CALIFORNIA REAL ESTATE – SEVENTH SIMULATION

#1. Zoning changes (rezoning) differ from variances because rezoning:

Only allows dimensional deviations

Is a judicial process

Requires proof of hardship

Changes the actual zoning classification of the property through legislative action

#2. Under California law, which of the following would NOT be considered a breach of an agent’s fiduciary duties?

An agent buying the listed property without the seller’s knowledge

An agent recommending that a client hire a licensed attorney to review complex contract terms

An agent sharing the client’s financial information with other agents in the office

An agent failing to present a full-price offer to the seller

#3. 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

#4. Convert the fraction 5/8 to a decimal.

0.580

0.750

0.525

0.625

#5. Which of the following statements about an option contract is TRUE?

The optionor can sell the property to someone else during the option period

The optionee has the right, but not the obligation, to purchase the property within the option period

Option contracts do not require consideration

The optionee must purchase the property when the option expires

#6. Under California law, which of the following is TRUE about a subordination agreement?

It automatically eliminates the earlier lien

It changes the priority of liens, allowing a later-recorded lien to take priority over an earlier one with the consent of the earlier lienholder

It is only used in commercial transactions

It requires court approval

#7. A buyer submits an offer with a contingency that the property must appraise for at least the purchase price. The appraisal comes in at $10,000 below. If the buyer cancels:

The buyer is entitled to a return of the earnest money if cancellation is within the contingency period

The buyer forfeits the earnest money

The seller must lower the price to the appraised value

The lender must approve the sale at the higher price

#8. A property manager’s management agreement should include all of the following EXCEPT:

A guarantee of a specific occupancy rate

The scope of the manager’s authority

The fee structure and compensation

The term of the management agreement

#9. TRID rules apply to:

Most residential mortgage transactions

Only loans over $1 million

Only commercial transactions

Only government-backed loans

#10. A property manager who manages 50 residential units collects approximately $75,000 in monthly rent. Trust fund management requirements include:

Depositing funds into the manager’s personal account until month-end

Maintaining records only for amounts over $1,000

Maintaining detailed records of all funds received and disbursed, depositing funds into the trust account within 3 business days, and reconciling monthly

Reconciling the trust account annually

#11. The CFPB was created to oversee:

Consumer financial protection across multiple financial sectors including mortgages

Only state-regulated lenders

Only bank operations

Only credit card companies

#12. Under California law, a landlord must provide which of the following before entering a tenant’s dwelling for non-emergency purposes?

48 hours’ advance verbal notice

No notice is required

24 hours’ advance written notice

72 hours’ advance written notice

#13. 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

#14. 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

#15. Under California contract law, a contract is said to be ‘executory’ when:

Both parties have completed all their obligations

The contract has been terminated by mutual agreement

The contract has been voided by a court

One or both parties have not yet fully performed their obligations under the agreement

#16. A listing agent discovers that the property’s sewer line is connected to the public sewer system but the TDS indicates a septic system. The agent must:

Leave the TDS as-is because the seller completed it

Only correct it if the buyer’s agent asks about the sewer connection

Wait for the home inspection to reveal the true connection

Correct the inaccuracy and ensure the proper disclosure is made to potential buyers

#17. A buyer discovers after closing that the seller knew about recurring flooding in the basement but marked ‘No’ on the TDS. The buyer’s legal remedy includes:

Filing a complaint with the MLS

Requesting a refund of the home inspection fee

Suing the seller for fraud and rescission based on intentional concealment of a known material defect

Contacting the county building department for a fine

#18. The physical characteristic of immobility justifies:

Water rights allocation

Local land use control through zoning

Federal Aviation Administration regulations

The doctrine of specific performance

#19. A California real estate broker must have how many years of experience or equivalent education?

5 years of experience

3 years of experience

2 years of full-time salesperson experience or equivalent education/experience

1 year of experience

#20. 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

#21. Under California law, mineral rights that have been extracted from the ground are classified as:

Community property

Public property

Real property

Personal property

#22. 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

#23. A title search reveals a gap in the chain of title. This indicates:

The property has been properly maintained

No issues exist with the title

A potential problem that may require legal action to resolve before the property can be conveyed with clear title

The property taxes have been paid

#24. The purpose of a reconveyance deed in California is to:

Transfer property from seller to buyer in a standard sale

Foreclose on a defaulting borrower

Create a new lien against the property

Transfer the property from the trustee back to the borrower when the loan secured by the trust deed is paid in full

#25. Under California law, an option to purchase real property must be:

Only verbal to be binding

Supported by consideration and in writing to be enforceable

Recorded with the county to be valid

Approved by the DRE

#26. A title insurance claim is filed when a buyer discovers an undisclosed lien from a previous owner. The title insurance company will:

Automatically deny the claim

Require the buyer to cure the defect personally

Increase the buyer’s premium

Investigate the claim and either cure the defect, negotiate a settlement, or compensate the insured up to the policy limits

#27. A property manager is evaluating a commercial property’s performance. Which metric best measures the property’s income-producing ability relative to its value?

