39 California State Law (DRE) Practice Questions & Answers
Every California State Law (DRE) practice question from the Real Estate License Practice Test, with the correct answer and a short explanation.
Start practice test →1. A licensed salesperson closes a deal and the grateful seller wants to hand the salesperson a cash bonus directly. Under California Real Estate Law, how may the salesperson lawfully be paid?
- A.From the escrow company as an independent contractor
- B.Only through the employing broker under their written agreement✓ Answer
- C.Directly from the buyer's lender at closing
- D.Directly from the seller since the seller chose to pay
A salesperson may only accept compensation from their employing broker, never directly from a principal or third party, because a salesperson acts solely under the broker's supervision pursuant to a written employment agreement and cannot operate independently.
Source: B&P Code §10137 (salesperson compensation only through employing broker)Report a problem with this question
2. A buyer hands a salesperson a $10,000 good-faith deposit check on a Monday. The broker's policy is to place such funds into a neutral escrow depository. Absent contrary written instructions, by when must the funds be deposited?
- A.Within five business days
- B.No later than three business days after receipt✓ Answer
- C.Within 24 hours
- D.By the end of the calendar month
Trust funds received on behalf of others must be placed into a neutral escrow depository, into the hands of the principal, or into a trust account no later than three business days after receipt, ensuring client money is not held improperly.
Source: Commissioner's Regulations 2832 (trust fund handling within 3 business days)Report a problem with this question
3. A broker uses $2,000 from the trust account to cover the office rent, intending to replace it after the next commission arrives. How is this act best characterized?
- A.Reconciliation of the trust account
- B.Commingling only, which is permitted short-term
- C.A permissible advance against future commissions
- D.Conversion — an unlawful use of clients' funds✓ Answer
Actually spending clients' trust funds for the broker's own purposes is conversion, which is more serious than commingling (merely mixing funds); both are prohibited, but conversion involves using the money and can lead to license revocation.
Source: B&P Code §10176(e) / Reg 2832.1 (commingling and conversion of trust funds)Report a problem with this question
4. A DRE audit reviews a broker's trust account handling. Which pair of requirements is correct?
- A.Reconcile the trust account at least monthly; retain records for three years✓ Answer
- B.Reconcile only at year-end; retain records permanently
- C.Reconcile annually; retain records for seven years
- D.Reconcile weekly; retain records for one year
A broker must reconcile the trust account with the separate record of each beneficiary at least once a month, and must retain trust-fund records for three years, so the DRE can verify no client funds were mishandled.
Source: Commissioner's Regulations 2831.2 (monthly reconciliation) & B&P §10148 (3-year retention)Report a problem with this question
5. A California homeowner alleges a lender refused a mortgage based on the racial makeup of the neighborhood. Which California statute most directly addresses discrimination in lending?
- A.The Alquist-Priolo Act
- B.The Unruh Civil Rights Act
- C.The Holden Act (Housing Financial Discrimination Act)✓ Answer
- D.The Subdivided Lands Act
The Holden Act specifically prohibits discrimination in real estate lending (including redlining based on neighborhood characteristics), while Unruh covers business establishments and Alquist-Priolo concerns earthquake fault zones.
Source: CA Health & Safety Code §35800 et seq. (Holden Act / Housing Financial Discrimination Act of 1977)Report a problem with this question
6. A restaurant owner refuses service to a customer because of the customer's religion. Which California law is designed to prohibit this discrimination by a business establishment?
- A.The Easton disclosure rule
- B.The Unruh Civil Rights Act✓ Answer
- C.The Holden Act
- D.The Rumford Fair Housing Act (FEHA)
The Unruh Civil Rights Act bars discrimination by all business establishments in California, whereas the Rumford Act/FEHA targets housing specifically and the Holden Act targets lending.
Source: CA Civil Code §51 (Unruh Civil Rights Act — business establishments)Report a problem with this question
7. A three-unit residential property is being sold at a trustee's sale following foreclosure. Is a Transfer Disclosure Statement (TDS) required?
- A.Yes — all residential transfers require a TDS with no exceptions
- B.No — transfers by a trustee's/foreclosure sale are exempt from the TDS✓ Answer
- C.No — because the property has more than two units
- D.Yes — but only if the buyer requests it in writing
The TDS is required on sales of one-to-four residential units, but transfers by a trustee/foreclosure sale (and by probate, court order, etc.) are specifically exempt because the seller lacks personal knowledge of the property's condition.
