CALIFORNIA REAL ESTATE – SIXTH SIMULATION

#1. HOA pending litigation must be disclosed to:

Prospective buyers as part of HOA disclosures

Only the board of directors

Only the developer

No one; litigation is confidential

#2. What is the primary difference between a single agency and a dual agency?

Single agency requires a higher commission rate

Dual agency eliminates all fiduciary duties

Single agency only applies to commercial transactions

In single agency, the agent represents only one party; in dual agency, the agent represents both buyer and seller

#3. Which of the following statements about a right of first refusal is TRUE?

The holder must purchase the property within 30 days

The right of first refusal guarantees a specific purchase price

The right of first refusal is the same as an option contract

The holder of a right of first refusal has the option to match any offer the property owner receives from a third party before the owner can accept it

#4. Under California Civil Code §2079.14, when must a listing agent provide the agency disclosure form in a residential transaction involving 1-4 units?

At the close of escrow

Before the listing agreement is signed

After the buyer submits an offer

When the escrow company requests it

#5. Fannie Mae and Freddie Mac primarily purchase:

Only commercial property loans

Only CalVet loans

Government-backed loans only

Conventional loans from lenders

#6. Under California law, which of the following is TRUE about pet deposits for residential rentals?

Pet deposits are unlimited and separate from the security deposit

Pet deposits cannot exceed $100

Landlords cannot charge pet deposits in California

There is no separate statutory limit for pet deposits; they are included in the overall security deposit cap (2 months unfurnished, 3 months furnished)

#7. Cap Rate = NOI / Sale Price is used to:

Determine insurance value

Calculate property taxes

Calculate loan-to-value ratios

Derive the market cap rate from comparable sales data

#8. Which type of listing agreement gives the broker the exclusive right to a commission regardless of who finds the buyer?

Exclusive right-to-sell listing

Exclusive agency listing

Open listing

Net listing

#9. Some loan programs accept DTI ratios up to:

60%

36%

43%

25%

#10. Under California’s agency laws, which of the following may a dual agent disclose to the buyer?

The lowest price the seller will accept

That the seller is financially distressed

Known material defects about the property

That the seller has received no other offers

#11. CalVet loans are available specifically to:

First-time homebuyers only

All California residents

Commercial investors

California veterans

#12. When should the Cost Approach be given the most weight in reconciliation?

When abundant comparable sales exist

When the property is in a declining market

When the property generates rental income

When the property is new construction or a special-use property

#13. A listing agent receives two offers simultaneously. Under the fiduciary duty of obedience, the agent must:

Present only the higher offer

Hold the lower offer until the seller responds to the higher one

Present both offers to the seller promptly

Advise the seller to reject both and wait for a better offer

#14. A one-percentage-point increase in mortgage rates typically reduces a buyer’s purchasing power by approximately:

25%

1%

10%

5%

#15. Under California law, a deed executed by a grantor who has been declared mentally incompetent by a court is:

Voidable at the grantor’s option

Void from the beginning because the grantor lacks legal capacity

Valid because the deed was signed

Enforceable if the grantee paid fair value

#16. A deed that states ‘as joint tenants with right of survivorship’ creates:

Tenancy in common

Community property

Joint tenancy

A trust

#17. Overlay zones impose:

Replacement of base zoning districts

Removal of all existing regulations

Additional restrictions over base zones

Federal zoning requirements

#18. The California Earthquake Authority (CEA) provides:

Flood insurance

Standard homeowners insurance

Earthquake insurance, which is not covered by standard policies

Title insurance

#19. In a dual agency situation in California, the agent must obtain:

Only verbal consent from both parties

Only the seller’s written consent

Approval from the DRE

Written consent from both the buyer and seller

#20. The California Homeowner Bill of Rights applies to:

Only commercial properties

Only properties purchased after 2013

Residential properties where the borrower is facing foreclosure

Only properties with FHA loans

#21. 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

#22. California’s SB 1079 (2020) provides:

Tax breaks for foreclosed property buyers

Prospective owner-occupants and nonprofits priority to bid on foreclosed properties

Automatic loan modifications for defaulting borrowers

Extended redemption periods for all foreclosures

#23. A seller accepts a buyer’s offer but simultaneously signs a listing with a new broker for the same property. This action:

Is permitted because sellers can always relist

Only violates the listing agreement, not the purchase agreement

May constitute a breach of the purchase agreement with the first buyer

Has no legal consequences

#24. When one joint tenant sells their interest without the other joint tenants’ consent:

The joint tenancy continues with the buyer as a new joint tenant

All joint tenants must sell their interests

The buyer becomes a tenant in common with remaining joint tenants

The sale is void

#25. Monthly rent is $2,100. The tenant pays rent on the 1st. If the property closes on March 18, how much rent credit does the buyer receive (30-day month)?

