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Free full exam answer key

Form C: 140 practice questions and answers

Try each question before opening its answer. Then check the explanation and source, especially for any answer you guessed. Everything here is free and works without JavaScript.

Last updated: September 7, 2026 · Content cutoff: September 6, 2026

How should I use this answer key?

This is the complete Form C used in the timed 140-question practice exam: 100 national questions followed by 40 Illinois questions. Questions follow the same order as the timed form. Reading these answers makes that form a study exercise rather than an unfamiliar test.

National: 100 questions

National 1 of 100 · Property Ownership · ID national-c-01

What does a condominium owner typically hold?

  1. A. Only corporate shares
  2. B. Only a hotel reservation
  3. C. Unit title plus an inseparable common-element interest
  4. D. A revocable parking license only
Show answer and explanation

Correct answer: C. Unit title plus an inseparable common-element interest

Condominium ownership combines the defined unit with an allocated common-element percentage.

What to remember: Condominium ownership differs from owning corporate shares with a right of occupancy.

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

Study this topicPSI national broker outline I

National 2 of 100 · Valuation · ID national-c-19

What is reconciliation?

  1. A. Automatic averaging
  2. B. Eliminating all assumptions
  3. C. Changing the conclusion to contract price
  4. D. Reasoned weighting of relevant and reliable indications
Show answer and explanation

Correct answer: D. Reasoned weighting of relevant and reliable indications

Reconciliation weighs the quality and applicability of the evidence and approaches.

What to remember: Reconciliation weighs reliability and relevance; it is not automatically an arithmetic average.

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

Study this topicPSI national broker outline III

National 3 of 100 · Contracts · ID national-c-43

Which statement correctly distinguishes executed from valid?

  1. A. A valid contract can never be executory
  2. B. Executed and valid always mean the same thing
  3. C. Executed concerns performance, while valid concerns legal sufficiency
  4. D. Only an oral contract can be executed
Show answer and explanation

Correct answer: C. Executed concerns performance, while valid concerns legal sufficiency

Performance stage and legal status are independent classifications.

What to remember: Validity and stage of performance are different classifications.

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

Study this topicPSI national broker outline V

National 4 of 100 · Transfer of Title · ID national-c-77

A defect arose under a prior owner before the special-warranty grantor acquired title. Which statement is most accurate?

  1. A. The defect disappears upon recording
  2. B. The deed automatically becomes a general warranty deed
  3. C. The defect generally falls outside the special warranty
  4. D. The grantee becomes the grantor
Show answer and explanation

Correct answer: C. The defect generally falls outside the special warranty

Special warranty is generally limited to claims arising by, through, or under the grantor.

What to remember: A special warranty generally covers the grantor’s own period and acts, not every earlier owner’s.

Check the rule: Texas Supreme Court, Chicago Title v. Cochran: special-warranty scope, pages 9-12.

Study this topicPSI national broker outline IX

National 5 of 100 · Property Ownership · ID national-c-05

What should be checked first when someone signs a deed for an LLC?

  1. A. The person's home address
  2. B. Current authority under the operating agreement and company records
  3. C. The listing photography
  4. D. The tenant's utility bill
Show answer and explanation

Correct answer: B. Current authority under the operating agreement and company records

The LLC's management structure and valid authorization determine who can bind it.

What to remember: Verify authority to bind the entity before relying on a signature.

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

Study this topicPSI national broker outline I

National 6 of 100 · Agency · ID national-c-54

A jurisdiction recognizes facilitators. Whom does a true facilitator represent?

  1. A. The buyer only
  2. B. The seller only
  3. C. Both parties
  4. D. Neither party
Show answer and explanation

Correct answer: D. Neither party

A facilitator provides permitted neutral assistance without acting in an agency capacity for buyer or seller.

What to remember: Where permitted, nonagency assistance differs from representing either principal.

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

Study this topicPSI national broker outline VI

National 7 of 100 · Financing · ID national-c-31

Which set lists the usual parties to a deed of trust?

  1. A. Grantor and grantee only
  2. B. Trustor, beneficiary, and trustee
  3. C. Maker and payee only
  4. D. Landlord and tenant
Show answer and explanation

Correct answer: B. Trustor, beneficiary, and trustee

The trustor gives the security interest, the beneficiary receives its protection, and the trustee holds the role assigned by the instrument and state law.

What to remember: Separate the borrower, lender beneficiary, and trustee roles.

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

Study this topicPSI national broker outline IV

National 8 of 100 · Practice of Real Estate · ID national-c-87

Competing brokerage owners agree that none will charge below the same commission rate. What is the clearest violation?

  1. A. Independent pricing
  2. B. Market allocation
  3. C. Tying
  4. D. Price fixing
Show answer and explanation

Correct answer: D. Price fixing

The competitors coordinated a minimum price for brokerage services.

What to remember: Agreeing on a minimum fee restricts price competition even without identical final invoices.

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

Study this topicPSI national broker outline X

National 9 of 100 · Property Management · ID national-c-75

What must be done before comparing a full-service gross commercial rate with a triple-net rate?

  1. A. Normalize both to a consistent expense basis
  2. B. Ignore expenses
  3. C. Compare only street addresses
  4. D. Convert both into property taxes only
Show answer and explanation

Correct answer: A. Normalize both to a consistent expense basis

Quoted base rent does not show total occupancy economics when leases allocate operating expenses differently.

What to remember: Normalize who pays operating costs before comparing gross and net lease quotes.

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

Study this topicPSI national broker outline VIII

National 10 of 100 · Agency · ID national-c-60

A represented buyer's broker is partly paid with funds provided by the seller at closing. Who is the broker's client?

  1. A. The seller
  2. B. Both automatically
  3. C. The buyer
  4. D. Neither party
Show answer and explanation

Correct answer: C. The buyer

The representation agreement identifies the buyer as client. Compensation source does not determine agency.

What to remember: Compensation source alone does not determine representation.

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

Study this topicPSI national broker outline VI

National 11 of 100 · Agency · ID national-c-61

An agent acts without prior authority. The principal later learns the material facts and knowingly adopts the transaction. What concept is illustrated?

  1. A. Ratification
  2. B. Subrogation
  3. C. Escheat
  4. D. Recordation
Show answer and explanation

Correct answer: A. Ratification

Ratification is the principal’s adoption of a previously unauthorized act with the required knowledge. It differs from granting authority before the act.

What to remember: Ratification follows an unauthorized act; advance authorization precedes it.

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

Study this topicPSI national broker outline VI

National 12 of 100 · Property Ownership · ID national-c-10

Under the usual common-law joint-tenancy rule, one of two joint tenants conveys that owner’s entire interest to a third person during life. What generally happens to the transferee’s ownership relationship with the remaining owner?

  1. A. The transfer can sever joint tenancy as to that share
  2. B. The buyer automatically owns the entire property
  3. C. The deed is always void without every co-owner's signature
  4. D. All remaining owners lose possession immediately
Show answer and explanation

Correct answer: A. The transfer can sever joint tenancy as to that share

The transferee commonly becomes a tenant in common as to the transferred interest. Joint tenancy can continue among remaining joint tenants, depending on the structure and law.

What to remember: A lifetime conveyance differs from a transfer at death under survivorship.

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

Study this topicPSI national broker outline I

National 13 of 100 · Transfer of Title · ID national-c-78

What does a quitclaim deed convey?

  1. A. The grantor's present interest, if any, without title covenants
  2. B. Guaranteed fee simple in every case
  3. C. A lender's mortgage only
  4. D. Perfect title certified by the recorder
Show answer and explanation

Correct answer: A. The grantor's present interest, if any, without title covenants

Quitclaim releases whatever legal or equitable interest the grantor has without promising ownership or freedom from encumbrances.

What to remember: The grantor cannot convey an interest it does not have merely by using quitclaim wording.

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

Study this topicPSI national broker outline IX

National 14 of 100 · Real Estate Calculations · ID national-c-100

A buyer’s monthly principal and interest are $1,850. Annual property taxes are $4,800 and annual homeowners insurance is $1,200. Ignoring all other charges, what is monthly PITI?

  1. A. $2,250
  2. B. $7,850
  3. C. $2,350
  4. D. $1,850
Show answer and explanation

Correct answer: C. $2,350

Convert annual amounts to monthly amounts: $4,800 ÷ 12 = $400 and $1,200 ÷ 12 = $100. Monthly PITI is $1,850 + $400 + $100 = $2,350.

What to remember: Keep all PITI components on a monthly basis. Do not add annual taxes directly to a monthly payment.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline XI

National 15 of 100 · Transfer of Title · ID national-c-81

Which phrase best describes marketable title?

  1. A. Title guaranteed to have no recorded document
  2. B. Title reasonably free from serious doubt and probable litigation
  3. C. Any title with an insurance exception
  4. D. A lender's appraisal conclusion
Show answer and explanation

Correct answer: B. Title reasonably free from serious doubt and probable litigation

Marketability concerns reasonable title quality, not absolute perfection or appraisal.

What to remember: Marketable title is reasonably free from serious legal doubt, not necessarily free from every recorded instrument.

Check the rule: Cornell Legal Information Institute, marketable title.

Study this topicPSI national broker outline IX

National 16 of 100 · Contracts · ID national-c-47

A ROFR holder matches a $500,000 price but adds financing and a longer closing to a cash offer. What is the best concern?

  1. A. The third-party offer became a mortgage
  2. B. The holder paid too much option consideration
  3. C. The owner created a life estate
  4. D. The holder did not match material terms
Show answer and explanation

Correct answer: D. The holder did not match material terms

A matching right commonly reaches the material economic package, not price alone.

What to remember: A right of first refusal can require matching material terms beyond price.

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

Study this topicPSI national broker outline V

National 17 of 100 · Practice of Real Estate · ID national-c-89

Several firms agree not to show a discount broker's listings until it raises its fee. Which label best fits?

  1. A. Independent vendor choice
  2. B. Group boycott
  3. C. Tying
  4. D. Property management
Show answer and explanation

Correct answer: B. Group boycott

Competing firms coordinated a refusal to pressure a price-cutting rival.

What to remember: A coordinated refusal to pressure a price-cutting competitor differs from an independent business decision.

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

Study this topicPSI national broker outline X

National 18 of 100 · Property Disclosures · ID national-c-68

Which item is a private land-use control?

  1. A. Municipal zoning ordinance
  2. B. County building code
  3. C. Federal wetlands permit
  4. D. Recorded restrictive covenant
Show answer and explanation

Correct answer: D. Recorded restrictive covenant

A recorded restrictive covenant arises from a private instrument. The other answers are public controls.

What to remember: Private restrictions may continue to matter even after public zoning approval.

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

Study this topicPSI national broker outline VII

National 19 of 100 · Property Ownership · ID national-c-07

Which ownership form permits unequal undivided shares and has no automatic right of survivorship?

  1. A. Severalty
  2. B. Life estate
  3. C. Joint tenancy
  4. D. Tenancy in common
Show answer and explanation

Correct answer: D. Tenancy in common

Tenants in common can own unequal fractions, and each owner's interest passes through that owner's estate or another valid transfer.

What to remember: Unequal undivided shares do not create automatic survivorship.

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

Study this topicPSI national broker outline I

National 20 of 100 · Contracts · ID national-c-48

Which statement correctly identifies option parties?

  1. A. The county recorder is always the optionor
  2. B. The optionee grants the right and the optionor must buy
  3. C. Both parties must buy before exercise
  4. D. The optionor grants the right and the optionee may exercise it
Show answer and explanation

Correct answer: D. The optionor grants the right and the optionee may exercise it

The optionee receives the election, while the optionor grants the binding offer.

What to remember: The optionor grants the right; the optionee decides whether to exercise it.

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

Study this topicPSI national broker outline V

National 21 of 100 · Transfer of Title · ID national-c-79

A buyer receives a quitclaim deed from an owner who does hold good title. Which conclusion is justified?

  1. A. A quitclaim deed does not itself prove the title is defective
  2. B. The deed automatically creates a mortgage
  3. C. The recorder guarantees the roof’s condition
  4. D. The grantor has made every general-warranty covenant
Show answer and explanation

Correct answer: A. A quitclaim deed does not itself prove the title is defective

The deed passes the grantor’s interest without title covenants. Warranty scope and the actual quality of title are different questions.

What to remember: A lack of covenants is different from proof of bad title.

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

Study this topicPSI national broker outline IX

National 22 of 100 · Valuation · ID national-c-21

Which approach is usually most directly supported by recent competitive sales of similar owner-occupied homes?

  1. A. Cost only
  2. B. Sales comparison
  3. C. Income only
  4. D. Book value
Show answer and explanation

Correct answer: B. Sales comparison

The sales comparison approach reflects how typical buyers compare substitutes when reliable transaction data exist.