Gross rent multiplier

Price per square foot

Capitalization rate (cap rate)

Loan-to-value ratio

#28. RESPA requires disclosure of affiliated business arrangements to:

Hide potential conflicts of interest

Benefit lender-affiliated companies

Increase costs for consumers

Enhance transparency and prevent conflicts of interest

#29. Under California law, when must the seller of a residential property provide the Mello-Roos disclosure?

Only at the close of escrow

Only if the buyer asks about special assessments

As soon as practicable before transfer of title, and the buyer must be informed of ongoing Mello-Roos special tax obligations

Within 30 days after closing

#30. Developers assess all of the following when deciding to build EXCEPT:

Market conditions

Potential returns on investment

Construction costs

Buyers’ personal credit scores

#31. Which limitation on police power requires that regulations not amount to an unconstitutional taking?

Rational Basis

Discriminatory Purpose

Procedural Due Process

No Takings

#32. Under California law, which type of listing agreement is considered a violation of antitrust law if used by multiple brokers to fix commission rates?

No specific listing type violates antitrust law; price-fixing agreements do

Exclusive right to sell listing

Open listing

Net listing

#33. 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

#34. A window air conditioning unit that is mounted but can be removed without damaging the property is MOST likely classified as:

Real property because it serves the building

A trade fixture regardless of the owner’s status

A fixture because it is attached to the property

Personal property because removal does not damage the property

#35. An express easement must be created through:

Verbal agreement between neighbors

Five years of continuous adverse use

Approval by the local planning department

A recorded deed meeting written requirements

#36. 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

#37. An agent representing a buyer writes an offer that includes a term the buyer did not authorize. This is a breach of which duty?

Loyalty

Obedience

Confidentiality

Accounting

#38. After a trustee’s sale in non-judicial foreclosure, a trustee’s deed is issued to:

The original borrower

The government

The winning bidder at auction

The real estate agent

#39. Under California’s agency disclosure requirements, a selling agent (buyer’s agent) must provide the disclosure form to the buyer no later than:

After the offer is accepted

At the close of escrow

Before the buyer makes an offer on the property

Within 5 days of first showing a property

#40. 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

#41. A tenant’s commercial lease is silent regarding which installations qualify as removable trade fixtures. At lease termination, a dispute arises. What is the BEST preventive measure?

Commercial leases should explicitly specify which installations qualify as removable trade fixtures

The tenant should have obtained a court order before installation

The tenant should have installed only portable equipment

The landlord should have required a performance bond

#42. A tenant who has been in a residential unit for 14 months gives 30 days’ notice to terminate a month-to-month tenancy. Under California law:

The tenant must give 60 days’ notice after 12 months of occupancy

The tenant must give 90 days’ notice

The tenant’s 30-day notice is sufficient regardless of how long they have occupied the unit

The tenant cannot terminate without the landlord’s consent

#43. 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

#44. A home built in 1965 is being sold. The seller claims there is no lead paint because the home was repainted 10 years ago. Which statement is CORRECT?

The seller is correct and no disclosure is needed

Repainting does not eliminate the lead paint disclosure requirement; the disclosure is still required because the home was built before 1978

The disclosure is waived if the home has been repainted within 20 years

Only a verbal disclosure about the repaint is needed

#45. A property’s assessed value is $425,000. Under Proposition 13, the maximum annual increase in assessed value is?

3%

1%

2.5%

2%

#46. 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

#47. Under California Revenue and Taxation Code §11900, transfer taxes are typically paid by:

Always the buyer

The seller, though parties can negotiate in the contract

The county recorder

The title company

#48. A listing agent discovers after executing the listing that they have a distant family relationship with a potential buyer. The agent must:

Withdraw from the transaction without explanation

Disclose the relationship to the seller as it could affect the agent’s objectivity

Only disclose if the family member submits an offer

Disclose only to the broker

#49. Which statement about the fiduciary duty of confidentiality is CORRECT?

