026
The CE Shop Final Exam Study
Companion and Review Workbook 2025
Real property ownership has significant tax advantages. Which of the following is an advantage?
A. Property tax exemption
B. Depreciation
C. Appreciation
D. Assessment increase
Rationale: Depreciation allows property owners to deduct a portion of their investment from
taxable income. The others aren’t guaranteed tax advantages.
Which entity ensures that contractors perform their work according to code by inspecting their
job sites?
A. Housing authority
B. Building department
C. Zoning board
D. Planning commission
Rationale: The building department enforces code compliance through inspections. The zoning
board handles land use, not construction standards.
Which type of real estate license requires a 60-hour licensing course as a condition of taking the
licensing exam?
A. Broker
B. Salesperson
C. Appraiser
D. Inspector
Rationale: A salesperson license requires 60 hours of pre-licensing education before testing.
Brokers typically need more hours and experience.
Uh-oh. You failed to present an offer on behalf of your client in a timely manner. As a result, the
seller accepted a lower offer from another buyer. You could be sued for ______.
A. Fraud
B. Negligence
C. Breach of contract
D. Dual agency
,026
Rationale: Negligence occurs when a professional fails to use reasonable care, causing harm.
This failure to act promptly qualifies.
Edgar's in the process of selling his home as a short sale. What's a short sale?
A. Sale with a short closing period
B. Sale to avoid foreclosure
C. The sale of a property at an amount less than is owed, not including closing costs
D. Cash-only sale
Rationale: A short sale means selling below the mortgage balance, with lender approval. It’s not
defined by time or payment type.
Mary is preparing a purchase offer using a standard brokerage form. Is this okay?
A. No, she must write the entire contract herself
B. No, only brokers can fill in blanks
C. Yes, Mary can use standard forms created or approved by an attorney
D. Only if the buyer agrees in writing
Rationale: Licensees may complete attorney-approved standard forms but cannot draft legal
documents from scratch.
Soundproofing and decorative material, shingles, and siding may contain what hazardous
material?
A. Lead
B. Asbestos
C. Radon
D. Mold
Rationale: Asbestos was commonly used in insulation, siding, and tiles before being banned due
to health risks.
Which of the following are landlords required by law to ensure?
A. That tenants can paint walls
B. That tenants have mail access
C. That tenants may peaceably and quietly enter the leased premises at the beginning of the
lease
D. That rent never increases
Rationale: The covenant of quiet enjoyment ensures tenants can occupy the property without
interference.
, 026
Not wanting to cause concern, Gwen hid a client’s financial issue. Which fiduciary duty to the
customer did she violate?
A. Loyalty
B. Honesty and fair dealing
C. Obedience
D. Disclosure
Rationale: Honesty and fair dealing apply to customers, requiring truthful communication even
when uncomfortable.
Robert’s local bank originated his mortgage before selling it to another company. What market is
the bank operating in?
A. Secondary market
B. Primary market
C. Tertiary market
D. Federal Reserve market
Rationale: The primary market involves loan origination between lender and borrower; the
secondary market is for resale.
In terms of encumbrances, what's a license?
A. Ownership right
B. Easement
C. Permission without possession, interest, or ownership
D. Covenant
Rationale: A license gives temporary permission to use property without transferring any
ownership or possessory rights.
Lenders will require which type of fund for taxes and insurance?
A. Credit reserve
B. Reserve fund
C. Maintenance escrow
D. Recovery account
Rationale: A reserve fund (escrow) holds prepaid property taxes and insurance payments.
If Mega Corporation owns real property, chances are it owns it in ______.
A. Joint tenancy
B. Tenancy by the entirety
C. Severalty
D. Tenancy in common
The CE Shop Final Exam Study
Companion and Review Workbook 2025
Real property ownership has significant tax advantages. Which of the following is an advantage?
A. Property tax exemption
B. Depreciation
C. Appreciation
D. Assessment increase
Rationale: Depreciation allows property owners to deduct a portion of their investment from
taxable income. The others aren’t guaranteed tax advantages.
Which entity ensures that contractors perform their work according to code by inspecting their
job sites?
A. Housing authority
B. Building department
C. Zoning board
D. Planning commission
Rationale: The building department enforces code compliance through inspections. The zoning
board handles land use, not construction standards.
Which type of real estate license requires a 60-hour licensing course as a condition of taking the
licensing exam?
A. Broker
B. Salesperson
C. Appraiser
D. Inspector
Rationale: A salesperson license requires 60 hours of pre-licensing education before testing.
Brokers typically need more hours and experience.
Uh-oh. You failed to present an offer on behalf of your client in a timely manner. As a result, the
seller accepted a lower offer from another buyer. You could be sued for ______.
A. Fraud
B. Negligence
C. Breach of contract
D. Dual agency
,026
Rationale: Negligence occurs when a professional fails to use reasonable care, causing harm.
This failure to act promptly qualifies.
Edgar's in the process of selling his home as a short sale. What's a short sale?
A. Sale with a short closing period
B. Sale to avoid foreclosure
C. The sale of a property at an amount less than is owed, not including closing costs
D. Cash-only sale
Rationale: A short sale means selling below the mortgage balance, with lender approval. It’s not
defined by time or payment type.
Mary is preparing a purchase offer using a standard brokerage form. Is this okay?
A. No, she must write the entire contract herself
B. No, only brokers can fill in blanks
C. Yes, Mary can use standard forms created or approved by an attorney
D. Only if the buyer agrees in writing
Rationale: Licensees may complete attorney-approved standard forms but cannot draft legal
documents from scratch.
Soundproofing and decorative material, shingles, and siding may contain what hazardous
material?
A. Lead
B. Asbestos
C. Radon
D. Mold
Rationale: Asbestos was commonly used in insulation, siding, and tiles before being banned due
to health risks.
Which of the following are landlords required by law to ensure?
A. That tenants can paint walls
B. That tenants have mail access
C. That tenants may peaceably and quietly enter the leased premises at the beginning of the
lease
D. That rent never increases
Rationale: The covenant of quiet enjoyment ensures tenants can occupy the property without
interference.
, 026
Not wanting to cause concern, Gwen hid a client’s financial issue. Which fiduciary duty to the
customer did she violate?
A. Loyalty
B. Honesty and fair dealing
C. Obedience
D. Disclosure
Rationale: Honesty and fair dealing apply to customers, requiring truthful communication even
when uncomfortable.
Robert’s local bank originated his mortgage before selling it to another company. What market is
the bank operating in?
A. Secondary market
B. Primary market
C. Tertiary market
D. Federal Reserve market
Rationale: The primary market involves loan origination between lender and borrower; the
secondary market is for resale.
In terms of encumbrances, what's a license?
A. Ownership right
B. Easement
C. Permission without possession, interest, or ownership
D. Covenant
Rationale: A license gives temporary permission to use property without transferring any
ownership or possessory rights.
Lenders will require which type of fund for taxes and insurance?
A. Credit reserve
B. Reserve fund
C. Maintenance escrow
D. Recovery account
Rationale: A reserve fund (escrow) holds prepaid property taxes and insurance payments.
If Mega Corporation owns real property, chances are it owns it in ______.
A. Joint tenancy
B. Tenancy by the entirety
C. Severalty
D. Tenancy in common
