Form A: 140 practice questions and answers

Correct answer: D. Pay rent and avoid waste or damage

"Deliver legal title to the landlord" confuses a tenant's possession with the landlord's ownership. "Issue an eviction judgment" is a judicial function rather than a tenant duty. "Appraise the building" is not the ordinary lease obligation described. "Pay rent and avoid waste or damage" states ordinary rent and reasonable-care obligations under a lease. Change the facts: A lease term granting a purchase option adds an election; it does not itself convey fee title or remove rent obligations.

What to remember: A lease gives possession with obligations; it does not transfer the landlord’s fee ownership.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline VIII

Correct answer: D. Real property

"Land alone, excluding improvements" omits the permanent building and associated interests. "Personal property only" does not describe ownership of the land and building. "The building materials before attachment" describes movable materials before they become attached. "Real property" covers the land, permanent improvements and associated property interests. Change the facts: If the sale covers only uninstalled building supplies, those supplies are personal property.

What to remember: Separate the physical asset from the ownership rights attached to it.

Check the rule: Cornell Legal Information Institute, real property.

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Correct answer: B. Severance

"Annexation" describes attachment rather than detachment. "Severance" describes separation from the real property. "Accession" concerns acquiring additions to property. "Escheat" concerns property passing to the state under applicable conditions. Change the facts: Attaching the movable item to become part of the property reverses the process to annexation.

What to remember: A written inclusion or exclusion can prevent a dispute over an attached item.

Check the rule: Cornell Legal Information Institute, fixture.

Study this topicPSI national broker outline I

Correct answer: C. Jumbo loan

"VA-guaranteed loan" is government guaranteed rather than the described conventional loan. "FHA-insured loan" is government insured rather than conventional. "Jumbo loan" matches a conventional loan exceeding the applicable conforming limit. "USDA-guaranteed loan" is a separate government-backed program. Change the facts: A loan within the size limit can still be nonconforming for other reasons; size alone does not prove conformity.

What to remember: Jumbo describes size above the applicable conforming limit. Do not assume a permanent nationwide dollar threshold.

Check the rule: CFPB, Conventional loans: conforming and nonconforming loans.

Study this topicPSI national broker outline IV

Correct answer: A. Arrange qualified follow-up and review the contract deadlines

"Arrange qualified follow-up and review the contract deadlines" obtains usable evidence while preserving the chance to exercise contractual rights. "Assume the appraisal already covered the wiring" confuses appraisal with specialist electrical investigation. "Wait until after closing to ask for repairs" may lose a contract-specific election through delay. "Promise the repair will cost less than $100" invents a repair price without evidence. Change the facts: If the deadline has already passed without a valid extension, later evaluation alone does not restore the original contractual timing right.

What to remember: Obtain usable information while the buyer still has time to exercise contractual rights.

Check the rule: CFPB, Schedule a home inspection.

Study this topicPSI national broker outline VII

Correct answer: C. Refuse to make the false statement

"Repeat it if the seller signs a waiver" does not permit a knowingly false statement to a buyer. "Obey because loyalty overrides honesty" does not turn loyalty into permission to deceive. "Refuse to make the false statement" avoids knowingly repeating the false roof claim. "State it only in private messages" does not make deception lawful merely by changing the communication channel. Change the facts: If reliable evidence establishes that the roof really is new, the knowingly-false-fact premise changes; accurate supporting facts still matter.

What to remember: Loyalty is not permission to make a knowingly false statement.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: A. Keep the information confidential

"Keep the information confidential" preserves the confidence where no permission or legal disclosure duty exists. "Publish because the listing expired" mistakes expiration for permission to disclose. "Share it only with the highest bidder" still makes an unauthorized disclosure. "Trade it for a referral" uses a former client's confidence for an unauthorized purpose. Change the facts: Actual client consent or a governing legal disclosure requirement would change the analysis to the extent it applies.

What to remember: Expiration does not turn the former client’s confidential information into marketing material.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: D. The trust's ownership and the trustee's authority

"The trustee's preferred price" does not establish authority to convey the trust's property. "The property's paint color" is not evidence of the signer's legal authority. "The broker's commission split" does not prove trust ownership or authority. "The trust's ownership and the trustee's authority" addresses both the trust's interest and the signer's power to convey. Change the facts: A person who is not an authorized trustee cannot rely on the trustee job label alone to establish authority.

What to remember: An individual’s job title does not replace evidence of authority to sign for a trust.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline IX

Correct answer: B. The creditor must deliver or mail the Loan Estimate no later than the third business day after receipt

"The creditor may delay indefinitely for a purchase contract" cannot be justified merely by waiting for that additional document after the defined application exists. "The creditor must deliver or mail the Loan Estimate no later than the third business day after receipt" states the ordinary initial Loan Estimate delivery-or-mailing deadline. "The Closing Disclosure is due the same hour" confuses initial estimates with final covered disclosures. "HMDA requires immediate approval" does not turn a data-reporting law into approval authority. Change the facts: If the application is withdrawn or denied within the relevant period, the regulatory disclosure exception must be considered.

What to remember: Delivery of a Loan Estimate is not underwriting approval or a rate-lock promise.

Check the rule: CFPB, Regulation Z § 1026.19(e) and (f): mortgage disclosures.

Study this topicPSI national broker outline IV

Correct answer: D. Blanket mortgage

"Package mortgage" generally combines real and personal property collateral, not merely several parcels. "Open-end lease" does not describe this secured loan. "Reverse mortgage" is not established by multiple parcels alone. "Blanket mortgage" covers more than one parcel as collateral. Change the facts: A loan secured by one parcel plus business personal property raises the package-collateral distinction instead.

What to remember: A blanket mortgage covers multiple parcels. Check release provisions when one parcel is sold.

Check the rule: California DRE, Real Estate Finance: notes and security instruments.

Study this topicPSI national broker outline IV

Correct answer: D. The approved pamphlet, known information, available reports, and required warning and acknowledgment language

"Only a verbal statement that the paint looks sound" does not supply the required written information and materials. "A mandatory full abatement certificate for every home" adds universal removal requirements the disclosure rule does not impose. "A guarantee that no lead exists" is a guarantee the rule does not require. "The approved pamphlet, known information, available reports, and required warning and acknowledgment language" identifies the principal information and document duties before the buyer is obligated. The separate buyer lead-evaluation opportunity is generally 10 days, unless the period is changed by mutual written agreement or waived in writing. Change the facts: A transaction outside target-housing coverage requires examining the actual exclusion rather than automatically applying every sale requirement.

What to remember: Federal lead disclosure generally concerns covered pre-1978 housing, not every property without exception.

Check the rule: EPA, Real Estate Disclosures about Potential Lead Hazards.

Study this topicPSI national broker outline VII

Correct answer: D. Market allocation

"Amortization" is repayment accounting rather than division of customers. "Severalty" describes sole ownership rather than anticompetitive coordination. "Substitution" is a valuation principle rather than the competitor arrangement. "Market allocation" describes an agreement to divide territory or customers. Change the facts: A firm choosing a service area independently, without competitor agreement, does not establish this allocation violation by that choice alone.

What to remember: An agreement to divide customers removes competition even without an agreed price.

Check the rule: U.S. Department of Justice, Price Fixing, Bid Rigging, and Market Allocation.

Study this topicPSI national broker outline X

Correct answer: C. An FHA-approved private lender

"The listing broker" does not become the mortgage lender by listing the property. "The county recorder" records instruments rather than making the purchase loan. "An FHA-approved private lender" advances the funds while FHA supplies qualifying insurance. "The property-tax assessor" performs assessment rather than mortgage lending. Change the facts: An uninsured conventional loan lacks FHA insurance even when a private lender makes it.

What to remember: FHA generally insures eligible loans; approved lenders make them.

Check the rule: CFPB, FHA loans: private lenders and federal insurance.

Study this topicPSI national broker outline IV

Correct answer: C. Title commitment

"Deed" is the conveyance rather than the conditional insurance undertaking. "Survey" maps property within its scope rather than promising insurance. "Title commitment" is the conditional insurance offer, with the stated requirements and exceptions. It is not the issued policy. "Promissory note" evidences debt rather than promising title coverage. Change the facts: Failure to satisfy a commitment requirement can prevent the promised policy from issuing on the requested terms.

What to remember: A commitment is conditional. It is not the issued policy or a guarantee of building condition.

Check the rule: ALTA 2021 Commitment for Title Insurance, notice and commitment to issue policy.

Study this topicPSI national broker outline IX

Correct answer: C. The option gives a purchase right rather than a purchase duty

"The option eliminates rent" does not follow; the lease can still require rent. "The option transfers title immediately" confuses a purchase election with a present conveyance. "The option gives a purchase right rather than a purchase duty" distinguishes the optionee's election from a purchase obligation. "The option requires no definite terms" does not follow; enforceability still requires sufficiently definite terms and other essentials. Change the facts: A binding promise to buy under a lease-purchase arrangement differs from an unexercised purchase option.

What to remember: A lease grants possession; an option adds a right to buy on specified terms.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: D. Refuse because obedience is limited to lawful instructions

"Obey because every client instruction is binding" ignores the limit to lawful instructions. "Transfer the defect to the customer" does not make a disclosure duty disappear. "Conceal because loyalty eliminates disclosure duties" does not override a governing disclosure requirement. "Refuse because obedience is limited to lawful instructions" recognizes that obedience cannot require unlawful concealment. Change the facts: If the information is protected negotiating strategy with no required disclosure, confidentiality presents a different issue.