What to remember: Comparable sales work best when relevant transactions and credible adjustments are available.

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

Study this topicPSI national broker outline III

National 23 of 100 · Contracts · ID national-c-49

A seller changes the closing date before signing and returns the buyer's offer. What did the seller make?

  1. A. Counteroffer
  2. B. Acceptance
  3. C. Deed
  4. D. Assignment
Show answer and explanation

Correct answer: A. Counteroffer

The seller materially changed the proposal, so the response is a new offer.

What to remember: Changing material terms creates a new proposal.

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

Study this topicPSI national broker outline V

National 24 of 100 · Property Disclosures · ID national-c-72

A six-foot foundation crack is fully visible in an accessible basement. How is the crack best classified?

  1. A. Patent
  2. B. Latent
  3. C. Nonphysical
  4. D. Confidential
Show answer and explanation

Correct answer: A. Patent

The visible, accessible condition is patent even if its cause or repair cost requires expert analysis.

What to remember: A visible defect can be patent even if its cause is unknown.

Check the rule: Cornell Legal Information Institute, patent defect.

Study this topicPSI national broker outline VII

National 25 of 100 · Contracts · ID national-c-46

An option expressly requires notice by certified mail by Friday, and no waiver or other rule excuses compliance. The optionee sends only a text message. What is the main problem?

  1. A. The option became a deed
  2. B. The tenant automatically owns the property
  3. C. Failure to strictly comply with the required exercise method
  4. D. The landlord must ignore the deadline
Show answer and explanation

Correct answer: C. Failure to strictly comply with the required exercise method

Illinois option cases generally enforce required timing and notice mechanics strictly.

What to remember: Do not assume a convenient communication method satisfies an expressly required one.

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

Study this topicPSI national broker outline V

National 26 of 100 · Practice of Real Estate · ID national-c-84

A lender refuses to serve neighborhoods because of residents' racial composition. Which label is most precise?

  1. A. Specific performance
  2. B. Steering
  3. C. Retaliation
  4. D. Redlining
Show answer and explanation

Correct answer: D. Redlining

Protected area composition drives the denial of housing-related credit service.

What to remember: Redlining concerns discriminatory denial of service to an area, such as housing credit.

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

Study this topicPSI national broker outline X

National 27 of 100 · Practice of Real Estate · ID national-c-83

A speculator tells owners that a protected group is moving nearby and urges immediate sales to the speculator for profit. What is this?

  1. A. Accommodation
  2. B. False availability
  3. C. Blockbusting
  4. D. Proration
Show answer and explanation

Correct answer: C. Blockbusting

The speculator uses protected-class entry to induce owner transactions for profit.

What to remember: Blockbusting seeks transactions for profit using claims about protected demographic change.

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

Study this topicPSI national broker outline X

National 28 of 100 · Transfer of Title · ID national-c-76

Which deed ordinarily gives the broadest grantor title covenants?

  1. A. Correction deed
  2. B. Special warranty deed
  3. C. Quitclaim deed
  4. D. General warranty deed
Show answer and explanation

Correct answer: D. General warranty deed

General warranty ordinarily reaches lawful title claims across the chain, subject to deed terms and exceptions.

What to remember: A general warranty ordinarily offers broader title covenants than a special warranty or quitclaim.

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

Study this topicPSI national broker outline IX

National 29 of 100 · Valuation · ID national-c-16

Which date tells when an appraisal's value opinion applies?

  1. A. Inspection date always
  2. B. License renewal date
  3. C. Effective date
  4. D. Deed recording date always
Show answer and explanation

Correct answer: C. Effective date

The effective date anchors the market and property conditions underlying the opinion.

What to remember: An effective date anchors the opinion to a particular market and property condition.

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

Study this topicPSI national broker outline III

National 30 of 100 · Property Disclosures · ID national-c-70

A local zoning map allows retail use, but the recorded declaration prohibits retail activity. Which conclusion is best?

  1. A. The private restriction must be reviewed separately even though public zoning allows the use
  2. B. Zoning automatically cancels the declaration
  3. C. The broker can erase the restriction
  4. D. The declaration matters only to the assessor
Show answer and explanation

Correct answer: A. The private restriction must be reviewed separately even though public zoning allows the use

Public zoning and private title restrictions are separate control layers. Permission under one does not eliminate the other.

What to remember: Public zoning and private restrictions are separate layers of control.

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

Study this topicPSI national broker outline VII

National 31 of 100 · Agency · ID national-c-65

A prospective seller asks whether every brokerage must charge the same listing fee. Which response is accurate?

  1. A. Federal law sets a uniform commission
  2. B. Each brokerage determines its fees independently, and compensation is negotiable
  3. C. Competitors must agree before one changes its fee
  4. D. The listing service fixes every seller’s fee
Show answer and explanation

Correct answer: B. Each brokerage determines its fees independently, and compensation is negotiable

Compensation is not a government-set uniform rate. Competitors must not coordinate their fees; each firm makes its own pricing decisions.

What to remember: Fees are independently determined and negotiable. Competitors may not set a common minimum.

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

Study this topicPSI national broker outline VI

National 32 of 100 · Contracts · ID national-c-34

A seller promises to convey a home, and the buyer promises to pay the stated price. What type of exchange is this?

  1. A. Bilateral contract
  2. B. Unilateral contract
  3. C. Void contract
  4. D. Executed contract
Show answer and explanation

Correct answer: A. Bilateral contract

The purchase agreement exchanges the seller's promise for the buyer's return promise.

What to remember: Bilateral describes exchanged promises, not the number of signatures on one page.

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

Study this topicPSI national broker outline V

National 33 of 100 · Practice of Real Estate · ID national-c-85

A manager says an available apartment is rented only when applicants have children. What violation is directly shown?

  1. A. Blockbusting
  2. B. False availability
  3. C. Lawful occupancy screening
  4. D. ADA barrier removal
Show answer and explanation

Correct answer: B. False availability

The manager conceals an actually available dwelling because of familial status.

What to remember: False availability hides an available dwelling from a protected applicant.

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

Study this topicPSI national broker outline X

National 34 of 100 · Financing · ID national-c-29

Which document contains the borrower's personal promise to repay principal and interest?

  1. A. Mortgage
  2. B. Promissory note
  3. C. Deed of trust
  4. D. Warranty deed
Show answer and explanation

Correct answer: B. Promissory note

The note states and evidences the debt and repayment promise. A mortgage or deed of trust supplies the real-estate security.

What to remember: The note creates the repayment promise; security documents address the collateral.

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

Study this topicPSI national broker outline IV

National 35 of 100 · Property Ownership · ID national-c-08

A deed expressly gives Maya a 70% interest and Luis a 30% interest as tenants in common. What does each generally have?

  1. A. An automatic right to inherit the other’s share
  2. B. Exclusive title to a mapped 70% or 30% physical area
  3. C. An undivided ownership interest with a right to possess the whole
  4. D. Only a lease from the other owner
Show answer and explanation

Correct answer: C. An undivided ownership interest with a right to possess the whole

Their ownership fractions are unequal, but undivided possession is shared. The deed has not physically partitioned the parcel.

What to remember: An undivided 70% interest is not the same as exclusive possession of 70% of the land.

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

Study this topicPSI national broker outline I

National 36 of 100 · Real Estate Calculations · ID national-c-94

A property sold for $1,000,000 with annual NOI of $75,000. What is the cap rate?

  1. A. 13.33%
  2. B. 7.5%
  3. C. 0.75%
  4. D. 75%
Show answer and explanation

Correct answer: B. 7.5%

$75,000 divided by $1,000,000 equals 0.075, or 7.5%.

What to remember: Divide annual NOI by price and multiply by 100 to express the rate as a percent.

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

Study this topicPSI national broker outline XI

National 37 of 100 · Land Use Controls · ID national-c-11

Which document most commonly creates development-wide covenants affecting subdivision lots?

  1. A. Recorded declaration
  2. B. Building permit
  3. C. Tax bill
  4. D. Zoning map alone
Show answer and explanation

Correct answer: A. Recorded declaration

A recorded declaration or CC&Rs can create reciprocal restrictions and association rights across a development.

What to remember: Recorded declarations can impose private obligations separate from zoning.

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

Study this topicPSI national broker outline II

National 38 of 100 · Property Ownership · ID national-c-06

A corporation is the only grantee on a deed, although it has 12 shareholders. How is the real estate held?

  1. A. Tenancy in common
  2. B. Joint tenancy
  3. C. Severalty
  4. D. Tenancy by the entirety
Show answer and explanation

Correct answer: C. Severalty

The corporation is one legal owner. Shareholders own corporate interests, not direct deeded interests in the parcel.

What to remember: One corporation is one legal owner, regardless of its shareholder count.

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

Study this topicPSI national broker outline I

National 39 of 100 · Property Ownership · ID national-c-04

A corporation owns a warehouse. What does a shareholder own?

  1. A. A deeded fraction of the warehouse
  2. B. The corporation's mortgage
  3. C. A life estate in the warehouse
  4. D. Shares in the corporation
Show answer and explanation

Correct answer: D. Shares in the corporation

The corporation is the separate property owner; the shareholder owns stock.

What to remember: A shareholder owns an entity interest, not a direct deeded slice of each corporate asset.

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

Study this topicPSI national broker outline I

National 40 of 100 · Agency · ID national-c-59

Which fact most directly identifies a real estate client?

  1. A. The consumer is always the fee source
  2. B. The consumer enters the property first
  3. C. The consumer receives representation from the licensee
  4. D. The consumer asks the most questions
Show answer and explanation

Correct answer: C. The consumer receives representation from the licensee

Representation is the core distinction. Payment, timing, and conversational attention are not reliable substitutes.

What to remember: A client is represented; a customer may receive services without that agency relationship.

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

Study this topicPSI national broker outline VI

National 41 of 100 · Property Ownership · ID national-c-03

Who generally holds legal title to real estate placed in a trust?

  1. A. Trustee
  2. B. Appraiser
  3. C. Listing agent
  4. D. Every beneficiary as tenant in common
Show answer and explanation

Correct answer: A. Trustee

The trustee holds title under the deed and trust, while beneficiaries hold beneficial interests.

What to remember: Legal title and beneficial ownership are distinct in a trust arrangement.

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

Study this topicPSI national broker outline I

National 42 of 100 · Financing · ID national-c-28

A homeowner's fixed-rate loan payment rises only because annual property taxes increased. Which statement is best?

  1. A. Property taxes are principal
  2. B. The loan automatically became an ARM
  3. C. The note rate must have increased
  4. D. The loan can remain fixed rate because escrow changed
Show answer and explanation

Correct answer: D. The loan can remain fixed rate because escrow changed

Fixed rate refers to the contract interest rate. Escrowed taxes and insurance are separate total-payment components.

What to remember: Fixed principal and interest can coexist with changing escrow payments.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline IV

National 43 of 100 · Valuation · ID national-c-20

A broker prepares a clearly labeled listing-price analysis for a seller. What is the product most likely?

  1. A. Survey
  2. B. Condemnation
  3. C. Title policy
  4. D. CMA
Show answer and explanation

Correct answer: D. CMA

A comparative market analysis is a brokerage pricing tool and is not presented as an appraisal.

What to remember: A broker’s pricing analysis should be identified accurately and supported by market evidence.

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

Study this topicPSI national broker outline III

National 44 of 100 · Property Disclosures · ID national-c-69

A buyer sees standing water and wetland-type vegetation where a building is planned. What is the best broker response?

  1. A. Guarantee that no permit is needed
  2. B. Guarantee that construction is prohibited
  3. C. Ignore the condition because the visit occurred in spring
  4. D. Recommend timely environmental and agency verification before the feasibility deadline
Show answer and explanation

Correct answer: D. Recommend timely environmental and agency verification before the feasibility deadline

The observations are red flags, but delineation, jurisdiction, and permit consequences require qualified technical and agency review.

What to remember: A wetland concern calls for qualified review and the relevant permitting authority.

Check the rule: U.S. Army Corps of Engineers, Wetlands: delineation and review.

Study this topicPSI national broker outline VII

National 45 of 100 · Practice of Real Estate · ID national-c-82

An agent removes matching listings after learning a buyer's religion and recommends a different neighborhood. Which violation best fits?

  1. A. Steering
  2. B. Blockbusting
  3. C. Redlining
  4. D. Novation
Show answer and explanation

Correct answer: A. Steering

The agent changes the housing seeker's choices and direction because of a protected characteristic.

What to remember: Steering concerns how the agent channels the buyer’s housing choices.

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

Study this topicPSI national broker outline X

National 46 of 100 · Contracts · ID national-c-39

A buyer and seller have signed a valid purchase agreement, but closing will occur in 30 days. How is the contract classified by performance status?

