California Real Estate Practice Exam

This practice test includes 300 questions based on the 2026 California DRE exam outline. Each question comes with detailed explanations and official citations, so you can learn as you go and review your performance at the end.

California Real Estate Practice Test Quiz

California Real Estate Practice Exam – 300 Questions 2026

Q1. A homeowner installed custom built-in bookcases and cabinets in her living room. Upon selling the house, she wants to remove them. Which statement is most correct regarding these bookcases?

Correct Answer: B
Explanation: Built-in bookcases and cabinets that are permanently attached and adapted to the use of the home are fixtures. Fixtures transfer with the real property upon sale unless excluded by agreement, regardless of who installed them.
Citation: California Real Estate Reference Book – Chapter 4 (Property)

Q2. A farmer’s annual crop of corn (fructus industriales) is ordinarily considered:

Correct Answer: C
Explanation: Annual crops (fructus industriales) are produced by human labor and are considered personal property, even though they grow on the land.
Citation: California Real Estate Reference Book – Chapter 4

Q3. Which of the following is considered personal property rather than real property?

Correct Answer: C
Explanation: A leasehold estate is a chattel real and is classified as personal property.
Citation: California Real Estate Reference Book – Chapter 4

Q4. Which of the following is NOT considered an encumbrance on real property?

Correct Answer: C
Explanation: A license is a personal, revocable privilege and does not create an interest in land.
Citation: California Real Estate Reference Book – Chapter 5

Q5. The government’s right to take private property for public use with just compensation is called:

Correct Answer: A
Explanation: Eminent domain allows the government to take private property for public use upon payment of just compensation.
Citation: California Civil Code §1001

Q6. Two people own property as joint tenants. If one dies, what happens?

Correct Answer: B
Explanation: Joint tenancy includes the right of survivorship; the deceased’s interest is extinguished.
Citation: California Real Estate Reference Book – Chapter 5

Q7. Which property is most appropriate for the cost approach?

Correct Answer: C
Explanation: The cost approach is best for unique or special-purpose properties with few comparables.
Citation: Appraisal Principles

Q8. NOI is $30,000 and the cap rate is 6%. What is the value?

Correct Answer: C
Explanation: Value = NOI ÷ cap rate. $30,000 ÷ 0.06 = $500,000.
Citation: California Real Estate Reference Book

Q9. Rent is $2,000 per month and GRM is 150. What is the value?

Correct Answer: C
Explanation: $2,000 × 150 = $300,000.
Citation: DRE Reference Book

Q10. A 100-year-old Victorian house has very small closets and no built-in heating system, making it less functional for modern living. This is an example of:

Correct Answer: B
Explanation: Functional obsolescence is a loss of value caused by out-of-date or impractical design features within the property. In this case, inadequate closets and lack of a heating system are internal deficiencies that reduce the home’s utility to modern buyers – a classic example of functional obsolescence 24] 24 Physical deterioration (A) would be wear and tear or damage (e.g. a leaking roof). Economic/external obsolescence (C) is loss of value from external factors (like neighborhood decline or zoning changes). “Curable depreciation” (D) is not a distinct category of obsolescence but rather refers to whether a deficiency can be feasibly corrected; some functional obsolescence can be curable (e.g. installing heating) while some may be incurable (e.g. poor layout).
Citation: California Real Estate Reference Book – Glossary (Functional Obsolescence)

Q11. In appraisal, “highest and best use” of a property is best described as:

Correct Answer: C
Explanation: The highest and best use of a property is that legally permissible use which is physically possible and financially feasible, and results in the maximum value or net return over time. It is essentially the most profitable use of the land or property. It may or may not be the current use. Answer C captures this: the use that is legally allowed and produces the greatest net return (profit) to the land and improvements 26] 26 It is not merely the highest gross income (A) if costs are too high; it must consider net return. Nor is it simply what the owner wants (B) or what zoning dictates (D) – zoning provides possible uses, but among those, the appraiser finds which yields highest value.
Citation: California Real Estate Reference Book – Glossary (Highest and Best Use)

Q12. A comparable property sold for $410,000 and has a feature superior to the subject property (the comp has an extra bedroom worth $10,000 more). To adjust for the differences in a sales comparison approach, the appraiser should:

Correct Answer: B
Explanation: In the market (sales comparison) approach, adjustments are made to the sale prices of the comparable properties to make them equivalent to the subject. If a comparable has a feature superior to the subject, the appraiser subtracts the value of that feature from the comp’s price. This brings the comp’s value down to what it would have been without that extra feature. Conversely, if the comp is inferior in some aspect, the appraiser adds value to the comp’s price. In this case, since the comp has an extra bedroom valued at $10,000 more than the subject, the appraiser subtracts $10,000 from the comp’s sale price of $410,000. That yields an adjusted comp value of $400,000 as an indication for the subject. This adjustment process ensures the comp reflects the subject’s characteristics.
Citation: Appraisal Practice – Sales Comparison Adjustments (Principle of Substitution and Comparison)

Q13. In California, a deed of trust differs from a mortgage in that:

Correct Answer: A
Explanation: The key structural difference is the number of parties. A deed of trust (trust deed) has three parties: the trustor (borrower), the beneficiary (lender), and a neutral trustee who holds “bare” legal title in trust. By contrast, a mortgage involves only two parties: the mortgagor (borrower) and mortgagee (lender). In California, deeds of trust are commonly used and they can be foreclosed (non-judicially by trustee’s sale). Legal title under a deed of trust is held by the trustee until the loan is paid (then reconveyed) 28] 28 With a mortgage, the borrower usually retains title but gives the lender a lien; both instruments create security interests in real property. Therefore, answer A is correct. (All real estate loans can be foreclosed if defaulted, so B is false; C is incorrect because in a mortgage the borrower keeps title but gives a lien, whereas in a trust deed the trustee holds title — opposite of C’s claim; D is false — both mortgages and trust deeds are used for real property loans.)
Citation: California Real Estate Reference Book – Glossary (Trustor in Deed of Trust) 29] 29

Q14. Which of the following is true regarding FHA-insured home loans in California?

Correct Answer: A
Explanation: FHA loans are mortgages insured by the Federal Housing Administration (a U.S. government agency). The FHA insurance protects the lender against loss if the borrower defaults 30] 30 This insurance allows lenders to offer loans with low down payments (often 3.5%) and more lenient credit requirements compared to conventional loans. FHA loans are not guaranteed by the state (B is false; VA loans are guaranteed by the federal VA for veterans). FHA loans do not require 20% down (often much less, so C is false). They are available to any qualified borrower (particularly aimed at low-to-moderate income or first-time buyers), not limited to veterans (D is false — veterans have separate VA loans).
Citation: U.S. Department of HUD/FHA Guidelines – FHA loans are government-insured 31] 31

Q15. The California Veterans Farm and Home Purchase (CalVet) program provides financing to qualified veterans by:

Correct Answer: C
Explanation: CalVet loans are structured as land sale contracts (contracts of sale). Under CalVet, the California Department of Veterans Affairs actually purchases the home and holds legal title as the vendor, then the veteran (vendee) buys the property from the department on a contract of sale. The veteran makes payments to the department, and title is deeded to the veteran only when the debt is fully paid. In other words, the veteran finances the property through a land contract with the state 32] 32 33] 33 (A is describing VA loans, which guarantee loans from private lenders – not the CalVet structure. B is inaccurate; in CalVet the state holds title, not a trust deed arrangement naming veteran as beneficiary. D is incorrect – CalVet loans are loans, not grants.)
Citation: California Department of Veterans Affairs – CalVet Loan (Land Contract Structure)

Q16. A lender charges a borrower “2 points” on a $250,000 loan. Approximately how much is this charge?

