Form A: 140 practice questions and answers

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

Tenants generally pay agreed rent, use the premises lawfully, exercise reasonable care, and avoid damage beyond ordinary wear.

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: C. Possession

TTIP represents time, title, interest, and possession.

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.

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Correct answer: B. Severance

Severance detaches an item from the land, generally creating personal-property status.

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

Check the rule: Cornell Legal Information Institute, fixture.

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Correct answer: C. Jumbo loan

A jumbo mortgage is a common conventional nonconforming loan whose amount exceeds the applicable conforming limit.

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.

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

Follow-up provides the information needed for a decision while contractual options remain available. A broker should not invent a diagnosis or repair estimate.

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

Check the rule: CFPB, Schedule a home inspection.

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Correct answer: C. Refuse to make the false statement

An agent’s obligation to follow instructions extends to lawful instructions. A client cannot authorize the agent to deceive a buyer.

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

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

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Correct answer: A. Keep the information confidential

Ending the agency does not make the former client’s confidential negotiating information available for the agent’s use.

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.

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

A fiduciary deed depends on the trust holding the interest and the signer having authority to convey it.

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.

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Correct answer: D. Blanket mortgage

A blanket mortgage uses more than one parcel as collateral for one debt structure.

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.

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

The federal rule focuses on timely information, records, warnings, certifications, and the buyer's evaluation opportunity.

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.

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Correct answer: D. Market allocation

The competitors have divided territory and customers rather than competing.

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.

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Correct answer: C. An FHA-approved private lender

The approved lender advances the funds, while FHA insures the qualifying mortgage under program rules.

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

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

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Correct answer: B. The exchanged promises to convey and pay

The seller's promise to convey and the buyer's promise to pay form the bargained exchange.

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.

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

An optionee may exercise the purchase right but generally is not obligated to do so before exercise.

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.

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Correct answer: B. Potential gross income

Potential gross income represents full-income potential before vacancy and collection loss.

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

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

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

An agent obeys lawful instructions only. Loyalty and confidentiality do not authorize concealment of a fact the law requires disclosed.

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.

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Correct answer: D. Assignment

Transferring the entire remaining leasehold is an assignment. A sublease leaves a reversion with the original tenant.

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

Replacement cost uses current design and materials to provide equivalent utility.

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

Regulation X requires the disclosure at or before the referral. The affiliated-business exception also has limits on required use and payments; disclosure alone does not legalize a kickback.

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

Both charges may use loan amount as the arithmetic base, but their purposes differ.

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

A special or conditional use is contemplated by the ordinance but needs discretionary approval under stated criteria.

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.

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

An inspection contingency creates contract-specific rights with procedures and deadlines.

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.

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

The proposed use must be checked against current public controls and private restrictions by authoritative sources.

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.

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Correct answer: C. Percentage lease

Percentage leases connect some rent to the tenant's gross sales, often above an agreed breakpoint.

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.

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Correct answer: A. Familial status

Familial status is one of the federal seven.

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.

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Correct answer: B. The use was lawful before the zoning change

Lawful establishment before the change distinguishes a protected nonconforming use from an illegal use.

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: B. Mortgage debt service

Debt service depends on owner financing and is below NOI.

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

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

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

A contractual right must be exercised under its conditions. Discovering a defect and properly delivering a termination notice are different steps.

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.

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Correct answer: C. Variance

A variance addresses limited relief from a dimensional rule under the ordinance's hardship standards.

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.

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Correct answer: D. Real property

Real property includes the physical asset and the legal rights or interests associated with it.

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: D. Provide a blank form and factual public information

Neutral or ministerial assistance can be provided without advocacy. The other choices compromise the seller relationship or create false buyer expectations.

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

A condition question requiring structural expertise belongs with a qualified specialist. An agent can identify the concern and help arrange the next step without guessing at the cause.

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

Check the rule: CFPB, Schedule a home inspection.

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Correct answer: D. $520,000

$500,000 - $80,000 + $100,000 = $520,000.

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.

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

The appraisal addresses value for the lending decision. A home inspection evaluates condition within its scope and may suggest specialist inspections.

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

Check the rule: CFPB, Schedule a home inspection.

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

Contract law evaluates outward expressions of agreement rather than undisclosed private intent.

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.

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Correct answer: B. Assignment

Assignment transfers rights or benefits; delegation transfers duties.

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

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

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

Subagency depends on a valid agency relationship. Cooperation, access, attendance, and compensation do not create it automatically.

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.

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Correct answer: B. Subdivision approval

Subdivision regulation governs land division, platting, infrastructure, and related dedications.

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.

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Correct answer: C. $4,200

Convert 1.5 points to 0.015, then multiply: $280,000 x 0.015 = $4,200.

