STATE OF COLORADO SALES LICENSE TEST QUESTIONS AND CORRECT ANSWERS| VERIFIED!!| LATEST UPDATE

1. In Colorado, how long must a broker retain all trust account records? a) 1 year b) 3 years c) 5 years d) 7 years ANSWER: b) 3 years 2. A salesperson's license is placed on inactive status. What must the salesperson do to engage in real estate activities? a) Nothing, they can still practice under their broker. b) Work under the supervision of an active broker. c) They cannot engage in any real estate activities. d) Only perform administrative tasks. ANSWER: c) They cannot engage in any real estate activities. 3. The Colorado Real Estate Commission (CREC) consists of how many members? a) 5 b) 7 c) 9 d) 11 ANSWER: c) 9 4. What is the primary purpose of a broker's trust account? a) To hold the broker's personal funds for business expenses. b) To hold earnest money deposits and other client funds. c) To pay salesperson commissions. d) To hold funds for property management only. ANSWER: b) To hold earnest money deposits and other client funds. 5. A property manager who collects rent on behalf of an owner is considered what type of agent? a) Special Agent b) General Agent c) Universal Agent d) Transaction-Broker ANSWER: b) General Agent 6. Which of the following is NOT a requirement for obtaining a Colorado real estate salesperson license? a) Be 18 years of age. b) Be a U.S. citizen. c) Complete 168 hours of approved real estate education. d) Pass the state and national licensing exam. ANSWER: b) Be a U.S. citizen. 7. The "Cooling-Off Period" for a timeshare contract in Colorado is: a) 3 calendar days b) 5 calendar days c) 7 calendar days d) 10 calendar days ANSWER: b) 5 calendar days 8. When acting as a transaction-broker, a licensee must: a) Promote the client's interests to the detriment of others. b) Treat all parties honestly and fairly. c) Disclose all known adverse material facts only to their client. d) Provide advice and opinions to help their client win the negotiation. ANSWER: b) Treat all parties honestly and fairly. 9. A broker discovers that a salesperson in their office has commingled client funds with the office operating account. How long does the broker have to report this violation to the Commission? a) Immediately b) 30 days c) 60 days d) At the next license renewal ANSWER: b) 30 days 10. The Colorado Real Estate Commission can impose all of the following penalties EXCEPT: a) Issue a formal letter of admonition. b) Impose a fine of up to $2,500 per violation. c) Sentence a licensee to jail time. d) Suspend or revoke a license. ANSWER: c) Sentence a licensee to jail time. 11. A seller's property is located in a special taxing district. When must this be disclosed to a prospective buyer? a) Before the buyer submits an offer. b) Only if the buyer asks. c) At the closing table. d) Within 10 days after the offer is accepted. ANSWER: a) Before the buyer submits an offer. 12. What document must a broker provide to a consumer at the first substantive contact? a) Agency Duties & Relationships Brochure b) Closing Disclosure c) Purchase Contract d) Property Disclosure Form ANSWER: a) Agency Duties & Relationships Brochure 13. A licensee is representing a buyer. The buyer tells the licensee they can only pay $X for a house but are willing to offer more. The licensee should: a) Encourage the buyer to offer the higher price to ensure their offer is accepted. b) Disclose the buyer's true financial position to the listing agent. c) Present the offer at the price the buyer is willing to pay. d) Follow the buyer's instruction and only offer $X. ANSWER: d) Follow the buyer's instruction and only offer $X. 14. In a transaction where both the buyer and seller are represented by the same broker but different salespersons within the office, what is the most likely agency relationship? a) Single Agent b) Designated Agent c) Transaction-Broker d) No Brokerage Relationship ANSWER: b) Designated Agent 15. A broker is holding an earnest money check. When must the broker deposit the check into the trust account? a) By the end of the next business day after acceptance of the contract. b) Within 3 business days. c) Within 5 business days. d) The broker can hold the check until closing. ANSWER: a) By the end of the next business day after acceptance of the contract. 16. Which of the following is a mandatory clause in every Colorado real estate contract? a) A clause specifying the type of home warranty. b) A clause naming the preferred title company. c) A clause allowing for mediation of disputes. d) A clause specifying the commission split. ANSWER: c) A clause allowing for mediation of disputes. 17. A property is sold, and the transaction closes on October 15. The seller has already paid the property taxes for the full year. How will this be handled on the closing statement? a) The seller will be credited for the taxes from October 16 through December 31. b) The buyer will be debited for the full year's taxes. c) The seller will receive no credit, as they paid for the year. d) The buyer will reimburse the seller for the full amount at closing. ANSWER: a) The seller will be credited for the taxes from October 16 through December 31. 18. What is the primary purpose of the Real Estate Recovery Fund? a) To pay for a licensee's legal defense. b) To reimburse consumers who have suffered a monetary loss due to a licensee's unlawful acts. c) To cover a broker's errors and omissions insurance deductible. d) To fund the Colorado Real Estate Commission's operations. ANSWER: b) To reimburse consumers who have suffered a monetary loss due to a licensee's unlawful acts.