Free practice test
California Real Estate Law Practice Test
25 questions on the California statutes and rules section only: the part of the exam generic national prep covers least. Every question shows its answer and explanation. No sign-up.
California exam facts
- Questions
- 150 multiple choice
- Time
- 3 hours
- Passing score
- 70% correct
Verified against Taking the Exam (California Department of Real Estate).
Question 1 of 25
A seller argues that a signed purchase bargain lacks consideration because the earnest-money deposit is due tomorrow and has not yet been delivered. The buyer has promised to pay and the seller has promised to convey. Which fact most directly answers the argument?
Reveal answer
Correct answer: The exchanged promises can supply consideration before the deposit is delivered
The exchange of promises can supply consideration now. A deposit is not the only possible consideration, and its later due date does not erase those promises.
From the free practice set Elements of a valid contract and contractual capacity
Question 2 of 25
A cabinet lifts out without damage but is custom-shaped for a unique recess and was installed to complete the room permanently. No agreement addresses it. What is the best analysis?
Reveal answer
Correct answer: Easy removal favors personal-property treatment, but adaptation and objective intention also must be weighed
The facts point in different directions. Fixture analysis weighs attachment alongside adaptability and intention rather than making any isolated fact conclusive.
From the free practice set Real and personal property, fixtures, and trade fixtures
Question 3 of 25
A $200,000 loan bears 6% annual interest. For the first month use the annual rate divided by 12. A $1,300 payment covers principal and interest, with no fees. What balance remains after that payment?
Reveal answer
Correct answer: $199,700
Monthly interest is $200,000 × 0.06 ÷ 12 = $1,000. Principal paid is $1,300 − $1,000 = $300. Remaining balance is $200,000 − $300 = $199,700.
From the free practice set General financing concepts: interest, amortization, points, and loan-to-value
Question 4 of 25
In California, to whom does a seller's agent acting for the seller only owe the fiduciary duty of utmost care, integrity, honesty, and loyalty?
Reveal answer
Correct answer: The seller
California's disclosure form identifies those fiduciary duties as owed by the seller's agent to the seller, while also specifying duties to both buyer and seller.
From the free practice set Agency defined: principal, agent, third party, general and special agents
Question 5 of 25
Two competent owners freely exchange promises for a lawful purpose and satisfy the required writing rule. One reviewer rejects the agreement solely because the properties have unequal values. Which assessment is best?
Reveal answer
Correct answer: The stated value difference does not itself defeat the bargained-for consideration
A difference in economic value does not itself defeat consideration. The inquiry is whether legal value was bargained for, and a writing does not replace that inquiry.
From the free practice set Elements of a valid contract and contractual capacity
Question 6 of 25
A trust account contains enough cash in total, but Client A's ledger is negative because A's payment was funded using money belonging to Client B. What is the best conclusion?
Reveal answer
Correct answer: The aggregate balance conceals an unauthorized use of Client B's funds.
An adequate aggregate bank balance does not establish that each beneficiary's money is intact. One client's funds cannot be treated as an unauthorized reserve for another client's shortfall.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 7 of 25
Under California's general broker placement rule, which receipt starts the placement clock if a salesperson receives funds before the broker does?
Reveal answer
Correct answer: The salesperson's receipt on the broker's behalf.
Section 2832 measures the general placement period from receipt by the broker or the broker's salesperson. An internal handoff cannot restart it.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 8 of 25
Removing a wall-mounted cabinet would tear out wall sections. Which fixture test does this fact most directly address?
Reveal answer
Correct answer: Method of attachment
Damage caused by removal is direct evidence about method of attachment. It describes the physical connection to the building.
From the free practice set Real and personal property, fixtures, and trade fixtures
Question 9 of 25
In California, a broker represents a buyer only, but the seller pays the broker's compensation by agreement. Whom does that broker represent?
Reveal answer
Correct answer: The buyer
California allows a buyer's agent to receive compensation from the seller while remaining the buyer's agent.
From the free practice set Agency defined: principal, agent, third party, general and special agents
Question 10 of 25
An owner hires a broker solely to locate a tenant for one vacant suite. The broker will have no ongoing management duties. Which classification best fits?
Reveal answer
Correct answer: Special agent for the leasing assignment
Locating a tenant for one suite is a particular undertaking rather than continuing management authority.
From the free practice set Agency defined: principal, agent, third party, general and special agents
Question 11 of 25
A California broker holds an ordinary buyer deposit with no earned broker portion. The broker proposes using it for payroll and replacing it before closing. Which conclusion follows from the trust-fund rule?
Reveal answer
Correct answer: The deposit must remain in authorized trust custody until disbursement under instructions from the person entitled to it.
Client trust funds are not temporary operating capital. California requires funds deposited in trust to remain there until properly disbursed on the entitled person's instructions.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 12 of 25
In California, a seller's broker presents a buyer's offer. The buyer has a separate broker. The seller argues that presenting the offer means the listing broker now represents the buyer too. Which analysis is best?
Reveal answer
Correct answer: Communicating with the buyer's side can carry out the seller's agency without establishing buyer representation
An agent acts for a principal in dealings with third parties. Communication with the buyer's side does not by itself establish California dual agency, which involves representation of both sides with knowledge and consent.
From the free practice set Agency defined: principal, agent, third party, general and special agents
Question 13 of 25
Which fact most directly distinguishes a potential trade fixture from an ordinary movable business possession?
Reveal answer
Correct answer: A tenant installed the item in leased premises to conduct the tenant's business
Trade-fixture analysis focuses on a tenant's installation for business use. Inventory treatment, resale value, and supplier identity do not establish that relationship to the premises.