Correct Answer: B
Explanation: One point is equal to one percent (1%) of the loan amount 36] 36 “Two points” means 2% of the loan. For a $250,000 loan: 1% is $2,500, so 2% (two points) is $5,000. Points are typically charged by lenders as prepaid interest or loan origination fees. In this question, the borrower would pay $5,000 in points on a $250,000 loan.
Citation: California Real Estate Reference Book – Glossary (Discount Points) 37] 37

Q17. A real estate salesperson receives a buyer’s deposit check on Monday. Absent contrary instructions, California Commissioner’s Regulations require that this trust fund be:

Correct Answer: A
Explanation: Trust funds (like buyer deposit checks) must be properly handled by the agent. Under California law, a broker (or salesperson on the broker’s behalf) must, within three business days of receipt, deposit the funds into the broker’s trust account, or place them in a neutral escrow or hand them to the rightful principal 38] 38 For example, if a check is received Monday, it should be deposited or forwarded by Thursday. Options B and D are improper – an agent cannot commingle or hold a check indefinitely. The regulations (Commissioner’s Regulation 2832 and Code §10145) forbid holding client funds in a personal account. Therefore, the check should be handled as answer A describes.
Citation: California Business & Professions Code §10145; DRE Commissioner’s Regulation 2832 (Trust Fund Handling) 39] 39

Q18. “Commingling” in real estate brokerage practice means:

Correct Answer: C
Explanation: Commingling is strictly prohibited and occurs when a broker or agent mixes client trust funds with personal funds or the firm’s operating funds. For example, depositing a buyer’s deposit check into the broker’s general business account (or personal account) would be commingling. California law allows only a very limited amount of broker’s own money (up to $200) in a trust account, solely to cover bank fees 40] 40 Beyond that, any personal use or mixing is improper. (Choice B describes conversion, which is actually using the client’s money for personal use – a more serious violation/theft. Mixing multiple clients’ trust funds together in one trust account (A) is generally allowed and normal, as long as they are all trust funds and properly accounted for. D is simply proper handling, not commingling.) Commingling can lead to license discipline.
Citation: 10 Cal. Code Regs. §2832.1; DRE Reference Book – Trust Funds (Commingling Limit)

Q19. An agent tells homeowners in a neighborhood, “You should consider selling because a group of new foreign buyers is moving in, which might lower property values.” This conduct is:

Correct Answer: B
Explanation: The agent’s tactic is classic “blockbusting” (also called panic peddling) – attempting to induce owners to sell by suggesting that the entry of certain people (in this case, based on foreign origin or presumably a particular ethnicity) will cause property values to fall. This is explicitly illegal under fair housing laws (California & federal) as a form of discrimination. It does not matter if the agent claims it’s true or not – it’s prohibited to make such representations. “Steering” refers to guiding buyers/renters toward or away from areas based on protected characteristics – that’s a different practice. Here, since the agent is working on sellers by fear of demographic changes, it’s blockbusting. Therefore, it is not legitimate marketing (A is wrong) and it’s not excusable by outcomes (D is wrong). It’s illegal, period, under the Fair Housing Act and California law (Business & Professions Code §10177(g)).
Citation: California Fair Housing Law – Blockbusting Prohibition (Cal. Civ. Code §52.3; §10177(l))

Q20. Which of the following is a protected class under California’s Fair Employment and Housing Act that is not explicitly protected by federal fair housing law?

Correct Answer: A
Explanation: California’s fair housing law covers all the federal protected categories (race, color, religion, sex, national origin, familial status, disability) and adds additional protections. Sexual orientation is explicitly protected under California law (as are gender identity/expression, marital status, ancestry, source of income, among others) 42] 42 The federal Fair Housing Act, however, does not explicitly list sexual orientation as a protected class (as of the time of writing, though some interpretations may offer limited protection). Race, religion, and national origin (B, C, D) are protected by federal law as well. Therefore, the category in the choices that is uniquely protected in California but not stated in the federal act is sexual orientation.
Citation: California Government Code §12955 (Fair Housing protected categories); Civil Rights Dept. Guidance

Q21. Which of these advertisements would violate fair housing laws?

Correct Answer: A
Explanation: Advertising “no children” is discrimination based on familial status, which is prohibited under federal and California fair housing laws.

Q22. A broker must retain copies of all transaction documents for at least:

Correct Answer: B
Explanation: California law requires brokers to retain transaction records for a minimum of three years.

Q23. Which task may an unlicensed real estate assistant legally perform?

Correct Answer: C
Explanation: Clerical and administrative tasks are permitted; licensed activities are not.

Q24. Which is grounds for disciplinary action by the DRE?

Correct Answer: A
Explanation: Intentional nondisclosure of material facts is a violation of license law.

Q25. How often must a California real estate salesperson renew their license?

Correct Answer: B
Explanation: Licenses are renewed every four years with 45 hours of continuing education.

Q26. What is the maximum Recovery Account payout per licensee?

Correct Answer: B
Explanation: The aggregate maximum is $250,000 per licensee.

Q27. As of 2024, residential security deposits are generally limited to:

Correct Answer: B
Explanation: AB 12 limits most residential security deposits to one month’s rent.

Q28. When must a landlord return or account for a security deposit?

Correct Answer: B

Q29. Which statement about the Transfer Disclosure Statement is TRUE?

Correct Answer: A

Q30. Under Civil Code §2079, a real estate agent must:

Correct Answer: A

Q31. Which is NOT required for a valid contract?

Correct Answer: D

Q32. An exclusive listing agreement must:

Correct Answer: A

Q33. Which is true about an option contract?

Correct Answer: C

Q34. A counteroffer has what legal effect?

Correct Answer: B

Q35. Before charging an advance fee, a broker must:

Correct Answer: A

Q36. Liquidated damages in most residential sales are limited to:

Correct Answer: B

Q37. A homeowner closes on June 10. Property taxes of $3,600 were prepaid for the year. Using a 360-day year, what is the seller’s credit?

Correct Answer: B
Explanation: Buyer owns 201 days. (201 ÷ 360) × $3,600 = $2,010.

Q38. The Doctrine of Emblements allows:

Correct Answer: A

Q39. Placing trust funds into a personal account is:

Correct Answer: A

Q40. A property earns $180,000 NOI at a 6% cap rate. Value?

Correct Answer: B

Q41. A buyer qualifies for a 90% LTV conventional loan on a $720,000 purchase. What is the required down payment?

Correct Answer: B
Explanation: A 90% LTV loan means the borrower finances 90% of the purchase price and provides a 10% down payment. Ten percent of $720,000 is $72,000.

Q42. Which of the following deeds provides the least protection to a buyer and contains no warranties?

Correct Answer: C
Explanation: A quitclaim deed transfers whatever interest the grantor may have, if any, without warranties or guarantees.

Q43. Which type of listing allows a seller to list with multiple brokers but only pay commission to the one who procures a ready, willing, and able buyer?

Correct Answer: B

Q44. Under California law, how long must a broker retain records related to a real estate transaction?

Correct Answer: C

Q45. A home sells for $950,000. If the listing broker receives a 2.5% commission and splits 40% with the buyer’s agent, how much does the buyer’s agent earn?

Correct Answer: A

Q46. A tenant with a one-year lease is evicted for failure to pay rent. Which legal process must the landlord use?

Correct Answer: A

Q47. A licensee uses drone footage of nearby homes without permission. This may violate laws related to:

Correct Answer: C

Q48. What is the primary difference between a general lien and a specific lien?

Correct Answer: C

Q49. When must a licensee disclose dual agency?

Correct Answer: C

Q50. A property sells for $825,000 with a 5.5% commission. If the listing broker receives 60%, how much is their share?

Correct Answer: C

Q51. What is the primary legal effect of recording a deed?

Correct Answer: C

Q52. Which is a voluntary lien?

Correct Answer: C

Q53. Which action is most likely to result in DRE discipline?

Correct Answer: C

Q54. Which makes a loan contingency enforceable?

Correct Answer: B

Q55. Which type of depreciation is usually incurable?

Correct Answer: D

Q56. Which is an example of functional obsolescence?

Correct Answer: B

Q57. A borrower with a 95% LTV loan will most likely be required to:

Correct Answer: A

Q58. Which document transfers interest from trustor to trustee?

Correct Answer: C

Q59. Which action violates RESPA?

Correct Answer: B

Q60. If a seller dies after signing a purchase agreement, what happens?

