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CA Licensing Exam |Real Estate Finals
2025/2026| Updated and Verified
Questions and Answers
A buyer discovers a major roof leak after closing on a property. Explain the seller’s disclosure
obligations in this situation and the potential legal implications.
The seller is required to disclose known material defects before the sale. If the leak was
known but not disclosed, the buyer might have grounds for a lawsuit based on failure to disclose.
Evaluate the impact of a lender’s lien on the transfer of property and propose how the seller
should address it during the sale process.
The lien must be satisfied or cleared (typically by paying off the debt) before the property
can transfer, ensuring the buyer gets a clear title.
A homeowner refinances their property but finds the lender failed to disclose key terms. Analyze
the potential remedies available to the borrower under federal law.
The borrower may file a complaint under the Truth in Lending Act (TILA), potentially
rescinding the loan or receiving compensation for damages.
A buyer assumes an existing loan as part of a property purchase. Identify the risks the buyer
faces and how they might mitigate them.
Risks include being liable for default or inheriting unfavorable loan terms. Mitigation
includes reviewing the loan agreement and consulting with an attorney.
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Explain the rationale behind including an as-is clause in a property sale contract and how it
affects the buyer’s rights.
An as-is clause limits the seller's responsibility for repairs, but buyers can still sue for
undisclosed defects if fraud is involved.
A couple divorces, and the property title is held as joint tenancy. Assess how the property should
be transferred during the settlement process.
The joint tenancy must be severed, often by selling the property or one party buying out the
other, depending on the divorce agreement.
A buyer opts for a lease-purchase agreement instead of a traditional sale. Analyze how this
financing structure benefits both the buyer and seller.
It allows the buyer to build equity while renting and helps the seller secure steady income
and potentially a higher sale price.
A seller discloses the presence of lead paint on a property built before 1978. Explain how this
affects the sale process and the buyer's options.
Federal law requires disclosure of lead paint hazards, and buyers can request inspections or
negotiate remediation before closing.
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Propose a solution for a property transfer scenario where the owner has died without a will.
The property goes through probate, and the court decides distribution based on state intestacy
laws. Title companies may assist in clearing the title.
A buyer discovers an unrecorded easement on their property after closing. Evaluate the
implications and their legal options.
The buyer might face restrictions on property use. They can negotiate with the easement
holder or pursue legal action if it wasn't disclosed.
Analyze the factors contributing to a buyer’s risk in purchasing a property subject to a land
contract.
Risks include limited rights until the contract is fulfilled, potential seller default, and
difficulties in securing financing later.
A lender issues a loan with adjustable interest rates. Explain how this could affect the borrower’s
ability to make payments over time.
If rates increase, monthly payments rise, potentially causing financial strain. Borrowers
should plan for possible rate hikes.
Evaluate the implications of failing to record a property deed after a sale transaction.
An unrecorded deed might not protect the buyer’s ownership against third parties, leading to
potential disputes over title.
, 4
Propose how a buyer can ensure they are protected against future claims on the property they’re
purchasing.
Purchase title insurance and ensure a thorough title search is conducted to uncover potential
issues.
A seller fails to disclose a history of flooding on the property. Assess how this oversight might
affect the buyer post-sale and the remedies available.
The buyer could sue for nondisclosure, claiming damages or rescinding the sale if the defect
is severe.
Analyze the role of contingencies in a real estate purchase agreement and their effect on the sale
process.
Contingencies allow buyers to back out without penalty if conditions like inspections,
financing, or appraisals aren’t met.
Explain the rationale behind requiring escrow accounts during property transactions and their
role in protecting all parties.
Escrow ensures funds are held securely until conditions of the sale are met, reducing risk for
buyers and sellers.
A buyer agrees to a seller-financed purchase. Assess the risks and benefits for the buyer in this
type of financing arrangement.
CA Licensing Exam |Real Estate Finals
2025/2026| Updated and Verified
Questions and Answers
A buyer discovers a major roof leak after closing on a property. Explain the seller’s disclosure
obligations in this situation and the potential legal implications.
The seller is required to disclose known material defects before the sale. If the leak was
known but not disclosed, the buyer might have grounds for a lawsuit based on failure to disclose.
Evaluate the impact of a lender’s lien on the transfer of property and propose how the seller
should address it during the sale process.
The lien must be satisfied or cleared (typically by paying off the debt) before the property
can transfer, ensuring the buyer gets a clear title.
A homeowner refinances their property but finds the lender failed to disclose key terms. Analyze
the potential remedies available to the borrower under federal law.
The borrower may file a complaint under the Truth in Lending Act (TILA), potentially
rescinding the loan or receiving compensation for damages.
A buyer assumes an existing loan as part of a property purchase. Identify the risks the buyer
faces and how they might mitigate them.
Risks include being liable for default or inheriting unfavorable loan terms. Mitigation
includes reviewing the loan agreement and consulting with an attorney.
, 2
Explain the rationale behind including an as-is clause in a property sale contract and how it
affects the buyer’s rights.
An as-is clause limits the seller's responsibility for repairs, but buyers can still sue for
undisclosed defects if fraud is involved.
A couple divorces, and the property title is held as joint tenancy. Assess how the property should
be transferred during the settlement process.
The joint tenancy must be severed, often by selling the property or one party buying out the
other, depending on the divorce agreement.
A buyer opts for a lease-purchase agreement instead of a traditional sale. Analyze how this
financing structure benefits both the buyer and seller.
It allows the buyer to build equity while renting and helps the seller secure steady income
and potentially a higher sale price.
A seller discloses the presence of lead paint on a property built before 1978. Explain how this
affects the sale process and the buyer's options.
Federal law requires disclosure of lead paint hazards, and buyers can request inspections or
negotiate remediation before closing.
, 3
Propose a solution for a property transfer scenario where the owner has died without a will.
The property goes through probate, and the court decides distribution based on state intestacy
laws. Title companies may assist in clearing the title.
A buyer discovers an unrecorded easement on their property after closing. Evaluate the
implications and their legal options.
The buyer might face restrictions on property use. They can negotiate with the easement
holder or pursue legal action if it wasn't disclosed.
Analyze the factors contributing to a buyer’s risk in purchasing a property subject to a land
contract.
Risks include limited rights until the contract is fulfilled, potential seller default, and
difficulties in securing financing later.
A lender issues a loan with adjustable interest rates. Explain how this could affect the borrower’s
ability to make payments over time.
If rates increase, monthly payments rise, potentially causing financial strain. Borrowers
should plan for possible rate hikes.
Evaluate the implications of failing to record a property deed after a sale transaction.
An unrecorded deed might not protect the buyer’s ownership against third parties, leading to
potential disputes over title.
, 4
Propose how a buyer can ensure they are protected against future claims on the property they’re
purchasing.
Purchase title insurance and ensure a thorough title search is conducted to uncover potential
issues.
A seller fails to disclose a history of flooding on the property. Assess how this oversight might
affect the buyer post-sale and the remedies available.
The buyer could sue for nondisclosure, claiming damages or rescinding the sale if the defect
is severe.
Analyze the role of contingencies in a real estate purchase agreement and their effect on the sale
process.
Contingencies allow buyers to back out without penalty if conditions like inspections,
financing, or appraisals aren’t met.
Explain the rationale behind requiring escrow accounts during property transactions and their
role in protecting all parties.
Escrow ensures funds are held securely until conditions of the sale are met, reducing risk for
buyers and sellers.
A buyer agrees to a seller-financed purchase. Assess the risks and benefits for the buyer in this
type of financing arrangement.