Confidentiality only applies during the listing period

An agent may share confidential information with other agents in the office

Confidentiality does not apply if the information is about property defects

The duty survives even after the agency relationship terminates

#50. Under California law, which of the following types of agents has the broadest scope of authority?

A special agent

A gratuitous agent

A general agent

A designated agent

#51. If a comparable sold for $450,000 and lacks a pool worth $25,000 that the subject has, the adjusted value is:

$450,000

$425,000

$500,000

$475,000

#52. If NOI is unknown but value is $2,500,000 and cap rate is 4%, NOI equals:

$100,000

$625,000

$62,500

$250,000

#53. Under California’s AB 1482 (Tenant Protection Act), which disclosure is required when selling a rental property?

Only the current rental income amount

The existence of any rent-controlled units and applicable tenant protections, including just cause eviction requirements

The tenant’s credit score

Whether the tenant has pets

#54. The primary purpose of an appraisal in a lending transaction is to:

Establish insurance premiums

Set the listing price

Calculate property taxes

Determine if the property provides adequate collateral for the loan

#55. A dual agent receives a home inspection report revealing significant structural defects. The dual agent must:

Disclose only to the buyer because it affects their purchase decision

Keep the report confidential until the buyer requests it

Disclose to the seller only if the defects existed before the listing

Disclose the structural defects to both the buyer and the seller

#56. A listing agent fails to disclose a known foundation crack to a prospective buyer. Which fiduciary duty has been violated?

Loyalty

Accounting

Disclosure

Obedience

#57. Which of the following actions by a listing agent could constitute an unauthorized dual agency?

The listing agent cooperates with a buyer’s agent from another brokerage

The listing agent provides the buyer with a copy of the listing agreement

The listing agent begins negotiating on behalf of an unrepresented buyer without disclosing dual agency

The listing agent recommends a home inspector to the buyer

#58. A property is sold subject to a deed of trust. The seller’s closing statement shows a payoff of the existing loan. The payoff amount includes:

The remaining principal balance, accrued interest, and any prepayment penalties or fees

Only the original loan amount

Only the remaining principal balance

The original loan amount plus all interest paid to date

#59. When a credit report shows payment delinquencies, underwriters will:

Automatically deny the application

Only consider the most recent delinquency

Evaluate the severity, frequency, and recency to assess risk

Ignore them

#60. Under California law, which of the following is required for a valid exclusive listing agreement?

A minimum listing price that cannot be changed

Approval from the local MLS

A written commitment from at least one buyer

A definite termination date

#61. In California, which factor can create substantial differences in value for properties just blocks apart?

School district boundaries, flood zones, and fire hazard zones

Only the color of the house

Only square footage differences

Only the height of the building

#62. To estimate value using GRM, multiply:

Subject’s gross monthly rent by the market-derived GRM

NOI by cap rate

Operating expenses by vacancy rate

Assessed value by tax rate

#63. TILA requires the APR to be disclosed because it:

Allows borrowers to compare the true total cost of different loan offers

Is set by the federal government

Only applies to government loans

Is always identical to the note rate

#64. A property manager collects $2,000 first month’s rent and $2,000 security deposit from a new tenant. The security deposit must be:

Combined with the first month’s rent in the operating account

Held in the property manager’s personal savings account

Forwarded directly to the property owner within 24 hours

Deposited into the broker’s trust account and accounted for separately from the operating account

#65. Under California Civil Code §2079.13-2079.24, which of the following is a required element of the agency disclosure?

The listing price of the property

A statement describing the duties agents owe to buyers, sellers, and both parties in a dual agency

The buyer’s maximum budget

The agent’s commission rate

#66. 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

#67. A property has a vacancy rate of 8% and potential gross income of $100,000. What is the effective gross income?

$100,000

$108,000

$92,000

$80,000

#68. Under California law, what happens to a joint tenancy when one joint tenant sells their interest to a third party?

The joint tenancy continues with the new owner

The entire property must be sold

The joint tenancy is severed as to the selling tenant’s share, creating a tenancy in common between the new owner and the remaining joint tenant(s)

The remaining joint tenants must approve the sale

#69. When comparing FHA and conventional loans, a borrower with strong credit and 20% down should prefer conventional because:

Conventional loans avoid MIP/PMI entirely with 20% down

FHA has no income limits

FHA offers better rates

Conventional loans require less documentation

#70. The Housing Accountability Act (Government Code §65589.5) restricts local governments from:

Unreasonably denying housing projects that comply with existing zoning

Collecting property taxes

Approving any new development

Issuing building permits

#71. Reserves for replacement in operating expenses account for:

Future capital expenditures for items like roofs and HVAC systems

Monthly mortgage payments

Income tax obligations

Agent commissions

#72. The California Real Estate Commissioner is appointed by the:

State Legislature

Attorney General

Governor

Real Estate Advisory Commission

#73. The Sales Comparison Approach mirrors how most residential buyers make decisions because:

Buyers focus on construction costs

Buyers compare available alternatives in the market

Buyers ignore comparable sales data

Buyers calculate NOI for personal residences

#74. Under California Civil Code §1710.2, a seller or seller’s agent must disclose a death on the property if it occurred within:

5 years prior to the offer

1 year prior to the offer

10 years prior to the offer

3 years prior to the offer

#75. In California, the concept of ‘ratification’ in agency law means:

An agent formally registers with the DRE

A principal approves previously unauthorized acts of an agent, retroactively making them binding

A broker ratifies commission splits with agents

An agency relationship is automatically renewed

#76. John purchases a property and receives a grant deed but delays recording for 2 weeks. During that time, the seller fraudulently conveys the same property to Mary, who records immediately. Under California recording law:

John has priority because he purchased first

Mary has priority rights because she recorded first, establishing constructive notice

Both buyers share equal rights to the property

The deed is void because of the fraud

#77. Under California law, which of the following must be disclosed if the property is located in a designated flood zone?

Only that the property is near a body of water

The property’s location within a Special Flood Hazard Area and the requirement for flood insurance if federally-backed financing is used

The flood zone designation is only disclosed if the buyer has flood insurance

Flood zone disclosure is optional for residential sales

#78. Trust account records must be maintained by a California broker for a minimum of:

5 years

7 years

2 years

3 years

#79. A buyer’s offer includes a contingency for environmental testing. The testing reveals soil contamination. The buyer may:

Only cancel if the contamination requires remediation costing more than $25,000

Not cancel because environmental contingencies are non-binding

Cancel the contract within the contingency period and receive a full refund of the earnest money

Request that the listing agent pay for remediation

#80. Dual tracking is prohibited under California law, meaning lenders cannot:

Pursue foreclosure while also reviewing a loan modification application

Contact the borrower more than once

Process two loans simultaneously

File both a judicial and non-judicial foreclosure

#81. Under California law, a deed of trust contains a power of sale clause that allows:

The borrower to sell the property without the lender’s consent

The lender to take immediate possession upon default

The trustee to sell the property through non-judicial foreclosure if the borrower defaults

The government to seize the property for unpaid taxes

#82. Underground Storage Tank (UST) remediation costs can range from:

No cost to the property owner

$100-$500

$10,000-$100,000+

$1,000-$5,000

#83. A grant deed that fails to include a legal description of the property is:

Valid as long as the address is included

Generally invalid because a legal description is required to identify the property being conveyed

Valid if the parties know which property is intended

Valid if the deed is notarized

#84. Which of the following is TRUE about the Statewide Buyer and Seller Advisory (SBSA) in California?

It is a mandatory document that must be signed before any offer can be accepted

It replaces all NHD requirements

It supplements statutory disclosures by providing advisory information about additional due diligence buyers and sellers should perform

It is issued by the California DRE

#85. A buyer signs a purchase agreement under duress from the seller threatening to reveal personal information. This contract is:

Void because duress makes the contract illegal

Valid because the buyer signed voluntarily

Voidable at the buyer’s option because duress is a defect in mutual consent

Enforceable if the seller’s threat was not carried out

#86. A property has a shared driveway with the neighboring property. The seller must disclose:

Nothing, because shared driveways are common and not material

The shared driveway arrangement, including any maintenance agreements or easements, as a material fact

The shared driveway only if there is a current dispute with the neighbor

The shared driveway only on the title report, not the TDS

#87. A deed restriction from 1920 limiting property to ‘single-family residential purposes’ in an area now zoned for duplexes:

Applies only to the original property owner

Remains effective and enforceable despite current zoning

Is automatically void because zoning overrides deed restrictions

Expires after 50 years automatically

#88. Under California law, an agent who reveals a client’s HIV status to potential buyers is:

Fulfilling the duty of disclosure

Acting within the scope of required health and safety disclosures

Only violating HIPAA, not real estate law

Violating both confidentiality requirements and fair housing laws

#89. Under California law, a fiduciary relationship in a contract context means:

Both parties are equal negotiators

Neither party has special obligations

One party owes the highest standard of care and loyalty to the other party

The contract must be notarized

#90. Under California Business and Professions Code Section 10176, grounds for disciplinary action include:

Charging a standard commission rate

Refusing to share a commission with a cooperating broker

Advertising a property for sale with seller’s consent

Making a substantial misrepresentation

#91. A commercial property manager must deposit client trust funds into a trust account within:

Five business days of receipt

Three business days of receipt, per DRE Regulation 2832

10 business days of receipt

24 hours of receipt

#92. A listing agent includes a clause in the listing agreement giving the agent the authority to accept offers on behalf of the seller without further consultation. Is this permissible?