Correct Answer: B

Q61. In California, what is the primary purpose of a Preliminary Title Report?

Q62. Misrepresenting a property’s boundary lines is considered:

Q63. In a 1031 exchange, replacement property must be identified within:

Q64. Which document transfers title to real property?

Q65. The primary purpose of a deed of trust is to:

Q66. An alienation clause allows the lender to:

Q67. A California real estate license not renewed within two years is:

Q68. Which law primarily governs real estate advertising in California?

Q69. An agency relationship is created by:

Q70. The best appraisal method for income-producing property is:

Q71. A lien that attaches to all property owned by a debtor is a:

Q72. Which is a voluntary lien?

Q73. Dual agency must be disclosed:

Q74. External obsolescence is usually:

Q75. Functional obsolescence is best illustrated by:

Q76. A buyer with a 95% LTV loan will likely be required to obtain:

Q77. Recording a deed provides:

Q78. An open listing allows commission to be paid to:

Q79. A counteroffer legally:

Q80. In California, liquidated damages in a residential sale are generally capped at:

Q81. When a California real estate broker receives a buyer’s earnest money deposit payable to the broker, what is the maximum time allowed to place the funds into a trust account if no written instructions state otherwise?

Correct Answer: B
Explanation: A broker who receives trust funds must deposit them into a trust account within three business days unless written instructions provide otherwise.
Citation: California Business & Professions Code §10145

Q82. What type of tenancy exists when two unmarried individuals buy a house together and the deed does not specify their rights?

Correct Answer: C
Explanation: Unless otherwise specified, California law presumes a tenancy in common when title is taken by two or more persons.
Citation: California Civil Code §686

Q83. A seller fails to disclose a known roof leak on the Transfer Disclosure Statement. Which legal theory most directly applies if the buyer suffers damages?

Correct Answer: B
Explanation: Failing to disclose a known material defect may constitute negligent misrepresentation if the buyer relies on the omission.
Citation: California Civil Code §§1102, 1710

Q84. In California, which circumstance most clearly requires a real estate license to lawfully collect compensation?

Correct Answer: C
Explanation: Negotiating leases or rents for another person in exchange for compensation requires a California real estate license.
Citation: California Business & Professions Code §10131(b)

Q85. Which transfer is exempt from the California Transfer Disclosure Statement (TDS) requirement?

Correct Answer: B
Explanation: Transfers ordered by a court, such as probate distributions, are exempt from the TDS requirement.
Citation: California Civil Code §1102.2

Q86. Under California agency law, which duty requires an agent to present all offers to the principal promptly?

Correct Answer: B
Explanation: The duty of disclosure requires an agent to timely convey all material information, including offers, to the principal.
Citation: California Civil Code §2079.16

Q87. Which loan type is most commonly insured by the Federal Housing Administration (FHA)?

Correct Answer: C
Explanation: FHA loans are designed primarily to insure residential mortgages for owner-occupied properties.
Citation: HUD FHA Handbook

Q88. Which situation best illustrates a broker acting as a disclosed dual agent?

Correct Answer: B
Explanation: A broker is a disclosed dual agent when representing both parties with full written disclosure and consent.
Citation: California Civil Code §2079.17

Q89. Which item is considered real property rather than personal property?

Correct Answer: C
Explanation: Built-in cabinets are permanently attached and considered fixtures, which are part of real property.
Citation: California Civil Code §660

Q90. A real estate broker must retain transaction records for at least how long under California law?

Correct Answer: B
Explanation: Brokers are required to retain transaction records for at least three years following completion.
Citation: California Business & Professions Code §10148

Q91. Which appraisal principle states that the value of a property is influenced by the cost of acquiring an equally desirable substitute?

Correct Answer: C
Explanation: The principle of substitution holds that buyers will not pay more than the cost of an acceptable alternative.
Citation: DRE Reference Book

Q92. Which form of ownership allows a surviving co-owner to automatically receive the deceased owner’s interest?

Correct Answer: B
Explanation: Joint tenancy includes the right of survivorship, allowing the surviving owner to take full title automatically.
Citation: California Civil Code §683

Q93. What is the primary purpose of the California Real Estate Recovery Account?

Correct Answer: B
Explanation: The Recovery Account compensates consumers who obtain a judgment against a dishonest licensee and cannot collect damages.
Citation: California Business & Professions Code §10471

Q94. Which disclosure is specifically required for residential properties located in a designated flood hazard area?

Correct Answer: A
Explanation: Flood hazard zones must be disclosed through the Natural Hazard Disclosure Statement.
Citation: California Civil Code §1103

Q95. Which act by a licensee would most likely result in disciplinary action by the DRE?

Correct Answer: B
Explanation: Secret profits violate fiduciary duties and are grounds for disciplinary action by the DRE.
Citation: California Business & Professions Code §10176(g)

Q96. Which appraisal approach is most appropriate for estimating the value of a single-family residence?

Correct Answer: C
Explanation: The sales comparison approach best reflects market behavior for owner-occupied residential properties.
Citation: DRE Reference Book

Q97. What is the maximum term of years for a leasehold estate for years?

Correct Answer: D
Explanation: California law does not impose a specific maximum term for an estate for years leasehold.
Citation: California Civil Code §761

Q98. Which statement best describes constructive notice?

Correct Answer: B
Explanation: Constructive notice arises from information available in public records, even if not actually known.
Citation: California Civil Code §1213

Q99. Which environmental disclosure is required for residential property built before 1978?

Correct Answer: B
Explanation: Federal law requires disclosure of known lead-based paint hazards for housing built before 1978.
Citation: 42 U.S.C. §4852d

Q100. What is the primary purpose of a preliminary title report in a California real estate transaction?

Correct Answer: B
Explanation: A preliminary title report lists recorded documents and conditions that affect title, but it is not an insurance policy.
Citation: California Insurance Code §12340.11

Q101. Under California law, which action by a real estate licensee most clearly constitutes misrepresentation?

Correct Answer: B
Explanation: Misrepresentation occurs when a licensee knowingly makes false statements of material fact that a buyer relies upon.
Citation: California Business & Professions Code §10176(a)

Q102. Which appraisal principle refers to the present worth of future benefits?

Correct Answer: B
Explanation: Anticipation holds that value is created by the expectation of future benefits from property ownership.
Citation: DRE Reference Book

Q103. A buyer purchases property “as is” in California. Which statement is correct?

Correct Answer: C
Explanation: An “as is” sale does not relieve the seller of the duty to disclose known material facts affecting value or desirability.
Citation: California Civil Code §1102

Q104. Which government body regulates and issues real estate licenses in California?

Correct Answer: B
Explanation: The California Department of Real Estate (DRE) is the agency responsible for licensing and regulation of real estate professionals.
Citation: California Business & Professions Code §10050

Q105. Which document transfers title to real property in California?

Correct Answer: B
Explanation: A grant deed is commonly used in California to transfer ownership of real property.
Citation: California Civil Code §1092

Q106. Which situation requires disclosure of a Mello-Roos Community Facilities District?

Correct Answer: B
Explanation: Properties subject to Mello-Roos special taxes require disclosure to buyers.
Citation: California Civil Code §1102.6b

Q107. What is the primary function of an escrow holder?

Correct Answer: C
Explanation: An escrow holder is a neutral third party who carries out escrow instructions for all parties.
Citation: California Financial Code §17003

Q108. Which loan is typically guaranteed by the Department of Veterans Affairs (VA)?

Correct Answer: C
Explanation: VA loans are guaranteed by the U.S. Department of Veterans Affairs to assist eligible veterans and service members.
Citation: 38 U.S.C. §3701

Q109. Which term describes a decrease in property value due to external factors?

Correct Answer: C
Explanation: Economic obsolescence results from external factors such as market conditions or nearby nuisances.
Citation: DRE Reference Book

Q110. What type of easement benefits a specific parcel of land?

Correct Answer: B
Explanation: An appurtenant easement benefits a particular parcel of land and transfers with the property.
Citation: California Civil Code §801

Q111. Which statement best describes a mortgage?

