CALIFORNIA REAL ESTATE BROKER EXAM 2026Practice
Questions & Correct Answers with Explanations
Exam Format: 200 multiple-choice questions | Time Limit: 4 hours | Passing
Score: 75% (150 correct)
Subject Area Weighting: Practice of Real Estate & Disclosures (25%), Property
Ownership & Land Use Controls (17%), Agency & Fiduciary Duties (14%), Valuation &
Financial Analysis (14%), Contracts (12%), Financing (9%), Transfer of Property (8%) .
SECTION 1: PROPERTY OWNERSHIP & LAND USE
CONTROLS
Question 1 of 50
Under the Alquist-Priolo Special Studies Zones Act, what must be disclosed to a
potential buyer?
• A. If the property is located in a high-risk flood zone.
• B. The presence of lead-based paint in homes built before 1978.
• C. If the property is located within a designated earthquake fault zone.
• D. The proximity of the property to a former military ordnance site.
Correct Answer: C – If the property is located within a designated earthquake
fault zone
Rationale: The Alquist-Priolo Act requires the disclosure of earthquake fault zones to
potential buyers to ensure they are aware of specific seismic hazards. Flood zones are
covered under other laws; lead-based paint is a federal disclosure; military ordnance sites
are not covered by this act .
,Question 2 of 50
Which of the following is considered real property in California?
• A. Trade fixtures used in a business.
• B. Stock in a mutual water company.
• C. A harvested crop of wheat.
• D. A portable space heater.
Correct Answer: B – Stock in a mutual water company
Rationale: Stock in a mutual water company is "appurtenant" to the land and is legally
treated as real property in California. Trade fixtures are personal property; harvested crops
are emblements (personal property); portable space heaters are personal property .
Question 3 of 50
What does the term escheat refer to in real estate?
• A. The government's right to take private property for public use.
• B. The process by which the state takes ownership of property when an owner
dies without a will or heirs.
• C. A legal principle that allows a squatter to gain title to property after
continuous occupation.
• D. The transfer of property title through a court proceeding.
Correct Answer: B – The state takes ownership when an owner dies without a
will or heirs
Rationale: Escheat is the legal process by which the state takes ownership of abandoned
property or assets of a deceased person with no will or legal heirs. This is one of the four
government powers over real property (along with police power, eminent domain, and
taxation).
Question 4 of 50
,A negative declaration under the California Environmental Quality Act (CEQA)
indicates:
• A. The project will have a significant negative impact on the environment.
• B. The project has been rejected by the planning commission.
• C. The project will not have a significant adverse effect on the environment.
• D. The developer must file a full Environmental Impact Report (EIR).
Correct Answer: C – The project will not have a significant adverse effect on the
environment
Rationale: A negative declaration is issued when an initial study shows that there is no
substantial evidence that a project may have a significant effect on the environment. If
significant effects are possible, an EIR is required .
Question 5 of 50
A "blind ad" is a real estate advertisement that:
• A. Does not include the price of the property.
• B. Does not identify the broker or the brokerage firm.
• C. Is placed by an unlicensed individual.
• D. Contains misleading photos of the property.
Correct Answer: B – Does not identify the broker or the brokerage firm
Rationale: California law prohibits blind ads; advertisements must identify the licensee's
status or the name of the broker/brokerage. This protects consumers by ensuring
transparency about whom they are dealing with .
Question 6 of 50
Which of the following would terminate an agency relationship by "operation of law"?
• A. Mutual agreement between the broker and the principal.
, • B. The death of the broker or the principal.
• C. Completion of the sale and close of escrow.
• D. Revocation of the listing by the seller.
Correct Answer: B – The death of the broker or the principal
Rationale: Termination by operation of law occurs automatically upon events such as
death, insanity, or bankruptcy of either party. Mutual agreement, completion of the
transaction, and revocation are voluntary terminations .
SECTION 2: LAWS OF AGENCY & FIDUCIARY DUTIES
Question 7 of 50
Under the California Fair Employment and Housing Act (FEHA), which action would be
considered a discriminatory practice?
• A. Requiring all tenants to provide a security deposit equal to one month's rent.
• B. Refusing to rent to an individual based on their source of income, such as a
Section 8 voucher.
• C. Implementing a "no pets" policy that excludes non-service animals.
• D. Verifying the employment history of all potential applicants.
Correct Answer: B – Refusing to rent based on source of income
*Rationale: California law explicitly prohibits discrimination based on "source of income,"
which includes federal, state, or local public assistance and housing subsidies like
Section 8 vouchers. Security deposits, uniform no-pet policies, and employment
verification are generally lawful .*
Question 8 of 50
Regarding a broker's responsibility for the actions of their salespersons, which statement
is true?
