Free New Mexico Real Estate Practice Exam

Q1.In New Mexico, a listing agreement must be in writing to be enforceable. Under NMREC rules, which of the following is also a requirement for a valid listing agreement?

• A.It must have a definite expiration date
• B.It must be recorded with the county clerk
• C.It must guarantee the broker a minimum commission of six percent
• D.It must be approved in advance by the New Mexico Real Estate Commission

Q2.A seller instructs their New Mexico associate broker to refuse to show a property to buyers who have children under 18 because the seller fears damage to the home. Which statement BEST describes the broker's legal obligation under New Mexico law?

• A.The broker may comply because the seller's preference is a lawful instruction from a client
• B.The broker must refuse this instruction because familial status is a protected class under the New Mexico Human Rights Act
• C.The broker may comply because the federal Fair Housing Act only protects familial status in rental transactions, not sales
• D.The broker may refuse to show the property only if the seller puts the instruction in writing

Q3.A broker is selling a residential property built in 1975. Under the EPA's Residential Lead-Based Paint Hazard Reduction Act (42 U.S.C. § 4852d), what is the broker's primary federal obligation before the sale is completed?

• A.Ensure that the seller provides the buyer with an EPA-approved lead hazard information pamphlet and a disclosure of any known lead-based paint or hazards, and that the buyer receives a 10-day opportunity to conduct a lead paint inspection
• B.Order a certified lead paint inspection and remediate all identified hazards before listing the property
• C.Disclose the presence of lead paint only if the broker has personal knowledge obtained from a prior inspection report
• D.File a lead paint disclosure form with the EPA within 30 days of closing

Q4.Under the Real Estate Settlement Procedures Act (RESPA), a lender must provide a Loan Estimate to a residential mortgage applicant within how many business days of receiving a completed loan application?

• A.1 business day
• B.3 business days
• C.5 business days
• D.7 business days

Q5.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

Q6.Under CERCLA (the Comprehensive Environmental Response, Compensation, and Liability Act), which of the following parties could be held liable for the cleanup of hazardous substances on a property?

• A.Only the party who originally deposited the hazardous substances on the property
• B.Only the current owner if they personally caused the contamination
• C.Current owners, past owners at the time of disposal, operators, and parties who arranged for disposal of hazardous substances
• D.Only the federal government if the contamination crosses state lines

Q7.Under federal fair housing law, which of the following activities would be considered illegal discrimination in the rental of residential property?

• A.Refusing to rent to someone because they have a pit bull and the property has a no-pets policy
• B.Charging a higher security deposit for a tenant with a service animal
• C.Requiring all tenants to have a minimum credit score of 650
• D.Refusing to rent a one-bedroom apartment to a family with three children due to occupancy standards

Q8.A salesperson represents a buyer and discovers that the home the buyer wants to purchase has a defective roof. What is the salesperson's duty to the buyer?

• A.Keep the information confidential to avoid disrupting the transaction
• B.Disclose the defect to the buyer as part of the fiduciary duty of disclosure
• C.Inform only the listing agent and allow them to decide what to share
• D.Disclose the defect to the lender financing the purchase

Q9.In New Mexico, the estimated closing cost disclosure provided to a seller by a licensee is intended primarily to inform the seller of which of the following?

• A.The seller's anticipated net proceeds from the transaction
• B.The buyer's credit score and loan approval status
• C.The assessed value of the property for tax purposes
• D.The lender's underwriting guidelines for the buyer's mortgage

Q10.The HUD rule formally codifying the legal definition of sexual harassment in housing (24 C.F.R. Part 100 Subpart B) was issued in what year?

• A.1988
• B.2016
• C.1998
• D.2003

Q11.Under the concept of loan-to-value (LTV) ratio, a borrower purchasing a home for $280,000 makes a down payment of $42,000. If the lender requires private mortgage insurance (PMI) for any loan with an LTV above 80%, will PMI be required on this loan?

• A.No, because the down payment exceeds 10% of the purchase price
• B.Yes, because the LTV ratio is 85%, which exceeds the 80% threshold
• C.No, because the LTV ratio is exactly 80%, which meets the lender's threshold
• D.Yes, because all conventional loans require PMI regardless of down payment

Q12.Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which party is typically held liable for environmental cleanup costs at a contaminated property?

• A.Only the party that originally caused the contamination
• B.The current owner, regardless of when the contamination occurred
• C.Only parties who knowingly purchased contaminated property
• D.The local municipality where the property is located

Q13.The Truth-in-Lending Act (TILA) requires lenders to disclose which of the following to borrowers?

• A.The borrower's credit score
• B.The property's appraised value
• C.The Annual Percentage Rate (APR)
• D.The loan officer's commission

Q14.What is the required pre-licensing education that a candidate must complete before sitting for the New Mexico associate broker licensing examination?

• A.30 hours of approved real estate coursework
• B.60 hours of approved real estate coursework
• C.90 hours of approved real estate coursework
• D.120 hours of approved real estate coursework

Q15.How long does a complainant have to file a fair housing complaint with HUD under 42 U.S.C. § 3610?

• A.90 days
• B.1 year
• C.180 days
• D.3 years