$910

$840

$1,260

$980

#26. A listing agreement contains a provision that the broker’s commission is ‘6% or $20,000, whichever is greater.’ This provision:

Violates DRE regulations on commission structures

Is unenforceable because commission rates must be a single percentage

Is valid as long as it was agreed to by both parties; commissions are always negotiable

Requires approval from the local Association of Realtors

#27. A listing agent promises a seller that the property will sell within 30 days at the listed price. This statement:

May constitute a misrepresentation because no agent can guarantee sale timing or price

Is acceptable if the agent has data supporting the claim

Is required to win competitive listings

Violates anti-trust laws

#28. California Civil Code §2079.24 establishes that agency duties owed to the principal include:

Only presenting offers over a certain amount

Diligent exercise of reasonable skill and care, and truthful and full disclosure of all material facts

Guaranteeing the property will pass inspection

Providing free legal advice

#29. Maria’s first five years of mortgage payments totaling $166,200 reduced her principal by only $27,550 because:

The lender miscalculated payments

The loan was interest-only

The loan had negative amortization

Early amortization payments are heavily weighted toward interest

#30. A buyer at a non-judicial foreclosure sale in California:

Receives a warranty deed with full protections

Receives a trustee’s deed upon sale and the former owner generally has no right of redemption

Has a mandatory 1-year waiting period before taking possession

Must obtain the former owner’s consent before moving in

#31. 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

#32. 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

#33. Properties with significant HOA issues typically:

Sell faster due to buyer sympathy

Are exempt from disclosure requirements

Command lower prices and may be harder to sell

Command higher prices than comparable properties

#34. Which of the following is TRUE about zoning disclosure in California?

Zoning disclosures are only required for commercial sales

The city planning department provides all zoning disclosures directly to buyers

Zoning is always disclosed through the NHD report

While there is no specific zoning disclosure statute, agents must disclose known zoning issues that materially affect the property

#35. A restricted real estate license in California is issued to a person who:

Has had their license revoked or suspended but is allowed to practice under conditions

Has never held a license before

Is a non-resident applicant

Has been convicted of a misdemeanor only

#36. Under California law, which of the following statements about deeds is TRUE?

A signed deed automatically transfers title

A deed must be delivered and accepted to be effective; mere signing is not sufficient to transfer title

A deed must be recorded to be valid between the parties

A deed is effective when notarized

#37. HOAs that enforce CC&Rs inconsistently may face:

Legal challenges from homeowners claiming selective enforcement

Automatic dissolution

Increased federal funding

No consequences

#38. California’s required agency disclosure form identifies three possible agency relationships:

Listing agent, selling agent, and escrow agent

Seller’s agent, buyer’s agent, and dual agent

Broker, associate, and subagent

Principal, agent, and third party

#39. Emergency access roads in subdivisions are required for:

Recreational vehicles

Public transit buses only

Fire trucks and emergency vehicles

Commercial delivery trucks only

#40. The Consumer Recovery Account is funded by:

State general fund appropriations

Fees from license applicants and renewals

Fines collected from licensee violations

Federal grants to state real estate commissions

#41. Under California law, creditors can force partition to reach:

Property owned in severalty by a non-debtor

Individual joint tenant interests

Trust property held by a trustee

Community property during marriage

#42. Underwriters evaluate all of the following EXCEPT:

Credit history and score

The property’s appraised value

Income stability and DTI ratio

The seller’s financial situation

#43. A property with NOI of $200,000 and a cap rate of 5% has an estimated value of:

$1,000,000

$2,000,000

$10,000,000

$4,000,000

#44. Under California law, the seller’s agent must provide which of the following documents to the buyer?

