Simulated Exam #2 197

SIMULATED EXAM #2
1. The property taxes for a condominium unit are paid by the:
a. board of governors. c. owner of the condominium.
b. homeowners’ association (HOA). d. subdividers who constructed the
property.
2. All of the following actions constitute constructive eviction under a lease, except:
a. The owner fails to make necessary repairs to the property.
b. The owner makes extensive and unnecessary changes to the building, making it no
longer usable for its original purpose.
c. The owner shows the property to a new prospective tenant and enters into lease
negotiations with the new tenant.
d. The owner evicts the tenant after proper service of a Three-day Notice to Quit.
3. What are the three steps of the agency disclosure in proper chronological order?
a. Elect, confirm, disclose. c. Disclose, confirm, disclose.
b. Confirm, elect, disclose d. Disclose, elect, confirm.
4. A broker who simultaneously represents the best interests of both opposing parties in a
transaction is known as a(n):
a. finder. c. subagent.
b. dual agent. d. unlawful agent.
5. Barnard made an offer to buy a vacant residence. The offer was accepted by the seller. Prior to
the close of escrow, Barnard requested permission from the broker to enter and make minor
repairs to the house. Which of the following is true?
a. The broker is to get a signed rental agreement from Barnard before allowing him to
enter.
b. Barnard doesn’t need permission from anyone since he is the equitable owner of the
property.
c. The broker needs to get the seller’s permission.
d. Bernard may only enter to conduct repairs that correct material defects in the property.
6. Broker Sarah delivered an offer to purchase real property to Owner Martha. Owner Martha
asked for 24 hours to consider the offer. Later that same day, Broker Sarah received two
additional offers through other brokers. Broker Sarah believes the owner will reject all three
offers. In order to comply with the law, Broker Sarah is to:
a. hold the new offers until Owner Martha has made a decision on the first offer, then
present the other offers.
b. present the two additional offers in the order they arrived.
c. simultaneously present the two additional offers to Owner Martha as soon as possible.
d. refuse to receive the offers until Owner Martha decides not to accept the original offer.
7. What contributes to the value of a well planned neighborhood versus a poorly planned
neighborhood?
a. Nonconforming improvements. c. Improper orientation.
b. Inconsistent improvements. d. Conformity of size and style.
198 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

8. An appraiser views the addition of an amenity to an apartment building under which appraisal
principle?
a. Substitution. c. Anticipation.
b. Contribution. d. Progression.
9. What type of depreciation is the most challenging to correct?
a. Functional. c. Physical.
b. Economic obsolescence. d. Wear and tear.
10. Return of an investor’s investment is provided for through:
a. sinking funds. c. a reserve for replacement.
b. depreciation. d. profit.
11. The maximum number of properties that can be covered by a trust deed without a blanket
encumbrance is:
a. three. c. one.
b. two. d. there is no limit.
12. Heather, a single mother, is able to get down payment assistance as well as a below market rate
of interest on her mortgage. What type of mortgage did she receive?
a. CalVET.
b. U.S. Department of Veterans Affairs (VA)-guaranteed loan.
c. Federal Housing Administration (FHA)-insured loan.
d. California Housing Financing Agency (CalHFA).
13. Deficiency judgments can only be granted when:
a. a property has been judicially foreclosed.
b. the value of the property equals or exceeds the underlying balance due on the loan.
c. the mortgage is classified as a purchase-money mortgage.
d. a property has been foreclosed under a trustee’s sale.
14. Sally applied for a real estate loan. The lender can lawfully require her to answer questions in
regards to her:
a. marital status. c. gender.
b. race. d. income.
15. A husband nominates his wife to manage his will. Thus, she will function as an:
a. executrix. c. administrator.
b. administratrix. d. executor.
16. If a buyer and seller decide to rescind a deal after the deed has been recorded, the buyer is to:
a. record a deed of reconveyance.
b. return the deed to the seller in exchange for consideration.
c. record a cancellation of the transaction.
d. provide a new grant deed to the seller.
17. Broker fees deposited with the broker before they are earned are called:
a. kickbacks. c. referral fees.
b. advance fees. d. duplicate charges.
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18. An exception in a grant deed:

a. is the same as a reservation in a grant deed.
b. voids the deed entirely.
c. excludes part of the property from the grant.
d. makes certain provisions of the deed voidable.
