Indiana Real Estate Practice Exam

Correct answer: Before the owner accepts an offer.

For a covered transaction, the owner must complete and sign the disclosure and submit it before an offer is accepted. Separate statutory provisions address later delivery and enforceability.

Why the other choices are incorrect:

• Only after the lender approves financing. Loan approval is not the delivery trigger.
• Only after closing. The statutory delivery point is before offer acceptance.
• Only if the buyer waives an inspection. The disclosure obligation does not depend on an inspection waiver.

Sources:

• IC 32-21-5-1 — (a)–(b)
• IC 32-21-5-10 — (a)

Correct answer: A reassignment application reporting termination and electing unassigned status or assignment to a new company.

The termination rule requires a reassignment application within five business days. A transfer to a new company requires the broker and new managing broker’s attestations and the required fee. Unassigned practice is restricted, subject to the rule’s eligible sole-proprietor exception.

Why the other choices are incorrect:

• Nothing until the next license renewal. The rule specifies five business days, not the renewal date.
• Only a new business card. A business card does not satisfy the commission filing requirement.
• An application to keep active assignments with both companies indefinitely. Termination and reassignment do not authorize simultaneous ordinary associations with two companies.

Sources:

• 876 IAC 8-1-4 — (a)–(d)

Correct answer: Do not reveal the buyer’s willingness to pay more without the buyer’s informed written consent.

The buyer-agency statute protects the buyer’s willingness to pay more, motivation and other protected information. Informed consent must be in writing.

Why the other choices are incorrect:

• Reveal it because the seller asked. A seller’s request does not authorize disclosure of protected client information.
• Reveal it if the offer has not yet been accepted. The protection is not limited to accepted contracts.
• Reveal it only to the listing agent and ask that agent to keep it secret. Sharing it with the opposing agent is still disclosure.

Sources:

• IC 25-34.1-10-11 — (b)

Correct answer: The assistant should refer the question to the appropriate licensed broker rather than explain the contract to the buyer.

An unlicensed assistant may not discuss or explain a contract, listing, lease or other real estate document with a person outside the broker company. The buyer is outside the company.

Why the other choices are incorrect:

• The assistant may explain any clause if reading from a script. A script does not remove the prohibition on discussing or explaining contracts to outsiders.
• The assistant may negotiate a replacement contingency. Negotiating terms is not an authorized unlicensed-assistant task.
• The assistant may explain it if no fee is charged for the call. The assistant’s lack of a separate fee does not authorize the prohibited function.

Sources:

• 876 IAC 8-1-7 — (4)

Correct answer: The applicant must be at least 18 before applying for the license.

The broker-license statute requires an individual to be at least 18 years old before applying. Meeting an education requirement does not change that timing.

Why the other choices are incorrect:

• Turning 18 before the first closing is enough. The age threshold applies before application, not the first closing.
• The minimum application age is 21. The statutory minimum is 18, not 21.
• A managing broker may waive the age requirement. This provision gives no such waiver power to a managing broker.

Sources:

• IC 25-34.1-3-4.1 — (a)(1)

Correct answer: Each individual represents that individual’s client; the managing broker does not automatically represent either party.

In an in-house agency relationship, each individual licensee represents only the client with whom that licensee works. The managing broker has no automatic agency relationship merely because both licensees are in the company.

Why the other choices are incorrect:

• The two individual licensees must automatically share all client confidences. Confidential information must be protected rather than freely shared.
• Every licensee in the company automatically represents both clients. The statute excludes automatic company-wide representation.
• The managing broker is always a limited agent solely because of the supervisory role. The managing broker represents a party only when personally in an agency relationship with that client.

Sources:

• IC 25-34.1-10-12.5 — (a), (c)–(e)

Correct answer: A federally insured financial institution.

A company collecting money in regulated activities must establish an escrow/trust account at a federally insured financial institution under the governing statutes and rules.

Why the other choices are incorrect:

• Any uninsured payment account chosen for convenience. The rule specifically requires a federally insured financial institution.
• The advertising vendor’s operating account. An operating account held by a vendor is not the company’s required trust account.
• The managing broker’s personal cash safe. A personal safe is not the required escrow/trust account.

Sources:

• 876 IAC 8-1-13 — (b)

Correct answer: The licensee may not offer or appoint subagency in that transaction.

Indiana prohibits offering subagency through an MLS or another information source and agreeing to appoint, cooperate with or compensate a subagent. Ordinary permitted cooperation is not categorically banned.

Why the other choices are incorrect:

• Subagency is mandatory for all MLS participants. The statute prohibits the described subagency.
• The prohibition also bans every form of cooperation between independent licensees. The statute preserves cooperation with a licensee who is not acting as a subagent.
• Subagency becomes lawful merely by paying a referral fee. Compensation does not override the prohibition.

Sources:

• IC 25-34.1-10-17 — Sec. 17

Correct answer: The commission may inspect a licensee’s records under its prescribed rules and standards.

Indiana expressly gives the commission authority to inspect licensee records under commission rules and standards. Private ownership does not prevent regulatory oversight.

Why the other choices are incorrect:

• The commission may inspect only after the broker voluntarily surrenders the license. Surrender is not a prerequisite in this provision.
• Only the broker’s accountant may inspect those records. Private accounting arrangements do not remove the commission’s statutory inspection power.
• The commission may inspect only records of publicly owned brokerages. The authority applies to licensees, not just public entities.

Sources:

• IC 25-34.1-2-5 — (6)

Correct answer: Keep the seller’s willingness to accept less confidential.

The limited-agency statute protects a seller’s willingness to accept less than the listed price. Limited agency does not remove this restriction; required disclosures of property defects are a different issue.

Why the other choices are incorrect:

• Disclose it whenever the buyer asks directly. A buyer’s question does not supply the seller’s informed written consent.
• Tell the buyer automatically to balance the transaction. Representing both parties does not authorize disclosure of this protected bargaining information.
• Post the seller’s minimum price in the listing. Public disclosure is not authorized without the required consent.

Sources:

• IC 25-34.1-10-12 — (a)(3)(A), (C)

Correct answer: Put the authority in writing, on paper or electronically, with a definite expiration date.

Indiana requires buyer agency agreements or authority to represent a buyer or tenant to be in writing and show a definite expiration date. Electronic format is permitted.

Why the other choices are incorrect:

• Only the commission amount must be written. The statute requires a written agreement or authority with a definite expiration.
• The agreement must continue indefinitely until a purchase occurs. An indefinite duration does not supply the required expiration date.
• An oral agreement is enough if the buyer trusts the broker. Personal trust does not replace the writing requirement.

Sources:

• IC 25-34.1-12-2 — Sec. 2

Correct answer: The broker may not perform that licensed activity while inactive.

An inactive licensee may not perform acts requiring a broker’s license. Inactive status relieves ordinary continuing-education duties while inactive but does not authorize practice.

Why the other choices are incorrect:

• The broker may negotiate if another broker handles closing. Another broker’s participation does not reactivate this license.
• The broker may negotiate if no advertisement is used. The restriction concerns licensed acts, not just advertising.
• The broker may negotiate for a former client only. There is no former-client exception in this provision.

Sources:

• IC 25-34.1-3-10 — (c)

Correct answer: The company may not accept it unless it provides a maximum commission payable by the seller.

A listing that provides a net return to the seller cannot be accepted unless it sets a maximum commission payable to the broker company. The defect here is the unlimited commission.

Why the other choices are incorrect:

• Every agreement stating a net return is prohibited even with a maximum commission. The rule contains an exception when the agreement provides a maximum commission.
• It is automatically valid if the home sells above asking price. A later price does not cure the missing contractual cap.
• It is acceptable without a cap whenever the seller signs. Consent alone does not remove the maximum-commission requirement.

Sources:

• 876 IAC 8-2-1 — (b)

Correct answer: The broker may decline to disclose, but may not intentionally give a false answer.

The statute generally does not require disclosure of psychologically affected property and protects a refusal to disclose. It does not permit intentional misrepresentation in response to a direct inquiry. Physical defects can create separate disclosure duties.

Why the other choices are incorrect:

• The broker must invent a harmless explanation. Inventing facts is not permitted.
• Any past death must always be volunteered in every advertisement. The statute generally does not require disclosure of psychologically affected status.
• The broker may knowingly say no because disclosure is not required. The direct-inquiry provision prohibits intentional misrepresentation.

Sources:

• IC 32-21-6-3 — (1)
• IC 32-21-6-5 — Sec. 5
• IC 32-21-6-6 — Sec. 6

Correct answer: Advise the buyer to obtain appropriate expert advice.

A buyer’s agent must advise the client to obtain expert advice concerning material matters beyond the licensee’s expertise and exercise reasonable care and skill.

Why the other choices are incorrect:

• Invent a confident answer to avoid delaying the sale. Fabrication conflicts with reasonable care and the expert-advice duty.
• Guarantee the engineering result based solely on a visual impression. The agent should not replace needed expertise with an unsupported guarantee.
• Tell the buyer that an agent never needs to identify limits of expertise. The statute specifically requires advising the client to seek expert advice on material matters beyond the licensee’s expertise.

Sources:

• IC 25-34.1-10-11 — (a)(3)(D), (F)

Correct answer: No. Offering or negotiating the transaction for consideration requires a license.

Indiana’s license requirement covers selling, listing, negotiating and offering to perform the listed acts for consideration. Deferring the fee does not exempt the activity.

Why the other choices are incorrect:

• Yes, because only collecting money is regulated. The statute covers offering and negotiating specified acts, not merely collection.
• Yes, if the owner approves the arrangement. Owner approval does not create a licensing exemption.
• No license is needed for residential property. The statute applies to real estate activities, including this residential transaction.

Sources:

• IC 25-34.1-3-2 — (a)

Correct answer: Disclose the possible referral compensation in writing to the customer at the time of the referral.

The 2026 statute requires a referring broker company to disclose if it may receive referral compensation. The notice must be written and provided to the client or customer at the time of referral.

Why the other choices are incorrect:

• Give oral notice only at closing. Both the written form and referral timing would be missed.
• Disclose it only after a commission is actually paid. The statute applies if the company may be compensated and requires disclosure at referral.
• Disclose only to the receiving broker company. The disclosure must go to the client or customer.

Sources:

• IC 25-34.1-10-18 — (a)–(b), added by P.L.30-2026, Sec. 1

Correct answer: The broker must turn them over to the former company; they remain its property.

Upon termination, the associated broker must turn over listings obtained during the association unless a written contract stipulates otherwise. The default is that the listings remain the broker company’s property.

Why the other choices are incorrect:

• They must all be destroyed upon departure. The rule requires turnover, not destruction.
• They become the property of the new company without consent. A new association does not automatically transfer the listings.
• They automatically follow the associated broker. The rule states the opposite unless a written contract provides otherwise.

Sources:

• 876 IAC 8-1-6 — Sec. 6

Correct answer: Suspension, with eligibility to be licensed again withheld until full repayment plus 12% annual interest.

When the commission makes a recovery-fund payment, it must suspend the judgment debtor’s license under the applicable procedures. The licensee is not eligible to be licensed again until the fund is repaid in full with 12% annual interest.

Why the other choices are incorrect:

• Automatic renewal because the client has been compensated. Payment triggers suspension rather than automatic renewal.
• Repayment of principal alone immediately restores eligibility. The statute also requires 12% per annum interest; repayment does not erase other applicable licensing requirements.
• A warning only, with no repayment obligation. The statute requires suspension and repayment with interest.

Sources:

• IC 25-34.1-7-10 — (a)–(b)

Correct answer: The broker may not compensate the unlicensed person for performing services that require a license.

Paying commission or other compensation to an unlicensed person for services legally requiring a license is incompetent practice. The broker also may not knowingly allow an unlicensed person to perform such acts.

Why the other choices are incorrect:

• The arrangement is permissible if the person signs no documents. Negotiating is regulated even without signing documents.
• Calling the payment a bonus makes the arrangement permissible. The substance of the licensed services matters, not the payment label.
• The arrangement is permissible if the payment is small. The cited rule provides no small-payment exception for these licensed services.

Sources:

• 876 IAC 8-2-7 — (12)
• 876 IAC 8-1-12 — Sec. 12

Correct answer: At least four of the 12 hours must address managing-broker business, management and legal knowledge.

The managing-broker rule reserves at least four of the 12 annual hours for the specified management and legal subjects. Serving for only part of that year still triggers this requirement.

Why the other choices are incorrect:

• Four additional hours are always required on top of the 12. The rule says four of the 12, not automatically 16 total.
• The broker can replace all 12 hours with four management hours. The four-hour component does not reduce the total to four.
• The specialization applies only after a full year as managing broker. It applies if the broker functions as managing broker for any period in that year.

Sources:

• 876 IAC 7-5-2 — (a)–(b)

Correct answer: Written, informed consent of all parties to the transaction.

A licensee personally representing both sides is a limited agent. The statute requires all parties’ written consent and specifies disclosures supporting informed consent.

Why the other choices are incorrect:

• Only the seller’s oral consent. Consent must be written and include all parties.
• No consent if both parties use the same lender. A shared lender does not waive the limited-agency rules.
• Only the managing broker’s internal approval. Office approval does not substitute for the parties’ consent.

Sources:

• IC 25-34.1-10-7 — Sec. 7
• IC 25-34.1-10-12 — (a)
• IC 25-34.1-10-12.5 — (b)

Correct answer: Within three business days of signing.

The listing statute requires delivery of one copy to the owner within three business days of signing. The original and all electronic files must be retained in the listing broker’s office.

Why the other choices are incorrect:

• Only after the first offer arrives. The delivery clock begins at signing, not receipt of an offer.
• Within 30 calendar days. That exceeds the statutory three-business-day period.
• Only at closing. Waiting until closing does not satisfy the delivery requirement.

Sources:

• IC 25-34.1-12-1 — Sec. 1

Correct answer: No. The statute permits showing the same property to competing buyers without that act alone breaching the duty.

Indiana permits a buyer’s agent to show a property to other prospective buyers and assist competing buyers. That permission does not authorize disclosure of confidential bargaining information or override other applicable duties.

Why the other choices are incorrect:

• Yes, the first buyer automatically owns an exclusive right to see the property. The statute creates no such right.
• Yes, unless the seller pays both buyers. There is no such statutory condition.
• No, and the agent may therefore freely disclose each buyer’s maximum price. Permission to show the property does not eliminate confidentiality.

Sources:

• IC 25-34.1-10-11 — (b), (e)(1)

Correct answer: Disclose the known adverse material physical-condition fact to the prospective buyer.

Indiana requires disclosure of actually known adverse material physical-condition facts and required facts that could not be found by reasonable, timely inspection. The rule does not impose a general duty on the seller’s agent to independently inspect for the buyer.

Why the other choices are incorrect:

• Conceal it because loyalty to the seller overrides disclosure. The seller’s instruction does not eliminate the statutory disclosure duty.
• Assume the buyer must discover it without assistance. The scenario expressly concerns a known material fact not discoverable by reasonable, timely inspection.
• Disclose only after closing. That would not fulfill the duty to the prospective buyer.

Sources:

• IC 25-34.1-10-10 — (d)

Correct answer: Written consent from the owner or the owner’s authorized agent before placing the sign.

A broker may not place a sign, advertise or offer property for sale, lease or rent without the owner or authorized agent’s written consent. A casual conversation about a future sale is insufficient.

Why the other choices are incorrect:

• The neighbor’s consent is sufficient. The rule requires the owner or authorized agent’s written consent.
• A verbal indication of possible interest is enough. The required consent must be written.
• No permission is needed until an offer is received. The restriction applies to placing the sign and advertising.

Sources:

• 876 IAC 8-1-8 — (f)

Correct answer: The broker’s ownership interest and the fact that the broker holds a valid real estate license.

A broker dealing in property in which the broker owns an interest must disclose both the interest and license status in writing to all parties.

Why the other choices are incorrect:

• Only the brokerage’s phone number. Contact information does not satisfy the required disclosures.
• Nothing if the broker acts as an owner. Licensed ownership does not eliminate this rule.
• Only the original purchase price. That does not replace disclosure of interest and license status.

Sources:

• 876 IAC 8-2-6 — Sec. 6

Correct answer: Take and pass 30 hours of commission-approved postlicensing education within those two years.

For licenses issued after June 30, 2014, the rule requires 30 approved postlicensing hours in the first two years. Separate provisions coordinate this with the ordinary continuing-education cycle.

Why the other choices are incorrect:

• Repeat the licensing exam instead of taking postlicensing education. The rule requires approved education; it does not offer this substitution.
• Wait until applying for a managing-broker designation. The requirement applies to newly licensed brokers, not only future managing brokers.
• Complete 12 hours total during the first three years. That does not satisfy the 30-hour postlicensing requirement.

Sources:

• 876 IAC 7-4-2 — (a)–(c)

Correct answer: 12 approved hours per continuing-education year.

The rule generally requires 12 approved hours each continuing-education year for brokers who are not inactive or covered by a waiver. This scenario excludes the initial postlicensing period.

Why the other choices are incorrect:

• Four hours per year for every broker. Four hours concerns the managing-broker portion of the 12-hour total.
• No continuing education after postlicensing education. Postlicensing education does not permanently replace continuing education.
• 12 hours total per three-year license term. The ordinary requirement is annual, not a single 12-hour total for the term.

Sources:

• 876 IAC 7-5-1 — (a)

Correct answer: Present the new offer immediately upon receipt.

A seller’s agent must present all offers immediately, even after an offer has been accepted, unless the seller directs otherwise. This differs from the separate rule that the agent need not seek additional offers after acceptance unless agreed.

Why the other choices are incorrect:

• Present it only if it pays a higher commission. Commission size is not a permitted filter for the presentation duty.
• Hold it until the first buyer defaults. The statute requires immediate presentation unless otherwise directed.
• Discard every later offer automatically. Acceptance alone does not eliminate the presentation duty.

Sources:

• IC 25-34.1-10-10 — (a)(3)(A)–(B)

Correct answer: Cooperate with the investigation and respond to the lawful request.

A broker under investigation must cooperate. The rule identifies failure to provide a requested written response or comply with a lawful information demand as possible lack of cooperation.

Why the other choices are incorrect:

• Destroy unrelated brokerage records before responding. Destroying records is not a substitute for complying with a lawful request.
• Respond only if the complaining person pays a fee. The rule imposes no such condition.
• Ignore the request until a lawsuit is filed. A civil lawsuit is not required before the cooperation duty applies.

Sources:

• 876 IAC 8-1-14 — Sec. 14

Correct answer: The client may seek payment through the statutory application process, subject to eligibility requirements and limits.

A qualifying unpaid judgment for embezzlement or specified fraudulent taking can support an application. The statute limits recovery to actual direct loss, permits court costs, excludes attorney fees and punitive damages, and sets payment limits.

Why the other choices are incorrect:

• The fund automatically pays every award, including punitive damages. Payment requires the statutory process, and punitive damages are excluded.
• The fund covers only a decline in the market value of property. The statute distinguishes actual cash loss from loss in market value.
• The fund is available only to reimburse the broker’s own commission loss. The provision protects qualifying aggrieved persons; it is not commission-loss insurance.

Sources:

• IC 25-34.1-7-4 — (a)–(b)

Correct answer: Pay the cooperating selling broker company, not its associated individual broker directly.

The rule permits a listing broker to offer part of its commission to a selling broker, but not to pay it directly to a broker associated with that selling broker. The rules define selling broker as the broker company acting for the buyer or tenant.

Why the other choices are incorrect:

• Commission sharing is prohibited in every transaction. The rule permits sharing but specifies the payment path.
• Pay any associated broker the listing company chooses. The rule expressly prohibits this direct payment.
• Pay the buyer directly instead of the cooperating company. That is not the commission arrangement described or the rule’s required recipient.

Sources:

• 876 IAC 8-1-9 — Sec. 9
• 876 IAC 5-2-18 — Sec. 18

Correct answer: The broker made timely, voluntary disclosure of the underlying conduct.

The fine rule identifies timely voluntary disclosure as mitigating. Dishonesty, a pattern of misconduct and failure to cooperate are aggravating factors; the rule does not promise that disclosure eliminates a penalty.

Why the other choices are incorrect:

• The conduct involved dishonesty. Dishonesty or deception is an aggravating factor.
• The conduct was part of a pattern of improper behavior. An overall pattern of improper conduct is aggravating.
• The broker failed to cooperate with the investigation. Failure to cooperate is listed as an aggravating factor.

Sources:

• 876 IAC 5-4-1 — (c)(6), (d)(3), (4), (8)

Correct answer: The individual cannot be a managing broker for at least two years after initial license issuance.

The licensing statute bars an individual from being a managing broker for at least two years after issuance. Reaching two years alone does not establish that all other managing-broker qualifications have been met.

Why the other choices are incorrect:

• Passing the license exam immediately removes all managing-broker requirements. Initial licensing does not remove the two-year restriction.
• The only restriction is reaching age 21. The cited provision uses time after license issuance.
• A client’s written approval waives the restriction. A client cannot waive this statutory qualification rule.

Sources:

• IC 25-34.1-3-4.1 — (f)

Correct answer: No. The owner exemption expressly excludes a person who is licensed under the article.

Acts relating to one’s own property are generally exempt under this provision, but the statute says the article still applies if the owner is licensed under it.

Why the other choices are incorrect:

• Yes, unless the property has more than four units. That unit-count test is not the licensed-owner exception.
• Yes, every owner is exempt regardless of licensure. The exemption contains an express exception for licensed owners.
• No, because no owner can ever sell property without a license. Unlicensed owners may qualify for the exemption; the question concerns a licensed owner.

Sources:

• IC 25-34.1-3-2 — (b)(8)

Correct answer: 60 days from mailing the certified letter.

Where the contract provides no release procedure, the rule allows notice to all parties at their last known addresses by certified mail. If no mutual release or litigation occurs within 60 days of mailing, the broker may release the deposit to the party identified in the notice.

Why the other choices are incorrect:

• Three business days after a phone call. A phone call does not replace the prescribed certified notice and 60-day period.
• No waiting period if the broker believes one party is at fault. The broker’s opinion does not eliminate the rule’s safeguards.
• Two banking days from the failed closing. That is not the certified-mail release period.

Sources:

• 876 IAC 8-2-2 — (c)–(d)

Correct answer: Tell the seller the nature of the deposit and show that fact in the earnest-money receipt.

When earnest money is not cash, a check or its equivalent, that fact must be communicated before the seller accepts the offer and shown in the receipt.

Why the other choices are incorrect:

• Keep the information only in a private broker note. The rule also requires it to appear in the earnest-money receipt.
• Wait until closing to mention it. The seller must be informed before acceptance.
• Describe it as cash because both have value. That would misstate the deposit and omit required disclosure.

Sources:

• 876 IAC 8-2-2 — (b)

Correct answer: The seller’s informed written consent.

A seller’s agent may not disclose the seller’s willingness to accept less or motivation without informed written consent. Required legal disclosures and fraud-related exceptions are distinct from these ordinary bargaining facts.

Why the other choices are incorrect:

• No consent because motivation is never confidential. The statute specifically protects the seller’s motivation and willingness to accept less.
• The buyer’s oral request. The buyer cannot waive the seller’s confidentiality rights.
• Consent from any other agent in the office. Another agent’s approval is not the seller’s informed written consent.

Sources:

• IC 25-34.1-10-10 — (b)

Correct answer: At least five years.

Every listing and selling broker must give the client a complete detailed statement of receipts and disbursements handled by that broker when the transaction is consummated and retain copies for at least five years.

Why the other choices are incorrect:

• Only until the commission check clears. That is shorter than the minimum retention period.
• One year. The rule requires at least five years.
• No copy is needed after the client receives one. Delivery and retention are separate duties.

Sources:

• 876 IAC 8-2-3 — Sec. 3

Correct answer: Add the associated broker company’s name so it is clearly visible.

Advertising that carries an associated broker’s name, including business cards, must include the broker company’s clearly visible name. Advertising is under the company’s direct supervision and name.

Why the other choices are incorrect:

• No change is required for business cards. Business cards are expressly included in the rule.
• Add only the broker’s license number. That does not replace the required company name.
• Replace the phone number with a post office box. A post office box does not supply the required company identification.

Sources:

• 876 IAC 8-1-8 — (a)–(b)

Correct answer: No. The assignment requires the applicable separate appraiser license or certification.

Indiana generally allows a licensed broker to perform certain appraisals for compensation, but transactions governed by the federal act and its regulations require the appraiser licensure or certification identified in subsection (i). A broker license alone is insufficient for this assignment.

Why the other choices are incorrect:

• Yes, if the broker calls the report a commission opinion. Renaming a report does not satisfy the specified credential requirement.
• Yes, a broker license automatically satisfies every federal appraisal requirement. The statute expressly limits appraisal authority for transactions governed by the federal act and regulations.
• Yes, if the lender orally agrees to waive the law. A lender cannot remove the credential requirement in the stated scenario.

Sources:

• IC 25-34.1-3-8 — (a), (i)

Correct answer: Submit a Branch Office Registration Form to the commission and arrange management by a branch manager.

The rule requires a branch manager and submission of the registration form before opening. It also requires notice of branch-manager changes and associated-broker transfers between branches. The definitions rule identifies a branch manager as an individual broker managing a branch office.

Why the other choices are incorrect:

• Use any unlicensed employee as branch manager. The rule calls for management by a branch manager under its licensing framework.
• Register only if the branch is in another state. The rule applies to branch offices the company maintains; the proposed Indiana office is not excluded.
• Wait until the first transaction closes to register. The form is required before opening.

Sources:

• 876 IAC 8-1-2 — (a)
• 876 IAC 5-2-2 — Sec. 2

Correct answer: On or before the next two banking days after final acceptance, into the trust account or to the recipient named in the purchase agreement.

After final acceptance, the listing broker must act on or before the next two banking days. The rule permits deposit in the listing broker’s escrow/trust account or with the deposit recipient identified in the purchase agreement.

Why the other choices are incorrect:

• Any time before closing. The rule sets a substantially earlier deadline.
• Only after the inspection contingency is removed. The stated trigger is final acceptance of the offer, not later contingency removal.
• Within two calendar months after acceptance. The rule uses banking days, not months.

Sources:

• 876 IAC 8-2-2 — (a)

Correct answer: The designated managing broker, or the sole proprietor acting as managing broker.

Every company must be directed, supervised and managed by a managing broker. The rule places primary responsibility to the commission on the designated managing broker or sole proprietor managing broker.

Why the other choices are incorrect:

• Only the newest associated broker. Experience or seniority does not replace the designated responsibility.
• No one once tasks are delegated. Delegation does not remove the managing broker’s responsibility.
• The company’s advertising vendor. A vendor is not the managing broker identified by the rule.

Sources:

• 876 IAC 8-1-1 — (a)–(b)

Correct answer: No. Payment of compensation does not by itself create an agency relationship.

Indiana separates compensation from representation. Agency depends on the applicable relationship and agreements, not solely on where the compensation originates.

Why the other choices are incorrect:

• Yes, the person funding compensation is always the client. The statute expressly rejects that automatic inference.
• Yes, unless the buyer pays at least half. There is no such percentage test in the provision.
• No agency relationship can exist whenever a third party pays. Payment does not itself create agency, but it does not preclude an otherwise established relationship.

Sources:

• IC 25-34.1-10-13 — (c)–(d)

Correct answer: In writing at the beginning of the relationship, before the prospective client discloses confidential information.

The licensee must disclose the written office policy at the beginning of the agency relationship and before the potential client shares confidential information. The policy must identify permitted agency relationships and permit or reject disclosed limited agency.

Why the other choices are incorrect:

• After the client reveals all negotiating limits. The statute requires disclosure before that confidential information is shared.
• Only at closing. Closing is too late for the required initial disclosure.
• Only if the client asks for the policy. The duty is not conditional on a request.

Sources:

• IC 25-34.1-10-13 — (a)–(b)

Correct answer: Guaranteeing future resale profits is identified as incompetent practice.

The rule lists guaranteeing, authorizing or permitting a guarantee of future resale profits as incompetent practice. An estimate with appropriate support is different from the guarantee described here.

Why the other choices are incorrect:

• It is acceptable if delivered orally rather than in writing. The prohibition is not limited to written guarantees.
• It is required whenever the property is an investment. No such guarantee is required.
• It is acceptable whenever the broker strongly believes the estimate. Confidence does not make a guarantee permissible.

Sources:

• 876 IAC 8-2-7 — (5)

Correct answer: No. The rule lists showing real property among functions an unlicensed assistant may not perform.

Indiana’s unlicensed-assistant rule expressly prohibits showing real property. A broker may not assign that licensed function to an unlicensed assistant.

Why the other choices are incorrect:

• Yes, if the broker is reachable by telephone. Telephone availability does not create an exception.
• Yes, if the assistant does not discuss price. The prohibition on showing property is not limited to price discussions.
• Yes, if the buyer has already viewed listing photos. Prior viewing of photographs does not authorize an unlicensed showing.

Sources:

• 876 IAC 8-1-7 — (2)

Correct answer: It continues after termination, along with the duty to account for money and property received during the relationship.

The statute preserves accounting and confidentiality duties after the relationship ends, subject to its stated exceptions. None of those exceptions is present in this scenario.

Why the other choices are incorrect:

• The broker may sell the information to another buyer. The facts do not satisfy an exception to the confidentiality duty.
• All confidentiality ends automatically with the contract. The statute preserves specified confidentiality after termination.
• Confidentiality continues only if the former client pays a monthly fee. The statute imposes no such payment condition.

Sources:

• IC 25-34.1-10-14 — (c)