  1. A. Executory
  2. B. Executed
  3. C. Void
  4. D. Unenforceable
Show answer and explanation

Correct answer: A. Executory

The buyer's payment and the seller's conveyance remain material future obligations.

What to remember: Signing is execution of a document; executed can also describe full contractual performance.

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

Study this topicPSI national broker outline V

National 47 of 100 · Contracts · ID national-c-37

A buyer pays consideration for the right, but not the duty, to purchase by September 1. Which concept is primary?

  1. A. Completed sale
  2. B. Option contract
  3. C. Bilateral purchase promise by the buyer
  4. D. Tenancy in common
Show answer and explanation

Correct answer: B. Option contract

The buyer purchased a choice while the owner promised to keep the underlying offer available for the stated period.

What to remember: The optionee has a choice to buy, not an initial promise that purchase must occur.

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

Study this topicPSI national broker outline V

National 48 of 100 · Practice of Real Estate · ID national-c-91

Three brokerages independently choose the same fee after observing public costs, with no coordination evidence. Which statement is most accurate?

  1. A. The firms formed a boycott
  2. B. Price fixing is automatic
  3. C. The firms allocated customers
  4. D. Similar fees alone do not prove price fixing
Show answer and explanation

Correct answer: D. Similar fees alone do not prove price fixing

Antitrust price fixing requires an agreement, not price similarity alone.

What to remember: Parallel prices alone are not proof of an agreement. Evidence of coordination matters.

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

Study this topicPSI national broker outline X

National 49 of 100 · Practice of Real Estate · ID national-c-86

A tenant asks to keep a disability-related assistance animal despite a no-pets rule. What kind of request is this?

  1. A. Redlining
  2. B. Reasonable modification
  3. C. Reasonable accommodation
  4. D. Blockbusting
Show answer and explanation

Correct answer: C. Reasonable accommodation

The request seeks a disability-related exception to a policy, not a physical alteration of the premises.

What to remember: A policy exception is an accommodation; a structural change is a modification.

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

Study this topicPSI national broker outline X

National 50 of 100 · Financing · ID national-c-24

Which mortgage keeps its contract interest rate unchanged for the loan term?

  1. A. Open-end mortgage
  2. B. Adjustable-rate mortgage
  3. C. Shared-appreciation mortgage
  4. D. Fixed-rate mortgage
Show answer and explanation

Correct answer: D. Fixed-rate mortgage

The defining feature is rate certainty, though taxes and insurance can still change the total payment.

What to remember: A fixed interest rate does not promise that taxes and insurance will stay fixed.

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

Study this topicPSI national broker outline IV

National 51 of 100 · Practice of Real Estate · ID national-c-93

Which product most directly communicates a defined opinion of value under appraisal credential and standards requirements?

  1. A. BPO
  2. B. CMA
  3. C. Appraisal
  4. D. Active listing
Show answer and explanation

Correct answer: C. Appraisal

An appraisal identifies the value definition, rights, effective date, scope, evidence, analyses, and report under applicable appraisal requirements.

What to remember: An appraisal is a defined opinion of value under the applicable assignment and standards.

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

Study this topicPSI national broker outline X

National 52 of 100 · Valuation · ID national-c-23

Which formula states the cost approach most accurately for a basic exam question?

  1. A. Monthly rent x GRM only
  2. B. NOI / capitalization rate
  3. C. Land value + cost new - accrued depreciation
  4. D. Sale price - land value
Show answer and explanation

Correct answer: C. Land value + cost new - accrued depreciation

The cost approach adds separately supported land value to depreciated improvement cost, with qualifying site improvements handled consistently.

What to remember: Deduct improvement depreciation while valuing land separately.

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

Study this topicPSI national broker outline III

National 53 of 100 · Agency · ID national-c-56

A principal tells a broker in clear words to negotiate a lease on the principal’s behalf. How is that agency authority described?

  1. A. Express authority
  2. B. Apparent authority arising only from a stranger’s assumption
  3. C. Title by adverse possession
  4. D. A tenancy in severalty
Show answer and explanation

Correct answer: A. Express authority

Express authority is communicated in words. Written-form requirements for a particular engagement still depend on applicable law.

What to remember: Express authority uses words; implied authority may arise from conduct or what is necessary to carry out authority.

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

Study this topicPSI national broker outline VI

National 54 of 100 · Contracts · ID national-c-45

What commonly triggers a right of first refusal?

  1. A. The holder's demand for an appraisal
  2. B. The owner's receipt of a bona fide third-party offer the owner is willing to accept
  3. C. The recording of any unrelated deed
  4. D. The holder's payment of property taxes without permission
Show answer and explanation

Correct answer: B. The owner's receipt of a bona fide third-party offer the owner is willing to accept

The right is ordinarily dormant until the defined sale or offer event occurs.

What to remember: A right of first refusal is triggered by the stipulated opportunity, rather than an unrestricted option to force a sale.

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

Study this topicPSI national broker outline V

National 55 of 100 · Real Estate Calculations · ID national-c-96

A subject has NOI of $96,000 and the market cap rate is 8%. What is indicated value?

  1. A. $768,000
  2. B. $1,200,000
  3. C. $120,000
  4. D. $12,000
Show answer and explanation

Correct answer: B. $1,200,000

$96,000 divided by 0.08 equals $1,200,000.

What to remember: Use 0.08, not 8, as the rate in the capitalization formula.

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

Study this topicPSI national broker outline XI

National 56 of 100 · Property Disclosures · ID national-c-66

A buyer wants to operate a use classified by the local ordinance as a special use. Which statement is most accurate?

  1. A. The use is automatically permitted
  2. B. A home inspection grants approval
  3. C. The buyer must follow the required approval process and should not assume approval
  4. D. The seller may waive zoning
Show answer and explanation

Correct answer: C. The buyer must follow the required approval process and should not assume approval

Illinois municipal law allows ordinances to classify special uses that require a hearing and evidence that ordinance standards are met.

What to remember: Check the written approval and its conditions rather than assuming the advertised use is permitted.

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

Study this topicPSI national broker outline VII

National 57 of 100 · Practice of Real Estate · ID national-c-90

Three contractors secretly plan the winning bid and submit cover bids. What is the conduct?

  1. A. Price comparison
  2. B. Bid rigging
  3. C. Open competition
  4. D. Commission negotiation
Show answer and explanation

Correct answer: B. Bid rigging

The bidders staged competition and arranged the winner before submission.

What to remember: Cover bids create the appearance of competition after the winner has been arranged.

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

Study this topicPSI national broker outline X

National 58 of 100 · Financing · ID national-c-25

An ARM index is 4.10% and its margin is 2.25%. Before caps and rounding, what is the fully indexed rate?

  1. A. 2.25%
  2. B. 4.10%
  3. C. 6.35%
  4. D. 1.85%
Show answer and explanation

Correct answer: C. 6.35%

Index plus margin equals 4.10% plus 2.25%, or 6.35%.

What to remember: Index plus margin gives the fully indexed rate before applicable caps or floors.

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

Study this topicPSI national broker outline IV

National 59 of 100 · Contracts · ID national-c-36

Which statement about a unilateral contract is correct?

  1. A. It is automatically unenforceable
  2. B. It has only one legal party
  3. C. It never requires consideration
  4. D. It still involves an offeror and an offeree
Show answer and explanation

Correct answer: D. It still involves an offeror and an offeree

Unilateral describes the requested promise-for-performance exchange, not a one-person transaction.

What to remember: Unilateral does not mean there can be only one person involved.

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

Study this topicPSI national broker outline V

National 60 of 100 · Real Estate Calculations · ID national-c-99

For this problem, a jurisdiction charges a transfer fee of $0.75 for each $500 of a $300,000 taxable consideration. What fee is due?

  1. A. $600
  2. B. $225
  3. C. $450
  4. D. $2,250
Show answer and explanation

Correct answer: C. $450

There are 600 units of $500 in $300,000. Multiply 600 by $0.75 to get $450. The stated rate is a problem assumption, not a claim about Illinois tax rates.

What to remember: Divide the taxable amount by the specified unit, then multiply by the fee per unit.

Check the rule: CFPB, Closing Disclosure explainer.

Study this topicPSI national broker outline XI

National 61 of 100 · Property Management · ID national-c-74

Which rent evidence usually deserves more weight, all else equal?

  1. A. A recent verified lease with known concessions
  2. B. An unverified stale listing
  3. C. An owner's target with no market support
  4. D. A rumor about another building
Show answer and explanation

Correct answer: A. A recent verified lease with known concessions

A recent verified transaction with complete economic terms is stronger than unsupported or unaccepted price information.

What to remember: Use verified economic terms, including concessions, rather than a bare advertised asking rent.

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

Study this topicPSI national broker outline VIII

National 62 of 100 · Financing · ID national-c-30

Which document is normally recorded to give notice that real estate secures a loan?

  1. A. Mortgage or deed of trust
  2. B. Promissory note only
  3. C. Loan application
  4. D. Credit report
Show answer and explanation

Correct answer: A. Mortgage or deed of trust

The security instrument is placed in the land records to provide notice and support priority under governing law.

What to remember: A mortgage is recorded as a security instrument, not as a conveyance deed from seller to buyer.

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

Study this topicPSI national broker outline IV

National 63 of 100 · Financing · ID national-c-26

Which cap limits the first rate change after a hybrid ARM's initial fixed period?

  1. A. Loan-to-value cap
  2. B. Subsequent adjustment cap
  3. C. Initial adjustment cap
  4. D. Escrow cap
Show answer and explanation

Correct answer: C. Initial adjustment cap

The initial adjustment cap applies at the first reset; later changes use the subsequent or periodic cap.

What to remember: The initial cap limits the first adjustment, not necessarily every later one.

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

Study this topicPSI national broker outline IV

National 64 of 100 · Agency · ID national-c-53

Which term primarily describes a real estate professional's representation relationship with a client?

  1. A. Appraiser
  2. B. Broker license
  3. C. Agent
  4. D. Escrow account
Show answer and explanation

Correct answer: C. Agent

Agent answers whom the professional represents and which relationship duties apply.

What to remember: Agent describes a relationship; holding a license does not create every possible agency relationship.

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

Study this topicPSI national broker outline VI

National 65 of 100 · Contracts · ID national-c-52

A purchase contract makes the sale contingent on the buyer selling an existing home by a specified date. What risk does this provision address?

  1. A. The buyer’s ability to complete that prerequisite sale
  2. B. Automatic removal of every title defect
  3. C. A guarantee of the buyer’s resale price
  4. D. A promise that interest rates will fall
Show answer and explanation

Correct answer: A. The buyer’s ability to complete that prerequisite sale

This is a sale-of-existing-home contingency. Its wording determines deadlines, notice requirements, and any seller rights to continue marketing.

What to remember: A home-sale contingency addresses a prerequisite transaction, not a guarantee of its outcome.

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

Study this topicPSI national broker outline V

National 66 of 100 · Property Disclosures · ID national-c-67

A garage was lawful before a zoning amendment but does not meet today's side setback. What should be verified first?

  1. A. Whether the paint color is popular
  2. B. Its documented nonconforming status and the local rules for alteration, rebuilding, and abandonment
  3. C. Only the property's list price
  4. D. Whether the neighbor likes it
Show answer and explanation

Correct answer: B. Its documented nonconforming status and the local rules for alteration, rebuilding, and abandonment

A prior lawful condition may qualify for nonconforming treatment, but the local ordinance controls what can continue or change.

What to remember: Past use is evidence to investigate, not proof of lawful nonconforming status.

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

Study this topicPSI national broker outline VII

National 67 of 100 · Agency · ID national-c-64

What does an ordinary listing agreement generally not give the broker automatically?

  1. A. Authority to advertise
  2. B. Authority to sign a purchase contract for the owner
  3. C. Authority to arrange showings
  4. D. Authority to present offers
Show answer and explanation

Correct answer: B. Authority to sign a purchase contract for the owner

Marketing and negotiation authority do not ordinarily include power to bind the owner to a sale.

What to remember: A listing appointment does not itself give power to sign a binding sale contract for the seller.

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

Study this topicPSI national broker outline VI

National 68 of 100 · Land Use Controls · ID national-c-13

Local zoning allows short-term rentals, but an enforceable declaration prohibits them. What is the result?

  1. A. Zoning erases the declaration
  2. B. The association becomes a government agency
  3. C. The declaration rezones the parcel
  4. D. The private prohibition may still control the owner
Show answer and explanation

Correct answer: D. The private prohibition may still control the owner

Government permission does not cancel a stricter enforceable private restriction.

What to remember: A permitted public use can still conflict with a valid private restriction.

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

Study this topicPSI national broker outline II

National 69 of 100 · Property Disclosures · ID national-c-71

What is the primary distinction between a latent and patent defect?