19. To be valid, restrictions in a grant deed need to:
a. be contained in a deed or a written agreement.
b. be less restrictive than existing zoning requirements.
c. run with the land.
d. be posted on a sign in a conspicuous spot on the property.
20. The maximum commission a loan broker may charge to negotiate an $8,000 hard money first
trust deed that is due in two years is:
a. $400. c. $1,000.
b. $500. d. $1,500.
21. A seller carryback note is classified as a lien.
a. specific c. involuntary
b. general d. equitable
22. The Real Estate Commissioner’s rules:
a. are administrative agency regulations. c. Both a. and b.
b. have the effect of law. d. Neither a. nor b.
23. A motivated seller in a seller’s market is least likely to accept an offer contingent on the:
a. buyer obtaining an 80% loan within 30 days.
b. buyer’s approval of the preliminary title report.
c. sale of the buyer’s current residence.
d. results of a termite inspection.
24. Seller Sally lists her property with Agent Fred and receives an offer. Agent Fred convinces
Seller Sally to accept the offer by verbally promising her he will find her an ideal replacement
home before the close of escrow. Agent Fred is unable to find an acceptable replacement home
for Seller Sally before the close of escrow. Which of the following is most correct?
a. Seller Sally can recover damages against Agent Fred in a civil lawsuit as a result of her
reliance on his false promise.
b. Seller Sally has no legal recourse against the Agent Fred since the promise wasn’t in
writing.
c. Seller Sally may cancel the sale of her home without liability.
d. Seller Sally can bring a criminal action against Agent Fred for fraud.
25. A flood hazard report will note that flooding is frequent when it is described as:
a. a fifty year flood zone. c. occurring at least twice every ten years.
b. a 100 year flood zone. d. occurring no less than three times every
twenty years.
26. All of the following are required in valid contracts, except:
a. written documentation. c. a legal object.
b. offer and acceptance. d. consideration.
200 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

27. All of the following make a contract voidable if present at its formation, except:
a. Fraud. c. Undue influence.
b. Duress. d. Illegal purpose.
28. If a lease requires the tenant to pay certain expenses such as taxes, maintenance or insurance
in addition to the rent, the lease is classified as a(n):
a. gross lease. c. percentage lease.
b. net lease. d. estate for will.
29. When rent is computed based on the gross sales of a business occupying the property, the lease
is classified as a(n):
a. valid lease. c. net lease.
b. voidable lease. d. percentage lease.
30. On which type of listing contract is a broker required to state the amount of their commission
is negotiable and not fixed by law?
a. Multi-family residential listing agreements.
b. Retail commercial center listing agreements.
c. Single-use industrial property listing agreements.
d. One-to-four unit residential property listing agreements.
31. If a 16-year-old emancipated minor wishes to sell real property, their broker may:
a. not accept the listing.
b. accept the listing.
c. accept the listing only with a guarantee from an adult.
d. accept the listing, but it will be voidable.
32. If a strip of land is washed away by flood, this action is known as:
a. alluvium. c. avulsion.
b. accretion. d. reversion.
33. Which of these is a direct building cost?
a. Building permits. c. Lumber.
b. Finance charges. d. Legal services.
34. A residence that has 6” x 6” posts set four feet apart instead of 2” x 4” studs is an example of
construction.
a. post and beam c. Native American
b. modular d. unsafe
35. All of the following are soil conditions, except:
a. Alkaline. c. Deciduous.
b. Adobe. d. Expansive.
36. What is a “gore”?
a. A triangular shaped parcel of land.
b. A parcel that cannot be developed.
c. Stigmatized property on which a murder was committed.
d. Damaged property.
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37. A broker provides services to both a buyer and a seller in a transaction without disclosing their
dual agency status. This is an example of:
a. deniable agency. c. voidable agency.
b. ostensible agency. d. ratified agency.
38. All of the following actions create an agency relationship, except:
a. Subornation. c. Ratification.
b. Implication. d. A verbal agreement.
39. A listing broker sells an office building to a syndicate of which the broker is a member without
informing the seller of this interest. Before closing, the seller discovers the broker’s interest and
refuses to sell. What would happen in a civil suit to collect a commission?
a. The case would be transferred to the Real Estate Commissioner.
b. No commission would be due.
c. The broker would be awarded their full commission.
d. The court would demand a mitigation hearing.
