Free Colorado Real Estate Practice Exam

Q1.When a Colorado property is located within a special district, such as a metropolitan district, what disclosure obligation applies to the seller?

• A.No disclosure is required because special districts are publicly recorded government entities
• B.The seller must disclose the special district on the Seller's Property Disclosure and the district is also disclosed on the Special District Notice required by Colorado law
• C.Only the buyer's lender is responsible for researching and disclosing special district assessments
• D.Disclosure is only required if the special district levy exceeds the county property tax rate

Q2.A Colorado broker is preparing an offer for a buyer client to purchase a residential property. Which of the following forms is the broker required to use for this transaction?

• A.Any standard contract form approved by the Colorado Bar Association
• B.A custom form drafted by the broker's supervising attorney
• C.The Colorado Real Estate Commission-approved Contract to Buy and Sell Real Estate
• D.A contract form of the broker's own design, provided it contains all required elements

Q3.According to EPA guidelines, which action regarding underground storage tanks (USTs) is required for real estate professionals when representing clients in commercial property transactions?

• A.Advising clients to investigate potential environmental liabilities associated with USTs
• B.Conducting soil contamination testing on all properties with current or former USTs
• C.Obtaining EPA permits for any existing USTs on the property
• D.Removing all USTs before completing the transaction

Q4.Under Colorado's Foreclosure Protection Act (C.R.S. § 38-38-700.5 et seq.) and CREC Rule 6.27, when a real estate licensee provides services to a homeowner in foreclosure (an 'equity purchaser' transaction), which of the following statements is MOST accurate regarding the required rescission period?

• A.The homeowner in foreclosure has 5 business days to rescind the contract with an equity purchaser after signing.
• B.The homeowner in foreclosure has 3 business days after signing or until 8:00 a.m. on the day of the foreclosure sale, whichever occurs first, to rescind the contract.
• C.No statutory rescission right exists; the homeowner must seek rescission through the courts.
• D.The homeowner has 72 hours from the recording of the deed to rescind the transaction by notifying the county public trustee.

Q5.A landlord refuses to rent to a family with three children under the age of 18, citing a 'no children' policy. Under the Fair Housing Act, this refusal is most likely:

• A.Lawful, because landlords have the right to set occupancy standards.
• B.Lawful, if the property qualifies as housing for older persons under the Act.
• C.Unlawful, because national origin is a protected class under the Fair Housing Act.
• D.Unlawful, but only if the family can prove the landlord had discriminatory intent.

Q6.In a real estate office transaction file, which document must be retained to demonstrate compliance with Truth in Lending Act (TILA) requirements when the transaction involves seller financing?

• A.Truth in Lending Disclosure Statement showing APR and finance charges
• B.Purchase agreement with financing terms
• C.Seller's financial qualification documents
• D.Property appraisal report

Q7.A seller breaches a purchase contract by refusing to convey the property after all contingencies have been satisfied. Under contract law principles, which remedy would most likely provide the buyer with the actual property they contracted to purchase?

• A.Specific performance requiring the seller to complete the sale as agreed
• B.Monetary damages equal to the difference between contract price and current market value
• C.Rescission of the contract with return of earnest money
• D.Liquidated damages as specified in the purchase agreement

Q8.A broker is the designated broker for two competing salespersons representing opposite sides of the same residential transaction. The broker has implemented a designated agency policy disclosed in both buyer and seller representation agreements. Which broker-level obligation is MOST critical to fulfilling the designated agency arrangement properly?

• A.The broker must personally attend all negotiations to ensure equitable treatment of both parties.
• B.The broker must ensure that confidential information obtained from each client is not shared with the other designated agent or the other party, and must act as a neutral manager.
• C.The broker must withdraw from the transaction entirely and assign a new supervising broker to avoid any conflict of interest.
• D.The broker must obtain written consent from the lender before implementing designated agency in any transaction.

Q9.In Colorado, a seller of residential property is required to complete which form to disclose known material defects to a buyer?

• A.The Seller's Property Disclosure (SPD) form approved by the Colorado Real Estate Commission
• B.A federally mandated HUD disclosure statement
• C.A verbal disclosure made directly to the buyer's broker
• D.A title commitment disclosure prepared by the closing attorney

Q10.A property sold for $425,000. The listing agent receives 3% commission and the selling agent receives 2.5% commission. If the listing agent splits their commission 60/40 with their broker (agent keeps 60%), how much does the listing agent receive?

• A.$5,100
• B.$7,650
• C.$12,750
• D.$10,625

Q11.Which statement best describes a designated broker's obligation regarding client data security in Arizona?

• A.Brokers are only responsible for paper records; digital data security is the client's responsibility
• B.Brokers must implement reasonable safeguards to protect client personally identifiable information from unauthorized access or disclosure
• C.Data security is solely an IT function with no broker liability
• D.Only social security numbers and financial account numbers require protection; other client data is unregulated

Q12.A borrower obtains a $320,000 mortgage at 6.5% annual interest. Using the simple interest method, what is the exact interest portion of the very first monthly payment?

• A.$1,733.33
• B.$1,760.00
• C.$1,625.00
• D.$1,840.00

Q13.A buyer and seller execute a purchase contract with a financing contingency stating the buyer must obtain a written mortgage commitment at a specific interest rate within 21 days or the contract is voidable by the buyer. On day 19, the buyer receives a commitment letter at a rate 0.5% higher than specified. The buyer gives timely notice of termination and demands the earnest money back. The seller refuses, claiming the buyer waived the contingency by not actively negotiating with other lenders. As the escrow broker, what is the most legally defensible course of action?

• A.Release the earnest money to the seller because the buyer received a commitment letter, satisfying the contingency regardless of rate
• B.Retain the earnest money in trust and advise both parties to seek legal counsel, because there is a good-faith dispute about whether the contingency was satisfied, and unilateral disbursement could expose the broker to liability
• C.Release the earnest money to the buyer immediately because the contingency was clearly not satisfied at the specified rate and the buyer gave timely notice
• D.Interplead the funds into the court immediately, as any dispute over earnest money requires mandatory judicial resolution

Q14.A lender orders an appraisal on a home and the completed report shows the property's value is $15,000 below the agreed purchase price. Under federal lending guidelines, what is the most likely outcome?

• A.The lender must fund the full loan amount based on the contract price
• B.The buyer's loan will be based on the lower appraised value, which may require renegotiation or additional down payment
• C.The seller is legally required to reduce the purchase price to match the appraised value
• D.The lender must order a second appraisal before making any lending decision

Q15.Under the Truth-in-Lending Act (TILA), what is the primary purpose of the Annual Percentage Rate (APR) disclosure?

• A.To allow borrowers to comparison shop between lenders
• B.To show the monthly payment amount
• C.To calculate the down payment required
• D.To determine property taxes