Correct Answer: B
Explanation: A mortgage is a security instrument that creates a lien on real property to secure repayment of a debt.
Citation: California Civil Code §2920

Q112. Which type of zoning restricts land use to residential purposes?

Correct Answer: D
Explanation: Residential zoning limits land use primarily to housing and related uses.
Citation: California Government Code §65800

Q113. Which action would most likely create a prescriptive easement?

Correct Answer: B
Explanation: Prescriptive easements arise from open, notorious, continuous, and hostile use over the statutory period.
Citation: California Civil Code §1007

Q114. What is the purpose of the Real Estate Recovery Account assessment paid by licensees?

Correct Answer: B
Explanation: Licensees fund the Recovery Account to reimburse consumers who suffer losses due to licensee fraud or dishonesty.
Citation: California Business & Professions Code §10471

Q115. Which term refers to the legal right to use another person’s land for a specific purpose?

Correct Answer: B
Explanation: An easement grants a nonpossessory right to use land owned by another for a limited purpose.
Citation: California Civil Code §801

Q116. Which contract element ensures that all parties are legally capable of entering into an agreement?

Correct Answer: C
Explanation: Capacity requires that parties have the legal ability, such as age and mental competence, to contract.
Citation: California Civil Code §1556

Q117. Which clause in a deed provides assurance that the grantor has not previously encumbered the property?

Correct Answer: B
Explanation: The covenant against encumbrances assures the grantee that no undisclosed liens or burdens exist on title.
Citation: California Civil Code §1113

Q118. What is the primary purpose of zoning ordinances?

Correct Answer: B
Explanation: Zoning ordinances are enacted to regulate land use, density, and development within jurisdictions.
Citation: California Government Code §65800

Q119. Which condition must be met for a valid listing agreement in California?

Correct Answer: B
Explanation: Listing agreements must be in writing and signed by the seller to be enforceable.
Citation: California Civil Code §1624

Q120. What is the primary purpose of a deed of trust in California?

Correct Answer: B
Explanation: A deed of trust secures repayment of a loan by placing legal title with a trustee until the debt is satisfied.
Citation: California Civil Code §2920

A. Obedience B. Loyalty“> C. Disclosure D. Reasonable care

Correct Answer: B
Explanation: The duty of loyalty requires an agent to act solely in the best interests of the principal and avoid conflicts of interest.
Citation: California Civil Code §2079.16

Q122. Which disclosure is required when selling residential property located near an airport?

Correct Answer: B
Explanation: Properties located within an airport influence area require disclosure due to potential noise and safety impacts.
Citation: California Civil Code §1103.4

Q123. What is the primary purpose of a contingency clause in a purchase agreement?

Correct Answer: B
Explanation: Contingency clauses permit a party to cancel the contract if specified conditions, such as financing or inspections, are not met.
Citation: California Civil Code §1436

Q124. Which form of depreciation results from outdated design or layout?

Correct Answer: B
Explanation: Functional obsolescence occurs when a property’s design or features no longer meet market preferences.
Citation: DRE Reference Book

Q125. Which agency enforces federal fair housing laws?

Correct Answer: B
Explanation: HUD enforces the federal Fair Housing Act, which prohibits discrimination in housing-related transactions.
Citation: 42 U.S.C. §3610

Q126. What is the primary purpose of a title insurance policy?

Correct Answer: B
Explanation: Title insurance protects owners and lenders against losses from defects in title existing at the time of purchase.
Citation: California Insurance Code §12340.1

Q127. Which term describes the bundle of rights that accompanies property ownership?

Correct Answer: C
Explanation: Property ownership includes a bundle of rights such as possession, control, exclusion, enjoyment, and disposition.
Citation: DRE Reference Book

Q128. Which legal description method uses bearings and distances?

Correct Answer: C
Explanation: Metes and bounds descriptions define property boundaries using distances and directional bearings.
Citation: California Civil Code §1092

Q129. Which factor is considered when determining highest and best use?

Correct Answer: B
Explanation: Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.
Citation: DRE Reference Book

Q130. What is the primary purpose of a promissory note?

Correct Answer: B
Explanation: A promissory note is the borrower’s written promise to repay the loan under specified terms.
Citation: California Commercial Code §3104

Q131. Which disclosure applies to properties located in a seismic hazard zone?

Correct Answer: A
Explanation: Seismic hazard zones are disclosed through the Natural Hazard Disclosure Statement.
Citation: California Civil Code §1103

Q132. Which appraisal approach is based on replacement or reproduction cost?

Correct Answer: C
Explanation: The cost approach estimates value based on the cost to replace or reproduce improvements minus depreciation.
Citation: DRE Reference Book

Q133. Which restriction is imposed by private agreements rather than government action?

Correct Answer: C
Explanation: Deed restrictions are private limitations placed on property use by previous owners or developers.
Citation: California Civil Code §1468

Q134. What is the maximum amount a claimant may receive per transaction from the Real Estate Recovery Account?

Correct Answer: C
Explanation: California limits Recovery Account payments to $50,000 per transaction as of current law.
Citation: California Business & Professions Code §10474

Q135. Which type of contract may be canceled by only one party without penalty?

Correct Answer: D
Explanation: A voidable contract may be canceled by one party due to legal reasons such as misrepresentation or incapacity.
Citation: California Civil Code §1689

Q136. Which statement best describes an option contract in real estate?

Correct Answer: B
Explanation: An option contract is unilateral, granting the optionee the right, but not the obligation, to purchase property within a specified time.
Citation: California Civil Code §1017

Q137. Which type of notice is implied by law through public records?

Correct Answer: B
Explanation: Constructive notice is knowledge the law presumes due to information available in public records.
Citation: California Civil Code §1213

Q138. What is the main purpose of rent control ordinances?

Correct Answer: B
Explanation: Rent control ordinances limit the amount and frequency of rent increases to protect tenants.
Citation: California Civil Code §1947.12

Q139. Which element is required for a valid contract but not necessarily written?

Correct Answer: A
Explanation: Consideration is required for contract validity and may exist without a written agreement unless the statute of frauds applies.
Citation: California Civil Code §1550

Q140. What is the legal effect of recording a deed?

Correct Answer: B
Explanation: Recording a deed gives constructive notice of ownership to the public and protects priority of title.
Citation: California Civil Code §1213

Q141. Which fiduciary duty requires a real estate licensee to follow lawful instructions of the principal?

Correct Answer: B
Explanation: Obedience requires the agent to follow all lawful instructions of the principal, even if the agent disagrees.
Citation: California Civil Code §2079.16

Q142. Which type of fraud occurs when a material fact is intentionally concealed?

Correct Answer: C
Explanation: Fraud by concealment occurs when a party intentionally hides a material fact that they have a duty to disclose.
Citation: California Civil Code §1710

Q143. Which appraisal concept recognizes that land value tends to increase while improvements depreciate?

Correct Answer: D
Explanation: The principle of increasing and decreasing returns explains that land may appreciate while improvements lose value over time.
Citation: DRE Reference Book

Q144. What type of agency relationship exists when a broker represents both buyer and seller with consent?

Correct Answer: C
Explanation: Representing both buyer and seller with informed written consent creates a disclosed dual agency relationship.
Citation: California Civil Code §2079.17

Q145. Which notice informs tenants of their rights under California law regarding foreclosed properties?

Correct Answer: D
Explanation: California requires that tenants receive a Notice of Tenants’ Rights when property ownership changes due to foreclosure.
Citation: California Civil Code §2924.85

Q146. Which factor most directly affects a property’s market value?

Correct Answer: B
Explanation: Market value is primarily influenced by the balance between supply and demand in the marketplace.
Citation: DRE Reference Book

Q147. Which type of lease continues indefinitely until terminated by notice?

Correct Answer: C
Explanation: A periodic estate renews automatically for successive periods until proper notice of termination is given.
Citation: California Civil Code §1946

Q148. Which law requires lenders to provide borrowers with information about loan costs and terms?

Correct Answer: B
Explanation: The Truth in Lending Act requires clear disclosure of loan terms, interest rates, and total costs to borrowers.
Citation: 15 U.S.C. §1601

Q149. Which situation best illustrates commingling of funds?

