Free Louisiana Real Estate Practice Exam

Q1.A salesperson represents a buyer who is purchasing a home using an FHA-insured loan. At closing, the buyer notices that the HUD-1 Settlement Statement (used in this transaction) reflects a $650 'document preparation fee' payable to the lender's affiliated title company. The buyer asks the salesperson whether this fee is legal. Under RESPA Section 8 (12 U.S.C. § 2607), which analysis is MOST legally accurate?

• A.The fee is potentially an illegal kickback or unearned fee under RESPA Section 8 if no actual, distinct settlement service was performed for that charge, and the affiliated business arrangement must have been properly disclosed via an Affiliated Business Arrangement (AfBA) disclosure.
• B.The fee is always legal because RESPA Section 8 permits lenders and their affiliates to charge any reasonable and customary fees for settlement services without restriction.
• C.The fee is legal as long as it is listed on the settlement statement, because RESPA's disclosure requirements are fully satisfied by itemization on the HUD-1, which eliminates any Section 8 violation.
• D.RESPA Section 8 applies only to fees paid between real estate brokers and lenders, so a fee charged by a lender's affiliated title company to the borrower is outside the scope of RESPA entirely.

Q2.Which 1968 federal law is the foundational statute prohibiting housing discrimination based on race, color, religion, sex, national origin, familial status, and disability?

• A.The Civil Rights Act of 1964
• B.The Fair Housing Act (Title VIII of the Civil Rights Act of 1968)
• C.The Housing and Community Development Act of 1974
• D.The Americans with Disabilities Act of 1990

Q3.A Louisiana licensed broker is representing a seller under a written exclusive right-to-sell listing agreement. The broker's affiliated salesperson subsequently identifies a buyer who wishes to purchase the same property. The broker wishes to facilitate the transaction as a designated agent for both parties. Under Louisiana Revised Statute 9:3897 and the Louisiana Real Estate Commission (LREC) rules, which action is MOST critical before the broker may lawfully proceed with designated agency in this scenario?

• A.The broker must obtain prior informed written consent from both the seller and the buyer acknowledging the designated agency relationship, identifying which licensee represents each party, and disclosing the limitations on confidentiality that apply to the broker.
• B.The broker must terminate the existing exclusive right-to-sell listing agreement with the seller and enter into a new dual-agency agreement before the salesperson may represent the buyer.
• C.The broker need only provide a verbal disclosure of the designated agency arrangement to both parties at the time of offer presentation, as Louisiana law does not require written consent for designated agency.
• D.The broker must refer the buyer to an unaffiliated brokerage firm because a broker who holds a listing agreement cannot simultaneously authorize designated agency for the same transaction under Louisiana law.

Q4.A real estate licensee discovers that a property previously housed a methamphetamine laboratory. Under federal environmental law, which statute would be most relevant for determining potential liability and cleanup requirements?

• A.Resource Conservation and Recovery Act (RCRA)
• B.Clean Air Act
• C.Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
• D.Safe Drinking Water Act

Q5.Louisiana Administrative Code Title 46, Part LXVII (LREC rules) requires a broker to perform a three-way reconciliation of the trust account. When the reconciliation reveals that the adjusted bank balance exceeds the total of all client ledger balances by $400, the broker's MOST appropriate first action is to:

• A.Immediately disburse the $400 overage to the brokerage's operating account to eliminate the discrepancy and document the transfer.
• B.Investigate the source of the discrepancy before making any disbursement, because an overage may indicate unidentified client funds that cannot be transferred until their ownership is determined.
• C.Report the $400 overage to the LREC within 30 days as a mandatory disclosure of a trust account shortage.
• D.Credit the $400 to the most recently opened client ledger as a default allocation pending further review.

Q6.A borrower discovers a $1,200 error on their Closing Disclosure three days before the scheduled closing. Under RESPA's TRID rule, what is the lender's obligation regarding the closing timeline?

