PSI National Real Estate Exam Questions | 100% Correct
Answers with Detailed Rationales (2026/2027 Edition)
SECTION 1: Property Ownership and Land Use Controls
Question 1
Which of the following represents the highest and most complete form of ownership
interest in real property?
A. Life estate
B. Fee simple absolute
C. Leasehold estate
D. Fee simple determinable
Correct Answer: B
Rationale: Fee simple absolute represents the maximum possible ownership interest,
with no limitations on duration or conditions. A life estate terminates upon the death of
the measuring life, a leasehold is a temporary possessory interest, and a fee simple
determinable may terminate automatically upon the occurrence of a specified condition.
Question 2
Three siblings own a vacation home as joint tenants with right of survivorship. If one
sibling dies, what happens to his interest?
A. It passes to his heirs according to his will
B. It is divided equally between the surviving siblings
C. It reverts to the original grantor
D. It is sold and the proceeds distributed to the estate
Correct Answer: B
,Rationale: In joint tenancy with right of survivorship, the deceased tenant's interest
automatically passes to the surviving joint tenants in equal shares by operation of law.
This is the defining characteristic of the right of survivorship, which supersedes any
testamentary disposition or inheritance by heirs.
Question 3
A property owner wants to build a small retail store in an area zoned exclusively for
residential use. Which land use control mechanism would allow this exception?
A. A zoning amendment
B. A variance
C. A special use permit
D. A nonconforming use
Correct Answer: B
Rationale: A variance grants permission to deviate from existing zoning requirements
due to unique hardship or practical difficulty affecting the specific property. A zoning
amendment changes the district classification, a special use permit applies to uses
conditionally permitted within the ordinance, and a nonconforming use applies only to
existing uses that predate current zoning.
Question 4
A city council decides to widen a public road and needs to acquire a strip of land from a
private homeowner. The city offers compensation, but the homeowner refuses to sell.
Which statement is correct?
A. The city cannot proceed without the owner's consent
B. The city may exercise eminent domain if it provides just compensation
C. The city must wait for the property to be listed for sale
D. The city can only proceed if the taking serves a federal purpose
Correct Answer: B
, Rationale: Eminent domain is the government's inherent power to take private property
for public use upon payment of just compensation. It does not require owner consent,
only that the taking be for a public purpose and that fair market value compensation is
provided to the property owner.
Question 5
A homeowner in a subdivision discovers that the community association is enforcing
rules regarding fence height and exterior paint colors. These rules are most likely
established by:
A. Municipal zoning ordinances
B. Deed restrictions or CC&Rs
C. Building codes
D. Adverse possession
Correct Answer: B
Rationale: Covenants, Conditions, and Restrictions (CC&Rs) are private agreements
recorded in the chain of title that govern property use within planned subdivisions.
Unlike public zoning ordinances, CC&Rs are contractual and enforced by homeowners
associations through civil remedies.
Question 6
Which government power allows a municipality to establish zoning districts that
separate commercial and residential properties?
A. Eminent domain
B. Taxation
C. Police power
D. Escheat
Correct Answer: C
Answers with Detailed Rationales (2026/2027 Edition)
SECTION 1: Property Ownership and Land Use Controls
Question 1
Which of the following represents the highest and most complete form of ownership
interest in real property?
A. Life estate
B. Fee simple absolute
C. Leasehold estate
D. Fee simple determinable
Correct Answer: B
Rationale: Fee simple absolute represents the maximum possible ownership interest,
with no limitations on duration or conditions. A life estate terminates upon the death of
the measuring life, a leasehold is a temporary possessory interest, and a fee simple
determinable may terminate automatically upon the occurrence of a specified condition.
Question 2
Three siblings own a vacation home as joint tenants with right of survivorship. If one
sibling dies, what happens to his interest?
A. It passes to his heirs according to his will
B. It is divided equally between the surviving siblings
C. It reverts to the original grantor
D. It is sold and the proceeds distributed to the estate
Correct Answer: B
,Rationale: In joint tenancy with right of survivorship, the deceased tenant's interest
automatically passes to the surviving joint tenants in equal shares by operation of law.
This is the defining characteristic of the right of survivorship, which supersedes any
testamentary disposition or inheritance by heirs.
Question 3
A property owner wants to build a small retail store in an area zoned exclusively for
residential use. Which land use control mechanism would allow this exception?
A. A zoning amendment
B. A variance
C. A special use permit
D. A nonconforming use
Correct Answer: B
Rationale: A variance grants permission to deviate from existing zoning requirements
due to unique hardship or practical difficulty affecting the specific property. A zoning
amendment changes the district classification, a special use permit applies to uses
conditionally permitted within the ordinance, and a nonconforming use applies only to
existing uses that predate current zoning.
Question 4
A city council decides to widen a public road and needs to acquire a strip of land from a
private homeowner. The city offers compensation, but the homeowner refuses to sell.
Which statement is correct?
A. The city cannot proceed without the owner's consent
B. The city may exercise eminent domain if it provides just compensation
C. The city must wait for the property to be listed for sale
D. The city can only proceed if the taking serves a federal purpose
Correct Answer: B
, Rationale: Eminent domain is the government's inherent power to take private property
for public use upon payment of just compensation. It does not require owner consent,
only that the taking be for a public purpose and that fair market value compensation is
provided to the property owner.
Question 5
A homeowner in a subdivision discovers that the community association is enforcing
rules regarding fence height and exterior paint colors. These rules are most likely
established by:
A. Municipal zoning ordinances
B. Deed restrictions or CC&Rs
C. Building codes
D. Adverse possession
Correct Answer: B
Rationale: Covenants, Conditions, and Restrictions (CC&Rs) are private agreements
recorded in the chain of title that govern property use within planned subdivisions.
Unlike public zoning ordinances, CC&Rs are contractual and enforced by homeowners
associations through civil remedies.
Question 6
Which government power allows a municipality to establish zoning districts that
separate commercial and residential properties?
A. Eminent domain
B. Taxation
C. Police power
D. Escheat
Correct Answer: C