Yes, it is standard practice

Generally not, because accepting an offer is a significant decision that should require the seller’s direct approval unless specifically authorized

Only if the offer is at or above list price

Only if the seller is unavailable

#93. Under California law, an agent who helps a buyer purchase a property owned by the agent’s family member without disclosure has violated the duty of:

Disclosure, because the family ownership interest is a material conflict that must be revealed

Care

Obedience

Accounting

#94. If a comparable sold for $500,000 with a pool worth $25,000, and the subject lacks a pool, the adjusted comparable value is:

$475,000

$525,000

$500,000

$550,000

#95. Under California law, which of the following environmental disclosures is required for properties near a former dry cleaning facility?

Dry cleaning proximity is never a material disclosure

Only the EPA provides disclosures about dry cleaning contamination

This disclosure is only required within 100 feet of the facility

The agent must disclose known contamination concerns as a material fact, as dry cleaning chemicals are common groundwater contaminants

#96. Liquid assets are important in underwriting because they:

Determine the property’s zoning

Ensure sufficient funds for down payment, closing costs, and unexpected expenses

Establish the property’s legal description

Set the loan interest rate

#97. Under California law, which of the following is TRUE about the disclosure of presence of mold on a property?

Mold disclosures are only required if the mold covers more than 50 square feet

While California has no specific mold statute, known mold must be disclosed as a material fact under general disclosure principles

Mold is never considered a material defect in California

Only toxic black mold requires disclosure

#98. A property owner dies without a will and no heirs can be located. The property will:

Be sold at public auction

Remain in limbo indefinitely

Transfer to the nearest neighbor

Escheat to the state of California

#99. What distinguishes an agency by ratification from other forms of agency creation?

It requires a written agreement before any acts are performed

The principal approves unauthorized acts after they occur, retroactively creating the agency

It can only be created by court order

It applies only to commercial transactions

#100. Under California law, a home seller must provide a completed Smoke Detector Statement of Compliance for properties with:

Only multi-family dwellings with 5 or more units

Only properties with fireplaces

All residential properties upon transfer of title

Only properties built before 1990

#101. Under California Civil Code §1102, which of the following items must be disclosed on the TDS regarding the property’s appliances?

Whether built-in appliances such as dishwasher, range, and oven are operational

The brand and model of all appliances

The purchase date of every appliance

The energy efficiency rating of each appliance

#102. A condominium owner receives a separate property tax bill because:

The owner holds individual fee simple title to their unit

The HOA pays taxes for all owners

Tax bills are issued only to the HOA

Condominiums are exempt from property taxation

#103. Under California agency law, the broker-salesperson relationship is BEST described as:

The salesperson is an independent agent with no connection to the broker

The broker works for the salesperson

The salesperson and broker are equal partners with shared liability

The salesperson is a licensee who must work under the supervision of a licensed broker

#104. The NE 1/4 of the SW 1/4 of a section contains how many acres?

10 acres

40 acres

20 acres

80 acres

#105. Which of the following is TRUE about a lease with option to purchase?

The tenant is required to purchase the property at the end of the lease

The tenant pays option consideration for the right to purchase the property during the lease term

The landlord can revoke the option at any time

Option consideration is always applied to rent payments

#106. A seller’s agent who learns that the buyer has been turned down by two lenders should:

Keep it confidential because it is the buyer’s private financial information

Advise the buyer to withdraw the offer

Disclose this information to the seller as it affects the likelihood of closing

Only disclose to the escrow officer

#107. 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

#108. A CUP that has not been used for more than 6 months may:

Lapse and become void

Automatically convert to permanent zoning

Transfer to a new property

Be sold to another business owner

#109. The secondary mortgage market benefits borrowers by:

Eliminating the need for down payments

Reducing the loan term automatically

Helping stabilize interest rates and ensure consistent credit availability

Increasing their closing costs

#110. An HOA board that fails to maintain common areas may face:

Lawsuits from homeowners for breach of fiduciary duty

Automatic dissolution of the HOA

Federal criminal charges

No consequences

#111. A personal easement in gross traditionally:

Runs with the land indefinitely

Creates a dominant tenement

Terminates upon the holder’s death

Is recorded as a deed restriction

#112. Coastal Commission approval for development projects can take:

1-2 weeks

1-2 days

6-12 months

5-10 years minimum

#113. A real estate agent attending an open house for another agent’s listing begins discussing representation with a visitor. When does agency potentially begin?