Source: CA Civil Code §1102.2 (TDS exemptions — foreclosure/trustee sale)Report a problem with this question
8. Under the doctrine established by Easton v. Strassburger, what duty does a listing broker owe when selling a one-to-four unit residential property?
- A.To conduct a reasonably competent and diligent visual inspection of accessible areas and disclose findings✓ Answer
- B.To hire a licensed engineer to certify the structure
- C.To guarantee the property is free of all defects
- D.To inspect only if the buyer pays for the inspection
Easton v. Strassburger imposed a duty on the broker to perform a reasonably competent and diligent visual inspection of accessible areas and disclose material facts to the buyer; it does not require expert certification or a defect guarantee.
Source: Easton v. Strassburger (1984); codified in CA Civil Code §2079Report a problem with this question
9. The DRE Commissioner initiates a formal disciplinary proceeding against a currently licensed broker for a violation. What is this document called?
- A.A Notice of Default
- B.A Statement of Issues
- C.A Desist and Refrain Order
- D.An Accusation✓ Answer
An Accusation is filed against an existing licensee to begin disciplinary action, whereas a Statement of Issues is used against an applicant for a license; distinguishing the two is a common exam point.
Source: CA Government Code §11503 (Accusation) / §11504 (Statement of Issues); B&P §10100Report a problem with this question
10. An agent tells homeowners that minority families are moving into the area and that they should sell now before values drop. What prohibited practice is this?
- A.Blockbusting (panic peddling)✓ Answer
- B.Puffing
- C.Redlining
- D.Steering
Blockbusting (panic peddling) is inducing owners to sell by exploiting fears about the entry of a protected class into the neighborhood; steering directs buyers toward or away from areas, and redlining is a lending refusal.
Source: Federal Fair Housing Act (42 U.S.C. §3604) — prohibition on blockbustingReport a problem with this question
11. A listing agent is bound by fiduciary duties to the seller summarized by the acronym ACOLD. Which set correctly lists these duties?
- A.Accountability, Care, Obedience, Loyalty, Disclosure✓ Answer
- B.Appraisal, Contract, Option, Loan, Deposit
- C.Acceptance, Consideration, Offer, Lease, Deed
- D.Advertising, Cost, Ownership, Location, Design
The fiduciary duties owed to a principal are Accountability, Care, Obedience, Loyalty, and Disclosure (ACOLD), which include not making secret profits and accounting for all funds on demand.
Source: CA Civil Code §2079.16 (agency duties); common law fiduciary dutiesReport a problem with this question
12. An agent lawfully represents both buyer and seller as a disclosed dual agent. The seller privately tells the agent she will accept far less than list price. What may the agent do with that information?
- A.Tell the buyer, since the agent also represents the buyer
- B.Keep it confidential — a dual agent may not disclose either party's bottom-line price✓ Answer
- C.Use it to negotiate a higher commission
- D.Disclose it only if the buyer directly asks
Even in a lawful disclosed dual agency, the agent may not reveal either party's confidential bottom-line price or motivation without permission, because doing so would breach the duty of confidentiality owed to that party.
Source: CA Civil Code §2079.21 (dual agent may not disclose price without consent)Report a problem with this question
13. California's statutory agency disclosure requires three steps in a specific order. What is the correct sequence?
- A.Elect, Disclose, Confirm
- B.Disclose, Confirm, Elect
- C.Disclose, Elect, Confirm✓ Answer
- D.Confirm, Elect, Disclose
The agent must first Disclose the agency relationship options (as soon as practicable), then Elect the actual relationship, then Confirm it in the purchase contract, so all parties understand who represents whom.
Source: CA Civil Code §2079.14–2079.17 (agency disclosure: disclose, elect, confirm)Report a problem with this question
14. An owner hires a property manager to handle ongoing leasing, maintenance, and rent collection for an apartment building over several years. What type of agent is the property manager?
- A.A gratuitous agent
- B.A special agent
- C.A general agent✓ Answer
- D.A dual agent
A property manager is a general agent because they handle ongoing, continuous transactions on the principal's behalf, unlike a listing agent who is a special agent for a single transaction.