The seller’s credit report

The listing agent’s commission agreement

The Agent Visual Inspection Disclosure (AVID) describing the results of the agent’s own visual inspection

The broker’s errors and omissions insurance policy

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

Consistency

Due diligence

Profitability

Full disclosure

#46. A property has Chinese drywall installed during a renovation in 2006. Under disclosure law, the seller must:

Not disclose because the drywall was installed legally

Disclose the Chinese drywall as a known defect because it can cause corrosion and health issues

Only disclose if the buyer asks about building materials

Disclose only if the drywall has already caused visible damage

#47. A dual agent in California may NOT do which of the following without express written permission?

Draft offer documents

Schedule property inspections

Provide comparable sales data to both parties

Disclose to the buyer that the seller will accept less than the listing price

#48. The principle of anticipation states that value is based on:

Original construction cost

Current assessed value

Historical costs only

Expected future benefits of property ownership

#49. The Rumford Act in California refers to:

The Subdivided Lands Law

Proposition 13 property tax provisions

The Fair Employment and Housing Act (FEHA) protections

The Subdivision Map Act

#50. A buyer and seller agree to extend the closing date by 10 days. This change should be documented as:

A verbal agreement between the agents

An email from the buyer to the seller

A notation in the escrow officer’s file

A written amendment to the purchase agreement signed by both parties

#51. A title company issues a preliminary title report that shows a judgment lien against the seller. Before closing:

The lien must be satisfied or addressed to deliver clear title as required by the purchase agreement

The buyer must accept the property with the lien

The lien automatically expires after 30 days

The title company must pay off the lien

#52. Under California law, an agent representing the seller discovers that the buyer’s earnest money check may be fraudulent. The agent should:

Immediately inform the seller and the escrow company

Only inform the escrow company

Wait to see if the check clears before taking action

Contact the buyer’s agent to request a replacement check quietly

#53. Mold remediation fails if:

HEPA filtration is used during work

Post-remediation testing is conducted

The moisture source is not identified and stopped

A licensed contractor performs the work

#54. California’s non-judicial foreclosure timeline typically spans:

5-10 years

2-3 years

1-2 weeks

4-6 months

#55. When listing property subject to special assessments, an agent must disclose:

Only the Mello-Roos amount

Nothing if the buyer does not ask

Current assessed value, tax amount, any special assessments, and their duration

Only the standard property tax amount

#56. A listing agent who fails to provide the required Lead-Based Paint Disclosure for a property built in 1970 may face:

Only a verbal warning from the DRE

A maximum fine of $100 under state law

No penalty if the property tests negative for lead paint

Federal penalties of up to $11,000 per violation, plus potential civil liability to the buyer

#57. Probate Code Section 5040 establishes:

Community property with right of survivorship

Tenancy in common

Severalty

Joint tenancy

#58. Restrictions in CC&Rs are:

Prohibitions on activities such as parking on lawns

Government tax requirements

Easement grants

Affirmative obligations to perform actions

#59. Deed restrictions can be terminated through:

Automatic expiration after 10 years

Unilateral action by the property owner

A simple written request to the county recorder

Court action (quiet title action) or agreement of all benefited parties

#60. A property manager’s fiduciary duties to the property owner include all of the following EXCEPT:

Guaranteeing a specific return on the owner’s investment

Loyalty to the owner’s interests

Proper accounting of all funds

Full disclosure of material information

#61. California uses how many principal meridians in the government rectangular survey system?

Four

Three

One

Two

#62. In California agricultural areas, water rights often:

Are managed exclusively by the federal government

Exceed land value

Have no impact on land value

Are irrelevant because of adequate rainfall

#63. Under California law, a power of attorney that authorizes a person to handle all of a principal’s real estate affairs creates what type of agency?

Special agency

General agency

Universal agency

Designated agency

#64. Plottage value refers to:

The value of a single lot

The increase in value when two or more lots are combined into a larger parcel

The decrease in value from subdivision

The assessed value of agricultural land

#65. Which of the following is TRUE about an owner’s title insurance policy?

It protects the lender against borrower default

It guarantees the property will appreciate in value

It covers losses from future events

It protects the buyer against losses from defects in the title that existed before the policy date

#66. A buyer’s offer includes a clause stating ‘Seller to provide a home warranty not to exceed $500.’ This clause:

Is prohibited because buyers cannot dictate warranty terms

Must be approved by the escrow company

Is only valid for properties less than 10 years old

Is a valid contractual provision that the seller can accept, counter, or reject

#67. The Davis-Stirling Common Interest Development Act governs:

Commercial lease agreements

Condominium and HOA operations

Agricultural water rights

Government survey descriptions

#68. California law prohibits HOAs from:

Carrying insurance for common areas

Establishing architectural standards

Discriminating against protected characteristics

Collecting monthly dues

#69. A lot measures 0.75 acres. How many square feet is this?

