LREC REAL ESTATE SALESPERSON PRACTICE EXAM – QUESTIONS AND
ANSWERS | VERIFIED AND WELL DETAILED ANSWERS | PLUS RATIONALES |
GUARANTEED PASS | LATEST EXAM UPDATE
CORE DOMAINS
*Property Ownership*
*Land Use Controls*
*Valuation and Market Analysis*
*Financing and Settlement*
*Agency Relationships*
*Contracts and Conveyance*
*Federal and State Laws*
*Real Estate Ethics*
*Property Disclosures*
INTRODUCTION
*This practice exam is designed to prepare candidates for the professional licens
Section One: Questions 1–100
1. Which element is essential to the validity of a real estate contract?
A. Earnest money deposit
, B. A notarized signature
🟢✔️C. Competent parties
D. A formal property appraisal
🔴 Explanation: For a contract to be legally binding, it must involve parties who
are of legal age and sound mind. Earnest money and notarization are not legal
requirements for contract validity.
2. A broker is acting as a dual agent. What is their primary duty?
A. To advocate for the seller exclusively
B. To advocate for the buyer exclusively
🟢✔️C. To provide neutral representation to both parties
D. To favor the party that pays the higher commission
🔴 Explanation: Dual agency requires the broker to represent both the buyer
and seller without favoring one over the other, ensuring all parties are treated
fairly and disclosed facts are shared.
3. The principle of substitution states that:
A. Property values always increase over time
B. A property is worth what the owner paid for it
🟢✔️C. A buyer will not pay more for a property than the cost of a comparable
substitute
D. The market value is determined by the cost of the land only
🔴 Explanation: This principle is the basis of the sales comparison approach,
suggesting that rational buyers will choose the most affordable option among
equally desirable properties.
,4. Which type of deed provides the greatest protection to the grantee?
A. Quitclaim deed
B. Special warranty deed
🟢✔️C. General warranty deed
D. Bargain and sale deed
🔴 Explanation: A general warranty deed includes covenants of seisin, quiet
enjoyment, and warranty forever, protecting the grantee against all past,
present, and future title defects.
5. What is an example of police power?
A. Eminent domain
B. Escheat
C. Taxation
🟢✔️D. Zoning ordinances
🔴 Explanation: Police power is the government’s right to enact laws to protect
public health, safety, and welfare, which includes zoning regulations and
building codes.
6. A house is sold for $300,000. If the buyer puts 20% down, what is the loan
amount?
A. $60,000
B. $220,000
🟢✔️C. $240,000
D. $280,000
, 🔴 Explanation: The loan amount is 80% of the purchase price ($300,000 * 0.80
= $240,000).
7. Which clause in a mortgage allows the lender to demand the entire balance if
the property is sold?
A. Subordination clause
B. Defeasance clause
🟢✔️C. Alienation clause
D. Acceleration clause
🔴 Explanation: An alienation clause, or due-on-sale clause, prohibits the
transfer of the mortgage liability to a new buyer without lender approval.
8. When an agent mixes client funds with their personal funds, it is known as:
A. Conversion
🟢✔️B. Commingling
C. Puffing
D. Steering
🔴 Explanation: Commingling is the illegal act of mixing trust funds (like earnest
money) with personal or operating accounts, whereas using those funds for
personal use is conversion.
9. The Civil Rights Act of 1866 prohibits discrimination based on:
🟢✔️A. Race
B. Religion
C. Sex
D. National origin
ANSWERS | VERIFIED AND WELL DETAILED ANSWERS | PLUS RATIONALES |
GUARANTEED PASS | LATEST EXAM UPDATE
CORE DOMAINS
*Property Ownership*
*Land Use Controls*
*Valuation and Market Analysis*
*Financing and Settlement*
*Agency Relationships*
*Contracts and Conveyance*
*Federal and State Laws*
*Real Estate Ethics*
*Property Disclosures*
INTRODUCTION
*This practice exam is designed to prepare candidates for the professional licens
Section One: Questions 1–100
1. Which element is essential to the validity of a real estate contract?
A. Earnest money deposit
, B. A notarized signature
🟢✔️C. Competent parties
D. A formal property appraisal
🔴 Explanation: For a contract to be legally binding, it must involve parties who
are of legal age and sound mind. Earnest money and notarization are not legal
requirements for contract validity.
2. A broker is acting as a dual agent. What is their primary duty?
A. To advocate for the seller exclusively
B. To advocate for the buyer exclusively
🟢✔️C. To provide neutral representation to both parties
D. To favor the party that pays the higher commission
🔴 Explanation: Dual agency requires the broker to represent both the buyer
and seller without favoring one over the other, ensuring all parties are treated
fairly and disclosed facts are shared.
3. The principle of substitution states that:
A. Property values always increase over time
B. A property is worth what the owner paid for it
🟢✔️C. A buyer will not pay more for a property than the cost of a comparable
substitute
D. The market value is determined by the cost of the land only
🔴 Explanation: This principle is the basis of the sales comparison approach,
suggesting that rational buyers will choose the most affordable option among
equally desirable properties.
,4. Which type of deed provides the greatest protection to the grantee?
A. Quitclaim deed
B. Special warranty deed
🟢✔️C. General warranty deed
D. Bargain and sale deed
🔴 Explanation: A general warranty deed includes covenants of seisin, quiet
enjoyment, and warranty forever, protecting the grantee against all past,
present, and future title defects.
5. What is an example of police power?
A. Eminent domain
B. Escheat
C. Taxation
🟢✔️D. Zoning ordinances
🔴 Explanation: Police power is the government’s right to enact laws to protect
public health, safety, and welfare, which includes zoning regulations and
building codes.
6. A house is sold for $300,000. If the buyer puts 20% down, what is the loan
amount?
A. $60,000
B. $220,000
🟢✔️C. $240,000
D. $280,000
, 🔴 Explanation: The loan amount is 80% of the purchase price ($300,000 * 0.80
= $240,000).
7. Which clause in a mortgage allows the lender to demand the entire balance if
the property is sold?
A. Subordination clause
B. Defeasance clause
🟢✔️C. Alienation clause
D. Acceleration clause
🔴 Explanation: An alienation clause, or due-on-sale clause, prohibits the
transfer of the mortgage liability to a new buyer without lender approval.
8. When an agent mixes client funds with their personal funds, it is known as:
A. Conversion
🟢✔️B. Commingling
C. Puffing
D. Steering
🔴 Explanation: Commingling is the illegal act of mixing trust funds (like earnest
money) with personal or operating accounts, whereas using those funds for
personal use is conversion.
9. The Civil Rights Act of 1866 prohibits discrimination based on:
🟢✔️A. Race
B. Religion
C. Sex
D. National origin