What to remember: Obedience applies to lawful instructions. A client cannot require discriminatory or dishonest conduct.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: D. Assignment

"Sublease" normally leaves some reversionary leasehold with the original tenant. "Novation automatically" would require the additional agreed substitution and release. "License" does not transfer the entire leasehold estate. "Assignment" transfers the whole remaining 18-month term. Change the facts: If the tenant retains the last month of the term, the retained reversion supports a sublease classification instead.

What to remember: Assignment transfers the remaining leasehold interest; a sublease retains a reversionary interest.

Check the rule: California DRE, Transfer of Interests: general contract principles.

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Correct answer: C. Replacement cost

"Reproduction cost" seeks a duplicate rather than equivalent utility using current design. "Historical cost only" reports past spending rather than current equivalent utility. "Replacement cost" uses current materials and design to provide equivalent utility. "Assessed cost" is not the requested construction-cost definition. Change the facts: An exact replica using the same design and materials calls for reproduction cost instead.

What to remember: Replacement uses current materials and utility; reproduction seeks a duplicate.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

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Correct answer: C. Give the prescribed written ownership and estimated-charge disclosure at or before referral

"Require the buyer to use the affiliate in every case" ignores the required-use limits of the exception. "Treat the ownership interest as confidential" hides the financial connection the disclosure is meant to reveal. "Give the prescribed written ownership and estimated-charge disclosure at or before referral" states the prescribed disclosure for this brokerage referral. "Accept a separate payment solely for the referral" is not legalized merely because an affiliate relationship exists. Change the facts: Even after disclosure, an impermissible required-use condition or referral payment can prevent the arrangement from qualifying.

What to remember: Affiliation disclosure is one condition of an exception, not blanket permission for referral payments.

Check the rule: CFPB, Regulation X § 1024.15: affiliated business arrangements.

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Correct answer: B. A discount point is tied to rate pricing while an origination fee pays for making the loan

"A point is based on sale price while an origination fee is based on appraised value" uses the wrong universal bases for the two charges. "A discount point is tied to rate pricing while an origination fee pays for making the loan" separates rate pricing from compensation for originating the loan. "An origination fee always reduces the interest rate by 1%" promises an interest-rate reduction the fee does not guarantee. "The two terms must always describe the same charge" ignores that the charges can have different purposes. Change the facts: If the origination fee is a stated flat dollar amount, use that amount; do not force every origination charge into a percentage formula.

What to remember: Discount points buy a rate reduction; an origination charge compensates loan-making services.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline XI

Correct answer: A. Special use

"Special use" fits a use contemplated by the ordinance but subject to discretionary approval. "Illegal use" does not follow merely because a hearing is required. "Tax assessment" does not authorize the proposed use. "Eminent domain" concerns government acquisition rather than permission to operate. Change the facts: If the use is allowed outright without that discretionary process, it is not a special-use approval on these facts.

What to remember: A permitted conditional use differs from a variance from a dimensional requirement.

Check the rule: California DRE, Planning and Zoning: general land-use concepts.

Study this topicPSI national broker outline II

Correct answer: C. The parties follow the contract's objection, response, and election process

"The seller must repair every item" does not follow automatically from an inspection report. "The broker decides which defects matter" gives the broker authority the facts do not provide. "The parties follow the contract's objection, response, and election process" uses the agreement's procedures to determine the available election. "The contract ends without notice" ignores any required notice and other conditions. Change the facts: If the contingency expressly requires timely written termination, the report alone does not exercise that election.

What to remember: Read the contingency. A defect alone does not establish a universal cancellation procedure.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: C. The seller's undisclosed private thought

"How the item is attached" is objective evidence of attachment. "How the item is adapted to the property" is objective evidence of adaptation. "The seller's undisclosed private thought" was never communicated and supplies no outward evidence of the parties' understanding. "The intention shown by the agreement and circumstances" is directly relevant objective evidence. Change the facts: An express written exclusion supplies evidence the private thought did not provide; its wording still matters.

What to remember: Fixture intent is judged from outward evidence, not a thought never communicated.

Check the rule: Cornell Legal Information Institute, fixture.

Study this topicPSI national broker outline I

Correct answer: D. Identify the proposed use and obtain current municipal and legal guidance

"Guarantee it because the property is residential" assumes that residential zoning permits every business. "Tell the buyer zoning never changes" makes an unsupported promise about future regulation. "Rely only on the listing remarks" does not verify the governing public or private controls. "Identify the proposed use and obtain current municipal and legal guidance" checks the actual proposed use against current authoritative restrictions. Change the facts: Even if zoning permits the use, an enforceable private restriction must still be checked separately.

What to remember: Verify legal use and restrictions before promising that a home business is permitted.

Check the rule: California DRE, Planning and Zoning: general land-use concepts.

Study this topicPSI national broker outline X

Correct answer: B. It was lawful before the zoning change

"It has higher profits" does not establish that the use began lawfully. "It was lawful before the zoning change" provides the relevant distinction from the later unlawful use. "The owner dislikes the new ordinance" is not a basis for legal nonconforming status. "It has no mortgage" does not establish the use's legal history. Change the facts: If the workshop was unlawful when established, age alone does not give it lawful nonconforming status.

What to remember: Verify that the use was lawful when established. An unlawful use does not become protected by age alone.

Check the rule: California DRE, Planning and Zoning: general land-use concepts.

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Correct answer: C. Percentage lease

"Gross lease" typically states a rent allocation different from a sales-percentage clause. "Ground lease" principally identifies the leased land rather than this sales formula. "Percentage lease" uses base rent plus an agreed share of sales under the clause. "Proprietary lease" relates to cooperative occupancy rather than retail sales rent. Change the facts: If rent is fixed without any sales component, this fact no longer establishes a percentage lease.

What to remember: Percentage rent depends on the sales formula in the lease, often in addition to base rent.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: B. Mortgage debt service

"Property tax" is a property operating expense in this model. "Mortgage debt service" is financing expense and is deducted below property NOI. "Management expense" is an expense of operating the property. "Routine maintenance" is also an operating expense rather than debt service. Change the facts: If an item is routine repair expense instead of a mortgage payment, it belongs in the operating-expense calculation.

What to remember: Debt service is a financing expense. NOI is calculated before it.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: C. RESPA's referral-kickback prohibition

"Mortgage-originator licensing alone" addresses mortgage-originator licensing rather than the referral payment. "Mortgage-data reporting alone" addresses mortgage data rather than settlement kickbacks. "RESPA's referral-kickback prohibition" addresses the thing of value exchanged for a covered referral. "Only an agreement between competing firms on price" does not capture the stated settlement-referral arrangement by itself. Change the facts: Reasonable payment for actual permitted services needs a different analysis; labelling a referral gift as a service does not supply one.

What to remember: A payment for a referral differs from reasonable compensation for actual services permitted by the rule.

Check the rule: CFPB, Regulation X § 1024.14: referral fees and kickbacks.

Study this topicPSI national broker outline IV

Correct answer: A. The notice method, recipient, and deadline in that contract

"The notice method, recipient, and deadline in that contract" identifies the conditions needed to exercise this termination right. "Only the inspector’s invoice" does not show proper contractual notice. "Whether the listing is still online" does not determine the stipulated termination mechanics. "Whether the buyer verbally mentioned concerns to a friend" is not delivery to the required recipient. Change the facts: If notice reaches the required recipient only after the stated deadline and no exception applies, timely discovery of a defect alone does not cure it.

What to remember: A right to terminate and a properly delivered termination notice are different things.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: C. Variance

"Rezoning" would change the zoning classification rather than give limited dimensional relief. "Escheat" is unrelated to a setback hardship. "Variance" fits relief from the dimensional rule under the ordinance's criteria. "Subdivision dedication" concerns setting land aside in a subdivision. Change the facts: If the owner seeks a different zoning classification for the parcel, the request is rezoning instead.

What to remember: A variance offers relief from a zoning requirement; it does not rewrite all zoning rules.

Check the rule: California DRE, Planning and Zoning: general land-use concepts.

Study this topicPSI national broker outline II

Correct answer: D. Provide a blank form and factual public information

"Reveal the seller's minimum price" discloses protected seller negotiating information without authority. "Recommend the exact offer needed to beat competitors" is negotiation advocacy rather than neutral factual assistance. "Promise to put the buyer's interest first" promises the buyer loyalty inconsistent with the stated seller representation. "Provide a blank form and factual public information" is the neutral assistance described after proper disclosure. Change the facts: A valid new buyer-representation relationship would require a different analysis; a blank form alone does not establish it.

What to remember: Providing factual assistance does not necessarily establish representation of the recipient.

Check the rule: California DRE, Agency: general agency principles.

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Correct answer: A. Recommend evaluation by a qualified structural professional

"Recommend evaluation by a qualified structural professional" gets the needed structural expertise rather than guessing. "Guarantee it is cosmetic after a walkthrough" makes a diagnosis without the stated expertise. "Treat an appraisal as a structural certification" confuses valuation with structural certification. "Assume fresh paint proves the wall is sound" does not prove the concealed condition is sound. Change the facts: A qualified structural evaluation can supply evidence the walkthrough alone did not; its actual findings must still be considered.

What to remember: Identifying a concern is different from diagnosing a structural defect.

Check the rule: CFPB, Schedule a home inspection.

Study this topicPSI national broker outline VII

Correct answer: D. $520,000

"$420,000" is $500,000 minus $80,000 and omits land. "$480,000" subtracts $120,000 from the $600,000 land-plus-cost sum, although depreciation is $80,000. "$680,000" adds the $80,000 loss instead of deducting it. "$520,000" is $100,000 + $500,000 - $80,000 = $520,000. Change the facts: If depreciation becomes $100,000, the indication becomes $500,000, with land and cost unchanged.

