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Licensed Real Estate Agent Exam study materials
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Licensed Real Estate Agent Exam practice questions

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Question 1Real Property Law, Ownership, and Interests in Land

A deed is delivered to the grantee with the words 'this deed takes effect only upon my death.' Under the common law rule governing conditional delivery of deeds, what interest passes when the deed is handed over?

  1. No interest passes at delivery, but a valid future interest is reserved in the grantor
  2. A fee simple passes immediately, and the condition is disregarded as repugnant to the grant
  3. A life estate passes to the grantee with a remainder in the grantor's heirs
  4. No interest passes until the stated condition occurs, so the deed is ineffective until death Correct answer.

Explanation

A deed delivered subject to a condition precedent does not transfer any present interest until the condition is satisfied; the grantor retains full title in the meantime. Because death is a condition precedent to effectiveness, nothing passes at handover, and the instrument operates only if the condition later occurs.

Question 2Real Property Law, Ownership, and Interests in Land

Three siblings take title as joint tenants with right of survivorship. One sibling conveys her interest to an outsider while the other two are alive. What is the resulting ownership structure?

  1. The conveyance is void because joint tenancy interests cannot be transferred without consent
  2. The outsider holds a one-third tenancy in common share with the two remaining siblings as joint tenants between themselves Correct answer.
  3. The two remaining siblings own the whole fee, and the outsider holds a life estate only
  4. The outsider becomes a joint tenant with the two siblings, preserving survivorship among all three

Explanation

A conveyance by one joint tenant severs the joint tenancy as to that share only, converting it into a tenancy in common. The remaining joint tenants continue to hold their shares with survivorship rights between them, while the grantee takes as a tenant in common.

Question 3Real Property Law, Ownership, and Interests in Land

A landowner grants a neighbor 'the right to cross my parcel to reach the public road.' The deed states the right is for the neighbor personally and is not assignable. What interest has been created?

  1. A profit a prendre limited to passage
  2. A license revocable at the landowner's will
  3. An easement in gross that is personal to the holder Correct answer.
  4. An easement appurtenant that runs with the neighbor's land

Explanation

An easement in gross benefits a particular person rather than a parcel of land, and it may be made nonassignable when personal to the holder. Because the right is expressly personal and not tied to ownership of any dominant estate, it is an easement in gross.

Question 4Real Property Law, Ownership, and Interests in Land

Which phrase best describes the estate held by a grantee who receives land 'to A and his heirs'?

  1. A fee simple determinable
  2. A fee simple absolute Correct answer.
  3. A fee tail
  4. A life estate pur autre vie

Explanation

Words of inheritance such as 'and his heirs' historically created a fee simple, and absent any limiting language the estate is absolute. The grantee therefore holds a fee simple absolute, the largest estate recognized at common law.

Question 5Real Property Law, Ownership, and Interests in Land

A grantor conveys land 'to the city so long as it is used as a park, and if it ceases to be so used, the grantor may re-enter.' What estate does the city hold, and what interest does the grantor retain?

  1. Life estate; grantor retains a reversion
  2. Fee simple absolute; grantor retains nothing
  3. Fee simple determinable; grantor retains a possibility of reverter
  4. Fee simple subject to condition subsequent; grantor retains a right of entry Correct answer.

Explanation

Language of duration plus a retained right to re-enter signals a fee simple subject to a condition subsequent. The grantor keeps a power of termination, sometimes called a right of entry, which must be exercised to cut the estate short.

Question 6Real Property Law, Ownership, and Interests in Land

Under the doctrine of adverse possession, which element is generally required in addition to actual, open, notorious, and exclusive use?

  1. Continuous use for the statutory period, often with a claim of right or hostility Correct answer.
  2. Written notice to the record owner at the start of possession
  3. Payment of all back taxes before entry
  4. Permission from the record owner that is later withdrawn

Explanation

Adverse possession requires possession that is actual, open and notorious, exclusive, continuous for the statutory period, and hostile or under a claim of right. The continuity and hostility elements distinguish true adverse possession from sporadic trespass or permissive use.

