16 California State Law (DRE) Practice Questions & Answers
Every California State Law (DRE) practice question from the Real Estate License Practice Test, with the correct answer and a short explanation.
Start practice test →1. Which California state agency licenses and regulates real estate salespersons and brokers?
- A.The Department of Real Estate (DRE)✓ Answer
- B.The Department of Housing and Urban Development (HUD)
- C.The Department of Consumer Affairs Bureau of Real Estate Appraisers
- D.The Franchise Tax Board (FTB)
The California Department of Real Estate (DRE), established under the Real Estate Law (Business and Professions Code), is the state agency responsible for licensing and regulating real estate salespersons and brokers to protect the public in real property transactions.
Source: California Business and Professions Code (Real Estate Law), Div. 4, Part 1 (DRE)Report a problem with this question
2. Who is the chief officer of the California Department of Real Estate?
- A.The Real Estate Commissioner✓ Answer
- B.The State Treasurer
- C.The Attorney General
- D.The Secretary of State
The Real Estate Commissioner is appointed by the Governor to serve as the chief officer of the DRE, with authority to enforce the Real Estate Law and adopt regulations (the Commissioner's Regulations) governing licensee conduct.
Source: California Business and Professions Code §10050–10071 (Real Estate Commissioner)Report a problem with this question
3. Under California agency law, when a listing agent takes a residential (1–4 unit) listing, at what point must the agent provide the Disclosure Regarding Real Estate Agency Relationships form?
- A.Only if the buyer requests it
- B.Only at the close of escrow
- C.After the offer is accepted
- D.Before entering into the listing agreement✓ Answer
California's agency disclosure law requires the listing agent to give the agency relationships (AD) disclosure form 'as soon as practicable' before entering into the listing agreement, so the seller understands whom the agent represents before committing.
Source: California Civil Code §2079.14 (agency disclosure timing)Report a problem with this question
4. After providing the agency disclosure form, an agent must have the parties sign a separate confirmation identifying the agent's actual role in the transaction. What is this step called?
- A.The Transfer Disclosure Statement
- B.The Homeowner's exemption
- C.The Natural Hazard Disclosure
- D.Confirmation of the agency relationship✓ Answer
California requires a separate confirmation of the agency relationship (typically in or attached to the purchase agreement) stating whether each agent represents the seller, the buyer, or both, so the parties know each agent's actual role at the time of contract.
Source: California Civil Code §2079.17 (confirmation of agency relationship)Report a problem with this question
5. The Transfer Disclosure Statement (TDS) is primarily used to disclose what to a buyer in a California residential sale?
- A.The agent's commission split
- B.The buyer's loan pre-approval amount
- C.The seller's asking price history
- D.The condition of the property and known material defects✓ Answer
The TDS requires the seller (and any agent) to disclose the physical condition of the property and known material defects that affect its value or desirability, giving the buyer information they cannot readily discover themselves.
Source: California Civil Code §1102 et seq. (Real Estate Transfer Disclosure Statement)Report a problem with this question
6. For which type of transaction is a Transfer Disclosure Statement (TDS) generally required in California?
- A.The sale of residential property of one to four units✓ Answer
- B.A transfer between co-owners by court order
- C.A foreclosure sale by the trustee
- D.The sale of a 200-unit commercial office tower
The TDS statute applies to transfers of residential real property of one to four dwelling units; commercial sales and certain transfers (such as court-ordered transfers or trustee foreclosure sales) are statutorily exempt.
Source: California Civil Code §1102(a) and §1102.2 (TDS scope and exemptions)Report a problem with this question
7. Which type of listing gives one broker the exclusive right to sell the property so the broker earns a commission even if the owner personally finds the buyer?
- A.Exclusive right to sell listing✓ Answer
- B.Open listing
- C.Exclusive agency listing
- D.Net listing
Under an exclusive right to sell listing, the listing broker is entitled to a commission if the property sells during the listing period regardless of who procures the buyer, including the owner, which is what distinguishes it from an exclusive agency listing.
Source: California DRE Reference Book — listing agreement typesReport a problem with this question
8. A 'net listing,' where the broker keeps everything above a set price the seller wants, is treated how under California real estate law?
- A.It is absolutely prohibited in all cases
- B.It is permitted but strictly regulated to prevent overcharging the seller✓ Answer
- C.It is required for all commercial listings
- D.It automatically becomes an open listing
California permits net listings but regulates them closely: the broker must reveal the amount of the actual selling price to the seller before or at the time the seller commits, to prevent the agent from secretly profiting at the principal's expense.
Source: California Business and Professions Code §10176(g) (net listings)Report a problem with this question
9. In a California real estate transaction, an agent representing both the buyer and the seller in the same deal is acting as what?
- A.A dual agent, which requires disclosure and the consent of both parties✓ Answer
- B.An unlicensed finder
- C.A subagent who owes no duties to either party
- D.A trustee of the escrow
An agent representing both parties is a dual agent; California law permits dual agency only if it is disclosed to and consented to by both the buyer and seller, because the agent owes fiduciary duties to both and must not disadvantage either.
Source: California Civil Code §2079.13(d) and §2079.17 (dual agency)Report a problem with this question
10. When a salesperson receives a buyer's earnest money deposit made payable to the broker, what must be done with those trust funds under California law?
- A.Deposit them into the salesperson's personal checking account
- B.Keep the cash in the salesperson's desk until closing
- C.Immediately spend them on marketing the property
- D.Deliver them to the broker, who must place them into a neutral escrow, a trust account, or into the principal's hands as directed✓ Answer
A salesperson must immediately deliver trust funds to the employing broker, who must then place them into a neutral escrow depository, the broker's trust account, or into the hands of the principal as directed; commingling trust funds with personal funds is prohibited.
Source: California Business and Professions Code §10145 and Commissioner's Regulation §2832 (trust funds)Report a problem with this question
11. What is 'commingling,' which is prohibited when a broker handles trust funds in California?
- A.Splitting a commission with a cooperating broker
- B.Refunding a deposit to the buyer
- C.Mixing clients' trust funds with the broker's own personal or business funds✓ Answer
- D.Depositing trust funds into a neutral escrow
Commingling is mixing clients' trust funds with the broker's own personal or business money; it is prohibited because it endangers client funds and obscures ownership, and it is grounds for disciplinary action against the license.
Source: California Business and Professions Code §10176(e) (commingling)Report a problem with this question
12. Under California's real estate license structure, a salesperson may lawfully perform licensed real estate activities only in what capacity?
- A.As a fully independent principal with no supervision
- B.Only while employed directly by the DRE
- C.Only under the supervision of, and as the agent of, a licensed broker✓ Answer
- D.Only after also obtaining an appraiser license
A salesperson's license authorizes real estate activity only when the salesperson is employed by and acts under the supervision of a licensed broker; the salesperson cannot operate independently, which is a defining feature of California's two-tier license structure.
Source: California Business and Professions Code §10132 and §10137 (salesperson must act for a broker)Report a problem with this question
13. What is the key difference between a real estate broker license and a salesperson license in California?
- A.A salesperson may employ brokers, but a broker may not
- B.A broker may operate independently and employ salespersons, while a salesperson must work under a broker✓ Answer
- C.Only a salesperson may hold client trust funds
- D.A broker license expires while a salesperson license never does
California uses a two-tier structure: a broker may conduct real estate business independently, hold trust funds, and employ salespersons, whereas a salesperson must be employed by and act under the supervision of a broker and cannot operate on their own.
Source: California Business and Professions Code §10131, §10132, §10159 (broker vs. salesperson)Report a problem with this question
14. Under California law, if the seller delivers the required Real Estate Transfer Disclosure Statement (TDS) to the buyer by mail AFTER the buyer has already signed the purchase offer, how long does the buyer have to terminate the offer?
- A.5 days after the deposit in the mail✓ Answer
- B.No right to terminate once the offer is signed
- C.10 days after the deposit in the mail
- D.3 days after the deposit in the mail
California Civil Code 1102.3 gives the buyer a statutory right to terminate the offer when the TDS is delivered after the offer is signed: 3 days if delivered in person but 5 days if delivered by deposit in the mail, because mailed delivery is given extra time to account for transit.
Source: California Civil Code 1102.3Report a problem with this question
15. For how long is a California real estate salesperson license issued before it must be renewed, and how many hours of DRE-approved continuing education are required for that renewal?
- A.4 years, with 90 hours of continuing education
- B.4 years, with 45 hours of continuing education✓ Answer
- C.1 year, with 15 hours of continuing education
- D.2 years, with 30 hours of continuing education
The California Department of Real Estate (DRE) issues a salesperson license for a four-year term, and Business and Professions Code 10170.5 requires 45 hours of DRE-approved continuing education to be completed within that period as a condition of renewal.
Source: California Business and Professions Code 10170.5; DRE license term (four years)Report a problem with this question
16. Under the rule from Easton v. Strassburger, later codified in the California Civil Code, what duty does a listing broker owe when selling residential property of one-to-four units?
- A.To inspect only areas the seller specifically points out
- B.To conduct a reasonably competent and diligent visual inspection of accessible areas and disclose material facts found✓ Answer
- C.To hire a licensed structural engineer before any sale
- D.To personally guarantee the property is free of all defects
Easton v. Strassburger (1984) held, and Civil Code 2079 now codifies, that a broker must conduct a reasonably competent and diligent visual inspection of the reasonably accessible areas of a 1-4 unit residential property and disclose to the buyer material facts that such an inspection would reveal; it is a duty of reasonable care, not a guarantee against all defects.
Source: Easton v. Strassburger (1984) 152 Cal.App.3d 90; California Civil Code 2079Report a problem with this question
Practice questions cover the uniform national portion of the real estate exam. Your state adds a state-law portion — study your state's official materials before testing. Licensing info (ARELLO) →