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Real Estate practice questions

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Question 1Real Property Characteristics, Legal Descriptions, and Property Ownership

Which type of property ownership interest is generally considered the most complete and enduring bundle of rights a person can hold in real property?

  1. A leasehold estate
  2. A life estate
  3. A fee simple absolute estate Correct answer.
  4. An easement appurtenant

Explanation

A fee simple absolute estate is the fullest estate recognized in law, potentially lasting forever and freely inheritable and alienable. Lesser estates such as life estates, leaseholds, and easements grant narrower or time-limited rights.

Question 2Real Property Characteristics, Legal Descriptions, and Property Ownership

A property owner grants a neighbor the right to cross her land to reach a public road, and the right benefits the neighbor's parcel. This arrangement is best described as which of the following?

  1. An easement appurtenant Correct answer.
  2. A lien
  3. A fee simple determinable
  4. A license

Explanation

An easement appurtenant benefits a dominant parcel and burdens a servient parcel, running with the land when the parcels are transferred. A license is merely personal permission that is revocable, and the other choices describe different interests entirely.

Question 3Real Property Characteristics, Legal Descriptions, and Property Ownership

Which of the following is an example of a physical characteristic of land rather than an economic characteristic?

  1. Immobility Correct answer.
  2. Situs
  3. Scarcity
  4. Modification

Explanation

Physical characteristics of land include immobility, indestructibility, and nonhomogeneity (uniqueness). Scarcity, situs, and modification are economic characteristics that describe how land behaves in the market.

Question 4Real Property Characteristics, Legal Descriptions, and Property Ownership

A legal description that identifies a parcel by reference to a recorded map that divides land into numbered blocks and lots is known as which method?

  1. Monument method
  2. Lot and block Correct answer.
  3. Metes and bounds
  4. Government survey

Explanation

The lot and block system (also called the recorded plat method) uses a plat map filed in public records to identify parcels by block and lot numbers. Metes and bounds and the government survey system describe boundaries by measurements or grid references instead.

Question 5Real Property Characteristics, Legal Descriptions, and Property Ownership

Two people take title to a property as joint tenants. Which feature distinguishes this form of co-ownership from a tenancy in common?

  1. The need for a written lease
  2. The right of survivorship Correct answer.
  3. The requirement of unequal shares
  4. The absence of unity of title

Explanation

Joint tenancy carries the right of survivorship, so a deceased joint tenant's share passes automatically to the surviving joint tenants. Tenancy in common has no survivorship right and allows unequal, separately transferable shares.

Question 6Real Property Characteristics, Legal Descriptions, and Property Ownership

A deed conveys a parcel 'to Alice for life, then to Bob.' What interest does Bob hold during Alice's lifetime?

  1. A life estate pur autre vie
  2. A reversion
  3. A leasehold
  4. A remainder Correct answer.

Explanation

Bob holds a remainder because his future interest is created in a named grantee and will become possessory when Alice's life estate ends. A reversion would remain in the grantor, and a life estate pur autre vie is measured by another person's life.

Question 7Real Property Characteristics, Legal Descriptions, and Property Ownership

A developer owns a tract and records a restriction stating that every lot must be used for single-family residences only. A later buyer of one lot wishes to operate a retail shop. Which concept most directly allows a neighboring lot owner to enforce the restriction?

  1. Covenant running with the land Correct answer.
  2. Eminent domain
  3. Adverse possession
  4. Escheat

Explanation

A restrictive covenant that touches and concerns the land and is intended to run with it can be enforced by benefited owners against successors. Eminent domain, adverse possession, and escheat address government taking, possession by trespass, and unclaimed property, respectively.

Question 8Real Property Characteristics, Legal Descriptions, and Property Ownership

Under the government survey system, a township is divided into 36 sections. What is the approximate area of one section?

  1. 640 acres Correct answer.
  2. 36 acres
  3. 1 acre
  4. 6,400 acres

Explanation

A township is six miles square and contains 36 sections, each one mile square, or 640 acres. The other figures do not match the standard section measurement.