When the agent begins providing services that go beyond casual conversation, such as negotiating terms

When the visitor walks into the open house

When the visitor gives the agent their phone number

Only when a written agreement is signed

#114. An FHA buyer puts 3.5% down on a $400,000 purchase. What is the down payment and loan amount?

$12,000 down / $388,000 loan

$16,000 down / $384,000 loan

$15,000 down / $385,000 loan

$14,000 down / $386,000 loan

#115. Residential rental properties are depreciated over how many years under MACRS?

39 years

27.5 years

25 years

30 years

#116. A buyer purchases a $550,000 home with PMI required because the down payment is 10%. PMI is 0.5% of the loan annually. What is the monthly PMI?

$229.17

$206.25

$187.50

$275.00

#117. A comprehensive title search during loan approval verifies:

The property’s appraised value

The property’s assessed value for taxes

The borrower’s credit score

Ownership history and confirms no outstanding claims or liens

#118. Under California law, when does an agency relationship with a listing agent typically terminate?

Only when the property is sold

Only when the agent decides to terminate

When the listing agreement expires, the property sells, or either party breaches the agreement

When a competing offer is received

#119. Which of the following is TRUE about an exclusive right-to-sell listing agreement in California?

The seller retains the right to sell without paying a commission

Multiple brokers may be hired simultaneously

The listing is automatically posted on the MLS

The broker earns a commission regardless of who procures the buyer, including the seller themselves

#120. A seller discloses a prior foundation crack repair on the TDS. A prospective buyer asks the listing agent if the crack will recur. The agent should:

Guarantee the crack will not recur since it was repaired

Say the crack will definitely recur to discourage the buyer

Recommend the buyer consult with a structural engineer for a professional opinion rather than speculating

Refuse to discuss the topic

#121. Using a 360-day year (banker’s year), a $200,000 loan at 6% has a daily interest rate of:

$33.33

$32.88

$36.00

$30.00

#122. Which of the following would be considered a breach of the fiduciary duty of accounting?

An agent failing to account for a $500 earnest money deposit received from a buyer

An agent arriving late to a property showing

An agent using an outdated comparable sales report

An agent choosing not to advertise on social media

#123. 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

#124. In a seller’s market, which condition exists?

Demand exceeds supply

No properties are available

Supply and demand are balanced

Supply exceeds demand

#125. Under Dodd-Frank, it is illegal for lenders or agents to:

Influence or attempt to influence the outcome of an appraisal

Use comparable sales data

Order appraisals

Recommend qualified appraisers

#126. HOA enforcement of CC&Rs must comply with:

Only the original developer’s guidelines

Fair Housing laws and California due process requirements

No specific laws

Only federal regulations

#127. Which of the following correctly describes the concept of vicarious liability in real estate agency?

The buyer is liable for the agent’s mistakes

The seller is always liable for the buyer’s agent’s errors

The broker can be held liable for the acts of agents performed within the scope of their authority

Agents are immune from liability if they follow broker instructions

#128. A California real estate broker must notify the DRE of a change of business address within:

1 business day

5 business days

10 business days

30 calendar days

#129. Under California agency law, an agent’s duty to disclose material facts extends to:

Only facts the agent has personally verified through inspection

Facts the agent knows or should reasonably be expected to know through diligent investigation

Only facts disclosed by the seller on the TDS

Only facts that appear in the title report

#130. Under California law, which of the following is a valid method of terminating a listing agreement?

Expiration of the listing period, mutual agreement, or breach by either party

Only by the broker’s decision

Only by court order

Only after the property is sold

#131. A listing agent discovers that the property’s permit for a room addition was never finalized. This is a:

Minor issue that does not require disclosure

Something that only the building department needs to know

Material fact that must be disclosed to all prospective buyers

An issue that should be disclosed only if the buyer plans to remodel

#132. Median days on market indicates:

Annual rainfall in the area

Average property age

How quickly properties are selling in the current market

The property’s assessed value

#133. Which statement about appropriative water rights is correct?