Correct Answer: A
Explanation: Commingling occurs when trust funds are mixed with a broker’s personal or operating funds, which is prohibited.
Citation: California Business & Professions Code §10145

Q150. What is the primary purpose of a homeowners association (HOA)?

Correct Answer: B
Explanation: HOAs are established to manage, maintain, and govern common areas and enforce community rules.
Citation: California Civil Code §4000

Q151. Which type of interest gives the holder the right to occupy property without ownership?

Correct Answer: B
Explanation: A leasehold estate grants possession and use of property without ownership rights.
Citation: California Civil Code §761

Q152. Which disclosure is required for residential property built before 1978?

Correct Answer: B
Explanation: Federal law mandates disclosure of known lead-based paint hazards in housing built before 1978.
Citation: 42 U.S.C. §4852d

Q153. Which clause in a deed defines the extent of ownership being conveyed?

Correct Answer: B
Explanation: The habendum clause describes the type and duration of the estate being transferred.
Citation: California Civil Code §1092

Q154. Which factor is NOT considered when determining highest and best use?

Correct Answer: C
Explanation: Highest and best use analysis excludes personal preferences and focuses on objective criteria.
Citation: DRE Reference Book

Q155. Which document is used to secure a loan with real property in California?

Correct Answer: B
Explanation: A deed of trust secures repayment of a loan by placing legal title with a trustee as security.
Citation: California Civil Code §2920

Q156. Which act would most likely violate California fair housing laws?

Correct Answer: B
Explanation: Refusing housing services based on race is prohibited under state and federal fair housing laws.
Citation: 42 U.S.C. §3604; California Government Code §12955

Q157. Which statement best describes constructive eviction?

Correct Answer: B
Explanation: Constructive eviction occurs when a landlord’s failure to maintain habitability effectively forces a tenant to vacate.
Citation: California Civil Code §1941.1

Q158. Which type of interest is considered personal property?

Correct Answer: C
Explanation: Leasehold estates are classified as personal property interests, not real property ownership.
Citation: California Civil Code §761

Q159. Which disclosure informs buyers about property tax assessments in certain districts?

Correct Answer: B
Explanation: Mello-Roos disclosures inform buyers of special tax assessments levied within community facilities districts.
Citation: California Civil Code §1102.6b

Q160. What is the primary purpose of the statute of frauds?

Correct Answer: B
Explanation: The statute of frauds requires certain contracts, including real estate agreements, to be in writing to be enforceable.
Citation: California Civil Code §1624

Q161. Which duty requires a real estate broker to safeguard and properly account for client funds?

Correct Answer: C
Explanation: The duty of accounting requires brokers to properly handle, safeguard, and account for trust funds and property.
Citation: California Civil Code §2079.16; Business & Professions Code §10145

Q162. Which statement best describes an exclusive right-to-sell listing?

Correct Answer: C
Explanation: Under an exclusive right-to-sell listing, the broker is entitled to a commission no matter who procures the buyer.
Citation: DRE Reference Book

Q163. Which factor determines whether a fixture is real or personal property?

Correct Answer: B
Explanation: Whether an item is a fixture depends largely on how permanently it is attached and intended to remain with the property.
Citation: California Civil Code §660

Q164. Which disclosure must be provided for residential property located in a wildfire hazard zone?

Correct Answer: B
Explanation: Wildfire hazard zones are included within the Natural Hazard Disclosure requirements in California.
Citation: California Civil Code §1103

Q165. Which loan feature allows a borrower to pay off a loan early without penalty?

Correct Answer: B
Explanation: A prepayment privilege allows the borrower to repay the loan early without incurring a penalty.
Citation: DRE Reference Book

Q166. Which circumstance requires a real estate broker to disclose compensation received from more than one party?

Correct Answer: C
Explanation: A broker must disclose dual compensation to all principals as it constitutes a potential conflict of interest.
Citation: California Civil Code §2079.17

Q167. Which type of notice terminates a month-to-month tenancy in California?

Correct Answer: B
Explanation: A month-to-month tenancy may generally be terminated by a 30-day written notice under California law, subject to tenant protections.
Citation: California Civil Code §1946.1

Q168. Which appraisal principle holds that value is affected by surrounding properties?

Correct Answer: B
Explanation: The principle of conformity states that property values are influenced by the degree of similarity within a neighborhood.
Citation: DRE Reference Book

Q169. Which document provides evidence of a borrower’s promise to repay a loan?

Correct Answer: B
Explanation: A promissory note is the written evidence of the borrower’s obligation to repay a loan.
Citation: California Commercial Code §3104

Q170. Which action would most likely constitute a violation of trust fund handling rules?

Correct Answer: B
Explanation: Commingling trust funds with personal funds violates California trust fund handling requirements.
Citation: California Business & Professions Code §10145

Q171. Which condition must exist for a valid prescriptive easement in California?

Correct Answer: B
Explanation: Prescriptive easements require open, notorious, continuous, and hostile use over the statutory period.
Citation: California Civil Code §1007

Q172. Which type of zoning variance allows deviation from zoning requirements due to unique property hardship?

Correct Answer: B
Explanation: A zoning variance grants relief from zoning regulations due to unique hardships affecting a specific property.
Citation: California Government Code §65906

Q173. Which contract is binding on one party but not the other?

Correct Answer: C
Explanation: A unilateral contract obligates only one party until the other performs the requested act.
Citation: California Civil Code §1439

Q174. Which environmental law addresses disclosure of lead-based paint hazards?

Correct Answer: C
Explanation: Federal law mandates disclosure of lead-based paint hazards for residential properties built before 1978.
Citation: 42 U.S.C. §4852d

Q175. Which action best demonstrates steering?

Correct Answer: B
Explanation: Steering involves directing buyers toward or away from neighborhoods based on protected characteristics, which is illegal.
Citation: 42 U.S.C. §3604; California Government Code §12955

Q176. What is the legal effect of a lis pendens?

Correct Answer: B
Explanation: A lis pendens gives public notice that the property is subject to ongoing litigation affecting title.
Citation: California Code of Civil Procedure §405.20

Q177. Which type of lien is given priority by law regardless of recording order?

Correct Answer: B
Explanation: Mechanics liens relate back to the start of construction and take priority over later-recorded liens.
Citation: California Civil Code §8450

Q178. Which type of insurance protects against liability claims arising from property ownership?

Correct Answer: C
Explanation: Homeowner’s liability insurance covers injuries or damages suffered by others on the property.
Citation: Insurance Industry Standard

Q179. Which requirement must be met for a valid option contract?

Correct Answer: B
Explanation: An option contract must be supported by consideration to be enforceable.
Citation: California Civil Code §1017

Q180. Which document terminates a deed of trust upon full repayment of the loan?

Correct Answer: B
Explanation: A reconveyance transfers title back to the borrower after the loan secured by a deed of trust is paid in full.
Citation: California Civil Code §2941

Q181. Which duty requires a real estate agent to disclose all known material facts affecting value or desirability?

Correct Answer: B
Explanation: The duty of disclosure obligates an agent to reveal all known material facts that could affect a buyer’s decision.
Citation: California Civil Code §2079.16

Q182. Which document provides notice that a borrower is in default under a deed of trust?

Correct Answer: B
Explanation: A Notice of Default is recorded when a borrower fails to meet loan obligations under a deed of trust.
Citation: California Civil Code §2924

Q183. Which appraisal principle states that the value of a property is influenced by future expectations?

Correct Answer: B
Explanation: Anticipation holds that present value is based on expectations of future benefits from the property.
Citation: DRE Reference Book

Q184. Which disclosure informs buyers that a property lies within a flood hazard area?

Correct Answer: B
Explanation: Flood zones are disclosed through the Natural Hazard Disclosure Statement.
Citation: California Civil Code §1103

Q185. Which loan clause allows the lender to demand full repayment upon transfer of ownership?

Correct Answer: C
Explanation: A due-on-sale clause allows the lender to accelerate the loan if the property is transferred without consent.
Citation: Garn–St. Germain Act, 12 U.S.C. §1701j-3

Q186. Which statement best describes a net listing?