34,848 sq ft

30,000 sq ft

36,000 sq ft

32,670 sq ft

#70. 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

#71. A real estate agent providing a Broker Price Opinion (BPO) to a client owes which level of duty?

The same fiduciary duties owed in any agency relationship including care, skill, and honesty

No duty because BPOs are informal opinions

A reduced duty because BPOs are not appraisals

A duty only to the lender, not the client

#72. Which of the following actions would constitute a breach of the fiduciary duty of obedience?

An agent following the principal’s legal instructions to market the property aggressively

An agent refusing to present a lowball offer because the agent believes it will offend the seller

An agent declining to assist with an illegal transaction at the client’s request

An agent submitting required disclosures on time

#73. The Latin maxim ‘cuius est solum, eius est usque ad coelum et ad inferos’ refers to:

Community property rights of married couples

Ownership extending upward to the heavens and downward to the depths

The right of first refusal in property sales

The requirement for a valid legal description

#74. A rate cap on an ARM limits:

How much the interest rate can increase per adjustment period and over the life of the loan

The loan amount

The loan term

The borrower’s credit score requirement

#75. Under California law, what is the legal consequence if an agent acts as a dual agent without proper disclosure and written consent?

The agency may be voidable, and the agent may face disciplinary action and civil liability

Nothing, because dual agency is the default in California

The agent simply loses the right to a commission

The transaction is automatically void

#76. A buyer receives a grant deed with the following covenant: ‘Subject to all existing easements of record.’ This means:

The buyer can eliminate the easements after closing

The buyer takes the property subject to any easements that have been recorded in the public records

No easements exist on the property

The easements will expire within 5 years

#77. A property has a deed restriction limiting the exterior paint color to approved earth tones. The seller must:

Disclose the deed restriction as a material fact that affects the buyer’s use of the property

Not disclose paint restrictions as they are cosmetic

Only disclose if the buyer mentions wanting to paint the exterior

Wait for the title company to discover the restriction

#78. Under California law, which of the following is NOT required for a valid listing agreement?

Approval from the buyer’s lender

A definite termination date

A description of the property

The amount of compensation

#79. Under California law, a residential landlord must return a security deposit within:

21 days after the tenant vacates

30 days after the tenant vacates

14 days after the tenant vacates

10 days after the tenant vacates

#80. California’s one-action rule requires a lender to:

Foreclose on the security (property) before seeking a personal judgment

File suit and foreclose simultaneously

Seek a personal judgment first

Choose either foreclosure or lawsuit at any time

#81. Under California law, which of the following is TRUE about lease assignments and assumptions?

An assignment releases the original tenant automatically

Assignments are prohibited without a novation

In an assignment, the original tenant transfers all rights but may remain secondarily liable; the assignee assumes primary liability

The landlord cannot restrict assignments in commercial leases

#82. Under California Civil Code §1102.6c, the listing agent’s visual inspection duty specifically excludes:

Areas that are not reasonably accessible, such as roofs, crawlspaces requiring special equipment, or locked areas

The kitchen and bathrooms

The exterior of the property

All areas that require walking on the property

#83. A purchase agreement provides that disputes will be resolved first through mediation and then through arbitration if mediation fails. This provision:

Eliminates the right to go to court entirely

Is unenforceable because parties must choose either mediation or arbitration

Requires DRE supervision

Is a common two-step dispute resolution process in California standard forms that parties may agree to

#84. Judicial foreclosure in California provides a redemption period of up to:

90 days

6 months

30 days

1 year

#85. A property’s title report shows the property is subject to CC&Rs (Covenants, Conditions, and Restrictions). These:

Are recorded restrictions that limit how the property can be used and are binding on all future owners

Can be ignored by the buyer after purchase

Expire after 10 years

Only apply to the original developer

#86. A buyer can qualify for a monthly PITI of $2,800. If taxes are $500/month and insurance is $150/month, how much is available for P&I?

$2,300

$2,150

$2,100

$2,250

#87. Under California law, which of the following situations does NOT require agency disclosure?

