Free New Mexico Real Estate Practice Exam

Q1.In states that require attorney involvement in real estate closings, the attorney typically represents which party?

• A.The party who retains their services
• B.Always the buyer
• C.Always the seller
• D.Both buyer and seller equally

Q2.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

Q3.A broker representing a seller is approached by an unrepresented buyer who makes an offer on the listing. The broker wants to assist the buyer with drafting the offer without creating an undisclosed dual-agency relationship. Under general principles of agency law applicable nationwide, which course of action best protects the broker from undisclosed dual-agency liability?

• A.The broker should provide the buyer with ministerial assistance only — such as providing standard forms and factual information — after clearly disclosing in writing that the broker represents only the seller and that the buyer should seek independent representation.
• B.The broker may orally inform the buyer of the agency relationship and then draft the offer on the buyer's behalf, because oral disclosure satisfies agency disclosure requirements in all jurisdictions.
• C.The broker should obtain written informed consent from the seller alone, converting the relationship to a disclosed dual agency before assisting the buyer.
• D.The broker may freely assist the unrepresented buyer with contract drafting because no agency relationship is created until a buyer representation agreement is signed.

Q4.A New Mexico qualifying broker operates a real estate office and wishes to designate two different affiliated brokers to represent the buyer and seller respectively in the same in-house transaction. Under NMAC 16.61.16 and the New Mexico Disclosure of Buyer Agency form (REALTORS® Form or NMREC-approved equivalent), which condition is an absolute prerequisite before designated agency may be used in this scenario?

• A.The qualifying broker must obtain informed written consent from both the buyer and the seller to the designated agency arrangement before either designated broker takes any negotiation action on behalf of their respective client.
• B.Designated agency is automatically authorized once the qualifying broker has a signed listing agreement with the seller and a signed buyer-broker agreement with the buyer, with no additional disclosure required.
• C.The qualifying broker may proceed with designated agency only if the two affiliated brokers are licensed at the associate broker level; a salesperson licensee cannot serve as a designated agent under NMAC 16.61.16.
• D.Written consent is required only from the party who first entered into a brokerage agreement with the firm; the second party need only receive verbal notice of the designated agency arrangement.

Q5.A qualifying broker in New Mexico maintains a property management trust account. The broker deposits $200 of personal funds into this account to cover anticipated bank service charges. Under NMREC rules, this practice is BEST described as:

• A.Commingling, which is strictly prohibited under all circumstances.
• B.Permissible, because maintaining a small personal funds buffer in a trust account is an accepted industry practice.
• C.Permissible, provided the amount is reasonable and is used solely to maintain the minimum balance required to avoid bank fees.
• D.Permissible only if the broker obtains written consent from all current property management clients.

Q6.RESPA (Real Estate Settlement Procedures Act) primarily protects consumers by requiring disclosure of what information?

• A.Property inspection results
• B.Property tax assessments
• C.Settlement costs and loan servicing details
• D.Homeowners insurance requirements

Q7.Under the New Mexico Real Estate License Law (NMSA 1978, §61-29-15) and NMAC 16.61.17, a qualifying broker discovers that an affiliated associate broker failed to submit a signed buyer representation agreement before presenting an offer on behalf of a buyer-client. Which broker-level obligation is MOST directly implicated?

• A.The qualifying broker's supervisory duty to ensure all affiliated licensees comply with written brokerage agreement requirements before providing real estate brokerage services.
• B.The qualifying broker's duty to disclose dual agency to all parties in the transaction.
• C.The qualifying broker's obligation to report the associate broker's conduct to the New Mexico Attorney General.
• D.The qualifying broker's duty to refund any earned commission to the buyer because no written agreement existed.

Q8.In New Mexico, water rights are administered under the doctrine of prior appropriation. Which state agency is responsible for administering and recording water rights in New Mexico?

• A.The New Mexico Office of the State Engineer
• B.The New Mexico Environment Department
• C.The New Mexico State Land Office
• D.The Bureau of Land Management (BLM)

Q9.The New Mexico Real Estate Commission (NMREC) requires brokers to retain transaction records for a specified period under NMAC 16.61.19.10. If a qualifying broker is audited and cannot produce complete transaction files for closed sales from three years ago, which of the following best describes the broker's exposure?

• A.The broker may face disciplinary action including license suspension or revocation because NMAC 16.61.19.10 requires transaction records to be maintained for a minimum of six years.
• B.The broker faces no regulatory exposure because the three-year retention period required by NMAC 16.61.19.10 has already been satisfied.
• C.The broker is only subject to a civil fine but cannot lose their license for a recordkeeping deficiency alone.
• D.The broker's exposure is limited to the specific transactions in which a consumer complaint has been filed within the past three years.

Q10.Which state agency is responsible for administering and enforcing the New Mexico Real Estate Brokers Act, including issuing real estate licenses?

• A.New Mexico Department of Finance and Administration
• B.New Mexico Regulation and Licensing Department
• C.New Mexico Real Estate Commission
• D.New Mexico Department of Commerce and Consumer Affairs

Q11.Under New Mexico Real Estate Commission rules, a licensee is strictly prohibited from doing which of the following with client trust funds?

• A.Depositing earnest money into a properly maintained trust account
• B.Commingling client trust funds with the broker's personal or operating funds
• C.Disbursing trust funds according to written instructions from all parties
• D.Maintaining trust fund records for a minimum required period

Q12.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

Q13.Under RESPA, which of the following practices is prohibited when a real estate professional refers a client to a mortgage lender?

• A.Receiving a fee from the lender for the referral without proper disclosure
• B.Providing the client with multiple lender options
• C.Discussing the benefits of different loan programs
• D.Recommending a lender based on competitive rates

Q14.Under NMREC rules, which of the following acts by a New Mexico associate broker constitutes a prohibited practice that could result in license revocation or suspension under NMSA 61-29-12?

• A.Advertising a listed property on a personal social media account with the responsible broker's prior approval.
• B.Negotiating a transaction directly with a party whom the associate broker knows is represented by another licensee, without that licensee's knowledge or consent.
• C.Presenting all written offers to the seller, including offers received after a contract has been accepted.
• D.Disclosing to a prospective buyer that a property is in a flood zone as identified by FEMA.

Q15.Under the Fair Housing Act, which scenario would constitute illegal discrimination based on familial status?

• A.Refusing to rent a studio apartment to a family of four due to legitimate occupancy standards
• B.Advertising 'adults only' for a 55+ senior housing community that qualifies for the housing for older persons exemption
• C.Requiring all tenants to provide references regardless of family composition
• D.Requiring higher security deposits from families with children due to potential property damage