CALIFORNIA QUALIFIED MANAGER (QM)
EXAM 2026 | Complete Study Guide |
Practice Questions, Verified Answers &
Licensing Exam Prep
CALIFORNIA QUALIFIED MANAGER (QM) EXAM 2026 | Complete Study Guide
DOCUMENT OVERVIEW
• This comprehensive question study guide mirrors the structure and difficulty of
the official California QM licensing exam, providing thorough coverage of all tested
competencies and regulations to build exam readiness through focused practice
and detailed answer rationales.
• Study this material by working through questions systematically, reviewing
incorrect answers carefully, and using the detailed rationales to understand the
regulatory reasoning behind each correct response—repeat sections until you
achieve 85% or higher accuracy before exam day.
QUESTION 1
According to California Real Estate Law, which entity must hold a valid real
estate broker's license before opening a property management office?
A) Any individual with property management experience
B) A certified public accountant specializing in real estate
C) A licensed real estate broker or a duly authorized officer
D) A property management company incorporated in California
E) Any person who has passed the property management certification
CORRECT ANSWER: C) A licensed real estate broker or a duly authorized officer
Rationale: California law requires that all property management offices must be
established and maintained under the supervision of a licensed real estate broker.
The broker or their duly authorized officer must hold a valid broker's license. This is
not dependent on alternative credentials like accounting certification or property
management company status alone. The broker's license ensures compliance with
,California Department of Real Estate (DRE) regulations and consumer protection
standards.
QUESTION 2
What is the maximum period for which a broker must retain trust account
records according to California Real Estate Law?
A) One year from the date of transaction
B) Three years from the date of transaction
C) Five years from the date of transaction
D) Seven years from the date of transaction
E) Until the statute of limitations expires
CORRECT ANSWER: B) Three years from the date of transaction
Rationale: California Real Estate Law requires brokers to maintain trust account
records for a minimum of three years from the date of the transaction. These
records include all deposits, withdrawals, and account reconciliations. The three-
year period aligns with California's standard record-retention requirements for real
estate transactions and allows for investigation of potential violations or disputes
that may arise during this timeframe.
QUESTION 3
Which of the following must be included in a property management
agreement in California?
A) The broker's personal medical insurance policy
B) A statement of all duties and compensation arrangements
C) A guarantee of specific rental rates for tenants
D) A warranty that no disputes will arise during the management period
,E) The names of all previous property management companies
CORRECT ANSWER: B) A statement of all duties and compensation
arrangements
Rationale: California law mandates that all property management agreements must
clearly state the duties of the property manager and the compensation
arrangements. This transparency protects both the property owner and the broker
by establishing clear expectations. The agreement must outline management
responsibilities, fees, commission structure, and term of engagement. This does not
require personal insurance information, rental rate guarantees, or dispute
immunity, which would be impractical and unethical to promise.
QUESTION 4
What is prohibited regarding commingling of funds in a broker's trust
account?
A) Commingling personal funds with client deposits is permissible if clearly
documented
B) Commingling is allowed only during the first 30 days of a transaction
C) All client funds must be maintained separate from the broker's personal and
operational funds
D) Commingling is acceptable if approved by the property owner
E) The broker may deposit only 50% of client funds separately
CORRECT ANSWER: C) All client funds must be maintained separate from the
broker's personal and operational funds
Rationale: California law strictly prohibits the commingling of trust account funds
with the broker's personal or operational funds. This is a fundamental protection
mechanism to prevent misappropriation of client money and fraud. Even if
documented or approved by clients, commingling violates DRE regulations and
constitutes a serious violation that can result in license suspension or revocation.
, All client funds must be maintained in a separate trust account with proper
oversight and reconciliation.
QUESTION 5
Under California Fair Housing Laws, what must an advertiser do when
promoting rental properties?
A) Advertise in languages matching neighborhood demographics only
B) Use only photographs that exclude certain groups
C) Avoid language that implies preference based on protected characteristics
D) List properties in publications that cater to specific ethnic groups
E) Require applicants to disclose family status in all advertising
CORRECT ANSWER: C) Avoid language that implies preference based on
protected characteristics
Rationale: California Fair Housing Laws prohibit advertising language that indicates
preference, limitation, or discrimination based on protected characteristics
including race, color, national origin, religion, sex, familial status, disability, and
sexual orientation. Advertisers must use neutral language that invites all qualified
applicants regardless of protected status. Targeting specific ethnic groups,
excluding certain groups through photography, or requiring unnecessary personal
disclosures violates these protections and may result in civil liability and regulatory
action.
QUESTION 6
Which of the following is a required element in all California residential lease
agreements?
