California Real Estate Practice Exam
(Free Questions & Answers)

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.

Explanation

The DRE's primary purpose is consumer protection — licensing agents, investigating complaints, and enforcing California real estate law.

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The required elements of a valid contract are: offer and acceptance, consideration, legal purpose, competent parties, and in writing (for real estate). Notarization is not required for a contract to be valid.

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The federal Fair Housing Act protects: race, color, religion, national origin, sex, disability, and familial status. Familial status, added by the 1988 Fair Housing Amendments Act, protects families with children under 18, pregnant women, and anyone securing legal custody of a minor. Housing providers cannot refuse to rent, impose different terms, or restrict facility access based on the presence of children. The primary exemption is qualified 55+ or 62+ senior housing meeting specific federal requirements. In California, familial status protections are enforced by the California Civil Rights Department (CRD, formerly DFEH) under the California Fair Employment and Housing Act (FEHA).

Explanation

California primarily uses deeds of trust (3 parties: trustor/borrower, beneficiary/lender, trustee) rather than mortgages (2 parties). The trustee holds legal title until the loan is repaid.

Explanation

Escrow is a neutral depository where funds, documents, and instructions are held by a third party until all conditions of the sale are met and closing can occur.

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Joint tenancy includes the right of survivorship — when one joint tenant dies, their interest automatically passes to the surviving joint tenant(s), bypassing probate.

Explanation

The sales comparison approach (market approach) is most commonly used for residential properties. It compares the subject property to recent sales of similar properties.

Explanation

$450,000 × 0.06 = $27,000 total commission. To solve this, multiply the relevant values: $450,000 at 6%.. The correct answer is $27,000.. This is a common calculation on the California real estate exam.

Explanation

The Residential Lead-Based Paint Hazard Reduction Act (Title X) requires sellers and landlords to disclose known lead-based paint hazards in housing built before 1978.

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California law requires brokers to deposit trust funds (including earnest money) into a trust account within 3 business days of receipt.

Explanation

California Civil Code requires landlords to give at least 24 hours written notice before entering a tenant's unit for non-emergency repairs or inspections.

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A conditional use permit (CUP) allows a use that is not automatically permitted in a zone but may be allowed if certain conditions are met — such as a daycare center in a residential zone.

Explanation

OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care are the six fiduciary duties an agent owes their client.

Explanation

A California real estate salesperson license is valid for 4 years and must be renewed with 45 hours of continuing education.

Explanation

Consideration is something of value given by each party to a contract. In a real estate sale, the consideration is typically the purchase price from the buyer and the property title from the seller.

Explanation

California adds several protections beyond federal law, including source of income, marital status, sexual orientation, gender identity, and ancestry. The federal Fair Housing Act prohibits discrimination based on seven protected classes: race, color, religion, sex, national origin, familial status, and disability. California adds sexual orientation, gender identity, gender expression, marital status, and others as additional protected classes beyond the federal seven. The California Civil Rights Department (CRD, formerly DFEH) enforces both federal and state protections under the California Fair Employment and Housing Act (FEHA). California's FEHA is among the broadest in the nation, covering more protected classes than any other state. The Civil Rights Act of 1866 separately prohibits racial discrimination in all property transactions with no exceptions.

Explanation

LTV (Loan-to-Value) is the ratio of the loan amount to the appraised value of the property. An 80% LTV means the buyer is borrowing 80% and putting 20% down.

Explanation

A cloud on title is any outstanding claim, lien, or encumbrance that could affect or challenge the owner's clear title to a property. It must be resolved before a clean sale.

Explanation

The key difference: tenancy in common has NO right of survivorship. Each owner's interest passes to their heirs (not the other owners) upon death. Shares can be unequal.

Explanation

The income approach estimates value based on the income a property generates. It's used for rental properties, commercial buildings, and other income-producing real estate.

Explanation

$380,000 × 0.06 = $22,800 total. Split 50/50 = $11,400 per side. To solve this, multiply the relevant values: $380,000 at 6%.. The correct answer is $11,400.. This is a common calculation on the California real estate exam.

Explanation

Radon is a naturally occurring colorless, odorless radioactive gas that comes from the decay of uranium in soil. It can seep into buildings and is a leading cause of lung cancer.

Explanation

Commingling is the illegal practice of mixing client trust funds with a broker's personal or business funds. It is a serious violation that can result in license revocation.

Explanation

In a gross lease, the tenant pays a fixed rent and the landlord covers all operating expenses (taxes, insurance, maintenance). Common in residential rentals.