Free Indiana Property Practice Test — LicenseIQ

Question 1

An owner's title insurance policy protects against:

Accepted Answer

Title insurance covers title defects existing before the policy date, such as forged deeds or undisclosed liens - not physical damage or future events.

Question 2

The government's power to take private property for public use with just compensation is:

Accepted Answer

Eminent domain (exercised through condemnation) allows taking for public use with just compensation. Escheat applies when an owner dies without a will or heirs.

Question 3

For a deed to be valid it must be:

Accepted Answer

Transfer requires a valid deed signed by the grantor and delivered to and accepted by the grantee. Recording gives constructive notice but is not required for validity between the parties.

Question 4

A property manager receives a tenant's security deposit and advance rent. These funds must be deposited in the:

Accepted Answer

Money belonging to others goes into a trust account; depositing it in an operating account is commingling.

Question 5

Private restrictions placed in a deed by a developer are called:

Accepted Answer

Deed restrictions (covenants, conditions and restrictions) are private controls enforced by owners or associations, not government. Zoning and building codes are public controls.

Question 6

The fiduciary duty that requires an agent to safeguard and account for all money and property received on behalf of the client is:

Accepted Answer

The duty of accounting requires the agent to track, report on and properly handle all funds and documents belonging to the client.

Question 7

The periodic report a property manager gives the owner showing rents and other income collected and expenses paid for the period is the:

Accepted Answer

The income statement (P&L) summarizes income and expenses for the accounting period, typically monthly.

Question 8

A commercial property has potential gross income of $240,000 and an 8% vacancy allowance. Using a gross income multiplier of 6, what is the estimated value?

Accepted Answer

EGI = $240,000 - 8% = $220,800; value = $220,800 x 6 = $1,324,800.

Question 9

A timeshare that lets the owner use the property during a specific, set week each year is a:

Accepted Answer

Fixed-week timeshares assign the same week every year; floating weeks allow different weeks subject to availability.

Question 10

A borrower's monthly principal and interest payment is $1,193.54. Annual property taxes are $6,000 and annual homeowner's insurance is $1,200. What is the monthly PITI payment?

Accepted Answer

Taxes = $6,000 / 12 = $500; insurance = $1,200 / 12 = $100. PITI = $1,193.54 + $500 + $100 = $1,793.54.

Question 11

Which event causes the Indiana Real Estate Commission to take custody of a broker company's trust accounts?

Accepted Answer

IC 25-34.1-4-5(c) lists death of a sole proprietor, termination of the company, or expiration, revocation, or suspension of the company license.

Question 12

A buyer purchases a $300,000 home with an 80% loan, pays 1 point on the loan, a $450 appraisal and $1,800 in title charges, and has already deposited $10,000 earnest money. How much must the buyer bring to closing?

Accepted Answer

Down payment = $60,000; 1 point = $240,000 x 0.01 = $2,400; total = $60,000 + $2,400 + $450 + $1,800 = $64,650; minus $10,000 earnest money = $54,650.

Question 13

Who appoints members of the Indiana Real Estate Commission?

Accepted Answer

Each member is appointed by the governor under IC 25-1-6.5. IPLA staffs the Commission but does not appoint it.

Question 14

On a property condition disclosure form, if a seller does not know the age of the roof, the seller should:

Accepted Answer

Only the seller completes the form, reporting what is known and stating when something is unknown; guessing creates liability.

Question 15

The reasonably probable use of a property that is legally permissible, physically possible, financially feasible and maximally productive is its:

Accepted Answer

Highest and best use is the use producing the greatest value that meets the four tests.

Question 16

Under a land contract (contract for deed), during the payment period the buyer holds:

Accepted Answer

In an installment/land contract the buyer has equitable title and possession; the seller keeps legal title until the final payment.

Question 17

Property taxes are paid in arrears (after the tax period). At a mid-year closing, the seller's share of unpaid taxes appears as:

Accepted Answer

When taxes are paid in arrears, the buyer will pay the full bill later, so the seller is charged (debit) and the buyer credited for the seller's portion.

Question 18

Which property taxes are excluded when computing whether the circuit breaker cap is exceeded?

Accepted Answer

IC 6-1.1-20.6-7.5 excludes voter-approved referendum taxes from the cap computation.

Question 19

How many members serve on the Indiana Real Estate Commission?

