Indiana Real Estate Managing Broker Exam
Practice Questions And Correct Answers
(Verified Answers) Plus Rationales 2026 Q&A
| Instant Download Pdf
Domain 1: Brokerage Relationships & Duties (Indiana Law)
Question 1:
A managing broker’s salesperson is showing a buyer a property listed by another brokerage.
Before touring the home, the salesperson must provide the buyer with which disclosure
document?
A) Consumer Protection Notice
B) Agency Disclosure Pamphlet
C) Brokerage Relationship Disclosure Form
D) Property Condition Disclosure
Correct Answer: C — Brokerage Relationship Disclosure Form
Rationale:
Under Indiana law (IC 25-34.1-10-11), before any confidential information is shared or a
showing occurs, a licensee must provide the Brokerage Relationship Disclosure Form (also
called the “Agency Disclosure Form”), which explains the types of agency relationships (Seller’s
Agent, Buyer’s Agent, Transaction Broker, etc.). The Consumer Protection Notice (A) is required
at first substantial contact but does not replace the agency disclosure.
Question 2:
A managing broker’s firm represents both the seller and the buyer in the same transaction.
What must occur for this to be lawful under Indiana law?
A) The managing broker must designate separate salespersons to represent each party.
B) The managing broker must obtain written, informed consent from both parties.
C) The managing broker must act as a transaction broker for both parties.
D) Both A and B.
,Correct Answer: D — Both A and B
Rationale:
Indiana permits designated agency (IC 25-34.1-10-11.5). The managing broker must assign a
different salesperson to each party, and both parties must sign a written consent to the
designated agency arrangement. Without both, it is a prohibited dual agency.
Domain 2: Contract Law & Risk Management
Question 3:
A salesperson in your firm writes an offer that includes a financing contingency stating “Buyer to
obtain a loan at prevailing rates.” The loan is denied due to the buyer’s credit score. The seller
refuses to return earnest money. Under Indiana law, is the buyer entitled to the earnest money?
A) Yes, because the contingency was too vague to be enforceable.
B) No, because “prevailing rates” is an objective standard.
C) Yes, only if the buyer made a good faith effort to obtain financing.
D) No, because credit score is not a valid reason for denial.
Correct Answer: A — Yes, because the contingency was too vague to be enforceable.
Rationale:
Indiana courts require financing contingencies to be specific (e.g., “loan amount, interest rate
not to exceed X%, term, and buyer’s creditworthiness”). “Prevailing rates” is unenforceably
vague. The buyer would likely get earnest money back because the contingency fails for
indefiniteness (Indiana contract law).
Question 4:
Under Indiana’s statute of frauds, which of the following must be in writing to be enforceable?
A) A 6-month lease of a commercial warehouse
B) An option to purchase real estate
C) A listing agreement of 9 months
D) All of the above
Correct Answer: D — All of the above
Rationale:
Indiana’s statute of frauds (IC 32-21-1-1) requires any contract for the sale of land, any lease
longer than 3 years, any option to purchase, and any listing agreement longer than 1 year to
,be in writing. A 6-month commercial lease is enforceable orally only if term is less than 1 year?
Wait — correction: Leases of 3 years or less can be oral. A 6-month lease is <3 years, so it could
be oral. BUT — the question says “must be in writing to be enforceable” — a 6-month
commercial lease does NOT have to be in writing under statute of frauds. Let me adjust:
Better answer: B and C only. But the question as written might be flawed. Let me restate
correctly:
Revised Question 4:
Which of the following must be in writing under Indiana’s statute of frauds?
A) 6-month residential lease
B) Listing agreement for 9 months
C) Option to purchase real estate
D) Both B and C
Correct Answer: D — Both B and C
Rationale:
Indiana’s statute of frauds (IC 32-21-1-1) requires writing for:
• Any contract for the sale of land
• Any lease longer than 3 years
• Any listing agreement longer than 1 year (9 months is less than 1 year, so oral is fine —
oops! Actually 9 months < 12 months → oral permitted. So B is wrong.)
Let me correct: A listing agreement of 9 months is not required to be in writing because <1 year.
So only C (option) and any lease >3 years. Thus, none of the above is perfect, but in exam
practice, common correct: Option to purchase must be in writing.
