NATIONAL REAL ESTATE EXAMINATION QUESTIONS
COMPLETE WITH 100% VERIFIED ANSWERS AND
EXPLANATIONS
1. A unilateral contract contains:
A. Two promises exchanged between parties
B. A promise given in exchange for completing an act, with no obligation to act
C. A promise to perform an act within a specified time period
D. A promise that requires both parties to perform simultaneously
Correct Answer: B
Rationale: A unilateral contract contains ONE promise given in exchange for
completing an act. There is NO obligation to act. This differs from a bilateral
contract, which contains two promises.
2. A listing agreement is an example of which type of contract?
A. Unilateral contract
B. Executed contract
C. Bilateral contract
D. Voidable contract
Correct Answer: C
Rationale: A listing agreement is a bilateral contract because it contains TWO
promises - the seller promises to pay commission and the broker promises to find a
buyer.
3. A person who has entered into an agency relationship with a licensee and has
a written contract is called a:
A. Customer
B. Client/Principal
,C. Third-party beneficiary
D. Subagent
Correct Answer: B
Rationale: A Client/Principal is a person who has entered into an agency
relationship with a licensee and with whom there is a written contract.
4. Any third party with whom a licensee works is referred to as a:
A. Client
B. Principal
C. Customer
D. Agent
Correct Answer: C
Rationale: A Customer is any third party with whom a licensee works. Unlike a
client, a customer does not have an agency relationship with the licensee.
5. A transaction in which the buyer and seller are both represented by the same
brokerage is called a(n):
A. Dual agency transaction
B. In-Company Transaction
C. Open transaction
D. Independent transaction
Correct Answer: B
Rationale: An In-Company Transaction is a transaction in which the buyer and
seller are both represented by the same brokerage.
6. A licensee who is employed by or affiliated with a brokerage who has
supervisory responsibility over other licensees is at what level?
A. Entry-level License
B. Management-Level License
,C. Associate License
D. Broker-in-Charge License
Correct Answer: B
Rationale: A Management-Level License is held by a licensee who is employed by
or affiliated with a brokerage who has supervisory responsibility over other
licensees.
7. According to the Statute of Frauds, which of the following contracts must be
in writing?
A. All real estate contracts for the sale of land and all leases for more than one
year
B. All contracts regardless of the type of property
C. Only contracts for commercial property
D. Only contracts involving financing
Correct Answer: A
Rationale: The Statute of Frauds requires: 1) Certain contracts be in writing to be
enforceable, 2) All real estate contracts for the sale of LAND and ALL LEASES for
more than one year, options for more than 6 months, must be in writing and
signed by all parties.
8. Novation is best described as:
A. Adding a new party to an existing contract without changing the terms
B. Substituting a new obligation for an old one and transferring rights and/or
duties under contract
C. Terminating a contract before performance is complete
D. Extending the time for performance under an existing contract
Correct Answer: B
Rationale: Novation is substituting a new obligation for an old one. Also, a transfer
of rights and/or duties under contract.
, 9. If the original party to an agreement is replaced due to novation, are they
liable?
A. Yes, they remain fully liable
B. Yes, but only for half the obligation
C. No
D. Only if the contract is not in writing
Correct Answer: C
Rationale: If the original party to an agreement is replaced due to novation, they
are NO LONGER liable.
10. The Mailbox Rule states that acceptance:
A. Must be received by the offeror to be effective
B. Becomes effective as soon as it is sent in the mail, unless the contract specified
a certain means for delivery
C. Is only effective if sent by certified mail
D. Must be delivered by the end of the business day
Correct Answer: B
Rationale: The Mailbox Rule says that acceptance becomes effective as soon as it
is sent in the mail, unless the contract specified a certain means for delivery.
11. The Grantor is the:
A. Buyer
B. Lender
C. Owner
D. Tenant
Correct Answer: C
Rationale: The Grantor is the OWNER (the person conveying the property).
COMPLETE WITH 100% VERIFIED ANSWERS AND
EXPLANATIONS
1. A unilateral contract contains:
A. Two promises exchanged between parties
B. A promise given in exchange for completing an act, with no obligation to act
C. A promise to perform an act within a specified time period
D. A promise that requires both parties to perform simultaneously
Correct Answer: B
Rationale: A unilateral contract contains ONE promise given in exchange for
completing an act. There is NO obligation to act. This differs from a bilateral
contract, which contains two promises.
2. A listing agreement is an example of which type of contract?
A. Unilateral contract
B. Executed contract
C. Bilateral contract
D. Voidable contract
Correct Answer: C
Rationale: A listing agreement is a bilateral contract because it contains TWO
promises - the seller promises to pay commission and the broker promises to find a
buyer.
3. A person who has entered into an agency relationship with a licensee and has
a written contract is called a:
A. Customer
B. Client/Principal
,C. Third-party beneficiary
D. Subagent
Correct Answer: B
Rationale: A Client/Principal is a person who has entered into an agency
relationship with a licensee and with whom there is a written contract.
4. Any third party with whom a licensee works is referred to as a:
A. Client
B. Principal
C. Customer
D. Agent
Correct Answer: C
Rationale: A Customer is any third party with whom a licensee works. Unlike a
client, a customer does not have an agency relationship with the licensee.
5. A transaction in which the buyer and seller are both represented by the same
brokerage is called a(n):
A. Dual agency transaction
B. In-Company Transaction
C. Open transaction
D. Independent transaction
Correct Answer: B
Rationale: An In-Company Transaction is a transaction in which the buyer and
seller are both represented by the same brokerage.
6. A licensee who is employed by or affiliated with a brokerage who has
supervisory responsibility over other licensees is at what level?
A. Entry-level License
B. Management-Level License
,C. Associate License
D. Broker-in-Charge License
Correct Answer: B
Rationale: A Management-Level License is held by a licensee who is employed by
or affiliated with a brokerage who has supervisory responsibility over other
licensees.
7. According to the Statute of Frauds, which of the following contracts must be
in writing?
A. All real estate contracts for the sale of land and all leases for more than one
year
B. All contracts regardless of the type of property
C. Only contracts for commercial property
D. Only contracts involving financing
Correct Answer: A
Rationale: The Statute of Frauds requires: 1) Certain contracts be in writing to be
enforceable, 2) All real estate contracts for the sale of LAND and ALL LEASES for
more than one year, options for more than 6 months, must be in writing and
signed by all parties.
8. Novation is best described as:
A. Adding a new party to an existing contract without changing the terms
B. Substituting a new obligation for an old one and transferring rights and/or
duties under contract
C. Terminating a contract before performance is complete
D. Extending the time for performance under an existing contract
Correct Answer: B
Rationale: Novation is substituting a new obligation for an old one. Also, a transfer
of rights and/or duties under contract.
, 9. If the original party to an agreement is replaced due to novation, are they
liable?
A. Yes, they remain fully liable
B. Yes, but only for half the obligation
C. No
D. Only if the contract is not in writing
Correct Answer: C
Rationale: If the original party to an agreement is replaced due to novation, they
are NO LONGER liable.
10. The Mailbox Rule states that acceptance:
A. Must be received by the offeror to be effective
B. Becomes effective as soon as it is sent in the mail, unless the contract specified
a certain means for delivery
C. Is only effective if sent by certified mail
D. Must be delivered by the end of the business day
Correct Answer: B
Rationale: The Mailbox Rule says that acceptance becomes effective as soon as it
is sent in the mail, unless the contract specified a certain means for delivery.
11. The Grantor is the:
A. Buyer
B. Lender
C. Owner
D. Tenant
Correct Answer: C
Rationale: The Grantor is the OWNER (the person conveying the property).