A broker selling a single-family home

A broker selling a duplex

A broker selling a fourplex

A broker selling commercial property with more than 4 units

#88. A deed that omits the grantee’s name is:

Valid as long as the grantor’s name is included

Valid if the property is properly described

Generally invalid because a grantee must be identified or identifiable for the deed to effectively transfer title

Valid because the county recorder will add the name

#89. Under California law, which of the following constitutes an illegal retaliatory action by a landlord?

Decreasing services or raising rent within 180 days after a tenant exercises a legal right, such as reporting code violations

Filing a lawful unlawful detainer after nonpayment of rent

Declining to renew a lease that has expired

Conducting a scheduled property inspection

#90. 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

#91. A property that is over-improved for its neighborhood MOST illustrates:

The principle of regression

The principle of anticipation

The principle of substitution

The principle of progression

#92. A pre-approval letter enhances an offer because it:

Guarantees the loan will be funded

Locks in the interest rate permanently

Eliminates the need for an appraisal

Signals to sellers that the buyer is financially capable of completing the purchase

#93. Under California’s mechanic’s lien law, the property owner must file a Notice of Completion within:

30 days

15 days after completion of the project

60 days

10 days

#94. A California real estate licensee may act as a mortgage loan originator (MLO) if:

They have been licensed for at least 5 years

They hold a separate MLO endorsement from the NMLS

The DRE automatically grants MLO authority

They complete an 8-hour MLO course

#95. California’s requirement for a preliminary title report to be provided to the buyer is:

Required by the DRE for all transactions

A standard practice facilitated by the title company, not mandated by specific statute for all sales

Required only for commercial transactions

Required only for new construction

#96. A borrower in non-judicial foreclosure has the right to reinstate by paying:

The full loan balance

Only the monthly payment for the current month

Nothing; reinstatement is not available

The overdue amount plus interest and fees before the Notice of Trustee’s Sale is issued

#97. In California, which of the following creates an agency relationship between a buyer and a buyer’s agent?

Verbal conversations about real estate needs

The buyer attending an open house hosted by the agent

The agent adding the buyer to an email list

A written buyer representation agreement

#98. A property’s air rights are limited by:

Only the owner’s imagination

The altitude of adjacent buildings

FAA regulations and local zoning ordinances

State environmental laws exclusively

#99. A county votes to widen a street, requiring 15 feet of frontage from property owners. This is an example of:

Police power

Taxation

Escheat

Eminent domain

#100. California’s ADU (Accessory Dwelling Unit) law allows homeowners to:

Convert garages to commercial space

Build unlimited units on any lot

Build additional dwelling units on single-family lots with streamlined permitting

Subdivide their lot without city approval

#101. The fiduciary duty of ‘Accounting’ requires an agent to:

Account for all funds and property received on behalf of the principal

Prepare the client’s tax returns

Maintain a personal ledger of all commissions earned

File financial reports with the DRE quarterly

#102. California’s Mello-Roos Community Facilities Act allows:

Property tax exemptions for new developments

Federal tax credits for homebuyers

Special tax districts to fund public improvements

Reduced interest rates for first-time buyers

#103. USPAP stands for:

United States Professional Appraiser Program

Unified Standards of Property Assessment Practice

Universal System of Property Analysis Procedure

Uniform Standards of Professional Appraisal Practice

#104. Under California law, a lease that is signed by only one party is:

Not yet a valid lease because both parties must sign for mutual consent

A valid lease that binds the signing party

An option to lease

A month-to-month agreement

#105. Under California law, a trust deed foreclosure sale is conducted by:

The beneficiary

The county sheriff

The trustee

The court

#106. A license in California real estate differs from an easement because a license is:

Always created by prescription

A monetary encumbrance on the property

Irrevocable and runs with the land

Personal, revocable permission that does not run with land

#107. PMI automatically terminates when LTV reaches:

80%

70%

78%

75%

#108. In California, a trust deed has three parties:

Mortgagor, mortgagee, and guarantor

Borrower, lender, and broker

Seller, buyer, and escrow officer

Trustor (borrower), beneficiary (lender), and trustee

#109. A property manager is preparing a property for lease. The manager discovers that the property contains lead paint. Under federal and California law:

Lead paint disclosure is only required for properties being sold, not leased

The manager must remove all lead paint before leasing

The manager must disclose the lead paint to prospective tenants and provide the EPA pamphlet if the property was built before 1978

Lead paint disclosure is only required if children will occupy the unit

#110. The probate process in California serves to:

Transfer property without court involvement

Validate the will, settle debts, and distribute the deceased’s assets under court supervision

Eliminate property taxes for inherited property

Automatically transfer title to the surviving spouse

#111. Business and Professions Code §10141.5 requires:

Environmental assessments for all properties

Annual property inspections

Broker supervision of all agents

Preliminary title reports during the loan process

#112. The acronym OLD CAR represents the fiduciary duties an agent owes to their principal. What does the ‘D’ stand for?