Question 9Real Property Characteristics, Legal Descriptions, and Property Ownership

A metes and bounds description reads in part: 'beginning at the large oak tree at the northeast corner, thence south 200 feet along the fence line...' Which element of the description is the oak tree?

  1. A bearing
  2. A course
  3. A distance
  4. A monument Correct answer.

Explanation

A monument is a natural or artificial object used to mark a boundary point, and it generally controls over stated distances or directions when conflicts arise. Courses and bearings describe direction, while distances describe length.

Question 10Real Property Characteristics, Legal Descriptions, and Property Ownership

Three siblings inherit a farm from their parent's will with no language specifying how they hold title. Absent contrary language, how do they most likely hold title?

  1. As tenants by the entirety
  2. As tenants in common Correct answer.
  3. As joint tenants with right of survivorship
  4. As community property

Explanation

When co-owners take title without express survivorship language, the law generally presumes a tenancy in common, giving each an undivided share that passes to heirs. Joint tenancy requires clear survivorship intent, and the other forms require specific relationships or elections.

Question 11Real Property Characteristics, Legal Descriptions, and Property Ownership

A landowner dies intestate with no surviving relatives and no valid will. Under the doctrine of escheat, what happens to the real property?

  1. It reverts to the prior grantor
  2. It is sold at a tax auction
  3. It passes to the state Correct answer.
  4. It becomes a public easement

Explanation

Escheat is the government's right to take ownership of property when an owner dies without a will and without heirs. The property passes to the state rather than to a prior owner or through a sale.

Question 12Real Property Characteristics, Legal Descriptions, and Property Ownership

A property is described as 'the NW 1/4 of the SE 1/4 of Section 12.' How many acres does this parcel contain?

  1. 320 acres
  2. 160 acres
  3. 40 acres Correct answer.
  4. 80 acres

Explanation

Each quarter-quarter division of a 640-acre section is 160 acres, and taking a quarter of that yields 40 acres. The description divides the section twice, producing a 40-acre tract.

Question 13Real Property Characteristics, Legal Descriptions, and Property Ownership

An owner holds a fee simple estate but grants a neighbor a permanent right to use a strip of the owner's land as a driveway. The owner then sells the property. What is the status of the neighbor's right after the sale?

  1. It continues to burden the property if properly created Correct answer.
  2. It becomes a license revocable at will
  3. It converts into a fee simple interest for the neighbor
  4. It terminates automatically on sale

Explanation

An easement appurtenant runs with the land and binds successors of the servient owner when properly created and recorded. It is not extinguished by a transfer of the burdened parcel and does not expand into ownership.

Question 14Real Property Characteristics, Legal Descriptions, and Property Ownership

Which unity is required for a joint tenancy but is not required for a tenancy in common?

  1. Unity of survivorship
  2. Unity of time Correct answer.
  3. Unity of interest
  4. Unity of possession

Explanation

Joint tenancy requires the four unities of time, title, interest, and possession, while tenancy in common requires only unity of possession. Unity of time means all joint tenants must acquire their interests at the same moment.

Question 15Real Property Characteristics, Legal Descriptions, and Property Ownership

A deed describes a parcel as beginning at a stated point and running 'thence north 45 degrees east 300 feet to an iron pin.' In this description, 'north 45 degrees east' is which element?

  1. A bearing Correct answer.
  2. A distance
  3. A monument
  4. A plat reference

Explanation

A bearing states direction using a compass angle, while the 300 feet is the distance and the iron pin is a monument. Plat references identify parcels by recorded maps rather than by compass direction.

Question 16Real Property Characteristics, Legal Descriptions, and Property Ownership

A grantor conveys property 'to the city so long as it is used for a public park.' The city later converts the land to a parking garage. What is the most likely result?

  1. The city keeps full title because the deed is absolute
  2. The property automatically becomes a public easement
  3. The restriction is unenforceable as a matter of law
  4. The grantor may re-enter and reclaim title Correct answer.

Explanation

A fee simple determinable ends automatically on the stated event, and the grantor retains a possibility of reverter, which supports re-entry and recovery of title. The estate is not absolute because the durational language limits it.

