100+ Free Real Estate Practice Exam Questions (May 2026)

Closing is always the final step in executing a real estate transaction. Closing is known by many names. Some areas may call it settlement and transfer, some may call it passing papers. Traditionally it is called closing.

Novation is the procedure in which an original contract is terminated and replaced with a new one. The legal process of novation makes it possible to transfer all contract benefits and liabilities from previous parties to a set of new ones. In plain terms, it’s a simple way to replace an old contract with a new one while maintaining most or all of its original properties.

Tax liens are imposed by the federal, state, or local government based upon back property taxes that are due. Not only can these seriously impact your credit report, but until they're paid off, they can prevent you from selling the property. Tax liens are involuntary and usually specific. The important thing to remember is the government always gets paid first in terms of money distribution.

All of the options would be justifiable reasons to insist on a mutual release except the buyer finding another property they prefer.

Cathlotics preferred would be discrimination since its catholicism is relgion. Religion is protected under Federal Fair Housing Law.

A real estate agent is a professional who has passed the required real estate classes and licensing exams in the state where he/she intends to work. This is the starting point for most real estate professionals agents. Agents are also legally called a licensee or license holder.

Commingling refers to mixing brokers funds with clients funds. The opposite of commingling is separation, which is just separating the funds.

When you borrow money to buy real estate, you give the lender a mortgage lien against the property. A mortgage lien is a voluntary, specific lien. In fact, it’s the most common type of voluntary real estate lien.

Economic Obsolescence refers to the loss of property value due to external factors, meaning things off the property affecting the properties value. Examples of causes of economic obsolescence can include: flight patterns, a busy highway, and rise in local crime. Read More Here

The rectangular survey system consists of principal meridian lines that cover most states in the US, running north to south and baselines running east to west. These principal meridian lines are named or numbered to identify their location. Using those lines for references, quadrangles are formed, which are smaller squares identifiable by where they are located near the principal meridian and baseline. This process continues, creating a smaller and smaller grid that can be used to identify the specific location of any property.

The alienation clause is a contract provision that comes into effect when ownership of a specified asset is transferred or sold. It ensures that if a transfer of property happens the lender is paid in full from the original borrower. It's a legal clause lenders add for protection.

A conventional loan is a type of loan that is not insured or guaranteed by the government. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower. Yes, typically they are the most popular but the best definition by far is the following: A type of loan that is not insured or guaranteed by the government, but backed by private lenders.

Condemnation is the procedure used by a public or private entity with the powers granted from eminent domain to take privately owned real estate. eminent domain is the right which grants the government to take privately owned land from someone while condemnation is the action of taking that land.

The Purchase Agreement is a contract that legally binds two or more parties together, to specific obligations, that create a legally binding contract between the buyer and the seller. So in plain terms, a Purchase Agreement is the document buyers and sellers sign with all the terms and conditions of their transaction on it.

The seller is usually entitled to keep the earnest money, because this is considered forfeiture of the contract. The only way the buyer can back out and get their earnest money back is if something happens with the inspection, appraisal, or they have a contract clause offering that protection.

Remember, execution means the contract is closed and cannot be assigned. Only executory contracts can be assigned.

A release clause is a contract provision (typically in a blanket mortgage) that allows for the freeing of all or part of a property from a claim through a proportional or full amount of the mortgage being paid off.

Void contracts are not contracts because they lack an essential element of a contract and are thus unenforceable. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects.

As a general rule of thumb all written offers must be presented to the seller. It is a serious breach of a real estate agent's fiduciary duty to the seller not to present all purchase offers.

Agents or brokers function under certain legally mandated duties called fiduciary duties. Fiduciary duties include: Loyalty, confidentiality, disclosure, obedience, reasonable care and diligence, accounting and more. Honesty and fairness must be given to an unrepresented buyer.

No replacement cost, is the cost of replacing an asset or property. Reproduction cost estimates how much it would cost to exactly reproduce an asset or property to exact specifications. Reproduction cost looks at the cost of creating an exact replica, and should not be confused with replacement cost, which looks at the cost of replacing an insured property with one of similar functionality. Reproduction cost is more specific.

The Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more.