What to remember: Start with land plus improvement cost, then deduct accrued depreciation from improvements.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: A. Estimate compensatory loss in advance

"Estimate compensatory loss in advance" is the compensatory purpose under the stem's validity assumption. "Impose a punishment unrelated to loss" describes a penalty rather than the stipulated compensatory clause. "Create assent that never existed" does not create an agreement where assent was absent. "Transfer title automatically on breach" does not occur merely because a damages clause exists. Change the facts: If a provision is an unreasonable punishment rather than a lawful forecast, the validity assumption no longer holds.

What to remember: A stated damages amount is not automatically enforceable if it operates as an unlawful penalty.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: A. An appraisal and a home inspection serve different purposes

"An appraisal and a home inspection serve different purposes" recognizes the different value and condition assignments. "The appraisal guarantees every system works" overstates an appraisal's purpose. "An inspection replaces title research" confuses physical condition with title evidence. "The lender checks every concealed defect" assumes a concealed-defect guarantee the facts do not supply. Change the facts: A separate specialist inspection may still be needed when a general inspection identifies a concern outside its scope.

What to remember: Value, physical condition, and title are separate investigations.

Check the rule: CFPB, Schedule a home inspection.

Study this topicPSI national broker outline VII

Correct answer: C. Objective words and conduct showing offer and acceptance

"One party's secret intention" does not communicate assent to the other party. "A later appraisal" does not by itself form the parties' agreement. "Objective words and conduct showing offer and acceptance" supplies objective evidence of agreement to terms. "The broker's hope that the parties agree" is neither party's assent. Change the facts: If the objective response changes a material term instead of accepting it, formation requires addressing the counteroffer.

What to remember: Mutual assent concerns agreement on terms, not simply both people wanting a sale eventually.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: D. The broker accepted a subagency relationship permitted by law

"The broker accessed the property through the MLS" does not automatically create seller subagency. "The listing brokerage offered compensation" does not by itself determine representation. "The broker attended the inspection" does not establish agency merely through attendance. "The broker accepted a subagency relationship permitted by law" supplies the valid relationship required by the question. Change the facts: If the broker validly represents the buyer instead, cooperation with the listing side does not turn that broker into a seller subagent.

What to remember: Subagency requires the relevant authorization and relationship; it is not assumed from cooperation alone.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: D. Reversion

"Reversion" is retained by the grantor after conveying the life estate. "A mortgage lien created by the life estate" does not arise merely because a life estate was created. "A leasehold in Avery's name" does not describe the grantor's future interest. "A remainder granted to a third party" would require a third-party remainder that the stem excludes. Change the facts: Naming Morgan to take after Avery would create a remainder for Morgan rather than the grantor's retained reversion.

What to remember: A life tenant cannot convey a longer possessory estate than the life estate provides.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline I

Correct answer: B. Subdivision approval

"Certificate of occupancy" concerns lawful occupancy of a structure rather than creating the subdivision. "Subdivision approval" addresses division, platting and associated infrastructure. "Variance" addresses relief from a zoning restriction. "Tax appeal" addresses assessment rather than land division. Change the facts: Approval of a particular building's occupancy would involve an occupancy approval, not substitute for subdivision approval.

What to remember: Subdivision approval and the right to build a specific structure are separate questions.

Check the rule: California DRE, Planning and Zoning: general land-use concepts.

Study this topicPSI national broker outline II

Correct answer: C. $4,200

"$1,867" does not apply 1.5 percent to the loan. "$2,800" charges only one point. "$4,200" is $280,000 x 0.015 = $4,200. "$42,000" uses 15 percent rather than 1.5 percent. Change the facts: At two points on the same loan, the charge becomes $5,600; changing the sale price alone does not change this loan-based calculation.

What to remember: One point is 1% of the loan amount, not 1% of the purchase price.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline XI

Correct answer: C. Home equity line of credit

"Closed-end home-equity loan" normally provides a closed-end advance rather than repeated draws. "Fully disbursed purchase loan" has already disbursed its purchase proceeds. "Home equity line of credit" permits repeated draws within the available limit and draw-period terms. "Package mortgage by definition" does not by itself mean a revolving equity credit line. Change the facts: Once the draw period ends, the borrower generally enters repayment and cannot assume new draws remain available.

What to remember: A credit line allows borrowing within its terms; it is not the same as receiving all proceeds at closing.

Check the rule: CFPB, What is a home equity line of credit?.

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Correct answer: B. Reasonable accommodation

"Rezoning" concerns changing land-use classification rather than a housing policy. "Reasonable accommodation" is a requested disability-related exception to a rule. "Eminent domain" concerns government acquisition of property. "Partition" concerns division of co-owned property. Change the facts: A request for a physical grab-bar installation instead concerns a reasonable modification, with payment duties depending on applicable law and program.

What to remember: An assistance-animal request is a possible exception to a policy, not a request to remodel a unit.

Check the rule: HUD, Housing Discrimination Under the Fair Housing Act.

Study this topicPSI national broker outline X

Correct answer: A. It does not erase that express inspection right

"It does not erase that express inspection right" preserves the inspection right expressly retained in the agreement. "It cancels every buyer contingency" disregards the rest of the signed contract. "It guarantees the home has no defects" turns an allocation of condition risk into a condition guarantee. "It makes fraud lawful" does not follow; as-is wording does not authorize fraud. Change the facts: If no contractual inspection right was retained, that right cannot be assumed from this example; other applicable law still matters.

What to remember: Read as-is language together with the rest of the contract.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline VII

Correct answer: A. Apparent authority

"Apparent authority" focuses on the principal's manifestation to the third party. "Subagency" does not describe the stated principal-to-buyer representation. "Universal agency" is not established by one representation about acceptance authority. "Customer status" describes the consumer relationship rather than this authority issue. Change the facts: The agent's unsupported claim alone, without a relevant principal manifestation, does not establish apparent authority on that basis.

What to remember: Apparent authority depends on the principal’s manifestations, not just an agent’s claim of power.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: D. Informed consent and the limits of representing competing interests

"Whether both clients use the same lender" does not resolve divided loyalty. "Only which party pays the fee" does not determine whether dual representation is permitted. "Only the order in which offers arrived" does not supply informed consent or define its limits. "Informed consent and the limits of representing competing interests" addresses both permission and the competing interests. Change the facts: In a jurisdiction prohibiting the proposed dual representation, consent alone cannot authorize it.

What to remember: Consent does not erase the practical limits of representing parties with opposing interests.

Check the rule: California DRE, Agency: general agency principles.

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Correct answer: B. Electronic form alone is not a reason to deny legal effect

"Electronic signatures remove the need for consent" does not follow from the use of electronic form. "Electronic form alone is not a reason to deny legal effect" matches the limited federal rule against denying effect solely for electronic form. "Every electronic message forms a contract" ignores assent and other formation requirements. "Electronic signatures make an illegal contract enforceable" does not follow; electronic form does not legalize an unlawful bargain. Change the facts: A signature made without authority still raises an authority problem even if the electronic format is acceptable.

What to remember: Electronic form does not cure missing consent, lack of authority, or unlawful terms.

Check the rule: Office of the Law Revision Counsel, 15 USC 7001(a)-(b).

Study this topicPSI national broker outline V

Correct answer: D. Amendment

"Listing extension only" does not amend the buyer-seller closing date. "New advertisement" does not supply the parties' agreed contract change. "Deed restriction" is a different instrument and function. "Amendment" records a change to the existing agreement. Change the facts: If the document accompanies the original offer as it is formed, an addendum rather than a later amendment is the usual label.

What to remember: An amendment changes an existing agreement. An addendum may supplement it when formed.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: A. Familial status

"Familial status" is the protection addressed by a qualifying older-persons exemption. "All protected classes" overstates the exemption's scope. "Race only" is not the exemption granted to qualifying older-persons housing. "Disability only" is not the protected class removed by that exemption. Change the facts: A development that fails the older-persons requirements cannot claim that exemption merely by calling itself senior housing.

What to remember: A qualifying older-persons exemption concerns familial status, not permission for racial or religious discrimination.

Check the rule: HUD, Housing Discrimination Under the Fair Housing Act.

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Correct answer: B. Buyer debit and seller credit for $360

"Seller debit and buyer credit for $360" reverses the reimbursement direction. "Buyer debit and seller credit for $360" charges the buyer and reimburses the seller for the $360 unused benefit. "Buyer debit and seller credit for $720" uses the whole annual cost instead of the unused half. "No entry because prepaid items cannot be prorated" incorrectly rules out prorating an agreed transferable prepaid benefit. Change the facts: If only three months remain for the buyer, the reimbursement is $180 with the same direction.

What to remember: Reimbursing a prepaid seller expense gives the seller a credit and the buyer a debit.

Check the rule: CFPB, Closing Disclosure explainer.

Study this topicPSI national broker outline XI

Correct answer: D. $2,610

"$2,060" adds only monthly insurance and omits tax. "$2,490" adds only monthly tax and omits insurance. "$2,730" adds an extra $120 beyond the supplied monthly components. "$2,610" is $1,940 + ($6,600 / 12) + ($1,440 / 12) = $2,610. Change the facts: If annual tax is $5,160, monthly tax is $430 and PITI becomes $2,490 with other inputs unchanged.