Accepted Answer

IC 25-34.1-2-1 provides nine congressional-district members, one real estate member at large, and two citizen members, for a total of twelve. Nine is tempting because it is the number of district seats only.

Question 20

Which of the following makes a property 'psychologically affected' under Indiana law?

Accepted Answer

IC 32-21-6-3 lists death, felony, criminal-organization activity, an officer-involved firearm discharge, and illegal drug manufacture or distribution. Airport and flood plain are seller disclosure form items.

Question 21

Before placing a sign on a property or advertising it for sale, a broker must have

Accepted Answer

876 IAC 8-1-8(f) requires written consent of the owner or the owner's authorized agent.

Question 22

A commercial office building in Indianapolis is subject to a property tax cap of

Accepted Answer

Nonresidential real property is capped at 3% under IC 6-1.1-20.6-7.5.

Question 23

An investor buys a single-family rental with a gross assessed value of $200,000 and no deductions. The local rate is $3.10 per $100. What tax does the investor pay after the circuit breaker credit?

Accepted Answer

Tax before credit = 200,000 ÷ 100 × 3.10 = $6,200. A non-homestead residential property is capped at 2%: 0.02 × 200,000 = $4,000. Credit = $2,200. The investor pays $4,000. $2,000 wrongly applies the 1% homestead cap.

Question 24

Which loss could qualify for payment from the Indiana Real Estate Recovery Fund?

Accepted Answer

The fund covers actual cash loss from embezzlement, false pretenses, trickery, or forgery after a final judgment. It excludes market-value declines, punitive damages, and attorney's fees.

Question 25

A homestead has a gross assessed value of $240,000 and a net assessed value of $140,000 after deductions. The rate is $3.00 per $100. What circuit breaker credit applies?

Accepted Answer

Tax before credit = 140,000 ÷ 100 × 3.00 = $4,200. 1% cap on gross AV = $2,400. Credit = 4,200 − 2,400 = $1,800. The owner pays $2,400.

Indiana real estate property practice test

1. An owner's title insurance policy protects against:

2. The government's power to take private property for public use with just compensation is:

3. For a deed to be valid it must be:

4. A property manager receives a tenant's security deposit and advance rent. These funds must be deposited in the:

5. Private restrictions placed in a deed by a developer are called:

6. The fiduciary duty that requires an agent to safeguard and account for all money and property received on behalf of the client is:

7. The periodic report a property manager gives the owner showing rents and other income collected and expenses paid for the period is the:

8. A commercial property has potential gross income of $240,000 and an 8% vacancy allowance. Using a gross income multiplier of 6, what is the estimated value?

9. A timeshare that lets the owner use the property during a specific, set week each year is a:

10. A borrower's monthly principal and interest payment is $1,193.54. Annual property taxes are $6,000 and annual homeowner's insurance is $1,200. What is the monthly PITI payment?

11. Which event causes the Indiana Real Estate Commission to take custody of a broker company's trust accounts?

12. A buyer purchases a $300,000 home with an 80% loan, pays 1 point on the loan, a $450 appraisal and $1,800 in title charges, and has already deposited $10,000 earnest money. How much must the buyer bring to closing?

13. Who appoints members of the Indiana Real Estate Commission?

14. On a property condition disclosure form, if a seller does not know the age of the roof, the seller should:

15. The reasonably probable use of a property that is legally permissible, physically possible, financially feasible and maximally productive is its:

16. Under a land contract (contract for deed), during the payment period the buyer holds:

17. Property taxes are paid in arrears (after the tax period). At a mid-year closing, the seller's share of unpaid taxes appears as:

18. Which property taxes are excluded when computing whether the circuit breaker cap is exceeded?

19. How many members serve on the Indiana Real Estate Commission?

20. Which of the following makes a property 'psychologically affected' under Indiana law?

21. Before placing a sign on a property or advertising it for sale, a broker must have

22. A commercial office building in Indianapolis is subject to a property tax cap of

23. An investor buys a single-family rental with a gross assessed value of $200,000 and no deductions. The local rate is $3.10 per $100. What tax does the investor pay after the circuit breaker credit?

24. Which loss could qualify for payment from the Indiana Real Estate Recovery Fund?

25. A homestead has a gross assessed value of $240,000 and a net assessed value of $140,000 after deductions. The rate is $3.00 per $100. What circuit breaker credit applies?

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