agent’s advertisement for a rental property states ‘Must speak English.’ Under fair housing law:

This requirement may constitute national origin discrimination because it could exclude applicants based on national origin

This is a reasonable requirement for tenant communication

This is legal if the landlord is monolingual

Language requirements are always permissible

#87. Under California law, a broker who discovers an agent has been engaging in steering must:

Wait for a formal complaint before taking action

Only advise the agent to stop without documentation

Report only if the DRE requests information

Take immediate corrective action, retrain the agent on fair housing, and document the remedial steps taken

#88. A DRE audit reveals that trust fund deposits have been consistently made on the 5th business day after receipt instead of the 3rd. This constitutes:

A violation of trust fund handling requirements that may result in disciplinary action

Acceptable practice because 5 days is close to the requirement

No violation because the funds were eventually deposited

A minor issue that only warrants a verbal warning

#89. Under California FEHA, a landlord who refuses to rent to a person because they receive disability benefits as their source of income violates:

No law because landlords can choose their tenants

Only federal law

Only local ordinances

California FEHA because source of income is a protected class in California

#90. Under California law, a broker’s responsibility for trust fund management includes:

Only ensuring the total balance is correct at year-end

Only managing trust funds for transactions over $10,000

Delegating all trust fund management to the office bookkeeper

Ensuring funds are deposited timely, maintained separately, reconciled monthly, and properly documented for a minimum of 3 years

#91. An agent who knowingly provides false information about a property’s zoning to facilitate a sale has violated:

The DRE Code of Conduct prohibition against misrepresentation, and may face license revocation and civil liability

Only ethical guidelines with no legal consequence

Only the MLS rules

No DRE rules if the client does not discover the falsity

#92. Under California law, which of the following is TRUE about the employee model for real estate agents?

Employees receive a salary, health benefits, and the employer manages payroll taxes including withholding

Employees pay their own self-employment taxes

Employees set their own hours and work methods

Employees are not subject to broker supervision

#93. A real estate agent who charges a higher commission rate to clients of a specific ethnicity violates:

Fair housing laws and the DRE Code of Conduct prohibiting discriminatory practices

No laws because commissions are negotiable

Only the MLS guidelines

Only ethical guidelines

#94. Under California’s DRE Code of Conduct, the term ‘material fact’ refers to:

Only facts about the property’s physical condition

Only facts about the purchase price

Any fact that significantly influences a client’s decision-making, including property defects, legal complications, and zoning changes

Only facts that appear on the MLS listing

#95. A broker who fails to provide continuing education opportunities for agents on fair housing, legal updates, and compliance may face:

No consequences because CE is the agent’s personal responsibility

Only a recommendation for improvement

A fine only if an agent violates fair housing

DRE disciplinary action for failing to fulfill mandatory supervisory training obligations

#96. Under California law, a real estate agent who uses social media to advertise properties must:

Not include any personal opinions about the property

Obtain DRE pre-approval for each social media post

Only advertise on DRE-approved platforms

Include their license number and ensure all statements comply with truth in advertising requirements

#97. The DRE’s authority to investigate and discipline licensees extends to:

All licensed real estate professionals in California, including brokers, salespersons, and their associated activities

Only brokers with more than 10 agents

Only agents who have received formal complaints

Only agents in Southern California

#98. Under California law, a broker’s supervision must include ensuring that all advertising materials:

Are only in English

Feature the broker’s personal photograph

Include the property’s assessed value

Are reviewed for legal compliance with truth in advertising laws and fair housing regulations before publication

#99. A real estate agent who unknowingly shows unconscious bias by providing better service to clients of a certain race may be engaging in:

Legal behavior because the bias is unconscious

Only an ethical lapse with no legal consequence

Disparate treatment that violates fair housing laws, even without conscious discriminatory intent

Acceptable practice if the agent means well

#100. Under California’s DRE disciplinary procedures, an agent who is found to have violated the Code of Conduct may appeal through:

An informal phone call to the DRE commissioner

A letter to their local Association of Realtors

A formal process involving presenting evidence and arguments to an administrative law judge

There is no appeal process

#101. A brokerage requires all agents to use the company’s email system, attend weekly meetings, and follow specific scripts for client calls. Under AB5, this level of control suggests:

The agents may be employees rather than independent contractors because the brokerage exercises substantial control over how work is performed

The agents are properly classified as independent contractors

The classification depends solely on the tax forms filed

This level of control is standard for independent contractors

#102. Under California law, a broker who collects trust funds must ensure:

Each transaction’s trust funds are properly accounted for separately and that records are maintained for a minimum of 3 years

Funds are deposited into the broker’s personal checking account

Records are maintained for only 1 year

Trust funds are combined in a single pool without individual tracking

#103. A real estate advertisement for a rental unit states ‘Ideal for singles or couples.’ Under fair housing law:

This is acceptable language for target marketing

This language is only problematic in buildings with playgrounds

This language could discourage families with children from applying and may violate familial status protections

Family status is not protected under California law

#104. Under the DRE Code of Conduct, an agent who provides a comparative market analysis must:

Guarantee the property will sell at the CMA price

Ensure the analysis is based on accurate, verifiable data and does not misrepresent the property’s value

Only use properties that have closed in the last 30 days

Include only properties with higher values to attract listings

#105. A property owner refuses to rent to a prospective tenant because the tenant has a guide dog. Under California FEHA:

The property owner may refuse because pets are not allowed

The property owner only needs to accommodate if the building has an elevator

The tenant must provide 30 days’ notice before bringing the animal

The property owner is violating fair housing laws because disability-related assistance animals must be accommodated

#106. Under California law, the DRE’s authority to audit a licensee’s records:

Is limited to only trust fund accounts

Extends to all transaction documents, trust fund accounts, and related business records

Only covers records from the current year

Requires a court order before any audit can occur

#107. A broker implements a policy that all rental applicants must have a FICO score of at least 750. If this policy disproportionately excludes a protected class:

The policy may constitute disparate impact discrimination even though it appears neutral on its face

The policy is always legal because credit scoring is objective

Disparate impact does not apply to credit requirements

The policy only violates fair housing if the broker intended to discriminate

#108. Under California B&P Code §10177, a licensee may face disciplinary action for:

Recommending that a buyer hire a home inspector

Providing accurate comparable sales data to a seller

Attending continuing education courses

Demonstrating negligence or incompetence in performing real estate activities

#109. A real estate agent’s obligation to maintain accurate records includes:

Only the final closing statement

Only documents the DRE specifically requests

Only records for transactions over $500,000

All client communications, transaction documents, contracts, and trust fund receipts for a minimum of 3 years

#110. Under California’s FEHA, marital status is a protected class. This means:

A landlord cannot refuse to rent to a prospective tenant based on whether they are single, married, divorced, or in a domestic partnership

Only married couples are protected

Marital status only applies to mortgage applications

Landlords may prefer married tenants as long as they don’t state it publicly

#111. A broker’s fair housing training program should cover:

Only federal fair housing requirements

Only fair housing topics that have resulted in complaints

Federal and state protected classes, prohibited practices, implicit bias, and proper screening procedures

Fair housing theory without practical scenarios

#112. Under California law, which of the following constitutes conversion of trust funds?

Using client trust funds for the broker’s personal or business expenses

Depositing trust funds into the trust account within 3 business days

Providing receipts for all trust fund transactions

Maintaining separate ledgers for each client

#113. An agent creates an advertisement for a property that says ‘Great neighborhood—no loud parties!’ Under fair housing law:

This language is always acceptable because it describes the neighborhood

Noise preferences can never violate fair housing

This language only violates local noise ordinances

While this may seem neutral, it could potentially be interpreted as code for excluding certain groups, depending on context

#114. Under California law, the broker must retain which of the following documents for at least 3 years?

Only the broker’s personal tax returns

Only the commission disbursement records

All transaction documents including purchase agreements, listing agreements, and Transfer Disclosure Statements

Only the closing statements

#115. A real estate agent who reveals confidential client information to gain an advantage in a separate transaction has violated:

Only the Realtor Code of Ethics

The DRE Code of Conduct principles of honesty and confidentiality, potentially resulting in disciplinary action

No regulations because information is the agent’s to use

Only the brokerage’s internal policies

#116. Under California’s truth in advertising requirements, what must accompany all projections of financial returns in property advertisements?

No disclaimer is needed if the agent believes the projection is reasonable

A notarized statement from the agent

Clear disclaimers labeling the projections as speculative with appropriate qualifying statements

DRE pre-approval of the projected returns

#117. A broker suspects an agent is engaging in blockbusting by telling homeowners in a neighborhood that property values will decline because a certain ethnic group is moving in. The broker must:

Immediately stop the agent’s activity, document the violation, retrain the agent, and report if required

Wait for a formal complaint before investigating

Only discuss it with the agent casually

Ignore it because blockbusting is difficult to prove

#118. Under California law, a DRE audit finding of commingling of trust funds results in:

A warning for the first offense

No consequences if the funds are separated within 30 days

A recommendation for voluntary compliance

Immediate disciplinary action which may include fines, suspension, or revocation of the broker’s license

#119. A real estate brokerage uses targeted digital advertising that only shows property listings to users of a specific race. Under fair housing law:

This constitutes discriminatory advertising regardless of whether traditional media or digital platforms are used

Digital advertising is exempt from fair housing laws

Targeted digital advertising is always legal

Only print advertisements are subject to fair housing rules

#120. Under the DRE’s code of conduct, an agent’s responsibility for ongoing education serves to:

Allow agents to charge higher commission rates

Reduce the number of agents in the market

Only satisfy DRE paperwork requirements

Keep agents informed about industry developments, legal changes, and compliance requirements to prevent misconduct

#121. A broker who has been disciplined by the DRE for trust fund violations must:

Simply pay a fine and continue practicing

Take required corrective action, which may include completing additional education and implementing improved trust fund procedures

Only notify their clients

Transfer all listings to another broker

#122. Under California law, a real estate agent who fails to include their license number in an online listing advertisement:

Is not in violation because online ads are exempt

Only violates the rule if the listing is for a commercial property

Violates B&P Code §10140 and may face DRE disciplinary action

May continue the ad if they add the number within 30 days

#123. A real estate agent applies a ‘first come, first served’ policy for rental applicants but makes exceptions for applicants of a particular religion. This practice:

Is legal because the base policy is neutral

Only violates fair housing if the exceptions are documented

Violates fair housing laws because the exception is based on religion, a protected class

Is acceptable if the religious community represents a market niche

#124. Under California law, the consequences for a broker who fails to supervise agents include:

No consequences because agents are responsible for their own actions

Only a recommendation for improvement

Consequences only if the broker had actual knowledge of the violations

DRE disciplinary action against the broker’s license, civil liability for agents’ misconduct, and potential fines

#125. A real estate agent who intentionally misrepresents a property’s condition by hiding defects during showings violates:

Only the MLS guidelines

Only the Realtor Code of Ethics

No laws because buyers should conduct their own inspections

The DRE Code of Conduct prohibition against misrepresentation and fraud, potentially resulting in license revocation and criminal liability

#126. Under California’s DRE Code of Conduct, agents must maintain which standard when communicating with clients?

Honesty, accuracy, and consistency, ensuring all statements are truthful and verifiable

Enthusiasm and positivity at all times

Brevity and efficiency without regard to accuracy

Only written communications need to be accurate

#127. A broker discovers that an agent has been charging different commission rates to clients of different races. This practice:

Violates fair housing laws and the DRE Code of Conduct, and the broker must take immediate corrective action

Is legal because commissions are negotiable

Only violates ethical guidelines

Is only a problem if the affected clients complain

#128. Under California’s truth in advertising, a broker’s oversight responsibilities include:

Only reviewing advertisements submitted by new agents

Only checking that the listing price is correct

Only reviewing print advertisements, not digital

Reviewing all promotional materials for legal compliance before publication and maintaining understanding of fair housing advertising regulations

#129. A real estate agent who assists a client in structuring a transaction to circumvent fair housing laws:

Is personally liable for participating in a discriminatory scheme, even if directed by the client

Is protected because they were following client instructions

Has no liability because the client made the decision

Is only liable if the transaction is for a rental property

#130. Under California law, the DRE investigates and disciplines licensees who:

Engage in fraud, misrepresentation, negligence, or violations of the real estate law

Only commit criminal acts

Only receive formal complaints from clients

Only violate federal regulations

#131. A broker’s record retention requirements under B&P Code §10148 specifically include:

Only original signed contracts

Transaction files, trust fund records, correspondence, and all supporting documentation for a minimum of 3 years

Only records for transactions that resulted in complaints

Only financial records over $5,000

#132. Under California law, which of the following is a potential consequence of an agent making misleading advertising claims about a property?

Only a verbal reprimand from the broker

DRE fines, civil lawsuits from buyers, reputational damage, and potential license suspension or revocation

No consequences if the buyer closes on the property

A maximum penalty of $100

#133. A real estate agent who applies to become a broker must have:

10 years of real estate experience

A minimum of 2 years of full-time real estate salesperson experience within the past 5 years, or equivalent education

A law degree

No prior experience if they complete additional courses

#134. Under California’s fair housing laws, a landlord who allows only certain breeds of dogs based on assumptions about the tenants who typically own those breeds may be engaging in:

Legal pet breed restrictions

Only a violation if the breed restriction is in writing

Potential discrimination through a proxy policy that has a disparate impact on certain protected classes

Acceptable property management

#135. A DRE audit discovers that a broker has been accepting trust fund deposits but not issuing receipts to clients. This constitutes:

A violation of trust fund handling requirements, as proper documentation including receipts must be maintained

Acceptable practice if the funds are deposited correctly

A minor administrative issue with no consequences

Only a violation if the client requests a receipt

#136. Under California law, a real estate agent who provides different levels of assistance to buyers based on the buyer’s disability violates:

No laws because the agent can choose their level of service

Both the ADA and California FEHA because disability is a protected class

Only the ADA, not California law

Only ethical guidelines

#137. A broker’s internal audit program should include:

Only a count of open and closed transactions

Regular review of transaction files, trust fund reconciliation, advertising compliance, and agent licensing status

Only a check of the broker’s personal accounts

Only an annual review of commission splits

#138. Under California’s DRE Code of Conduct, an agent who exaggerates a property’s features in an advertisement without verifiable data has violated:

Only the MLS rules

The prohibition against misrepresentation and the requirement for substantiated claims

No regulation because advertising is subjective

Only ethical guidelines with no legal consequence

#139. A real estate agent who refuses to cooperate with a DRE investigation:

Has the right to refuse without consequences

Can delegate the investigation response to their agent

May face additional disciplinary action including license suspension or revocation for failure to cooperate

Must only cooperate if served with a court order

#140. Under California law, a broker who maintains a trust account at a bank that is not federally insured:

Is in compliance as long as the account balance is accurate

Only violates if the bank fails

Violates DRE trust fund requirements because trust accounts must be held at federally insured institutions

Has 90 days to transfer to an insured institution

#141. A real estate agent advertises an open house and posts a sign that says ‘English speakers only.’ Under fair housing:

This is a reasonable communication requirement

This restriction violates fair housing laws because it constitutes national origin discrimination

Language preferences are not covered by fair housing

This is only illegal for rental advertisements

#142. Under California law, the DRE’s primary mission is to:

Maximize revenue from real estate licensing fees

Promote the real estate industry

Set commission rates for all transactions

Protect the public in real estate transactions by licensing and regulating real estate professionals

#143. A real estate agent who uses a client’s trust funds to cover a personal financial emergency and then replaces the funds the next day has committed:

No violation because the funds were replaced quickly

Only an ethical lapse with no legal consequence

Conversion of trust funds, which is a serious violation regardless of the temporary nature of the misuse

A violation only if the amount exceeded $5,000

#144. Under California law, which of the following constitutes a violation of the prohibition against discriminatory advertising?

Including the property’s address in the advertisement

Listing the asking price in the advertisement

Using images in property advertisements that show only one racial group to the exclusion of others in a diverse community

Describing the property’s features accurately

#145. A broker’s duty to monitor legislative changes means:

Only attending the annual CAR legal update seminar

Staying current on changes to real estate law, civil code, and regulations and proactively ensuring agent awareness and compliance

Only reading changes published in the DRE newsletter

Monitoring changes but not communicating them to agents

#146. Under California’s AB5, if any single prong of the ABC test is not satisfied:

The worker is classified as an employee, and the hiring entity must provide employment benefits and withhold taxes

The worker is classified as an independent contractor

The classification is determined by the worker’s preference

A court hearing is required to determine classification

#147. A real estate agent who provides kickbacks to lenders for referring buyers violates:

RESPA (Real Estate Settlement Procedures Act) which prohibits kickbacks and unearned fees in settlement services

No federal or state laws

Only state lending regulations

Only the DRE Code of Conduct

#148. Under California law, a broker who allows agents to operate without proper supervision may face:

No liability because agents are independent contractors

Only a recommendation for improvement

Personal liability for agents’ misconduct, DRE disciplinary action, and potential civil lawsuits from affected clients

Liability only if the agents are employees

#149. A real estate advertisement that targets only LGBTQ+ communities for certain properties while excluding them from others may constitute:

Targeted marketing that is always legal

Steering based on sexual orientation, which violates California FEHA’s fair housing protections

A violation only under federal law, not California law

Legal niche marketing

#150. Under California law, a broker who discovers that an agent has failed to retain required disclosure documents for a transaction that closed 18 months ago must:

Destroy all remaining records for that transaction

Notify the DRE immediately

Require the agent to locate or reconstruct the documents and implement better recordkeeping procedures

Wait for the next audit to address the issue

#151. A real estate agent who advertises a property as ‘no HOA fees’ when the property actually has HOA fees of $200/month has:

Made an acceptable marketing simplification

Only violated MLS rules

Made a material misrepresentation in advertising that violates truth in advertising laws and may result in DRE action

Made a minor error with no legal consequence

#152. Under California FEHA, a landlord who refuses to rent to a tenant because the tenant is transgender violates:

California’s fair housing laws because gender identity is a protected class under FEHA

No California law because gender identity is not protected

Only federal law

Only local ordinances

#153. A broker’s quarterly transaction review should examine:

Only the commission amounts collected

Only the listing agreements

Completeness and accuracy of all contracts, disclosures, correspondence, and trust fund documentation

Only transactions that resulted in complaints

#154. Under the DRE Code of Conduct, an agent who provides different levels of service based on the property’s location in a predominantly minority neighborhood may be engaging in:

Efficient use of their time

Standard market-based service adjustments

Legal market segmentation

Discriminatory behavior that violates fair housing principles

#155. A real estate agent who receives a gift from a client after closing must:

Return all gifts immediately

Report the gift to the IRS but not the DRE

Accept without disclosure because the transaction is complete

Disclose the gift if it creates a potential conflict for future transactions with the same client

#156. Under California law, the DRE may revoke a license for:

A single minor paperwork error

Charging a commission below market rate

Taking continuing education at an unapproved provider

Demonstrating a pattern of dishonesty, fraud, or serious violations of real estate law

#157. A real estate agent who targets marketing for luxury properties exclusively to clients of a certain race or national origin violates:

Fair housing laws because marketing must be offered equally regardless of race or national origin

No laws because luxury marketing is a business strategy

Only ethical guidelines

Only the Realtor Code of Ethics

#158. Under California’s truth in advertising laws, disclaimers in property advertisements must:

Be written in legal terminology only lawyers can understand

Appear only in fine print at the bottom of the advertisement

Clarify potentially ambiguous statements and manage expectations, being clearly visible and understandable

Not be included because they reduce consumer interest

#159. A broker’s internal compliance program should include:

Only a mission statement posted in the office

Only annual meetings about compliance

Only responding to DRE inquiries

Written policies, regular training, internal audits, and a system for reporting and addressing violations

#160. Under California law, an agent who discovers that a colleague is engaging in redlining practices should:

Ignore it because it is the colleague’s responsibility

Report the conduct to the broker and potentially to the DRE, as redlining violates federal and state fair housing laws

Only discuss it with the colleague privately

Wait for a client to file a complaint

#161. A broker who has 15 agents must ensure each agent:

Has a personal website

Maintains current licensing, completes continuing education, and follows all DRE regulations and brokerage policies

Has at least 3 years of experience

Holds a broker’s license

#162. Under California’s DRE Code of Conduct, the duty of due diligence specifically requires agents to:

Guarantee the property will sell within 30 days

Provide legal opinions on contract terms

Verify accuracy of all information before presenting it to clients, such as confirming square footage before listing

Conduct structural engineering assessments

#163. A real estate agent who tells a prospective tenant ‘This building has mostly Asian tenants so you might feel out of place’ is engaging in:

Steering based on race and national origin, which violates both federal and California fair housing laws

Providing helpful neighborhood information

Acting in the tenant’s best interest

Only an ethical lapse with no legal consequence

#164. Under California law, trust fund reconciliation must compare:

The trust account ledger with bank statements to identify and resolve any discrepancies

Only the total deposits with total withdrawals

Only the year-end balance

The trust account with the broker’s personal account

#165. A DRE investigator requests access to a broker’s transaction files for the past 3 years. The broker must:

Refuse until a court order is obtained

Provide the requested records because licensees must comply with DRE audit and investigation requests

Only provide records for the current year

Provide only records the broker deems relevant

#166. Under California’s fair housing laws, a real estate agent who charges a higher security deposit to tenants with children:

Violates fair housing laws because familial status is a protected class and deposits must be applied equally

Is acting reasonably because children may cause more damage

Only violates federal law, not California law

Is following standard property management practices

#167. A broker’s agent commits a fair housing violation during a transaction. Under California law:

The broker has no liability because the agent acted independently

The broker may be vicariously liable for the agent’s actions, as supervision is a non-delegable duty

Only the agent faces consequences

The broker is only liable if personally present during the violation

#168. Under the DRE’s advertising regulations, a broker must ensure that:

Agents never advertise on social media

All agent advertisements include the broker’s identity or DRE number and comply with truth-in-advertising requirements

All advertisements are approved by the local Association of Realtors

Only print advertisements are reviewed for compliance

#169. A real estate agent who deliberately underestimates repair costs to encourage a client to proceed with a purchase has violated:

No regulation because repair estimates are opinions

Only ethical guidelines

The DRE Code of Conduct prohibition against misrepresentation and the duty to provide accurate information

Only the brokerage’s internal policies

#170. Under California’s fair housing enforcement, a person who files a complaint with the DFEH alleging housing discrimination:

Must first obtain an attorney

Is protected from retaliation by the landlord or agent under California law

Can only file for incidents within the past 30 days

Must provide physical evidence of discrimination

#171. A broker who implements a comprehensive trust fund management system with digital records, automatic reconciliation, and audit trails is:

Going beyond what is legally required with no benefit

Following best practices that exceed minimum requirements and help ensure compliance with DRE regulations

Wasting resources on unnecessary technology

Only required to do this for transactions over $100,000

#172. Under California law, the consequences of trust fund conversion (using client funds for personal purposes) include:

Only a verbal reprimand

Criminal charges, license revocation, civil liability, and requirement to make full restitution

A 30-day suspension maximum

A fine of $500

#173. A real estate agent who markets properties differently in predominantly white versus predominantly minority neighborhoods by emphasizing different features:

Is using smart, targeted marketing

Only violates ethical guidelines

May be engaging in discriminatory marketing practices that violate fair housing laws

Is following standard industry practice

#174. Under the DRE Code of Conduct, a licensee who exaggerates their experience or qualifications in advertising:

Is engaging in acceptable self-promotion

Violates the prohibition against misrepresentation and may face disciplinary action