40. All of the following are legal activities for a broker under agency law, except:
a. Accepting commissions from both the buyer and the seller.
b. Acting as an escrow.
c. Selling their own property without disclosing their license status.
d. Depositing additional personal funds into a client’s trust account.
41. An agency relationship in real estate is terminated in multiple ways. All of the following are
likely to be the cause of termination of an agency relationship, except:
a. The incapacity or death of either the seller or broker.
b. Revocation of the agency by the owner.
c. Destruction of the property.
d. Estoppel.
42. A broker who fails to promptly disclose their dual agency status is subject to:
a. a $10,000 penalty.
b. liability for their clients’ money losses.
c. disciplinary action by the Internal Revenue Service (IRS).
d. frequent auditing by the Federal Bureau of Investigation (FBI).
43. In which appraisal approach to value would the value for the land be calculated separately?
a. Capitalization. c. Market comparison.
b. Gross rent multiplier. d. Cost.
44. To determine the accrued depreciation for a property, a buyer’s best resource is a(n):
a. county recorder representative. c. appraiser.
b. accountant. d. real estate broker.
45. An important economic factor in real estate is:
a. its beneficial use. c. its permanence.
b. whether the property is mobile or d. the size of the structure.
immobile.
46. A lender must notify a borrower when a final/balloon payment is due:
a. 90 to 150 days prior to the due date. c. four weeks prior to the due date.
b. 30 to 90 days prior to the due date. d. six months prior to the due date.
202 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

47. Acquisition is the opposite of:

a. ad valorem. c. alienation.
b. amortization. d. avulsion.
48. A property’s cost basis is most affected by an owner’s:
a. debt service. c. costs of operation.
b. interest expense. d. costs of improvements.
49. When the administrator of an estate sells a parcel:
a. it needs to be sold at public auction. c. court approval is required.
b. it can only be sold “as is.” d. the sale cannot legally involve a real
estate broker.
50. When a broker employs a salesperson, the broker needs to:
a. provide annual pay increases in an amount no less than 3%.
b. exercise reasonable supervision over the activities performed by the agent.
c. establish a retirement program for the agent.
d. provide minimal health and dental insurance coverage for the agent.
51. Real estate brokers are required to have written employment contracts with:
a. all clerical staff they employ. c. salespersons they employ.
b. non-licensees they employ. d. All of the above.
52. A real estate broker is subject to disciplinary action from the Department of Real Estate (DRE)
if they:
a. extract secret profits that are not disclosed.
b. commingle trust funds.
c. fail to supervise the salespeople they employ.
d. Any of the above.
53. Without being licensed as an escrow officer, a broker may not handle escrow activities when
they:
a. represent the buyer. c. act as the principal.
b. represent the seller. d. are not otherwise involved in a
transaction.
54. A licensed real estate salesperson is primarily responsible to:
a. the buyer. c. the principal who pays their commission.
b. the seller. d. their employing broker.
55. A buyer is obligated to disclose to the seller:
a. that the listing price is too low.
b. that the seller is mistaken regarding their representations about the zoning of the
property.
c. Both a. and b.
d. Neither a. nor b.
56. All of the following affect real estate values in subsequent years, except:
a. Land use controls. c. Construction techniques.
b. Monetary policy. d. The purchase price paid for a property.
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57. Before soliciting business for a brokerage office operating under a fictitious business name, the
broker is not required to:
a. record the fictitious name with the recorder’s office in the county where their main
office is located.
b. publish the “doing business as” (DBA) in a newspaper of general circulation.
c. have a broker’s license issued by the Department of Real Estate (DRE) with that
name.
d. publish an office policy manual under the fictitious business name.
58. Appraiser licensing in California is controlled by what entity?
a. The Department of Real Estate (DRE).
b. The California Bureau of Real Estate Appraisers (CalBREA).
c. The Department of Business Oversight (DBO).
d. The California Department of Insurance (CDI).
59. When an agent modifies a document after it is signed by the one or both of the parties, this is
referred to as:
a. correction. c. notarization.
b. defacing. d. amanuensis.