  1. A. Repair price
  2. B. Discoverability
  3. C. Property age
  4. D. Broker compensation
Show answer and explanation

Correct answer: B. Discoverability

A latent defect is not discoverable through reasonably diligent inspection, while a patent defect is apparent or discoverable.

What to remember: Latent and patent describe discoverability, not whether repair will be expensive.

Check the rule: Cornell Legal Information Institute, latent defect.

Study this topicPSI national broker outline VII

National 70 of 100 · Property Ownership · ID national-c-02

Which document usually grants a cooperative resident the right to occupy a unit?

  1. A. Proprietary lease
  2. B. Warranty deed to the unit
  3. C. Tax deed
  4. D. Easement by necessity
Show answer and explanation

Correct answer: A. Proprietary lease

The cooperative entity owns the real estate, while the proprietary lease or occupancy agreement gives the shareholder possession.

What to remember: The cooperative owns the real estate; the resident’s shares and occupancy agreement serve different roles.

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

Study this topicPSI national broker outline I

National 71 of 100 · Agency · ID national-c-55

A broker’s written authority is limited to leasing one retail unit. The broker is a special agent for that task. What determines whether the broker may also sell the building?

  1. A. The size of the leasing commission
  2. B. The fact that both activities involve real estate
  3. C. The broker’s own preference
  4. D. Additional authority from the owner
Show answer and explanation

Correct answer: D. Additional authority from the owner

Authority is task-specific. Holding a license or a limited leasing appointment does not authorize a sale of the owner’s building.

What to remember: Authority to lease does not automatically include authority to sell.

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

Study this topicPSI national broker outline VI

National 72 of 100 · Land Use Controls · ID national-c-15

What is the correct treatment of a recorded racial covenant?

  1. A. Treat it as unenforceable and follow fair housing law
  2. B. Use it only for cash sales
  3. C. Enforce it until amended
  4. D. Ask the association to select buyers
Show answer and explanation

Correct answer: A. Treat it as unenforceable and follow fair housing law

Courts cannot enforce racial restrictions, and fair housing law prohibits discriminatory sales conduct.

What to remember: A racially restrictive covenant does not become enforceable merely because it appears in an old deed.

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

Study this topicPSI national broker outline II

National 73 of 100 · Contracts · ID national-c-44

Which right lets its holder initiate a purchase during a stated period without waiting for a third-party offer?

  1. A. Right of first refusal
  2. B. Option
  3. C. Listing agreement
  4. D. Lis pendens
Show answer and explanation

Correct answer: B. Option

The optionee controls whether to exercise the binding offer during the option period.

What to remember: An option fixes a right to act on agreed terms for the stated period.

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

Study this topicPSI national broker outline V

National 74 of 100 · Real Estate Calculations · ID national-c-98

With NOI fixed, what happens to value when the cap rate increases?

  1. A. Value increases
  2. B. Value decreases
  3. C. Value stays identical
  4. D. NOI becomes gross rent
Show answer and explanation

Correct answer: B. Value decreases

Value equals NOI divided by the rate, so a larger divisor lowers the result.

What to remember: With a fixed numerator, a larger positive denominator produces a smaller quotient.

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

Study this topicPSI national broker outline XI

National 75 of 100 · Practice of Real Estate · ID national-c-88

Two competing firms agree to divide seller clients by ZIP code. What is this?

  1. A. Lawful specialization
  2. B. Bid rigging
  3. C. Unilateral refusal
  4. D. Market allocation
Show answer and explanation

Correct answer: D. Market allocation

The firms divided geographic customers instead of competing independently.

What to remember: Dividing customers geographically is market allocation, not merely independent specialization.

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

Study this topicPSI national broker outline X

National 76 of 100 · Practice of Real Estate · ID national-c-92

A broker analyzes closed sales and active competition to recommend a seller's listing range. Which product fits best?

  1. A. Appraisal
  2. B. CMA
  3. C. AVM
  4. D. Tax assessment
Show answer and explanation

Correct answer: B. CMA

A CMA is the brokerage product commonly used for listing, marketing, and buyer-offer strategy.

What to remember: A CMA serves brokerage pricing decisions and should be identified as such.

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

Study this topicPSI national broker outline X

National 77 of 100 · Land Use Controls · ID national-c-14

Which document primarily governs association meetings and officer procedures?

  1. A. Bylaws
  2. B. Flood map
  3. C. Warranty deed
  4. D. Building code
Show answer and explanation

Correct answer: A. Bylaws

Bylaws typically establish internal association governance, subject to law and the declaration.

What to remember: Bylaws govern association operations; they do not replace every recorded property restriction.

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

Study this topicPSI national broker outline II

National 78 of 100 · Real Estate Calculations · ID national-c-97

Which method explicitly reflects operating expenses through its income input?

  1. A. Capitalization rate
  2. B. GRM
  3. C. Price per room only
  4. D. Cost per square foot only
Show answer and explanation

Correct answer: A. Capitalization rate

The cap-rate formula uses NOI after property operating expenses.

What to remember: NOI reflects property operating expenses; gross rent does not.

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

Study this topicPSI national broker outline XI

National 79 of 100 · Valuation · ID national-c-22

A comparable is inferior to the subject by $12,000 for a market-supported feature difference. What adjustment is made?

  1. A. Subtract $12,000 from the subject
  2. B. Add $12,000 to the comparable
  3. C. Subtract $12,000 from the comparable
  4. D. No adjustment can ever be made
Show answer and explanation

Correct answer: B. Add $12,000 to the comparable

The comparable is worse, so its price is adjusted upward to represent the subject's superior feature.

What to remember: Raise an inferior comparable’s price to make it comparable to the superior subject feature.

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

Study this topicPSI national broker outline III

National 80 of 100 · Contracts · ID national-c-50

After a seller counteroffer, who has the power to accept?

  1. A. The seller only
  2. B. The county recorder
  3. C. The buyer as the new offeree
  4. D. The listing photographer
Show answer and explanation

Correct answer: C. The buyer as the new offeree

The counteroffer reverses the parties' offeror and offeree roles.

What to remember: The person receiving a counteroffer becomes its offeree.

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

Study this topicPSI national broker outline V

National 81 of 100 · Financing · ID national-c-27

An ARM began at 4.00% with a 5-percentage-point lifetime cap. What is its stated lifetime ceiling?

  1. A. 20.00%
  2. B. 5.00%
  3. C. 4.00%
  4. D. 9.00%
Show answer and explanation

Correct answer: D. 9.00%

The maximum total increase is added to the initial rate: 4.00% plus 5.00% equals 9.00%.

What to remember: A five-percentage-point lifetime cap added to 4% produces 9%, not 4.2%.

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

Study this topicPSI national broker outline IV

National 82 of 100 · Agency · ID national-c-63

Which agreement hires a brokerage to market an owner's identified property?

  1. A. Purchase contract
  2. B. Listing agreement
  3. C. Promissory note
  4. D. Inspection agreement
Show answer and explanation

Correct answer: B. Listing agreement

The listing agreement creates the owner-brokerage service relationship for marketing the property.

What to remember: A listing agreement establishes the seller-side engagement and its scope.

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

Study this topicPSI national broker outline VI

National 83 of 100 · Financing · ID national-c-33

A company begins collecting loan payments for an investor. Which role does that fact establish?

  1. A. Original payee
  2. B. Property owner
  3. C. Servicer
  4. D. Trustee in every case
Show answer and explanation

Correct answer: C. Servicer

Payment administration identifies the servicing role. It does not alone prove who owns or may enforce every loan document.

What to remember: The servicer collects and administers payments; it need not own the loan.

Check the rule: CFPB, Loan Estimate explainer.

Study this topicPSI national broker outline IV

National 84 of 100 · Valuation · ID national-c-18

What should happen first in an appraisal assignment?

  1. A. Average three values
  2. B. Choose a target value
  3. C. Select the highest sale
  4. D. Define the appraisal problem
Show answer and explanation

Correct answer: D. Define the appraisal problem

The problem definition establishes the rights, value type, use, users, effective date, and scope needs.

What to remember: Define the problem and assignment before selecting methods or collecting unrelated data.

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

Study this topicPSI national broker outline III

National 85 of 100 · Contracts · ID national-c-51

A seller receives a higher offer with a financing contingency and a lower cash offer. Unless another obligation requires acceptance, what may the seller consider?

  1. A. A nationally fixed rule requiring cash offers
  2. B. Only the largest headline price
  3. C. Only the order of arrival
  4. D. Price and the other material terms together
Show answer and explanation

Correct answer: D. Price and the other material terms together

The seller evaluates the full proposal, including contingencies and closing terms. An offer does not itself compel acceptance.

What to remember: Headline price is only one of the material terms in an offer.

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

Study this topicPSI national broker outline V

National 86 of 100 · Agency · ID national-c-58

A listing agent represents the seller and properly assists an unrepresented buyer with a blank offer form. What is the buyer to that listing agent?

  1. A. Customer
  2. B. Client
  3. C. Principal
  4. D. Designated agent
Show answer and explanation

Correct answer: A. Customer

The buyer receives no representation from the seller's agent. Neutral assistance does not make the buyer a client.

What to remember: Factual help should not become an undisclosed assumption of representation.

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

Study this topicPSI national broker outline VI

National 87 of 100 · Real Estate Calculations · ID national-c-95

A comparable sold for $480,000 and rents for $4,000 per month. What is its monthly GRM?

  1. A. 12
  2. B. 120
  3. C. 0.0083
  4. D. 1,920
Show answer and explanation

Correct answer: B. 120

$480,000 divided by $4,000 equals a monthly GRM of 120.

What to remember: Keep rent periods consistent. A monthly GRM is not an annual gross-income multiplier.

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

Study this topicPSI national broker outline XI

National 88 of 100 · Land Use Controls · ID national-c-12

What remedy is commonly associated with enforcing a restrictive covenant?

  1. A. Escheat
  2. B. Tax equalization
  3. C. Eminent domain
  4. D. Injunction
Show answer and explanation

Correct answer: D. Injunction

Equitable enforcement often seeks an injunction stopping or correcting the prohibited use.

What to remember: An injunction orders conduct to stop or occur; damages award money.

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

Study this topicPSI national broker outline II

National 89 of 100 · Agency · ID national-c-62

Which action is most consistent with serving a customer without becoming that customer's advocate?

  1. A. Provide objective public tax information
  2. B. Recommend the exact price needed to beat another offer
  3. C. Reveal the seller client's minimum price
  4. D. Promise to put the customer's interests first
Show answer and explanation

Correct answer: A. Provide objective public tax information

Objective factual help fits customer service. The other actions compromise client confidentiality or promise advocacy.

What to remember: Objective facts and confidential bargaining information must be treated differently.

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

Study this topicPSI national broker outline VI

National 90 of 100 · Agency · ID national-c-57

Which fact best distinguishes a facilitator from a dual agent?

  1. A. A facilitator represents neither side, while a dual agent represents both
  2. B. A facilitator represents both without consent
  3. C. A dual agent holds no license
  4. D. A facilitator always receives no compensation
Show answer and explanation

Correct answer: A. A facilitator represents neither side, while a dual agent represents both

Representation count is the clean distinction. Compensation and license status do not reverse it.

What to remember: A nonagent assisting both sides differs from one agent representing both sides.

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

Study this topicPSI national broker outline VI

National 91 of 100 · Valuation · ID national-c-17

Which interest belongs to a tenant under a lease?

  1. A. Leased fee
  2. B. Fee simple automatically
  3. C. Leasehold
  4. D. Remainder
Show answer and explanation

Correct answer: C. Leasehold

The tenant holds the leasehold interest, while the landlord holds the leased fee.

What to remember: Specify the ownership interest being valued; a leasehold is not fee simple ownership.

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

Study this topicPSI national broker outline III

National 92 of 100 · Contracts · ID national-c-35

An owner promises $300 to anyone who returns a lost survey. How is the offer accepted?

  1. A. By asking whether the reward is negotiable
  2. B. By privately intending to search
  3. C. By returning the survey as requested
  4. D. By promising to look next month
Show answer and explanation

Correct answer: C. By returning the survey as requested

The offer requests performance, making return of the survey the acceptance event.

What to remember: A reward offer can invite acceptance by completing the requested act.

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

Study this topicPSI national broker outline V

National 93 of 100 · Contracts · ID national-c-42

The buyer has fully paid, but the seller still owes the deed. What is the contract's performance status?

  1. A. Fully executed
  2. B. Executory as to the outstanding conveyance
  3. C. Automatically void
  4. D. Unilateral only
Show answer and explanation

Correct answer: B. Executory as to the outstanding conveyance

One party's completion does not erase the other party's material unperformed promise.

What to remember: One party’s completed payment does not mean the other party has delivered the promised deed.

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

Study this topicPSI national broker outline V

National 94 of 100 · Financing · ID national-c-32

A seller signs a warranty deed, and the buyer signs a mortgage. What is the best distinction?