They are shared equally during drought

They cannot be sold separately from land

They can be lost through five years of non-use

They are tied to riparian land

#134. The underwriting process serves as the lender’s:

Detailed risk assessment mechanism

Architectural review

Marketing tool

Property management plan

#135. A Historic District Overlay imposes:

Architectural guidelines and preservation requirements

No restrictions on property modifications

Industrial zoning requirements

Commercial-only zoning

#136. Under California Civil Code §1950.7, a commercial landlord must return a security deposit within:

21 days after the tenant vacates

60 days after the tenant vacates

90 days after the tenant vacates

30 days after the tenant vacates, unless the lease specifies otherwise

#137. A buyer receives a TDS disclosing ‘previous water damage in the basement, repaired.’ The buyer should:

Accept the disclosure and proceed without further investigation

Investigate the extent and quality of the repair through a professional inspection before waiving contingencies

Demand the seller provide a 10-year warranty on the repair

Automatically reduce the offer price by 10%

#138. Under California law, the Window Security Bars disclosure specifically addresses:

Whether the bars are made of steel or iron

Whether bedroom windows with security bars have approved quick-release mechanisms for emergency exit

The aesthetic design of the security bars

Whether the bars were installed by a licensed contractor

#139. Which statement about lien priority is correct?

The newest lien has highest priority

Property tax liens always have first priority

Mechanics liens always have last priority

All liens are paid equally in foreclosure

#140. Annual property taxes are $4,380. Closing is October 1. The seller owned the property for 273 days (Jan 1 to Sept 30). The seller’s prorated share is approximately:

$3,276

$1,104

$4,380

$2,190

#141. The term of a loan indicates:

The down payment percentage

The duration over which the loan will be repaid

The closing cost amount

The interest rate

#142. A mechanic’s lien in California:

Requires court approval before being filed

Is only valid for government projects

Expires after 30 days regardless of payment

Gives a contractor or laborer a security interest in the property for unpaid work or materials

#143. Non-judicial foreclosure in California begins with recording a:

Notice of Default (NOD)

Quit claim deed

Judgment of foreclosure

Lis Pendens

#144. Civil Code Section 660 governs which area of California real estate law?

Community property transmutation

Fixture determination

Water rights

Easement creation

#145. The California Environmental Quality Act (CEQA) requires:

Environmental impact reports for projects that may significantly affect the environment

Only federal projects to undergo environmental review

Environmental review only for residential developments

Environmental studies only for wetland areas

#146. 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

#147. Under California law, the key difference between judicial and non-judicial foreclosure is:

Judicial foreclosure is faster and less expensive

Non-judicial foreclosure requires court approval

There is no difference in California

Non-judicial foreclosure is handled by the trustee without court involvement and is faster (3-4 months vs 12-18 months for judicial)

#148. Under California law, which of the following is a valid defense to enforcement of a contract?

Fraud, duress, undue influence, or mutual mistake

The contract was too favorable to one party

One party later found a better deal

The property value decreased after the contract was signed

#149. A deed to ‘A and B’ with no further specification creates:

Severalty

Community property

Tenancy in common

Joint tenancy

#150. 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

Simulated Exam #7

Results

#1. Zoning changes (rezoning) differ from variances because rezoning:

#2. Under California law, which of the following would NOT be considered a breach of an agent’s fiduciary duties?

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

#4. Convert the fraction 5/8 to a decimal.

#5. Which of the following statements about an option contract is TRUE?

#6. Under California law, which of the following is TRUE about a subordination agreement?

#7. A buyer submits an offer with a contingency that the property must appraise for at least the purchase price. The appraisal comes in at $10,000 below. If the buyer cancels:

#8. A property manager’s management agreement should include all of the following EXCEPT:

#9. TRID rules apply to:

#10. A property manager who manages 50 residential units collects approximately $75,000 in monthly rent. Trust fund management requirements include:

#11. The CFPB was created to oversee:

#12. Under California law, a landlord must provide which of the following before entering a tenant’s dwelling for non-emergency purposes?

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

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

#15. Under California contract law, a contract is said to be ‘executory’ when:

#16. A listing agent discovers that the property’s sewer line is connected to the public sewer system but the TDS indicates a septic system. The agent must:

#17. A buyer discovers after closing that the seller knew about recurring flooding in the basement but marked ‘No’ on the TDS. The buyer’s legal remedy includes:

#18. The physical characteristic of immobility justifies:

#19. A California real estate broker must have how many years of experience or equivalent education?

