Free New Mexico Real Estate Practice Exam

Q1.Under the New Mexico Real Estate License Law, what is the PRIMARY distinction between an associate broker and a qualifying broker?

• A.An associate broker may operate an independent brokerage, while a qualifying broker must work under supervision
• B.A qualifying broker is responsible for the supervision of associate brokers and the conduct of the brokerage, while an associate broker must work under a qualifying broker
• C.An associate broker must hold a four-year college degree, while a qualifying broker does not
• D.A qualifying broker is only authorized to handle commercial real estate transactions

Q2.After the New Mexico Real Estate Recovery Fund pays a claim on behalf of a licensed associate broker who engaged in fraudulent conduct, what consequence does NMSA Chapter 61, Article 29 impose on that associate broker's license?

• A.The associate broker's license is automatically suspended until the amount paid from the Fund is fully repaid to the Fund
• B.The associate broker receives a formal written reprimand but may continue practicing immediately
• C.The Commission reduces the associate broker's license renewal fee as a penalty
• D.No additional license consequence occurs because payment from the Fund fully resolves the matter

Q3.In a joint tenancy, what happens to a deceased owner's interest in the property?

• A.It passes to the deceased owner's heirs according to their will
• B.It is distributed equally among all remaining joint tenants
• C.It reverts to the state through escheat
• D.It automatically passes to the surviving joint tenant(s) by right of survivorship

Q4.A property manager receives a written complaint that one tenant is repeatedly propositioning a neighboring tenant. Under 24 C.F.R. § 100.600(c), the manager must:

• A.Take prompt corrective action within the manager's control
• B.Take no action — tenant-on-tenant conduct is a private matter
• C.Wait for a second complaint before investigating
• D.Report to law enforcement before taking any internal action

Q5.Under the New Mexico Real Estate Brokers Act, which of the following individuals is NOT required to obtain a New Mexico real estate license?

• A.A person who advertises and shows homes for sale on behalf of a neighbor in exchange for a referral fee
• B.A licensed New Mexico attorney who, as an incidental part of legal practice, negotiates a real estate purchase on behalf of a client
• C.A salaried employee of a real estate brokerage who calls prospective buyers to schedule property showings
• D.A person who collects rent and negotiates lease renewals for multiple landlords for a monthly management fee

Q6.Under RESPA, which service provider is NOT required to provide a Loan Estimate to mortgage applicants?

• A.Hard money lenders making business purpose loans
• B.Commercial banks
• C.Credit unions
• D.Mortgage companies

Q7.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

Q8.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.

Q9.Under New Mexico law, which of the following individuals is EXEMPT from the requirement to hold a real estate license when selling property?

• A.A property manager who collects rent on behalf of multiple owners
• B.An attorney-in-fact acting under a duly executed power of attorney on behalf of a property owner
• C.A friend who is paid a referral fee for introducing a buyer to a seller
• D.A person who lists homes for sale on a website in exchange for compensation

Q10.Under NMAC 16.61.19, a New Mexico qualifying broker who maintains a trust account for property management funds must perform a three-way reconciliation at minimum how often, and the reconciliation must balance which three records?

• A.Monthly; the bank statement, the trust account journal, and the individual client ledger cards
• B.Quarterly; the bank statement, the general business ledger, and the broker's commission records
• C.Monthly; the bank statement, the broker's personal financial statement, and the transaction log
• D.Annually; the trust account journal, the individual client ledger cards, and the corporate tax return

Q11.A seller discovers structural damage after signing a purchase contract but before closing. The seller has no legal obligation to disclose this information to the buyer. What principle does this scenario violate?

• A.Caveat emptor
• B.Material fact disclosure
• C.Stigmatized property rules
• D.As-is sale provisions

Q12.Under NMSA 1978 § 61-29-15 and NMAC 16.61.17, a New Mexico qualifying broker is audited by the New Mexico Real Estate Commission (NMREC). The auditor finds that the broker's brokerage agreement with a seller contains a provision automatically renewing the exclusive right-to-sell listing for successive 90-day periods unless the seller provides written cancellation notice. The auditor flags this clause as a violation. What is the specific regulatory basis for the violation?

• A.NMAC 16.61.17 prohibits automatic renewal clauses in exclusive brokerage agreements; every exclusive listing must have a definite termination date and may not include a provision that automatically extends the agreement without the seller's affirmative renewed consent.
• B.The clause is permissible under New Mexico law as long as the automatic renewal period does not exceed 180 days; a 90-day renewal is within the allowable range under NMAC 16.61.17.
• C.The violation arises solely because the broker failed to provide a copy of the agreement to the seller within 24 hours of execution, not because of the renewal clause itself, which is lawful.
• D.Automatic renewal provisions are only prohibited in buyer-broker agreements; seller listing agreements are exempt from the definite-termination-date requirement under NMAC 16.61.17.

Q13.In a government rectangular survey legal description, 'the NW 1/4 of the SE 1/4 of Section 23, Township 4 North, Range 7 West of the Third Principal Meridian' describes how many acres?

• A.160 acres
• B.80 acres
• C.10 acres
• D.40 acres

Q14.In New Mexico, the Real Estate Recovery Fund is primarily designed to compensate which type of claimant?

• A.Licensed associate brokers who suffer financial loss when a qualifying broker absconds with commission income
• B.Members of the public who obtain a final court judgment against a licensed broker for fraudulent or dishonest acts in a real estate transaction and cannot collect
• C.Mortgage lenders who suffer losses resulting from a licensee's misrepresentation on a loan application
• D.The New Mexico Real Estate Commission itself, to cover the costs of disciplinary proceedings

Q15.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