Colorado PSI Real Estate Licensing Exam
Practice Test Questions with Verified
Answers & Rationales 2026 Q&A | Instant
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1. What is the primary purpose of a real estate license law?
A. To increase property taxes
B. To protect the public
C. To guarantee commissions
D. To regulate lenders
Answer: B. To protect the public
Rationale: Real estate license laws are designed primarily to protect
consumers by regulating the conduct and qualifications of real estate
professionals.
2. Which type of ownership gives the holder full rights to a property?
A. Leasehold estate
B. Life estate
C. Fee simple estate
D. Easement interest
Answer: C. Fee simple estate
Rationale: Fee simple ownership provides the greatest bundle of rights
and is considered the highest form of property ownership.
, 3. Which document transfers ownership of real property?
A. Lease
B. Deed
C. Listing agreement
D. Easement
Answer: B. Deed
Rationale: A deed is the legal instrument used to transfer title from
one party to another.
4. What is earnest money?
A. A broker’s commission
B. Rent paid in advance
C. Deposit showing buyer good faith
D. Mortgage insurance
Answer: C. Deposit showing buyer good faith
Rationale: Earnest money demonstrates a buyer’s serious intent to
complete the purchase transaction.
5. A property manager collects rent on behalf of:
A. The tenant
B. The lender
C. The owner
D. The county assessor
,Answer: C. The owner
Rationale: Property managers act as agents for property owners and
manage rental operations on their behalf.
6. Which approach to value compares similar recently sold
properties?
A. Income approach
B. Cost approach
C. Sales comparison approach
D. Gross rent multiplier
Answer: C. Sales comparison approach
Rationale: The sales comparison approach estimates value by
analyzing recent sales of comparable properties.
7. A legal description is MOST commonly found in:
A. An appraisal
B. A deed
C. A listing presentation
D. A loan estimate
Answer: B. A deed
Rationale: Deeds contain legal descriptions that precisely identify the
property being transferred.
8. What does a lien represent?
, A. Ownership interest
B. Government zoning
C. Claim against property for debt
D. Property insurance coverage
Answer: C. Claim against property for debt
Rationale: A lien is a financial claim placed against property to secure
payment of a debt or obligation.
9. Which government power allows taxation of real estate?
A. Police power
B. Eminent domain
C. Escheat
D. Taxation
Answer: D. Taxation
Rationale: Taxation is one of the government’s inherent powers over
real property.
10. What is the term for property that is permanently attached
to land?
A. Personal property
B. Fixture
C. Trade secret
D. Emblement
Answer: B. Fixture
Practice Test Questions with Verified
Answers & Rationales 2026 Q&A | Instant
Download Pdf
1. What is the primary purpose of a real estate license law?
A. To increase property taxes
B. To protect the public
C. To guarantee commissions
D. To regulate lenders
Answer: B. To protect the public
Rationale: Real estate license laws are designed primarily to protect
consumers by regulating the conduct and qualifications of real estate
professionals.
2. Which type of ownership gives the holder full rights to a property?
A. Leasehold estate
B. Life estate
C. Fee simple estate
D. Easement interest
Answer: C. Fee simple estate
Rationale: Fee simple ownership provides the greatest bundle of rights
and is considered the highest form of property ownership.
, 3. Which document transfers ownership of real property?
A. Lease
B. Deed
C. Listing agreement
D. Easement
Answer: B. Deed
Rationale: A deed is the legal instrument used to transfer title from
one party to another.
4. What is earnest money?
A. A broker’s commission
B. Rent paid in advance
C. Deposit showing buyer good faith
D. Mortgage insurance
Answer: C. Deposit showing buyer good faith
Rationale: Earnest money demonstrates a buyer’s serious intent to
complete the purchase transaction.
5. A property manager collects rent on behalf of:
A. The tenant
B. The lender
C. The owner
D. The county assessor
,Answer: C. The owner
Rationale: Property managers act as agents for property owners and
manage rental operations on their behalf.
6. Which approach to value compares similar recently sold
properties?
A. Income approach
B. Cost approach
C. Sales comparison approach
D. Gross rent multiplier
Answer: C. Sales comparison approach
Rationale: The sales comparison approach estimates value by
analyzing recent sales of comparable properties.
7. A legal description is MOST commonly found in:
A. An appraisal
B. A deed
C. A listing presentation
D. A loan estimate
Answer: B. A deed
Rationale: Deeds contain legal descriptions that precisely identify the
property being transferred.
8. What does a lien represent?
, A. Ownership interest
B. Government zoning
C. Claim against property for debt
D. Property insurance coverage
Answer: C. Claim against property for debt
Rationale: A lien is a financial claim placed against property to secure
payment of a debt or obligation.
9. Which government power allows taxation of real estate?
A. Police power
B. Eminent domain
C. Escheat
D. Taxation
Answer: D. Taxation
Rationale: Taxation is one of the government’s inherent powers over
real property.
10. What is the term for property that is permanently attached
to land?
A. Personal property
B. Fixture
C. Trade secret
D. Emblement
Answer: B. Fixture
