CALIFORNIA REAL ESTATE PRACTICE EXAM Questions
And Correct Answers (Verified Answers) Plus Rationales
2026 Q&A.
When an appraiser evaluates real property, his concept of annual, or periodic, depreciation
applies to which of the following?
a. Actual life
b. Economic life
c. Physical life
d. Theoretical life - answer-; b. Economic life
Ordinarily, a loss in value is considered on an annual basis. Economic life treats such loss,
whether accrued or future, at a periodic rate.
A request for a "Notice of Default" on a first trust deed is for the benefit of the:
a. trustor.
b. vendee.
c. trustee.
d. beneficiary on the junior loan/second trust deed. - answer-; d. beneficiary on the junior
loan/second trust deed.
,A beneficiary of any junior note and trust deed would benefit from such a notice, in a timely
fashion, so that he will have sufficient time to take necessary measures to protect himself
during the reinstatement period.
In a subdivision, which of the following would NOT be a blanket encumbrance?
a. Trust Deed
b. Subdivision lot improvement assessment
c. Mechanic's lien
d. None of the above - answer-; b. Subdivision lot improvement assessment
Would be levied against each and every lot in the subdivision separately.
Which of the following is primarily responsible for the considerable increase in low cost rental
housing for low income groups?
a. Federal Housing Administration
b. Public Housing Administration
c. State Housing Act
d. Urban Renewal Service - answer-; b. Public Housing Administration
A broker agrees to manage a client's investment portfolio ($85,000) of 1st trust deeds. If broker
guarantees a return of 11% on the investments, he:
a. must provide a bond.
b. must obtain a loan broker's license.
c. would be violating "Regulation Z."
d. would be violating usury laws. - answer-; a. must provide a bond.
,Must obtain a Real Property Security Dealer's Endorsement, which requires him to provide a
bond ($5,000).
A loan (trust deed) held by an individual is:
a. a chattel real.
b. real property.
c. a real chattel.
d. personal property. - answer-; d. personal property.
A loan or trust deed is a lien; chattel real or real chattel are technical names for leasehold
estates.
By definition, economic obsolescence would not apply to which of the following?
a. Location of a government building adjacent to the property
b. Neighborhood reconstruction projects
c. Antique fixtures in a building
d. Regulatory changes - answer-; c. Antique fixtures in a building
The antique fixtures would represent functional obsolescence, not economic obsolescence.
All of the following are used in the purchase of residential properties, except:
a. Cal-Vet.
b. VA approved lenders.
c. Commercial banks.
, d. FHA approved lenders providing insured FHA Title I and Title II loans. - answer-; d. FHA
approved lenders providing insured FHA Title I and Title II loans.
FHA Title I loans are for home improvement.
The normal method of disposing of government property is by:
a. sealed bids.
b. negotiated sale.
c. auction.
d. predetermined prices. - answer-; c. auction.
Adam purchased a residence for $180,000 and made $20,750 in capital improvements. He sold
the house for $200,000 and moved into an apartment on a 3-year lease. What kind of tax effect
would this sale have?
a. Capital gain of $750
b. Capital loss of $750
c. Capital loss of one-half of the $750
d. No effect - answer-; d. No effect
Cannot declare loss on personal residence.
A married woman purchased a business with separate funds, and subsequently decided to
obtain a liquor license. She:
a. must apply to the Department of Alcoholic Beverage Control.
b. must apply to the Franchise Tax Board.
And Correct Answers (Verified Answers) Plus Rationales
2026 Q&A.
When an appraiser evaluates real property, his concept of annual, or periodic, depreciation
applies to which of the following?
a. Actual life
b. Economic life
c. Physical life
d. Theoretical life - answer-; b. Economic life
Ordinarily, a loss in value is considered on an annual basis. Economic life treats such loss,
whether accrued or future, at a periodic rate.
A request for a "Notice of Default" on a first trust deed is for the benefit of the:
a. trustor.
b. vendee.
c. trustee.
d. beneficiary on the junior loan/second trust deed. - answer-; d. beneficiary on the junior
loan/second trust deed.
,A beneficiary of any junior note and trust deed would benefit from such a notice, in a timely
fashion, so that he will have sufficient time to take necessary measures to protect himself
during the reinstatement period.
In a subdivision, which of the following would NOT be a blanket encumbrance?
a. Trust Deed
b. Subdivision lot improvement assessment
c. Mechanic's lien
d. None of the above - answer-; b. Subdivision lot improvement assessment
Would be levied against each and every lot in the subdivision separately.
Which of the following is primarily responsible for the considerable increase in low cost rental
housing for low income groups?
a. Federal Housing Administration
b. Public Housing Administration
c. State Housing Act
d. Urban Renewal Service - answer-; b. Public Housing Administration
A broker agrees to manage a client's investment portfolio ($85,000) of 1st trust deeds. If broker
guarantees a return of 11% on the investments, he:
a. must provide a bond.
b. must obtain a loan broker's license.
c. would be violating "Regulation Z."
d. would be violating usury laws. - answer-; a. must provide a bond.
,Must obtain a Real Property Security Dealer's Endorsement, which requires him to provide a
bond ($5,000).
A loan (trust deed) held by an individual is:
a. a chattel real.
b. real property.
c. a real chattel.
d. personal property. - answer-; d. personal property.
A loan or trust deed is a lien; chattel real or real chattel are technical names for leasehold
estates.
By definition, economic obsolescence would not apply to which of the following?
a. Location of a government building adjacent to the property
b. Neighborhood reconstruction projects
c. Antique fixtures in a building
d. Regulatory changes - answer-; c. Antique fixtures in a building
The antique fixtures would represent functional obsolescence, not economic obsolescence.
All of the following are used in the purchase of residential properties, except:
a. Cal-Vet.
b. VA approved lenders.
c. Commercial banks.
, d. FHA approved lenders providing insured FHA Title I and Title II loans. - answer-; d. FHA
approved lenders providing insured FHA Title I and Title II loans.
FHA Title I loans are for home improvement.
The normal method of disposing of government property is by:
a. sealed bids.
b. negotiated sale.
c. auction.
d. predetermined prices. - answer-; c. auction.
Adam purchased a residence for $180,000 and made $20,750 in capital improvements. He sold
the house for $200,000 and moved into an apartment on a 3-year lease. What kind of tax effect
would this sale have?
a. Capital gain of $750
b. Capital loss of $750
c. Capital loss of one-half of the $750
d. No effect - answer-; d. No effect
Cannot declare loss on personal residence.
A married woman purchased a business with separate funds, and subsequently decided to
obtain a liquor license. She:
a. must apply to the Department of Alcoholic Beverage Control.
b. must apply to the Franchise Tax Board.
