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California Real Estate test (DRE) - Salesperson Practice Test

CA-Real-Estate test Format | Course Contents | Course Outline | test Syllabus | test Objectives

Exam Code: CA Real Estate
Exam Name: CA-Real-Estate California Real Estate test (DRE) - Salesperson
Number of Questions: 150 multiple-choice
Time Allotted: 3 hours
Passing Marks: 0% (at least 105 correct)

Property Ownership and Land Use Controls and Regulations 15%

- Classes of Property
- Real versus personal property
- Mobile homes/manufactured homes
- Land, improvements, fixtures, and appurtenances

- Property Characteristics
- Physical: land, subsurface rights, water rights, air rights
- Economic: location, amenities, scarcity

- Encumbrances and Limitations on Ownership
- Liens (voluntary/involuntary, general/specific)
- Easements (appurtenant, in gross, by necessity, prescription)
- Encroachments
- Restrictions (public and private: CC&Rs, zoning, building codes)

- Land Use Controls (Public and Private)
- Zoning and general/master plans
- Subdivision Map Act
- Environmental laws (CEQA, endangered species, coastal commission)
- Private controls: deeds, conditions, covenants, restrictions (CC&Rs)
- Homeowners associations (HOAs) and common interest developments (condos, PUDs, stock cooperatives, community apartment projects)

Laws of Agency and Fiduciary Duties 17%

- Creation and Termination of Agency Relationships
- Express vs. implied agency
- Ostensible agency
- Ratification, estoppel
- Termination: completion, expiration, mutual consent, death, destruction

- Types of Agency Relationships
- Universal, general, special agent
- Single agency, dual agency (with disclosure and consent), buyer’s agent

- Fiduciary Duties (OLD CAR + more)
- Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care/Diligence
- Duty to disclose material facts
- Puffing vs. misrepresentation

- Disclosures Required in Agency Relationships
- Agency Disclosure Law (Civil Code § 2079.13–2079.24)
- Confirmation of Agency form (AD form)
- Disclosure of dual representation
- No secret profits

Property Valuation and Financial Analysis 14%

- Value Influences and Characteristics
- Principles of value (anticipation, contribution, substitution, conformity, highest and best use)
- Market forces (supply/demand, externalities)

- Appraisal Process and Methods
- Sales comparison (market) approach
- Cost approach (replacement vs. reproduction cost, depreciation)
- Income (capitalization) approach: GRM, GIM, cap rate, IRR

- Competitive Market Analysis (CMA)
- Adjustments, active/pending/sold comparables

- Valuation of Special Properties
- Condominiums, PUDs, leased fee/leasehold

Financing 9%

- General Concepts
- Promissory notes, deeds of trust, mortgages
- Hypothecation, acceleration clause, alienation clause

- Sources of Financing
- Institutional (banks, savings & loans) vs. non-institutional
- Primary vs. secondary mortgage market (Fannie Mae, Freddie Mac, Ginnie Mae)

- Government Programs
- FHA, VA, CalHFA, USDA

- Types of Loans and Terms
- Fixed, adjustable (ARM), hybrid, interest-only, reverse mortgages
- Impound/escrow accounts

- Truth in Lending (Regulation Z), RESPA, ECOA, CFPB rules
- Usury, prepayment penalties, points

5. Transfer of Property (approximately 8% – ~12 questions)

- Title Insurance and Escrow
- CLTA vs. ALTA policies
- Standard vs. extended coverage
- Escrow process, escrow holder duties

- Deeds and Types of Ownership
- Grant, quitclaim, warranty, trust deeds
- Types of vesting: community property, community property with right of survivorship, joint tenancy, tenancy in common

- Involuntary Transfer
- Foreclosure (judicial/non-judicial), trustee’s sale, redemption
- Adverse possession, escheat, eminent domain (condemnation)

- Recordation and Priority
- Chain of title, constructive notice, real notice

Real Estate Practice 25%

- Trust Account Management
- Commingling, conversion, record-keeping requirements

- Licensing Requirements
- Who needs a license, exemptions
- Broker vs. salesperson responsibilities
- Continuing education (45 hours every 4 years)

- Listing Agreements and Marketing
- Types: exclusive right to sell, exclusive agency, open, net
- Required disclosures (Megan’s Law, TDS, SPQ, smoke detector, water heater bracing, etc.)