The Environmental Protection Agency (EPA) is the federal agency responsible for dealing with environmental issues. The EPA was established in December 1970 by an executive order of United States President Richard Nixon. The agency enforces all federal environmental rules and regulations.

The statute of frauds is a legal concept that requires certain types of contracts to be executed in writing (real estate included). The statute specifically covers contracts for the sale of land, agreements involving goods worth over $500, and contracts lasting one year or more.

A prepayment penalty clause states that a lender can penalize a borrower if the borrower pays off the mortgage much sooner than usual. Lenders are required to disclose prepayment penalties at closing in the form of a prepayment penalty clause.

Percentage lease which pertains to commercial real estate. A Percentage lease is a rental that is based on a percentage of the monthly or annual gross sales made on the premises. Percentage leases are common with large retail stores, especially in shopping centers.

A Listing agreement is a document in which a property owner contracts with a real estate agent to find a buyer for the owner's property. The owner executes the listing agreement to give a real estate broker the authority to act as the owner's agent in the sale of the owner's property, for which the owner agrees to pay a commission. A listing agreement is a personal service contract. That means that should the seller die, or either party becomes incapacitated, or the property is physically destroyed in an accident, the listing agreement is terminated.

The income approach determines how much a property generates income for it’s owner, that income, or potential for income. This is used to calculate or identify the market value of the property. The income approach is primarily used for rental properties as not all properties normally generate income.

Intangible Deterioration. There is no such thing as intangible deterioration. All the others are forms of depreciation.

A warranty deed can include six forms of covenants for title. A warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer). The general warranty deed offers the grantee the most protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land. Typically a warranty deed has five to six covenants.

Since the offer includes all the personal property as well, Mrs Thompson is required to do a package loan. A package loan is a real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a fully furnished condominium.

Real estate has three physical characteristics that differentiate it from other assets in the economy: 1. Indestructibility meaning land cannot be destroyed or worn out. Its appearance may be altered but it always continues to exist. 2. Immobility meaning geographical location of the property remains the same & can never be changed, it is fixed. 3. Uniqueness or non-homogeneity meaning no parcels of real estate are exactly alike. An economic characteristic of real estate is scarcity meaning the total supply is fixed.

Zoning usually increases the marketability of the property. The idea is that when a community is organized, it is more attractive, safer and has fewer conflicts among people. However, it does not directly affect market value. For example, they can't implement zoning code to raise what people pay for properties, they can, however, implement zoning codes to help promote the local economy. Market value is never directly determined by the government.

The correct statement is: “In title theory states, banks or mortgage lenders hold the title of a property until it is paid in full. In lien theory states, however, banks or mortgage lenders never retain title to the property.” In lien theory states banks or mortgage lenders never retain title to the property. Instead, the mortgage lender holds a lien against the property.

A comparative market analysis is an examination of the prices at which similar properties in the same area recently sold. Agents can use a comparative market analysis for their clients to help them determine a price when selling or buying a home.

Duress is the unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable.

In this situation, the new offer cannot be accepted unless the seller's counteroffer is withdrawn or hypothetically rejected. Remember, if a new offer is accepted two valid contracts could exist, so the first step must be to withdraw the counteroffer.

Frontage is the boundary between a plot of land or a building and the road onto which the plot or building fronts. Frontage may also refer to the full length of this boundary. This length is considered especially important for certain types of commercial and retail real estate, in applying zoning bylaws and property tax.

Estates can be divided into two different sections: freehold estates, and less than freehold estates(or leasehold estates).The key difference between a leasehold estate and a freehold estate is the limitation of time. A freehold estate is an estate in which you have exclusive right to enjoy the possession of a property for an undefined length of time, while a leasehold estate is an estate held by one who rents or leases property for a period of time. Read More Here

The term retroactive liability is used in connection with CERCLA and the Superfund. It means that all previous owners also can be held accountable for the hazardous waste site.

The term “ad valorem” is Latin for “according to value,” which means that it is flexible and depends on the assessed value of an asset, product, or service. An ad valorem tax is charged by state and municipal governments and is based on the assessed value of a product or property. The most common ad valorem tax is the property tax, which is charged on real estate and personal property.