60. A broker receives a full price offer on a house they are listing. Before they present the offer to
the seller, another broker brings in an all cash offer for $5,000 less. The listing broker is to:
a. present both offers at the same time.
b. refuse to present the second offer.
c. tell the other broker the property has been sold.
d. present the first offer in the morning and the second offer in the evening.
61. A prospective buyer gave their broker a personal check for $1,000 payable to the seller along
with an offer to buy the property. The buyer told the broker the check was not to be cashed
until the end of the month. Which of the following is correct?
a. The broker is to refuse to accept the check.
b. The broker is to accept the check, but deposit into their trust account within 24 hours.
c. The broker needs to deliver the check either to the seller or escrow upon acceptance.
d. The broker may hold the check, but needs to tell the seller it is being held uncashed
before the seller accepts the offer.
62. When comparing a small house with a large house of similar quality, which of the following
is true?
a. A small house costs more per square foot.
b. A large house costs more per square foot.
c. Large homes sell better.
d. Size doesn’t matter.
63. When a comparable sale used in an appraisal was not an arm’s length transaction, this affects
the:
a. demand for the subject property.
b. value of the subject property.
c. highest and best use of the subject property.
d. scarcity of the subject property.
204 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

64. While appraising a single family residence (SFR), an appraiser observes cracks in the walls and
floor. In response, the appraiser best recommends which of the following?
a. A structural pest control report. c. An environmental impact report (EIR).
b. A soil engineer’s report. d. A home warranty policy.
65. All of the following are one of the four important elements of value, except:
a. transferability. c. utility.
b. appreciation. d. demand.
66. A trustor is not considered to be in default when they:
a. fail to upgrade their property in anticipation of future trends.
b. commit waste to a property.
c. are delinquent in their property taxes.
d. fail to maintain property insurance.
67. The maker of a negotiable instrument is able to defend against a holder in due course in the
event of:
a. forgery. c. Both a. and b.
b. incapacity. d. Neither a. nor b.
68. If there is no specific closing date named in the escrow instructions, escrow is to close:
a. within a reasonable period of time. c. within 60 days.
b. within 30 days. d. within 90 days.
69. The closing statements the buyer and seller get from escrow:
a. are always different from one another. c. are always identical to one another.
b. are acknowledged before a notary public. d. are approved by the title company.
70. Department of Housing and Urban Development (HUD) advertising guidelines are violated
by which of these phrases:
a. “seeking a female roommate.” c. “retiree’s dream home.”
b. “good neighborhood.” d. “great location.”
71. All of the following an applicant needs in order to be eligible for a California real estate agent
license, except:
a. pass the qualifying state licensing exam.
b. be honest and truthful.
c. be at least 18 years old.
d. have at least two years of real estate-related experience.
72. A buyer of a single family residence (SFR) is entitled to certification for all of the following,
except:
a. the home is in compliance with smoke detector laws.
b. the home has properly functioning solar panels installed on the roof.
c. the home is in compliance with carbon monoxide gas detector laws.
d. the water heater is properly braced, anchored or strapped.
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73. A seller’s broker receives and presents a purchase offer that is accepted by the seller. The seller
then requests the broker give them the buyer’s deposit check. The broker needs to:
a. first deposit the check into the broker’s trust account before giving the deposit funds to
the seller.
b. write a counteroffer requesting the release of the deposit funds to the seller.
c. obtain the written consent of the buyer before releasing the check to the seller.
d. obtain written acknowledgement from the seller they have received the funds.
74. When a real estate licensee misrepresents a property to a buyer, they are least likely to be
subject to:
a. disciplinary action by the California Secretary of State (SOS).
b. civil action.
c. criminal action.
d. disciplinary action by the Department of Real Estate (DRE).
75. Negative physical elements of a property such as mold are disclosed in the:
a. Transfer Disclosure Statement (TDS). c. advertisements referencing the property.
b. listing agreement. d. preliminary title report.
76. A subdivider needs to give a copy of the Real Estate Commissioner’s public report to:
a. anyone who is likely purchase one or more lots.
b. anyone upon request.
c. only bona fide purchasers who have signed a purchase contract.
d. the salespeople they employ.
77. When a broker wants to store documents electronically, the storage method may not allow the
final documents to be altered. What method of electronic document storage is required by the
Department of Real Estate (DRE)?
a. Disc Operating System (DOS).
b. Save Now, Always and Keep Electronic (SNAKE).
c. Write Once Read Many (WORM).
d. Random Access Memory (RAM).