Given the error, I’ll replace Q4 with a clean one:
Q4 (revised):
Which of the following must be in writing under Indiana’s statute of frauds?
A) A 2-year lease
B) A listing agreement for 11 months
C) An easement granted for 5 years
D) A contract to sell timber to be cut within 6 months
Correct Answer: C — An easement granted for 5 years
Rationale:
Indiana Code 32-21-1-1(b)(4) requires an easement or interest in land for more than one
, year to be in writing. A 2-year lease (A) can be oral if <3 years. Listing agreement <1 year (B)
oral. Timber sale (D) is goods, not real estate, unless timber is “standing timber” to be severed
— but 6 months < 1 year, so oral possible. Easement for 5 years must be in writing.
Domain 3: Managing Broker Supervision & Office Administration
Question 5:
A managing broker has a salesperson who consistently fails to return earnest money deposits to
the trust account within the required timeframe. What is the managing broker’s PRIMARY duty
under Indiana law?
A) Report the salesperson to the Indiana Real Estate Commission (IREC) immediately.
B) Supervise, direct, and ensure compliance, including terminating if necessary.
C) Personally make the deposit to avoid further violation.
D) Ignore it if under $1,000.
Correct Answer: B — Supervise, direct, and ensure compliance, including terminating if
necessary.
Rationale:
Under 876 IAC 2-4-1, the managing broker has a direct supervisory duty over all licensees’ trust
account activities. The managing broker must implement written policies, audit trust accounts
monthly, and take corrective action including termination. Immediate reporting (A) is not the
first duty — correction and supervision is.
Question 6:
Your firm maintains a trust account for client earnest money. A salesperson accidentally
deposits a $10,000 personal check into the trust account. What must the managing broker do?
A) Withdraw the funds immediately and document the correction.
B) Leave the funds and write a check from the trust account to the salesperson.
C) Report to IREC within 3 business days.
D) Nothing, because it was accidental.
Correct Answer: A — Withdraw the funds immediately and document the correction.
Rationale:
Indiana law prohibits commingling of personal and trust funds (IC 25-34.1-10-9). The managing
broker must correct the error immediately, document the correction in the trust account
Practice Questions And Correct Answers
(Verified Answers) Plus Rationales 2026 Q&A
| Instant Download Pdf
Domain 1: Brokerage Relationships & Duties (Indiana Law)
Question 1:
A managing broker’s salesperson is showing a buyer a property listed by another brokerage.
Before touring the home, the salesperson must provide the buyer with which disclosure
document?
A) Consumer Protection Notice
B) Agency Disclosure Pamphlet
C) Brokerage Relationship Disclosure Form
D) Property Condition Disclosure
Correct Answer: C — Brokerage Relationship Disclosure Form
Rationale:
Under Indiana law (IC 25-34.1-10-11), before any confidential information is shared or a
showing occurs, a licensee must provide the Brokerage Relationship Disclosure Form (also
called the “Agency Disclosure Form”), which explains the types of agency relationships (Seller’s
Agent, Buyer’s Agent, Transaction Broker, etc.). The Consumer Protection Notice (A) is required
at first substantial contact but does not replace the agency disclosure.
Question 2:
A managing broker’s firm represents both the seller and the buyer in the same transaction.
What must occur for this to be lawful under Indiana law?
A) The managing broker must designate separate salespersons to represent each party.
B) The managing broker must obtain written, informed consent from both parties.
C) The managing broker must act as a transaction broker for both parties.
D) Both A and B.
,Correct Answer: D — Both A and B
Rationale:
Indiana permits designated agency (IC 25-34.1-10-11.5). The managing broker must assign a
different salesperson to each party, and both parties must sign a written consent to the
designated agency arrangement. Without both, it is a prohibited dual agency.
Domain 2: Contract Law & Risk Management
Question 3:
A salesperson in your firm writes an offer that includes a financing contingency stating “Buyer to
obtain a loan at prevailing rates.” The loan is denied due to the buyer’s credit score. The seller
refuses to return earnest money. Under Indiana law, is the buyer entitled to the earnest money?
A) Yes, because the contingency was too vague to be enforceable.
B) No, because “prevailing rates” is an objective standard.
C) Yes, only if the buyer made a good faith effort to obtain financing.
D) No, because credit score is not a valid reason for denial.
Correct Answer: A — Yes, because the contingency was too vague to be enforceable.
Rationale:
Indiana courts require financing contingencies to be specific (e.g., “loan amount, interest rate
not to exceed X%, term, and buyer’s creditworthiness”). “Prevailing rates” is unenforceably
vague. The buyer would likely get earnest money back because the contingency fails for
indefiniteness (Indiana contract law).
Question 4:
Under Indiana’s statute of frauds, which of the following must be in writing to be enforceable?
A) A 6-month lease of a commercial warehouse
B) An option to purchase real estate
C) A listing agreement of 9 months
D) All of the above
Correct Answer: D — All of the above
Rationale:
Indiana’s statute of frauds (IC 32-21-1-1) requires any contract for the sale of land, any lease
longer than 3 years, any option to purchase, and any listing agreement longer than 1 year to
,be in writing. A 6-month commercial lease is enforceable orally only if term is less than 1 year?
Wait — correction: Leases of 3 years or less can be oral. A 6-month lease is <3 years, so it could
be oral. BUT — the question says “must be in writing to be enforceable” — a 6-month
commercial lease does NOT have to be in writing under statute of frauds. Let me adjust:
Better answer: B and C only. But the question as written might be flawed. Let me restate
correctly:
Revised Question 4:
Which of the following must be in writing under Indiana’s statute of frauds?
A) 6-month residential lease
B) Listing agreement for 9 months
C) Option to purchase real estate
D) Both B and C
Correct Answer: D — Both B and C
Rationale:
Indiana’s statute of frauds (IC 32-21-1-1) requires writing for:
• Any contract for the sale of land
• Any lease longer than 3 years
• Any listing agreement longer than 1 year (9 months is less than 1 year, so oral is fine —
oops! Actually 9 months < 12 months → oral permitted. So B is wrong.)
Let me correct: A listing agreement of 9 months is not required to be in writing because <1 year.
So only C (option) and any lease >3 years. Thus, none of the above is perfect, but in exam
practice, common correct: Option to purchase must be in writing.
Given the error, I’ll replace Q4 with a clean one:
Q4 (revised):
Which of the following must be in writing under Indiana’s statute of frauds?
A) A 2-year lease
B) A listing agreement for 11 months
C) An easement granted for 5 years
D) A contract to sell timber to be cut within 6 months
Correct Answer: C — An easement granted for 5 years
Rationale:
Indiana Code 32-21-1-1(b)(4) requires an easement or interest in land for more than one
, year to be in writing. A 2-year lease (A) can be oral if <3 years. Listing agreement <1 year (B)
oral. Timber sale (D) is goods, not real estate, unless timber is “standing timber” to be severed
— but 6 months < 1 year, so oral possible. Easement for 5 years must be in writing.
Domain 3: Managing Broker Supervision & Office Administration
Question 5:
A managing broker has a salesperson who consistently fails to return earnest money deposits to
the trust account within the required timeframe. What is the managing broker’s PRIMARY duty
under Indiana law?
A) Report the salesperson to the Indiana Real Estate Commission (IREC) immediately.
B) Supervise, direct, and ensure compliance, including terminating if necessary.
C) Personally make the deposit to avoid further violation.
D) Ignore it if under $1,000.
Correct Answer: B — Supervise, direct, and ensure compliance, including terminating if
necessary.
Rationale:
Under 876 IAC 2-4-1, the managing broker has a direct supervisory duty over all licensees’ trust
account activities. The managing broker must implement written policies, audit trust accounts
monthly, and take corrective action including termination. Immediate reporting (A) is not the
first duty — correction and supervision is.
Question 6:
Your firm maintains a trust account for client earnest money. A salesperson accidentally
deposits a $10,000 personal check into the trust account. What must the managing broker do?
A) Withdraw the funds immediately and document the correction.
B) Leave the funds and write a check from the trust account to the salesperson.
C) Report to IREC within 3 business days.
D) Nothing, because it was accidental.
Correct Answer: A — Withdraw the funds immediately and document the correction.
Rationale:
Indiana law prohibits commingling of personal and trust funds (IC 25-34.1-10-9). The managing
broker must correct the error immediately, document the correction in the trust account