The Gross Rent Multiplier is found by dividing the price of the property by its rent.

Constructive eviction is a term used in the law of real property to describe when a landlord sidesteps the formal, legal eviction process, and instead attempts to force the eviction of the tenant by rendering the property uninhabitable. A tenant who is constructively evicted may terminate the lease and seek damages.

In this example the answer is 18 months. Established business relationship means a relationship between a seller and a consumer based on….. “ the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months.” Per 16 CFR 310.2

By definition, a dominant estate is a parcel of real property that has an easement over another piece of property.

Once the appraisal has been performed on a property being bought with a VA loan, the Department of Veterans Affairs (VA) issues a Certificate of Reasonable Value. A Certificate of Real Estate Value documents the price at which a property was sold as well as any unique terms that were added to the transaction prior to its completion.

The statute of frauds requires certain types of contracts to be executed in writing. The statute covers contracts for the sale of land, agreements involving goods worth over $500, and contracts lasting one year or more.

Think of supply and demand like a scale usually if one side raises, the other will lower or vice versa. Generally, low supply and high demand increase price. In contrast, the greater the supply and the lower the demand, the price tends to fall. So in real estate terms, when the supply of available houses in an area increases significantly the average cost of housing goes down.

If a seller rejects a written offer made by a buyer, changes the terms of the offer, and has the new offer delivered to the buyer, this would be considered a counteroffer.

Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. In our instance since the washer and dryer were included in the contract, the buyer may sue the seller for specific performance.

Leo should use Contribution. Contribution is most commonly applied to determine how renovation and property changes may affect the property’s overall cost. In this case, since the owner wants a feasibility study, contribution would need to be used. Swimming pools are a common contribution example. It's worth noting the cost doesn't always equal the value to the home. For example, a pool could add $5000 to the value of a home but cost $10,000 to build.

A mortgagee is an entity that lends the mortgagor money. This entity is typically referred to as the lender.

The keywords here are lender and payment. Some of these provisions protect the borrower, lender, or both. The Acceleration Clause and Prepayment Penalty Clause is the best answer here. The acceleration clause is a contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract - which definitely protects the lenders and their interests by asking for repayment. A prepayment penalty clause states that a lender can penalize a borrower if the borrower pays off the mortgage much sooner than usual - This definitely protects the lenders, their interests, and results in repayment as well. Within the other answers the clauses may, or may not protect lenders, or do not require some form of payment or insurance.

According to the law of supply and demand, the first property sold would have sold for the lowest price. Remember generally speaking, when the supply of houses goes down, the price goes up, and vice versa.

Severance is the opposite of attachment. Severance is taking an item that is attached to the land and removing it as personal property.

A depth table is used to estimate the value of commercial properties. A depth table is a table used by real estate appraisers to show land values in percentages based on variations in the depth of the lot.

In real estate, the increase of the actual land via a stream, lake or sea by the action of water which deposits soil upon the shoreline is accretion.

Users, owners, renters, developers, renovators, and facilitators are the main participants in real estate markets.

A lease option is when a lease is combined with an option contract.

Tenants by the entirety Is a special form of co-ownership used in some states that allow a husband or wife to inherit the other spouse's ownership interest upon death. Community Property Laws are based on the idea that husband and wife are equal, separate, partners rather than one whole one like tenants by the entirety. Both terms pertain to spouses.

Antitrust Laws are a collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. While selling a house without a license is illegal and some of the other answers are too, the only clear antitrust violation is dividing territories. Which is when competing brokers agree to split territories, and divide interests accordingly. An example of this is if agencies meet up and agree to divide the town in to three separate areas to work in. This prevents competition which is bad for the consumer and a clear antitrust violation.

In this instance age doesn't really matter. What does matter is that the middle age couple has a mortgage with a high interest rate and at the current rates at much lower. They would most likely qualify for a refinance and they would definitely derive the most value from it. Bonus tip. The rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. Generally speaking, homeowners should have a solid credit score to refinance, although there are a few exceptions in government run loan assistance programs.

A condominium is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. A condominium is often shortened to condo. What is the difference between a condo and a co-op? Well, a condo is a private residence in a multiunit structure that includes ownership of commonly used property. A co-op is also a multiunit building, but that’s where the similarities end. A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit.