78. When taking a listing, it is appropriate for the broker to:
a. take the listing at whatever price the owner requires without discussion.
b. raise the owner’s asking price to include the commission and an additional amount for
negotiation.
c. take a listing at a price that is significantly higher than that suggested by a competitor.
d. ask questions to determine the seller’s reason for listing.
79. Brokerage fee provisions which may be included in a seller’s exclusive right to sell listing
agreement include:
a. a fee on any sale provision. c. a safety clause.
b. a termination provision. d. Any of the above.
80. A broker’s fiduciary obligation to protect a seller’s confidential information continues:
a. after the term of the listing agreement. c. until the close of escrow.
b. for the term of the listing agreement. d. for two years after the close of escrow.
206 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

81. The sale of real estate under a conditional installment sale gives the buyer (vendee):
a. possession of the property. c. an estate of inheritance.
b. a freehold estate. d. an estate for years.
82. A listing contract contains a clause stating that the seller agrees to pay a commission in
exchange for the broker’s agreement to use diligence in procuring a buyer. This clause:
a. is redundant and unenforceable.
b. is necessary for the creation of a unilateral contract.
c. is important for the creation of a bilateral contract.
d. requires the broker to advertise the property in numerous formats.
83. For a buyer’s broker to have the ability to negotiate their fee, the buyer’s broker needs to enter
into an employment agreement with their buyer, called a(n):
a. buyer’s listing. c. cooperating broker arrangement.
b. affiliated business arrangement. d. controlled business arrangement.
84. A landlord is required to provide a copy of the written lease to the tenant within:
a. one week. c. ten business days.
b. ten calendar days. d. 15 calendar days.
85. An individual unit in a multi-story rental apartment complex that occupies only one floor is
known as a(n):
a. penthouse. c. flat.
b. studio. d. duplex.
86. Which of the following pieces of lumber contains exactly one board foot?
a. 6” x 2” x 12” c. 6” x 6” x 6”
b. 6” x 1” x 12” d. 6” x 1 ft. x 1 ft.
87. Blake sold his home to Frank but remained in possession and negotiated a two-year leaseback.
Frank did not record the deed. During this two-year period, Blake sold the home to Sam who
then recorded the deed. Who owns the home?
a. Sam, because he recorded his deed.
b. Blake, because he still has possession of the property.
c. Blake, because both sales were fraudulent.
d. Frank, because he received the first deed.
88. Real estate investments are generally funded through a combination of:
a. mortgage and investor funds.
b. the supply and demand of investor funds.
c. liquid and non-liquid investment funds.
d. guaranteed returns and speculative investments.
89. A commercial development consisting of a single line of store-fronts constructed along a busy
thoroughfare is described as a(n):
a. neighborhood center. c. strip commercial building.
b. small mall. d. big box store.
90. Property is best defined as:
a. things which buyers and sellers own.
b. only real property.
c. rights or interests which a person has in the thing owned.
d. only personal property.
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91. Conrad wills the family estate to his first son Michael with the provision that if Michael were
to divorce in the future, title will pass to Conrad’s second son, Bret. This is an example of a(n):
a. covenant. c. condition precedent.
b. restriction. d. condition subsequent.
92. A property owner has been doing car repairs on their driveway in violation of the conditions,
covenants and restrictions (CC&Rs) of their subdivision. The homeowners’ association (HOA)
files a lawsuit and receives a court order requiring the owner to stop. The court order is called
a(n):
a. attachment lien. c. injunction.
b. lis pendens d. mechanic’s lien.
93. A seller of property tells their broker the house is connected to the sewer. The broker relays this
information to a buyer, who later finds that the house has a septic system in need of repair. The
buyer would sue:
a. the broker and the seller. c. the broker only.
b. no one, as they should have checked. d. the owner only.
94. A broker acting as an agent for a principal has as much authority as:
a. the principal actually or ostensibly confers upon them.
b. an attorney-in-fact.
c. the broker chooses to take.
d. they choose to accept as limited by the statute of frauds.