Question 7Real Property Law, Ownership, and Interests in Land

A developer records a plat showing every lot bounded by a 20-foot strip labeled 'parkland' and sells lots by reference to the plat. The strip is never deeded to any buyer. What is the most likely result?

  1. The strip remains the developer's unrestricted property because no deed mentions it
  2. The strip is owned by the local government automatically upon recording
  3. The strip is divided among buyers by acreage regardless of the plat
  4. Buyers acquire an implied dedication or easement over the strip for park purposes Correct answer.

Explanation

When lots are sold by reference to a recorded plat that sets aside an area for a common purpose, purchasers acquire rights in that area, typically through implied dedication or an easement. The developer cannot later use the strip inconsistently with the dedication.

Question 8Real Property Law, Ownership, and Interests in Land

Two co-owners hold title as tenants in common, each with an undivided one-half interest. One co-owner dies intestate. What happens to her share?

  1. It is extinguished and the survivor becomes sole owner
  2. It passes to her heirs or devisees, who become tenants in common with the survivor Correct answer.
  3. It escheats to the state because co-tenancy shares cannot be inherited
  4. It passes to the surviving co-owner by right of survivorship

Explanation

Tenancy in common carries no right of survivorship, so each owner may devise or pass her share through intestacy. The heir or devisee steps into the decedent's position as a tenant in common with the surviving co-owner.

Question 9Real Property Law, Ownership, and Interests in Land

A husband and wife take title as tenants by the entirety. The husband alone executes a mortgage on the property without his spouse's joinder. What is the effect of that mortgage?

  1. It is void as to the wife's interest and generally cannot encumber the estate without joinder Correct answer.
  2. It is valid but unenforceable until the wife dies
  3. It conveys a valid half interest to the lender subject to the wife's survivorship right
  4. It automatically severs the entirety and creates a tenancy in common

Explanation

Tenancy by the entirety treats the spouses as a single owner, so one spouse acting alone cannot convey or encumber the estate. A mortgage executed by only one spouse is generally ineffective against the other spouse's interest and does not sever the tenancy.

Question 10Real Property Law, Ownership, and Interests in Land

Which covenant in a general warranty deed promises that the grantor will defend the grantee's title against lawful claims?

  1. Covenant of seisin
  2. Covenant of quiet enjoyment Correct answer.
  3. Covenant against encumbrances
  4. Covenant of further assurance

Explanation

The covenant of quiet enjoyment includes the promise that the grantor will defend the grantee against lawful claims to title, and it is the broadest of the present covenants in a warranty deed. The covenant of warranty is closely related and reinforces this defense obligation.

Question 11Real Property Law, Ownership, and Interests in Land

A grantor conveys 'to my sister for life, then to my nephew.' The grantor retains no reversion. What interest does the nephew hold during the sister's lifetime?

  1. An executory interest shifting from the sister
  2. A reversion subject to divestment
  3. A vested remainder in fee simple Correct answer.
  4. A contingent remainder contingent on surviving the sister

Explanation

The nephew is ascertained, the remainder is not subject to any condition precedent, and it is ready to become possessory on the natural end of the life estate. A remainder that is certain to vest in an identified person is vested, even though possession is deferred.

Question 12Real Property Law, Ownership, and Interests in Land

A property owner grants a utility company 'the right to install and maintain underground cables across my land.' The agreement is properly recorded. What is the nature of this interest?

  1. An express easement by grant Correct answer.
  2. A restrictive covenant running with the land
  3. A profit a prendre
  4. A prescriptive easement acquired by use

Explanation

An express easement is created by a written instrument such as a deed or recorded agreement that identifies the parties, the burdened land, and the scope of use. Recording protects the easement against later purchasers of the servient parcel.

Question 13Real Property Law, Ownership, and Interests in Land

A landlocked parcel has no access to a public road except across a neighbor's land. The owner sues for an easement by necessity. Which fact is most essential to the claim?

  1. The neighbor's land is larger than the landlocked parcel
  2. The owner has offered to pay the neighbor for access
  3. The parcel was once under common ownership with the neighbor's parcel and was severed Correct answer.
  4. The owner has used the neighbor's path for more than twenty years

Explanation

An easement by necessity requires strict necessity and a common source of title, meaning the dominant and servient parcels were once owned as a unit and severed. The necessity must arise from that severance rather than from the owner's later circumstances.

Question 14Real Property Law, Ownership, and Interests in Land

A seller agrees in writing to sell a parcel, and the buyer takes possession and pays the full price, but no deed is delivered. The seller then dies, and the heirs claim the land. What doctrine most likely protects the buyer?

  1. Equitable conversion
  2. The rule against perpetuities
  3. The doctrine of part performance Correct answer.
  4. The doctrine of merger

Explanation

Part performance allows a court to enforce an oral or incomplete land contract when the buyer has taken possession and paid the price, because the acts are unequivocally referable to the agreement. The doctrine prevents the statute of frauds from being used as an instrument of fraud.

Question 15Real Property Law, Ownership, and Interests in Land

A recorded restrictive covenant limits all lots in a subdivision to single-family residential use. A buyer purchases a lot with actual notice of the covenant. What is the buyer's position?

  1. The covenant is enforceable as a real covenant running with the land because notice and intent are satisfied Correct answer.
  2. The covenant is unenforceable because it restricts alienation
  3. The covenant is enforceable only if the original developer still owns a lot
  4. The covenant binds only the original grantee who signed it

Explanation

A real covenant runs with land when there is intent, notice, horizontal and vertical privity, and the burden touches and concerns the land. A residential-use restriction touches and concerns the land and is enforceable against purchasers with notice.

Question 16Real Property Law, Ownership, and Interests in Land

A landowner grants a neighbor an easement for driveway access and later sells the servient parcel to a buyer who has no actual knowledge of the easement. The easement was never recorded but is plainly visible as a paved drive. What is the buyer's status?

  1. The buyer takes subject to the easement under inquiry notice Correct answer.
  2. The buyer takes subject to the easement only if the neighbor sues within one year
  3. The buyer takes free of the easement because it was unrecorded
  4. The buyer's title extinguishes the easement by merger

Explanation

A purchaser is charged with inquiry notice of easements that are apparent from a reasonable inspection of the property. A visible paved drive used by a neighbor puts the buyer on notice, so the unrecorded easement remains enforceable.

Question 17Real Property Law, Ownership, and Interests in Land

Which of the following is a freehold estate of inheritance?

  1. Estate at will
  2. Periodic tenancy
  3. Tenancy for years
  4. Fee simple Correct answer.

Explanation

Freehold estates last for an indefinite period and include fee simple, fee tail, and life estates; the fee simple is inheritable. Leasehold estates such as terms for years, periodic tenancies, and tenancies at will are nonfreehold.

Question 18Real Property Law, Ownership, and Interests in Land

A testator devises land 'to my son for life, then to my son's children who survive him.' At the testator's death, the son has two living children. What type of remainder do the children hold?

  1. A vested remainder subject to open
  2. A contingent remainder because survival is a condition precedent Correct answer.
  3. An executory interest in fee simple
  4. A vested remainder subject to divestment

Explanation

A remainder is contingent if it is held by unascertained persons or is subject to a condition precedent. Because the gift requires the children to survive the son, survivorship is a condition precedent, making the remainder contingent even though the children are presently identifiable.

Question 19Real Property Law, Ownership, and Interests in Land

A property owner dies intestate leaving a surviving spouse and two children, with no will. Under the common law approach to intestate succession, how is the real property generally distributed?

  1. Half to the spouse and half to the state by escheat
  2. Entirely to the surviving spouse
  3. Entirely to the eldest child under primogeniture
  4. Equally among the children, with the spouse receiving a statutory share Correct answer.

Explanation

Intestate succession statutes distribute property to the decedent's heirs, and children typically share equally in the real property while the spouse takes a statutory share that varies by jurisdiction. Modern statutes differ in the exact spousal share, but escheat and primogeniture do not apply when heirs exist.

Question 20Real Property Law, Ownership, and Interests in Land

A grantor conveys land 'to A, but if the land is ever used for commercial purposes, then to B.' What interest does B hold before any commercial use occurs?

  1. A vested remainder
  2. A shifting executory interest Correct answer.
  3. A possibility of reverter
  4. A right of entry

Explanation

An executory interest divests another's estate upon the occurrence of a condition and, because it follows a fee simple in A, it is shifting rather than springing. B holds no present estate but will take automatically if the condition occurs.

Question 21Real Property Law, Ownership, and Interests in Land

A buyer and seller sign a valid contract for the sale of a home, and before closing the home is destroyed by fire through no fault of either party. The contract is silent on risk of loss. Under the doctrine of equitable conversion, who bears the loss?

  1. The seller, because title has not yet passed
  2. The loss is shared equally between buyer and seller
  3. The buyer, because equitable title passed at contract formation Correct answer.
  4. The real estate broker, who holds the earnest money

Explanation

Under equitable conversion, the buyer is treated as the equitable owner from the moment a specifically enforceable contract is formed, so the buyer bears casualty risk subject to the terms of the contract. Many modern contracts shift this risk back to the seller until closing, but the traditional rule rests on equitable conversion.

Question 22Real Property Law, Ownership, and Interests in Land

Which of the following best describes a life estate measured by the life of someone other than the holder?

  1. A fee simple determinable
  2. An estate for years
  3. A tenancy at sufferance
  4. A life estate pur autre vie Correct answer.

Explanation

A life estate pur autre vie lasts for the lifetime of a person other than the life tenant, such as a grant 'to A for the life of B.' If A dies before B, the estate passes to A's successors until B's death.

Question 23Real Property Law, Ownership, and Interests in Land

A landowner has used a path across a neighbor's land openly and continuously for the statutory period without permission. The landowner now sells the benefited parcel. Does the easement pass to the buyer?

  1. Yes, but only if the buyer reuses the path for another statutory period
  2. Yes, if the easement is appurtenant and the deed conveys the benefited land Correct answer.
  3. No, because prescriptive easements cannot be transferred
  4. No, because prescriptive easements are personal and end on sale

Explanation

A prescriptive easement that benefits a particular parcel is appurtenant and passes automatically with a conveyance of the dominant estate. The buyer need not re-establish the use for a new statutory period.

Question 24Real Property Law, Ownership, and Interests in Land

A mortgage lender holds a recorded first deed of trust on a parcel. The borrower later grants a neighbor an unrecorded easement for drainage. The property is foreclosed. What happens to the easement?

  1. The easement survives only if the neighbor pays the foreclosure price
  2. The easement is converted into a license
  3. The easement is extinguished because it was recorded after the deed of trust and without the lender's consent Correct answer.
  4. The easement survives foreclosure because it is appurtenant

Explanation

A foreclosure of a prior recorded lien extinguishes junior interests, including easements created after the lien and without the lender's consent. The purchaser at foreclosure takes title free of the later unrecorded easement.

Question 25Real Property Law, Ownership, and Interests in Land

A tenant signs a one-year lease with a fixed start and end date and pays rent monthly. What type of estate does the tenant hold?

  1. A tenancy at will
  2. An estate for years Correct answer.
  3. A periodic tenancy
  4. A tenancy by the entirety

Explanation

An estate for years has a fixed beginning and ending date and terminates automatically without notice. The monthly payment schedule does not change the fixed-term character of the leasehold.

Question 26Real Property Law, Ownership, and Interests in Land

A deed conveys a parcel 'to Maria and her heirs, in fee simple.' Which characteristic distinguishes the estate Maria now holds from a life estate?

  1. It is inheritable and has no fixed maximum duration Correct answer.
  2. It must be renewed by recording a new deed every twenty years
  3. It can last only as long as Maria's own lifetime
  4. It terminates automatically when Maria stops occupying the parcel

Explanation

A fee simple absolute is a freehold estate of potentially infinite duration that descends to the holder's heirs, which is why the words 'and her heirs' appear in the granting clause. A life estate, by contrast, is measured by a life and ends at death with no inheritable remainder in the holder.

Question 27Real Property Law, Ownership, and Interests in Land

A landowner grants a neighbor a right-of-way across a defined gravel lane for access to the neighbor's rear parcel. The grant is in writing, signed, and recorded, but no price is paid. What interest has the landowner created in the neighbor?

  1. A license revocable at the landowner's discretion
  2. A profit a prendre entitling the neighbor to remove gravel
  3. A fee simple determinable subject to a possibility of reverter
  4. An easement appurtenant benefiting the neighbor's parcel Correct answer.

Explanation

A written, recorded grant of a right-of-way for the benefit of the grantee's adjoining parcel creates an express easement appurtenant; the benefited parcel is the dominant tenement and the burdened lane is the servient tenement. No consideration is required to create the interest, and recording protects it against later purchasers.

Question 28Real Property Law, Ownership, and Interests in Land

A developer sells a lot by a deed that describes the lot as bounded on the north by 'the Smith farm line' and on the east by 'the centerline of Cedar Creek.' A later survey shows the creek has gradually shifted eastward through slow, imperceptible erosion and accretion over many years. Which description generally controls the boundary now?

  1. The creek's present centerline, because a gradual, imperceptible shift moves the boundary with the water Correct answer.
  2. The creek's original recorded centerline, because the deed fixes the boundary permanently
  3. The high-water mark on the developer's side, because the state owns all beds of navigable streams
  4. The deed is void for uncertainty, so the boundary is set by the local zoning map

Explanation

When a watercourse is a boundary and changes by accretion or erosion, the boundary generally follows the water as it gradually moves, so the deed's reference to the creek incorporates the creek's current location. Avulsion, a sudden and perceptible change, is treated differently and does not move the boundary.

Question 29Real Property Law, Ownership, and Interests in Land

A mother conveys a parcel 'to my daughter for life, then to my daughter's children who survive her.' At the mother's death the daughter has two living children and is pregnant with a third. Under the common law rule against perpetuities as applied to class gifts, what is the status of the gift to the grandchildren?

  1. It is void as to all grandchildren because the class could include a child born after the daughter's death
  2. It is valid because every member of the class will be determined at the daughter's death Correct answer.
  3. It creates a fee tail in the daughter that must be barred by judicial proceeding
  4. It is valid only if the grandchildren are alive when the deed is recorded

Explanation

The measuring life is the daughter, and the class of children who survive her will close at her death, which must occur within a life in being plus twenty-one years. Because the interest necessarily vests or fails within the perpetuities period, the gift to the class is valid.

Question 30Real Property Law, Ownership, and Interests in Land

A recorded subdivision declaration imposes a uniform setback, a single-family-use restriction, and a requirement that each owner pay a share of maintaining common greenbelts. A buyer purchases a lot with actual knowledge of the declaration and later begins operating a commercial dog-grooming business from the home. A neighbor sues to enforce the use restriction. Which theory most directly supports enforcement against this buyer?

  1. The neighbor holds an easement by prescription over the buyer's lot
  2. The declaration is unenforceable because the buyer did not sign it personally
  3. The restrictions are enforceable as equitable servitudes running with the land because the buyer had notice Correct answer.
  4. The restrictions bind only the original developer, since privity of estate ended at the first resale

Explanation

A scheme of development with uniform restrictions recorded in the chain of title creates reciprocal negative servitudes that run with the land, and a purchaser who takes with notice is bound even without signing the declaration. Because the neighbor seeks an injunction rather than damages, the remedy sounds in equity and does not require strict horizontal and vertical privity.

Question 31Agency, Brokerage Relationships, and Fiduciary Duties

A broker is engaged by a seller under a written agreement that authorizes the broker to list the property and pays the broker a commission regardless of who procures the buyer. This arrangement is best described as which type of brokerage relationship?

  1. No brokerage relationship
  2. Single agency with the seller Correct answer.
  3. Dual agency with disclosed consent
  4. Transaction brokerage with both parties

Explanation

When a broker represents only the seller and owes fiduciary duties exclusively to that seller, the relationship is single agency. The commission structure does not change the agency designation; it only affects how compensation is earned.

Question 32Agency, Brokerage Relationships, and Fiduciary Duties

Which duty requires a broker to place the principal's interests above the broker's own financial gain when a conflict arises during the transaction?

  1. Fiduciary loyalty Correct answer.
  2. Accounting
  3. Reasonable care
  4. Confidentiality

Explanation

Loyalty obligates the agent to prioritize the principal's interests over the agent's own, including avoiding self-dealing and undisclosed profit. It is the core fiduciary duty that governs conflicts of interest.

Question 33Agency, Brokerage Relationships, and Fiduciary Duties

A buyer's agent learns that the buyer is going through a divorce and is under financial pressure. The agent mentions this to the seller's agent to help the offer get accepted. Which fiduciary duty has the agent breached?

  1. Confidentiality Correct answer.
  2. Disclosure
  3. Reasonable care
  4. Obedience

Explanation

Confidentiality requires the agent to keep the principal's personal and financial information private unless disclosure is authorized or legally required. Sharing the buyer's divorce and financial strain with the opposing side breaches that duty.

Question 34Agency, Brokerage Relationships, and Fiduciary Duties

Under common agency principles, when does a broker's fiduciary duty of loyalty to a client generally end?

  1. When the commission is negotiated
  2. When the buyer submits an offer
  3. When the listing agreement is signed
  4. When the transaction closes or the agreement terminates Correct answer.

Explanation

Fiduciary duties attach when the agency relationship begins and generally continue until the transaction is completed or the agreement is terminated. Some duties, such as confidentiality, may survive termination for a period.

Question 35Agency, Brokerage Relationships, and Fiduciary Duties

A licensee gives a buyer a statutory agency disclosure form at the first substantive contact but never signs an agency agreement with the buyer. The licensee shows homes and writes an offer for the buyer while stating she represents the seller. What relationship most likely exists with the buyer?

  1. No brokerage relationship or transaction brokerage, depending on state law Correct answer.
  2. Dual agency
  3. Subagency
  4. Single agency for the buyer

Explanation

Without an agreement creating representation, the licensee does not owe full fiduciary duties to the buyer. Many states classify this as a no-brokerage or transaction-brokerage relationship, where limited services are provided without agency representation.

Question 36Agency, Brokerage Relationships, and Fiduciary Duties

A seller instructs the listing agent not to show the property to buyers of a particular national origin. How should the agent respond?

  1. Refuse because complying would violate fair housing law Correct answer.
  2. Ask the seller to put the instruction in writing before complying
  3. Show the property but disclose the seller's instruction to buyers
  4. Follow the instruction because obedience is a fiduciary duty

Explanation

The duty of obedience applies only to lawful instructions. Refusing to discriminate is required by fair housing laws, which override any conflicting client direction.

Question 37Agency, Brokerage Relationships, and Fiduciary Duties

A broker receives an earnest money deposit and deposits it into the brokerage's general operating account. Which fiduciary duty is most directly implicated?

  1. Confidentiality
  2. Disclosure
  3. Loyalty
  4. Accounting and safekeeping of funds Correct answer.

Explanation

Funds held for others must be kept in a designated trust or escrow account and properly recorded. Commingling client funds with operating money breaches the duty to account for and safeguard entrusted property.

Question 38Agency, Brokerage Relationships, and Fiduciary Duties

A buyer's agent discovers that the property's roof was replaced after a hailstorm but the seller's disclosure statement says the roof is original. What is the agent's most appropriate action?

  1. Advise the buyer to waive inspection to speed closing
  2. Report the seller to the licensing board immediately
  3. Keep the discrepancy confidential to protect the seller
  4. Disclose the material discrepancy to the buyer client Correct answer.

Explanation

The duty of disclosure requires the agent to inform the client of material facts that could affect the client's decision. A conflicting disclosure about the roof is material and must be shared with the buyer.

Question 39Agency, Brokerage Relationships, and Fiduciary Duties

Which statement accurately distinguishes a customer from a client in a real estate transaction?

  1. A customer receives full fiduciary duties while a client receives only limited services
  2. A customer and a client both receive identical fiduciary protections
  3. A client is a party who pays cash while a customer finances the purchase
  4. A client is represented by the broker while a customer is not represented Correct answer.

Explanation

A client has an agency relationship with the broker and receives fiduciary duties, while a customer receives limited services such as honesty and fair dealing without representation. The distinction turns on representation, not payment method.

Question 40Agency, Brokerage Relationships, and Fiduciary Duties

A licensee represents both the buyer and the seller in the same transaction after both parties sign written consent. Which duty is most likely to create an inherent conflict in this arrangement?

  1. Disclosure of property defects
  2. Reasonable care
  3. Accounting for funds
  4. Confidentiality of each party's negotiating position Correct answer.

Explanation

In dual agency the licensee cannot advocate fully for either side, and confidentiality toward one party can conflict with the duty to disclose material information to the other. This inherent tension is why dual agency requires informed written consent.

Question 41Agency, Brokerage Relationships, and Fiduciary Duties

A seller's listing agreement states that the broker will receive a commission if the property is sold during the listing term. After the listing expires, the seller sells to a buyer the broker introduced during the term. Which concept most likely supports the broker's claim for compensation?

  1. Subagency
  2. Open listing
  3. Net listing
  4. Procuring cause Correct answer.

Explanation

Procuring cause refers to the broker's efforts that set in motion the chain of events leading to the sale. A broker who introduced the ultimate buyer may claim compensation even after the listing expires, depending on the agreement and state law.

Question 42Agency, Brokerage Relationships, and Fiduciary Duties

An agent representing a seller is asked by the buyer's agent whether the seller would accept less than the list price. How should the seller's agent respond?

  1. Decline to reveal the seller's negotiating position Correct answer.
  2. Disclose the seller's bottom-line price to speed negotiations
  3. Suggest the buyer submit a low offer to test the seller
  4. Tell the buyer the seller is desperate to move

Explanation

The seller's willingness to accept less is confidential information that the agent may not reveal without authorization. Disclosing it would undermine the seller's bargaining position and breach loyalty and confidentiality.

Question 43Agency, Brokerage Relationships, and Fiduciary Duties

A broker's agency agreement with a buyer includes a clause allowing the broker to act as a dual agent without further consent. Under most state licensing rules, this clause is best characterized as which of the following?

  1. Enforceable because it is in writing
  2. Unenforceable because dual agency requires informed consent at the time it arises Correct answer.
  3. Valid only if the seller also signs the buyer's agreement
  4. Sufficient if the broker verbally explains it later

Explanation

Dual agency requires informed, written consent from both parties after they understand the conflicts involved. A blanket advance waiver in the agreement does not substitute for that contemporaneous informed consent.