Question 17Real Property Characteristics, Legal Descriptions, and Property Ownership

An owner conveys a parcel to a friend 'for life, then to the friend's heirs.' The friend later attempts to sell the property in fee simple. Which statement best describes the friend's authority?

  1. The friend may convey full fee simple title because the heirs' interest is void
  2. The friend may convey nothing because life tenants cannot transfer
  3. The friend may convey a fee simple subject to a condition subsequent
  4. The friend may convey only the life estate interest Correct answer.

Explanation

A life tenant holds a present possessory estate measured by a life and can transfer only that limited interest; the remainder held by the heirs is unaffected. A life tenant cannot convey greater rights than the estate held.

Question 18Real Property Characteristics, Legal Descriptions, and Property Ownership

A recorded subdivision plat shows Lot 7 in Block 3. A later survey reveals that the physical improvements on Lot 7 encroach slightly onto Lot 8. If a dispute arises over the true boundary, which principle most likely governs?

  1. The plat lot lines always control regardless of monuments
  2. The encroachment automatically transfers title to the encroaching owner
  3. Monuments and physical evidence may control over the plat when boundaries conflict Correct answer.
  4. The recorded plat is void and the parcel must be re-platted

Explanation

When a legal description conflicts with physical monuments or established boundaries, courts generally give priority to monuments and physical evidence over recorded distances and plat lines. A plat is not automatically void because of a conflict, and encroachment alone does not transfer title.

Question 19Agency and Non-Agency Relationships

A broker is engaged by a seller under a listing agreement that grants the broker the right to a commission if anyone, including the seller, procures a ready, willing, and able buyer. What type of listing is this?

  1. Exclusive right to sell listing Correct answer.
  2. Open listing
  3. Exclusive agency listing
  4. Net listing

Explanation

An exclusive right to sell listing entitles the broker to a commission no matter who procures the buyer, including the seller. It provides the strongest protection for the broker among the common listing types.

Question 20Agency and Non-Agency Relationships

Under a typical exclusive agency listing, the seller personally finds a buyer without any broker's help. What is the broker owed?

  1. No commission Correct answer.
  2. Half of the agreed commission
  3. A flat marketing fee only
  4. The full agreed commission

Explanation

In an exclusive agency listing the seller retains the right to sell the property personally without owing the broker a commission. The broker is protected only against sales procured by other brokers or by the broker.

Question 21Agency and Non-Agency Relationships

Which party does a real estate broker legally represent in a customary transaction where the broker works with a buyer under a buyer agency agreement?

  1. Both buyer and seller equally
  2. The seller
  3. The buyer Correct answer.
  4. Neither party

Explanation

A buyer's agent owes fiduciary duties to the buyer who engaged the agent. Representation flows to the party with whom the agency relationship is formed, not to the other side of the transaction.

Question 22Agency and Non-Agency Relationships

A broker shows a property to a prospective buyer and, without any written agreement, begins acting on the buyer's behalf. Which agency creation method does this most closely describe?

  1. Agency by operation of law
  2. Implied agency Correct answer.
  3. Agency by ratification
  4. Agency by estoppel

Explanation

Implied agency arises from the conduct of the parties rather than an express written agreement. When a broker acts on behalf of a party and that party accepts the benefits, an agency may be implied.

Question 23Agency and Non-Agency Relationships

Which duty requires a broker to place the principal's interests above the broker's own interests?

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

Explanation

Loyalty is the fiduciary duty that obligates the agent to put the principal's interests ahead of the agent's own. It underlies rules against self-dealing and undisclosed profits.

Question 24Agency and Non-Agency Relationships

A seller tells a listing broker in confidence that the seller will accept a price well below the list price. The broker reveals this to a buyer. Which fiduciary duty has the broker breached?

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

Explanation

Confidentiality prohibits an agent from disclosing the principal's private bargaining information that could harm the principal's position. Revealing the seller's bottom line undercuts the seller's negotiating leverage.