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

#21. Under California law, mineral rights that have been extracted from the ground are classified as:

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

#23. A title search reveals a gap in the chain of title. This indicates:

#24. The purpose of a reconveyance deed in California is to:

#25. Under California law, an option to purchase real property must be:

#26. A title insurance claim is filed when a buyer discovers an undisclosed lien from a previous owner. The title insurance company will:

#27. A property manager is evaluating a commercial property’s performance. Which metric best measures the property’s income-producing ability relative to its value?

#28. RESPA requires disclosure of affiliated business arrangements to:

#29. Under California law, when must the seller of a residential property provide the Mello-Roos disclosure?

#30. Developers assess all of the following when deciding to build EXCEPT:

#31. Which limitation on police power requires that regulations not amount to an unconstitutional taking?

#32. Under California law, which type of listing agreement is considered a violation of antitrust law if used by multiple brokers to fix commission rates?

#33. 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:

#34. A window air conditioning unit that is mounted but can be removed without damaging the property is MOST likely classified as:

#35. An express easement must be created through:

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

#37. An agent representing a buyer writes an offer that includes a term the buyer did not authorize. This is a breach of which duty?

#38. After a trustee’s sale in non-judicial foreclosure, a trustee’s deed is issued to:

#39. Under California’s agency disclosure requirements, a selling agent (buyer’s agent) must provide the disclosure form to the buyer no later than:

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

#41. A tenant’s commercial lease is silent regarding which installations qualify as removable trade fixtures. At lease termination, a dispute arises. What is the BEST preventive measure?

#42. A tenant who has been in a residential unit for 14 months gives 30 days’ notice to terminate a month-to-month tenancy. Under California law:

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

#44. A home built in 1965 is being sold. The seller claims there is no lead paint because the home was repainted 10 years ago. Which statement is CORRECT?

#45. A property’s assessed value is $425,000. Under Proposition 13, the maximum annual increase in assessed value is?

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

#47. Under California Revenue and Taxation Code §11900, transfer taxes are typically paid by:

#48. A listing agent discovers after executing the listing that they have a distant family relationship with a potential buyer. The agent must:

#49. Which statement about the fiduciary duty of confidentiality is CORRECT?

#50. Under California law, which of the following types of agents has the broadest scope of authority?

#51. If a comparable sold for $450,000 and lacks a pool worth $25,000 that the subject has, the adjusted value is:

#52. If NOI is unknown but value is $2,500,000 and cap rate is 4%, NOI equals:

#53. Under California’s AB 1482 (Tenant Protection Act), which disclosure is required when selling a rental property?

#54. The primary purpose of an appraisal in a lending transaction is to:

#55. A dual agent receives a home inspection report revealing significant structural defects. The dual agent must:

#56. A listing agent fails to disclose a known foundation crack to a prospective buyer. Which fiduciary duty has been violated?

#57. Which of the following actions by a listing agent could constitute an unauthorized dual agency?

#58. A property is sold subject to a deed of trust. The seller’s closing statement shows a payoff of the existing loan. The payoff amount includes:

#59. When a credit report shows payment delinquencies, underwriters will:

#60. Under California law, which of the following is required for a valid exclusive listing agreement?

#61. In California, which factor can create substantial differences in value for properties just blocks apart?

#62. To estimate value using GRM, multiply:

#63. TILA requires the APR to be disclosed because it:

#64. A property manager collects $2,000 first month’s rent and $2,000 security deposit from a new tenant. The security deposit must be:

#65. Under California Civil Code §2079.13-2079.24, which of the following is a required element of the agency disclosure?

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

#67. A property has a vacancy rate of 8% and potential gross income of $100,000. What is the effective gross income?

#68. Under California law, what happens to a joint tenancy when one joint tenant sells their interest to a third party?

#69. When comparing FHA and conventional loans, a borrower with strong credit and 20% down should prefer conventional because:

#70. The Housing Accountability Act (Government Code §65589.5) restricts local governments from:

#71. Reserves for replacement in operating expenses account for:

#72. The California Real Estate Commissioner is appointed by the:

#73. The Sales Comparison Approach mirrors how most residential buyers make decisions because:

#74. Under California Civil Code §1710.2, a seller or seller’s agent must disclose a death on the property if it occurred within:

#75. In California, the concept of ‘ratification’ in agency law means:

#76. John purchases a property and receives a grant deed but delays recording for 2 weeks. During that time, the seller fraudulently conveys the same property to Mary, who records immediately. Under California recording law:

#77. Under California law, which of the following must be disclosed if the property is located in a designated flood zone?

#78. Trust account records must be maintained by a California broker for a minimum of: