California Real Estate Broker
Examination with Practice Questions And
Correct Answers (Ve
1. A broker represents a seller under a listing agreement. The broker also owns a
property management company that leases the seller's property to a tenant. Without
written consent, the broker receives a referral fee from the tenant's renter's insurance
provider. Which fiduciary duty is most directly breached?
A. Duty of care
B. Duty of loyalty
C. Duty of disclosure
D. Duty of accounting
Answer: B. Duty of loyalty
Rationale: The broker's undisclosed receipt of a referral fee creates a conflict of interest
and secret profit, violating the duty of loyalty. Duty of care involves competence, disclosure
requires material facts to be revealed, and accounting involves handling funds; none
directly address the secret profit.
2. A buyer obtains a 30-year fixed-rate mortgage with an 80% loan-to-value ratio. The
lender charges 2 discount points and a 1% origination fee. Within three years, the
buyer refinances. Which federal disclosure must have been provided at application to
compare these costs with alternative loans?
A. Closing Disclosure
B. Loan Estimate
C. Affiliated Business Arrangement Disclosure
D. Homeownership Counseling Notice
Answer: B. Loan Estimate
Rationale: The Loan Estimate, required by TILA-RESPA Integrated Disclosure (TRID)
rules, must be provided within three business days of application and includes projected
costs like points and origination fees. The Closing Disclosure is provided at consummation,
not application; the other disclosures are not for cost comparison.
Page 1 of 82
,3. A developer seeks to subdivide a 50-acre parcel into 20 lots. The local agency
requires dedication of land for a park. Under the Subdivision Map Act, what is the
maximum parkland dedication requirement without a special tax?
A. 5 acres per 1,000 residents
B. 3 acres per 1,000 residents
C. 2 acres per 1,000 residents
D. 1 acre per 1,000 residents
Answer: B. 3 acres per 1,000 residents
Rationale: California Government Code §66477 allows local agencies to require up to 3
acres of parkland per 1,000 residents, or fees in lieu, without a special tax. Options A, C,
and D are incorrect because they exceed or fall below the statutory maximum.
4. A broker is preparing a Comparative Market Analysis (CMA) for a seller. The
broker adjusts comparable sales for differences in lot size, view, and condition. Which
appraisal principle justifies the adjustment for a superior view?
A. Contribution
B. Substitution
C. Conformity
D. Anticipation
Answer: A. Contribution
Rationale: The principle of contribution holds that a property's value is affected by the
contribution of individual features, such as a view, to the whole. Substitution relates to
buyer alternatives, conformity to neighborhood homogeneity, and anticipation to future
benefits.
Page 2 of 82
,5. A seller enters a listing agreement with Broker A. Before expiration, the seller signs
a new listing with Broker B. Broker A had procured a ready, willing, and able buyer
but had not yet presented the offer. Which statement is correct regarding Broker A's
commission?
A. Broker A is entitled to a commission because a ready, willing, and able buyer was
procured.
B. Broker A forfeits commission because the listing expired.
C. Broker A must share commission with Broker B.
D. Broker A is entitled to commission only if the sale closes.
Answer: A. Broker A is entitled to a commission because a ready, willing, and able
buyer was procured.
Rationale: Under California law, a broker earns a commission upon procuring a ready,
willing, and able buyer on the terms authorized by the seller, even if the sale does not close,
unless the listing specifies otherwise. Options B, C, and D misstate the procuring cause
doctrine.
6. A lender forecloses on a deed of trust via nonjudicial foreclosure. The trustee sends
a Notice of Default on March 1. What is the earliest date the trustee can conduct the
trustee's sale without a court order?
A. May 30
B. June 29
C. July 29
D. August 28
Answer: C. July 29
Rationale: Under California Civil Code §2924, a nonjudicial foreclosure requires a
three-month reinstatement period after the Notice of Default, plus at least 20 days' notice of
sale. March 1 + 3 months = June 1; then 20 days minimum = June 21, but the sale cannot
occur until at least 20 days after the Notice of Sale, which is typically published. The
earliest date is July 29, considering the 3-month period and 20-day notice. Options A, B,
and D are too early or late.
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, 7. A broker is managing a property with a gross annual income of $120,000 and
operating expenses of $45,000. The mortgage payment is $3,000 monthly. What is the
debt coverage ratio?
A. 1.25
B. 1.50
C. 2.08
D. 2.67
Answer: C. 2.08
Rationale: Net Operating Income (NOI) = $120,000 - $45,000 = $75,000. Annual debt
service = $3,000 × 12 = $36,000. DCR = NOI / Debt Service = $75,000 / $36,000 = 2.08.
Options A, B, and D are incorrect calculations.
8. A broker is reviewing a commercial lease that includes a percentage rent clause.
The tenant pays 5% of gross sales over a natural breakpoint. If base rent is $50,000
annually and the tenant's gross sales are $1,200,000, what is the percentage rent?
A. $10,000
B. $35,000
C. $60,000
D. $50,000
Answer: A. $10,000
Rationale: Natural breakpoint = Base Rent / Percentage Rate = $50,.05 =
$1,000,000. Sales over breakpoint = $1,200,000 - $1,000,000 = $200,000. Percentage rent
= 5% × $200,000 = $10,000. Options B, C, and D are incorrect.
