California Agency
Practice Questions & Answers (2026)
Agency law is one of the most tested subjects on the California real estate exam, and it's also one of the most misunderstood. The California Department of Real Estate (DRE) expects licensees to understand the legal duties owed to clients vs. customers, and the specific timing of required disclosures under California law. As a community property state, California also tests how agency relationships are affected when spouses are both parties to a transaction. Study these questions carefully — candidates who rely on national agency frameworks and don't account for CA-specific rules are among the most common failures on the state portion.
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California Agency — Practice Questions & Answers
158 questions on Agency from the California real estate question bank. First 10 are free — sign up to unlock all 158.
Q1. Which of the following best describes 'agency' in real estate?
Explanation
Agency is a fiduciary relationship in which an agent is authorized to act on behalf of a principal (client). The agent owes duties of loyalty, confidentiality, and care to the principal.
Q2. A buyer's agent owes which fiduciary duties to their client? (OLD CAR)
Explanation
OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care are the six fiduciary duties an agent owes their client.
Q3. A dual agent represents:
Explanation
Dual agency occurs when one agent (or brokerage) represents both the buyer and seller in the same transaction. It requires written consent from both parties in California.
Q4. When does an agency relationship typically terminate?
Explanation
Agency terminates upon: completion of the purpose (sale closes), mutual agreement, expiration of the listing agreement, death or incapacity of either party, or destruction of the property.
Q5. What is a 'subagent' in real estate?
Explanation
A subagent is an agent who works under another broker and represents the same principal as that broker. The original broker is responsible for the subagent's actions.
Q6. Which of the following best describes an 'express agency'?
Explanation
Express agency is created by an explicit written or oral agreement between the principal and agent — for example, a signed listing agreement.
Q7. An agent who acts beyond the scope of their authority may be liable for:
Explanation
An agent who exceeds their authority can be liable for breach of fiduciary duty and may be personally liable for any resulting damages to the principal.
Q8. What is 'ratification' in agency law?
Explanation
Ratification occurs when a principal approves or accepts an unauthorized act performed by an agent or a third party, making it binding as if it had been authorized from the start.
Q9. A seller's agent who learns the seller is willing to accept less than the listing price must:
Explanation
The duty of confidentiality requires a seller's agent to keep the seller's bottom-line price confidential from buyers. Disclosing it would be a breach of fiduciary duty.
Q10. A real estate agent must disclose their agency relationship to all parties:
Explanation
California law requires agents to disclose their agency relationship (using the Agency Disclosure form) as soon as practicable before the buyer or seller signs any offer or listing agreement.
Q11. What is 'agency by estoppel'?
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