48 California State Law (DRE) Practice Questions & Answers

1. 1. A licensed salesperson closes a deal and the grateful seller wants to hand the salesperson a cash bonus directly. Under California Real Estate Law, how may the salesperson lawfully be paid?

   • A.From the escrow company as an independent contractor
   • B.Only through the employing broker✓ Answer
   • C.Directly from the buyer's lender at closing
   • D.Directly from the seller since the seller chose to pay

   A salesperson may only accept compensation from their employing broker, never directly from a principal or third party, because a salesperson acts solely under the broker's supervision pursuant to a written employment agreement and cannot operate independently.

   Ref QB-APJ228Source: B&P Code §10137 (salesperson compensation only through employing broker)Report a problem with this question

2. 2. A buyer hands a salesperson a $10,000 good-faith deposit check on a Monday. The broker's policy is to place such funds into a neutral escrow depository. Absent contrary written instructions, by when must the funds be deposited?

   • A.Within five business days
   • B.Within three business days✓ Answer
   • C.Within 24 hours
   • D.By the end of the calendar month

   Trust funds received on behalf of others must be placed into a neutral escrow depository, into the hands of the principal, or into a trust account no later than three business days after receipt, ensuring client money is not held improperly.

   Ref QB-T6R7M8Source: Commissioner's Regulations 2832 (trust fund handling within 3 business days)Report a problem with this question

3. 3. A broker uses $2,000 from the trust account to cover the office rent, intending to replace it after the next commission arrives. How is this act best characterized?

   • A.Reconciliation of the trust account
   • B.Commingling only, which is permitted short-term
   • C.A permissible advance against future commissions
   • D.Conversion — an unlawful use of clients' funds✓ Answer

   Actually spending clients' trust funds for the broker's own purposes is conversion, which is more serious than commingling (merely mixing funds); both are prohibited, but conversion involves using the money and can lead to license revocation.

   Ref QB-BPWC79Source: B&P Code §10176(e) / Reg 2832.1 (commingling and conversion of trust funds)Report a problem with this question

4. 4. A DRE audit reviews a broker's trust account handling. Which pair of requirements is correct?

   • A.Reconcile at least monthly; keep records for three years✓ Answer
   • B.Reconcile only at year-end; retain records permanently
   • C.Reconcile annually; retain records for seven years
   • D.Reconcile weekly; retain records for one year

   A broker must reconcile the trust account with the separate record of each beneficiary at least once a month, and must retain trust-fund records for three years, so the DRE can verify no client funds were mishandled.

   Ref QB-Q6P745Source: Commissioner's Regulations 2831.2 (monthly reconciliation) & B&P §10148 (3-year retention)Report a problem with this question

5. 5. A California homeowner alleges a lender refused a mortgage based on the racial makeup of the neighborhood. Which California statute most directly addresses discrimination in lending?

   • A.The Alquist-Priolo Act
   • B.The Unruh Civil Rights Act
   • C.The Holden Act✓ Answer
   • D.The Subdivided Lands Act

   The Holden Act specifically prohibits discrimination in real estate lending (including redlining based on neighborhood characteristics), while Unruh covers business establishments and Alquist-Priolo concerns earthquake fault zones.

   Ref QB-8PUCP5Source: CA Health & Safety Code §35800 et seq. (Holden Act / Housing Financial Discrimination Act of 1977)Report a problem with this question

6. 6. A restaurant owner refuses service to a customer because of the customer's religion. Which California law is designed to prohibit this discrimination by a business establishment?

   • A.The Easton disclosure rule
   • B.The Unruh Civil Rights Act✓ Answer
   • C.The Holden Act
   • D.The Rumford Fair Housing Act (FEHA)

   The Unruh Civil Rights Act bars discrimination by all business establishments in California, whereas the Rumford Act/FEHA targets housing specifically and the Holden Act targets lending.

   Ref QB-R62J96Source: CA Civil Code §51 (Unruh Civil Rights Act — business establishments)Report a problem with this question

7. 7. A three-unit residential property is being sold at a trustee's sale following foreclosure. Is a Transfer Disclosure Statement (TDS) required?

   • A.Yes — all residential transfers require a TDS with no exceptions
   • B.No — trustee's/foreclosure sales are exempt from the TDS✓ Answer
   • C.No — because the property has more than two units
   • D.Yes — but only if the buyer requests it in writing

   The TDS is required on sales of one-to-four residential units, but transfers by a trustee/foreclosure sale (and by probate, court order, etc.) are specifically exempt because the seller lacks personal knowledge of the property's condition.

   Ref QB-9P7QU6Source: CA Civil Code §1102.2 (TDS exemptions — foreclosure/trustee sale)Report a problem with this question

8. 8. Under the doctrine established by Easton v. Strassburger, what duty does a listing broker owe when selling a one-to-four unit residential property?

   • A.To visually inspect accessible areas with reasonable competence and diligence and disclose findings✓ Answer
   • B.To hire a licensed engineer to certify the structure before the listing goes live
   • C.To guarantee the property is free of all defects
   • D.To inspect only if the buyer pays for the inspection

   Easton v. Strassburger imposed a duty on the broker to perform a reasonably competent and diligent visual inspection of accessible areas and disclose material facts to the buyer; it does not require expert certification or a defect guarantee.

   Ref QB-W6T75CSource: Easton v. Strassburger (1984); codified in CA Civil Code §2079Report a problem with this question

9. 9. The DRE Commissioner initiates a formal disciplinary proceeding against a currently licensed broker for a violation. What is this document called?

   • A.A Notice of Default
   • B.A Statement of Issues
   • C.A Desist and Refrain Order
   • D.An Accusation✓ Answer

   An Accusation is filed against an existing licensee to begin disciplinary action, whereas a Statement of Issues is used against an applicant for a license; distinguishing the two is a common exam point.

   Ref QB-EPYCQCSource: CA Government Code §11503 (Accusation) / §11504 (Statement of Issues); B&P §10100Report a problem with this question

10. 10. An agent tells homeowners that minority families are moving into the area and that they should sell now before values drop. What prohibited practice is this?

    • A.Blockbusting✓ Answer
    • B.Puffing
    • C.Redlining
    • D.Steering

    Blockbusting (panic peddling) is inducing owners to sell by exploiting fears about the entry of a protected class into the neighborhood; steering directs buyers toward or away from areas, and redlining is a lending refusal.

    Ref QB-2MQDGESource: Federal Fair Housing Act (42 U.S.C. §3604) — prohibition on blockbustingReport a problem with this question

11. 11. A listing agent is bound by fiduciary duties to the seller summarized by the acronym ACOLD. Which set correctly lists these duties?

    • A.Accountability, Care, Obedience, Loyalty, Disclosure✓ Answer
    • B.Appraisal, Contract, Option, Loan, Deposit
    • C.Acceptance, Consideration, Offer, Lease, Deed
    • D.Advertising, Cost, Ownership, Location, Design

    The fiduciary duties owed to a principal are Accountability, Care, Obedience, Loyalty, and Disclosure (ACOLD), which include not making secret profits and accounting for all funds on demand.

    Ref QB-H4J8WDSource: CA Civil Code §2079.16 (agency duties); common law fiduciary dutiesReport a problem with this question

12. 12. An agent lawfully represents both buyer and seller as a disclosed dual agent. The seller privately tells the agent she will accept far less than list price. What may the agent do with that information?

    • A.Tell the buyer, since the agent also represents the buyer
    • B.Keep it confidential from the buyer✓ Answer
    • C.Use it to negotiate a higher commission
    • D.Disclose it only if the buyer directly asks

    Even in a lawful disclosed dual agency, the agent may not reveal either party's confidential bottom-line price or motivation without permission, because doing so would breach the duty of confidentiality owed to that party.

    Ref QB-ZKC3BDSource: CA Civil Code §2079.21 (dual agent may not disclose price without consent)Report a problem with this question

13. 13. California's statutory agency disclosure requires three steps in a specific order. What is the correct sequence?

    • A.Elect, Disclose, Confirm
    • B.Disclose, Confirm, Elect
    • C.Disclose, Elect, Confirm✓ Answer
    • D.Confirm, Elect, Disclose

    The agent must first Disclose the agency relationship options (as soon as practicable), then Elect the actual relationship, then Confirm it in the purchase contract, so all parties understand who represents whom.

    Ref QB-G47WQCSource: CA Civil Code §2079.14–2079.17 (agency disclosure: disclose, elect, confirm)Report a problem with this question

14. 14. An owner hires a property manager to handle ongoing leasing, maintenance, and rent collection for an apartment building over several years. What type of agent is the property manager?

    • A.A gratuitous agent
    • B.A special agent
    • C.A general agent✓ Answer
    • D.A dual agent

    A property manager is a general agent because they handle ongoing, continuous transactions on the principal's behalf, unlike a listing agent who is a special agent for a single transaction.

    Ref QB-YKZQ5CSource: CA Civil Code §2295–2300 (classification of agents; general vs special)Report a problem with this question

15. 15. A person signs a contract on behalf of an owner without prior authority. The owner later learns of it and accepts the benefits of the deal. How was the agency created?

    • A.By necessity
    • B.By ratification✓ Answer
    • C.By express written agreement
    • D.By estoppel

    Ratification creates an agency after the fact when a principal accepts or approves an act that was performed without prior authority, effectively adopting the agent's unauthorized conduct.

    Ref QB-F4UJJBSource: CA Civil Code §2307 (agency by ratification)Report a problem with this question

16. 16. An agent secretly represents both parties in a sale without disclosing the dual relationship. When it is discovered, what is a likely consequence for the agent?

    • A.Automatic conversion to a single-agency arrangement
    • B.Lost commission plus possible rescission and discipline✓ Answer
    • C.Nothing, provided the deal closed successfully
    • D.A reduced commission of half the normal amount

    Undisclosed dual agency is a serious breach of fiduciary duty; the agent can forfeit the entire commission, the injured party may rescind the transaction, and the DRE may impose discipline.

    Ref QB-XKNDYASource: CA Civil Code §2079.24; B&P §10176(d) (undisclosed dual agency)Report a problem with this question

17. 17. A principal, by their words and conduct, leads a third party to reasonably believe a person is their agent, though no formal authority was granted. What kind of authority does the agent have?

    • A.Ostensible authority✓ Answer
    • B.Actual express authority
    • C.Universal authority
    • D.Statutory authority

    Ostensible (apparent) authority arises when a principal's conduct causes a third party to reasonably believe someone is the principal's agent; this can create agency by estoppel even without express authority.

    Ref QB-E4G8DASource: CA Civil Code §2300 & §2317 (ostensible authority)Report a problem with this question

18. 18. A person dies owning California real property with no will and no locatable heirs. Under which government power does the property pass to the state?

    • A.Escheat✓ Answer
    • B.Police power
    • C.Eminent domain
    • D.Taxation

    Escheat is the government power by which property of a person who dies intestate with no heirs passes to the state; the four government powers are recalled by PETE (Police power, Eminent domain, Taxation, Escheat).

    Ref QB-JXSX8HSource: CA Probate Code §6800 et seq. (escheat to the state)Report a problem with this question

19. 19. A court must decide whether a built-in bookshelf is a fixture. Under the MARIA test, which single factor is generally given the most weight?

    • A.Agreement between the parties
    • B.Intention of the party who attached it✓ Answer
    • C.Adaptability to the property
    • D.Method of attachment

    In the MARIA test (Method, Adaptability, Relationship, Intention, Agreement), intention is generally the most important factor courts consider when deciding whether an item has become a fixture.

    Ref QB-3FY4UHSource: CA Civil Code §660 (fixtures); MARIA common-law test — intention primaryReport a problem with this question

20. 20. A developer wants to divide a parcel into eight lots for sale. Under the Subdivided Lands Act, what must the developer obtain before marketing the lots?

    • A.A homestead declaration
    • B.A Notice of Default
    • C.A DRE Public Report✓ Answer
    • D.A Coastal Commission variance

    The Subdivided Lands Act applies to subdivisions of five or more parcels and requires the developer to obtain a Public Report from the DRE (Preliminary/pink, then Final/white) before selling, to protect purchasers.

    Ref QB-HXEM3GSource: B&P Code §11000 et seq. (Subdivided Lands Act — Public Report for 5+ parcels)Report a problem with this question

21. 21. An appraiser must value a property that generates rental income. Which approach is most appropriate, and what is the basic relationship?

    • A.Income approach: Value = NOI ÷ cap rate✓ Answer
    • B.Cost approach: Value = replacement cost minus land
    • C.GRM approach: Value = NOI × cap rate
    • D.Sales comparison: Value = average of nearby sales

    The income (capitalization) approach is best for income-producing property: Value equals net operating income divided by the cap rate. Note that mortgage/debt service is not deducted when computing NOI.

    Ref QB-2FMSNGSource: DRE Reference Book — Appraisal: income capitalization approachReport a problem with this question

22. 22. An appraiser is valuing a newly built church with no comparable sales and no rental income. Which valuation approach is most reliable?

    • A.Sales comparison approach
    • B.Cost (replacement) approach✓ Answer
    • C.Income approach
    • D.Gross rent multiplier

    The cost/replacement approach is most reliable for new, unique, or special-purpose properties such as churches, schools, and government buildings, where comparable sales and income data are lacking.

    Ref QB-MXGMKKSource: DRE Reference Book — Appraisal: cost approach for special-purpose propertyReport a problem with this question

23. 23. A busy freeway is built adjacent to a residential neighborhood, permanently reducing home values from the constant noise. This loss in value is an example of what type of depreciation?

    • A.Economic obsolescence — generally incurable✓ Answer
    • B.Accrued appreciation
    • C.Physical deterioration — usually curable
    • D.Functional obsolescence from outdated design

    Economic (external) obsolescence is caused by factors outside the property lines, such as a new freeway or neighborhood decline, and is generally incurable because the owner cannot control the external cause.

    Ref QB-5FPS6MSource: DRE Reference Book — Appraisal: types of depreciation (external obsolescence)Report a problem with this question

24. 24. After completing all three approaches to value, an appraiser must arrive at a final value estimate. What does the reconciliation step involve?

    • A.Weighing the approaches by their reliability✓ Answer
    • B.Averaging the three values arithmetically
    • C.Selecting the highest of the three values
    • D.Adding the three values and applying the cap rate

    Reconciliation is the appraiser's analysis weighing the relative reliability of each approach for the specific property to reach a final opinion of value; it is never a simple mathematical average.

    Ref QB-KX5AEJSource: DRE Reference Book — Appraisal: reconciliation of valueReport a problem with this question

25. 25. Which of the following is a required element for a valid and enforceable real estate contract?

    • A.A licensed broker as a party
    • B.Mutual consent of the parties✓ Answer
    • C.Recording with the county
    • D.Notarization of both signatures

    A valid contract requires capable parties, a lawful object, consideration, and mutual consent (offer and acceptance / meeting of the minds); notarization and recording are not required for validity.

    Ref QB-4FBFZJSource: CA Civil Code §1550 (essential elements of a contract)Report a problem with this question

26. 26. A 16-year-old signs a contract to purchase a condominium. What is the legal status of this contract?

    • A.Void from the beginning✓ Answer
    • B.Voidable by the minor
    • C.Enforceable only against the seller
    • D.Fully valid and binding

    In California this contract is void. Family Code §6701(b) says a minor cannot make a contract relating to real property or any interest in it, so the purchase never has legal effect. Most other minors' contracts are only voidable (the minor may disaffirm them, §6710), but real property is the exception the California exam tests.

    Ref QB-PX7AXNSource: CA Family Code §6701(b) (minor cannot make a contract relating to real property — void); §6710 (other minors' contracts disaffirmable)Report a problem with this question

27. 27. A seller signs an Exclusive Right to Sell listing. Which requirement is specifically mandated for this type of listing in California?

    • A.It may only be given to a Realtor
    • B.It must be renewed monthly
    • C.It must have a definite end date✓ Answer
    • D.It must be recorded with the county

    An exclusive listing (right to sell or agency) must contain a definite, specified termination date; a broker who uses an exclusive listing without one is subject to discipline.

    Ref QB-7FDFHPSource: B&P Code §10176(f) (exclusive listing must have definite termination date)Report a problem with this question

28. 28. Under the Statute of Frauds in California, which of these agreements is NOT required to be in writing to be enforceable?

    • A.An agreement between two brokers to split a commission✓ Answer
    • B.A lease for a term of two years
    • C.A contract for the sale of real property
    • D.An agreement authorizing an agent to sell real estate

    The Statute of Frauds requires real property sales, leases of one year or longer, and agency agreements to sell real estate to be in writing, but a commission split between two brokers need not be written.

    Ref QB-NZS4SMSource: CA Civil Code §1624 (Statute of Frauds; broker commission split exception)Report a problem with this question

29. 29. In a California deed of trust, which party holds bare (naked) legal title as a neutral third party?

    • A.The vendee
    • B.The trustor
    • C.The beneficiary
    • D.The trustee✓ Answer

    In a deed of trust the trustor is the borrower, the beneficiary is the lender, and the trustee is the neutral third party who holds bare legal title with the power of sale until the loan is repaid.

    Ref QB-5HMX6MSource: CA Civil Code §2924 (deed of trust; roles of trustor, trustee, beneficiary)Report a problem with this question

30. 30. A lender completes a non-judicial (power-of-sale) foreclosure on a California home. Regarding the borrower's remaining obligations and rights, which statement is correct?

    • A.The borrower has a one-year redemption right after the sale
    • B.The lender may pursue a deficiency judgment
    • C.The borrower keeps possession for one year rent-free
    • D.No deficiency judgment and no redemption right after the sale✓ Answer

    In a non-judicial foreclosure the lender waives the right to a deficiency judgment, and the borrower has no post-sale redemption right; by contrast, judicial foreclosure allows a deficiency judgment but grants a redemption period.

    Ref QB-PZ5FXNSource: CA Code of Civil Procedure §580d & Civil Code §2924 (no deficiency/redemption in non-judicial foreclosure)Report a problem with this question

31. 31. A buyer takes over an existing loan's payments 'subject to' the loan without a novation. Who remains primarily liable to the lender?

    • A.The lender releases all parties
    • B.The seller remains primarily liable✓ Answer
    • C.The trustee becomes liable
    • D.The buyer becomes solely liable

    When a buyer takes title 'subject to' an existing loan, the original borrower remains primarily liable; in a true assumption the buyer becomes primarily liable and the seller may be released, which is the key distinction.

    Ref QB-6HY9CNSource: DRE Reference Book — Financing: 'subject to' vs assumptionReport a problem with this question

32. 32. A grantor signs a deed that conveys whatever interest, if any, the grantor may have in a parcel, with no warranties of title. What type of deed is this?

    • A.A grant deed
    • B.A trustee's deed
    • C.A quitclaim deed✓ Answer
    • D.A warranty deed

    A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, whereas a grant deed carries two implied warranties (no prior conveyance and no undisclosed encumbrances by the grantor).

    Ref QB-KZ3FEJSource: CA Civil Code §1092 (grant deed warranties); quitclaim conveys existing interest onlyReport a problem with this question

33. 33. In California's property tax fiscal year, the second installment of property taxes becomes delinquent after which date?

    • A.February 1
    • B.April 10✓ Answer
    • C.December 10
    • D.November 1

    The first installment is due Nov 1 and delinquent after Dec 10; the second installment is due Feb 1 and delinquent after April 10 (mnemonic 'No Darn Fooling Around'). The lien date is January 1.

    Ref QB-3HW9UHSource: CA Revenue & Taxation Code §2617, §2618 (property tax delinquency dates)Report a problem with this question

34. 34. A person openly occupies a neighbor's vacant lot, using it continuously and notoriously, and pays the property taxes for the statutory period. What is the minimum time required to claim title by adverse possession in California?

    • A.Ten years of occupancy only
    • B.Five years with taxes paid for all five✓ Answer
    • C.Three years with no tax payment required
    • D.Seven years with a recorded claim

    In California adverse possession requires open, notorious, hostile, and continuous possession for five years AND payment of the property taxes for those five years; without the tax payment the claim fails.

    Ref QB-MZESKKSource: CA Code of Civil Procedure §325 (adverse possession — 5 years plus taxes)Report a problem with this question

35. 35. Which of the following is one of the hazard areas that a California Natural Hazard Disclosure (NHD) statement addresses?

    • A.Elevated indoor radon area
    • B.Airport noise influence area
    • C.Former military ordnance area
    • D.Dam failure inundation area✓ Answer

    Civil Code 1103 limits the NHD statement to six mapped hazards: a special flood hazard area, a dam failure inundation area, a very high fire hazard severity zone, a wildland area with state fire protection responsibility, an earthquake fault zone, and a seismic hazard zone. The dam inundation area is one of those six. Former military ordnance sites have their own separate disclosure rule under Civil Code 1102.15. Airport influence areas also fall under separate rules, and radon is not an NHD category, so none of these belongs on the NHD form.

    Ref QB-G7Z7VESource: Cal. Civ. Code 1103(c) and 1103.2 (Natural Hazard Disclosure zones)Report a problem with this question

36. 36. In a California resale of property located in a mapped natural hazard zone, who must deliver the NHD statement to the prospective buyer?

    • A.The county recorder upon recording
    • B.The title company with its prelim
    • C.The buyer's lender at loan approval
    • D.The seller and the listing agent✓ Answer

    Civil Code 1103.2 puts the disclosure duty on the transferor (the seller) and the seller's agent. They often hire a third-party report provider to gather the map information (Civ 1103.4), but the duty to get the statement to the buyer still rests with the seller and the agent. A title company's preliminary report deals with recorded title matters, not natural hazard zones. Lenders and county recorders have no NHD delivery duty.

    Ref QB-ZP6DFFSource: Cal. Civ. Code 1103.2 and 1103.4Report a problem with this question

37. 37. A California seller's agent delivers the NHD statement in person after the buyer's purchase offer has already been signed. What right does the buyer gain?

    • A.Only a price credit; the contract stays binding
    • B.None, because the NHD is merely informational
    • C.Termination by written notice within a short window✓ Answer
    • D.Cancellation at any time before the close of escrow

    Civil Code 1103.3 says that if the NHD statement is delivered after the offer is signed, the buyer may terminate by written notice to the seller or the seller's agent. The deadline is 3 days after delivery in person or 5 days after the statement is mailed. The right is not open-ended until the close of escrow, because it expires when that short window ends. It is also a real right to cancel, not a limit to price adjustments.

    Ref QB-H7CJ2GSource: Cal. Civ. Code 1103.3 (termination right when NHD is delivered after the offer)Report a problem with this question

38. 38. What is the purpose of California's Consumer Recovery Account (formerly the Real Estate Recovery Fund)?

    • A.To fund DRE audits of brokers' trust account records
    • B.To refund buyers for any defect discovered after closing
    • C.To pay uncollectible fraud judgments against licensees✓ Answer
    • D.To insure licensees against their own negligence claims

    Under B&P 10471, the account pays a victim only after the victim wins a final judgment against a licensee for intentional fraud, misrepresentation, deceit, or conversion of trust funds, and only if that judgment cannot be collected from the licensee. It is a last resort for consumers. It is not errors-and-omissions insurance that protects licensees from their own negligence claims. It also does not pay for every defect found after closing.

    Ref QB-2QHQMGSource: Cal. Bus. & Prof. Code 10471 (Consumer Recovery Account eligibility)Report a problem with this question

39. 39. The Consumer Recovery Account pays a claim based on a judgment against a California salesperson. What happens to that salesperson's license?

    • A.It is permanently revoked with no path back
    • B.It goes on probation for one renewal cycle
    • C.It is suspended until the account is repaid✓ Answer
    • D.It stays active because the fund is no-fault

    B&P 10475 makes the suspension automatic as soon as the account pays on a licensee's behalf. The license cannot be reinstated until the licensee repays the full amount plus interest. Suspension is not the same as permanent revocation, because repayment restores eligibility. The account is also not no-fault, since it pays only on judgments for the licensee's own fraud or conversion.

    Ref QB-J7QV7HSource: Cal. Bus. & Prof. Code 10475 (automatic suspension upon payment)Report a problem with this question

40. 40. Which of the following persons needs a California real estate license for the described activity?

    • A.A person paid to negotiate leases for several owners✓ Answer
    • B.A friend helping a neighbor find a buyer for no pay
    • C.An owner selling her own home without any agent
    • D.A court-appointed receiver selling under a court order

    Under B&P 10131, anyone who, for compensation or the expectation of it, negotiates leases or collects rents for other people is acting as a real estate broker and needs a license. B&P 10133 exempts owners dealing with their own property and receivers acting under a court order. Someone who helps without any compensation falls outside the definition. Of the four, only the paid lease negotiator needs a license.

    Ref QB-3QV2THSource: Cal. Bus. & Prof. Code 10131 and 10133Report a problem with this question

41. 41. A California salesperson leaves her responsible broker and has not yet joined another brokerage. What may she do while unaffiliated?

    • A.Act for any broker without notifying the DRE
    • B.Keep servicing her own listings until her renewal
    • C.Work directly for clients under her own name
    • D.No licensed work until a new broker is on file✓ Answer

    A salesperson may perform licensed acts only while employed by, and acting under, a licensed responsible broker (B&P 10132 and 10137). The broker must notify the DRE of the hire (Reg 2752). Until a new broker does that, her license cannot be used for licensed activity. The listings belong to the former broker, not to her, so she cannot keep servicing them. She also cannot act on her own under her own name.

    Ref QB-K738DJSource: Cal. Bus. & Prof. Code 10132, 10137; Cal. Code Regs. tit. 10, 2752Report a problem with this question

42. 42. Which statement correctly describes renewal of an active California real estate salesperson license? (CE = continuing education)

    • A.Every two years, with CE including implicit bias
    • B.Every four years, with CE required only for brokers
    • C.Every four years, with CE only on property valuation
    • D.Every four years, with CE including implicit bias✓ Answer

    California real estate licenses run for a four-year term. To renew an active license, both salespersons and brokers must complete DRE-approved continuing education under B&P 10170.5. The required topics include ethics, agency, trust fund handling, fair housing, risk management, and implicit bias training. CE is not limited to brokers, and it is not limited to valuation.

    Ref QB-4Q8DYJSource: Cal. Bus. & Prof. Code 10154, 10170.5 (license term and continuing education)Report a problem with this question

43. 43. A California broker's earned commission is paid into the brokerage trust account, and the broker leaves it there for several months as a cushion. This is best described as:

    • A.Conversion of client funds to broker use
    • B.A permitted reserve for bank service fees
    • C.An earned rebate held for the client
    • D.Commingling broker and client funds✓ Answer

    Regulation 2835 treats a broker's own money left in the trust account as commingling. Earned commissions must be withdrawn within 25 days, and only a small amount for bank charges may stay in the account. This is not conversion, because no client money was taken for the broker's use. Commingling is still a separate ground for discipline under B&P 10176(e).

    Ref QB-5QKQ5MSource: Cal. Code Regs. tit. 10, 2835; Cal. Bus. & Prof. Code 10176(e)Report a problem with this question

44. 44. Following the buyer's written instructions, a California broker forwards the buyer's deposit check directly to a neutral escrow holder instead of the trust account. What recordkeeping duty applies?

    • A.None, because escrow funds are not trust funds
    • B.The escrow holder must cosign the trust account
    • C.The check must first clear the trust account
    • D.The broker must log it as trust funds received✓ Answer

    Regulation 2832 lets a broker place trust funds with a neutral escrow depository instead of the trust account, so routing the check through the trust account first is not required. The money is still trust funds, though. Regulation 2831 requires the broker to keep a record of all trust funds received, including funds forwarded to escrow without ever entering the trust account.

    Ref QB-K9ZCDJSource: Cal. Code Regs. tit. 10, 2831 and 2832Report a problem with this question

45. 45. A California broker authorizes a bonded office employee to sign checks on the brokerage trust account. Who remains responsible for the trust funds?

    • A.The escrow company on each deal
    • B.The employee alone, once bonded
    • C.The broker, despite the delegation✓ Answer
    • D.The bank holding the trust account

    Regulation 2834 allows withdrawals by a designated licensee, or by an unlicensed employee who holds the required fidelity bond, but only with the broker's written authorization. The regulation says this delegation does not relieve the broker of responsibility for the trust funds. The broker's duty to supervise (Reg 2725) stays in place. The bond only protects against losses; it does not shift the accountability to the employee.

    Ref QB-3ST7THSource: Cal. Code Regs. tit. 10, 2834 and 2725Report a problem with this question

46. 46. Under Proposition 13, property tax is based on 1% of assessed value. How may a California property's assessed value change over time?

    • A.No yearly limit; reset every January to full market value
    • B.Up to 2% yearly; reset by a fresh appraisal every five years
    • C.Up to 2% yearly; reset on new owner or new construction✓ Answer
    • D.Up to 1% yearly; reset only when the owner refinances

    Article XIII A of the California Constitution sets the base-year value. After that, the assessed value may rise by no more than 2% a year to reflect inflation. A full reassessment to market value happens only on a change of ownership or new construction. The 1% figure is the base tax rate, not the cap on assessment increases. Refinancing is not a change of ownership, and there is no periodic five-year reappraisal.

    Ref QB-J9N28HSource: Cal. Const. art. XIII A, secs. 1-2 (Proposition 13)Report a problem with this question

47. 47. A California home being resold lies within a Mello-Roos community facilities district that levies a special tax. What does the law require of the seller?

    • A.Disclose the tax only if the buyer asks in writing
    • B.Get the buyer's lender to approve the special tax
    • C.Pay off the special tax lien in full before closing
    • D.Try in good faith to give the buyer a tax notice✓ Answer

    Civil Code 1102.6b requires a seller of property subject to a continuing Mello-Roos special-tax lien to make a good-faith effort to obtain a notice of the special tax from the levying agency and deliver it to the buyer. If the notice arrives after the offer is signed, the buyer gets a short statutory window to terminate. The duty applies without any request from the buyer. The seller does not have to pay off the lien, because it continues with the land.

    Ref QB-2SFVMGSource: Cal. Civ. Code 1102.6b (Mello-Roos / special tax notice)Report a problem with this question

48. 48. In California, a grant deed carries implied warranties even though none are written in it. What do those implied warranties promise?

    • A.No warranties of any kind; the grantor passes only whatever interest is held
    • B.Full defense of title against every claim, including those before the grantor's ownership
    • C.The property is free of all encumbrances of record and complies with local zoning
    • D.No prior conveyance by the grantor and no undisclosed encumbrances made by the grantor✓ Answer

    Under California Civil Code §1113, use of the word 'grant' implies two warranties. The grantor has not previously conveyed the same estate, and the estate is free of encumbrances done, made, or suffered by the grantor, except those disclosed. Defending title against claims from before the grantor's ownership is a general warranty covenant, which a grant deed does not imply. No warranty covers zoning compliance.

    Ref QB-N9Q2RMSource: California Civil Code §1113 (implied covenants in grant deed); CA DRE Salesperson Examination Content Outline, Transfer of PropertyReport a problem with this question

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