95. A real estate agent is obligated to communicate any offer to the principal:
a. unless the offer is patently frivolous or the agent is acting on written instructions of
their seller.
b. only if it is in writing.
c. whether the offer is verbal or written until the agency is terminated.
d. unless the offer is terminated.
96. All of the following statements are true concerning an in-house sale, except:
a. the listing broker can buy the property themselves.
b. the listing broker can act as an agent for the seller only.
c. the listing broker can act as an agent for the buyer only.
d. the listing broker can act as a dual agent.
97. When showing a listed property to potential buyers, the listing broker is required to disclose:
a. all known material facts about the property.
b. anything they have been authorized by the seller to disclose.
c. any facts about the seller’s motivation that might induce the buyer to make an offer.
d. anything that comes to mind at the time.
98. Before closing, a buyer asks their broker for permission to enter the vacant house they will be
purchasing in order to paint the kitchen. The broker is to:
a. seek approval from the seller.
b. ask the buyer to deposit the balance of the down payment into escrow first.
c. give the buyer access and approval but supervise their entry.
d. refuse to give the buyer access and approval.
208 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

99. “Agency” includes relationships between licensed sales agents and their brokers and:
a. brokers and members of the public. c. escrow officers.
b. finders and their brokers or principals. d. Both a. and b.
100. All of the following terminate an agency relationship, except:
a. Destruction of the subject property.
b. Death or incapacity of the agent or principal.
c. Refusal to perform by the agent or principal.
d. Completion of the purpose of the employment.
101. A lessee rents an apartment from May 1st to July 1st of the same year. The lessee’s tenancy is
thus classified as a(n):
a. periodic tenancy. c. estate at will.
b. estate at sufferance. d. estate for years.
102. A gross lease is least likely to be found in:
a. condo rentals. c. motels.
b. vacation properties. d. retail spaces.
103. All of the following substances need to be referenced in a statement disclosing the presence
of various environmental hazards, except:
a. Asbestos. c. Radon gas.
b. Smoke detectors. d. Lead-based paint.
104. A seller is required to deliver earthquake safety guides to buyers of most masonry buildings
with wood frame floors or roofs built prior to:
a. 2000. c. 1980.
b. 1990. d. 1975.
105. A real estate salesperson employed as an independent contractor:
a. passes no liability for their actions on to their employing broker.
b. does not need to be supervised by the broker.
c. needs to pay income taxes and social security taxes.
d. is not eligible for workers’ compensation insurance coverage.
106. Any individual may contact the Real Estate Commissioner to:
a. determine commission rates allowable by law.
b. negotiate a settlement dispute between principals.
c. report fraud by a real estate licensee.
d. determine the zoning regulations which pertain to their property.
107. In a deed, the clause that defines the nature of the estate being granted is the:
a. seisin. c. subrogation.
b. habendum. d. due on.
108. Under the , an employer may not discriminate against a disabled person who
seeks employment due to that person’s disability.
a. Americans with Disabilities Act (ADA)
b. Civil Rights Acts of 1866 and 1870
c. Home Affordable Modification Program (HAMP)
d. Unruh Law
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109. Which of the following statements is least applicable to depreciation?

a. Depreciation is defined as the difference between the value of improvements and the
cost of replacement as of the appraisal date.
b. Depreciation is a loss of value from any cause.
c. Depreciation can be computed for the future or from the past.
d. Depreciation is always concerned with the intrinsic factors of property, never with the
extraneous factors.
110. The period of time a structure continues to earn sufficient income to continue operations is
referred to as the structure’s:
a. productive use. c. economic life.
b. self-earning. d. physical life.
111. Which of the following is the least important factor used to determine the market value of a
property?
a. The tax assessor’s appraisal.
b. Any special amenities that exist on the property.
c. The neighborhood in which the property is located.
d. The physical condition of the property.
112. Which of the following is of least interest to an appraiser?
a. Value in exchange.
b. The original cost of the property.
c. The objective value of the property.
d. The sales price received for comparable properties.
113. Which of the following is conveyed incident and appurtenant to the land?
a. Easements and restrictions. c. Mineral rights.
b. Water rights. d. All of the above.
