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

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.

According to the 28/36 rule, she would need to spend less than $1260 in housing costs a month to qualify for most loans. All you do is multiply .28 to her monthly income. This is useful for agents to work with clients to determine what loans they can qualify. The 28/36 Rule states: a household should spend a maximum of 28% of its gross monthly income on total housing expenses, and no more than 36% on total debt service. Lenders typically want no more than 28% of your gross monthly income to go toward your housing expenses including your mortgage payment, property taxes, and insurance. Once you add in monthly payments on other debt, the total shouldn't exceed 36% of your gross income.

A percentage lease is a lease in which all or part of the rental is a specified percentage of gross income from the total sales made upon the property.

In an exclusive right to sell listing the agent gets paid no matter who sells the property, regardless of whether it’s the agent or the seller. Knowing this, it's safe to assume this was an exclusive right to sell listing.

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.

In this situation, the new offer cannot be accepted unless the seller's counteroffer is withdrawn or hypothetically rejected.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.

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.

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.

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.

A less than freehold estate (also known as a leasehold estate) is an estate held by one who rents or leases property. The key difference between a leasehold estate and a freehold estate is the limitation of time. As lease is a legal estate, leasehold estate can be bought and sold on the open market.

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.

In order to qualify for the Fair Housing Act’s "Housing for Older Persons" Exemption, at least 80 percent of the units must have at least one occupant who is 55 years of age or older OR all units are occupied by residents over the age of 62.

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."

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.

Emblements are annual crops cultivated by a tenant that is treated as the tenant's personal property. Read More Here

Condominium often shortened to condo, 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. The answer is all the condominium owners in the form of percentage undivided interests because all condominium owners legally own a portion of all the facilities there.

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.

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.

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.

A unilateral contract is a contract in which only one party makes a promise to perform an action. An insurance contract or a reward contract are both examples of unilateral contracts. Unilateral contracts appear more often than you may think; one of the most common instances is a reward contract. Imagine you’ve lost your cat, Coco. You place an advertisement online offering a $250 reward to the person who returns Coco. By providing a reward, you’re offering a unilateral contract.

Each square, six miles by six miles, is called a township. Since each township is six miles by six miles, townships contain 36 square miles, each one forming a section.

Housing prices tend to rise with inflation. While the economy is experiencing inflation, interest rates typically rise and housing prices rise. There is a correlation between inflation and house prices. In fact, there are correlations between inflation and any good with a limited supply. When interest rates are low, buying homes can be more affordable and increase the demand for homes. If the supply of homes remains constant and the demand increases, then the prices of homes will increase.

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.

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.

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.

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.

A special agent is an agent hired to perform a specific duty. The real estate agent’s power and authority is limited to that specific task. Example: If you list a house on behalf of a seller, you are hired for one specific job – listing the house. Once that job is complete, then the agency relationship is over.

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.

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.

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.

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.

A lawsuit for specific performance would grant your client the house. Specific Performance asks the court to force the opposing party into a contract that binds them to actually perform the contract at issue, rather than award damages for breach of contract.

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.

Liquidated damages are most likely to be found in purchase contracts. Remember, liquidated damages are the amount agreed to in advance that will compensate a party for any loss they suffer on a purchase contract.

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.

Most real estate agents make money through commission. A commission is a fee paid to an agent for performing a transaction. A commission is usually a percentage of the property's selling price, although sometimes it can be a flat fee.

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.

Fixtures, easements, and mineral rights are all examples of real property - a mortgage is not. Real Property is all things attached to the land and all the legal rights to it. Real property is usually things that are immovable such as the home itself or the buildings within the property line. There are some exceptions of items that can be moved but are still real property, like for businesses. Business-related items like mineral rights, or if you own a farming business it would include crops, barns, and stables. Those are all considered real property because it is part of the business.

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 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.

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 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.

A bit of a trick question. Voidable contracts MAY be valid, often they appear valid but are not. Remember, 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. Since the question says “may be” valid it is voidable.

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

A VA loan is a mortgage loan available for military service members, veterans, and eligible surviving spouses. They often come with better terms than a traditional mortgage which is why they are commonly sought. The program was established by the United States Department of Veterans Affairs and has been a strong success ever since. VA loans are only for active military service members, veterans, and certain military spouses. Aside from that, most VA loans require moderate credit. One of the biggest advantages of a VA loan is in some circumstances people don’t even need a down deposit for the property they want. They also come packaged with lower interest rates so if you qualify VA loans are the way to go.

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

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.

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

Reverse mortgages can provide much-needed cash for seniors whose net worth is mostly tied up in the value of their home. In this instance age does in fact matter you must be at least 62 years or older to qualify for a reverse mortgage. There is no minimum credit score requirement for a reverse mortgage, primarily because the main thing lenders want to know is whether you can handle the ongoing expenses required to maintain the house. Lenders will, however, look to see if you're delinquent on any federal debt.

Fixing is the practice of setting the price of a good or service to make a particular price a standard. So in our terms, real estate fixing is when competing agents meet up and agree on the same commission rates. Any agreement even if it just implied with other brokerages to set a standard commission rate is a violation of the antitrust laws.

Dividing Territories is when competing brokers agree to split territories, and divide interests accordingly. This is a clear antitrust violation.

Conspiracy to Boycott occurs when two or more persons or entities conspire to restrict the ability of someone from competing. Another clear antitrust violation.

Selling property you listed to someone who resides in more than one state over is not a violation and is legal.