Correct Answer: B
Explanation: In a net listing, the broker’s compensation is any amount above the seller’s stated net price, which is legal but discouraged in California.
Citation: California Business & Professions Code §10176(g)

Q187. Which government power allows taking private property for public use with compensation?

Correct Answer: B
Explanation: Eminent domain permits the government to acquire private property for public use with just compensation.
Citation: California Constitution, Article I, §19

Q188. Which statement best describes a life estate?

Correct Answer: B
Explanation: A life estate lasts for the duration of a specified person’s life and then terminates.
Citation: California Civil Code §766

Q189. Which disclosure is required when selling a condominium in California?

Correct Answer: A
Explanation: Sellers of condominiums must provide HOA documents, including CC&Rs, budgets, and rules.
Citation: California Civil Code §4525

Q190. Which act would most likely be considered blockbusting?

Correct Answer: B
Explanation: Blockbusting involves encouraging owners to sell by suggesting neighborhood changes related to protected classes.
Citation: 42 U.S.C. §3604(e)

Q191. Which document authorizes a trustee to conduct a foreclosure sale?

Correct Answer: B
Explanation: A Notice of Trustee’s Sale authorizes and schedules the foreclosure sale under a deed of trust.
Citation: California Civil Code §2924f

Q192. Which appraisal approach is most appropriate for valuing an apartment building?

Correct Answer: C
Explanation: The income approach best reflects value for income-producing properties such as apartment buildings.
Citation: DRE Reference Book

Q193. Which clause gives the lender the right to declare the entire loan balance due after default?

Correct Answer: C
Explanation: An acceleration clause allows the lender to demand immediate payment of the full loan balance upon default.
Citation: DRE Reference Book

Q194. Which disclosure is required for residential property located in a very high fire hazard severity zone?

Correct Answer: B
Explanation: Very high fire hazard severity zones must be disclosed via the Natural Hazard Disclosure Statement.
Citation: California Civil Code §1103

Q195. Which type of agency relationship arises when a buyer’s broker cooperates with the seller’s broker?

Correct Answer: B
Explanation: Subagency occurs when one broker cooperates with another broker and represents the seller as an agent.
Citation: California Civil Code §2079.13

Q196. Which interest gives the holder full ownership with no limitations?

Correct Answer: B
Explanation: Fee simple absolute represents the most complete form of property ownership.
Citation: California Civil Code §761

Q197. Which act would most likely be considered commingling?

Correct Answer: B
Explanation: Commingling occurs when a broker mixes client trust funds with personal or operating funds.
Citation: California Business & Professions Code §10145

Q198. Which statement best describes a mechanics lien?

Correct Answer: B
Explanation: Mechanics liens secure payment for contractors, laborers, and suppliers who improve real property.
Citation: California Civil Code §8400

Q199. Which notice must be recorded before a trustee’s sale can occur?

Correct Answer: B
Explanation: The Notice of Trustee’s Sale must be recorded and published before the foreclosure sale is held.
Citation: California Civil Code §2924f

Q200. Which contract term refers to something of value exchanged between parties?

Correct Answer: B
Explanation: Consideration is the value exchanged between parties and is required for a valid contract.
Citation: California Civil Code §1550

Q201. Which element is required for a valid real estate contract?

Correct Answer: B
Explanation: Consideration is one of the essential elements required to form a valid and enforceable contract.
Citation: California Civil Code §1550

Q202. Which disclosure informs buyers about noise impacts from nearby airports?

Correct Answer: B
Explanation: Properties within an airport influence area require disclosure due to potential noise and safety impacts.
Citation: California Civil Code §1353

Q203. Which appraisal approach is most appropriate for a newly constructed special-purpose building?

Correct Answer: C
Explanation: The cost approach is most useful for new or special-purpose properties where comparable sales are limited.
Citation: DRE Reference Book

Q204. Which action is required of a broker when handling trust funds?

Correct Answer: A
Explanation: California law requires brokers to deposit trust funds within three business days of receipt unless otherwise instructed.
Citation: California Business & Professions Code §10145

Q205. Which clause allows a tenant to purchase the leased property?

Correct Answer: B
Explanation: An option clause grants the tenant the right to purchase the property under specified terms.
Citation: California Civil Code §1017

Q206. Which act would most likely violate California fair housing laws?

Correct Answer: B
Explanation: Discrimination based on disability is prohibited under state and federal fair housing laws.
Citation: 42 U.S.C. §3604; California Government Code §12955

Q207. Which document conveys title from seller to buyer?

Correct Answer: B
Explanation: A grant deed transfers ownership interest from the seller (grantor) to the buyer (grantee).
Citation: California Civil Code §1092

Q208. Which appraisal principle states that value is limited by the cost of acquiring a substitute property?

Correct Answer: B
Explanation: The principle of substitution holds that buyers will not pay more than the cost of a comparable substitute property.
Citation: DRE Reference Book

Q209. Which clause prevents transfer of property without lender approval?

Correct Answer: B
Explanation: A due-on-sale clause allows the lender to require loan payoff upon transfer of ownership.
Citation: 12 U.S.C. §1701j-3

Q210. Which notice is required to begin nonjudicial foreclosure proceedings?

Correct Answer: B
Explanation: Recording a Notice of Default initiates the nonjudicial foreclosure process in California.
Citation: California Civil Code §2924

Q211. Which type of lien is created by agreement of the parties?

Correct Answer: B
Explanation: Voluntary liens, such as mortgages and deeds of trust, are created by agreement between borrower and lender.
Citation: DRE Reference Book

Q212. Which government power allows regulation of land use through zoning?

Correct Answer: B
Explanation: Police power authorizes the state to regulate land use to protect public health, safety, and welfare.
Citation: California Constitution, Article XI

Q213. Which type of tenancy includes the right of survivorship?

Correct Answer: B
Explanation: Joint tenancy includes the right of survivorship, allowing the surviving owner to automatically acquire the decedent’s interest.
Citation: California Civil Code §683

Q214. Which disclosure warns buyers about potential industrial land contamination?

Correct Answer: C
Explanation: Environmental hazard disclosures inform buyers of known contamination or industrial hazards affecting property.
Citation: California Civil Code §1102

Q215. Which document outlines rules and restrictions within a common interest development?

Correct Answer: B
Explanation: CC&Rs set forth the covenants, conditions, and restrictions governing common interest developments.
Citation: California Civil Code §4250

Q216. Which contract is binding on both parties once accepted?

Correct Answer: B
Explanation: A bilateral contract involves mutual promises that bind both parties upon acceptance.
Citation: California Civil Code §1439

Q217. Which insurance protects lenders against borrower default?

Correct Answer: B
Explanation: Mortgage insurance protects lenders if the borrower defaults on the loan.
Citation: Federal Housing Finance Regulations

Q218. Which situation requires disclosure of a death on the property?

Correct Answer: B
Explanation: California law requires disclosure of deaths occurring on the property within the prior three years.
Citation: California Civil Code §1710.2

Q219. Which type of deed offers the greatest protection to the grantee?

Correct Answer: C
Explanation: A warranty deed provides the highest level of protection by guaranteeing clear title against defects.
Citation: DRE Reference Book

Q220. Which method is commonly used to establish property boundaries?

Correct Answer: B
Explanation: Surveys are used to determine exact property boundaries and dimensions.
Citation: DRE Reference Book

Q221. A broker arranging a loan fails to provide the Mortgage Loan Disclosure Statement. What has been violated?

Correct Answer: D
Explanation: Article 7 of Real Estate Law requires brokers to deliver the Mortgage Loan Disclosure Statement timely.
Citation: California Business & Professions Code §10166

Q222. A tenant moves out and leaves significant damage. What must the landlord do before retaining deposit funds?

Correct Answer: C
Explanation: Landlords must provide an itemized list of deposit deductions and receipts within 21 days of tenant move-out.
Citation: California Civil Code §1950.5(g)

Q223. What does “as is” imply in a property sale?