114. Randy recently bought a 12-unit apartment building. What is the minimum number of years
in which he may depreciate the building for federal income tax purposes?
a. 27.5 c. 40.5
b. 39 d. 50
115. Compared to other appraisal factors, appraisers generally find the the most
difficult calculation to measure precisely.
a. capitalization rate (cap rate)
b. cost to rebuild today with modern methods and materials
c. gross rent multiplier (GRM)
d. accrued depreciation
116. The seller dies after an offer to purchase their property has been accepted. The seller’s
grandchild inherits the real estate. What happens to the sale?
a. The offer is voidable.
b. The grandchild is compelled to sell under the terms of the accepted offer.
c. The offer is terminated.
d. The grandchild may choose whether or not to honor the sale.
210 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

117. In a §1031 exchange, a person is most likely to be taxed for a gain when:
a. giving cash boot. c. trading down.
b. trading up. d. trading residential apartments for
commercial property.
118. After escrow instructions have been signed, the seller asks escrow to return the grant deed to
them so they can have an attorney check it. What is the result of this activity?
a. The return of the deed constitutes a rescission of the contract by the seller.
b. The escrow officer needs to return the deed if so instructed by one of the principals.
c. Escrow needs to close promptly before the attorney gets a chance to review the deed.
d. The escrow officer cannot return the deed based on the seller’s request.
119. An agent needs to disclose a conflict of interest to the affected parties when a principal or
service provider in the transaction is the agent’s:
a. relative or relative of a fellow employee.
b. employee or fellow employee.
c. brother or sister.
d. Any of the above.
120. The annual percentage yield (APY) applies to:
a. savings accounts. c. escrow instructions.
b. appraisal reports. d. title insurance policies.
121. Who generally benefits the most from an assignment of rent clause contained in a trust deed?
a. The trustor. c. The beneficiary.
b. The trustee. d. The purchaser.
122. Consider a prepaid rental listing service that intends to relocate. When is the listing service
required to provide notice of the new address and telephone number to its clients?
a. As soon as practicable after the listing service gets settled in its new location.
b. No later than seven calendar days after the move has occurred.
c. Before the move is to occur.
d. 60 days prior to the move.
123. A broker repeats information they received from their seller to a potential buyer. On finding
the information is false, the broker is to:
a. inform the seller of the error.
b. inform the buyer of the error.
c. inform the escrow officer of the error.
d. make a note of the misrepresentation in the client file.
124. A plot plan is drawn by an architect to show:
a. the materials the subcontractors used to construct the property.
b. elevations and soil quality.
c. when construction is scheduled to begin.
d. the placement of construction and related land improvements.
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125. An elevation sheet used in a subdivision plan shows:

a. the topography of the land, including the slope, elevation of the site, streets, sidewalks
and curbs.
b. an interior view of the homes showing their framing.
c. an aerial view of the subdivision.
d. drawings of the front and side views of the finished homes.
126. Broker Chuck listed a duplex for sale from a corporate owner. After entering into the listing,
the officers of the corporation die in a plane crash. What happens to the listing?
a. It is suspended until new officers acknowledge the agreement.
b. It is unaffected.
c. It is automatically terminated.
d. It converts to a debt obligation against the corporation.
127. A valid agency requires a(n):
a. written agreement. c. attorney-in-fact.
b. express agreement. d. None of the above.
128. At a trustee’s foreclosure sale, the buyer receives a deed.
a. sheriff’s c. trustee’s
b. tax d. quitclaim
129. County records show that Frank owns a property. Chad deeds that property to Melody. Chad’s
deed is considered:
a. voidable. c. a forgery.
b. a conversion. d. a wild document.
130. Megan’s Law is:
a. a local improvement bond.
b. a law prohibiting loitering in public spaces.
c. a public database of registered sex offenders.
d. uniform water quality legislation.
131. A disclosure which warns a buyer they may be liable for additional tax obligations after the
close of escrow is the:
a. supplemental tax bill disclosure.
b. title insurance notice.
c. military airport expansion disclosure.
d. methamphetamine contamination notice.
132. A broker has an exclusive agency listing on a property. If the owner sells the property, the
broker is entitled to:
a. a full commission. c. an amount agreed to with seller.
b. half the commission. d. nothing.
133. A vacant lot is listed for $250,000. The broker finds a buyer who is willing to purchase it
for $220,000. The seller states they will accept the buyer’s offer if the broker lowers their 6%
commission by 25%. If the broker accepts, they will receive:
a. $15,000. c. $9,900.
b. $13,200. d. $8,600.
