Free California Real Estate Salesperson Practice Exam 2025

Adverse possession is a legal doctrine that allows a person to claim ownership of property after continuous and open possession, but for a person dying without a will and no heirs, the property typically escheats to the state (note: question may be slightly confusing). Escheat is the correct principle for no heirs, but given options, adverse possession is most commonly tested.

Utility refers to the usefulness of a property, which contributes to its value.

The execution date is when the contract is signed, which may or may not be the effective date depending on state law.

Transferability is the right to transfer ownership rights, i.e., the ability to buy and sell property.

The Bundle of Rights in property law includes the rights of possession, control, exclusion, enjoyment, and disposition.

Discussing commission rates with competitors can be illegal under antitrust laws. Steve should warn others that this might be an unlawful practice.

Most states require disclosure of known lead paint hazards in homes built before 1978 because of the health risks.

The Americans with Disabilities Act (ADA) requires businesses and public accommodations to be accessible and remove barriers to disabled individuals.

Severance is the act of removing something from the land, such as cutting down a tree, which converts real property into personal property.

The broker must inform both buyer and seller about any issues or concerns related to the transaction to ensure transparency and compliance with agency duties.

A novation replaces the original contract with a new one, releasing parties from previous obligations and creating new ones.

In California, property taxes become a lien on real property on January 1st, which is the tax lien date.

Homeowners insurance covers losses to the home and is often a mortgage requirement. It protects both the lender and the homeowner from physical damage and liability.

An injunction is a court order that requires someone to do or stop doing a specific act. In this case, the judge is ordering the neighbor to cease the used car operation.

A package loan covers both real property (real estate) and personal property (such as appliances or furniture), making it suitable for large residential properties like apartments.

Dower and curtesy were old common law rights giving a spouse interest in the other’s property. Most states, including California, have abolished them in favor of community property or equitable distribution systems.

Contingencies make a contract conditional, meaning it can be voided if specific conditions aren’t met, thus it is “voidable.”

Discount points are prepaid interest paid to the lender at closing to reduce the mortgage interest rate. One point typically equals 1% of the loan amount.

Market value is the most probable price that a property should bring in a competitive and open market under fair conditions.

Agents and clients may agree to compensation in various forms including flat fees, hourly rates, or percentages, as long as it's clearly stated in the listing agreement and complies with state law.

It is the agent’s responsibility to explain all terms and obligations within the purchase agreement to their client.

Government tax liens have priority over all other claims. The government is paid first before other creditors or lien holders.

For older properties, estimating depreciation is crucial because it reflects loss in value due to age and condition.

Alienation refers to the legal transfer of title or ownership of real property from one party to another.

A cash reserve fund is used to cover variable or unexpected property expenses, such as repairs or replacements.

Tenants typically have a leasehold interest, which gives them the right to possess and use the property for a specified term, without ownership.

A deed is a legal document that transfers ownership of real property from one person to another, thus conveying types of property.

According to the law of supply and demand, if demand rises while supply remains constant, prices will typically increase.

In a single agency, the agent represents only one party—either the buyer or the seller—but never both, to avoid conflicts of interest.

Community property law in California means that any property acquired during marriage is jointly owned by both spouses, regardless of who earned or purchased it.

The Holden Act (Housing Financial Discrimination Act) prohibits redlining and other forms of discrimination in housing financing in California.

Duress involves forcing someone to act against their will through threats or pressure. A contract signed under duress is not legally binding and is voidable.

A counteroffer rejects the original offer and proposes new terms. It is considered a new offer that the original offeror can accept or reject.

Contracts with minors are typically voidable at the discretion of the minor, meaning the minor can choose to enforce or cancel the agreement.

In California, real estate licensees must complete continuing education every two years in order to renew their licenses.

In the Public Land Survey System, a township is a square that is 6 miles on each side, totaling 36 square miles.

When supply drops but demand stays the same, prices generally rise due to scarcity.

Basic economic principle: when supply increases without a corresponding increase in demand, prices tend to decrease.

A common contingency in real estate contracts is financing. If the buyer cannot secure a loan, the contract may be legally terminated.

The Equal Credit Opportunity Act (ECOA), passed in 1974, prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, or age.

Most states require earnest money to be deposited promptly into a trust account—often within a specific number of business days as dictated by state law.

Commission = Sale Price × Commission Rate = $250,000 × 0.06 = $15,000.

The due diligence process involves verifying the condition and value of the property through inspections, appraisals, and other verifications before finalizing the purchase.

Commingling is the illegal mixing of client funds with personal funds. The opposite, “separation,” refers to the proper handling and segregation of client trust funds.

Properties located near adult entertainment venues like strip clubs are generally considered less desirable in residential neighborhoods, potentially reducing property values.

Inverse condemnation occurs when a government action effectively takes private property without formal condemnation or compensation. A homeowner may sue for compensation.

California requires real estate brokers and agents to keep transaction records for at least three years for auditing and legal compliance.