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

Check the rule: CFPB, Loan Estimate explainer.

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Correct answer: C. Home equity line of credit

A HELOC is open-end credit with repeated draws up to an available limit under its terms.

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

The tenant seeks a change to a policy to obtain equal housing opportunity.

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.

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

Read the entire agreement. An as-is provision does not, by itself, delete a separately negotiated inspection contingency or permit misrepresentation.

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.

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Correct answer: A. Apparent authority

The principal's statement to the third party may create apparent authority even though the private instruction limits the agent's actual authority.

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

Dual agency raises divided-loyalty concerns even if only one party pays. Permission and disclosure requirements depend on the jurisdiction.

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

E-SIGN prevents rejecting a qualifying record or signature solely because it is electronic. Agreement, authority, and other substantive requirements still matter.

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

Check the rule: 15 U.S.C. § 7001: validity of electronic records and signatures.

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Correct answer: D. Amendment

The parties are changing a term of an existing contract, which calls for an amendment.

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.

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Correct answer: A. Familial status

The exemption permits qualifying older-person housing despite familial-status protections; other classes remain protected.

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

The buyer reimburses the seller for the unused half of the transferable prepaid benefit: $720 / 2 = $360.

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.

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Correct answer: D. $2,610

Monthly taxes are $550 and monthly insurance is $120. PITI is $1,940 + $550 + $120 = $2,610.

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

Check the rule: CFPB, Loan Estimate explainer.

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Correct answer: A. Special agency

The authority is limited to a particular transaction. A special agent does not gain authority to bind the client beyond the agreed scope.

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.

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Correct answer: C. External obsolescence

The value influence comes from outside the property.

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.

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Correct answer: C. No more than 31 days old

The caller must use a registry version downloaded no more than 31 days before the call.

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.

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Correct answer: A. Provide public notice and protect priority

Recording places the instrument in the public chain and affects later purchasers and creditors.

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.

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Correct answer: D. Severalty

Severalty is separate ownership by one holder.

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.

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Correct answer: D. Remainder

Morgan is a third party designated to receive possession after the life estate, so Morgan holds a remainder.

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.

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

Novation substitutes and releases through consent; delegation alone generally leaves the original obligor responsible.

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.

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Correct answer: D. $960

The stated actual-day method gives $5,840 ÷ 365 = $16 per day. January 31 days + February 28 days + March 1 = 60 seller days, so $16 × 60 = $960. Use the day-allocation convention specified in the question.

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.

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Correct answer: C. General warranty deed

A general warranty deed typically protects against covered title defects across the chain, not only the grantor's period.

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.

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Correct answer: A. Estimate difficult-to-prove loss in advance

A valid clause reasonably forecasts compensation where actual damages are difficult to determine.

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.

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Correct answer: C. RESPA

RESPA Section 8, implemented by Regulation X Section 1024.14, prohibits referral kickbacks and unearned fee splits in covered transactions.

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.

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

Regulation C implements HMDA's mortgage-activity data requirements.

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.

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Correct answer: C. Executory

The parties still have material duties to perform, so the contract is executory.

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.

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

Quitclaim conveys the interest the grantor currently holds without warranty covenants.

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.

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Correct answer: C. ECOA

ECOA and Regulation B govern discrimination and applicant rights throughout a credit transaction.

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

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

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

Illinois separately licenses the performance of home inspections and preparation of home inspection reports.

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

Check the rule: CFPB, Schedule a home inspection.

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

The general deadline is three business days after receiving the application. For this initial-delivery rule, a business day is a day the creditor’s offices are open to the public for substantially all business functions. This is not the same as a loan approval.

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.

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

Objective facts and agreement matter; an undisclosed subjective thought does not give the other party notice.

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

Check the rule: Cornell Legal Information Institute, fixture.

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Correct answer: A. Delivery

Retained control and lack of present irrevocable transfer intent weigh against effective delivery.

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.

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

Inspection findings are evidence. The agreement determines the available requests, notices, and deadlines, subject to applicable law.

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.

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Correct answer: D. Routine maintenance

Operating expenses relate to running the property. Financing principal, owner income tax, and sale proceeds are different cash-flow items.

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

An added prepayment penalty is one of three material changes that trigger a new waiting period.

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.

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

A precise written exclusion resolves intent and tells the buyer what will remain.

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

Check the rule: Cornell Legal Information Institute, fixture.

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

Radon is invisible and odorless. EPA recommends testing homes; the result from another property is not a substitute for testing this one.

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.

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

A seller-specific stop request must be recorded and honored.

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.

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Correct answer: B. 85%

$340,000 / $400,000 = 0.85, or 85% 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

National origin is one of the Act’s protected characteristics. A housing provider cannot avoid the prohibition by keeping the refusal out of writing.