What to remember: PITI adds principal, interest, taxes, and insurance. Use monthly figures throughout.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline XI

Correct answer: A. Self-employed statutory nonemployee

"Self-employed statutory nonemployee" fits all three stated federal-tax conditions. "Employee solely because the agent holds a license" mistakes licensing alone for employee status. "Employee solely because commissions are paid" mistakes output-based pay for a reason to impose employee status despite the supplied conditions. "Classification cannot be determined without an hourly time sheet" ignores the statutory criteria already given. Change the facts: If the required written nonemployee contract is absent, these facts no longer establish the statutory category; a separate classification analysis is needed.

What to remember: The federal tax test does not settle classification under wage, benefit, or state law.

Check the rule: IRS, Statutory nonemployees.

Study this topicPSI national broker outline X

Correct answer: A. Special agency

"Special agency" fits authority confined to the identified transaction. "Universal agency" would describe authority far broader than these facts. "General power of attorney" is not supplied by a limited negotiation appointment. "Property ownership in severalty" is ownership, not this representation relationship. Change the facts: An additional valid power to sign would change the signing-authority analysis, but would not make all authority unlimited.

What to remember: A special agent’s authority is limited. A license does not create a power of attorney.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: C. External obsolescence

"Reproduction cost" is a cost measure rather than this loss category. "Curable physical wear" does not describe an influence outside the residence. "External obsolescence" fits a value influence originating outside the property. "Entrepreneurial profit" is not the nuisance-caused loss category. Change the facts: If the problem is an outdated floor plan inside the home, functional obsolescence is the closer category.

What to remember: An outside nuisance differs from wear and tear or an outdated interior layout.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: C. No more than 31 days old

"Five years old" is far older than the stated maximum registry age. "One year old" is also older than that maximum. "No more than 31 days old" is the FTC national-registry age used in the stated process. Meeting this age condition alone does not establish the entire safe harbor. "Only downloaded once" does not maintain a current checking process. Change the facts: A consumer's direct seller-specific stop request still matters even when the national-registry version is current.

What to remember: Thirty-one days is a maximum registry age, not permission to ignore a direct stop request.

Check the rule: FTC, Complying with the Telemarketing Sales Rule: Do Not Call.

Study this topicPSI national broker outline X

Correct answer: A. A novation releases the replaced party by agreement

"A novation releases the replaced party by agreement" adds agreed substitution and release, beyond delegation alone. "A novation is always oral" is not a universal form requirement for novation. "A delegation transfers title" confuses performance duties with ownership conveyance. "A delegation ends every contract" does not follow; delegation does not automatically terminate the contract. Change the facts: Without release of the original obligor, a transfer of performance does not by itself establish novation.

What to remember: Look for an agreed substitution and release when distinguishing novation from assignment.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: D. $960

"$944" uses only 59 seller days. "$1,440" uses 90 days rather than the stated calendar period. "$976" uses 61 days and includes closing day in the seller period. "$960" uses 60 seller days at $16 per day: $5,840 / 365 x 60 = $960. Change the facts: If the seller instead owns March 2 under the supplied convention, 61 days produce $976.

What to remember: Use the stated non-leap-year convention and identify who owns closing day before counting.

Check the rule: CFPB, Closing Disclosure explainer.

Study this topicPSI national broker outline XI

Correct answer: B. Potential gross income

"Net operating income" is after operating deductions, rather than full-income potential. "Potential gross income" is income at full occupancy and collection before the stated losses. "Before-tax cash flow after financing" is a later cash-flow measure after financing. "Debt service" is a financing payment rather than gross property income. Change the facts: After vacancy, collection loss and other income are accounted for, the resulting measure is effective gross income.

What to remember: Potential gross income comes before vacancy and collection-loss deductions.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: C. General warranty deed

"Tax deed" does not conventionally provide the requested broad grantor covenants. "Quitclaim deed" conveys the existing interest without those title covenants. "General warranty deed" conventionally offers the requested broad warranty scope, subject to the deed and law. "Sheriff's deed" does not conventionally provide that general grantor warranty merely because of its label. Change the facts: A special warranty limited to claims by, through or under its grantor has a narrower scope; actual title quality remains separate.

What to remember: Warranty scope is a promise by the grantor, not a government certification of perfect title.

Check the rule: Cornell Legal Information Institute, warranty deed.

Study this topicPSI national broker outline IX

Correct answer: B. $335,000

"$305,000" subtracts the garage contribution although the comparable is inferior. "$335,000" adds the supported $15,000 contribution: $320,000 + $15,000 = $335,000. "$320,000, with $15,000 added to the subject" adjusts the subject instead of the comparable. "$335,000 only if the garage cost exactly $15,000 to build" incorrectly makes market contribution depend on matching construction cost. Change the facts: If the comparable had the garage and the subject lacked it, subtract $15,000 to reach $305,000.

What to remember: Adjust the comparable toward the subject. An inferior comparable needs an upward adjustment.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: C. Requiring many covered institutions to collect, report, and disclose mortgage-lending data

"Guaranteeing every mortgage" is not HMDA's purpose. "Licensing real estate brokers" concerns a different licensing system. "Requiring many covered institutions to collect, report, and disclose mortgage-lending data" states HMDA's covered mortgage-data function. "Setting local property taxes" is a local tax function rather than mortgage data reporting. Change the facts: A particular lender may be exempt or a transaction excluded; the general purpose does not establish every lender's reporting duty.

What to remember: HMDA data helps reveal lending patterns; the law is not a mortgage insurance program.

Check the rule: CFPB, Regulation C § 1003.1: purposes of HMDA.

Study this topicPSI national broker outline IV

Correct answer: C. Executory

"Executed" would require the material performance to be completed. "Void" does not follow merely from pending financing. "Executory" describes the remaining financing and closing duties. "Rescinded" would mean the agreement was undone, which the facts do not say. Change the facts: Once all required material performance is completed, the performance classification can become executed.

What to remember: A signed agreement may still be executory because performance remains due.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: C. The grantor's then-existing interest, if any

"Guaranteed fee-simple title" adds a title guarantee a quitclaim does not supply. "Only future-acquired title" does not describe the ordinary present-interest conveyance. "The grantor's then-existing interest, if any" passes the grantor's existing interest, if any, without title covenants. "A lender's insured interest" does not follow merely from receiving a quitclaim. Change the facts: If the grantor owns good title, a quitclaim can convey that interest; its lack of covenants does not prove defective title.

What to remember: A quitclaim can convey good title if the grantor has it; it simply makes no title covenants.

Check the rule: Cornell Legal Information Institute, quitclaim deed.

Study this topicPSI national broker outline IX

Correct answer: C. ECOA

"Recording Act" concerns public records rather than the credit-discrimination prohibition. "RESPA Section 8" concerns covered referral fees rather than prohibited-basis credit discrimination. "ECOA" is implemented by Regulation B and addresses discrimination in credit transactions. "Statute of Frauds" concerns required writings rather than credit discrimination. Change the facts: A thing of value for covered settlement referrals instead points to RESPA's Section 8 analysis.

What to remember: Credit discrimination rules and mortgage settlement-fee rules address different conduct.

Check the rule: CFPB, Regulation B § 1002.4: credit discrimination.

Study this topicPSI national broker outline IV

Correct answer: A. Performing the compensated inspection and issuing the report

"Performing the compensated inspection and issuing the report" is the professional inspection task that requires the relevant competence. "Sharing a seller disclosure" shares a document without performing the inspection. "Scheduling access" arranges logistics rather than issuing an inspection opinion. "Calendaring the inspection deadline" tracks the contractual timeline rather than evaluating systems. Change the facts: A broker with separate appropriate inspection qualifications would need analysis of that distinct role and engagement; a brokerage license alone does not establish it.

What to remember: A real estate license is not proof of inspection or engineering expertise.

Check the rule: CFPB, Schedule a home inspection.

Study this topicPSI national broker outline X

Correct answer: B. The exchanged promises can supply consideration

"Only a deposited earnest-money check can be consideration" mistakes a possible deposit term for the only form of consideration. "The exchanged promises can supply consideration" can supply consideration through the bargained exchange of promises. "The broker's advertising bill is the parties' exchange" does not describe the buyer-seller exchange. "The later deed must already be recorded" is later performance rather than a prerequisite for consideration here. Change the facts: An express deposit condition for contract formation would need separate satisfaction; it is excluded from the original facts.

What to remember: Consideration may be a return promise. It need not be a cash deposit.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: A. Delivery

"Delivery" is doubtful because the grantor retained unrestricted control rather than present irrevocable transfer intent. "Legal description" is not identified as defective by the facts. "Grantee identity" is not the stated uncertainty. "Recording fee" does not settle the delivery issue. Change the facts: A valid irrevocable delivery with present transfer intent and acceptance would remove this specific retained-control objection.

What to remember: A deed’s intended delivery and acceptance matter; signing alone is not the whole transfer analysis.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline IX

Correct answer: A. The owner as optionor

"The owner as optionor" grants the supported purchase election and must honor the option terms. "The optionee as an already bound purchaser" does not become bound to purchase merely by holding an unexercised option. "The escrow holder as property owner" does not own the parcel merely by holding funds. "The appraiser as seller" does not become the seller by valuing it. Change the facts: After a valid exercise, the resulting purchase obligations must be analyzed under the option and applicable law.

What to remember: The optionor gives the right; the optionee receives the choice to exercise it.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: C. A shared right to possess the whole property

"An automatic priority based on contribution" does not follow merely from paying a greater contribution. "An automatic physical partition" has not occurred in these facts. "A shared right to possess the whole property" belongs to the undivided ownership model, subject to any valid agreement. "A probate award during both owners' lives" has no role in assigning upstairs rooms during both owners' lives. Change the facts: A valid exclusive-possession agreement would change the stated assumption; unequal fractions alone would not physically divide the building.

