Free Indiana Real Estate Practice Exam

Q1.Indiana's real estate licensing structure is unique in that it does NOT issue a 'salesperson' license. What is the entry-level license classification issued by the Indiana Real Estate Commission (IREC) to individuals who wish to begin practicing real estate under supervision?

• A.Associate Broker
• B.Provisional Broker
• C.Broker
• D.Salesperson

Q2.A deed contains a covenant restricting the lot to single-family residential use. A buyer wants to operate a daycare from the property. This restriction is best described as:

• A.A financial encumbrance, like a mortgage
• B.An easement granting access rights to neighboring properties
• C.A non-financial encumbrance — a restrictive covenant in the deed that limits the permitted use of the property
• D.A zoning variance that can be modified through a city planning process

Q3.The most important thing a listing agent can ask a buyer's agent when reviewing a financed offer is:

• A.Whether the buyer has a pre-qualification, pre-approval, or loan commitment — and from what type of lender
• B.Whether the buyer has made offers before
• C.Whether the buyer's agent will reduce their commission
• D.Whether the buyer will waive the inspection contingency

Q4.What type of contract exists when only one party is legally bound to perform?

• A.Bilateral contract
• B.Executed contract
• C.Unilateral contract
• D.Express contract

Q5.An Indiana broker is found to have paid a referral fee to an unlicensed individual who directed a buyer client to the broker. Under IC 25-34.1, which of the following best describes the broker's exposure?

• A.The broker faces no disciplinary action because referral fees to unlicensed persons are permitted as long as the amount does not exceed $500.
• B.The broker may be subject to license suspension or revocation and civil penalties because Indiana law prohibits paying compensation for real estate services to an unlicensed person.
• C.The broker is only subject to discipline if the unlicensed person also received a written agreement memorializing the referral fee.
• D.The broker faces discipline only if the transaction closed and the unlicensed person actually collected the fee.

Q6.A lender refuses to make mortgage loans in a specific geographic area because the neighborhood has a high concentration of minority residents, regardless of individual applicants' creditworthiness. This illegal practice is known as:

• A.Blockbusting
• B.Steering
• C.Redlining
• D.Predatory lending

Q7.Which federal law requires lenders to provide a Good Faith Estimate of closing costs to borrowers?

• A.Fair Housing Act
• B.Real Estate Settlement Procedures Act (RESPA)
• C.Truth in Lending Act
• D.Equal Credit Opportunity Act

Q8.A salesperson tells a prospective buyer that the neighborhood has 'no crime problems' without verifying this claim. Under general agency principles and the duty of honesty, this action could best be described as:

• A.Puffing, which is always legally acceptable
• B.A negligent misrepresentation
• C.A legal opinion that requires no verification
• D.Blockbusting under the Fair Housing Act

Q9.Which of the following best describes the purpose of the 5 D's bystander intervention framework?

• A.To provide five concrete options so that witnesses have a plan before a harassing situation arises
• B.To give bystanders five legal defenses if they are accused of harassment
• C.To establish five mandatory reporting steps required under Arizona law
• D.To define the five elements of a hostile environment harassment claim

Q10.If a buyer obtains conventional financing and the property appraises at $490,000 against a $510,000 purchase price with no appraisal contingency, what is the buyer's most likely obligation?

• A.The seller must reduce the price to $490,000 automatically
• B.The lender will fund $510,000 and ignore the appraisal
• C.The transaction cancels and earnest money is returned to the buyer
• D.The buyer must bridge the $20,000 gap in cash or renegotiate with the seller

Q11.Indiana Administrative Code 876 IAC 1-2-1 governs the Indiana Real Estate Commission's rules on trust accounts. Which statement is CORRECT regarding an Indiana broker's handling of earnest money deposits?

• A.Earnest money may be held in the listing broker's operating account as long as it is tracked separately in the accounting records
• B.Earnest money must be deposited into a federally insured trust account no later than two banking days after all parties have accepted the contract
• C.Earnest money must be deposited within 24 hours of receipt regardless of whether a contract has been fully executed
• D.Earnest money may be held by the salesperson until closing if the buyer requests it in writing

Q12.A broker is managing a commercial property transaction where environmental due diligence reveals that a neighboring parcel was previously used as a dry-cleaning facility. The buyer is concerned about potential liability under CERCLA. Which statement most accurately describes CERCLA's 'innocent landowner' defense and the broker's advisory responsibility?

• A.CERCLA imposes strict, joint, and several liability on current property owners for cleanup costs; the innocent landowner defense is available only if the buyer conducted 'all appropriate inquiries' (AAI) prior to acquisition, typically via a Phase I Environmental Site Assessment.
• B.CERCLA liability attaches only to the party that actually caused the contamination; a buyer who did not use hazardous substances on the property cannot be held liable under any circumstances.
• C.The broker should advise the buyer that CERCLA liability is limited to $1 million per site and that title insurance will cover any environmental cleanup costs.
• D.The innocent landowner defense requires only that the buyer obtain a seller's disclosure of no known contamination; no professional environmental assessment is needed.

Q13.Under 876 IAC 4-1-8, a salesperson must notify the Indiana Real Estate Commission within how many days of a change in residence address?

• A.10 days
• B.15 days
• C.20 days
• D.30 days

Q14.A broker's affiliated salesperson tells a prospective buyer that a particular neighborhood is 'changing' and suggests the buyer look in a different area because 'property values may decline.' The broker becomes aware of this conversation. Under the Fair Housing Act, which action best describes the broker's primary statutory obligation?

• A.Immediately terminate the salesperson to avoid vicarious liability and file a report with HUD.
• B.Take corrective action against the salesperson, retrain staff on fair housing, and understand that the broker may bear vicarious liability for the salesperson's steering conduct.
• C.Do nothing unless the buyer files a formal complaint, because the broker cannot be held responsible for unsupervised statements made by an affiliated licensee.
• D.Issue a written warning to the salesperson and report the conduct to the local MLS only.

Q15.Under IC 25-34.1-10, at what point is an Indiana broker required to disclose the nature of the agency relationship to a prospective buyer who is being shown a listed property?

• A.Before the buyer makes an offer to purchase
• B.At the first substantial contact with the prospective buyer
• C.Only after a written buyer agency agreement has been signed
• D.At closing, when all parties are present