A) A clause prohibiting any guests or visitors
B) A statement of the parties' rights and responsibilities regarding maintenance
EXAM 2026 | Complete Study Guide |
Practice Questions, Verified Answers &
Licensing Exam Prep
CALIFORNIA QUALIFIED MANAGER (QM) EXAM 2026 | Complete Study Guide
DOCUMENT OVERVIEW
• This comprehensive question study guide mirrors the structure and difficulty of
the official California QM licensing exam, providing thorough coverage of all tested
competencies and regulations to build exam readiness through focused practice
and detailed answer rationales.
• Study this material by working through questions systematically, reviewing
incorrect answers carefully, and using the detailed rationales to understand the
regulatory reasoning behind each correct response—repeat sections until you
achieve 85% or higher accuracy before exam day.
QUESTION 1
According to California Real Estate Law, which entity must hold a valid real
estate broker's license before opening a property management office?
A) Any individual with property management experience
B) A certified public accountant specializing in real estate
C) A licensed real estate broker or a duly authorized officer
D) A property management company incorporated in California
E) Any person who has passed the property management certification
CORRECT ANSWER: C) A licensed real estate broker or a duly authorized officer
Rationale: California law requires that all property management offices must be
established and maintained under the supervision of a licensed real estate broker.
The broker or their duly authorized officer must hold a valid broker's license. This is
not dependent on alternative credentials like accounting certification or property
management company status alone. The broker's license ensures compliance with
,California Department of Real Estate (DRE) regulations and consumer protection
standards.
QUESTION 2
What is the maximum period for which a broker must retain trust account
records according to California Real Estate Law?
A) One year from the date of transaction
B) Three years from the date of transaction
C) Five years from the date of transaction
D) Seven years from the date of transaction
E) Until the statute of limitations expires
CORRECT ANSWER: B) Three years from the date of transaction
Rationale: California Real Estate Law requires brokers to maintain trust account
records for a minimum of three years from the date of the transaction. These
records include all deposits, withdrawals, and account reconciliations. The three-
year period aligns with California's standard record-retention requirements for real
estate transactions and allows for investigation of potential violations or disputes
that may arise during this timeframe.
QUESTION 3
Which of the following must be included in a property management
agreement in California?
A) The broker's personal medical insurance policy
B) A statement of all duties and compensation arrangements
C) A guarantee of specific rental rates for tenants
D) A warranty that no disputes will arise during the management period
,E) The names of all previous property management companies
CORRECT ANSWER: B) A statement of all duties and compensation
arrangements
Rationale: California law mandates that all property management agreements must
clearly state the duties of the property manager and the compensation
arrangements. This transparency protects both the property owner and the broker
by establishing clear expectations. The agreement must outline management
responsibilities, fees, commission structure, and term of engagement. This does not
require personal insurance information, rental rate guarantees, or dispute
immunity, which would be impractical and unethical to promise.
QUESTION 4
What is prohibited regarding commingling of funds in a broker's trust
account?
A) Commingling personal funds with client deposits is permissible if clearly
documented
B) Commingling is allowed only during the first 30 days of a transaction
C) All client funds must be maintained separate from the broker's personal and
operational funds
D) Commingling is acceptable if approved by the property owner
E) The broker may deposit only 50% of client funds separately
CORRECT ANSWER: C) All client funds must be maintained separate from the
broker's personal and operational funds
Rationale: California law strictly prohibits the commingling of trust account funds
with the broker's personal or operational funds. This is a fundamental protection
mechanism to prevent misappropriation of client money and fraud. Even if
documented or approved by clients, commingling violates DRE regulations and
constitutes a serious violation that can result in license suspension or revocation.
, All client funds must be maintained in a separate trust account with proper
oversight and reconciliation.
QUESTION 5
Under California Fair Housing Laws, what must an advertiser do when
promoting rental properties?
A) Advertise in languages matching neighborhood demographics only
B) Use only photographs that exclude certain groups
C) Avoid language that implies preference based on protected characteristics
D) List properties in publications that cater to specific ethnic groups
E) Require applicants to disclose family status in all advertising
CORRECT ANSWER: C) Avoid language that implies preference based on
protected characteristics
Rationale: California Fair Housing Laws prohibit advertising language that indicates
preference, limitation, or discrimination based on protected characteristics
including race, color, national origin, religion, sex, familial status, disability, and
sexual orientation. Advertisers must use neutral language that invites all qualified
applicants regardless of protected status. Targeting specific ethnic groups,
excluding certain groups through photography, or requiring unnecessary personal
disclosures violates these protections and may result in civil liability and regulatory
action.
QUESTION 6
Which of the following is a required element in all California residential lease
agreements?
A) A clause prohibiting any guests or visitors
B) A statement of the parties' rights and responsibilities regarding maintenance