Ginnie Mae exists to solely guarantee the security of the loan. Ginnie Mae is a government agency that guarantees securities backed by loans issued under other government agency programs, such as the VA and FHA. Fannie Mae, is a private corporation that buys loans from private lenders, assembles them into mortgage-backed securities to maintain an active secondary market.

A mechanic’s lien also called a construction lien is a lien placed on your property for nonpayment for work you had done on the property. It is a claim made against a property by a contractor or other professional who has supplied labor or materials for work on that property. They are designed to protect professionals from the risk of not being paid for services. A mechanic’s lien is involuntary and specific.

It generally has to do with performance. Time is of the essence clause in real estate contracts refers to a clause that requires one party in a real estate contract to fulfill their obligations within a specific time frame.

All of the following. Rescission or rescinding a contract is when a contract is rendered null and void and is no longer recognized as legally binding. Rescinding a contract is an option if there is proof that there was evidence of fraud, errors or mistakes, lack of legal capacity, fraud, and more.

In this problem we have to find the annual property taxes. First off we have to find the assessed value. In order to do that we have to take the market value which is $400,000 and then multiply it by the assessment rate which is 25%. So $400,000 x .25 = $100,000. Now that we the assessed value we must subtract the deductions. So $100,000 - $25,000 = $75,000. The next step is to utilize mills. The mill rate is the amount of tax payable per dollar of the assessed value of a property. So we have to multiply the assessed value by the mill rate which is $75,000 x .02275 = $1,706.25 So the annual property taxes on the property is $1,706.25.

Steve should advise the other agents this could constitute a violation of Sherman Antitrust Act. The Sherman Antitrust Act prohibits price-fixing. Real estate agents and brokers should understand that any discussion about commission could constitute a violation of the laws even if only implied.

Most loans require some form of homeowners insurance. Homeowners insurance is property insurance that covers losses and damages. They cover an individual's house and assets in the home. It may also provide liability coverage against accidents in the home or on the property.

The actual transfer of title in a real estate transaction is handled by lawyers or title agencies, not the agent. However as with other legal aspects in the transactions a real estate agent needs to understand them. Alienation is the act of transferring title, ownership, an estate, or an interest in real estate from one party to another.

When contracting parties have signed a contract and both parties have done all they promised to do, it is called an executed contract or executed agreement.

Encroachment is an intrusion on a person's territory or property. For those of you who are football fans, it's pretty much the same thing as the penalty. If a tree grows over someone's property, or when a fence or another piece of your neighbor's property crosses the property lines. Those are all examples of encroachment. Encroachment can lead to some large legal issues and if there are potential encroachment owners and agents should seek a solution immediately.

Blockbusting, also sometimes referred to as "panic selling," is a discriminatory and illegal real estate practice. Blockbusting is when real estate agents try to increase their sales and profit by suggesting that people leave their neighborhoods before property values decrease. They may base their statements about these declining values on the race, ethnicity, or economic class of some of the people living in the neighborhood.

A tenant who continues to occupy property after his or her rights have expired is said to occupying the property under an Estate at Sufferance.

A fixture is any physical property that is permanently attached to real property. Trade fixtures refer to items installed in connection with the business, such as stoves or refrigerators in a restaurant.

The Purchase Agreement is a contract that legally binds two or more parties together, to specific obligations, that create a legally binding contract between the buyer and the seller. A good example of a purchase agreement is when you order something online. Sometimes websites will ask you to sign or check a box that says terms and conditions. That's a purchase agreement. Most people don’t normally read those but truely should. Real Estate Purchase Agreements are the same but at a larger scale.

They belong to Trinity Real Estate LLC. The listings belong to brokerage, not the salesperson who listed the property.

Real estate liens are financial claims against property. Liens can be divided into two categories: Voluntary and Involuntary liens. Involuntary liens aren’t created by the homeowner. It is a claim imposed against a property without the consent of its owner. Involuntary liens are placed usually by government revenue authorities for unpaid duties or taxes. Read More Here

The U.S. Department of Housing and Urban Development's Office (or HUD) administers and enforces federal laws and establishes policies that make sure all Americans have equal access to the housing of their choice.