  1. A. Both documents promise repayment
  2. B. The deed conveys ownership; the mortgage secures debt
  3. C. The mortgage conveys the seller's title to the buyer
  4. D. The deed is never recorded
Show answer and explanation

Correct answer: B. The deed conveys ownership; the mortgage secures debt

A conveyance deed and a security instrument perform different jobs even though both may enter the land records.

What to remember: A deed transfers an interest; a mortgage secures an obligation.

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

Study this topicPSI national broker outline IV

National 95 of 100 · Transfer of Title · ID national-c-80

Which statement best separates deed type from title quality?

  1. A. Recording guarantees property condition
  2. B. Quitclaim always proves defective title
  3. C. General warranty eliminates every lien automatically
  4. D. Deed type sets warranty scope, while title quality depends on the actual estate and claims
Show answer and explanation

Correct answer: D. Deed type sets warranty scope, while title quality depends on the actual estate and claims

Covenant strength and the state of the title are related but distinct issues.

What to remember: A strong covenant does not itself erase a lien.

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

Study this topicPSI national broker outline IX

National 96 of 100 · Contracts · ID national-c-41

A landlord and tenant signed a three-year lease yesterday. Which statement is best?

  1. A. The lease is void until the final month
  2. B. The lease is fully executed because signatures end every obligation
  3. C. The document is signed, but the lease is executory because future duties remain
  4. D. The tenant already owns legal title
Show answer and explanation

Correct answer: C. The document is signed, but the lease is executory because future duties remain

Future rent, possession, and other covenants keep the lease executory during its term.

What to remember: A newly signed lease usually still has future rent and possession obligations.

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

Study this topicPSI national broker outline V

National 97 of 100 · Property Ownership · ID national-c-09

What feature most directly distinguishes joint tenancy from tenancy in common?

  1. A. A right of survivorship
  2. B. A recorded deed
  3. C. A right to possess the property
  4. D. The ability to incur expenses
Show answer and explanation

Correct answer: A. A right of survivorship

Both forms involve undivided co-ownership and possession rights. Joint tenancy adds survivorship while the estate remains valid and unsevered.

What to remember: Both forms involve co-ownership; survivorship is the critical difference.

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

Study this topicPSI national broker outline I

National 98 of 100 · Contracts · ID national-c-40

Which facts most strongly support classifying a purchase contract as executed?

  1. A. The lender ordered an appraisal
  2. B. The buyer submitted an offer
  3. C. The parties scheduled an inspection
  4. D. The buyer paid and the seller delivered the deed as required
Show answer and explanation

Correct answer: D. The buyer paid and the seller delivered the deed as required

Completed payment and conveyance establish the core performed exchange rather than a preliminary step.

What to remember: A contract is fully executed in the performance sense only when required performance is complete.

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

Study this topicPSI national broker outline V

National 99 of 100 · Contracts · ID national-c-38

Which question best distinguishes bilateral from unilateral formation?

  1. A. How many pages were signed?
  2. B. Did the offer request a return promise or completed performance?
  3. C. Was the property residential?
  4. D. Did the deed record?
Show answer and explanation

Correct answer: B. Did the offer request a return promise or completed performance?

The requested mode of acceptance controls the basic classification.

What to remember: Ask whether the requested acceptance is a promise or completed performance.

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

Study this topicPSI national broker outline V

National 100 of 100 · Property Management · ID national-c-73

A 12-month lease charges $1,800 per month and gives one month free. What is the simplified effective monthly rent?

  1. A. $1,500
  2. B. $1,800
  3. C. $1,650
  4. D. $1,950
Show answer and explanation

Correct answer: C. $1,650

Eleven paid months total $19,800. Dividing by the 12-month occupancy period gives $1,650.

What to remember: Spread total contracted rent over the entire occupancy period when comparing effective rent.

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

Study this topicPSI national broker outline VIII

Illinois: 40 questions

Illinois 1 of 40 · Illinois Real Estate License Act · ID state-c-05

A home was the site of a past event that did not affect the physical condition of the property, its structures, or environment. What distinction does Section 15-20 make?

  1. A. It allows concealment of every physical defect associated with an event.
  2. B. It makes all neighboring physical conditions irrelevant even if they substantially reduce value.
  3. C. It protects a licensee from a failure-to-disclose claim for that specified nonphysical history.
  4. D. It turns every historical event into a mandatory structural warranty.
Show answer and explanation

Correct answer: C. It protects a licensee from a failure-to-disclose claim for that specified nonphysical history.

Section 15-20 distinguishes certain nonphysical history from physical conditions. The protection should not be stretched to conceal a known physical defect or to justify a false statement. Read the facts about physical effects carefully.

Why the other choices miss the mark

  • A. It allows concealment of every physical defect associated with an event.

    The statutory protection described here depends on the absence of the specified physical effects.

  • B. It makes all neighboring physical conditions irrelevant even if they substantially reduce value.

    The statute does not create that unlimited neighboring-condition exclusion.

  • D. It turns every historical event into a mandatory structural warranty.

    The section creates a disclosure distinction, not a warranty of the structure.

Check the rule: 225 ILCS 454/15-20: nonphysical property history.

Study this topicPSI broker outline II.A

Illinois 2 of 40 · Additional Illinois Laws and Regulations · ID state-c-21

A nonexempt Illinois conveyance has taxable value of $250,001, with no deduction. What is the state transfer tax at $0.50 per $500 or fraction?

  1. A. $250.00.
  2. B. $250.50.
  3. C. $375.75.
  4. D. $500.50.
Show answer and explanation

Correct answer: B. $250.50.

Divide $250,001 by $500 to get 500.002 units. A fraction counts as another unit, so use 501 units. Multiplying by $0.50 gives $250.50. Round up the unit count before applying the rate.

Why the other choices miss the mark

  • A. $250.00.

    This ignores the fractional unit created by the final dollar.

  • C. $375.75.

    This uses a combined $0.75 rate; the question asks for state tax only.

  • D. $500.50.

    This applies $1 per unit rather than the stated $0.50 state rate.

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

Study this topicPSI broker outline III.C

Illinois 3 of 40 · Disclosures · ID state-c-31

A licensee owns 1% of a private LLC buying a home. The licensee says the interest is too small to require written licensee-status disclosure. What is the better answer?

  1. A. The licensee is correct because only majority owners disclose.
  2. B. Disclosure is required only if the LLC pays the licensee a salary.
  3. C. The LLC membership still triggers the stated disclosure requirement.
  4. D. Oral disclosure at closing is sufficient for a small interest.
Show answer and explanation

Correct answer: C. The LLC membership still triggers the stated disclosure requirement.

Rule 1450.765 includes an LLC manager or member and direct or indirect interests. It does not create a 50% or controlling-interest threshold for this disclosure. The licensee must disclose status in writing to all parties before initiating the transaction.

Why the other choices miss the mark

  • A. The licensee is correct because only majority owners disclose.

    The rule does not limit LLC-member disclosure to majority owners.

  • B. Disclosure is required only if the LLC pays the licensee a salary.

    A salary is not the trigger; the described membership interest is relevant.

  • D. Oral disclosure at closing is sufficient for a small interest.

    The requirement is written disclosure before initiation, not a late oral comment.

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

Illinois 4 of 40 · Illinois Real Estate License Act · ID state-c-06

A broker wants a quick commission and urges a seller to accept an offer without discussing a competing offer the broker is required to present. Which duty is most directly at issue?

  1. A. Maximizing the broker's income before considering the client's terms.
  2. B. Allowing the broker to choose which required offers the client may see.
  3. C. Promoting the client's interests rather than the broker's self-interest.
  4. D. Treating every competing offer as confidential from the seller who received it.
Show answer and explanation

Correct answer: C. Promoting the client's interests rather than the broker's self-interest.

Section 15-15 requires acting consistently with the client's best interests and timely presenting offers when that duty applies. Wanting a faster commission does not justify suppressing required information about another offer.

Why the other choices miss the mark

  • A. Maximizing the broker's income before considering the client's terms.

    The statute expressly distinguishes client interests from the licensee's self-interest.

  • B. Allowing the broker to choose which required offers the client may see.

    A broker's preference does not authorize withholding an offer the broker must present.

  • D. Treating every competing offer as confidential from the seller who received it.

    Required presentation to the seller is not defeated merely by labeling an offer confidential from that seller.

Check the rule: 225 ILCS 454/15-15: duties to a client.

Study this topicPSI broker outline II.A

Illinois 5 of 40 · Licensing Requirements · ID state-c-01

A standard candidate completed the required Illinois broker prelicense education 25 months ago and has not tested. What issue should the candidate resolve before trying to schedule?

  1. A. Education certificates remain valid forever once issued.
  2. B. Passing a national practice test automatically extends eligibility.
  3. C. The booklet's two-year validity period for the prelicense education has elapsed.
  4. D. The one-year post-exam application period has begun even though no exam was passed.
Show answer and explanation

Correct answer: C. The booklet's two-year validity period for the prelicense education has elapsed.

The PSI booklet states that prelicense education is valid for two years after satisfactory completion. Twenty-five months is beyond that period. Confirm the required new eligibility steps instead of assuming the certificate remains valid indefinitely.

Why the other choices miss the mark

  • A. Education certificates remain valid forever once issued.

    The booklet expressly gives a two-year education-validity period.

  • B. Passing a national practice test automatically extends eligibility.

    An unofficial practice score cannot extend licensing-exam eligibility.

  • D. The one-year post-exam application period has begun even though no exam was passed.

    That is a different deadline triggered by a passing exam, not by course completion alone.

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

Study this topicPSI broker outline I.E

Illinois 6 of 40 · Additional Illinois Laws and Regulations · ID state-c-22

For this Illinois tax calculation, the assessed value is $120,000 and the applicable equalization factor is 0.95. What is the equalized assessed value before exemptions?

  1. A. $126,315.79.
  2. B. $6,000.
  3. C. $114,000.
  4. D. $120,000.
Show answer and explanation

Correct answer: C. $114,000.

Multiply the assessed value by the stated equalization factor: $120,000 × 0.95 = $114,000. This is equalized assessed value before exemptions, not the tax bill or the property's sale price.

Why the other choices miss the mark

  • A. $126,315.79.

    This divides by the factor instead of multiplying the assessed value by it.

  • B. $6,000.

    That is the reduction from $120,000, not the resulting equalized value.

  • D. $120,000.

    That ignores the supplied equalization factor.

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

Illinois 7 of 40 · Illinois Real Estate License Act · ID state-c-07

A written buyer brokerage agreement names the parties and describes the broker's duties, but says nothing about compensation or when it will be paid. What is missing under Rule 1450.770(c)?

  1. A. The agreed basis or amount of compensation and time of payment.
  2. B. Only a statement that compensation will always be set by law.
  3. C. Nothing, because compensation terms belong only in seller agreements.
  4. D. Only the appraised value of whichever home is eventually purchased.
Show answer and explanation

Correct answer: A. The agreed basis or amount of compensation and time of payment.

The current buyer-agreement rule requires the agreed compensation basis or amount and payment timing, along with the other required terms and signatures. These items should not be left for an assumption at closing.

Why the other choices miss the mark

  • B. Only a statement that compensation will always be set by law.

    The rule requires the agreed basis or amount; it does not supply a universal statutory commission.

  • C. Nothing, because compensation terms belong only in seller agreements.

    Subsection (c) expressly includes compensation in buyer or tenant agreements.

  • D. Only the appraised value of whichever home is eventually purchased.

    An appraisal figure is not a replacement for the compensation term.

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

Study this topicPSI broker outline II.D

Illinois 8 of 40 · Disclosures · ID state-c-32

A licensee holds a beneficial interest in a land trust that is selling property. The trustee alone appears on the deed. What must the licensee recognize?

  1. A. Only the person named on the deed can have a disclosure duty.
  2. B. The beneficial interest still requires written licensee-status disclosure.
  3. C. Land trusts automatically exempt every beneficiary from real estate rules.
  4. D. The duty begins only if the trustee gives the licensee the sale proceeds.
Show answer and explanation

Correct answer: B. The beneficial interest still requires written licensee-status disclosure.

Rule 1450.765 expressly includes a beneficial interest in a land trust involved in the sale, lease, or purchase. The trustee's appearance on the deed does not remove the beneficiary licensee's disclosure duty.

Why the other choices miss the mark

  • A. Only the person named on the deed can have a disclosure duty.

    The rule expressly covers this indirect beneficial interest.

  • C. Land trusts automatically exempt every beneficiary from real estate rules.

    The rule specifically includes licensee beneficiaries; no blanket exemption applies.

  • D. The duty begins only if the trustee gives the licensee the sale proceeds.

    Waiting for proceeds comes after the required pre-initiation disclosure timing.