Correct Answer: C
Explanation: “As is” means the seller won’t repair but must still disclose all known material defects.
Citation: California Civil Code §1102 et seq.

Q224. When must the Agency Disclosure form be provided to a buyer?

Correct Answer: B
Explanation: Must be provided before writing or presenting a purchase offer.
Citation: California Civil Code §2079.14

Q225. A buyer’s deposit is held in trust. Transaction falls through and broker won’t return it. What violation?

Correct Answer: B
Explanation: Refusing to return a deposit constitutes conversion of trust funds.
Citation: California Code of Regulations §2832

Q226. In a lease, the covenant of quiet enjoyment guarantees that:

Correct Answer: C
Explanation: Ensures tenant’s right to possess and enjoy property without landlord interference.
Citation: California Civil Code §1927

Q227. An agent tells a seller “I already have the perfect buyer, no need to market.” If untrue, this is:

Correct Answer: B
Explanation: Deliberately making a false statement to induce a client is fraudulent misrepresentation under B&P Code §10176(b).
Citation: California Business & Professions Code §10176(b)

Q228. A deed must be acknowledged before it can be:

Correct Answer: C
Explanation: A deed must be acknowledged (notarized) to be recorded and give constructive notice.
Citation: California Civil Code §§1189, 1215

Q229. Which action constitutes commingling?

Correct Answer: A
Explanation: Commingling is mixing client trust funds with personal/business funds, prohibited by B&P Code §10145(a).
Citation: California Business & Professions Code §10145(a)

Q230. What happens if a deed is delivered but not accepted by the grantee?

Correct Answer: B
Explanation: Delivery and acceptance by the grantee are required to effectuate title transfer.
Citation: California Civil Code §1050

Q231. Who is liable if a salesperson misstates square footage at an open house?

Correct Answer: B
Explanation: Brokers are liable for their salespersons’ actions if they fail to supervise per Civil Code §2079.13.
Citation: California Civil Code §2079.13

Q232. What is the function of an impound (escrow) account in a mortgage loan?

Correct Answer: B
Explanation: Impound accounts hold borrower funds for taxes and hazard insurance to ensure timely payment.
Citation: California Real Estate Reference Book – Chapter 10 (Escrow Accounts)

Q233. Which lease must be in writing to be enforceable in California?

Correct Answer: B
Explanation: Leases over one year must be in writing under Statute of Frauds.
Citation: California Civil Code §1624(a)(3)

Q234. A seller refuses to sell to a buyer because of national origin. What law is violated?

Correct Answer: C
Explanation: Discrimination based on national origin breaches the federal Fair Housing Act.
Citation: 42 U.S.C. §3604

Q235. What is “ratification” in agency law?

Correct Answer: C
Explanation: Ratification is when a principal accepts an agent’s unauthorized act, binding the principal.
Citation: California Civil Code §2317

Q236. A broker advertises a guaranteed rent program but owns no properties. This may be:

Correct Answer: C
Explanation: Advertising services that don’t exist is false or misleading under B&P Code §10140.
Citation: California Business & Professions Code §10140

Q237. Which element is NOT required to form a valid contract?

Correct Answer: C
Explanation: A performance bond is not required; essential elements are mutual consent, lawful object, consideration, and capacity.
Citation: California Civil Code §1550

Q238. An agent learns a buyer will pay more than their written offer. What must they do?

Correct Answer: C
Explanation: Agents owe a duty of disclosure to their client and must promptly disclose such information.
Citation: California Civil Code §2079.16

Q239. The capitalization rate primarily reflects:

Correct Answer: C
Explanation: The cap rate represents the investor’s required rate of return, converting NOI into value.
Citation: California Real Estate Reference Book – Chapter 16 (Income Approach)

Q240. Recording a deed provides:

Correct Answer: C
Explanation: Recording gives constructive notice of the transfer to the public.
Citation: California Civil Code §1215

Q241. Which element determines whether a contract is void or voidable?

Correct Answer: A
Explanation: Capacity determines whether a contract is void or voidable, such as when a party is a minor or mentally incompetent.
Citation: California Civil Code §§1556, 1557

Q242. Which notice must a landlord generally provide to terminate a month-to-month tenancy of less than one year?

Correct Answer: B
Explanation: A tenancy of less than one year may generally be terminated with a 30-day written notice, subject to tenant protection laws.
Citation: California Civil Code §1946.1

Q243. Which appraisal principle recognizes that buyers consider future benefits when purchasing property?

Correct Answer: B
Explanation: Anticipation holds that present value is based on expected future benefits from the property.
Citation: DRE Reference Book

Q244. Which disclosure alerts buyers to flood, fire, and earthquake hazards?

Correct Answer: B
Explanation: The Natural Hazard Disclosure informs buyers of flood, fire, seismic, and other designated hazard zones.
Citation: California Civil Code §1103

Q245. Which clause permits rent increases tied to a cost index?

Correct Answer: B
Explanation: Escalation clauses allow rent to adjust based on indices such as CPI or predetermined schedules.
Citation: DRE Reference Book

Q246. Which act would constitute fraud by concealment?

Correct Answer: B
Explanation: Fraud by concealment occurs when a party intentionally hides a material fact they have a duty to disclose.
Citation: California Civil Code §1710

Q247. Which document establishes public notice of ownership interests?

Correct Answer: A
Explanation: Recording documents provides constructive notice of ownership and interests to the public.
Citation: California Civil Code §1213

Q248. Which appraisal approach is most applicable to income-producing property?

Correct Answer: B
Explanation: The income approach estimates value based on the property’s ability to generate income.
Citation: DRE Reference Book

Q249. Which clause allows a lender to demand full repayment after borrower default?

Correct Answer: B
Explanation: An acceleration clause allows the lender to declare the entire loan balance due upon default.
Citation: DRE Reference Book

Q250. Which notice must be recorded before a trustee’s sale can be conducted?

Correct Answer: B
Explanation: A Notice of Trustee’s Sale must be recorded and published before the foreclosure sale occurs.
Citation: California Civil Code §2924f

Q251. Which type of lien is created without the owner’s consent?

Correct Answer: B
Explanation: Involuntary liens, such as tax or judgment liens, arise without the property owner’s agreement.
Citation: DRE Reference Book

Q252. Which government power allows regulation of land use through zoning ordinances?

Correct Answer: B
Explanation: Police power authorizes zoning and land-use regulations to protect public welfare.
Citation: California Constitution, Article XI

Q253. Which tenancy allows two or more persons to own unequal interests?

Correct Answer: B
Explanation: Tenancy in common allows co-owners to hold unequal ownership interests without survivorship rights.
Citation: California Civil Code §686

Q254. Which disclosure warns buyers about property located near a former military base?

Correct Answer: B
Explanation: Military Ordnance Disclosures are required for properties located within designated military influence zones.
Citation: California Civil Code §1102.15

Q255. Which document secures repayment of a loan using real property?

Correct Answer: B
Explanation: A deed of trust secures a loan by placing title in trust until the debt is repaid.
Citation: California Civil Code §2920

Q256. Which broker action violates fiduciary duty?

Correct Answer: B
Explanation: Accepting secret profits breaches the fiduciary duties of loyalty and disclosure owed to clients.
Citation: California Business & Professions Code §10176

Q257. Which appraisal principle explains that value is influenced by surrounding properties?

Correct Answer: B
Explanation: The principle of conformity holds that property values are affected by the consistency of surrounding uses.
Citation: DRE Reference Book

Q258. Which clause permits a tenant to purchase the property?

Correct Answer: B
Explanation: An option clause grants the tenant the right to purchase the property under agreed terms.
Citation: California Civil Code §1017

Q259. Which document evidences the borrower’s promise to repay a loan?

Correct Answer: B
Explanation: A promissory note is the borrower’s written promise to repay the loan obligation.
Citation: California Commercial Code §3104

Q261. Which requirement must be met for a real estate contract to be valid?

Correct Answer: B
Explanation: A valid contract requires mutual consent, lawful object, consideration, and capable parties.
Citation: California Civil Code §1550

Q262. Which notice is generally required to terminate a month-to-month tenancy of one year or more?