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.

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Correct answer: D. Price fixing

A competitor agreement on fees is 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.

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Correct answer: A. Reasonable modification

Installing a physical feature is a modification of the premises.

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

Specific performance compels the promised act when money is inadequate and equitable requirements are met.

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.

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

The second number identifies the periodic adjustment frequency after the initial fixed-rate period.

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.

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Correct answer: A. Optionor

The optionor grants the option and is bound to keep the offer open according to the agreement.

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.

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

Earnest money is handled according to the contract, escrow authority, and law; it is not a universal formation requirement.

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.

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Correct answer: D. $150,000

Total secured debt is $325,000. Equity is $475,000 - $325,000 = $150,000.

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: A. Obtain the owner’s authorization before committing

The agreement defines the agent’s spending authority. Breaking an invoice into smaller pieces does not expand that authority.

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: D. General agent for a continuing range of matters

A property manager commonly illustrates general agency because the authority covers recurring matters in an ongoing operation. The written scope still controls the exact powers.

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

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

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Correct answer: A. Survivorship

Joint tenancy includes survivorship when validly created; tenancy in common does not.

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.

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Correct answer: B. A counteroffer

Changing a material financial term prevents mirror-image acceptance and creates a counteroffer.

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.

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Correct answer: A. Output-based compensation

Licensed real estate agents meeting the output-based pay and written-contract conditions are statutory nonemployees for federal tax purposes. This does not settle employee status under every other law.

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

Check the rule: IRS, Statutory nonemployees.

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Correct answer: B. The buyer

The representation agreement establishes the buyer as client. Compensation source does not by itself determine agency.

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

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

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Correct answer: B. Add to comparable

The comparable is inferior, so add the feature's market-supported contribution to its sale price.

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.

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Correct answer: A. Trade fixture

Business equipment installed by a commercial tenant can qualify as a trade fixture.

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.

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Correct answer: C. Title commitment

The commitment is the insurer's preclosing conditional obligation to issue the described policy.

What to remember: A commitment states conditions and exceptions for issuing coverage. Read them before assuming protection.

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

Study this topicPSI national broker outline IX

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

A material breach goes to the essence of the bargain and can discharge the other party's duty.

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

Amir holds the future interest that follows Elena’s life estate. He does not yet have Elena’s present possessory estate.

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: A. Functional obsolescence

Layout and design inadequacy arise within the property and are functional.

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. The buyer's undisclosed maximum price

An undisclosed maximum is negotiating strategy received from the client. Public and visible property information is different.

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

The Statute of Frauds creates an enforceability defense rather than making the subject matter illegal.

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

Public and private controls operate independently, and compliance with one does not excuse violation of the other.

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

The first answers whom the licensee represents. The second reveals an interest that could affect loyalty or judgment.

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

Direct capitalization divides annual net operating income by the market capitalization rate: $90,000 ÷ 0.06 = $1,500,000.

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.

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.

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.

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.

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.

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.

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.

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 the prior dual-agency consent.

The statute requires confirmation of the earlier consent before the parties sign the contract. If included in the contract, the confirmation must be signed and initialed as the statute directs. Advance consent and transaction-stage confirmation serve different purposes.

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.

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.

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.

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.

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.

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 status and indirect interest in writing.

The Act requires written licensee-status disclosure for a direct or indirect interest. Rule 1450.765 addresses that disclosure before initiation of the transaction. An LLC does not conceal or eliminate the licensee's interest for this purpose.

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.

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.

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.

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.

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.

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.

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.

Section 10 permits reliable documentation when the disability or need is not apparent or known. The provider may not demand a specific diagnosis. Documentation must be assessed under the Act, including its therapeutic-relationship requirements.

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.

Check the rule: 765 ILCS 77/30: supplemental 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.

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.

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.

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.

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.

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.

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.

Under Rule 1450.750, escrow money must ordinarily be deposited no later than the next business day following the transaction, unless the written transaction terms provide otherwise. Here acceptance on Monday makes Tuesday the deadline.

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.

For covered pre-1978 housing, lack of known lead does not waive the disclosure package. The buyer receives the approved pamphlet, required warning and acknowledgment, and the purchase inspection opportunity unless properly modified or waived in writing. The rule does not require the seller to test first.

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.

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.

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

Study this topicPSI broker outline III.J

Correct answer: B. Within one year after passing the appropriate examination.

PSI states that a candidate must apply to IDFPR and meet the licensing requirements within one year after passing. The two-year education-validity period is a different clock.

Check the rule: PSI Illinois Candidate Information Booklet, June 24, 2026.

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.

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.

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.

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.

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.

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.

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.

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

Study this topicPSI broker outline II.J