Source: CA Civil Code §2295–2300 (classification of agents; general vs special)Report a problem with this question
15. A person signs a contract on behalf of an owner without prior authority. The owner later learns of it and accepts the benefits of the deal. How was the agency created?
- A.By necessity
- B.By ratification✓ Answer
- C.By express written agreement
- D.By estoppel
Ratification creates an agency after the fact when a principal accepts or approves an act that was performed without prior authority, effectively adopting the agent's unauthorized conduct.
Source: CA Civil Code §2307 (agency by ratification)Report a problem with this question
16. An agent secretly represents both parties in a sale without disclosing the dual relationship. When it is discovered, what is a likely consequence for the agent?
- A.Automatic conversion to a single-agency arrangement
- B.Forfeiture of commission plus possible rescission and discipline✓ Answer
- C.Nothing, provided the deal closed successfully
- D.A reduced commission of half the normal amount
Undisclosed dual agency is a serious breach of fiduciary duty; the agent can forfeit the entire commission, the injured party may rescind the transaction, and the DRE may impose discipline.
Source: CA Civil Code §2079.24; B&P §10176(d) (undisclosed dual agency)Report a problem with this question
17. A principal, by their words and conduct, leads a third party to reasonably believe a person is their agent, though no formal authority was granted. What kind of authority does the agent have?
- A.Ostensible (apparent) authority✓ Answer
- B.Actual express authority
- C.Universal authority
- D.Statutory authority
Ostensible (apparent) authority arises when a principal's conduct causes a third party to reasonably believe someone is the principal's agent; this can create agency by estoppel even without express authority.
Source: CA Civil Code §2300 & §2317 (ostensible authority)Report a problem with this question
18. Two unmarried siblings take title as joint tenants. One sibling dies leaving a will devising her share to a friend. What happens to her interest?
- A.It passes to the friend named in the will
- B.It passes automatically to the surviving joint tenant by right of survivorship, not to the friend✓ Answer
- C.It is divided equally between the friend and the surviving sibling
- D.It escheats to the state
Joint tenancy carries the right of survivorship, so a deceased joint tenant's interest passes automatically to the surviving joint tenant and cannot be transferred by will, avoiding probate.
Source: CA Civil Code §683 (joint tenancy — right of survivorship)Report a problem with this question
19. A grantor conveys property 'to A for life, then to B.' What future interest does B hold?
- A.A fee simple defeasible
- B.A reversion
- C.A reversion to the grantor's heirs
- D.A remainder✓ Answer
When a life estate is followed by an interest granted to a named third party (B), that interest is a remainder; if the property instead returned to the grantor, it would be a reversion.
Source: CA Civil Code §767–768 (remainders and reversions)Report a problem with this question
20. A person dies owning California real property with no will and no locatable heirs. Under which government power does the property pass to the state?
- A.Escheat✓ Answer
- B.Police power
- C.Eminent domain
- D.Taxation
Escheat is the government power by which property of a person who dies intestate with no heirs passes to the state; the four government powers are recalled by PETE (Police power, Eminent domain, Taxation, Escheat).
Source: CA Probate Code §6800 et seq. (escheat to the state)Report a problem with this question
21. A court must decide whether a built-in bookshelf is a fixture. Under the MARIA test, which single factor is generally given the most weight?
- A.Agreement between the parties
- B.Intention of the party who attached it✓ Answer
- C.Adaptability to the property
- D.Method of attachment
In the MARIA test (Method, Adaptability, Relationship, Intention, Agreement), intention is generally the most important factor courts consider when deciding whether an item has become a fixture.
Source: CA Civil Code §660 (fixtures); MARIA common-law test — intention primaryReport a problem with this question
22. A developer wants to divide a parcel into eight lots for sale. Under the Subdivided Lands Act, what must the developer obtain before marketing the lots?
- A.A homestead declaration
- B.A Notice of Default
- C.A Public Report from the DRE✓ Answer
- D.A Coastal Commission variance
The Subdivided Lands Act applies to subdivisions of five or more parcels and requires the developer to obtain a Public Report from the DRE (Preliminary/pink, then Final/white) before selling, to protect purchasers.
Source: B&P Code §11000 et seq. (Subdivided Lands Act — Public Report for 5+ parcels)Report a problem with this question
23. An appraiser must value a property that generates rental income. Which approach is most appropriate, and what is the basic relationship?