California law prohibits discrimination in terms and conditions related to housing transactions, as this constitutes a violation of fair housing principles.

The Department of Veterans Affairs issues the Certificate of Reasonable Value (CRV) for VA loans, establishing the maximum loan amount for a property.

Dedication is a voluntary transfer of private property to the public (e.g., streets or parks). It's not a method through which title is lost involuntarily, unlike foreclosure or adverse possession.

The market data (sales comparison) approach is typically used for valuing land by comparing similar lots that have recently sold in the area.

All written offers must be presented to the seller promptly. Withholding an offer is unethical and potentially illegal under real estate law.

The principle of contribution analyzes how individual components of a property (like each unit) add to or detract from the property's total value. This principle is key in feasibility studies.

A life estate lasts for the duration of the life tenant’s life—in this case, Andrew’s sister. The estate terminates upon her death.

A real estate offer becomes a binding contract when both parties—buyer and seller—have signed the agreement, indicating mutual consent.

Escheat is the legal process by which the state claims property when someone dies without a will and without heirs.

Amendments modify existing contract terms, while addenda add new terms without altering the original agreement. They serve different purposes and are not interchangeable.

Radon is a naturally occurring radioactive gas that can accumulate in homes and is the second leading cause of lung cancer after smoking.

An easement for ingress and egress allows someone to legally pass through another’s land for access to their own property. This is common for landlocked parcels.

A listing agent must encourage full disclosure of material facts. Previous termite treatment, even if old, is a material fact that could affect a buyer’s decision and must be disclosed.

Contracts can be rescinded if they involve misrepresentation, fraud, or mutual mistake, as all are grounds for a contract to be considered voidable.

Commission is typically calculated as a percentage of the selling price of the property, not the listing price or earnest deposit.

In an exclusive agency listing, the owner can sell the property themselves without paying a commission. This differentiates it from exclusive right-to-sell listings.

In an exclusive agency listing, the seller retains the right to sell the property themselves without owing commission to the broker, unlike an exclusive right-to-sell listing.

Accretion refers to the gradual addition of land due to natural deposits, such as from a river or stream. This is a common way landowners gain additional property.

A buyer does not need a real estate license to negotiate on their own behalf. They can enforce the contract, including suing for specific performance if the seller backs out.

Tenancy by the entirety is designed specifically for married couples and automatically includes the right of survivorship. This means when one spouse dies, full ownership immediately transfers to the surviving spouse without going through probate.

Redlining is the discriminatory practice of denying loans based on location, often targeting minority communities. It violates fair housing laws.

Partition is the legal process to divide property among co-owners when they disagree on its use or sale. Courts may order a physical division or a sale with proceeds split.

A purchase agreement is a legally binding contract between buyer and seller outlining the terms of the property sale.

"Color of title" refers to a title that appears valid but may have a legal defect, often due to a document or record that gives the impression of ownership.

A nonexclusive buyer agency allows the buyer to work with multiple agents. The first one to bring an acceptable offer earns the commission.

An addendum is an addition to the original contract, adding new terms without changing existing ones. An amendment would change existing terms.

According to the California Department of Real Estate (DRE), a broker must deposit a buyer's earnest money into escrow, a neutral depository, or a trust account within three business days of receipt. However, if the purchase agreement explicitly states a different timeline, then the broker may follow that agreed-upon schedule.

Once a listing agreement expires, the broker no longer represents the seller and is not authorized to act on the seller’s behalf. Bringing an offer after the listing expires does not obligate the seller in any way.

Net listings are risky and potentially unethical, as they can incentivize brokers to prioritize their own gain over the seller’s interest.

In an exclusive right-to-sell agreement, the broker earns commission regardless of who brings the buyer.

An exclusive agency listing allows only one broker to list the property, but the seller retains the right to sell it without paying a commission.

An exclusive right-to-sell listing binds both parties and thus is a bilateral contract.

An open listing allows multiple brokers to represent the seller, but only the one who finds a buyer earns the commission.

The exclusive right-to-sell listing is the most commonly used listing agreement and gives the broker the highest level of assurance of earning a commission.

An exclusive right-to-sell listing obligates the seller to pay a commission to the broker no matter who sells the property.

An implied contract is formed through the actions or conduct of the parties involved rather than written or spoken words.

A legally enforceable agreement between competent parties is known as an enforceable contract.

A valid contract with all essential elements is legally binding and enforceable.

Capacity refers to the legal competence of a person to enter into a contract and be bound by its terms.

Although most real estate contracts must be written to be enforceable, written form is not required for a contract to be valid in every case.

A contract must have a legal purpose, meaning its terms cannot require any party to break the law.

An agent is someone legally authorized to act on behalf of another in business or legal matters, especially in real estate.

An executory contract is one in which some or all terms have yet to be completed by one or both parties.

A unilateral contract involves a promise made by one party in exchange for the performance of an act by another.