Diligence

Due process

Disclosure

Duty of care

#113. A property in a probate sale receives an overbid at the confirmation hearing. Under California probate law:

Overbids are not permitted in probate sales

The original buyer has an absolute right to purchase at their original offer price

The executor decides whether to accept the overbid

The property may be sold to the highest bidder at the confirmation hearing, which may be someone other than the original buyer

#114. A property built in 1972 is being sold. The seller claims ‘I never tested for lead paint so I don’t know if there is any.’ Under the lead paint disclosure requirements:

The seller must still provide the lead paint disclosure form and indicate their lack of knowledge; the buyer must be given the EPA pamphlet and the opportunity to test

The seller is exempt from the disclosure because they have no knowledge of lead paint

The seller must test for lead paint before the sale can proceed

The listing agent must personally test for lead paint

#115. Under California law, what is the maximum number of salespersons a broker may supervise?

10 salespersons per office

25 salespersons per broker license

There is no statutory maximum; the broker must supervise as many agents as they can adequately manage

50 salespersons if the broker has a branch office license

#116. A property with a swimming pool is being sold. Under California disclosure requirements, the seller must disclose:

Only that a pool exists on the property

The pool’s original construction cost

Whether the pool and safety barriers comply with current California pool safety requirements

Whether the pool has been used for competitive swimming

#117. Under the duty of full disclosure, a listing agent who is aware that the property may have soil contamination from a former gas station on an adjacent lot must:

Only disclose if a Phase I environmental report confirms contamination

Not disclose because the contamination is on an adjacent property

Only disclose to the buyer’s lender

Disclose this information to all prospective buyers as a material fact

#118. A property closing is delayed because the title company discovers a judgment lien that the seller was unaware of. The seller must:

Clear the judgment lien before closing can proceed, either by paying it off or negotiating with the judgment creditor

Ignore the lien because the seller was unaware of it

Transfer the lien obligation to the buyer automatically

File a complaint with the DRE against the judgment creditor

#119. The effective date of value in an appraisal means:

The date the report is due

The specific date as of which the value conclusion applies

The date the property was built

Any date the appraiser chooses

#120. The power of sale clause in a deed of trust grants:

The trustee authority to sell the property in event of default

The lender the right to increase interest rates

The government the right to seize the property

The borrower the right to sell without lender consent

#121. An agent who provides market analysis, negotiates on behalf of a party, and drafts offer terms for a buyer without a written agreement has likely created:

A dual agency

An ostensible agency

No agency relationship

An implied agency relationship

#122. A title search reveals an unrecorded easement that allows a utility company to access the property. Under California law:

Unrecorded easements are never valid

The easement may still be valid and enforceable even though it is not recorded, especially if it was created by necessity or prescription

The easement is only valid if the buyer agrees to it

Unrecorded easements automatically terminate after 5 years

#123. Under California law, a landlord who owns a single-family home that is not owned by a corporation and provides proper notice to the tenant may be exempt from:

AB 1482 rent caps and just cause eviction requirements

All California landlord-tenant laws

Security deposit limitations

Fair housing requirements

#124. An agent representing a seller discovers the buyer is a close personal friend of the agent’s broker. The agent should:

Not disclose because the broker is not a party to the transaction

Disclose this relationship to the seller as it could create a conflict of interest

Only disclose if the broker instructs the agent to do so

Withdraw from the listing without explanation

#125. Under California contract law, the difference between an express contract and an implied contract is:

An express contract is formed by written or spoken words; an implied contract is formed by the conduct of the parties

Express contracts are always written; implied contracts are always verbal

Express contracts are more enforceable than implied contracts

There is no legal distinction between the two

#126. A buyer and seller execute a purchase agreement for $600,000. Before closing, the property is severely damaged by an earthquake. Under the doctrine of risk of loss:

Generally, risk of loss remains with the seller until closing; the buyer may cancel or negotiate a reduced price

The buyer assumes all risk once the contract is signed

The risk is split equally between buyer and seller

The listing agent assumes the risk

#127. Under California law, which of the following is required when selling a property that contains a private domestic well?