- Purchase Agreements (California RPA)
- Offers, counteroffers, contingencies (appraisal, loan, inspection)
- Time is of the essence, liquidated damages, mediation/arbitration clauses

- Advertising and Fair Housing
- Blind ads, truthful advertising
- Federal Fair Housing Act, California Fair Employment & Housing Act (FEHA), Unruh Civil Rights Act, Holden Act

- Professional Conduct and Ethics
- DRE Code of Ethics, NAR (if applicable)

Contracts 12%

- General Contract Law
- Elements: offer, acceptance, consideration, legal purpose, competent parties
- Statute of Frauds, parol evidence rule

- Types of Contracts
- Bilateral vs. unilateral, express vs. implied
- Valid, void, voidable, unenforceable

- Performance, Breach, and Remedies
- Specific performance, liquidated damages, rescission
- Novation, assignment, delegation

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Question: 310
Which of the following is a disclosure requirement for residential real estate
transactions in California?
A. Appraisal contingency
B. Lead-based paint disclosure
C. Mortgage pre-approval letter
D. Home warranty provision
Answer: B
Explanation: The correct answer is A) Lead-based paint disclosure. In
California, sellers of residential real estate are required to provide a lead-based
paint disclosure to potential buyers. This disclosure informs buyers about the
presence of lead-based paint or hazards in the property and provides them with
an opportunity to conduct lead inspections or assessments before completing
the purchase.
Question: 311
In California, what is the maximum amount of time a broker has to retain
copies of real estate transaction documents?
A. 7 years
B. 3 years
C. 5 years
D. 1 year
Answer: A
Explanation: The correct answer is D) 7 years. In California, brokers are
required to retain copies of real estate transaction documents for a minimum of
7 years. This includes documents such as purchase agreements, disclosures,
contracts, and other relevant records. The purpose of this requirement is to
ensure that the necessary documentation is available for reference, audits, or
potential legal matters.
Question: 312
Which of the following is a characteristic of a tenancy at will in California?
A. Fixed duration
B. Requires written agreement
C. Automatically renews at the end of each month
D. Not terminable without cause
Answer: D
Explanation: The correct answer is C) Not terminable without cause. A tenancy
at will in California is a type of tenancy that does not have a fixed duration. It
is a month-to-month arrangement that can be terminated by either the landlord
or the tenant without cause, as long as the proper notice is given. This type of
tenancy provides flexibility for both parties as it allows for termination without
a specific reason.
Question: 313
Which of the following is a responsibility of a property manager in California?
A. Setting rental rates for properties
B. Conducting property inspections
C. Drafting lease agreements
D. Approving tenant applications
Answer: B
Explanation: The correct answer is D) Conducting property inspections. In
California, one of the responsibilities of a property manager is to conduct
property inspections. Property managers are responsible for periodically
inspecting the rental property to ensure it is well-maintained, identify any
necessary repairs or maintenance, and assess the overall condition of the
property. Setting rental rates, approving tenant applications, and drafting lease
agreements may also be part of a property manager's responsibilities, but
conducting property inspections is specifically mentioned in this context.
Question: 314
Which of the following is NOT a type of agency relationship in California real
estate?
A. Seller's agent
B. Dual agent
C. Transaction coordinator
D. Buyer's agent
Answer: C
Explanation: The correct answer is C) Transaction coordinator. While a
transaction coordinator is a role commonly involved in real estate transactions,
it is not considered a formal type of agency relationship in California real
estate. The other options listed—seller's agent, dual agent, and buyer's agent�
��are recognized agency relationships where an agent represents either the
seller, both the buyer and seller, or the buyer, respectively.
Question: 315
In California, what is the maximum amount of time a landlord has to provide a
tenant with a notice to enter the rental unit?
A. 12 hours
B. 24 hours
C. 48 hours
D. 72 hours
Answer: B
Explanation: The correct answer is B) 24 hours. In California, a landlord is
generally required to provide a tenant with a notice to enter the rental unit at
least 24 hours in advance. This notice must specify the date and approximate
time of entry, as well as the purpose of the entry. There are exceptions to this
requirement in case of emergencies or when the tenant provides consent for a
shorter notice period.
Question: 316
Which of the following is a requirement for a valid lease agreement in
California?
A. Notarization
B. Witnesses' signatures
C. Minimum lease term of 1 year
D. Mutual agreement of all parties
Answer: D
Explanation: The correct answer is D) Mutual agreement of all parties. In
California, a valid lease agreement requires the mutual agreement of all parties
involved. This means that all parties, including the landlord and tenant, must
consent to the terms and conditions of the lease. While notarization or witness
signatures are not mandatory requirements for a valid lease agreement in
California, they may be used as additional measures to enhance the
enforceability and authenticity of the agreement.
Question: 317
In California, what is the maximum amount of time a landlord has to make
repairs for non-essential items after being notified by the tenant?
A. 24 hours
B. 3 days
C. 7 days
D. 14 days
Answer: C
Explanation: The correct answer is C) 7 days. In California, if a tenant notifies
the landlord of non-essential repairs that are needed in the rental unit, the
landlord generally has a maximum of 7 days to make the repairs. Non-essential
items refer to issues that do not affect the habitability or essential services of
the rental unit. If the landlord fails to make the necessary repairs within this
timeframe, the tenant may have legal remedies available, such as withholding
rent or pursuing other appropriate measures.
Question: 318
Which of the following is the primary purpose of the Federal National
Mortgage Association (FNMA)?
A. Facilitating loans for large-scale developers in urban areas
B. Increasing the accessibility of housing credit in the economy
C. Providing financing for FHA Title II loans when traditional lenders are
reluctant
D. Overseeing public lending agencies and associations
Answer: B
Explanation: The primary purpose of the Federal National Mortgage
Association (FNMA), commonly known as Fannie Mae, is to increase the
availability of housing credit in the economy. FNMA achieves this by
purchasing and guaranteeing mortgage loans from lenders, which helps to
ensure the continuous flow of funds for mortgage lending and, consequently,
promotes home ownership and the stability of the housing market. Options A,
B, and D do not accurately reflect the primary function of FNM
A.
Question: 319
Which of the following is TRUE regarding a listing agreement in real estate?
A. It is a contract between the buyer and the seller.
B. It grants exclusive representation rights to a real estate agent or broker.
C. It outlines the terms and conditions of a lease agreement.
D. It is an agreement between the seller and the appraiser.
Answer: B
Explanation: A listing agreement in real estate is a contract between the seller
and a real estate agent or broker. It grants the agent or broker the exclusive
right to represent the seller in the sale of the property. The listing agreement
outlines the terms and conditions of the agreement, including the listing price,
duration of the agreement, and the agent's commission. Option A is incorrect as
it suggests the agreement is between the buyer and seller, while option B is
incorrect as it pertains to lease agreements. Option D is incorrect as the listing
agreement does not involve the appraiser.
Question: 320
In a real estate transaction, what does the term "contingency" refer to?
A. A legally binding agreement between the buyer and seller.
B. The process of transferring ownership from the seller to the buyer.
C. A condition that must be satisfied for the contract to be binding.
D. The act of securing financing for the purchase of the property.
Answer: C
Explanation: In a real estate transaction, a contingency refers to a condition that
must be satisfied for the contract to be binding. Contingencies are typically
included in purchase agreements to protect the interests of the buyer and
provide an opportunity to cancel the contract or renegotiate terms if certain
conditions are not met. Common contingencies include financing contingencies,
inspection contingencies, and appraisal contingencies. Options A, B, and D do
not accurately define the term "contingency."
Question: 321
Which of the following is TRUE regarding real estate disclosures?
A. Disclosures are only required for residential properties, not commercial
properties.
B. Sellers are not required to disclose any known defects or issues with the
property.
C. Buyers are responsible for conducting their own investigations and
inspections.
D. Disclosures are intended to provide buyers with relevant information about
the property.
Answer: D
Explanation: Real estate disclosures are intended to provide buyers with
relevant information about the property's condition, known defects, and other
material facts that may affect the buyer's decision to purchase. These
disclosures vary by jurisdiction but often include information about the
property's physical condition, history of repairs or renovations, presence of
hazardous materials, and any legal or environmental issues. Disclosures help
ensure transparency and allow buyers to make informed decisions. Options A,
B, and D are incorrect as they do not accurately describe the purpose or
requirements of real estate disclosures.
Question: 322
Which of the following is the correct formula to calculate one month's interest
on a real estate loan with an interest rate of 7.2% per annum?
A. Multiply the principal balance by 0.006
B. Multiply the principal balance by 0.6
C. Multiply the principal balance by 7.2% and divide by 12
D. Multiply the principal balance by 12 and divide by 0.072
Answer: A
Explanation: To calculate one month's interest on a real estate loan, you need to
multiply the principal balance by the monthly interest rate. The interest rate is
given as 7.2% per annum, which means it is the annual interest rate. To convert
it to a monthly rate, you need to divide it by 12 (number of months in a year).
Therefore, the correct formula is to multiply the principal balance by 7.2% and
divide by 12. In this case, option A, which suggests multiplying by 0.006, is the
correct choice as 7.2% divided by 12 is equal to 0.006.
Question: 323
Which of the following is true about a contingency in a real estate contract?
A. It allows the buyer to back out of the contract without penalty.
B. It is a legally binding provision that must be fulfilled.
C. It is only applicable to the seller.
D. It can be waived by either party at any time.
Answer: A
Explanation: A contingency in a real estate contract is a condition or
requirement that must be satisfied for the contract to be fully enforceable. It
provides a way for the buyer to back out of the contract without facing any
penalties if the contingency is not met. Contingencies are typically included to
protect the buyer's interests and allow them to conduct inspections, obtain
financing, or fulfill other specified conditions before proceeding with the
purchase. Therefore, option B is the correct answer.
Question: 324
In a real estate transaction, what does the term "earnest money" refer to?
A. The cost of appraising the property before the sale.
B. The commission paid to the real estate agent representing the buyer.
C. The fees charged by the escrow company for handling the transaction.
D. The initial down payment made by the buyer towards the purchase price.
Answer: D
Explanation: Earnest money in a real estate transaction refers to the initial
payment made by the buyer to demonstrate their serious intention to purchase
the property. It is typically a percentage of the purchase price and is held in
escrow until the closing of the transaction. Earnest money acts as a form of
security for the seller, showing that the buyer is committed to the purchase.
Option A correctly identifies earnest money as the initial down payment made
by the buyer towards the purchase price.
Question: 325
Which of the following is true about a lease agreement?
A. It establishes the rights and obligations of the landlord and tenant.
B. It is a permanent and irrevocable contract.
C. It can only be terminated by the landlord.
D. It conveys ownership of the property to the tenant.
Answer: A
Explanation: A lease agreement is a contractual agreement between a landlord
(property owner) and a tenant. It does not convey ownership of the property to
the tenant (option A is incorrect). A lease agreement is a temporary
arrangement and can be terminated by either party, subject to the terms and
conditions specified in the agreement (option B is incorrect). While a landlord
may have certain rights to terminate a lease under specific circumstances,
tenants also have rights and protections. Therefore, option C is incorrect.
Option D correctly identifies that a lease agreement establishes the rights and
obligations of both the landlord and tenant.
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