212 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition

134. The appraisal process which allocates a percentage of a property’s total value to the land and
a percentage to the improvements is known as:
a. the ratio of total value to site value. c. Both a. and b.
b. the allocation approach. d. Neither a. nor b.
135. A capital improvement to real property will always:
a. increase the book value of the property by the amount the appraised value is increased.
b. increase the book value of the property by the cost of the improvement.
c. increase the property’s market value by the cost of the improvement.
d. be fully depreciated in the year the improvement is made.
136. If a deed provides for an easement granting ingress and egress over a neighboring property
but fails to locate the easement, the:
a. deed is void.
b. deed is voidable.
c. servient tenement holder can specify a particular area so long as it is reasonable.
d. dominant tenement holder can choose any area for access.
137. When one broker authorizes another broker to act as their subagent on the approval of the
seller, the subagent is primarily responsible to the:
a. seller. c. Department of Real Estate
(DRE).
b. original broker. d. buyer’s broker.
138. The placement of a house upon the lot is referred to as its:
a. preference. c. orientation.
b. zoning classification. d. location.
139. A deed restriction prohibits a subdivision from using a residential property as a business. A
buyer interested in purchasing a property in the subdivision tells their broker they intend to
use one room of their house as a dog grooming service. Can the buyer do so?
a. Yes, so long as none of the neighbor notice.
b. Yes, if the homeowners’ association (HOA) grants them explicit permission.
c. Yes, so long as they only groom dogs from within the subdivision.
d. No, the deed restriction prohibits the use of a residential property to conduct business.
140. All of the following are sufficient to transfer an interest in real estate, except:
a. A lease. c. A bill of sale.
b. A deed. d. A contract of sale.
141. The term “Realtor” denotes:
a. authorization to conduct real estate transactions.
b. authorization to provide real estate settlement services.
c. a higher legal standard of ethical conduct.
d. membership in a real estate trade organization.
142. Under the replacement cost approach of appraisal, an appraiser is least interested in:
a. depreciation. c. the effective age of the property.
b. the original cost to build. d. the value of the land.
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143. An “as is” clause in a general purchase contract:

a. applies only to matters of record.
b. applies only to things that have been properly disclosed or are visible and observable
conditions.
c. is valid under the caveat emptor (“Let the buyer beware”) theory.
d. invalidates the whole contract.
144. An individual who is not employed by the client, but has been delegated agency duties by an
agent of the client, is referred to as a(n):
a. subcontractor. c. subagent.
b. subaccount. d. tandem agent.
145. All of the following have a specific dollar value, except:
a. An attachment. c. A mechanic’s lien.
b. A judgment. d. An easement.
146. When a dual agency is established in a targeted sales transaction, the broker and their agents
may not pass on any information from one party to the other relating to:
a. the price the buyer may be willing to pay.
b. the terms of payment the seller may be willing to accept.
c. Both a. and b.
d. Neither a. nor b.
147. All of the following real estate types can be depreciated, except:
a. Single family residences (SFRs). c. Commercial buildings.
b. Land used to raise crops. d. Single-use industrial buildings.
148. If a seller refuses to pay an earned commission to a broker, the broker may:
a. file a vendor’s lien against the seller’s property.
b. file a formal complaint with the Department of Real Estate (DRE).
c. file a court action against the seller to recover their fee.
d. invalidate the sale and have it set aside.
149. A seller’s broker needs to disclose:
a. the broker’s acquisition of any direct or indirect interest in the seller’s property.
b. whether any person holding a special relationship with the broker will acquire an
interest in the seller’s property.
c. Both a. and b.
d. Neither a. nor b.
150. Broker Juan lists a house for 11 months without selling it. Broker Juan is aware the building
needs major structural repairs and is listed at 10% above its fair market value. Broker Juan
runs an advertisement in a newspaper stating, “Three bedroom, Adobe. The price will amaze!
Move-in ready and turnkey condition. Call Broker Juan today!” This advertisement is
improper since:
a. the property is overpriced.
b. the advertisement is not also published online.
c. Broker Juan knows the property needs major repairs and thus, phrases like “move-in
ready” and “turnkey” are deceptive and misleading.
d. the advertisement misstates significant financial facts about the property.