Only violates if the client relies on the exaggeration

Is not subject to DRE oversight for personal marketing

#175. A broker’s annual plan for fair housing compliance should include:

Only posting fair housing posters in the office

Only attending one annual seminar

Regular staff training, review of marketing materials, audit of screening practices, and documentation of compliance efforts

Only responding to complaints after they are filed

#176. Under California law, an agent who assists a seller in concealing material property defects during a DRE investigation:

Is protecting their client’s interests

Has no obligation to cooperate with the DRE

Can only be disciplined for the original concealment, not the obstruction

May face additional disciplinary charges for obstruction and failure to cooperate with the investigation

#177. A real estate agent who restricts showing times for certain properties based on the religious observances of prospective buyers:

Is accommodating the buyer’s schedule

Violates fair housing laws because religion is a protected class and showing access must be equal

Only violates local ordinances

Is following standard scheduling practices

#178. Under California law, a broker’s duty to maintain accurate trust fund records includes:

Only keeping the monthly bank statements

Keeping columnar records showing all receipts, disbursements, and running balances for each trust fund transaction

Only tracking total deposits and withdrawals

Only maintaining records for amounts over $1,000

#179. A DRE audit reveals that a broker has accepted personal checks from clients for trust fund deposits. Under California law:

Personal checks are never acceptable for trust funds

Personal checks are acceptable for trust fund deposits; the key requirement is timely deposit into the trust account

Only cashier’s checks may be deposited into trust accounts

Personal checks may only be used for amounts under $500

#180. Under California’s fair housing laws, a real estate agent who tells a seller ‘You shouldn’t accept the offer from that family because they have young children who might damage the property’ has:

Provided sound financial advice

Only violated ethical guidelines

Made an acceptable risk assessment

Violated fair housing laws by advising the seller to discriminate based on familial status

#181. A broker who operates a real estate brokerage must ensure:

All trust fund activities comply with DRE regulations, all agents are properly supervised, and all advertising meets legal requirements

Only that commissions are properly split

Only that the office is properly licensed

Only that agents have valid licenses

#182. Under California law, a real estate agent who photoshops images to remove minority neighbors from property listing photos:

Is engaging in standard photo editing

Only violates if the edited photos are used in print

Violates fair housing laws by creating discriminatory advertising that misrepresents the neighborhood

Is not subject to any regulations for photo editing

#183. A broker’s continuing education on trust fund management should cover:

Only how to open a trust account

Only the annual reporting requirements

Only the penalties for violations

DRE deposit requirements, commingling prohibitions, reconciliation procedures, and recordkeeping standards

#184. Under California law, a DRE audit that finds no violations results in:

An automatic 5-year audit exemption

A mandatory follow-up audit within 6 months

A clean audit report with no further action required

A recommendation for reduced supervision

#185. A real estate agent who provides false or exaggerated testimonials in their marketing materials:

Is engaging in acceptable marketing

Only violates if the testimonials are completely fabricated

Violates truth in advertising requirements and may face DRE disciplinary action

Is not subject to advertising regulations for testimonials

#186. Under California law, which of the following best summarizes the broker’s supervisory obligations?

The broker only needs to collect commissions from agents

The broker’s only duty is to maintain the office

The broker can delegate all supervisory duties to a licensed agent

The broker must regularly review transactions, ensure compliance with all laws, provide training, and conduct audits of trust accounts

#187. A real estate agent who refuses to cooperate with another agent who represents a client of a different race:

Is exercising their right to choose business partners

Only violates the MLS cooperation rules

Is not subject to fair housing regulations in agent-to-agent interactions

May be violating fair housing laws by impeding the other client’s housing opportunities based on race

#188. Under California’s DRE regulations, a broker must maintain trust fund records that:

Only show monthly totals

Are detailed enough to trace every dollar received and disbursed, with supporting documentation for each transaction

Only include the year-end balance

Are summarized annually for the DRE

#189. A real estate agent who tells a prospective buyer ‘This neighborhood is changing—you might want to look elsewhere’ based on the racial composition of incoming residents is engaging in:

Providing helpful market analysis

Blockbusting, which is prohibited under both federal and California fair housing laws

Standard neighborhood advisory

Legal real estate practice if based on market data

#190. Under California law, which of the following is TRUE about trust fund interest earned on trust account deposits?