An offer from a third party does not affect someone else's offer. A counteroffer by that offeree would affect an offer, however, as well as a cancellation or death of the offeror before the offer is accepted.

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.

Holding earnest money is only legal with written authorization, and even then it's best to deposit it as soon as possible. Having verbal authority is not good enough, and in many states is considered illegal.

A contingency clause is considered one of the most important purchase contract provisions for the potential buyer of real property. A contingency is a future event or circumstance which is possible but cannot be predicted with certainty. So in this instance, the married couple intends to purchase property, but only if they can qualify for a mortgage loan at a reasonable rate. That is a contingency.

The Residential Lead-Based Paint Hazard Reduction Act was established in 1996. Real estate agents must be aware of this federal law providing homes before 1978 the following: an agreement of sale/lease with lead warning statement and statement allowing prospective buyers 10 days obtain certified inspection/assessment before purchase obligation or must disclose info. about existing lead paint to purchaser AND provide purchaser federal gov't prepared lead hazard brochure.

This is an example of a balloon loan. A balloon loan is a mortgage which does not fully amortize over the term. Amortization is when payments divide into equal amounts for the duration of the loan. A balloon loan is different as not all payments are the equally divided and the most substantial payments are called Balloon payments.

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.

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

A land trust is a legal agreement in which a property owner transfers the title to a property to a trustee. The property owner is typically the beneficiary and directs the trustee in all matters relating to the management of the property, as outlined in the trust agreement or deed. The property owner also retains all property rights including the freedom to develop, rent and sell the property. One of the main advantages of this trust is that the actual property owner remains anonymous. Land trusts can not only bring some legal protection, but it can also help the property owner negotiate prices if he or she is particularly wealthy and wants to remain anonymous.

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.

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.

The buyer doesn't need to know the sellers getting a divorce. Lead paint, and flooding, however, both must be disclosed (nationally). State laws differ on whether a buyer is entitled to know about deaths. In Texas, deaths from natural causes, suicides, or accidents unrelated to the property do not have to be disclosed. However, deaths related to the condition of the property or violent crime on the property must be disclosed. Other states impose a duty on a stigmatized property in which there has been a suicide or murder.

Economic life is the expected period of time during which an asset remains useful to the average owner. When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life.

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.

Technically speaking, if there is a high occupancy rate (higher than usual), rent may be too low. The theory of supply and demand supports this. Property managers need to be aware of this as one of their responsibilities is to make sure the rental property is at max profitability.

The principal is always the one whom you have an agency relationship with and therefore is the person whom you owe fiduciary responsibility.

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.

Earnest money should be deposited into a trust account in a timely manner, according to state laws. While the time period varies from state-to-state its best practice to always deposit the money as soon as possible.

Gross Rent Multiplier is the ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities. More specifically its a measure of the value of an investment property that is obtained by dividing the property's sale price by its gross annual rental income. The math looks like this: Gross Rent Multiplier = Property Price / Gross Rental Income. So in our case it would be 500,000/75,000 which equals 6.66!

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.

The legal document that authorizes someone to act on behalf of another person, in business or for some sort of business transaction is a power of attorney. An attorney-in-fact is someone authorized to act on behalf of another person, the legal document that authorizes that person is called a power of attorney. Read More Here

The subordination clause in real estate establishes order of priorities of financial claims (liens). The subordination clause effectively makes the current claim number 1 to any existing claims that have already been recorded.

The comprehensive plan, aka, master plan is a document that is prepared by local government to guide growth and development. It is generally a plan looking 10 to 20 years into the future for the area. These plans can be found at many levels, from neighborhoods, to cities and counties on up to the state level, all across the US.

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.

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.

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.

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.

Fee simple absolute or (fee simple for short) is an estate in land. It is the highest form of real estate ownership that is recognized by law, in which the owner can enjoy the property to its fullest extent and is only limited by government powers which we’ll cover later on. Fee simple absolute is the greatest interest in a parcel of land that one can possibly own. The fee simple estate has unlimited duration and can be passed on to heirs. Read More Here

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.

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.

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.

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

In order to qualify for the Fair Housing Act’s "Housing for Older Persons" Exemption, at least 80 percent of the units must have at least one occupant who is 55 years of age or older OR all units are occupied by residents over the age of 62.

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.

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).

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.

A fiduciary is NOT a neutral third party. Fiduciary is a term that refers to a legal relationship that is confidential between two parties. The fiduciary responsibility is to protect the privacy of the client and to keep all of the client’s information confidential. An example of a neutral third party is an escrow agent is a person or entity that holds property in trust for third parties while a transaction is finalized or a disagreement is resolved.

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.

In this example the answer is 3 months. Established business relationship means a relationship between a seller and a consumer based on….. “ the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months.” Per 16 CFR 310.2

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.

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

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.

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.

Remember. A Dominant Estate is a parcel of real property that has an easement over another piece of property. A Servient Estate is a parcel of land that is subject to an easement.

Partition is a term used in real estate to describe an act, by a court order, to divide up a concurrent estate into separate portions representing interests of the owners of a property.

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.

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.

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.

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.

So in short, commingling refers to the act of mixing a client's funds with the broker’s own funds. Conversion is the unlawful misappropriation and use of a client’s funds by a licensee, see the difference? If your state allows commingling, and you misappropriate the funds, that's conversion. It's worth mentioning, both illegal commingling and conversion lead to criminal penalties and severe consequences.