Free California Real Estate Practice Exam

Q1.A title insurance company issues a California Residential Owner's Policy (formerly CLTA policy) to a buyer at the close of escrow. Shortly after closing, the buyer discovers an encroachment by a neighbor's fence that existed prior to closing but was not disclosed. The buyer's policy excludes survey matters unless a survey is attached. Which statement best describes the coverage situation under California title insurance law?

• A.The ALTA Extended Coverage Policy would likely have covered this encroachment because it insures against matters that a physical inspection would reveal, whereas the CLTA standard policy typically does not.
• B.Both CLTA and ALTA policies in California provide identical coverage for physical encroachments visible by inspection.
• C.The title insurance company must defend the buyer because all title policies in California are required by the California Department of Insurance to cover boundary disputes.
• D.The buyer should file a claim with the California Contractors State License Board because the encroachment constitutes a construction defect.

Q2.In California, how long is a salesperson's real estate license valid before it must be renewed?

• A.One year
• B.Two years
• C.Four years
• D.Five years

Q3.A real estate sales contract contains a contingency stating that the purchase is subject to the buyer obtaining financing within 30 days. If the buyer cannot obtain financing within that period, what is the most likely outcome?

• A.The buyer may void the contract and recover the earnest money deposit.
• B.The seller may sue the buyer for breach of contract.
• C.The contract automatically converts to a lease agreement.
• D.The buyer must proceed with the purchase regardless of the financing outcome.

Q4.Under the California Unruh Civil Rights Act, which of the following protected bases is NOT expressly listed in the Unruh Act itself but has been held by California courts to be covered?

• A.Sex
• B.Race
• C.Arbitrary discrimination based on personal appearance or unconventional dress
• D.Religion

Q5.A caller asks an unlicensed assistant what price to offer. What is the best response?

• A.Recommend a price from recent sales.
• B.Give an opinion if the assistant discloses being unlicensed.
• C.Route the question to a properly licensed person and do not give pricing or value advice.
• D.Negotiate within a range supplied by the client.

Q6.A property manager collects security deposits, last month's rent, and application fees on behalf of the property owner. Under generally accepted property management principles and fiduciary duty, these funds should be:

• A.Deposited into the property manager's personal operating account for convenience
• B.Held in a pooled trust account commingled with the manager's own funds
• C.Placed in a separate trust or escrow account segregated from the manager's operating funds
• D.Forwarded immediately to the property owner within 24 hours of receipt

Q7.A seller of a residential property with 1-4 units in California refuses to complete the Transfer Disclosure Statement, claiming the buyer waived the requirement in the purchase contract. Which of the following statements is MOST accurate under California law?

• A.The waiver is valid because parties to a contract may mutually agree to waive statutory disclosures.
• B.The waiver is invalid; the TDS requirement under Civil Code Section 1102 cannot be waived by either party.
• C.The waiver is valid only if it is made in writing and signed by both the buyer and the seller.
• D.The waiver is valid because the buyer, as the protected party, may choose to forgo the disclosure.

Q8.A designated broker cannot act for 20 days. Which action fits A.R.S. § 32-2127(D)?

• A.Make a written designation lasting no more than 30 days and retain it for one year.
• B.Use an oral designation for 60 days.
• C.Allow an unlicensed person to serve as broker.
• D.Make no record if the absence is temporary.

Q9.A lender denies a mortgage application from a married couple and refuses to explain the reason for the denial. Under the Equal Credit Opportunity Act (ECOA), what is the lender required to provide?

• A.A written statement of the specific reasons for the adverse action within 30 days
• B.A verbal explanation of the denial within 10 business days
• C.A written statement only if the applicant requests it in writing
• D.No explanation is required as long as the decision was based on creditworthiness

Q10.A deed restriction that prohibits the sale of alcohol on a property is an example of what type of land use control?

• A.Public land use control
• B.Governmental regulation
• C.Zoning ordinance
• D.Private land use control

Q11.Which item is appropriately described as a high-risk review point rather than an official ADRE 'top ten' ranking?

• A.Unresolved three-way reconciliation variances
• B.The exact order of ADRE's unpublished deficiency rankings
• C.A guaranteed disciplinary outcome
• D.A universal ten-day deadline for every trust-account change

Q12.At termination, when must the firm reimburse money remaining in property accounts, except amounts needed for unpaid obligations incurred during the agreement?

• A.Within 5 days
• B.Within 14 days
• C.Within 35 days
• D.Within 75 days

Q13.A tenant with a severe cat allergy lives in a no-pets building. A neighboring tenant requests permission to keep an emotional support cat as a reasonable accommodation for a diagnosed anxiety disorder. The landlord denies the request, citing the strict no-pets policy and the allergic neighbor's condition. Under the Fair Housing Act, which statement is most accurate?

• A.The landlord may deny the request because another tenant's health condition constitutes a legitimate, non-discriminatory reason under the FHA
• B.The landlord must grant the request unconditionally because emotional support animals are always required accommodations under the FHA
• C.The landlord must engage in an interactive process to find a solution that accommodates both tenants; outright denial without exploring alternatives likely violates the FHA
• D.The FHA does not cover emotional support animals; only service animals trained for specific tasks are protected

Q14.Which three amounts must agree in a monthly three-way trust reconciliation?

• A.Gross rent, management fees, and owner distributions
• B.Adjusted bank balance, trust ledger, and total individual client liabilities
• C.Bank balance, tax return, and property value
• D.Security deposits, maintenance expenses, and vacancy loss

Q15.Under the Truth-in-Lending Act (TILA), which document must a lender provide to a borrower that discloses the true cost of credit, including the annual percentage rate (APR)?

• A.Loan Estimate
• B.Closing Disclosure
• C.Truth-in-Lending Disclosure Statement
• D.HUD-1 Settlement Statement