Question 25Agency and Non-Agency Relationships

A broker represents both the buyer and the seller in the same transaction with the informed written consent of both. What is this arrangement called?

  1. Dual agency Correct answer.
  2. Subagency
  3. Transaction brokerage
  4. Designated agency

Explanation

Dual agency exists when one broker represents both parties in the same transaction, which requires informed consent because the fiduciary duties conflict.

Question 26Agency and Non-Agency Relationships

A single brokerage appoints one licensee to represent the buyer and a different licensee to represent the seller in the same transaction. What is this practice called?

  1. Dual agency
  2. Designated agency Correct answer.
  3. Open agency
  4. Subagency

Explanation

Designated agency lets one brokerage assign separate agents to each side so each party has an advocate, while the brokerage itself remains neutral. It is often used to avoid classic dual agency conflicts.

Question 27Agency and Non-Agency Relationships

A broker acting as a subagent in a transaction owes fiduciary duties primarily to which party?

  1. The lender
  2. The buyer
  3. The cooperating broker
  4. The seller Correct answer.

Explanation

A subagent works through the listing broker and represents the seller, so the fiduciary duties run to the seller. The subagent must not advocate for the buyer against the seller's interests.

Question 28Agency and Non-Agency Relationships

A buyer's agent learns that the property's roof leaks badly and that the seller is eager to close quickly. The agent says nothing to the buyer. Which duty to the buyer has the agent most directly violated?

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

Explanation

An agent owes the principal disclosure of material facts the agent knows that could affect the principal's decision. Withholding known defects harms the buyer the agent represents.

Question 29Agency and Non-Agency Relationships

An agent's authority that is specifically spelled out in a written agency agreement is best described as which type of authority?

  1. Apparent authority
  2. Emergency authority
  3. Express authority Correct answer.
  4. Implied authority

Explanation

Express authority is granted in explicit terms, usually in writing, in the agency agreement. Implied and apparent authority arise from circumstances rather than explicit grant.

Question 30Agency and Non-Agency Relationships

A seller gives a broker authority to list and market the home. The broker signs a purchase contract on the seller's behalf without any such authority. What is the result?

  1. The contract binds the seller because the broker had apparent authority
  2. The contract is unenforceable against the seller unless ratified Correct answer.
  3. The contract binds the broker personally as a matter of law
  4. The contract is void because brokers can never sign contracts

Explanation

An agent can bind the principal only within the scope of actual or apparent authority. An unauthorized signature does not bind the principal unless the principal later ratifies the act.

Question 31Agency and Non-Agency Relationships

A property manager collects rent and security deposits for an owner. Which fiduciary duty is most directly implicated by how those funds are handled?

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

Explanation

Accounting requires an agent to safeguard the principal's money and property and to render accurate records of receipts and disbursements. Handling rents and deposits is the core of that duty.

Question 32Agency and Non-Agency Relationships

A broker's agency relationship with a seller ends when the listing term expires. Which statement best describes the broker's continuing obligation?

  1. Confidentiality may continue after termination Correct answer.
  2. The broker may now represent the buyer against the seller
  3. All duties end immediately at expiration
  4. The broker must return the commission

Explanation

Some fiduciary duties, particularly confidentiality regarding the former principal's private information, can survive termination of the agency. Other duties tied to active representation end with the relationship.

Question 33Agency and Non-Agency Relationships

Which event automatically terminates an agency relationship by operation of law?

  1. The principal revokes the agreement
  2. The listing period expires
  3. The broker resigns
  4. The principal dies Correct answer.

Explanation

Death of the principal terminates the agency by operation of law. Revocation, expiration, and resignation are terminations by act of the parties rather than by operation of law.

Question 34Agency and Non-Agency Relationships

A seller instructs a listing broker to refuse to show the home to buyers of a particular national origin. How should the broker respond?

  1. Resign and keep the listing active
  2. Refuse because lawful instructions only must be obeyed Correct answer.
  3. Follow the instruction but document it in writing
  4. Follow the instruction because obedience is a fiduciary duty

Explanation

The duty of obedience applies only to lawful instructions. A broker must refuse instructions that would violate fair housing law, and the duty of obedience does not require discriminatory conduct.

Question 35Agency and Non-Agency Relationships

A buyer's broker receives a commission offered by the listing broker through a multiple listing service. In the absence of any buyer agency agreement, this arrangement traditionally made the buyer's broker a what?

  1. Transaction broker
  2. Subagent of the seller Correct answer.
  3. Dual agent
  4. Buyer's fiduciary

Explanation

Historically, a broker who accepted compensation offered by the listing broker was treated as a subagent working for the seller. This is why buyer agency agreements were developed to establish representation of the buyer.

Question 36Agency and Non-Agency Relationships

An agent who represents the seller learns from the buyer that the buyer will pay more than the asking price. To whom should the agent disclose this information?

  1. The cooperating broker only
  2. The buyer, to build trust
  3. The seller, the agent's principal Correct answer.
  4. No one, because it is confidential

Explanation

The agent's fiduciary loyalty runs to the seller, so information that could benefit the seller's negotiating position should be shared with the seller. The agent does not owe confidentiality to the opposing buyer.

Question 37Contracts

A buyer and seller sign a written purchase agreement that states the buyer's offer is contingent on obtaining financing at an interest rate no higher than 6%. Which contract concept does this provision illustrate?

  1. An assignment of the buyer's rights
  2. A liquidated damages clause
  3. A condition precedent to the buyer's duty to perform Correct answer.
  4. An illusory promise by the seller

Explanation

A condition precedent is an event that must occur before a party's duty to perform becomes enforceable. Here the buyer's obligation to close does not arise unless financing at the stated rate is secured.

Question 38Contracts

Which element is essential to form a valid real estate sales contract?

  1. A licensed broker's signature
  2. Recording of the agreement with the county
  3. Approval by the buyer's lender
  4. Mutual assent plus consideration Correct answer.

Explanation

A contract requires offer, acceptance (together forming mutual assent), and consideration, along with capacity and legality. Recording, broker signatures, and lender approval are not formation requirements.

Question 39Contracts

A seller delivers a signed offer to a buyer that states it will remain open for ten days. The buyer does nothing for twelve days and then attempts to accept. What is the result?

  1. A binding contract, because ten days is a reasonable period
  2. No contract, because only the seller signed
  3. A binding contract, because the offer was in writing
  4. No contract, because the offer lapsed before acceptance Correct answer.

Explanation

An offer that states a deadline terminates automatically when that time expires, so a later purported acceptance is ineffective. The writing and signature do not extend the stated period.

Question 40Contracts

A buyer submits an offer, and the seller responds in writing agreeing to every term but changing the closing date. What has the seller made?

  1. A revocation effective only if the buyer objects
  2. A counteroffer that terminates the original offer Correct answer.
  3. An option contract
  4. An acceptance creating a contract

Explanation

A purported acceptance that changes a material term operates as a counteroffer and rejects the original offer. The original offer is thereby terminated and cannot later be accepted.

Question 41Contracts

Under the statute of frauds, which real estate agreement must generally be evidenced by a signed writing?

  1. A six-month residential lease at market rent
  2. A month-to-month tenancy
  3. An oral agreement to split a commission between two brokers
  4. A contract for the sale of a house Correct answer.

Explanation

Contracts for the sale of an interest in land fall within the statute of frauds and must be in writing and signed by the party to be charged. Short-term leases and service arrangements are typically outside the land-sale rule.

Question 42Contracts

A seller signs a listing agreement giving a broker the exclusive right to sell. During the term, the seller personally finds a buyer and closes without the broker. What is the seller's obligation?

  1. Owe only a reduced fee for advertising costs
  2. Owe the agreed commission, because the broker's exclusive right to sell covers any sale during the term Correct answer.
  3. Owe a commission only if the buyer was shown the property by the broker
  4. Owe nothing, because the broker did not produce the buyer

Explanation

Under an exclusive right to sell, the broker earns a commission on any sale during the listing period regardless of who procured the buyer. This distinguishes it from an exclusive agency, where the owner retains the right to sell without paying.

Question 43Contracts

A buyer gives a seller $5,000 as earnest money. The contract says the money is refundable if the buyer terminates for any reason during a seven-day inspection period. The buyer terminates on day five. What happens to the deposit?

  1. It is held by the court until closing
  2. It is returned to the buyer Correct answer.
  3. It is split evenly between the parties
  4. The seller keeps it as liquidated damages

Explanation

Earnest money is refundable when the buyer terminates within a contractual contingency period. The deposit becomes the seller's only on default outside such a protected window.

Question 44Contracts

A contract states that if the buyer defaults, the seller may keep the earnest money as agreed damages. A court is most likely to enforce this clause if the amount is:

  1. Equal to the full purchase price
  2. Payable to the buyer on default
  3. Determined solely by the broker
  4. A reasonable forecast of the seller's actual loss Correct answer.

Explanation

A liquidated damages provision is enforceable when damages are difficult to estimate at formation and the stipulated sum reasonably forecasts probable loss. A penalty that bears no relation to anticipated harm is unenforceable.

Question 45Contracts

A buyer assigns a purchase contract to a third party. The original buyer remains liable to the seller for performance unless:

  1. The original buyer notifies the broker
  2. The seller agrees to a novation releasing the original buyer Correct answer.
  3. The assignment is recorded
  4. The assignee pays a transfer fee

Explanation

An assignment delegates performance but does not by itself relieve the assignor of liability. Only a novation, in which all parties agree to substitute a new party, releases the original obligor.

Question 46Contracts

A property is sold subject to an existing mortgage. What is the buyer's personal liability for that debt?

  1. The buyer is liable only for accrued interest
  2. The buyer is liable for half the balance
  3. The buyer has no personal liability unless the buyer assumes the loan Correct answer.
  4. The buyer is personally liable because the buyer now owns the property

Explanation

When a buyer takes subject to a mortgage, the lender may foreclose on the property but cannot pursue the buyer personally for a deficiency. Personal liability arises only if the buyer expressly assumes the loan.

Question 47Contracts

A buyer and seller sign a contract, but before closing the property is destroyed by fire and the contract is silent on risk of loss. Under the common-law equitable conversion doctrine, who bears the loss?

  1. The parties share the loss equally
  2. The seller, because the seller still holds legal title
  3. The listing broker, as escrow agent
  4. The buyer, because equitable title passed at contract signing Correct answer.

Explanation

Equitable conversion treats the buyer as the equitable owner once a binding contract is signed, so the buyer bears casualty risk absent a contrary clause. Modern practice often shifts this risk back to the seller by contract provision.

Question 48Contracts

A seller agrees to sell a lot to a buyer for $200,000. Before closing, the seller refuses to convey. The buyer sues and the court orders the seller to deliver the deed upon payment. What remedy was awarded?

  1. Specific performance Correct answer.
  2. Reformation
  3. Rescission
  4. Restitution

Explanation

Because land is unique, a court may order specific performance compelling the seller to convey as promised. The buyer must tender the purchase price.

Question 49Contracts

A contract contains a clause stating that time is of the essence. What is the effect of this clause?

  1. It waives the statute of frauds
  2. It allows either party to perform at any reasonable time
  3. It converts the contract into an option
  4. It makes timely performance a material condition Correct answer.

Explanation

A time-is-of-the-essence clause elevates deadlines to material conditions, so late performance is a breach permitting the other party to terminate. Without such a clause, courts often allow a reasonable extension.

Question 50Contracts

A buyer's offer is contingent on the property appraising at or above the purchase price. The appraisal comes in low and the buyer cancels. The seller argues the buyer must still close. Who is most likely correct?

  1. The seller, because an appraisal is not a material term
  2. The buyer, but only if the lender also refuses the loan
  3. The buyer, because the appraisal contingency was not satisfied Correct answer.
  4. The seller, because contingencies favor sellers

Explanation

A contingency conditions the buyer's duty on the specified event. If the appraisal falls below the stated threshold, the condition fails and the buyer may terminate without breach.