Free State Law Practice Test — LicenseIQ

Question 1

Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

Accepted Answer

Specific terms like the down payment amount, number or amount of payments, finance charge or repayment period trigger full disclosure (including APR). General statements do not.

Question 2

A licensee's advertising must generally:

Accepted Answer

Ads must identify the licensed broker/brokerage; salespersons cannot advertise under only their own name.

Question 3

Which is the most common and desirable way a real estate sales contract terminates?

Accepted Answer

Contracts ideally end by performance. They can also end by mutual agreement, impossibility, operation of law, or breach.

Question 4

A broker received a 4.2% commission totaling $12,600. What was the sale price?

Accepted Answer

Sale price = commission / rate = $12,600 / 0.042 = $300,000.

Question 5

The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

Accepted Answer

The Sherman Antitrust Act of 1890 prohibits conspiracies in restraint of trade, including these practices.

Question 6

A licensee may manage property for an owner for a fee only if there is:

Accepted Answer

Property management agreements must be written and signed; they make the manager a general agent and define duties, authority and fees.

Question 7

Which statement about dual agency is correct?

Accepted Answer

Dual agency creates an inherent conflict; with informed written consent, the agent provides limited representation and must keep each party's confidences.

Question 8

A home sells for $400,000 with a 5% total commission. What is the total commission?

Accepted Answer

$400,000 x 0.05 = $20,000.

Question 9

Under the statute of frauds, a real estate sales contract must be:

Accepted Answer

The statute of frauds requires real estate sales contracts to be in writing and signed to be enforceable.

Question 10

Under the Code of Ethics, commission disputes between REALTORS associated with different firms are generally resolved through:

Accepted Answer

Article 17 requires REALTORS to mediate or arbitrate contractual and specific non-contractual disputes with other REALTORS through the association.

Question 11

On the $20,000 commission above, the listing broker keeps 50% and pays 50% to the buyer's broker. How much does the buyer's broker receive?

Accepted Answer

$20,000 x 0.50 = $10,000 to the buyer's broker.

Question 12

On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

Accepted Answer

Earnest money and loan proceeds are sources of funds that reduce what the buyer must bring, so they are buyer credits.

Question 13

A salesperson earns $6,000 on a $150,000 sale. What was the commission rate?

Accepted Answer

Rate = commission / sale price = $6,000 / $150,000 = 0.04 = 4%.

Question 14

Which action may a life tenant take WITHOUT the remainderman's consent?

Accepted Answer

A life tenant may occupy or lease the property for the duration of the life estate but cannot sell, mortgage or commit waste that harms the remainderman's future interest.

Question 15

A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

Accepted Answer

Specific performance compels the breaching party to perform; it is available because land is unique. The buyer could alternatively seek monetary damages.

Question 16

A salesperson wants to buy a FSBO home for his own investment. He must:

Accepted Answer

A licensee acting as a principal must disclose licensed status, because the licensee has superior knowledge and expertise.

Question 17

A licensee representing the seller who learns the buyer will pay more than the offer must:

Accepted Answer

Loyalty and disclosure require the seller's agent to share material information that benefits the client. The agent owes the buyer-customer no confidentiality.

Question 18

A real estate licensee who is not an attorney may:

Accepted Answer

Licensees may complete attorney-prepared forms but may not draft contracts, amendments or addenda or give legal advice - that is the unauthorized practice of law.

Question 19

The deed clause that defines the extent of the estate granted, often beginning 'to have and to hold,' is the:

Accepted Answer

The habendum clause defines the estate conveyed; the granting clause contains the words of conveyance.

Question 20

A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):

Accepted Answer

In an exclusive right-to-sell listing, the listing broker earns a commission no matter who procures the buyer, even the owner. (Reclassified to section 6 / CORE.)

Question 21

On a closing statement, the purchase price is a:

Accepted Answer

The seller receives the price (credit); the buyer owes it (debit).

Question 22

Two brokers agree not to cooperate with a discount brokerage in order to drive it out of business. This is:

Accepted Answer

Agreeing with competitors to refuse to deal with another business is an illegal group boycott.

Question 23

In real estate, the accessibility requirements of the Americans with Disabilities Act apply mainly to:

Accepted Answer

The ADA's accessibility rules primarily cover public accommodations and commercial facilities; housing accessibility is governed mainly by the Fair Housing Act.

Question 24

A home sells for $389,000. The seller pays a 5% commission, a $212,600 mortgage payoff, $1,200 attorney fee, $1,950 transfer tax and $600 in other costs. What are the seller's net proceeds?

Accepted Answer

Commission = $389,000 x 0.05 = $19,450. Total costs = $19,450 + $212,600 + $1,200 + $1,950 + $600 = $235,800. Net = $389,000 - $235,800 = $153,200.

Question 25

An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

Accepted Answer

Conditioning one service on the purchase of another is a tying arrangement prohibited by antitrust law.

National real estate state law practice test

1. Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

2. A licensee's advertising must generally:

3. Which is the most common and desirable way a real estate sales contract terminates?

4. A broker received a 4.2% commission totaling $12,600. What was the sale price?

5. The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

6. A licensee may manage property for an owner for a fee only if there is:

7. Which statement about dual agency is correct?

8. A home sells for $400,000 with a 5% total commission. What is the total commission?

9. Under the statute of frauds, a real estate sales contract must be:

10. Under the Code of Ethics, commission disputes between REALTORS associated with different firms are generally resolved through:

11. On the $20,000 commission above, the listing broker keeps 50% and pays 50% to the buyer's broker. How much does the buyer's broker receive?

12. On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

13. A salesperson earns $6,000 on a $150,000 sale. What was the commission rate?

14. Which action may a life tenant take WITHOUT the remainderman's consent?

15. A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

16. A salesperson wants to buy a FSBO home for his own investment. He must:

17. A licensee representing the seller who learns the buyer will pay more than the offer must:

18. A real estate licensee who is not an attorney may:

19. The deed clause that defines the extent of the estate granted, often beginning 'to have and to hold,' is the:

20. A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):

21. On a closing statement, the purchase price is a:

22. Two brokers agree not to cooperate with a discount brokerage in order to drive it out of business. This is:

23. In real estate, the accessibility requirements of the Americans with Disabilities Act apply mainly to:

24. A home sells for $389,000. The seller pays a 5% commission, a $212,600 mortgage payoff, $1,200 attorney fee, $1,950 transfer tax and $600 in other costs. What are the seller's net proceeds?

25. An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

Sources