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

Illinois 9 of 40 · Additional Illinois Laws and Regulations · ID state-c-23

Under the Illinois land-trust definition, how is the beneficiary's interest classified even though the trustee holds title to real estate?

  1. A. As personal property.
  2. B. As the trustee's legal title transferred automatically to the beneficiary.
  3. C. As a mortgage lien in every land trust.
  4. D. As a public easement for access across the property.
Show answer and explanation

Correct answer: A. As personal property.

The statutory land-trust definition treats the beneficiary's interest as personal property, while legal and equitable title to the real estate sits with the trustee. Do not assume that every interest connected with land is itself title to the land.

Why the other choices miss the mark

  • B. As the trustee's legal title transferred automatically to the beneficiary.

    The definition keeps legal and equitable real-estate title with the trustee.

  • C. As a mortgage lien in every land trust.

    A beneficial interest is not automatically a mortgage securing a loan.

  • D. As a public easement for access across the property.

    An easement right and a beneficial trust interest are different interests.

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

Study this topicPSI broker outline III.A

Illinois 10 of 40 · Illinois Real Estate License Act · ID state-c-08

A broker prepares a seller listing agreement. Which pair of terms does Rule 1450.770(d) expressly require, in addition to the other listed agreement terms?

  1. A. Only a neighborhood nickname and a hoped-for commission.
  2. B. Only the seller's mortgage balance and credit score.
  3. C. A guaranteed closing date and a promise of appreciation.
  4. D. The list price and identification of the real property.
Show answer and explanation

Correct answer: D. The list price and identification of the real property.

The rule requires the list price and property identification by address and/or legal description. It also requires compensation, parties, designated agents, signatures, duties, and duration terms. A marketing nickname alone does not reliably identify the listed property.

Why the other choices miss the mark

  • A. Only a neighborhood nickname and a hoped-for commission.

    Those details do not supply the specified list price and real-property identification.

  • B. Only the seller's mortgage balance and credit score.

    Those are not substitutes for the required listing terms.

  • C. A guaranteed closing date and a promise of appreciation.

    The rule does not replace property identification and price with these guarantees.

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

Study this topicPSI broker outline II.D

Illinois 11 of 40 · Disclosures · ID state-c-33

A licensee owns part of the LLC selling a property and wants to act as dual agent for the transaction. Both sides offer written consent. What does Rule 1450.820 provide?

  1. A. The licensee may act as dual agent because both sides signed consent.
  2. B. The licensee may act as dual agent if the ownership share is below 10%.
  3. C. The licensee may act as dual agent if commission is waived.
  4. D. The licensee may not serve as dual agent in that transaction.
Show answer and explanation

Correct answer: D. The licensee may not serve as dual agent in that transaction.

The rule prohibits dual agency when the licensee, or an entity in which the licensee has or will have a direct or indirect ownership interest, is a party. Written consent does not override this ownership-based prohibition.

Why the other choices miss the mark

  • A. The licensee may act as dual agent because both sides signed consent.

    Consent does not cure the separate ownership-based prohibition.

  • B. The licensee may act as dual agent if the ownership share is below 10%.

    The rule uses any ownership interest, not the proposed threshold.

  • C. The licensee may act as dual agent if commission is waived.

    The prohibition concerns the ownership interest, not whether commission is charged.

Check the rule: 68 Ill. Adm. Code 1450.820: dual agency.

Study this topicPSI broker outline IV.A

Illinois 12 of 40 · Illinois Real Estate License Act · ID state-c-09

A brokerage agreement is labeled Exclusive, but its text waives the minimum services in Section 15-75. How does Rule 1450.770(b)(2) treat that agreement?

  1. A. As exclusive because the heading controls every conflicting term.
  2. B. As nonexclusive.
  3. C. As a purchase contract that transfers the property automatically.
  4. D. As exempt from all brokerage-agreement requirements.
Show answer and explanation

Correct answer: B. As nonexclusive.

The rule expressly treats omission or waiver of the statutory minimum-services language as making the agreement nonexclusive under the Act's definition. The heading cannot preserve exclusivity while the text waives those services.

Why the other choices miss the mark

  • A. As exclusive because the heading controls every conflicting term.

    The rule specifically addresses the minimum-services language, not just the heading.

  • C. As a purchase contract that transfers the property automatically.

    Changing the classification of a brokerage agreement does not convey property.

  • D. As exempt from all brokerage-agreement requirements.

    Nonexclusive agreements still have applicable written-agreement requirements.

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

Study this topicPSI broker outline II.D

Illinois 13 of 40 · Licensing Requirements · ID state-c-02

A standard broker candidate, who is not education exempt, has failed the licensing examination on the fourth allowed attempt. What does the PSI booklet require before another try?

  1. A. Keep repeating only the failed portion without further education.
  2. B. Retake the 75-hour broker education and the entire examination.
  3. C. Wait one week and receive an automatic fifth attempt.
  4. D. Take the residential leasing exam instead and receive a broker license.
Show answer and explanation

Correct answer: B. Retake the 75-hour broker education and the entire examination.

The booklet states that after the fourth failed attempt, a nonexempt broker candidate must retake the 75-hour education and the entire examination. This differs from the usual earlier-attempt rule of repeating only the failed portion.

Why the other choices miss the mark

  • A. Keep repeating only the failed portion without further education.

    That overlooks the booklet's specific consequence after the fourth failure.

  • C. Wait one week and receive an automatic fifth attempt.

    A short waiting period does not replace the required education and exam reset.

  • D. Take the residential leasing exam instead and receive a broker license.

    A different license examination does not satisfy the broker requirements.

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

Study this topicPSI broker outline I.E

Illinois 14 of 40 · Disclosures · ID state-c-34

After consenting to dual agency, a seller asks the broker for the buyer's confidential maximum offer. The buyer has not authorized that disclosure. Which response respects the dual-agency limits?

  1. A. Reveal it because the seller listed with the broker first.
  2. B. Reveal it because the seller pays a larger share of the fee.
  3. C. Hint at the exact maximum without naming the buyer as the source.
  4. D. Decline to reveal the buyer's confidential maximum.
Show answer and explanation

Correct answer: D. Decline to reveal the buyer's confidential maximum.

A dual agent cannot use one client's confidential bargaining information for the other client merely because both consented to dual agency. The statutory disclosure explains these limits, including limits on confidential price information.

Why the other choices miss the mark

  • A. Reveal it because the seller listed with the broker first.

    Being the earlier client does not give the seller the other client's confidences.

  • B. Reveal it because the seller pays a larger share of the fee.

    The compensation split does not override confidentiality.

  • C. Hint at the exact maximum without naming the buyer as the source.

    An indirect disclosure of the same confidence does not solve the problem.

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

Study this topicPSI broker outline IV.A

Illinois 15 of 40 · Additional Illinois Laws and Regulations · ID state-c-24

Two condominium units have different percentages of ownership in the common elements. For ordinary common expenses, what should a broker check before telling the buyers their shares will be identical?

  1. A. Only whether the units have the same number of occupants.
  2. B. Only whether both buyers use the same mortgage lender.
  3. C. Only the asking price; higher asking prices always produce identical dues.
  4. D. The percentages stated in the declaration.
Show answer and explanation

Correct answer: D. The percentages stated in the declaration.

Section 9(a) generally bases each unit's common-expense share on its percentage of ownership in the common elements in the declaration. The number of units alone does not prove equal shares. Special statutory allocations should also be checked where relevant.

Why the other choices miss the mark

  • A. Only whether the units have the same number of occupants.

    Occupancy count is not the ordinary allocation basis in Section 9(a).

  • B. Only whether both buyers use the same mortgage lender.

    Financing arrangements do not set the declaration's ownership percentages.

  • C. Only the asking price; higher asking prices always produce identical dues.

    Asking prices do not replace the declaration's allocation.

Check the rule: 765 ILCS 605/9: condominium common expenses.

Study this topicPSI broker outline III.A

Illinois 16 of 40 · Illinois Real Estate License Act · ID state-c-10

A brokerage ad offers a free home warranty, but only to owners who sign a listing agreement. Where must that condition be disclosed?

  1. A. Only in paperwork handed over after the owner signs.
  2. B. Only if the owner asks whether there is a condition.
  3. C. Nowhere if the item is described as a no-charge benefit instead.
  4. D. In the same advertisement or offer.
Show answer and explanation

Correct answer: D. In the same advertisement or offer.

Section 20-20(a)(35) prohibits offering something as free without disclosing the necessary conditions or obligations in the same ad or offer. A listing-signature requirement is a condition the consumer needs to see.

Why the other choices miss the mark

  • A. Only in paperwork handed over after the owner signs.

    That is later than the same-advertisement disclosure the statute requires.

  • B. Only if the owner asks whether there is a condition.

    The disclosure is not conditional on a consumer question.

  • C. Nowhere if the item is described as a no-charge benefit instead.

    The statute includes similar free-offer terms, not just the single word free.

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

Study this topicPSI broker outline II.B

Illinois 17 of 40 · Disclosures · ID state-c-35

An investor renovates an older, previously occupied home and lists it as Like new. Assuming no other exemption, does that marketing phrase exempt the sale from the Illinois residential disclosure report?

  1. A. Yes, because any new kitchen resets the home's occupancy history.
  2. B. No. Like new is not the never-occupied new-construction exemption.
  3. C. Yes, if the investor held title for less than a year.
  4. D. Yes, if the buyer agrees the finishes look new.
Show answer and explanation

Correct answer: B. No. Like new is not the never-occupied new-construction exemption.

Section 15 exempts newly constructed residential property that has never been occupied. A marketing description of a renovated, previously occupied home does not establish those facts. Other exemptions must be evaluated on their actual conditions.

Why the other choices miss the mark

  • A. Yes, because any new kitchen resets the home's occupancy history.

    Renovating a component does not make the dwelling never occupied.

  • C. Yes, if the investor held title for less than a year.

    The stated new-construction exemption does not turn on that holding period.

  • D. Yes, if the buyer agrees the finishes look new.

    A buyer's opinion of the finishes does not satisfy the statutory exemption.

Check the rule: 765 ILCS 77/15: exempt transfers.

Study this topicPSI broker outline IV.D

Illinois 18 of 40 · Additional Illinois Laws and Regulations · ID state-c-25

A broker shows a family only neighborhoods the broker believes match the family's race, despite suitable listings elsewhere. What is the fair housing concern?

  1. A. It is permissible if the broker believes the family will feel comfortable.
  2. B. Steering that promotes racial segregation.
  3. C. It is permissible if the broker charges no showing fee.
  4. D. It becomes permissible when all selected properties meet the budget.
Show answer and explanation

Correct answer: B. Steering that promotes racial segregation.

Section 20-20(a)(30) prohibits conduct intended to promote or maintain racially or religiously segregated housing. A broker should respond to the client's lawful property criteria, rather than substitute racial assumptions about where the family belongs.

Why the other choices miss the mark

  • A. It is permissible if the broker believes the family will feel comfortable.

    A claimed helpful motive does not justify racial steering.

  • C. It is permissible if the broker charges no showing fee.

    The fair housing restriction does not depend on a separate showing fee.

  • D. It becomes permissible when all selected properties meet the budget.

    Meeting a budget does not cure exclusion of other choices on racial grounds.

Check the rule: 225 ILCS 454/20-20: grounds for discipline; 775 ILCS 5/3-102: fair housing practices.

Study this topicPSI broker outline III.G

Illinois 19 of 40 · Illinois Real Estate License Act · ID state-c-11

A broker asks parties to sign a purchase contract with the price blank, intending to fill it in after they agree by phone. What does Rule 1450.775(a) prohibit?

  1. A. Only leaving the buyer's email address blank, never the price.
  2. B. Accepting the signed document with the intention of filling that blank afterward.
  3. C. Only filling the blank in ink instead of electronically.
  4. D. Nothing, because a future phone call always authorizes the change.
Show answer and explanation

Correct answer: B. Accepting the signed document with the intention of filling that blank afterward.

The rule prohibits soliciting, accepting, or executing a transaction document containing blanks intended to be filled after signing or initialing. It does not mean every unused space in a form is unlawful; the intended later completion is the key fact.

Why the other choices miss the mark

  • A. Only leaving the buyer's email address blank, never the price.

    The rule is not limited to contact information; the intended later completion of a term is covered.

  • C. Only filling the blank in ink instead of electronically.

    The safeguard applies to physical and electronic written agreements.

  • D. Nothing, because a future phone call always authorizes the change.

    A planned later conversation does not cure accepting the document in the prohibited manner.

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

Study this topicPSI broker outline II.J

Illinois 20 of 40 · Illinois Real Estate License Act · ID state-c-12

Both parties signed an electronic lease. The broker changes the rent in the file without collecting their written authority and approval of the change. Does the electronic format avoid Rule 1450.775?