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Examination with Practice Questions And
Correct Answers (Ve
1. A broker represents a seller under a listing agreement. The broker also owns a
property management company that leases the seller's property to a tenant. Without
written consent, the broker receives a referral fee from the tenant's renter's insurance
provider. Which fiduciary duty is most directly breached?
A. Duty of care
B. Duty of loyalty
C. Duty of disclosure
D. Duty of accounting
Answer: B. Duty of loyalty
Rationale: The broker's undisclosed receipt of a referral fee creates a conflict of interest
and secret profit, violating the duty of loyalty. Duty of care involves competence, disclosure
requires material facts to be revealed, and accounting involves handling funds; none
directly address the secret profit.
2. A buyer obtains a 30-year fixed-rate mortgage with an 80% loan-to-value ratio. The
lender charges 2 discount points and a 1% origination fee. Within three years, the
buyer refinances. Which federal disclosure must have been provided at application to
compare these costs with alternative loans?
A. Closing Disclosure
B. Loan Estimate
C. Affiliated Business Arrangement Disclosure
D. Homeownership Counseling Notice
Answer: B. Loan Estimate
Rationale: The Loan Estimate, required by TILA-RESPA Integrated Disclosure (TRID)
rules, must be provided within three business days of application and includes projected
costs like points and origination fees. The Closing Disclosure is provided at consummation,
not application; the other disclosures are not for cost comparison.
Page 1 of 82
,3. A developer seeks to subdivide a 50-acre parcel into 20 lots. The local agency
requires dedication of land for a park. Under the Subdivision Map Act, what is the
maximum parkland dedication requirement without a special tax?
A. 5 acres per 1,000 residents
B. 3 acres per 1,000 residents
C. 2 acres per 1,000 residents
D. 1 acre per 1,000 residents
Answer: B. 3 acres per 1,000 residents
Rationale: California Government Code §66477 allows local agencies to require up to 3
acres of parkland per 1,000 residents, or fees in lieu, without a special tax. Options A, C,
and D are incorrect because they exceed or fall below the statutory maximum.
4. A broker is preparing a Comparative Market Analysis (CMA) for a seller. The
broker adjusts comparable sales for differences in lot size, view, and condition. Which
appraisal principle justifies the adjustment for a superior view?
A. Contribution
B. Substitution
C. Conformity
D. Anticipation
Answer: A. Contribution
Rationale: The principle of contribution holds that a property's value is affected by the
contribution of individual features, such as a view, to the whole. Substitution relates to
buyer alternatives, conformity to neighborhood homogeneity, and anticipation to future
benefits.
Page 2 of 82
,5. A seller enters a listing agreement with Broker A. Before expiration, the seller signs
a new listing with Broker B. Broker A had procured a ready, willing, and able buyer
but had not yet presented the offer. Which statement is correct regarding Broker A's
commission?
A. Broker A is entitled to a commission because a ready, willing, and able buyer was
procured.
B. Broker A forfeits commission because the listing expired.
C. Broker A must share commission with Broker B.
D. Broker A is entitled to commission only if the sale closes.
Answer: A. Broker A is entitled to a commission because a ready, willing, and able
buyer was procured.
Rationale: Under California law, a broker earns a commission upon procuring a ready,
willing, and able buyer on the terms authorized by the seller, even if the sale does not close,
unless the listing specifies otherwise. Options B, C, and D misstate the procuring cause
doctrine.
6. A lender forecloses on a deed of trust via nonjudicial foreclosure. The trustee sends
a Notice of Default on March 1. What is the earliest date the trustee can conduct the
trustee's sale without a court order?
A. May 30
B. June 29
C. July 29
D. August 28
Answer: C. July 29
Rationale: Under California Civil Code §2924, a nonjudicial foreclosure requires a
three-month reinstatement period after the Notice of Default, plus at least 20 days' notice of
sale. March 1 + 3 months = June 1; then 20 days minimum = June 21, but the sale cannot
occur until at least 20 days after the Notice of Sale, which is typically published. The
earliest date is July 29, considering the 3-month period and 20-day notice. Options A, B,
and D are too early or late.
Page 3 of 82
, 7. A broker is managing a property with a gross annual income of $120,000 and
operating expenses of $45,000. The mortgage payment is $3,000 monthly. What is the
debt coverage ratio?
A. 1.25
B. 1.50
C. 2.08
D. 2.67
Answer: C. 2.08
Rationale: Net Operating Income (NOI) = $120,000 - $45,000 = $75,000. Annual debt
service = $3,000 × 12 = $36,000. DCR = NOI / Debt Service = $75,000 / $36,000 = 2.08.
Options A, B, and D are incorrect calculations.
8. A broker is reviewing a commercial lease that includes a percentage rent clause.
The tenant pays 5% of gross sales over a natural breakpoint. If base rent is $50,000
annually and the tenant's gross sales are $1,200,000, what is the percentage rent?
A. $10,000
B. $35,000
C. $60,000
D. $50,000
Answer: A. $10,000
Rationale: Natural breakpoint = Base Rent / Percentage Rate = $50,.05 =
$1,000,000. Sales over breakpoint = $1,200,000 - $1,000,000 = $200,000. Percentage rent
= 5% × $200,000 = $10,000. Options B, C, and D are incorrect.
Page 4 of 82