From the free practice set Real and personal property, fixtures, and trade fixtures
Question 14 of 25
A California broker receives money for an owner and immediately places it into that owner's hands as authorized. The broker says a separate deposit into the broker's trust account was unnecessary. Which statement is correct?
Reveal answer
Correct answer: Delivery to the owner is an authorized placement route under the general rule.
Section 2832(a) recognizes placement into the owner's hands, neutral escrow, or a properly titled broker trust account. The broker's account is not a mandatory intermediate stop for every receipt.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 15 of 25
Two quotes have the same loan amount, note rate, term, and payment schedule, but one requires substantially higher upfront finance charges. What is the strongest conclusion?
Reveal answer
Correct answer: Matching note rates do not establish equal borrowing costs; compare charges and APR.
The note rate alone does not account for upfront finance charges. APR and the charges help compare credit costs when other loan terms match.
From the free practice set General financing concepts: interest, amortization, points, and loan-to-value
Question 16 of 25
Which statement best distinguishes commingling from conversion in trust-fund handling?
Reveal answer
Correct answer: Commingling mixes client and broker money; conversion uses another person's money without authority.
The distinction is mixing versus unauthorized use. The terms do not depend on the payment instrument or simply describe delays.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 17 of 25
Which list identifies the four essential elements of a valid contract?
Reveal answer
Correct answer: Competent parties, mutual consent, lawful object, and consideration
The four essentials are competent parties, mutual consent, a lawful object, and consideration. Formalities and transaction steps do not replace those elements.
From the free practice set Elements of a valid contract and contractual capacity
Question 18 of 25
Which assignment is the clearest example of general agency?
Reveal answer
Correct answer: Continuing operation of rental units, including leasing, rent collection, and repair arrangements
General agency involves continuing transactions within a business activity, as in ongoing rental management.
From the free practice set Agency defined: principal, agent, third party, general and special agents
Question 19 of 25
Under California regulation section 2835(a), which broker-owned deposit falls within the bank-charge exception to commingling?
Reveal answer
Correct answer: Reasonably sufficient funds, not exceeding $200, for bank service charges or fees against the account.
The exception is limited by both purpose and amount: reasonably sufficient funds up to $200 for account service charges or fees. It is not a general operating or shortage reserve.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 20 of 25
A California broker explains an interest-bearing trust arrangement but says nothing about who pays service charges or possible withdrawal penalties. Which assessment is best?
Reveal answer
Correct answer: Required account disclosures include service-charge responsibility and possible withdrawal notice requirements or penalties.
Section 10145(d)(4) requires disclosures about account nature, interest, service charges and who pays them, and possible withdrawal notice requirements or penalties.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 21 of 25
Which interest does a lender’s title insurance policy principally protect?
Reveal answer
Correct answer: The lender’s insured security interest and lien priority
A loan policy protects the lender’s insured interest in the collateral and its lien priority under the policy.
From the free practice set Title insurance: preliminary reports and CLTA and ALTA policies
Question 22 of 25
A broker was hired to find a buyer for one building. The owner later gives the broker continuing authority to operate the owner's rentals, collect rents, and arrange repairs. What most clearly explains the new general-agency role?
Reveal answer
Correct answer: The new authorization covers a continuing rental business activity
The expanded grant of continuing operating authority, not duration or familiarity, explains the general-agency role.
From the free practice set Agency defined: principal, agent, third party, general and special agents
Question 23 of 25
A California broker receives two separate payments: one for the principal and one for the broker's earned fee. The broker deposits both in trust and invokes the mixed-payment exception. Which fact defeats that explanation?
Reveal answer
Correct answer: The funds are already separated, so separation before deposit is reasonably practicable.
Section 2835(b) addresses funds that cannot reasonably practicably be separated before deposit. Two already separate payments do not satisfy that condition merely because they arise from one transaction.
From the free practice set Trust funds: handling deposits, trust accounts, and commingling
Question 24 of 25
A loan has level scheduled payments and a balloon due at maturity. A salesperson says the balloon proves the loan has negative amortization. What is the best response?
Reveal answer
Correct answer: Incorrect; a balloon can remain after partial principal repayment without any capitalized interest.
A balloon identifies a remaining amount due at maturity, not how the balance developed. Partial amortization can leave a balloon while reducing principal; negative amortization specifically adds unpaid interest to principal.
From the free practice set General financing concepts: interest, amortization, points, and loan-to-value
Question 25 of 25
A buyer's promise to pay is exchanged for a seller's promise to convey. The parties are competent, genuinely agree, and pursue a lawful purpose. What should a reviewer still check before concluding the agreement is enforceable?
Reveal answer
Correct answer: Whether applicable enforcement formalities, such as a required writing, are satisfied
The facts address the four essentials, but required formalities can still affect enforcement. Prior experience, equal value, and completed payment are not substitutes for that check.
From the free practice set Elements of a valid contract and contractual capacity
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How this test is built
Questions are drawn from the 280 free practice questions for California, one free practice set per exam module. Each module gets questions in proportion to its share of the state law section. The test only changes when the course content is updated.
| Module | Share of exam | Questions here |
|---|---|---|
| 1. Property ownership and land use controls and regulations Free practice: Real and personal property, fixtures, and trade fixtures | 12% | 3 |
| 2. Laws of agency and fiduciary duties Free practice: Agency defined: principal, agent, third party, general and special agents | 19% | 6 |
| 4. Financing Free practice: General financing concepts: interest, amortization, points, and loan-to-value | 9% | 3 |
| 5. Transfer of property Free practice: Title insurance: preliminary reports and CLTA and ALTA policies | 4% | 1 |
| 6. Practice of real estate and disclosures (includes specialty areas) Free practice: Trust funds: handling deposits, trust accounts, and commingling | 28% | 8 |
| 7. Contracts Free practice: Elements of a valid contract and contractual capacity | 13% | 4 |