Questions & Correct Answers with Explanations
Exam Format: 200 multiple-choice questions | Time Limit: 4 hours | Passing
Score: 75% (150 correct)
Subject Area Weighting: Practice of Real Estate & Disclosures (25%), Property
Ownership & Land Use Controls (17%), Agency & Fiduciary Duties (14%), Valuation &
Financial Analysis (14%), Contracts (12%), Financing (9%), Transfer of Property (8%) .
SECTION 1: PROPERTY OWNERSHIP & LAND USE
CONTROLS
Question 1 of 50
Under the Alquist-Priolo Special Studies Zones Act, what must be disclosed to a
potential buyer?
• A. If the property is located in a high-risk flood zone.
• B. The presence of lead-based paint in homes built before 1978.
• C. If the property is located within a designated earthquake fault zone.
• D. The proximity of the property to a former military ordnance site.
Correct Answer: C – If the property is located within a designated earthquake
fault zone
Rationale: The Alquist-Priolo Act requires the disclosure of earthquake fault zones to
potential buyers to ensure they are aware of specific seismic hazards. Flood zones are
covered under other laws; lead-based paint is a federal disclosure; military ordnance sites
are not covered by this act .
,Question 2 of 50
Which of the following is considered real property in California?
• A. Trade fixtures used in a business.
• B. Stock in a mutual water company.
• C. A harvested crop of wheat.
• D. A portable space heater.
Correct Answer: B – Stock in a mutual water company
Rationale: Stock in a mutual water company is "appurtenant" to the land and is legally
treated as real property in California. Trade fixtures are personal property; harvested crops
are emblements (personal property); portable space heaters are personal property .
Question 3 of 50
What does the term escheat refer to in real estate?
• A. The government's right to take private property for public use.
• B. The process by which the state takes ownership of property when an owner
dies without a will or heirs.
• C. A legal principle that allows a squatter to gain title to property after
continuous occupation.
• D. The transfer of property title through a court proceeding.
Correct Answer: B – The state takes ownership when an owner dies without a
will or heirs
Rationale: Escheat is the legal process by which the state takes ownership of abandoned
property or assets of a deceased person with no will or legal heirs. This is one of the four
government powers over real property (along with police power, eminent domain, and
taxation).
Question 4 of 50
,A negative declaration under the California Environmental Quality Act (CEQA)
indicates:
• A. The project will have a significant negative impact on the environment.
• B. The project has been rejected by the planning commission.
• C. The project will not have a significant adverse effect on the environment.
• D. The developer must file a full Environmental Impact Report (EIR).
Correct Answer: C – The project will not have a significant adverse effect on the
environment
Rationale: A negative declaration is issued when an initial study shows that there is no
substantial evidence that a project may have a significant effect on the environment. If
significant effects are possible, an EIR is required .
Question 5 of 50
A "blind ad" is a real estate advertisement that:
• A. Does not include the price of the property.
• B. Does not identify the broker or the brokerage firm.
• C. Is placed by an unlicensed individual.
• D. Contains misleading photos of the property.
Correct Answer: B – Does not identify the broker or the brokerage firm
Rationale: California law prohibits blind ads; advertisements must identify the licensee's
status or the name of the broker/brokerage. This protects consumers by ensuring
transparency about whom they are dealing with .
Question 6 of 50
Which of the following would terminate an agency relationship by "operation of law"?
• A. Mutual agreement between the broker and the principal.
, • B. The death of the broker or the principal.
• C. Completion of the sale and close of escrow.
• D. Revocation of the listing by the seller.
Correct Answer: B – The death of the broker or the principal
Rationale: Termination by operation of law occurs automatically upon events such as
death, insanity, or bankruptcy of either party. Mutual agreement, completion of the
transaction, and revocation are voluntary terminations .
SECTION 2: LAWS OF AGENCY & FIDUCIARY DUTIES
Question 7 of 50
Under the California Fair Employment and Housing Act (FEHA), which action would be
considered a discriminatory practice?
• A. Requiring all tenants to provide a security deposit equal to one month's rent.
• B. Refusing to rent to an individual based on their source of income, such as a
Section 8 voucher.
• C. Implementing a "no pets" policy that excludes non-service animals.
• D. Verifying the employment history of all potential applicants.
Correct Answer: B – Refusing to rent based on source of income
*Rationale: California law explicitly prohibits discrimination based on "source of income,"
which includes federal, state, or local public assistance and housing subsidies like
Section 8 vouchers. Security deposits, uniform no-pet policies, and employment
verification are generally lawful .*
Question 8 of 50
Regarding a broker's responsibility for the actions of their salespersons, which statement
is true?