  1. A. Yes. The rule regulates paper documents only.
  2. B. Yes, if the platform retains a version history.
  3. C. No. The written-agreement safeguards also apply electronically.
  4. D. Yes, if the broker emails the altered file after the tenant moves in.
Show answer and explanation

Correct answer: C. No. The written-agreement safeguards also apply electronically.

Rule 1450.775(e) covers physical and electronic agreements. Changing an electronic file requires the same applicable signatory authorization and approval as changing a paper document. Access to the editing software is not consent.

Why the other choices miss the mark

  • A. Yes. The rule regulates paper documents only.

    Subsection (e) expressly includes electronic agreements.

  • B. Yes, if the platform retains a version history.

    A version history records an edit; it does not provide the parties' required consent.

  • D. Yes, if the broker emails the altered file after the tenant moves in.

    A later email does not cure the unauthorized alteration.

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

Study this topicPSI broker outline II.J

Illinois 21 of 40 · Additional Illinois Laws and Regulations · ID state-c-26

A tenant supplies reliable assistance-animal documentation that otherwise satisfies the Illinois Act. May a housing provider deny the request solely because the tenant did not use the provider's preferred form?

  1. A. Yes. Any requested accommodation may be denied for using a different template.
  2. B. No. Adequate documentation cannot be rejected solely for not using that form.
  3. C. Yes, unless the tenant buys a registry card from the provider.
  4. D. Yes, if the preferred form requires a specific medical diagnosis.
Show answer and explanation

Correct answer: B. No. Adequate documentation cannot be rejected solely for not using that form.

Section 10 permits a provider to supply a form, but not to deny an otherwise adequately supported request solely because that form was not used. Evaluate the documentation under the statutory requirements rather than treating a preferred template as decisive.

Why the other choices miss the mark

  • A. Yes. Any requested accommodation may be denied for using a different template.

    That is the sole-form denial the Act disallows when the documentation otherwise satisfies it.

  • C. Yes, unless the tenant buys a registry card from the provider.

    A purchased registry card is not the statutory solution to a preferred-form dispute.

  • D. Yes, if the preferred form requires a specific medical diagnosis.

    The provider may not require a specific diagnosis as a condition of the documentation.

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

Study this topicPSI broker outline III.H

Illinois 22 of 40 · Disclosures · ID state-c-36

A seller completing the statutory report knows an underground fuel tank remains on the property but has no soil test. What is the sound disclosure approach?

  1. A. Omit the tank until a laboratory proves contamination.
  2. B. State that the soil is contaminated because every buried tank leaks.
  3. C. Disclose the known tank and avoid claiming unverified contamination or safety.
  4. D. State that the soil is clean because there is no test report.
Show answer and explanation

Correct answer: C. Disclose the known tank and avoid claiming unverified contamination or safety.

The statutory report asks about awareness of underground fuel storage tanks. The known tank should not be omitted merely because contamination has not been established. At the same time, the seller should not invent a test result or guarantee the soil's condition.

Why the other choices miss the mark

  • A. Omit the tank until a laboratory proves contamination.

    The report asks about the tank itself; known existence is not dependent on a positive contamination test.

  • B. State that the soil is contaminated because every buried tank leaks.

    That invents a condition the facts do not establish.

  • D. State that the soil is clean because there is no test report.

    Absence of a test is not evidence of clean soil.

Check the rule: 765 ILCS 77/35: disclosure report.

Study this topicPSI broker outline IV.D

Illinois 23 of 40 · Illinois Real Estate License Act · ID state-c-13

A person holds both an Illinois broker license and an appraiser license. When preparing a BPO in the broker role, which license number must appear on the initial page under Rule 1450.790(a)?

  1. A. The broker license number.
  2. B. Only the appraiser license number because it is a pricing opinion.
  3. C. Only the sponsoring firm's federal tax number.
  4. D. No license number if the person holds both credentials.
Show answer and explanation

Correct answer: A. The broker license number.

Rule 1450.790(a) requires the broker or managing-broker name and license number, not the appraiser license number, on the initial page of a BPO or CMA. Identify the professional role used for this report.

Why the other choices miss the mark

  • B. Only the appraiser license number because it is a pricing opinion.

    The rule requires the brokerage credential for the BPO or CMA.

  • C. Only the sponsoring firm's federal tax number.

    A tax number does not replace the author's required professional identification.

  • D. No license number if the person holds both credentials.

    Holding both credentials does not waive the identification requirement.

Check the rule: 68 Ill. Adm. Code 1450.790: BPO and CMA license identification.

Study this topicPSI broker outline II.L

Illinois 24 of 40 · Licensing Requirements · ID state-c-03

A first-time broker receives a license 100 days before the next broker renewal deadline. Under Section 5-50(b), when must the broker complete the required 45-hour post-license education and course exams?

  1. A. Never; a license issued near renewal permanently waives post-license education.
  2. B. Within 30 days of issuance, regardless of the renewal dates.
  3. C. Only after the broker becomes a managing broker.
  4. D. Before the second broker renewal deadline after receiving the license.
Show answer and explanation

Correct answer: D. Before the second broker renewal deadline after receiving the license.

A first license issued within 180 days before the next broker renewal deadline qualifies for the statutory second-renewal timing exception for post-license education. This exception concerns education timing; it should not be read as permission to ignore other renewal obligations.

Why the other choices miss the mark

  • A. Never; a license issued near renewal permanently waives post-license education.

    The exception delays the education deadline; it does not eliminate the requirement.

  • B. Within 30 days of issuance, regardless of the renewal dates.

    That fixed 30-day deadline is not the rule in Section 5-50(b).

  • C. Only after the broker becomes a managing broker.

    The post-license requirement belongs to the initial broker license, not a future managing-broker application.

Check the rule: 225 ILCS 454/5-50: renewal and post-license education.

Study this topicPSI broker outline I.G

Illinois 25 of 40 · Additional Illinois Laws and Regulations · ID state-c-27

A parcel falls within a Plat Act exemption, but an Illinois registered surveyor nevertheless makes a plat of it. What does Section 1(c) require about that plat?

  1. A. It may never be recorded because the parcel is exempt.
  2. B. It must be destroyed before any deed can be signed.
  3. C. Only the broker's advertising brochure needs to show it.
  4. D. The plat must be recorded.
Show answer and explanation

Correct answer: D. The plat must be recorded.

Section 1(c) says that when a registered surveyor makes a plat of a parcel otherwise exempt under subsection (b), the plat must be recorded. An exemption from having to create a subdivision plat is different from the treatment of a plat that is actually made.

Why the other choices miss the mark

  • A. It may never be recorded because the parcel is exempt.

    The statute says the opposite when the stated plat is made.

  • B. It must be destroyed before any deed can be signed.

    The Act requires recording, not destruction of the plat.

  • C. Only the broker's advertising brochure needs to show it.

    Displaying a drawing in advertising is not recording the plat.

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

Study this topicPSI broker outline III.E

Illinois 26 of 40 · Illinois Real Estate License Act · ID state-c-14

A potential seller asks an Illinois broker for a written analysis to help choose a listing price. Assuming the report complies with Section 10-45, how should this use be classified?

  1. A. A permitted CMA or BPO purpose.
  2. B. Prohibited because no listing agreement has been signed yet.
  3. C. Permitted only if it is renamed a certified appraisal.
  4. D. Prohibited because every pricing analysis requires the broker to hold an appraiser license.
Show answer and explanation

Correct answer: A. A permitted CMA or BPO purpose.

Section 10-45(a) permits a BPO or CMA for an existing or potential seller. The report must meet the written-content requirements and cannot be represented as an appraisal. The mortgage-origination restriction does not ban ordinary listing-price analysis.

Why the other choices miss the mark

  • B. Prohibited because no listing agreement has been signed yet.

    The statute expressly includes potential sellers among permitted recipients.

  • C. Permitted only if it is renamed a certified appraisal.

    Renaming a CMA as an appraisal would misdescribe the service.

  • D. Prohibited because every pricing analysis requires the broker to hold an appraiser license.

    The statute permits a compliant BPO or CMA by a broker or managing broker for this purpose.

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

Study this topicPSI broker outline II.L

Illinois 27 of 40 · Disclosures · ID state-c-37

A seller first answered No to a report item in good faith. Before closing, new information shows that answer is incorrect. The seller says a correction would weaken the sale. What does Section 30 require?

  1. A. A written supplement correcting the earlier report.
  2. B. No correction if the original answer was made honestly.
  3. C. No correction unless the buyer first proves financial loss.
  4. D. A correction only after the deed has been delivered.
Show answer and explanation

Correct answer: A. A written supplement correcting the earlier report.

The duty to supplement follows the seller's awareness before closing that the earlier report is inaccurate, incomplete, or incorrect. Concern about the sale does not excuse withholding the correction.

Why the other choices miss the mark

  • B. No correction if the original answer was made honestly.

    An honest original answer does not eliminate the later duty triggered by new information.

  • C. No correction unless the buyer first proves financial loss.

    The pre-closing supplement is not conditioned on proof of damages.

  • D. A correction only after the deed has been delivered.

    The statute requires action on the new knowledge before closing.

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

Study this topicPSI broker outline IV.D

Illinois 28 of 40 · Additional Illinois Laws and Regulations · ID state-c-28

A 2026 residential lease requires rent through a third-party portal that adds a transaction fee, including for e-checks. Under Section 3.5, what must the landlord also allow?

  1. A. An allowed payment method that avoids that transaction fee.
  2. B. Only a different portal that charges the same fee.
  3. C. Only a waiver after the tenant pays the fee for twelve months.
  4. D. No alternative when the fee is collected by the portal rather than the landlord.
Show answer and explanation

Correct answer: A. An allowed payment method that avoids that transaction fee.

Section 3.5 requires an alternative such as delivering a paper check or cash, or another means that avoids the portal charge. The landlord cannot make the fee-bearing portal the tenant's only payment route for this covered agreement.

Why the other choices miss the mark

  • B. Only a different portal that charges the same fee.

    That does not provide a means to avoid the transaction fee.

  • C. Only a waiver after the tenant pays the fee for twelve months.

    The statute does not impose that waiting period before a fee-free option.

  • D. No alternative when the fee is collected by the portal rather than the landlord.

    Third-party portal charges are the express subject of the provision.

Check the rule: 765 ILCS 705/3.5: rental payment portals.

Study this topicPSI broker outline III.I

Illinois 29 of 40 · Illinois Real Estate License Act · ID state-c-15

All required principals give the sponsoring broker matching written directions to return earnest money before closing. The broker receives the last required direction on Wednesday; Thursday is a business day. What is the ordinary deadline for this authorized disbursement?

  1. A. The broker may wait until the scheduled closing regardless of the directions.
  2. B. The broker must wait 30 days for objections in every case.
  3. C. No later than Thursday, the next business day.
  4. D. The broker may choose any date before license renewal.
Show answer and explanation

Correct answer: C. No later than Thursday, the next business day.

Rule 1450.750(g)(6) requires disbursement according to the written directions no later than the next business day after receiving the last required direction. This question assumes the required principals agree; it is not an unresolved dispute.

Why the other choices miss the mark

  • A. The broker may wait until the scheduled closing regardless of the directions.

    The rule requires the authorized earlier disbursement within the specified time.

  • B. The broker must wait 30 days for objections in every case.

    This is agreed written direction, not a universally required 30-day notice process.

  • D. The broker may choose any date before license renewal.

    Renewal timing is unrelated to the escrow disbursement deadline.

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

Study this topicPSI broker outline II.I

Illinois 30 of 40 · Disclosures · ID state-c-38

A covered Illinois seller has never tested for radon and has no known elevated-radon records. Under the Radon Awareness Act alone, what is the correct distinction?

  1. A. No test means the seller may certify that the home is radon free.
  2. B. Required information and disclosures still apply, but the Act does not itself require a new test or mitigation.
  3. C. The Act always requires the seller to install an active mitigation system before listing.
  4. D. No test means none of the prescribed radon materials is required.
Show answer and explanation

Correct answer: B. Required information and disclosures still apply, but the Act does not itself require a new test or mitigation.

The Act separates disclosure from mandatory testing or remediation. A seller must provide the required information for a covered transaction and accurately disclose what is known. Having no test is not a reason to invent a safe result or withhold the prescribed materials.

Why the other choices miss the mark

  • A. No test means the seller may certify that the home is radon free.

    No measurement does not establish a radon-free condition.

  • C. The Act always requires the seller to install an active mitigation system before listing.

    The Act does not itself impose that universal testing or mitigation prerequisite.

  • D. No test means none of the prescribed radon materials is required.

    Lack of test records does not erase the applicable information and disclosure requirements.