The broker keeps all interest as compensation

Interest is automatically paid to the DRE

Interest earned on trust funds generally belongs to the party whose funds are in the account, unless otherwise agreed

Trust accounts cannot earn interest

#191. A broker discovers that the brokerage’s website contains property advertisements without license numbers. The broker must:

Wait for the DRE to issue a notice

Immediately correct all advertisements to include required license information and review processes to prevent recurrence

Only correct new advertisements going forward

Ask agents to correct their own listings

#192. Under California’s fair housing laws, a property owner who posts a ‘No Section 8’ sign on a rental property:

Is acting within their rights as a property owner

Only violates local ordinances in certain cities

Is not subject to fair housing regulations for signage

Violates California FEHA because source of income, including housing vouchers, is a protected class

#193. A real estate agent who provides advice on tax implications of a property sale without being a licensed tax professional may:

Be providing standard real estate service

Only be liable if the advice is incorrect

Be providing advice outside their scope of practice, potentially violating DRE regulations and exposing themselves to liability

Be protected by their errors and omissions insurance

#194. Under California law, the DRE’s enforcement process for code of conduct violations ensures:

Violations result in immediate license revocation without hearing

Licensees receive notice, can present evidence, and have the right to due process before disciplinary action is imposed

Only complaints from other licensees are investigated

Violations are only addressed during scheduled audits

#195. A broker’s responsibility for fair housing extends to:

All activities conducted by the brokerage including advertising, client interactions, screening, and showing of properties

Only advertising materials

Only the broker’s personal transactions

Only transactions involving government-backed loans

#196. Under California’s AB5, a real estate brokerage that misclassifies employees as independent contractors may face:

Only a letter of notification

No consequences if the workers don’t complain

Back taxes, penalties, unemployment insurance contributions, and potential class action lawsuits from affected workers

A maximum fine of $500

#197. A real estate agent’s advertisement includes the phrase ‘conveniently located near synagogues and kosher markets.’ Under fair housing:

This is always acceptable because it describes neighborhood amenities

This language could be interpreted as indicating a preference based on religion, potentially violating fair housing advertising rules

Religious references are exempt from fair housing advertising rules

This language is only problematic if used in rental advertisements

#198. Under California law, a broker who is aware of an agent’s pattern of fair housing violations but takes no corrective action:

Has no liability if the pattern is not documented

Is only liable if a formal complaint is filed

Can avoid liability by verbally warning the agent

Is personally liable and subject to DRE disciplinary action for failure to supervise

#199. A DRE audit discovers inconsistencies between a broker’s trust fund ledger and bank statements totaling $5,000. The broker must:

Explain the discrepancy as a rounding error

Immediately investigate and resolve the discrepancy, as this may indicate commingling, conversion, or accounting errors

Wait for the DRE to resolve it

Transfer funds from the operating account to cover the difference without investigation

#200. Under California’s fair housing laws, an agent who uses an algorithm to set different pricing recommendations based on the neighborhood’s racial demographics:

Is using acceptable technology-based pricing

Only violates if the algorithm is publicly known

May be engaging in discriminatory pricing practices that violate fair housing laws

Is not subject to fair housing for pricing recommendations

Chapter 11 (Practice of Real Estate)

Results

#1. Under the California DRE Code of Conduct (B&P Code §10177), which of the following is a core ethical requirement for real estate professionals?

#2. Under the federal Fair Housing Act, which of the following is a protected class?

#3. California’s Fair Employment and Housing Act (FEHA) adds which protected class NOT covered by the federal Fair Housing Act?

#4. A real estate agent directs prospective minority buyers away from predominantly white neighborhoods and toward more diverse areas. This practice is called:

#5. Which prohibited practice involves denying financial services to residents of specific geographic areas based on the demographics of those areas?

#6. Blockbusting occurs when a real estate agent:

#7. Under California B&P Code §10140, truth in advertising requires that all advertisements:

#8. A real estate advertisement states ‘Invest now and earn guaranteed 20% returns!’ Without supporting data or disclaimers, this advertisement violates:

#9. Under California’s AB5 (ABC test), a real estate agent is classified as an independent contractor ONLY if all three prongs are satisfied. Which is NOT a prong of the ABC test?

#10. Under California B&P Code §10148, the minimum retention period for real estate transaction documents is:

#11. A broker fails to conduct transaction audits for over a year while agents commingle trust funds. Under B&P Code §10168, the broker:

#12. Under California law, commingling of trust funds occurs when:

#13. Which of the following statements about fair housing violations is TRUE?

#14. Under California’s truth in advertising laws, which of the following is a COMPLIANT advertisement?

#15. A broker classifies a real estate agent as an independent contractor. The agent must follow the brokerage’s mandatory office hours, use the brokerage’s systems, and cannot set their own commission rate. Under AB5:

#16. The California DFEH investigates complaints of housing discrimination. If discrimination is found, remedies may include:

#17. Under the DRE Code of Conduct, an agent’s duty of due diligence includes:

#18. A real estate agent uses different screening criteria for rental applicants based on their national origin. This practice violates:

#19. Under California law, the DRE investigates complaints against licensees through which process?

#20. A broker’s supervision duties under B&P Code §10168 include all of the following EXCEPT:

#21. Which of the following is TRUE about the DRE audit process?

#22. Under California law, a real estate agent’s continuing education requirement is:

#23. A real estate advertisement uses virtual staging to show furniture in an empty property. Under truth in advertising:

#24. Under California FEHA, which of the following is TRUE about reasonable accommodations for disabled tenants?