- A.Income approach: Value = NOI ÷ capitalization rate✓ Answer
- B.Cost approach: Value = replacement cost minus land
- C.GRM approach: Value = NOI × cap rate
- D.Sales comparison: Value = average of nearby sales
The income (capitalization) approach is best for income-producing property: Value equals net operating income divided by the cap rate. Note that mortgage/debt service is not deducted when computing NOI.
Source: DRE Reference Book — Appraisal: income capitalization approachReport a problem with this question
24. An appraiser is valuing a newly built church with no comparable sales and no rental income. Which valuation approach is most reliable?
- A.Sales comparison approach
- B.Cost (replacement) approach✓ Answer
- C.Income approach
- D.Gross rent multiplier
The cost/replacement approach is most reliable for new, unique, or special-purpose properties such as churches, schools, and government buildings, where comparable sales and income data are lacking.
Source: DRE Reference Book — Appraisal: cost approach for special-purpose propertyReport a problem with this question
25. A busy freeway is built adjacent to a residential neighborhood, permanently reducing home values from the constant noise. This loss in value is an example of what type of depreciation?
- A.Economic (external) obsolescence — generally incurable✓ Answer
- B.Accrued appreciation
- C.Physical deterioration — usually curable
- D.Functional obsolescence from outdated design
Economic (external) obsolescence is caused by factors outside the property lines, such as a new freeway or neighborhood decline, and is generally incurable because the owner cannot control the external cause.
Source: DRE Reference Book — Appraisal: types of depreciation (external obsolescence)Report a problem with this question
26. After completing all three approaches to value, an appraiser must arrive at a final value estimate. What does the reconciliation step involve?
- A.Weighing the approaches based on reliability for this property, not averaging them✓ Answer
- B.Averaging the three values arithmetically
- C.Selecting the highest of the three values
- D.Adding the three values and applying the cap rate
Reconciliation is the appraiser's analysis weighing the relative reliability of each approach for the specific property to reach a final opinion of value; it is never a simple mathematical average.
Source: DRE Reference Book — Appraisal: reconciliation of valueReport a problem with this question
27. Which of the following is a required element for a valid and enforceable real estate contract?
- A.A licensed broker as a party
- B.Mutual consent through offer and acceptance✓ Answer
- C.Recording with the county
- D.Notarization of both signatures
A valid contract requires capable parties, a lawful object, consideration, and mutual consent (offer and acceptance / meeting of the minds); notarization and recording are not required for validity.
Source: CA Civil Code §1550 (essential elements of a contract)Report a problem with this question
28. A 16-year-old signs a contract to purchase a condominium. What is the legal status of this contract?
- A.Void from the beginning✓ Answer
- B.Voidable by the minor
- C.Enforceable only against the seller
- D.Fully valid and binding
Because a minor lacks contractual capacity, the contract is voidable — the minor may disaffirm it. It is not automatically void; distinguishing void (no effect ever) from voidable (valid until rescinded) is a key exam point.
Source: CA Family Code §6700–6701 (minors' contracts voidable)Report a problem with this question
29. A seller signs an Exclusive Right to Sell listing. Which requirement is specifically mandated for this type of listing in California?
- A.It may only be given to a Realtor
- B.It must be renewed monthly
- C.It must contain a definite, specified termination date✓ Answer
- D.It must be recorded with the county
An exclusive listing (right to sell or agency) must contain a definite, specified termination date; a broker who uses an exclusive listing without one is subject to discipline.
Source: B&P Code §10176(f) (exclusive listing must have definite termination date)Report a problem with this question
30. Under the Statute of Frauds in California, which of these agreements is NOT required to be in writing to be enforceable?
- A.An agreement between two brokers to split a commission✓ Answer
- B.A lease for a term of two years
- C.A contract for the sale of real property
- D.An agreement authorizing an agent to sell real estate
The Statute of Frauds requires real property sales, leases of one year or longer, and agency agreements to sell real estate to be in writing, but a commission split between two brokers need not be written.
Source: CA Civil Code §1624 (Statute of Frauds; broker commission split exception)Report a problem with this question
31. In a California deed of trust, which party holds bare (naked) legal title as a neutral third party?
- A.The vendee
- B.The trustor
- C.The beneficiary
- D.The trustee✓ Answer
In a deed of trust the trustor is the borrower, the beneficiary is the lender, and the trustee is the neutral third party who holds bare legal title with the power of sale until the loan is repaid.