Correct Answer: C
Explanation: California law generally requires 60 days’ written notice to terminate a tenancy of one year or more, subject to tenant protection laws.
Citation: California Civil Code §1946.1

Q263. Which appraisal principle states that buyers will not pay more for a property than the cost of a comparable substitute?

Correct Answer: B
Explanation: The principle of substitution holds that value is limited by the cost of acquiring a similar property with equal utility.
Citation: DRE Reference Book

Q264. Which disclosure informs buyers of flood, fire, seismic, and other hazard zones?

Correct Answer: B
Explanation: The Natural Hazard Disclosure alerts buyers to designated hazard zones affecting the property.
Citation: California Civil Code §1103

Q265. Which clause permits periodic rent increases under a lease?

Correct Answer: B
Explanation: An escalation clause allows rent to increase according to a schedule or index specified in the lease.
Citation: DRE Reference Book

Q266. Which act constitutes fraud by concealment in a real estate transaction?

Correct Answer: B
Explanation: Fraud by concealment occurs when a party hides a material fact they have a duty to disclose.
Citation: California Civil Code §1710

Q267. Which action provides constructive notice of ownership interests?

Correct Answer: A
Explanation: Recording a document gives constructive notice of ownership and other property interests.
Citation: California Civil Code §1213

Q268. Which appraisal approach is most appropriate for valuing rental property?

Correct Answer: B
Explanation: The income approach values property based on its income-producing potential.
Citation: DRE Reference Book

Q269. Which clause allows a lender to require full loan repayment upon borrower default?

Correct Answer: B
Explanation: An acceleration clause permits the lender to declare the entire loan balance due after default.
Citation: DRE Reference Book

Q270. Which notice must be recorded and published before a trustee’s sale?

Correct Answer: B
Explanation: A Notice of Trustee’s Sale must be recorded and published prior to the foreclosure sale.
Citation: California Civil Code §2924f

Q271. Which type of lien arises without the owner’s consent?

Correct Answer: B
Explanation: Involuntary liens, such as tax or judgment liens, are imposed without the property owner’s agreement.
Citation: DRE Reference Book

Q272. Which government power authorizes zoning and land-use regulation?

Correct Answer: B
Explanation: Police power allows the state to regulate land use to protect public health, safety, and welfare.
Citation: California Constitution, Article XI

Q273. Which form of ownership allows unequal ownership interests?

Correct Answer: B
Explanation: Tenancy in common allows co-owners to hold unequal shares of ownership.
Citation: California Civil Code §686

Q274. Which disclosure alerts buyers to property located near a military ordnance site?

Correct Answer: B
Explanation: Military Ordnance Disclosures are required when property lies within designated military influence zones.
Citation: California Civil Code §1102.15

Q275. Which document secures a loan using real property as collateral?

Correct Answer: B
Explanation: A deed of trust creates a security interest in real property to secure loan repayment.
Citation: California Civil Code §2920

Q276. Which broker conduct violates fiduciary duties?

Correct Answer: B
Explanation: Accepting undisclosed compensation breaches the fiduciary duty of loyalty owed to the client.
Citation: California Business & Professions Code §10176

Q277. Which appraisal principle holds that value is influenced by surrounding property uses?

Correct Answer: B
Explanation: Conformity suggests that property value is affected by the consistency of neighboring properties.
Citation: DRE Reference Book

Q278. Which lease clause grants a tenant the right to purchase the property?

Correct Answer: B
Explanation: An option clause gives the tenant the right, but not the obligation, to purchase the property.
Citation: California Civil Code §1017

Q279. Which document evidences the borrower’s promise to repay a loan?

Correct Answer: B
Explanation: A promissory note is the borrower’s written promise to repay the loan obligation.
Citation: California Commercial Code §3104

Q280. Which action would most likely constitute illegal steering?

Correct Answer: B
Explanation: Steering based on protected classes violates federal and California fair housing laws.
Citation: 42 U.S.C. §3604; California Government Code §12955

Q281. Which element is required for a contract to be enforceable in California?

Correct Answer: B
Explanation: Consideration is required for an enforceable contract, along with mutual consent, lawful object, and capable parties.
Citation: California Civil Code §1550

Q282. Which notice is generally required to terminate a month-to-month tenancy of one year or more?

Correct Answer: C
Explanation: California law generally requires a 60-day written notice to terminate a tenancy of one year or more, subject to tenant protection laws.
Citation: California Civil Code §1946.1

Q283. Which appraisal principle states that buyers anticipate future benefits from ownership?

Correct Answer: B
Explanation: Anticipation recognizes that value is based on expected future benefits of property ownership.
Citation: DRE Reference Book

Q284. Which disclosure informs buyers of flood, fire, and seismic hazard zones?

Correct Answer: B
Explanation: The Natural Hazard Disclosure alerts buyers to designated hazard zones affecting the property.
Citation: California Civil Code §1103

Q285. Which lease clause allows periodic rent increases?

Correct Answer: B
Explanation: An escalation clause allows rent to increase according to a schedule or index stated in the lease.
Citation: DRE Reference Book

Q286. Which act constitutes fraud by concealment in a real estate transaction?

Correct Answer: B
Explanation: Fraud by concealment occurs when a party hides a material fact they have a duty to disclose.
Citation: California Civil Code §1710

Q287. Which action provides constructive notice of ownership interests?

Correct Answer: A
Explanation: Recording a document provides constructive notice of property ownership and interests.
Citation: California Civil Code §1213

Q288. Which appraisal approach is most suitable for valuing an apartment building?

Correct Answer: B
Explanation: The income approach is most appropriate for income-producing properties such as apartments.
Citation: DRE Reference Book

Q289. Which clause allows a lender to demand full loan repayment after default?

Correct Answer: B
Explanation: An acceleration clause permits the lender to require immediate payment of the entire loan balance upon default.
Citation: DRE Reference Book

Q290. Which notice must be recorded and published before a trustee’s sale?

Correct Answer: B
Explanation: A Notice of Trustee’s Sale must be recorded and published before the foreclosure sale.
Citation: California Civil Code §2924f

Q291. Which type of lien arises without the owner’s consent?

Correct Answer: B
Explanation: Involuntary liens, such as tax or judgment liens, are imposed without the property owner’s agreement.
Citation: DRE Reference Book

Q292. Which government power authorizes zoning and land-use regulation?

Correct Answer: B
Explanation: Police power allows the state to regulate land use to protect public health and safety.
Citation: California Constitution, Article XI

Q293. Which form of ownership allows unequal ownership interests?

Correct Answer: B
Explanation: Tenancy in common permits co-owners to hold unequal ownership interests.
Citation: California Civil Code §686

Q294. Which disclosure alerts buyers to property near a military ordnance location?

Correct Answer: B
Explanation: Military Ordnance Disclosures are required when property lies within designated military influence zones.
Citation: California Civil Code §1102.15

Q295. Which document secures a loan using real property as collateral?

Correct Answer: B
Explanation: A deed of trust secures repayment of a loan by using real property as collateral.
Citation: California Civil Code §2920

Q296. Which broker action violates fiduciary duty?

Correct Answer: B
Explanation: Accepting undisclosed compensation breaches the fiduciary duty of loyalty owed to clients.
Citation: California Business & Professions Code §10176

Q297. Which appraisal principle states that value is affected by surrounding properties?

Correct Answer: B
Explanation: The principle of conformity recognizes that property value is influenced by neighboring property uses.
Citation: DRE Reference Book

Q298. Which lease clause grants a tenant the right to purchase the property?

Correct Answer: B
Explanation: An option clause gives the tenant the right, but not the obligation, to purchase the property.
Citation: California Civil Code §1017

Q299. Which document evidences the borrower’s promise to repay a loan?

Correct Answer: B
Explanation: A promissory note is the borrower’s written promise to repay the loan obligation.
Citation: California Commercial Code §3104

Q300. Which practice would most likely constitute illegal steering?

Correct Answer: B
Explanation: Steering based on protected classes violates federal and California fair housing laws.
Citation: 42 U.S.C. §3604; California Government Code §12955

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