What to remember: An undivided share is an ownership fraction, not an assigned room or corner of land.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline I

Correct answer: B. The signed purchase agreement and its contingency terms

"The listing photograph alone" does not set the buyer's contingency remedies. "The signed purchase agreement and its contingency terms" states the agreed rights, notice requirements and deadlines, subject to law. "The lender’s rate lock" does not determine the inspection election. "The broker’s commission schedule" does not create the buyer's remedy. Change the facts: Without an inspection contingency, the buyer cannot assume this particular contractual termination right exists merely because a report is unfavorable.

What to remember: The inspection report describes findings; the contract supplies the agreed remedies and deadlines.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline VII

Correct answer: D. General agent for a continuing range of matters

"Special agent for one isolated act" does not describe continuity across recurring management matters. "Subagent solely because rent is collected" does not follow simply because rent is collected. "Customer" does not describe an appointed representative. "General agent for a continuing range of matters" fits the usual continuing-service general-agency model within the written limits. Change the facts: If authority is limited to one isolated purchase negotiation, special agency is the closer scope classification.

What to remember: Continuing authority over a business activity points toward general agency.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: D. Routine maintenance

"Sale proceeds from the property" is a disposition inflow rather than an operating expense. "The owner’s personal income tax" is the owner's tax rather than property operations. "A mortgage principal payment" is financing principal, below property NOI. "Routine maintenance" is an expense of running and maintaining the property. Change the facts: Property tax, unlike the owner's personal income tax, belongs among property operating expenses in this model.

What to remember: Separate property operations from the owner’s financing and personal taxes.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline VIII

Correct answer: A. A newly added prepayment penalty

"A newly added prepayment penalty" is one of the changes requiring the new corrected-disclosure waiting period. "A corrected seller mailing address only" alone is not one of the three specified triggers. "A minor spelling correction" alone is not one of those triggers. "A final walkthrough note" does not itself establish a triggering APR, product or prepayment-penalty change. Change the facts: If the only correction is the seller's mailing address, a new three-business-day waiting period is not triggered by that correction alone.

What to remember: Adding a prepayment penalty triggers a new waiting period. Not every corrected figure does.

Check the rule: CFPB, Regulation Z § 1026.19(e) and (f): mortgage disclosures.

Study this topicPSI national broker outline IV

Correct answer: B. State the exclusion and replacement terms in the written contract

"Remove it after closing without notice" creates an undisclosed removal risk rather than an agreed exclusion. "State the exclusion and replacement terms in the written contract" documents what the buyer is and is not purchasing. "Rely only on verbal custom" leaves the intended exclusion uncertain. "Call it personal property in advertising only" does not itself amend the buyer-seller agreement. Change the facts: If the parties agree that the fixture stays, the seller cannot rely on an earlier private wish to keep it.

What to remember: A built-in item is different from ordinary movable furniture.

Check the rule: Cornell Legal Information Institute, fixture.

Study this topicPSI national broker outline I

Correct answer: A. Familial status

"Familial status" addresses the qualifying household-with-child fact under the stated coverage assumption. "Credit score" is not the federal protected characteristic identified by this refusal. "Occupation" does not describe the reason for this refusal. "Education level" does not describe the stated protected status. Change the facts: A genuinely qualifying housing-for-older-persons exemption changes familial-status analysis, without waiving protection for every other class.

What to remember: Familial status includes qualifying households with children; avoid treating all adult-only preferences as lawful.

Check the rule: HUD, Housing Discrimination Under the Fair Housing Act.

Study this topicPSI national broker outline X

Correct answer: D. Testing is needed; radon cannot be detected by smell

"A neighbor’s result proves this home’s level" does not test this property's level. "No smell means no radon" cannot establish the absence of an odorless gas. "Only homes with basements can have radon" incorrectly limits radon risk to basement homes. "Testing is needed; radon cannot be detected by smell" recognizes that smell cannot measure radon and the home needs testing. Change the facts: A valid test result for this home supplies property-specific evidence; another property's result still does not substitute.

What to remember: A clean smell or a neighbor’s low reading cannot establish this home’s radon level.

Check the rule: EPA, Home Buyer’s and Seller’s Guide to Radon, March 2024.

Study this topicPSI national broker outline VII

Correct answer: B. Assignment

"Delegation alone" describes a duty transfer rather than the stated right transfer. "Assignment" transfers the permitted contractual right without proving release. "Tender of the closing payment" is an offer of performance, not this transfer. "Rescission of the whole agreement" would undo the contract rather than transfer the purchase right. Change the facts: An agreed substitution that releases the old obligation would add the features needed for novation.

What to remember: Transferring rights does not automatically release the original obligor.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: D. Honor the internal do-not-call request

"Keep calling for 18 months" ignores the seller-specific stop request. "Sell the number to another team" does not honor the request or create calling permission. "Call only after 9 p.m." does not solve the stop request and adds a calling-time problem. "Honor the internal do-not-call request" records and honors the consumer's instruction for covered calls. Change the facts: An established business relationship does not by itself override the consumer's seller-specific stop request.

What to remember: An entity-specific stop request defeats reliance on an established business relationship for further covered calls.

Check the rule: FTC, Complying with the Telemarketing Sales Rule: Do Not Call.

Study this topicPSI national broker outline X

Correct answer: B. 85%

"15%" is the unfinanced fraction of the supplied value base. "85%" is $340,000 / $400,000 = 85 percent. "80%" is not the ratio of the stated loan and value. "117.65%" reverses the numerator and denominator. Change the facts: A $320,000 loan on the same $400,000 required base gives 80 percent LTV.

What to remember: Divide the loan by the stated value base, then convert to a percentage.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline XI

Correct answer: D. National origin is federally protected

"An agent can carry out the instruction without responsibility" does not excuse participation in unlawful discrimination. "Only citizenship, not national origin, matters under the Act" does not remove the Act's national-origin protection. "The refusal is lawful if stated verbally" does not make a prohibited refusal lawful. "National origin is federally protected" identifies the federally protected characteristic in the stated covered transaction. Change the facts: An actual lawful, consistently applied financial criterion presents a different stated reason; it cannot be a pretext for national-origin discrimination.

What to remember: National origin is protected federally; do not confuse it with the separate question of immigration status.

Check the rule: HUD, Housing Discrimination Under the Fair Housing Act.

Study this topicPSI national broker outline X

Correct answer: D. Price fixing

"Appraisal" is valuation, not this competitor agreement. "Market focus" does not excuse coordinating a minimum fee. "Independent pricing" is contradicted by the agreement between competing firms. "Price fixing" describes coordinated prices, including an agreed minimum. Change the facts: Similar fees chosen independently, without an agreement, do not by themselves establish price fixing.

What to remember: A coordinated minimum fee is still price fixing even if firms may charge above it.

Check the rule: U.S. Department of Justice, Price Fixing, Bid Rigging, and Market Allocation.

Study this topicPSI national broker outline X

Correct answer: A. Reasonable modification

"Reasonable modification" describes the requested physical change. "Source of income" is a separate discrimination subject rather than the installation. "Blockbusting" concerns inducing transactions through protected-class change. "Redlining" concerns discriminatory geographic lending or services. Change the facts: A disability-related exception to a no-pets rule instead asks for accommodation of a policy.

What to remember: A physical change is a modification. The applicable housing program can affect who pays.

Check the rule: HUD, Housing Discrimination Under the Fair Housing Act.

Study this topicPSI national broker outline X

Correct answer: B. Specific performance

"Rescission" seeks to unwind the bargain rather than compel conveyance. "Specific performance" asks the court to compel the promised act, subject to equitable requirements. "Liquidated damages" seeks the agreed monetary remedy rather than the deed. "Mitigation" concerns reducing loss rather than compelling conveyance. Change the facts: A request to undo the agreement and restore the parties instead concerns rescission.

What to remember: Specific performance asks for the promised performance rather than only a money award.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: B. One adjustment each year after the initial period

"A one-dollar payment" does not describe the adjustment interval. "One adjustment each year after the initial period" means annual adjustment after the initial period in the stated 5/1 convention. "One percent lifetime cap in every loan" is not a universal lifetime cap. "A one-year total loan term" confuses adjustment frequency with the total loan term. Change the facts: A stated 5/6m ARM instead has a five-year initial period followed by six-month adjustment intervals.

What to remember: In a 5/1 ARM, the first number describes the initial fixed period and the second the adjustment interval.

Check the rule: CFPB, Consumer Handbook on Adjustable-Rate Mortgages.

Study this topicPSI national broker outline IV

Correct answer: A. Functional obsolescence

"Functional obsolescence" fits the internal layout inadequacy despite a sound structure. "Physical deterioration" requires wear or physical damage, which is not the stated cause. "External obsolescence" requires an influence outside the property, excluded here. "Depreciation of the site itself" does not identify the building's layout problem. Change the facts: If the loss instead comes from a new nuisance next door, the relevant category is external obsolescence.

What to remember: A poor floor plan is a problem within the property, not an external market influence.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: B. It is a deposit governed by the agreement and escrow instructions

"It is always required for a valid purchase contract" incorrectly treats a deposit as a universal formation requirement. "It is a deposit governed by the agreement and escrow instructions" recognizes that the deposit is subject to the agreement and lawful escrow instructions. "It automatically belongs to the seller after any buyer default" assumes entitlement and release authority without the required analysis. "It replaces the parties' signatures" does not supply the parties' assent. Change the facts: An express contractual deposit condition changes the analysis of that condition; it does not create a universal earnest-money rule.