Private wells do not require any disclosure

The seller must disclose the well and may be required to provide water quality testing information

Only commercial properties with wells need disclosure

The county health department automatically provides well disclosures

#128. A property is purchased for $600,000. The buyer makes a 20% down payment. What is the loan amount?

$480,000

$120,000

$500,000

$540,000

#129. Under California contract law, if both parties have fully performed their obligations under a purchase agreement, the contract is described as:

Executory

Executed

Voidable

Unilateral

#130. The resale market for time-shares is typically:

Stronger than the primary market

Weak, with substantial value loss after purchase

Regulated to maintain purchase price

Nonexistent under California law

#131. Agent Lee shows a buyer 10 properties over several weeks without a written buyer representation agreement. Which of the following is TRUE?

An implied agency relationship may have been created through the agent’s conduct

No agency relationship can exist without a written agreement

The buyer is automatically a client of Agent Lee’s broker

Agent Lee has no fiduciary duties to the buyer

#132. Under California law, an exclusive agency listing differs from an exclusive right to sell in that:

The broker receives a commission regardless of who sells the property

Multiple brokers can share the listing

The owner retains the right to sell without paying a commission if they find a buyer independently

The listing automatically renews every 90 days

#133. Under California law, a buyer who is in material breach of a purchase agreement:

May still enforce the contract if they cure the breach quickly

Can demand return of the earnest money

Has priority over other buyers

Cannot compel specific performance from the seller

#134. Energy-efficient improvements (solar panels, EV chargers) increasingly affect value in California because of:

Title 24 energy standards and buyer preferences for sustainable features

Insurance companies require them

They decrease property values

Federal mandates requiring them on all properties

#135. A buyer submits an offer of $450,000. The seller counters at $470,000. The buyer then counters at $460,000. The seller accepts. What is the final contract price?

$450,000

$460,000

$470,000

$465,000

#136. 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

#137. 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

#138. Quarterly interest on a $250,000 loan is $4,687.50. What is the annual interest rate?

7.0%

8.0%

7.5%

6.5%

#139. TILA (15 U.S.C. §1601 et seq.) was enacted to:

Eliminate the need for appraisals

Deregulate the lending industry

Ensure borrowers fully understand loan terms through clear disclosure

Increase borrower confusion

#140. Which of the following is NOT a fiduciary duty owed by an agent to a principal under California law?

Loyalty

Guaranteeing a specific sale price

Disclosure

Obedience

#141. If a comparable sold 8 months ago in a market appreciating at 0.5% per month, the time adjustment would be approximately:

2%

0.5%

4%

8%

#142. California’s Alquist-Priolo Earthquake Fault Zoning Act requires:

All properties to have earthquake insurance

Disclosure of properties located within earthquake fault zones

Retrofitting of all buildings near fault lines

Annual seismic inspections of commercial buildings

#143. A property has an unpermitted addition that was completed by the previous owner 15 years ago. The current seller must:

Disclose the unpermitted addition on the TDS if they have knowledge of it

Not disclose because the addition was completed more than 10 years ago

Only disclose if the addition is visible from the street

Disclose only if asked directly by the buyer

#144. A rectangular lot measures 150 feet by 200 feet. What is the area in square feet?

35,000 sq ft

30,000 sq ft

25,000 sq ft

20,000 sq ft

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

1 business day

5 business days

3 business days

7 calendar days

#146. Under California agency law, a seller’s agent who learns that the property’s actual square footage is significantly less than what is advertised must:

Only correct it if a buyer questions the square footage

Leave the square footage as listed and let the appraiser correct it

Immediately correct the listing and disclose the actual square footage to all prospective buyers

Disclose only to the buyer’s agent in writing

#147. 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

#148. An easement by necessity is MOST likely to arise when:

A property division creates a landlocked parcel with no access to public roads

A property owner wants to restrict neighbor’s use

A property owner voluntarily grants access to a neighbor

A utility company needs to install power lines

#149. The Sales Comparison Approach is most reliable when:

Abundant comparable sales of similar properties are available

The property generates rental income

The property is a special-use building

No comparable sales exist

#150. FHA loans are insured by:

The FDIC

Private mortgage insurance companies

The Federal Housing Administration

The VA

Simulated Exam #6

Results