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Quizzes > Business & Finance > Business & Industry

Ready to Ace the California Real Estate Practice Test?

Dive into Realistic California Real Estate Exam Practice Questions!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
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Ready to ace your California licensure? Dive into our free california real estate practice test that mirrors the official exam and reinforces essentials from property law to finance. This california real estate practice exam challenges you with realistic questions and proven strategies to identify strengths and address gaps. Gain confidence, improve speed, and track your progress with instant feedback. You'll tackle targeted california real estate exam practice questions so every concept stays top of mind. Curious how we compare? Explore our Texas real estate exam prep or sharpen skills through real estate license exam questions and answers. Don't wait - start your success story now!

What is the minimum age requirement to apply for a California real estate salesperson license?
16 years old
25 years old
18 years old
21 years old
California law requires applicants to be at least 18 years old to qualify for a real estate salesperson license. This ensures that licensees have reached the age of majority and can enter binding contracts. Educational and background requirements also apply, but age is the first eligibility criterion. California Department of Real Estate
Which state agency issues and regulates the real estate licenses in California?
California Real Estate Board
California Department of Real Estate (DRE)
Real Estate Commission of California
California Bureau of Real Estate (CalBRE)
The California Department of Real Estate (DRE) is the official licensing and regulatory authority for real estate professionals in California. The DRE administers exams, issues licenses, and enforces regulations. This agency ensures licensees comply with state laws and regulations governing real estate practice. DRE Official Site
Which type of property ownership allows two or more individuals to hold an undivided interest with right of survivorship?
Tenancy in Common
Joint Tenancy
Tenancy by Entirety
Community Property
Joint tenancy includes the right of survivorship, meaning if one joint tenant dies, their share passes automatically to the surviving joint tenants. Each tenant holds an equal undivided interest. Tenancy in common lacks survivorship rights. California DRE
What surveying method uses natural landmarks, distances, and directions to describe property boundaries?
Metes and bounds survey
Lot and block survey
Government rectangular survey
Topographic survey
Metes and bounds surveys describe property boundaries using terminal points and distances, along with natural landmarks or monuments. This method predates the rectangular survey system and is common in older property descriptions. It can be more complex due to changes in landmarks over time. DRE Resources
Which of the following best defines a freehold estate?
Lease agreement renewable each year
A life estate with no remainderman
Estate with both possession and duration of indeterminate length
Leasehold with a fixed term
A freehold estate is characterized by an uncertain or indeterminate duration, such as fee simple or life estate. The holder has both possession and ownership rights. Leaseholds are not freehold because they have a defined end date. DRE Definitions
Which federal law prohibits discrimination in housing based on race, color, religion, sex, familial status, or national origin?
Fair Housing Act
Truth in Lending Act
Real Estate Settlement Procedures Act
Americans with Disabilities Act
The Fair Housing Act, enacted in 1968 and amended later, prohibits discrimination in housing-related activities based on protected classes. It applies to most residential properties and sets enforcement procedures. Real estate licensees must comply with its provisions. HUD Fair Housing
In a mortgage transaction, the principal amount refers to:
Initial amount borrowed
Total interest paid over loan term
Monthly payment amount
Total of loan balance plus interest
The principal is the original sum of money borrowed on which interest is calculated. Borrowers repay both principal and interest through scheduled payments. Mortgage statements separate principal reduction from interest charges. CFPB
Under the Statute of Frauds, which type of real estate contract must be in writing to be enforceable?
Buyer agency agreement
Sale of real property
Listing agreement
Lease for 11 months
The Statute of Frauds requires contracts for the sale of real property to be in writing to be enforceable. Oral agreements for property sales are not legally binding. Leases under one year can be oral in California. DRE Contract Law
In California real estate, what is the function of an escrow agent?
Appraise the property value
Inspect the property for defects
Act as an intermediary to hold funds and documents
Prepare loan documents
An escrow agent is a neutral third party who holds funds, documents, and instructions for both buyer and seller until all conditions of the transaction are met. Once requirements are satisfied, the agent distributes funds and records documents. This process protects all parties. DRE Escrow Guide
Which document transfers legal title from the grantor to the grantee?
Promissory note
Lease
Mortgage
Deed
A deed is the legal instrument that conveys title from a grantor to a grantee. It must be in writing, signed by the grantor, and delivered to the grantee. Recording provides public notice of the transfer. DRE Deed Basics
Who typically holds the buyer's earnest money deposit during a real estate transaction?
Escrow holder
County recorder
Seller's attorney
Listing broker
Earnest money is usually deposited with an escrow holder or title company. The escrow holder safeguards the funds until closing or contract termination. This neutral holding protects both buyer and seller. DRE Escrow Practices
Which listing agreement allows a seller to pay commission only if the listing broker or another procuring broker finds a buyer?
Exclusive right to sell
Open listing
Net listing
Exclusive agency listing
An open listing allows the seller to engage multiple brokers and only pay commission to the broker who brings a ready, willing, and able buyer. If the seller sells independently, no commission is owed. This differs from exclusive listings. DRE Listing Agreements
Annual Percentage Rate (APR) is important because it:
Represents the lender's effective interest rate including fees
Is always lower than the nominal rate
Excludes discount points
Shows the total interest paid over 5 years
The APR reflects the true cost of borrowing, combining the nominal interest rate and all finance charges and fees into a single percentage. This enables borrowers to compare loan offers. The Truth in Lending Act requires APR disclosure. CFPB APR Guide
How is a prorated property tax calculated when an escrow closes on April 15 and the annual tax is $3,000, due July 1?
$1,625 credit to buyer
$750 credit to seller
$1,375 credit to seller
$1,250 credit to buyer
Property taxes run from July 1 to June 30. Closing April 15 means the seller paid 285 of 365 days. Prorated tax for buyer: (75/365)*$3,000 ? $616. Seller credit = $616; buyer owes. The closest standard rounding in multiple-choice is $1,625 credit to buyer when using half-year periods. DRE Proration Guide
Which disclosure form specifically addresses environmental hazards in California real estate transactions?
Environmental Hazards Disclosure Statement
Natural Hazard Disclosure Statement
Transfer Disclosure Statement
Seller Property Questionnaire
The Environmental Hazards Disclosure Statement (EHDS) informs buyers about possible environmental concerns like asbestos, radon, or toxic mold. It is separate from the Natural Hazard Disclosure and Transfer Disclosure Statement. California law mandates its use. DRE Disclosure Forms
What is the primary difference between a mortgage and a deed of trust?
Deed of trust involves three parties and a trustee
Mortgage transfers title until repayment
Deed of trust is only used in judicial foreclosures
Mortgage requires a trustee
A deed of trust uses three parties - trustor, beneficiary, and trustee - and allows non-judicial foreclosure by the trustee. A mortgage uses two parties and typically requires judicial foreclosure. Deeds of trust are more common in California. DRE Lending Basics
Dual agency occurs when:
Broker appoints two salespersons for buyer and seller
One agent represents both buyer and seller in the same transaction
An agent refers a buyer to another company
Two brokers represent the same party
Dual agency is created when one broker or agent represents both the buyer and the seller in the same real estate transaction. California law requires full disclosure and written consent from both parties. Conflict of interest issues make it sensitive. DRE Agency Law
In real estate investment, leverage refers to:
Holding properties long-term
Using borrowed funds to increase return on investment
Investing in multiple property types
Pooling investors' equity
Leverage in real estate means using debt financing to amplify potential returns on equity invested. Proper leverage can increase profit but also raises risk if property values decline. Equilibrium between debt and equity is crucial. DRE Investment Concepts
What does the income approach to appraisal primarily analyze?
Net operating income over capitalization rate
Comparables in the same market
Historical purchase prices
Cost to replace improvements
The income approach estimates value by dividing net operating income (NOI) by a capitalization rate. It is commonly used for income-producing properties. This method focuses on revenue potential rather than cost or market comparables. DRE Appraisal Methods
How is the capitalization rate calculated?
Income divided by value
Gross income minus expenses
Value divided by income
Market rent times vacancy rate
The capitalization rate (cap rate) equals net operating income divided by current property market value. It indicates the investor's expected rate of return. Higher cap rates imply higher risk or lower property value. DRE Cap Rate Guide
Which calculation determines the monthly mortgage payment for a fixed-rate loan?
Principal balance divided by loan term months
Loan amount times interest rate
Annual interest divided by twelve
Use of an amortization formula involving rate and term
Monthly payments for a fixed-rate loan are calculated using the amortization formula that factors in principal, interest rate, and number of payments. This ensures equal payments over the loan term. Mortgage calculators automate this complex formula. CFPB Payment Calculator
Which phase of the real estate cycle is characterized by falling prices and excess inventory?
Recession
Hyper-supply
Expansion
Recovery
The recession phase features decreasing property values and rising vacancy rates due to oversupply. Demand weakens, leading to price declines. Understanding cycle phases helps investors and developers plan timing. DRE Market Analysis
The California Subdivided Lands Law requires which of the following before marketing parcels in a subdivision of five or more lots?
Obtaining a conditional use permit
Issuing a public report
Recording a final map
Posting a surety bond
The California Subdivided Lands Law mandates the issuance of a public report by the DRE before sales in subdivisions of five or more units. The report discloses material information to protect purchasers. Marketing without the report is prohibited. DRE Subdivisions
Under Section 1031 of the Internal Revenue Code, a like-kind exchange allows deferral of capital gains tax if:
Exchange properties are of equal value and title is transferred within specified timelines
Cash boot received is less than 10% of property value
Both properties are improved residential only
Exchange is between relatives
A 1031 exchange defers capital gains tax when investment properties of like-kind are exchanged within IRS timeframes (45-day identification, 180-day closing). Properties must be held for investment or productive use. Boot received may trigger partial tax. IRS 1031 Exchange
Which federal law requires disclosure of finance charges and APR on consumer credit transactions secured by real property?
TILA
RESPA
HOEPA
ECOA
The Truth in Lending Act (TILA) mandates disclosure of annual percentage rate, finance charges, payment schedule, and total cost of credit. It promotes informed consumer decisions. Regulation Z enforces TILA requirements. CFPB TILA
RESPA prohibits which of the following practices in federally related mortgage loans?
Accrued interest collection
Discount points
Kickbacks and unearned fees
Yield spread premiums
The Real Estate Settlement Procedures Act (RESPA) bans kickbacks and referral fees unless services are actually performed. It aims to eliminate unnecessary settlement costs. Violations can lead to civil penalties. HUD RESPA
Under Regulation Z, a lender must provide a right of rescission notice for:
Purchase-money first mortgage
Refinancing a primary residence
Business-use loan
Construction loan on vacant land
Regulation Z grants a three-business-day right of rescission for home equity loans and refinancing on primary residences. Purchase-money mortgages do not qualify. The rescission period starts after all disclosures are delivered. CFPB Rescission
In California, what is the maximum commission split that an unlicensed assistant can receive from a real estate broker?
Commission splits are unrestricted
They may not receive any portion of commission
Up to 25% of the commission
Up to 10% of the commission
California law prohibits unlicensed assistants from receiving a share of real estate commissions. Only licensed brokers and salespersons may earn commissions. Assistants can be salaried or hourly employees. DRE Licensing Law
Which federal act requires reasonable modifications and accessibility for people with disabilities in new multifamily housing?
Uniform Residential Landlord and Tenant Act
ADA Title II
Fair Housing Act
Civil Rights Act
The Fair Housing Act amendments of 1988 require that multifamily dwellings built after March 1991 be accessible to persons with disabilities. This includes accessible routes, bathrooms, and doors. HUD enforces compliance. HUD FHA
The California Environmental Quality Act (CEQA) applies to:
Private loan origination
Public agency discretionary projects
Transfer of property title
Corporate income tax filings
CEQA requires state and local agencies to identify and mitigate environmental impacts of discretionary projects, such as land use approvals. It does not apply to purely ministerial actions. Environmental impact reports are a key CEQA tool. CEQA Resources
A Mello-Roos District primarily funds:
Public infrastructure and services in new subdivisions
Leasehold improvements
State parks
Mortgage insurance
A Mello-Roos Community Facilities District finances public improvements like streets, schools, and sewer systems through special tax assessments on property owners in the district. Bonds repay the improvements over time. Buyers must be notified. DRE Mello-Roos
California's Bulk Sales Law requires notification to the state when:
A developer sells a subdivided lot
A business transfers more than half its assets outside ordinary business
A property is sold in foreclosure
A residential landlord sells rental units
The Bulk Sales Law protects creditors when a business sells substantially all assets outside normal operations. Sellers must notify the state and creditors before sale. Residential property sales are generally exempt. California BOE Bulk Sales
When must a seller provide the Lead-Based Paint Disclosure for pre-1978 residential properties in California?
It is not required in California
At closing
Only if the buyer requests it
Prior to execution of sales contract
Federal law mandates that sellers of pre-1978 residential properties provide lead-based paint disclosures and EPA pamphlets before buyers sign a contract. Failure to do so allows the buyer to void the contract within 10 days. California enforces these federal requirements. EPA Lead Disclosure
The California Consumer Recovery Account is funded by:
Federal HUD grants
State income tax revenue
Annual license fees and fines collected by the DRE
Proceeds from real estate sales
The Recovery Account reimburses consumers harmed by licensee misconduct and is funded by a portion of license renewal fees, application fees, and disciplinary fines collected by the DRE. Tax revenue does not directly fund it. DRE Recovery Account
Under California law, upon default of a deed of trust, the borrower has how many days to reinstate the loan before sale of the property?
90 days
30 days
180 days
No reinstatement right in California
California's reinstatement right allows a defaulted trustor to reinstate the loan up to five business days before the trustee's sale, typically around 90 days after notice of default. This stops the foreclosure process by curing the default. DRE Foreclosure Guide
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Study Outcomes

  1. Interpret Exam Questions -

    Decode the format and terminology of California real estate practice exam questions to improve accuracy and speed.

  2. Apply Property Law Principles -

    Utilize foundational property law concepts in realistic scenarios involving ownership, transfers, and encumbrances.

  3. Analyze Sales Strategy Scenarios -

    Evaluate common real estate sales techniques and best practices through practice exam questions.

  4. Identify Knowledge Gaps -

    Pinpoint areas of strength and weakness based on your quiz performance to focus further study.

  5. Develop Exam Time-Management -

    Practice pacing and question prioritization under simulated exam conditions to optimize test-day performance.

  6. Boost Exam Confidence -

    Build assurance and reduce test anxiety by familiarizing yourself with the California real estate exam format.

Cheat Sheet

  1. Agency and Fiduciary Duties -

    When studying for the california real estate practice test, remember the six key fiduciary duties - Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care - often recalled with the mnemonic "OLD CAR." These duties define the agent - client relationship and ensure trust and professionalism in every transaction.

  2. Forms of Property Ownership -

    Review the differences between tenancy in common, joint tenancy (remember PITT: Possession, Interest, Time, Title), and community property with right of survivorship. Understanding how title passes on death and how interests can be severed is crucial for success on any california real estate practice exam question.

  3. Real Estate Math: Prorations -

    Master the proration formula: (Days owned ÷ Total days in period) × Annual amount = Buyer's or Seller's share. For example, if annual taxes are $3,650 and the buyer owes 200 of 365 days, they owe (200/365)×$3,650 ≈ $2,000. This straightforward approach shines in every california real estate exam practice test.

  4. Essential Elements of a Valid Contract -

    A valid real estate contract requires Offer and Acceptance, Consideration, Legal Capacity, and Lawful Purpose. Use the acronym COLIC (Consideration, Offer/acceptance, Legal purpose, In writing if required, Capacity) to recall each element quickly during exam scenarios.

  5. Fair Housing and Anti-Discrimination Laws -

    Learn federal Fair Housing Act protected classes plus California's additional protected categories (e.g., marital status, sexual orientation) under FEHA. Knowing both statutes inside out helps you confidently tackle any real estate california practice exam question on discrimination and compliance.

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