What to remember: Earnest money supports the transaction but is not the only possible form of consideration.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: A. Recording gives public notice and can affect priority

"Recording gives public notice and can affect priority" states the notice and potential priority function. "Recording creates any ownership the grantor lacked" cannot supply title the grantor did not own. "Recording replaces an adequate legal description" does not cure a missing or defective description. "Recording certifies marketable title and physical condition" does not guarantee either title quality or physical condition. Change the facts: If the deed was never validly delivered, later recording alone does not prove that the underlying transfer was valid.

What to remember: Recording gives public notice under applicable law. It does not guarantee title quality.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline IX

Correct answer: D. $150,000

"$325,000" is total secured debt, not equity. "$185,000" subtracts only the $290,000 first mortgage. "$290,000" is the first mortgage balance rather than the residual ownership amount. "$150,000" is $475,000 - $290,000 - $35,000 = $150,000. Change the facts: If no second mortgage existed, equity would be $185,000; this still would not be net sale proceeds after costs.

What to remember: Equity is value minus debt; it is not the same as cash received after selling costs.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline XI

Correct answer: D. In severalty

"As a partitioned estate" would require an actual division, which the deed does not supply. "As joint tenants with its shareholders" incorrectly adds shareholders as deeded co-owners. "As tenants in common with its shareholders" also incorrectly gives shareholders direct ownership of the parcel. "In severalty" fits the corporation's status as one legal owner. Change the facts: If the deed instead names two individuals as tenants in common, there are two direct co-owners.

What to remember: Severalty means one legal owner, even when that owner is an entity.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline I

Correct answer: A. Obtain the owner’s authorization before committing

"Obtain the owner’s authorization before committing" respects the stated authority limit for this nonemergency repair. "Approve it because every manager has unlimited authority" invents unlimited agency power. "Split one invoice to evade the limit" does not expand authority by dividing the same obligation. "Treat the contractor’s quote as owner consent" confuses a contractor's offer with owner permission. Change the facts: A valid owner authorization for this repair changes the authority facts; an unstated emergency power cannot be assumed.

What to remember: The management agreement sets authority. An agent cannot expand it by splitting invoices.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VIII

Correct answer: A. Survivorship

"Survivorship" is the distinguishing joint-tenancy feature when valid and unsevered. "Possession" can be shared in either co-ownership form. "A written deed" does not by itself distinguish the two forms. "Real property" can be held under either form. Change the facts: With tenancy in common, the deceased owner's share does not pass automatically to the other cotenant by survivorship.

What to remember: Survivorship concerns what happens at death, not who may occupy the property today.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline I

Correct answer: B. A counteroffer

"An acceptance" requires assent to the proposed material terms, which changed here. "A counteroffer" proposes a changed material bargain rather than mirror-image acceptance. "An executed contract" cannot follow merely from a changed, unaccepted response. "A unilateral option" is not created by changing the seller-credit term. Change the facts: Acceptance of the original offer without changing its terms removes this counteroffer issue, assuming the other formation conditions hold.

What to remember: Changing a material offer term proposes a counteroffer rather than accepting the original terms.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: B. The buyer

"The seller, because the listing side funds compensation" mistakes the funding source for the representation relationship. "The buyer" is the client identified by the valid representation agreement. "Both parties automatically" does not arise automatically from seller-side compensation. "Neither party" ignores the buyer's stated representation. Change the facts: If the broker instead validly accepts seller subagency and does not represent the buyer, the represented principal changes.

What to remember: Who pays compensation does not, by itself, establish whom an agent represents.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: A. Trade fixture

"Trade fixture" can describe business equipment installed by a commercial tenant. Classification alone does not settle removal timing, lease restrictions or repair obligations. "Easement" is a use right, rather than the installed equipment. "Life estate" is an estate measured by a life. "Special assessment" is a charge against benefited property. Change the facts: If the item is an ordinary building fixture rather than tenant business equipment, the trade-fixture classification does not follow.

What to remember: Trade fixtures concern a tenant’s business. Check the lease, removal timing, and damage obligations.

Check the rule: Cornell Legal Information Institute, fixture.

Study this topicPSI national broker outline I

Correct answer: B. A material breach defeating the contract's essential purpose

"A harmless typographical error" does not ordinarily defeat the essential bargain. "A material breach defeating the contract's essential purpose" can justify discharge when the material-breach and other legal conditions are met. "A corrected mailing label" does not identify a material failure of performance. "A minor delay expressly waived" does not identify an unexcused material breach. Change the facts: If the delay was expressly waived and no other material failure exists, it does not supply the same basis for discharge.

What to remember: A material breach is more serious than a trivial departure from performance.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: A. A remainder interest

"A remainder interest" is the third party's future interest following the life estate. "A tenancy at sufferance" concerns a holdover tenant rather than this grant. "A mortgage lien" would secure a debt, which is absent. "Elena’s life estate" belongs to Elena, not Amir. Change the facts: If the grantor retains the future interest instead of naming Amir, the retained interest is a reversion.

What to remember: Identify who has possession now and who receives it after the measuring life ends.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline I

Correct answer: B. The buyer's undisclosed maximum price

"A visible hole in the roof" is a visible property condition rather than a private bargaining limit. "The buyer's undisclosed maximum price" is confidential negotiating strategy supplied by the client. "The recorded property tax amount" is public-record information rather than the stated confidence. "The property's street address" is an ordinary public identifying fact. Change the facts: If the buyer authorizes disclosure of that maximum price, the permission changes the confidentiality analysis within its scope.

What to remember: A negotiating limit is different from an objective public fact about the property.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: B. Unenforceable

"Executed" describes completed performance rather than the writing defect. "Unenforceable" is the classification for the stipulated unmet writing requirement. "Automatically illegal" confuses an enforceability defense with an unlawful purpose. "Unilateral" describes a mode of acceptance rather than the missing writing. Change the facts: A sufficient signed writing, with the other requirements met, removes this particular statute-of-frauds defect.

What to remember: Distinguish lack of an enforceable writing from an agreement with an illegal purpose.

Check the rule: California DRE, Transfer of Interests: general contract principles.

Study this topicPSI national broker outline V

Correct answer: B. The owner must address both independent controls

"Zoning automatically cancels the covenant" does not follow from public permission. "The owner must address both independent controls" recognizes that public and enforceable private restrictions operate separately. "The covenant automatically rezones the parcel" confuses a private instrument with a zoning amendment. "The building permit transfers title" does not follow from issuance of a permit. Change the facts: If the private covenant has validly expired, the particular private prohibition may be gone; zoning still applies.

What to remember: Public permission does not automatically remove a valid private restriction.

Check the rule: California DRE, Title to Real Property: general ownership principles.

Study this topicPSI national broker outline II

Correct answer: C. Agency disclosure identifies representation; conflict disclosure identifies a competing interest

"They are always identical" ignores that the disclosures answer different questions. "Agency disclosure states price; conflict disclosure transfers title" does not describe either disclosure correctly. "Agency disclosure identifies representation; conflict disclosure identifies a competing interest" separates representation identity from a competing-interest disclosure. "Neither applies to licensees" is not a general exemption for licensees. Change the facts: If the relationship changes, an earlier representation disclosure may need updating; it does not replace any separate conflict disclosure.

What to remember: Disclosure of a conflict and creation of an agency relationship are separate issues.

Check the rule: California DRE, Agency: general agency principles.

Study this topicPSI national broker outline VI

Correct answer: C. $1,500,000

"$5,400" multiplies $90,000 by 0.06 rather than dividing. "$540,000" would produce only $32,400 NOI at 6 percent. "$1,500,000" is $90,000 divided by 0.06 = $1,500,000. "$15,000,000" results from using 0.006, which is 0.6 percent rather than 6 percent. Change the facts: At a 7.5 percent cap rate with NOI unchanged, indicated value is $1,200,000.

What to remember: Convert 6% to 0.06 before dividing. Multiplying NOI by the rate reverses the valuation formula.

Check the rule: California DRE, Appraisal and Valuation: valuation methods.

Study this topicPSI national broker outline III

Correct answer: B. Assemble the documents needed for a closing.

Rule 1450.740 permits assembling closing documents under licensee supervision. It does not permit the assistant to interpret a contract, show property, or host a public open house. If the facts change: An unlicensed assistant may sit at a broker tour that is closed to the public. That permission does not extend to hosting a public open house.

Check the rule: 68 Ill. Adm. Code 1450.740: unlicensed assistants.

Study this topicPSI broker outline II.G

Correct answer: B. It uses a recorded plat to identify the parcel.

A lot-and-block description identifies land by reference to a recorded subdivision plat. The plat reference matters because it connects the lot and block to the recorded boundaries. A mailing address serves a different purpose. If the facts change: If the description instead follows bearings, distances and boundary calls, it is using metes and bounds. Mentioning a block alone does not turn a plat reference into that system.

Check the rule: 68 Ill. Adm. Code 1270.56: land survey standards.

Study this topicPSI broker outline III.E

Correct answer: C. Notice that the listing agent is not acting as the buyer's agent.

Section 15-35(c) requires written no-agency disclosure in time to prevent the customer from revealing confidential information, and never later than preparation of an offer. Waiting for an offer signature can already be too late. If the facts change: If the buyer is about to reveal confidential information before any offer is prepared, give the notice then. Offer preparation is the outside deadline, not permission to wait.

Check the rule: 225 ILCS 454/15-35: agency disclosure.

Study this topicPSI broker outline IV.A

Correct answer: D. Give the sponsor name at least equal font size or display area under the rule.

The sponsor must be identified. Rule 1450.715 allows the size requirement to be met through equal-or-larger font, equal-or-larger occupied area, or the qualifying sponsor-logo alternative. This ad meets none of those alternatives. If the facts change: A sponsor logo that incorporates the sponsor's name and meets the rule's size test can provide another compliance path. A symbol without the name cannot.

Check the rule: 68 Ill. Adm. Code 1450.715: advertising; 225 ILCS 454/10-30: advertising.

Study this topicPSI broker outline II.B

Correct answer: C. When she turns 18.

The standard broker route requires age 18 or older. Completing the coursework and holding an equivalency credential meet different requirements; neither changes the minimum age. If the facts change: If Maya is already 18, the age requirement is met. She still needs the other qualifications and a valid registered sponsorship before practicing.

Check the rule: 225 ILCS 454/5-27: broker qualifications.

Study this topicPSI broker outline I.D

Correct answer: D. A survey and subdivision plat prepared by an Illinois registered land surveyor.

Section 1(a) applies when land is divided into two or more parts and any part is under five acres, unless an exemption applies. The question rules out those exemptions; do not assume that every two-parcel division is exempt. If the facts change: A statutory exemption can change the result. The Plat Act does not require a subdivision plat for every possible two-parcel split, and local requirements may also matter.

Check the rule: 765 ILCS 205/1: subdivisions and exemptions.

Study this topicPSI broker outline III.E

Correct answer: A. Oak Street Realty Team.

The rule treats realty and several similar terms as inherently misleading unless followed by the word team. Adding Team addresses this naming issue; the ad must still satisfy sponsor-identification and prominence requirements. If the facts change: Oak Street Realty Group still leaves Realty without the required following word Team. Review the entire name as well as the sponsoring broker's identification.

Check the rule: 68 Ill. Adm. Code 1450.715: advertising.

Study this topicPSI broker outline II.H

Correct answer: A. Written confirmation from both clients of their prior consent to dual agency in this transaction.

Section 15-45(c) calls for written confirmation of the prior consent when the clients execute an offer or contract to purchase or lease. If the confirmation is included in the contract, each client signs the document and also initials the dual-agency confirmation provision. Advance consent alone does not complete this transaction-stage step. If the facts change: If confirmation is a separate document, the contract-initialing requirement does not turn it into a contract clause. Obtain the required written transaction-specific confirmation from each client.

Check the rule: 225 ILCS 454/15-45: dual agency.

Study this topicPSI broker outline IV.A

Correct answer: A. Taxes are paid in arrears.

Illinois property taxes are generally paid in the year after the assessment year. Arrears describes that timing. It does not, by itself, mean this owner is late or that a penalty has been imposed. If the facts change: If the owner misses the actual installment due date, the payment may become delinquent. The prior assessment year printed on the bill does not establish lateness.

Check the rule: Illinois Department of Revenue: The Illinois Property Tax System, January 2026 (pp. 6, 18, 22).

Study this topicPSI broker outline III.F

Correct answer: C. As soon as reasonably practical after those activities.

The rule permits the buyer agreement before the activities or as soon as reasonably practical afterward. That wording does not permit routinely waiting for an accepted offer or closing. The seller agreement has a different outside deadline. If the facts change: If the client is a seller, subsection (g) requires the written agreement before marketing or listing. The buyer-side timing language does not extend that seller deadline.

Check the rule: 68 Ill. Adm. Code 1450.770: brokerage agreements.

Study this topicPSI broker outline II.D

Correct answer: A. Provide written disclosure to both clients and refer any client who requests it to another designated agent.

Rule 1450.830 and Section 15-15(b) require written disclosure to all affected clients and referral to another designated agent when a client requests it. They do not authorize revealing one client's confidential offer terms to the other. If the facts change: The rule concerns offers the agent knows or has reason to know will be considered at the same time. Working with two buyers on different properties does not, by itself, create that situation.

Check the rule: 68 Ill. Adm. Code 1450.830: contemporaneous offers; 225 ILCS 454/15-15: duties to a client.

Study this topicPSI broker outline IV.A

Correct answer: A. Enter the written seller agreement before marketing or listing the property.

Rule 1450.770(g) requires the seller or owner agreement before the sponsoring broker markets or lists the property. The buyer-side reasonably-practical timing language does not extend this seller deadline. If the facts change: If the property has not yet been marketed or listed, the broker can enter the written seller agreement first. Telephone permission is not that agreement.

Check the rule: 68 Ill. Adm. Code 1450.770: brokerage agreements.

Study this topicPSI broker outline II.D

Correct answer: A. 60 hours of topics and 15 hours of interactive applied principles.

The standard route combines 60 hours of Broker Pre-License Topics with 15 hours of interactive Applied Real Estate Principles. Use an approved provider; unrelated continuing education does not substitute for either course. If the facts change: If the applicant has 60 approved topic hours and 15 ordinary CE hours, the total is 75 but the required applied-principles component is still missing.

Check the rule: PSI Illinois Candidate Information Booklet, June 24, 2026; 225 ILCS 454/5-27: broker qualifications.

Study this topicPSI broker outline I.D

Correct answer: C. The licensee's Illinois licensure status, in writing to all parties.

Rule 1450.765 specifically includes LLC members and managers who buy an interest in the property. Before initiating the transaction, the licensee must disclose their licensed status in writing to all parties. Section 10-27 applies to direct and indirect interests; using an LLC does not avoid the disclosure. If the facts change: A minority LLC interest still triggers the stated status disclosure. This provision is not limited to a member who controls more than half of the company.

Check the rule: 68 Ill. Adm. Code 1450.765: disclosure of licensee status; 225 ILCS 454/10-27: licensee status.

Study this topicPSI broker outline IV.B

Correct answer: C. $200.50.

$200,001 divided by $500 is 400.002 units. Round the number of units up to 401, then multiply by $0.50: $200.50. County and municipal charges are outside this question. If the facts change: At exactly $200,000, there are 400 units and the state tax is $200.00. One additional taxable dollar creates the 401st unit and adds $0.50.

Check the rule: 35 ILCS 200/31-10: state transfer tax.

Study this topicPSI broker outline III.C

Correct answer: C. That duty is part of the minimum services required for an exclusive agreement.

Section 15-75 requires minimum services under an exclusive agreement, including receiving and presenting offers. Rule 1450.770(b)(2) treats an agreement that omits or waives those services as nonexclusive. If the facts change: A brokerage agreement that omits or waives those minimum services is treated as nonexclusive under the rule, even if its heading says Exclusive.

Check the rule: 225 ILCS 454/15-75: minimum services; 68 Ill. Adm. Code 1450.770: brokerage agreements.

Study this topicPSI broker outline II.D

Correct answer: B. No. Delivery is effective on receipt, and the report was received too late.

Section 20 requires delivery before signing the contract. Section 50 makes delivery effective on the buyer's receipt. Sending a message is not enough when the buyer receives the report only after the contract is signed. If the facts change: If the buyer verifiably receives the report before signing, an allowed electronic method can meet the delivery requirement. Merely showing when it was sent is not the same fact.

Check the rule: 765 ILCS 77/20: disclosure before a contract; 765 ILCS 77/50: effective delivery.

Study this topicPSI broker outline IV.D

Correct answer: C. It states an exclusion based on a protected source of income.

Illinois fair housing protections include source of income. A blanket refusal of applicants using housing assistance can violate that protection. Housing providers may use lawful screening criteria, but cannot simply exclude this protected income source. If the facts change: Removing the words from the ad does not make a discriminatory screening practice lawful. Evaluate applicants under lawful criteria without excluding the protected income source.

Check the rule: Illinois Department of Human Rights: housing rights.

Study this topicPSI broker outline III.G

Correct answer: B. No. Specific designation can keep their agency relationships separate.

Section 15-50 allows specified affiliated licensees to act as agents to the exclusion of other affiliated licensees. Common sponsorship alone does not make Lee and Ana individual dual agents. Client confidences must still be protected. If the facts change: If Lee personally represents both clients, separate designation of other brokers does not cure Lee's dual agency. The dual-agency requirements then need attention.

Check the rule: 225 ILCS 454/15-50: brokerage agreements.

Study this topicPSI broker outline II.A

Correct answer: D. No. All clients must give informed written consent before the dual representation.

Section 15-45 permits dual agency only with informed written consent of all clients. One written consent and one oral consent do not satisfy that condition. Later contract-stage confirmation is an additional step. If the facts change: If both clients sign informed written consent before dual representation begins, that consent requirement is met. Transaction-stage confirmation is still a separate step.

Check the rule: 225 ILCS 454/15-45: dual agency.

Study this topicPSI broker outline II.A

Correct answer: A. Reliable documentation supporting the disability-related need.

Because neither fact is apparent or known, Section 10 permits reliable written documentation of the disability and the disability-related need for the animal. It must come from someone with the required therapeutic relationship. The provider may not demand a specific diagnosis or the tenant's complete medical history. If the facts change: If both the disability and need are readily apparent or already known, the provider cannot use this provision to demand documentation of those known facts.

Check the rule: 310 ILCS 120/10: assistance animals.

Study this topicPSI broker outline III.H

Correct answer: D. Give the buyer a written supplemental disclosure.

Section 30 requires a written supplement when the seller becomes aware before closing that the prior report is inaccurate, incomplete, or incorrect. The original delivery does not end the obligation to correct it. If the facts change: Even if the original report was accurate when delivered, learning of a relevant defect before closing can require a supplement. Do not assume supplementation automatically creates a right to cancel.