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

Study this topicPSI broker outline IV.E

Illinois 31 of 40 · Illinois Real Estate License Act · ID state-c-16

A broker deposits client earnest money into the firm's operating account so it can temporarily cover rent, intending to replace it next week. What is the central problem?

  1. A. There is no problem if the balance is restored before closing.
  2. B. Entrusted client funds are being mixed with and used as business funds.
  3. C. There is no problem if the broker owns the brokerage entity.
  4. D. The only problem is failing to earn interest for the buyer.
Show answer and explanation

Correct answer: B. Entrusted client funds are being mixed with and used as business funds.

Section 20-20 prohibits commingling and failure to maintain entrusted escrow separately. An intention to replace the money does not authorize using it for operating expenses. Client money must be handled under the escrow requirements.

Why the other choices miss the mark

  • A. There is no problem if the balance is restored before closing.

    Later replacement does not cure improper mixing and use of entrusted money.

  • C. There is no problem if the broker owns the brokerage entity.

    Ownership of the business does not make client funds the broker's property.

  • D. The only problem is failing to earn interest for the buyer.

    The immediate issue is misuse and commingling of escrow, not investment return.

Check the rule: 225 ILCS 454/20-20: grounds for discipline; 68 Ill. Adm. Code 1450.750: escrow money.

Study this topicPSI broker outline II.I

Illinois 32 of 40 · Additional Illinois Laws and Regulations · ID state-c-29

A new Illinois home has the required passive radon-resistant construction. A broker says this replaces all applicable radon disclosure duties when the home is sold. What is wrong with that conclusion?

  1. A. Nothing; a passive system automatically proves that no radon can enter.
  2. B. Nothing; a building contractor may waive any future disclosure for the seller.
  3. C. Construction requirements and applicable sale disclosures are separate.
  4. D. Only that the buyer must remove the passive system before signing.
Show answer and explanation

Correct answer: C. Construction requirements and applicable sale disclosures are separate.

The Radon Resistant Construction Act addresses construction features. The Radon Awareness Act addresses information and disclosures for covered transactions. Installing a passive system is not, by itself, an exemption from otherwise applicable sale disclosures.

Why the other choices miss the mark

  • A. Nothing; a passive system automatically proves that no radon can enter.

    The installation does not establish that absolute factual guarantee.

  • B. Nothing; a building contractor may waive any future disclosure for the seller.

    The contractor cannot create a blanket waiver of statutory sale duties.

  • D. Only that the buyer must remove the passive system before signing.

    No such removal requirement follows from these laws.

Check the rule: 420 ILCS 52/20: passive radon construction; 420 ILCS 46/10: radon disclosure.

Study this topicPSI broker outline III.K

Illinois 33 of 40 · Licensing Requirements · ID state-c-04

A broker gives an unlicensed assistant a lockbox code and asks the assistant to show a rental to a prospect. Does access to the property authorize the showing?

  1. A. No. An unlicensed assistant may not show property.
  2. B. Yes, if the assistant avoids discussing the lease terms.
  3. C. Yes, because the broker's lockbox permission acts as a temporary license.
  4. D. Yes, if the prospect signs a waiver before the visit.
Show answer and explanation

Correct answer: A. No. An unlicensed assistant may not show property.

Rule 1450.740 distinguishes administrative access tasks from licensed activity. Having keys made or obtaining entry codes can be permitted, but taking a prospect through the property as a showing is prohibited for an unlicensed assistant.

Why the other choices miss the mark

  • B. Yes, if the assistant avoids discussing the lease terms.

    The prohibition on showing property does not depend on discussing terms.

  • C. Yes, because the broker's lockbox permission acts as a temporary license.

    Access authorization is not professional licensure.

  • D. Yes, if the prospect signs a waiver before the visit.

    A prospect's waiver cannot authorize prohibited unlicensed activity.

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

Study this topicPSI broker outline I.C

Illinois 34 of 40 · Disclosures · ID state-c-39

A nonexempt 1970 home is sold as is. Does the as-is wording eliminate the required federal lead disclosures?

  1. A. No. The covered transaction still requires the lead disclosures.
  2. B. Yes, because as-is language is a universal federal disclosure waiver.
  3. C. Yes, if the buyer plans to repaint immediately.
  4. D. Yes, if the house is priced below its appraised value.
Show answer and explanation

Correct answer: A. No. The covered transaction still requires the lead disclosures.

The federal rule applies to most pre-1978 housing, subject to its specific exemptions. An as-is contract clause alone is not one of those exemptions and does not replace the required disclosures, pamphlet, and applicable purchase inspection opportunity.

Why the other choices miss the mark

  • B. Yes, because as-is language is a universal federal disclosure waiver.

    The phrase does not provide a blanket exemption from the federal lead rule.

  • C. Yes, if the buyer plans to repaint immediately.

    The buyer's renovation plans do not remove the covered transaction's requirements.

  • D. Yes, if the house is priced below its appraised value.

    A discount is not a substitute for mandatory lead disclosure.

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

Study this topicPSI broker outline IV.E

Illinois 35 of 40 · Illinois Real Estate License Act · ID state-c-17

An unlicensed assistant receives a buyer's question about whether an inspection clause allows cancellation. What should the assistant do?

  1. A. Interpret the clause if the assistant has seen it used before.
  2. B. Answer from memory if no fee is charged for the response.
  3. C. Tell the buyer that every inspection clause provides an unconditional cancellation right.
  4. D. Refer the interpretation question to the supervising licensee.
Show answer and explanation

Correct answer: D. Refer the interpretation question to the supervising licensee.

An assistant may handle administrative inquiries but may not explain or interpret contracts. Passing the question to an appropriate licensee respects that boundary. The licensee should involve legal counsel when the issue requires legal advice.

Why the other choices miss the mark

  • A. Interpret the clause if the assistant has seen it used before.

    Experience with a form does not authorize an unlicensed assistant to interpret it.

  • B. Answer from memory if no fee is charged for the response.

    A separate fee is not required for the prohibited interpretation to be outside the assistant role.

  • C. Tell the buyer that every inspection clause provides an unconditional cancellation right.

    That both interprets the contract and makes an unsupported universal claim.

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

Study this topicPSI broker outline II.G

Illinois 36 of 40 · Additional Illinois Laws and Regulations · ID state-c-30

A broker is owed a commission on an ordinary noncommercial residential sale and proposes recording a commission lien against the home. Which distinction matters?

  1. A. The commercial broker lien remedy does not authorize this residential commission lien.
  2. B. Every unpaid brokerage fee creates the same lien on every type of property.
  3. C. Calling the document a notice instead of a lien always makes it lawful.
  4. D. The lien becomes lawful if the homeowner refuses to answer the broker's calls.
Show answer and explanation

Correct answer: A. The commercial broker lien remedy does not authorize this residential commission lien.

Section 20-20(a)(47) identifies recording compensation-related liens or instruments on noncommercial residential property as a disciplinary ground. The Commercial Real Estate Broker Lien Act should not be applied to an ordinary residential commission dispute.

Why the other choices miss the mark

  • B. Every unpaid brokerage fee creates the same lien on every type of property.

    That erases the commercial limitation and the express residential disciplinary provision.

  • C. Calling the document a notice instead of a lien always makes it lawful.

    Section 20-20 also addresses compensation-related recorded written instruments, not just a title label.

  • D. The lien becomes lawful if the homeowner refuses to answer the broker's calls.

    Lack of response does not create a statutory residential commission lien.

Check the rule: 225 ILCS 454/20-20: grounds for discipline; 770 ILCS 15/10: commercial broker liens.

Study this topicPSI broker outline III.J

Illinois 37 of 40 · Disclosures · ID state-c-40

An owner received a mine subsidence insurance payment and repaired the property. The owner now signs an agreement to sell it. No disclosure waiver applies. Does the repair alone remove the mine subsidence disclosure duty?

  1. A. Yes, because all paid claims disappear from disclosure duties after repair.
  2. B. Yes, provided the seller changes insurers before the transfer.
  3. C. Yes, if no broker is involved in the transfer.
  4. D. No. The claim paid to this owner still must be disclosed.
Show answer and explanation

Correct answer: D. No. The claim paid to this owner still must be disclosed.

Section 3 concerns claims paid to the transferor. With no waiver, this owner must disclose the paid claim to the transferee and lender at the transfer agreement, as part of that written agreement. Repairs alone do not remove the duty.

Why the other choices miss the mark

  • A. Yes, because all paid claims disappear from disclosure duties after repair.

    The statute does not provide that repair-based exception to the paid-claim disclosure.

  • B. Yes, provided the seller changes insurers before the transfer.

    A change of insurer does not change the property's paid-claim history.

  • C. Yes, if no broker is involved in the transfer.

    The owner-transfer disclosure duty is not conditioned on employing a broker.

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

Study this topicPSI broker outline IV.E

Illinois 38 of 40 · Illinois Real Estate License Act · ID state-c-18

A licensee knows a buyer has an exclusive brokerage agreement with another broker. Without that broker's specific authorization, the licensee directly negotiates a purchase with the buyer. Which provision is implicated?

  1. A. There is no restriction because the buyer initiated a conversation.
  2. B. Only a written complaint from the other broker can make the conduct improper.
  3. C. The restriction on direct negotiation with a person known to be exclusively represented.
  4. D. The restriction disappears if the new licensee charges less.
Show answer and explanation

Correct answer: C. The restriction on direct negotiation with a person known to be exclusively represented.

Section 20-20(a)(33) makes this a disciplinary ground unless the other broker specifically authorizes it. Do not confuse direct transaction negotiation with a rule-permitted discussion of a possible future brokerage agreement.

Why the other choices miss the mark

  • A. There is no restriction because the buyer initiated a conversation.

    Consumer-initiated discussion of a future agreement is a different issue from the direct transaction negotiation described here.

  • B. Only a written complaint from the other broker can make the conduct improper.

    The statutory restriction is not created by the later filing of a complaint.

  • D. The restriction disappears if the new licensee charges less.

    A lower fee does not supply the required authorization.

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

Study this topicPSI broker outline II.F

Illinois 39 of 40 · Illinois Real Estate License Act · ID state-c-19

An Illinois licensee is also an attorney. The licensee acts as the buyer's broker in a sale and proposes also serving as the seller's attorney in that same transaction. How does Section 20-20(a)(34) treat this?

  1. A. It is allowed if each side pays a separate invoice.
  2. B. It is allowed because the attorney client is on the opposite side.
  3. C. It is allowed if the legal work begins after the brokerage work is finished.
  4. D. It is a ground for discipline.
Show answer and explanation

Correct answer: D. It is a ground for discipline.

The Act bars a licensee who is also an attorney from acting as attorney for either buyer or seller in the same transaction in which the licensee acts or has acted as broker or managing broker. Holding two credentials does not permit this combination.

Why the other choices miss the mark

  • A. It is allowed if each side pays a separate invoice.

    Separate billing does not remove the same-transaction prohibition.

  • B. It is allowed because the attorney client is on the opposite side.

    The prohibition refers to acting as attorney for either buyer or seller.

  • C. It is allowed if the legal work begins after the brokerage work is finished.

    The statute also covers a transaction in which the licensee has acted as broker.

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

Study this topicPSI broker outline II.K

Illinois 40 of 40 · Illinois Real Estate License Act · ID state-c-20

An Illinois buyer brokerage agreement runs for more than one year. What duration safeguard does Rule 1450.770(c)(5) require for that longer term?

  1. A. A right to terminate annually with 30 days' prior written notice.
  2. B. A right to terminate only after ten years.
  3. C. No termination right if the compensation amount is clearly stated.
  4. D. A right for only the broker, never the buyer, to end the agreement.
Show answer and explanation

Correct answer: A. A right to terminate annually with 30 days' prior written notice.

The rule requires the agreement's duration, including an automatic expiration date or, for a term longer than one year, the right to terminate annually with 30 days' prior written notice. A longer term is not permission to bind the buyer indefinitely without the specified exit.

Why the other choices miss the mark

  • B. A right to terminate only after ten years.

    That does not provide the required annual termination right.

  • C. No termination right if the compensation amount is clearly stated.

    Clear compensation terms do not replace the separate duration safeguard.

  • D. A right for only the broker, never the buyer, to end the agreement.

    That would omit the required termination protection in the buyer agreement.

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

Study this topicPSI broker outline II.D

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Sources and review

Content cutoff: September 6, 2026. Sources checked: September 7, 2026. The question distribution follows the June 24, 2026 PSI Illinois Candidate Information Booklet. Each explanation links to its source. DRE chapters cited for national concepts are general educational references, not statements of Illinois law. Illinois-specific rules appear with Illinois sources.

Original practice questions from Pass Illinois, independent of PSI and IDFPR. No actual exam questions, expert-approval claim, or guaranteed exam result. For an issue, send us the form and question ID.