COLORADO REAL ESTATE BROKER EXAM
PREP 2027-2028
200 Practice Questions with Verified Answers &
Detailed Rationales
ABSTRACT: This comprehensive practice examination is designed to prepare candidates
for the Colorado Real Estate Broker Licensing Exam administered by PSI. The exam
consists of two portions: a National section (80 questions, 120 minutes, 75% passing score)
and a Colorado State-specific section (74 questions, 110 minutes, 71.5% passing score) .
This practice bank contains 200 questions formatted in the standard A, B, C, D multiple-
choice structure used on the actual exam . Questions cover all major test areas including
property ownership, contracts, agency relationships, financing, Colorado Commission rules,
brokerage relationships, trust accounts, and fair housing laws . Each question includes a
verified correct Answer, a detailed rationale explaining why the correct Answer is right,
and explanations of why the other options are incorrect, with references to Colorado
statutes and Commission rules where applicable.
SECTION 1: COLORADO REAL ESTATE COMMISSION & LICENSING
Question 1
Duties of the Colorado Real Estate Commission include all of the following EXCEPT:
A) Investigation of verified written complaints
B) Approving errors and omissions insurance carriers
C) Creating the Annual Commission Update course each year
D) Hearing disputes between brokers
Answer: D
Rationale: The Colorado Real Estate Commission does not hear disputes between brokers;
such matters are civil disputes between private parties. The Commission's statutory duties
include investigating complaints, approving E&O carriers, and creating required
continuing education courses including the Annual Commission Update .
A is incorrect because investigating verified written complaints is a core statutory duty of
the Commission.
B is incorrect because the Commission approves errors and omissions insurance carriers for
licensees.
C is incorrect because the Commission creates the mandatory Annual Commission Update
course each year.
,Question 2
Which of the following qualifies toward the 12 hours of required elective continuing
education credits for a Colorado real estate broker?
A) An exam prep class taken to prepare for the state portion of the licensing exam
B) A brokerage firm's orientation and personal marketing course
C) Passing the national portion of the broker licensing exam
D) The National Association of REALTORS® ethics course
Answer: D
Rationale: The NAR ethics course qualifies for elective continuing education credit in
Colorado. Exam prep classes, firm orientation, and passing the licensing exam do not count
toward continuing education requirements .
A is incorrect because exam preparation courses do not qualify for CE credit.
B is incorrect because brokerage orientation and marketing courses are not approved CE.
C is incorrect because passing the licensing exam is a prerequisite, not continuing
education.
Question 3
Errors and omissions professional liability insurance is required for which of the following
licensees?
A) Inactive licensees
B) Active licensees
C) Retired licensees
D) License applicants who have not yet passed the exam
Answer: B
Rationale: Active licensees are required to carry errors and omissions insurance. Inactive
licensees are not engaged in real estate activities and therefore are not required to carry
E&O insurance .
A is incorrect because inactive licensees are exempt from the E&O requirement.
C is incorrect because retired licensees are not actively practicing.
D is incorrect because applicants who have not yet passed the exam are not yet licensed.
Question 4
A Colorado broker associate referred a client to a broker in Florida. The Florida broker
called to say the buyer's property will close soon and wants to know where to send the
referral fee. Which is TRUE?
,A) The broker associate must deposit the fee into a trust account for holding
B) The fee must be made payable to the brokerage firm
C) The broker associate does not need to inform anyone of the fee
D) The broker associate needs to split the fee 50/50 with the brokerage
Answer: B
Rationale: All referral fees must be paid to the brokerage firm, not directly to the individual
broker associate. This ensures proper accounting and compliance with licensing laws .
A is incorrect because referral fees are not held in trust accounts; they are compensation.
C is incorrect because the brokerage must be informed of and receive the fee.
D is incorrect because the split arrangement is a matter between the broker and the
brokerage firm.
Question 5
A broker developed a website to advertise the brokerage with the firm's name, location, and
phone number. What additional information must the broker include?
A) Name and address of the home office
B) License number of the brokerage
C) States in which the brokerage holds licenses
D) Broker's personal email address
Answer: A
Rationale: All advertising must include the brokerage name as registered with the Colorado
Real Estate Commission. This ensures proper identification of the brokerage entity
responsible for the advertising .
B is incorrect although license numbers may be required in some contexts, the brokerage
name is the primary requirement.
C is incorrect because advertising only needs to identify the brokerage, not list all states of
operation.
D is incorrect because personal contact information is not required in advertising.
Question 6
All of the following are required to have an active Colorado real estate license EXCEPT:
A) An attorney who lists and sells property in addition to practicing law
B) A mortgage broker who helps buyers find and purchase homes
C) A business opportunity salesperson selling a franchise with a leasehold estate
D) An attorney selling property as part of an estate administration
, Answer: D
Rationale: Attorneys selling property as part of estate administration are exempt from
licensing requirements in Colorado. However, attorneys who list and sell property outside
of estate administration must be licensed .
A is incorrect because attorneys engaged in real estate brokerage outside estate
administration must be licensed.
B is incorrect because mortgage brokers involved in property transactions require licensure.
C is incorrect because selling a franchise with a leasehold estate constitutes real estate
activity requiring a license.
Question 7
Brokers selling real estate must renew their license and errors and omissions insurance
every:
A) Three years for the license and every two years for E&O insurance
B) Year for the license and every three years for E&O insurance
C) Three years for the license and every year for E&O insurance
D) Three years for the license and every three years for E&O insurance
Answer: C
Rationale: Colorado real estate licenses must be renewed every three years. Errors and
omissions insurance must be renewed annually .
A is incorrect because it reverses the E&O renewal requirement.
B is incorrect because it states the wrong renewal periods for both.
D is incorrect because E&O insurance must be renewed annually, not every three years.
Question 8
Which law primarily governs real estate licensing in Colorado?
A) Colorado Criminal Code
B) Colorado Real Estate Commission Rules
C) Federal Housing Act
D) Uniform Commercial Code
Answer: B
Rationale: The Colorado Real Estate Commission Rules establish licensing requirements,
conduct standards, and enforcement for real estate professionals in Colorado .
A is incorrect because the Criminal Code does not govern licensing.
PREP 2027-2028
200 Practice Questions with Verified Answers &
Detailed Rationales
ABSTRACT: This comprehensive practice examination is designed to prepare candidates
for the Colorado Real Estate Broker Licensing Exam administered by PSI. The exam
consists of two portions: a National section (80 questions, 120 minutes, 75% passing score)
and a Colorado State-specific section (74 questions, 110 minutes, 71.5% passing score) .
This practice bank contains 200 questions formatted in the standard A, B, C, D multiple-
choice structure used on the actual exam . Questions cover all major test areas including
property ownership, contracts, agency relationships, financing, Colorado Commission rules,
brokerage relationships, trust accounts, and fair housing laws . Each question includes a
verified correct Answer, a detailed rationale explaining why the correct Answer is right,
and explanations of why the other options are incorrect, with references to Colorado
statutes and Commission rules where applicable.
SECTION 1: COLORADO REAL ESTATE COMMISSION & LICENSING
Question 1
Duties of the Colorado Real Estate Commission include all of the following EXCEPT:
A) Investigation of verified written complaints
B) Approving errors and omissions insurance carriers
C) Creating the Annual Commission Update course each year
D) Hearing disputes between brokers
Answer: D
Rationale: The Colorado Real Estate Commission does not hear disputes between brokers;
such matters are civil disputes between private parties. The Commission's statutory duties
include investigating complaints, approving E&O carriers, and creating required
continuing education courses including the Annual Commission Update .
A is incorrect because investigating verified written complaints is a core statutory duty of
the Commission.
B is incorrect because the Commission approves errors and omissions insurance carriers for
licensees.
C is incorrect because the Commission creates the mandatory Annual Commission Update
course each year.
,Question 2
Which of the following qualifies toward the 12 hours of required elective continuing
education credits for a Colorado real estate broker?
A) An exam prep class taken to prepare for the state portion of the licensing exam
B) A brokerage firm's orientation and personal marketing course
C) Passing the national portion of the broker licensing exam
D) The National Association of REALTORS® ethics course
Answer: D
Rationale: The NAR ethics course qualifies for elective continuing education credit in
Colorado. Exam prep classes, firm orientation, and passing the licensing exam do not count
toward continuing education requirements .
A is incorrect because exam preparation courses do not qualify for CE credit.
B is incorrect because brokerage orientation and marketing courses are not approved CE.
C is incorrect because passing the licensing exam is a prerequisite, not continuing
education.
Question 3
Errors and omissions professional liability insurance is required for which of the following
licensees?
A) Inactive licensees
B) Active licensees
C) Retired licensees
D) License applicants who have not yet passed the exam
Answer: B
Rationale: Active licensees are required to carry errors and omissions insurance. Inactive
licensees are not engaged in real estate activities and therefore are not required to carry
E&O insurance .
A is incorrect because inactive licensees are exempt from the E&O requirement.
C is incorrect because retired licensees are not actively practicing.
D is incorrect because applicants who have not yet passed the exam are not yet licensed.
Question 4
A Colorado broker associate referred a client to a broker in Florida. The Florida broker
called to say the buyer's property will close soon and wants to know where to send the
referral fee. Which is TRUE?
,A) The broker associate must deposit the fee into a trust account for holding
B) The fee must be made payable to the brokerage firm
C) The broker associate does not need to inform anyone of the fee
D) The broker associate needs to split the fee 50/50 with the brokerage
Answer: B
Rationale: All referral fees must be paid to the brokerage firm, not directly to the individual
broker associate. This ensures proper accounting and compliance with licensing laws .
A is incorrect because referral fees are not held in trust accounts; they are compensation.
C is incorrect because the brokerage must be informed of and receive the fee.
D is incorrect because the split arrangement is a matter between the broker and the
brokerage firm.
Question 5
A broker developed a website to advertise the brokerage with the firm's name, location, and
phone number. What additional information must the broker include?
A) Name and address of the home office
B) License number of the brokerage
C) States in which the brokerage holds licenses
D) Broker's personal email address
Answer: A
Rationale: All advertising must include the brokerage name as registered with the Colorado
Real Estate Commission. This ensures proper identification of the brokerage entity
responsible for the advertising .
B is incorrect although license numbers may be required in some contexts, the brokerage
name is the primary requirement.
C is incorrect because advertising only needs to identify the brokerage, not list all states of
operation.
D is incorrect because personal contact information is not required in advertising.
Question 6
All of the following are required to have an active Colorado real estate license EXCEPT:
A) An attorney who lists and sells property in addition to practicing law
B) A mortgage broker who helps buyers find and purchase homes
C) A business opportunity salesperson selling a franchise with a leasehold estate
D) An attorney selling property as part of an estate administration
, Answer: D
Rationale: Attorneys selling property as part of estate administration are exempt from
licensing requirements in Colorado. However, attorneys who list and sell property outside
of estate administration must be licensed .
A is incorrect because attorneys engaged in real estate brokerage outside estate
administration must be licensed.
B is incorrect because mortgage brokers involved in property transactions require licensure.
C is incorrect because selling a franchise with a leasehold estate constitutes real estate
activity requiring a license.
Question 7
Brokers selling real estate must renew their license and errors and omissions insurance
every:
A) Three years for the license and every two years for E&O insurance
B) Year for the license and every three years for E&O insurance
C) Three years for the license and every year for E&O insurance
D) Three years for the license and every three years for E&O insurance
Answer: C
Rationale: Colorado real estate licenses must be renewed every three years. Errors and
omissions insurance must be renewed annually .
A is incorrect because it reverses the E&O renewal requirement.
B is incorrect because it states the wrong renewal periods for both.
D is incorrect because E&O insurance must be renewed annually, not every three years.
Question 8
Which law primarily governs real estate licensing in Colorado?
A) Colorado Criminal Code
B) Colorado Real Estate Commission Rules
C) Federal Housing Act
D) Uniform Commercial Code
Answer: B
Rationale: The Colorado Real Estate Commission Rules establish licensing requirements,
conduct standards, and enforcement for real estate professionals in Colorado .
A is incorrect because the Criminal Code does not govern licensing.