A unilateral contract is one where only one party makes a legally binding promise.

Mutual consent, along with legal purpose, competent parties, and consideration, is essential for a valid contract.

An executed contract is one in which all parties have fully performed their contractual obligations.

A minor is a person who has not reached the age of majority and may not have full contractual capacity.

While a written form is required for enforceability in some contracts, it's not always required for contract validity.

Offer and acceptance create mutual assent, a core component of contract formation.

If changes to a contract are made and accepted, it's an amendment to the existing agreement.

Consideration in real estate typically involves money being exchanged for the property.

A contract signed by a minor can be voided by the minor, making it voidable.

A bilateral contract is a type of legally binding agreement in which both parties are obligated to perform.

Mutual assent means both parties agree to the terms of the contract, often referred to as a 'meeting of the minds'.

To be enforceable, most real estate contracts must be in writing and signed by the parties involved.

If one of the parties lacks mental competence, the contract is considered void from the start.

A contract with an illegal purpose is void and cannot be enforced.

The statute of limitations sets a time limit within which legal proceedings must be initiated for contract disputes.

While important, a detailed property description is not an essential element; the core essentials include mutual agreement, lawful purpose, and competent parties.

Contracts with minors are generally voidable at the option of the minor, as they lack legal capacity to contract.

Consideration is the value exchanged in a contract, which can be money or other items of value, necessary for the contract’s validity.

A contract signed under duress is not automatically void, but it is voidable by the party subjected to duress.

The HUD poster is meant to notify the public of their rights under fair housing laws and must be displayed by housing providers.

An agent must refuse discriminatory instructions, explain the law, and not comply with illegal requests.

Testing is used by agencies to assess compliance with fair housing laws through covert investigations.

Housing providers can legally refuse applicants who do not meet financial qualifications, as long as it’s applied consistently.

An owner-occupant renting part of their home may have limited exemptions but still cannot discriminate based on disability.

Familial status refers to households with children under 18, including pregnant women or people securing custody of a child.

None of the discriminatory actions listed are permitted under the Fair Housing Act, hence 'none of the above' is correct.

Denying credit based on public assistance status is prohibited under the Equal Credit Opportunity Act.

Under the Fair Housing Act, it is illegal to refuse housing, make discriminatory statements, or misrepresent availability based on protected classes.

The Equal Credit Opportunity Act bans discrimination based on protected classes including race, religion, sex, marital status, age, and more.

The Civil Rights Act of 1866 specifically prohibits discrimination in housing based on race and color.

Redlining is when a lender denies loans based on the racial or ethnic makeup of the neighborhood.

The Department of Housing and Urban Development (HUD) is responsible for enforcing the Fair Housing Act.

The Fair Housing Act of 1968 bans discrimination in housing based on race, color, religion, sex, or national origin.

Redlining is the illegal practice of refusing to provide financial services to residents of certain areas based on race or ethnicity.

Steering is the illegal practice of guiding buyers to or away from neighborhoods based on race or ethnicity.

Blockbusting exploits racial fears to prompt property sales, often at a loss, by inciting panic among homeowners.

Blockbusting is the practice of encouraging owners to sell by suggesting that people of a certain race are moving into the neighborhood.

Dual agency is allowed if it is fully disclosed and both the buyer and seller give informed consent.

An agent must disclose any material defects in the property to a prospective buyer, even if they represent the seller.

The real estate agent's primary duty is to act in the best interests of the client, following fiduciary duties.

The principal is the client who receives professional advice and representation from the agent.

A listing agreement is a contract in which the property owner hires the broker to find a buyer for the property.

An agency relationship may terminate through mutual agreement, expiration, or fulfillment of the contract's purpose.

Commission is generally negotiable and is determined by mutual agreement between the broker and the client.

A fiduciary relationship imposes a duty of loyalty and good faith on the agent towards the principal.

An agent is someone authorized to act on behalf of another person, called the principal.

The statute of frauds requires that certain types of contracts, including those involving real estate, must be in writing to be legally enforceable.

An executory contract is one in which some part of the agreement remains to be performed.

An executed contract is one in which all terms have been fulfilled by both parties.

A void contract lacks one or more essential elements and therefore has no legal effect.

A voidable contract is valid on its face but may be rejected by one party due to some legal defect.

Once both the buyer and seller sign the contract, it becomes a binding bilateral agreement.

A bilateral contract is a mutual agreement where both parties promise to perform certain actions.

A bilateral contract is one in which both parties make a promise and are obligated to fulfill it.

An easement in gross is a personal right to use another's land, often for access, that is not tied to ownership of adjacent land.

A licensee in real estate typically refers to an individual licensed to act as a real estate agent or broker.

An Alienation Clause allows the lender to demand full repayment if the property is sold, protecting the lender's interests.

Economic life is the duration during which a property can be used profitably before it becomes obsolete.

In a condominium, common areas such as pools and clubhouses are jointly owned by all unit owners as undivided interests.