If demand increases more than supply does, we get an increase in price. If supply rises more than demand, we get a decrease in price. If they rise or decrease the same amount, the price remains the same.

A satisfaction of mortgage is a document that confirms a mortgage has been paid off and details the provisions for the transfer of collateral title rights.

Antitrust Laws are a collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. In retrospect, antitrust laws protect the consumer and are healthy for a stable economy. It’s important to know and understand the ones that deal with real estate as they directly relate to how you function as an agent.

The market data approach, also known as the sales comparison approach, involves comparing a property to other recently sold properties in the same area of similar size and condition. For residential real estate, the market data approach is typically regarded as the most accurate comparison method.

Closing is the final step in executing a real estate transaction. It is when official ownership and payment is transferred to the rightful parties. The fees that the buyer pays to close the deal are called closing costs.

Warehousing has to deal with loans and the secondary market. The term refers to the process where a bank or lender packages mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market.

Lead-Based Paint Disclosure Rule (Section 1018 of Title X) requires that potential buyers and renters of housing built prior to 1978 receive certain information about lead and lead hazards in the residence prior to becoming obligated to buy or rent, and provides the opportunity for an independent lead inspection for buyers. Sellers, landlords, and agents are responsible for compliance.

Appraisals are the best way to determine fair value. The overall appraisal process is based on a number of factors, such as its cost, the income it generates or its fair market value as compared to similar assets.

The Federal Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more. You cannot have a listing that states looking for white people only. Or looking for married couples without children only. The interesting thing is though you can put language referring to sex. For example “Seeking female roommate.” However, it's only in cases of finding someone to share living spaces with. The “Mrs. Murphy” exemption provides that if a dwelling has four or fewer rental units and the owner lives in one of those units, that home is exempt from the FHA. “Mrs. Murphy” is the hypothetical elderly widow who has converted a portion of her home into a rental apartment to supplement her limited income.

Real estate police power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals, and general welfare. The most common example of real estate police power is zoning.

The acceleration clause is a contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract.

When a home is purchased using an adjustable rate mortgage or ARM, the monthly loan payment on the mortgage will vary over the life of the loan depending on fluctuations in the interest rate to which the loan is referenced. A variable-rate mortgage, adjustable-rate mortgage, or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.

In this case, the contract would be voidable by the buyer because of fraud. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects. Fraud is the act of intentionally deceiving another party for financial or personal gain.

Carbon monoxide is an odorless, colorless, gas created from burning fuels. If the system is used correctly and with proper ventilation, gas is controlled. However, if not there can be immediate and serious health risks. If inhaled, causes red blood cells to deprive the body of oxygen. Extreme exposure cuts off oxygen and cause death within 30 mins or less. It's a good rule of thumb to use a CO Detector on every floor, especially with floors with an open flame.

Radon is radioactive gas dispersed from natural decay of mineral in earth. odorless, colorless, tasteless. Rises out of ground and enters homes through openings in basement where usually found. If trapped inside a house, can increase to harmful health levels. Small particles inhaled into lungs can cause cancer. Can also contaminate groundwater. Radon is usually detected by radon test kits.

The term is used very often in real estate. Equity is the difference between the market value of your home and the amount you owe the lender who holds the mortgage. Your equity is the money you'd receive after paying off the mortgage if you were to sell the home.

A testate estate means that the decedent or deceased person left a will. An intestate estate means that the decedent did not leave a will. If this occurs then a probate court will determine the distribution of his or her property to the appropriate parties.

Hypothecation occurs when an asset is pledged as collateral to secure a loan. A rental property, for example, may undergo hypothecation as collateral against a mortgage issued by a bank.

Remember DUST and your essential elements of value. Demand: This means the desire to buy and an ability to pay. Utility: The item satisfies a human need or desire; such as shelter, income, or recreation. Scarcity: Limited in supply, as supply diminishes, value increases. Transferability: Able to transfer from one owner to another.

Codicil (pronounced kaa-duh-sl) is a written supplement or amendment to an existing will such as one affecting the transfer of real estate upon death. In plain terms it's an addendum of any kind to a will.