Source: CA Civil Code §2924 (deed of trust; roles of trustor, trustee, beneficiary)Report a problem with this question
32. A lender completes a non-judicial (power-of-sale) foreclosure on a California home. Regarding the borrower's remaining obligations and rights, which statement is correct?
- A.The borrower has a one-year redemption right after the sale
- B.The lender may pursue a deficiency judgment
- C.The borrower keeps possession for one year rent-free
- D.No deficiency judgment and no right of redemption after the sale✓ Answer
In a non-judicial foreclosure the lender waives the right to a deficiency judgment, and the borrower has no post-sale redemption right; by contrast, judicial foreclosure allows a deficiency judgment but grants a redemption period.
Source: CA Code of Civil Procedure §580d & §2924 (no deficiency/redemption in non-judicial foreclosure)Report a problem with this question
33. A buyer takes over an existing loan's payments 'subject to' the loan without a novation. Who remains primarily liable to the lender?
- A.The lender releases all parties
- B.The original seller (borrower) remains primarily liable✓ Answer
- C.The trustee becomes liable
- D.The buyer becomes solely liable
When a buyer takes title 'subject to' an existing loan, the original borrower remains primarily liable; in a true assumption the buyer becomes primarily liable and the seller may be released, which is the key distinction.
Source: DRE Reference Book — Financing: 'subject to' vs assumptionReport a problem with this question
34. A grantor signs a deed that conveys whatever interest, if any, the grantor may have in a parcel, with no warranties of title. What type of deed is this?
- A.A grant deed
- B.A trustee's deed
- C.A quitclaim deed✓ Answer
- D.A warranty deed
A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, whereas a grant deed carries two implied warranties (no prior conveyance and no undisclosed encumbrances by the grantor).
Source: CA Civil Code §1092 (grant deed warranties); quitclaim conveys existing interest onlyReport a problem with this question
35. In California's property tax fiscal year, the second installment of property taxes becomes delinquent after which date?
- A.February 1
- B.April 10✓ Answer
- C.December 10
- D.November 1
The first installment is due Nov 1 and delinquent after Dec 10; the second installment is due Feb 1 and delinquent after April 10 (mnemonic 'No Darn Fooling Around'). The lien date is January 1.
Source: CA Revenue & Taxation Code §2617, §2618 (property tax delinquency dates)Report a problem with this question
36. A person openly occupies a neighbor's vacant lot, using it continuously and notoriously, and pays the property taxes for the statutory period. What is the minimum time required to claim title by adverse possession in California?
- A.Ten years of occupancy only
- B.Five years, including payment of property taxes for five years✓ Answer
- C.Three years with no tax payment required
- D.Seven years with a recorded claim
In California adverse possession requires open, notorious, hostile, and continuous possession for five years AND payment of the property taxes for those five years; without the tax payment the claim fails.
Source: CA Code of Civil Procedure §325 (adverse possession — 5 years plus taxes)Report a problem with this question
37. One acre contains how many square feet?
- A.5,280 square feet
- B.640 square feet
- C.43,560 square feet✓ Answer
- D.10,000 square feet
One acre equals exactly 43,560 square feet — a fixed land-measurement constant the California exam expects you to have memorized (a recall fact, not a calculation).
Source: U.S. land-measurement standard (1 acre = 43,560 square feet)Report a problem with this question
38. How many linear feet are in one mile?
- A.1,760 feet
- B.43,560 feet
- C.2,640 feet
- D.5,280 feet✓ Answer
One mile equals 5,280 feet. This is a commonly tested rote land-measurement fact on the California salesperson exam, not a math computation.
Source: U.S. land-measurement standard (1 mile = 5,280 feet)Report a problem with this question
39. Under the U.S. Government (Rectangular) Survey System, how many acres are in one section of land?
- A.320 acres
- B.640 acres✓ Answer
- C.36 acres
- D.160 acres
One section equals one square mile = 640 acres, and one township is 36 sections. These fixed survey equivalents are memorization items on the California exam.
Source: U.S. Government Rectangular Survey System (1 section = 640 acres = 1 square mile; 1 township = 36 sections)Report a problem with this question
Practice questions cover the uniform national portion of the real estate exam. Your state adds a state-law portion — study your state's official materials before testing. Licensing info (ARELLO) →