#25. An agent’s failure to disclose a known material defect violates which DRE Code of Conduct principle?

#26. Under California law, which of the following is TRUE about trust fund reconciliation?

#27. A real estate agent advertises a property using language that says ‘ideal for mature adults seeking a quiet lifestyle.’ Under fair housing law:

#28. Under California’s AB5, the B prong of the ABC test requires that:

#29. A broker discovers that an agent has been making misleading statements to clients about property appreciation. The broker’s obligation is:

#30. Under the federal Fair Housing Act, discriminatory financing occurs when:

#31. A broker who fails to maintain organized records and is found noncompliant during a DRE audit may face:

#32. Under California law, which of the following practices is prohibited under fair housing laws?

#33. A real estate advertisement that states ‘Walking distance to the Catholic church!’ may violate fair housing laws because:

#34. Under California law, the DRE Code of Conduct principle of consistency requires:

#35. A broker’s transaction review should include:

#36. Under California law, which of the following is NOT a protected class under FEHA?

#37. An agent publishes an advertisement that includes the broker’s name but omits the agent’s license number. Under B&P Code §10140:

#38. Under California law, the DRE may take disciplinary action against a licensee for all of the following EXCEPT:

#39. A real estate agent refuses to show properties in a certain neighborhood to clients because of the neighborhood’s ethnic composition. This practice is:

#40. Under the ABC test (AB5), the C prong requires that:

#41. A broker’s obligation for legislative monitoring means:

#42. Under California law, a real estate agent who inadvertently misrepresents a property’s square footage may be liable for:

#43. The DRE can impose which of the following disciplinary measures on a licensee who violates the code of conduct?

#44. Under California law, which statement about trust fund handling is TRUE?

#45. A real estate agent shows a prospective tenant only properties in predominantly African American neighborhoods because the tenant is African American. This is an example of:

#46. Under California’s truth in advertising laws, an agent who guarantees specific investment returns without data-backed analysis may face:

#47. A broker’s risk management responsibilities include:

#48. Under California law, which of the following is TRUE about implicit bias in real estate practice?

#49. A real estate advertisement states ‘No children allowed.’ Under fair housing law:

#50. Under California B&P Code §10177, which of the following may result in disciplinary action against a licensee?

#51. A real estate agent receives a referral fee from a home inspector for recommending the inspector to clients. Under California law:

#52. Under the DRE’s audit procedures, which documents are typically examined?

#53. A property management company uses an AI-powered screening tool that disproportionately rejects applicants of a certain national origin. Under fair housing law:

#54. Under California law, a broker who delegates all supervisory duties to an office manager:

#55. An agent advertises a rental property as ‘great for couples’ without mentioning families. Under fair housing:

#56. Under California’s DRE Code of Conduct, the principle of honesty requires:

#57. A broker discovers during an internal audit that an agent has been using the trust account for personal expenses. The broker must:

#58. Under California law, which of the following best describes the independent contractor model in real estate?

#59. The California DFEH (now CRD) investigates fair housing complaints. Complaints must be filed within:

#60. Under California law, a broker’s policy manual should cover:

#61. A real estate agent consistently shows white clients properties in affluent neighborhoods and minority clients properties in less expensive areas. This pattern demonstrates:

#62. Under California’s truth in advertising regulations, a real estate agent who uses altered photos of a property (making rooms appear larger) may face:

#63. A broker conducts quarterly transaction reviews. During a review, the broker discovers incomplete disclosure documents. The broker must:

#64. Under California law, which statement about real estate employee vs. independent contractor taxation is TRUE?

#65. An agent advertises a property in a predominantly Spanish-speaking neighborhood using only English-language media. Under fair housing law:

#66. Under California law, trust funds received by a broker must be deposited into the trust account within:

#67. A broker’s conflict resolution duties include:

#68. Under California law, which of the following is TRUE about the consequences of employment misclassification under AB5?

#69. A real estate agent places an advertisement that says ‘beautiful view, perfect for retirees.’ Under fair housing law:

#70. Under the DRE Code of Conduct, avoiding misrepresentation means:

#71. Under California law, a broker who has not reviewed their agents’ advertisements may be liable for:

#72. A real estate agent who learns that the DRE has changed a regulation affecting trust fund handling must:

#73. Under California law, which of the following fair housing practices is required of all real estate professionals?

#74. A DRE audit reveals that a broker has not conducted any agent training on fair housing for 3 years. The audit finding may result in:

#75. Under California law, which statement about broker supervision is CORRECT?

#76. A real estate agent who provides a higher level of service to white clients compared to minority clients violates:

#77. Under California’s DRE Code of Conduct, which of the following constitutes a potential violation?

#78. A broker who conducts regular internal audits of trust fund accounts is: