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

The fiduciary duty of confidentiality lasts forever. Confidentiality requires that you do not disclose any information learned about your clients, their business, financial or personal affairs or motivations. Again, this duty lasts forever.

The statute of frauds is a common law concept that requires written contracts for certain agreements to be legally binding. The statute applies to land sales and most purchases of goods over $500 (this includes real estate sales agreements). This is a bit of a trick question. There are some circumstances in real estate where a written contract is not required, so it is not ALL real estate contracts, but it is ALL real estate sales agreements.

A bit of a trick question. Crossing out part of a printed contract is actually allowed and legally enforceable as long as both parties and the original text is still readable.

An addendum is an attachment to a contract that modifies the terms and conditions of the original contract. An example of an addendum being used would be if the parties wanted to add something to the original document. For instance, an individual who is purchasing a house may not want to purchase all of the furniture that is being left behind. However, after thinking about it further, he changes his mind.

The surface rights are the rights to use the surface of the earth. Subsurface rights are the rights to the natural resources lying below the earth's surface. Interestingly an owner may transfer rights without transferring the subsurface rights. For example, a landowner can sell his rights to an oil and gas company in his land but still can own the land itself.

The rescission of a contract occurs when there is an agreement between the contracting parties to waive all the remaining duties and to terminate the contract. Basically, it would be returning the parties to the same legal position they were in before entering into the contract.

You’ll hear a lot of people use the word Market Value or Market Price. This just means the actual selling price of the property. So if your home sells for $250,000. Its market value is $250,000.

It's the seller that must make the disclosure. It's real estate professionals' job to make sure all parties are in compliance with the law, but ultimately it's the sellers obligation.

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.

Each state determines the rules for brokerage firm trust accounts and how earnest money must be deposited.

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.

Mechanic's liens are legal documents that essentially reserve the rights of the filer to seek unpaid compensation. They are usually filed by contractors, subcontractors, or suppliers that never received payment for work that they performed or materials that they provided on the property.

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.

Consideration is anything of legal value that is offered in exchange by one party for something of value from another party. Common forms of consideration include money, property in exchange, work or a promise to perform. Without consideration, a contract is not valid.

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.

Home inspection contingencies are one of the most common home buying contingencies. According to NAR, around 80% of homebuyers include a home inspection contingency in their purchase agreement. Financing is right behind it, as it allows the buyer to terminate the contract if they cannot obtain a loan.

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.

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

Percolation is the process of a liquid slowly passing through a filter. It's how coffee is usually made. For real estate, a percolation test is a test to determine the water absorption rate of soil in preparation for the building of a septic drain field or infiltration basin. The results of a percolation test are required to properly design a septic system.

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 Federal Housing Administration (FHA) provides mortgage insurance on single-family, multifamily, manufactured home, and hospital loans made by FHA-approved lenders throughout the United States and its territories.

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

Closing is known by many names. Some areas of the country may call it settlement and transfer some may call it passing papers. The textbook name is for closing is closing.

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.

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.

Water rights are appurtenant, meaning they run with the land and not with the original owner. In other words, if an oceanfront property is sold, the new owner gains the littoral rights and the seller relinquishes his or her rights. Read More Here

Easements are appurentent meaning generally pass along with ownership changes in real estate, but there are several ways of legally terminating them. Expiration, release, merging, and abandonment of the easement are all ways to legally terminate the applicable easement. The servient estate serves the dominant estate and cannot terminate the easement even through revocation.

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.

After smoking, this is the second leading cause of lung cancer in the United States. Radon is a naturally occurring gas that forms in rocks, soil, and water.

The execution date or date executed is the day the contract is signed. The effective date is the day the contract goes into effect. Both dates can both be found in a contract. In many instances, the execution and effective dates are the same; however, that is not the case in some circumstances. You might sign a lease today to move into an apartment, but you won’t be able to move in until the following week. The execution date might be today, but the effective date will be when you move into your brand new home. Many times, the execution date and effective date are the same, but again not always.

In real estate, commingling refers to the act of mixing the client’s funds with the broker’s own funds. Commingling can be both legal and illegal depending on the state and circumstance. Typically, from an agent’s perspective, commingling should be avoided at all costs. Commingling can be legal in some circumstances, but in most cases, as an agent or a broker, it’s best to avoid it.

Trusts can be created during an individual's lifetime, or they can be established following someone's death. A trust works as it follows: the first party, the trustor or settlor, transfers a property upon the second party for the benefit of the third party, the beneficiary. The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustor can be an individual or organization.

Service Contracts are agreements between a customer or client and a person or company who will be providing services. A listing agreement is a service contract between the seller and the broker, or brokerage company.

Economic obsolescence refers to the loss of property value due to external factors, meaning things off the property affecting the properties value. A new noisy highway would be considered economic obsolescence because it is an external factor. Usually, in these circumstances, homeowners cannot do anything to prevent it. Read More Here

The process of valuing real estate is a challenging one. There are many different techniques and sources that can be used to arrive at an estimate of the cost. It requires extensive experience to achieve accurate results with all relevant factors present. Reconciliation is the final step in a real estate appraisal where the appraiser weighs each appraisal approach and determines which one is most relevant and should be used.

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.

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.

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.

A non-exclusive buyer agency agreement allows buyers to hire more than one agent to find their home; however, buyers must inform each agent they work with that another agent is involved and whether they have shown them specific homes.

Compliance with zoning ordinances is monitored through the issuance of zoning permits; where the property owner or developer cannot substantially alter the use of the property without getting a zoning permit, which will not be issued unless the proposed development conforms to the zoning ordinance. Zoning permits are usually required before building permits can be issued.

Depreciation is any loss in the value of a property over time from any cause. There are three main forms of depreciation: Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.

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. Scarcity, improvements and permanence of investment are all economic characteristics of real estate.

An implied contract is a legally enforceable obligation that arises from one or more parties due to the parties actions, conduct, or circumstances. It has the same legal effect as an express contract, a contract between two or more parties that is willingly entered into and agreed upon verbally or in writing. An implied contract is presumed to exist but does not require written or verbal confirmation.

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 three main forms of depreciation are : Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.

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.

For special-purpose and public service buildings like schools, churches, and post offices the cost approach is the best choice. The reasoning is because these types of buildings usually do not have income so Income Approach is out, and there's not enough comparables to do the sales comparison approach. Cost approach is the best answer.

Title III prohibits discrimination on the basis of disability in the activities of places of public accommodations. Public accommodations are businesses that are generally open to the public such as restaurants, movie theaters, and schools. Title III also prohibits discrimination for commercial facilities like privately owned, nonresidential facilities such as factories, warehouses, or office buildings. Point being, Title III impacts commercial and public accommodations and makes sure they comply with the ADA Standards.

The cost approach is considered to be reliable when used on newer buildings, and not as reliable with older. The cost approach becomes nearly ineffective after 25 years or so because of the difficulty in: estimating depreciation, estimating changes in the cost of construction, and estimating changes in prices of building materials.

Demand is an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service (holding all other factors constant).

Safe Drinking Water Act (SDWA) was established in 1974. It allowed greater control by EPA to control contaminant levels, take legal action against public water auth. for violations, and require periodic water testing and notification to state authority and homeowners if contaminated.

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.

Under riparian rights, all landowners whose properties adjoin a river or stream, have the right to make reasonable use of it as it flows through or over their properties. The only limitation owners have is they cannot stop or prevent the flow of water. Riparian rights vary from state to state but most grant unrestricted use. Unrestricted use means owners have the right to access it for swimming, boating, and fishing, build docs, etc. Read More Here

Remember, an open listing is truly open. Each broker has an opportunity to earn the entire commission if they can come up with a buyer.

A void contract is one that lacks all or one of the elements that make a contract valid. The contract is invalid at the time of its establishment, and is not legally enforceable. Since a contract needs consideration for it to be valid, it is immediately considered void. It is not voidable because voidable contracts have the necessary elements to be enforceable, but are rejected by one party for any number of defects.

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

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.

When a purchaser signs a purchase agreement and gives the seller's broker a large check it is considered an offer. When a potential buyer is found, the agent must help them prepare an offer to purchase the property. The form itself is usually pre-drafted or preprinted. Forms vary from state to state. It is customary but not required for a buyer to provide a deposit when making an offer to purchase. This deposit is referred to as earnest money. It’s important the buyer understands the document as it becomes legally binding as soon as they sign it.

A borrower is a mortgagor while the lender is the mortgagee. A mortgagee is an entity that lends money to a borrower (also known as a mortgagor) for the purpose of purchasing real estate.

The contract was established under duress, fraud, deception, or coercion making it voidable. A voidable contract is a legal agreement between two parties that may be unenforceable for any number of reasons. 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.

If a dispute is pending, the court will likely issue an injunction preventing Mr. Joe from cutting down the trees until they are entirely resolved. Injunctions can be used to protect interests in real property. A court ordered injunction can be used to prevent a harmful action, stop ongoing or repeated conduct, or force a defendant to take action to prevent harm.

Open listings are truly open. Sellers might consider an open listing if there are a lot of buyers in the marketplace. An open listing is when any agent or broker can participate in the listing and is entitled to a commission if he or she produces the sale. Since the listing agreement between the first agent wasn't met it had to be an open listing because another agent obtained a buyer.

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.

Adverse possession is a legal principle under which a person who does not have legal title to a property acquires legal ownership based on the continuous occupation of the property. If successful in proving adverse possession, the person or parties are usually not required to pay the owner for the land. Read More Here

Fee packing, equity stripping, and balloon payment abuses are all examples of predatory lending practices. Predatory lending typically refers to lending practices that impose unfair, deceptive, or abusive loan terms on borrowers. While these practices are wrong, unfortunately sometimes they are perfectly legal.

The formula for finding commission is pretty simple. Just times whatever percentage you have by the total price of the house. So in this case take $250,000 and multiply it by .06 or 6%. Doing the math that gives you $15,000.00.

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.

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.

Instead of being handed down to his family(since he has none), his assets (farm included) are going to go to the government in the process called escheat. Escheat is the government's right to take ownership of unclaimed real estate or assets. Read More Here

The lot and black method identifies land by reference to lot and block numbers appearing on maps or a plat map. The lot and block survey system is a method used in densely populated metropolitan areas, suburban areas and suburbs. It is sometimes referred to as the recorded plat survey system or the recorded map survey system.

The habendum clause is the statement in a contract that describes the rights and interests being given. It almost always begins with the words "to have and to hold."

Deed restrictions are limitations to the use of the property imposed by a past or current owner and are usually legally binded forever. Some common examples of deed restrictions are: Type and number of trees you can remove from the property, house color, window size, overall style, color, and construction materials used in a renovation.

It’s important the buyer and seller clearly understand the document as it becomes legally binding as soon as both parties sign. It is an agent's duty to explain to purchase agreement and not mislead both or either parties.

Forgery refers to the false making or material alteration of a legal instrument with the specific intent to defraud anyone. It is illegal and real estate agents must be aware of the action.

Verifying ingress and egress rights is an essential part of the due diligence process when purchasing property for both real estate agents and buyers. If one of your clients is planning to buy landlocked property, don't assume anything. Check records. Have the land surveyed, if necessary. Due diligence is the process of examining the details of a transaction to make sure it's legal. When the deal satisfies both aspects of due diligence, the two parties can finalize and correctly price the transaction. Read More Here

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.

If problems emerge after a sale is complete; that is not the seller's problem, and not a cause for the buyer to sue. Unfortunately, exactly when a problem started and when the seller first "knew" about it are not always clear. In this instance the seller didn't know about the issue, meaning she is not liable for failure to disclose the material defect.

The buyer can withdraw their offer as long as the seller did not accept the offer and the buyer can obtain the $3,000 deposit. This is all because the seller has to accept the offer. Remember an offer isn’t legally binding until it becomes a contract through acceptance.

Remember, community property and tenants by the entirety is through marriage. You can't have that form of ownership with two unmarried individuals. Joint tenancy would be the best answer. Tenancy in common significantly differs from a joint tenancy, particularly in terms of survivorship rights and the degree of ownership each tenant has. Unlike with a joint tenancy, tenants in common have no rights of survivorship. So knowing that Tony and Taylor have a right to survivorship and are unmarried, we can assume they have a joint tenancy. The amount of interest really doesn't matter in this case.

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.

Dual agency is when one real estate agent represents both the buyer and seller in a transaction. A single agency has a relationship with the buyer or the seller, but not both.

Dedication in property law means the donation of your land. Dedication would be considered voluntary, while the others are all involuntarily.

The primary public land-use control is zoning and issued by the government. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. The biggest difference is that the government does not write or enforce private controls but it does impose and enforce public controls like zoning.

There are three different main approaches that appraisers use while they make an appraisal. They are the Market Data Approach, Cost Approach, and Income Approach. The Market Data Approach is also commonly called the sales comparison approach. The Cost Approach is also referred to as summation. And lastly, the Income Approach, is also known as capitalization. Each method has its own set of benefits. When applied together, the various valuation methods provide the best estimate of the value of the income-producing real estate under evaluation.

This is a bit of a trick question. There are four main elements of a valid real estate contract: The party must be the legal age of 18 or older and deemed legally competent. The contract must be legal or hold a legal purpose. A clear and specific consideration must be included in the agreement. The contract must hold mutual consent or be agreed upon by both parties. Monetary consideration is optional. Consideration is a main element, but it doesn't necessarily have to be money. Remember, consideration is anything of legal value, it could be a promise or promise to perform an action.

The assessed value is a property's determined valuation to calculate the appropriate tax rates.

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.

Trusts can be created during an individual's lifetime, or they can be established following someone's death. A trust works as it follows: the first party, the trustor or settlor, transfers a property upon the second party for the benefit of the third party, the beneficiary. The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustee can be an individual or a financial institution such as a bank.

A contingent property means an offer for the property has been accepted but there is a condition or “contingency” that is written into the contract and it must be met before the sale can go through. In order for the contract to be legally binding, the contingency must be met.

Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. Both the buyer and seller can sue for specific performance, but it's more common for a buyer to sue and win a suit on specific performance. The buyer is more likely to force since the seller was the one who put the property on the market.

The primary public land-use control is zoning. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. Deed restrictions are limitations to the use of the property imposed by a past or current owner and are usually legally bound forever.

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. Changing terms of a sale because someone is Chinese is clearly illegal and a violation of The Fair Housing Act.

An easement in gross is basically selling rights to the land to another person, but without giving them legal ownership. An example of an easement in gross is an easement to a utility company to run a power line across a burdened piece of property.

A general agency in real estate is where an agent has limited power. This is very common in property management situations.

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.

When a property is owned by joint tenants, the interest of a deceased owner automatically gets transferred to the remaining surviving owners. For example, if three joint tenants own a house and one of them dies, the two remaining tenants each obtain a one-half share of the property. This is called the right of survivorship.

By definition, a servient estate is a parcel of land that is subject to an easement.

An individual seeking to be excused from the requirements of a zoning ordinance needs a variance. Or a conditional use permit. A conditional use permit is a zoning exception that allows you to use your property in non-conforming ways. A variance is a request to deviate from current zoning requirements.

Trusts can be created during an individual's lifetime, or they can be established following someone's death. A trust is a three-party relationship in which the first party, the trustor or settlor, transfers a property upon the second party for the benefit of the third party, the beneficiary. The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustee can be an individual or a financial institution such as a bank.

Proration is the allocation or division of money items at the closing. Proration mainly comes into play when a seller prepays their home taxes for the year. Because they paid for the full year and are selling the property, the buyer will then owe the seller the remaining months of taxes.