• A.The closing may proceed as scheduled since the error is less than $2,000
• B.The lender has 30 days after closing to provide a corrected Closing Disclosure
• C.The borrower may waive the waiting period if they sign a written waiver
• D.The lender must provide a corrected Closing Disclosure and wait an additional three business days before closing

Q7.Under Louisiana license law and LREC regulations, which of the following actions by a salesperson would constitute 'commingling' of funds, a violation subject to disciplinary action under La. R.S. 37:1455?

• A.Depositing a buyer's earnest money into the salesperson's personal checking account temporarily until the broker can open an escrow account.
• B.Depositing a buyer's earnest money into the broker's designated trust account within the required timeframe.
• C.Advising the buyer to make the earnest money check payable directly to the listing broker's trust account.
• D.Holding an uncashed earnest money check until the offer is accepted, as agreed upon in writing by both parties.

Q8.Which federal environmental law creates potential liability for property owners regarding contaminated properties, even if they did not cause the contamination?

• A.Clean Air Act
• B.Safe Drinking Water Act
• C.CERCLA (Superfund)
• D.Toxic Substances Control Act

Q9.Under the Supreme Court's 2020 Bostock v. Clayton County decision as applied to housing, federal sex protections extend to:

• A.Sexual orientation and gender identity
• B.Only biological sex, not sexual orientation or gender identity
• C.Only gender identity, not sexual orientation
• D.Only state law covers LGBTQ+ housing discrimination

Q10.A real estate broker also operates a mortgage company. A buyer using the broker's realty services is steered toward the broker's affiliated mortgage company without receiving any written disclosure. Which federal statute is MOST directly implicated by this arrangement, and what does it require?

• A.ECOA, which requires the lender to provide an adverse action notice within 30 days of application denial.
• B.RESPA Section 8, which prohibits fee-splitting and kickbacks for referrals of settlement services, and Section 3, which requires an Affiliated Business Arrangement (AfBA) disclosure so the consumer can make an informed choice.
• C.TILA, which requires disclosure of the annual percentage rate before the consumer signs any loan documents.
• D.CERCLA, which imposes liability on parties who arrange for disposal of hazardous substances at a settlement service provider.

Q11.In a real estate purchase contract, what is the legal effect of a condition precedent that fails to occur?

• A.The contract becomes voidable at either party's option
• B.The contract remains valid but performance is delayed
• C.The parties' obligations under the contract are discharged
• D.The contract becomes an option contract

Q12.A Louisiana licensee representing a seller discovers during the transaction that the property has a history of flooding not reflected in the seller's property disclosure. The seller instructs the licensee to remain silent about the flooding. Under La. R.S. 37:1455, how must the licensee respond?

• A.Follow the seller's instruction, since the duty of obedience to the client overrides all other duties
• B.Disclose the known material defect to the buyer regardless of the seller's instruction, because the duty of disclosure to customers overrides an instruction to conceal material facts
• C.Withdraw from the transaction immediately without disclosing the reason to the buyer
• D.Place the information in the listing remarks visible only to other licensees on the MLS

Q13.At a real estate closing, RESPA prohibits which of the following practices?

• A.Charging the buyer for title insurance
• B.Paying a kickback or unearned fee to a settlement service provider for a referral
• C.Requiring the buyer to obtain a home inspection
• D.Collecting prepaid interest at closing

Q14.A candidate for a Louisiana real estate salesperson license has completed all required pre-licensing education. Before the LREC will issue the license, which of the following steps must the candidate ALSO complete under Louisiana law?

• A.Pass the PSI-administered state and national licensing examination and submit an application with the required fee to the LREC
• B.Pass only the Louisiana state-specific portion of the PSI examination; the national portion is waived for Louisiana residents
• C.Pass the PSI examination and then complete an additional six-month apprenticeship under a licensed broker before the license is issued
• D.Submit a notarized affidavit of good moral character from three licensed brokers and then take the examination

Q15.Under the federal Fair Housing Act, which of the following is NOT a protected class?

• A.Familial status
• B.National origin
• C.Sexual orientation
• D.Religion