Question 44Agency, Brokerage Relationships, and Fiduciary Duties

A property manager who is also a licensed broker collects rent for an owner and uses part of it to pay the brokerage's office utilities, intending to repay it later. Which statement is correct?

  1. This is permissible if the owner is notified after the fact
  2. This is impermissible commingling of trust funds Correct answer.
  3. This is permissible because the broker earned a management fee
  4. This is permissible if the funds are repaid within thirty days

Explanation

Trust funds must be kept separate from the brokerage's operating money and used only for their intended purpose. Using collected rents for office expenses, even with intent to repay, is unlawful commingling.

Question 45Agency, Brokerage Relationships, and Fiduciary Duties

Which situation most clearly creates a conflict of interest requiring disclosure and possible withdrawal by the agent?

  1. The agent recommends a home inspector to the buyer
  2. The agent's spouse wants to buy the listing the agent represents Correct answer.
  3. The agent markets the listing on social media
  4. The agent attends the buyer's final walk-through

Explanation

A personal or family interest in the transaction can bias the agent's advice and creates a conflict that must be disclosed. Depending on state rules and consent, the agent may need to withdraw or refer the matter.

Question 46Agency, Brokerage Relationships, and Fiduciary Duties

A seller asks the listing agent to prepare a comparative market analysis and recommend a list price. The agent has no reasonable basis for the recommendation and picks a figure to win the listing. Which duty is breached?

  1. Reasonable care and skill Correct answer.
  2. Accounting
  3. Confidentiality
  4. Obedience

Explanation

Agents must exercise the competence and diligence expected of a licensed professional, including supporting pricing advice with adequate analysis. Recommending a price without a reasonable basis fails the duty of care.

Question 47Agency, Brokerage Relationships, and Fiduciary Duties

A buyer's broker learns that the buyer client plans to convert the purchased home into an unlicensed short-term rental, which the local zoning code prohibits. What is the broker's best course of action?

  1. Report the buyer to the zoning board before closing
  2. Say nothing because the buyer's future use is not the broker's concern
  3. Refuse to continue representing the buyer
  4. Advise the buyer of the zoning restriction and proceed Correct answer.

Explanation

The broker should inform the client of material legal restrictions affecting the intended use while continuing to represent the client. Disclosure supports informed decision-making without requiring the agent to police lawful client choices.

Question 48Agency, Brokerage Relationships, and Fiduciary Duties

A broker acting as a transaction broker in a state that recognizes that relationship owes which of the following to the parties?

  1. Accounting, honesty, and limited confidentiality without full advocacy Correct answer.
  2. Full fiduciary loyalty to the seller only
  3. No duties of any kind
  4. Full fiduciary loyalty to the buyer only

Explanation

Transaction brokerage provides limited services such as honesty, accounting for funds, and limited confidentiality, but not full fiduciary advocacy for either party. The broker facilitates the deal without representing either side.

Question 49Agency, Brokerage Relationships, and Fiduciary Duties

A listing agent accepts a gift of expensive concert tickets from a buyer's agent shortly before recommending that the seller accept that buyer's offer. Which duty is most directly implicated?

  1. Obedience
  2. Loyalty Correct answer.
  3. Accounting
  4. Confidentiality

Explanation

Accepting a valuable gift from the opposing side creates a conflict that can compromise the agent's duty to act in the seller's best interest. Loyalty requires the agent to avoid undisclosed benefits that could influence advice.

Question 50Agency, Brokerage Relationships, and Fiduciary Duties

Which of the following best describes the duty of disclosure owed by a seller's agent to a prospective buyer who is not represented by the agent?

  1. The agent must disclose all of the seller's confidential negotiating strategy
  2. The agent owes no disclosure duties to an unrepresented buyer
  3. The agent must disclose only facts the seller puts in writing
  4. The agent must disclose known material adverse facts about the property Correct answer.

Explanation

Even without an agency relationship, the agent must deal honestly and disclose known material adverse facts about the property. Confidential client information, by contrast, remains protected.