Check the rule: 765 ILCS 77/30: supplemental disclosure; 765 ILCS 77/40: conditions for termination after disclosure.

Study this topicPSI broker outline IV.D

Correct answer: D. Keep the price confidential despite the expired listing.

Section 15-30 preserves confidentiality after the brokerage agreement ends. The broker also must account for transaction money and property. Expiration does not make the former client's confidential negotiating information public. If the facts change: If the seller later authorizes disclosure of that minimum price, the broker can act within that authorization. Expiration alone supplies no such permission.

Check the rule: 225 ILCS 454/15-30: duties after termination.

Study this topicPSI broker outline II.A

Correct answer: D. Wait until valid new sponsorship is registered before doing licensed work.

Termination of sponsorship makes the license inactive immediately. An expected new affiliation does not authorize a showing during the gap. The buyer needs an appropriately active licensee for that showing. If the facts change: If the new sponsorship is validly registered before Tuesday's showing, the sponsorship gap no longer prevents that showing.

Check the rule: 225 ILCS 454/5-40: sponsorship.

Study this topicPSI broker outline I.D

Correct answer: D. The trustee.

In the Illinois land-trust arrangement described by the statute, the trustee holds legal and equitable title. The beneficiary's interest is treated as personal property, even though the beneficiary may retain important powers under the trust agreement. If the facts change: A beneficiary's power to direct the trustee does not itself transfer legal or equitable title out of the trustee. This question concerns a conventional Illinois land trust.

Check the rule: 765 ILCS 405/1: land trusts.

Study this topicPSI broker outline III.A

Correct answer: B. No. A sponsored licensee may not maintain an individual escrow account.

Rule 1450.750(j) prohibits sponsored licensees from maintaining their own escrow accounts. Keeping the money untouched does not cure the wrong account arrangement. The brokerage's compliant escrow procedures must be followed. If the facts change: Depositing through the sponsoring broker's properly maintained escrow account addresses this account-ownership problem. Deposit timing and recordkeeping still apply.

Check the rule: 68 Ill. Adm. Code 1450.750: escrow money.

Study this topicPSI broker outline II.I

Correct answer: C. The required radon information and disclosure, including the known report.

The Illinois Radon Awareness Act requires the prescribed radon information and disclosure before the buyer is obligated, including available records of elevated radon. It does not let a seller replace those disclosures with a verbal assurance. If the facts change: If the seller has no elevated-radon report, the prescribed information and disclosure duties still need to be addressed. The Act does not require a seller to test or mitigate before selling.

Check the rule: 420 ILCS 46/10: radon disclosure.

Study this topicPSI broker outline IV.E

Correct answer: B. The qualifying spousal relationship, homestead use, and express creation of the estate.

Section 1c ties tenancy by the entirety to spouses in a marriage or civil union, homestead property, and the required instrument language. Two people buying together does not by itself create this estate. If the facts change: If the instrument does not expressly create tenancy by the entirety, marriage and homestead use alone do not create that estate.

Check the rule: 765 ILCS 1005/1c: tenancy by the entirety.

Study this topicPSI broker outline III.A

Correct answer: C. Tuesday, the next business day after the transaction.

Tuesday is the next business day after the signed, accepted contract creates the transaction. Rule 1450.750(d) requires timely deposit into the sponsoring broker's escrow account. The broker already has the funds, and no contract term or bank closure changes this deadline. If the facts change: If the depository is closed Tuesday for a bank holiday, deposit is due on the next business day the depository is open. This question expressly rules out that delay.

Check the rule: 68 Ill. Adm. Code 1450.750: escrow money.

Study this topicPSI broker outline II.I

Correct answer: D. The seller still provides the required lead disclosure package and states the lack of knowledge.

Lack of known lead does not waive the disclosure package for this nonexempt pre-1978 home. Before the buyer becomes obligated, provide the approved pamphlet, required disclosure and warning, and the buyer's inspection or risk-assessment opportunity. The usual period is 10 days. The parties may agree in writing to a different period, or the buyer may waive it in writing. This disclosure rule does not require the seller to test first. If the facts change: A post-1977 construction date changes the federal target-housing analysis. This question specifies a nonexempt 1965 home, so lack of known lead is not an exemption.

Check the rule: U.S. EPA: lead disclosures for sellers and lessors.

Study this topicPSI broker outline IV.E

Correct answer: A. Continue holding the money while following the lawful dispute-resolution process.

A broker cannot decide who deserves contested earnest money. Rule 1450.750(h) requires continued escrow pending an authorized disposition, such as the parties' written release or a civil action in which the money may be deposited with the court. If the facts change: If every party or authorized agent later signs a release, follow that direction. The rule sets the next business day after receipt of the last required release as the outside disbursement deadline.

Check the rule: 68 Ill. Adm. Code 1450.750: escrow money.

Study this topicPSI broker outline II.I

Correct answer: D. The fee is due under a qualifying signed written instrument.

Section 10 requires an entitlement to a fee under a qualifying written instrument signed by the owner, buyer, tenant, or authorized agent as applicable. Recording and notice rules also matter. Performing helpful work alone does not create the lien. If the facts change: A signed fee agreement is only a foundation. The broker must also satisfy the applicable recording, notice and enforcement requirements to establish and enforce a lien.

Check the rule: 770 ILCS 15/10: commercial broker liens.

Study this topicPSI broker outline III.J

Correct answer: B. She meets the national cutoff but is one correct Illinois answer short.

The national raw cutoff is 70 of 100; the Illinois cutoff is 30 of 40. Her 78 national answers reach the national cutoff, but 29 Illinois answers are one short. Combining the two scores cannot make up for the Illinois result. If the facts change: If her Illinois result is 30 of 40 with the same national result, both raw cutoffs are reached. Passing the exam alone does not authorize licensed work.

Check the rule: PSI Illinois Candidate Information Booklet, June 24, 2026; 225 ILCS 454/5-27: broker qualifications.

Study this topicPSI broker outline I.E

Correct answer: A. The transferee and lender.

Section 3 requires disclosure to the transferee and lender of mine subsidence claims paid to the transferor. It is due when the transfer agreement is made and forms part of a written agreement. A waiver of disclosure or its timing must be written and signed by the transferee and lender; this question excludes a waiver. If the facts change: If both the transferee and lender sign a written waiver, its terms may change the disclosure or timing duty. An oral waiver from the buyer alone does not.

Check the rule: 765 ILCS 95/3: mine subsidence disclosure.

Study this topicPSI broker outline IV.E

Correct answer: B. Decline that proposed use of the BPO.

Section 10-45 permits several BPO uses but excludes using one as the primary basis to determine market value for a financial institution's mortgage loan origination. A permitted pricing service does not become suitable for that excluded purpose by changing its label. If the facts change: A BPO requested by a seller to help choose an asking price is a permitted purpose under Section 10-45, subject to the report's other requirements.

Check the rule: 225 ILCS 454/10-45: BPO and CMA requirements.

Study this topicPSI broker outline II.L

Correct answer: B. On or before the day the new tenant takes possession.

Section 15 applies in counties with a population over three million and contains exceptions. For the covered turnover in this question, the locks must be changed or rekeyed on or before possession day. Do not apply this provision automatically to every Illinois tenancy. If the facts change: Section 15 does not apply statewide. A property outside a county with more than three million residents must be assessed under any other applicable law or lease term.

Check the rule: 765 ILCS 705/15: changing dwelling locks.

Study this topicPSI broker outline III.I

Correct answer: B. Disclose the flooding history and frequency in writing under the lower-level rule.

Illinois defines a lower-level unit to include the first floor. The lower-level disclosure applies to the specified ten-year flood history even outside the mapped floodplain. The disclosure must also be included in the lease and signed by both parties. If the facts change: The lower-level rule can also reach flooding elsewhere on the real property containing the unit. Being outside the mapped floodplain does not remove this separate ten-year inquiry.

Check the rule: 765 ILCS 705/25: rental flood disclosure.

Study this topicPSI broker outline IV.E

Correct answer: A. The sponsored broker receives licensed-service compensation through her sponsoring broker.

Section 10-5 requires sponsored licensees to receive compensation for licensed activities from their sponsoring broker, subject to statutory exceptions. A seller's preference for direct payment does not create an exception. If the facts change: Section 10-5 contains a limited exception for payment under a former employment agreement for work performed while previously sponsored. The seller's direct-payment offer is not that exception.

Check the rule: 225 ILCS 454/10-5: payment of compensation.

Study this topicPSI broker outline II.E

Correct answer: D. $25,000 per violation.

Section 20-20 authorizes a fine up to $25,000 for each violation, along with other possible discipline. This is a maximum, not a claim that every violation receives that amount. If the facts change: Two proved violations can expose the licensee to separate fines. The $25,000 figure is a ceiling for each violation, not an automatic fine or a combined case limit.

Check the rule: 225 ILCS 454/20-20: grounds for discipline.

Study this topicPSI broker outline II.K

Correct answer: C. Obtain written authority and have all signatories sign or initial the change.

Rule 1450.775(b) requires written consent or direction from all signatories for an alteration. Each change must be signed or initialed by all signatories when made. Calling the date a typo does not bypass those safeguards. If the facts change: If every signatory gives the required written direction and signs or initials the change, the corrected document may be processed. Give the signatories a true corrected copy within 24 hours.

Check the rule: 68 Ill. Adm. Code 1450.775: written agreements.

Study this topicPSI broker outline II.J