California Yacht and Ship Salesperson's Exam Questions & Correct Answers Verified Plus Rationales 2026 Q&A | Instant Download Pdf

Question 1 A salesperson takes a deposit from a buyer for a $150,000 yacht. Under California law, the deposit must be placed into: A) The salesperson’s personal account B) The broker’s general operating account C) A neutral escrow or trust account D) The seller’s personal account Answer: C Rationale: California law requires that all deposits and trust funds received by a broker or salesperson in a transaction must be placed in a neutral escrow or trust account until the transaction closes or is terminated. This prevents commingling with the broker’s operating funds and protects the buyer’s money. Question 2 A yacht is advertised as “brand new never registered.” The vessel was used as a dealer demo for 6 months. This is: A) Permissible if the dealer discloses demo use at signing B) A violation of false advertising laws C) Acceptable because demos are considered new D) Only a problem if the buyer asks about prior useAnswer: B Rationale: California Business and Professions Code and federal FTC guidelines prohibit false advertising. A demo vessel has been used, so “brand new” is misleading. All material facts must be disclosed. Question 3 What document must be provided to a buyer before any money changes hands in a yacht sale? A) Bill of Sale B) Buyer’s Order or Purchase Agreement C) Title abstract D) Insurance binder Answer: B Rationale: A Buyer’s Order or Purchase Agreement outlines terms, contingencies, deposit handling, and disclosures. It must be provided and signed before funds are accepted to ensure both parties understand the transaction. Question 4 A salesperson works for Broker A. The salesperson finds a buyer for a yacht listed with Broker B. The commission split is 50/50. The salesperson’s broker must pay the salesperson: A) Directly from the buyer’s deposit B) Within 10 days of closing C) According to the employment agreement between salesperson and Broker A D) Only after Broker B pays Broker A Answer: C Rationale: The salesperson’s compensation is governed by their written employment agreement with their own broker. The cooperating broker pays the listing broker, then the listing broker pays the salesperson per their contract.Question 5 A yacht sold in California must have a valid: A) Coast Guard documentation or state registration B) Only Coast Guard documentation C) Only DMV registration D) No requirement if sold privately Answer: A Rationale: All vessels in California waters must be either federally documented (Coast Guard) or registered with the DMV. The seller must provide proof to transfer ownership legally. Question 6 A salesperson tells a buyer that a yacht’s engine has 500 hours when the salesperson knows it has 1,200 hours. This is: A) Puffery B) Fraudulent misrepresentation C) A minor error D) Acceptable if the buyer doesn’t check Answer: B Rationale: Knowingly providing false information about a material fact (engine hours affecting value and maintenance) constitutes fraud. California law allows rescission and damages. Question 7 The California Yacht and Ship Brokers Act is part of: A) The Harbors and Navigation Code B) The Vehicle Code C) The Business and Professions Code D) The Civil CodeAnswer: A Rationale: The Yacht and Ship Brokers Act is found in the Harbors and Navigation Code, Sections 700-785. It regulates brokers, salespersons, and transactions. Question 8 A salesperson’s license expires on June 30. The salesperson continues to work without renewing until July 15. What happens? A) No penalty if renewed by July 31 B) All transactions during that period are voidable C) The salesperson may be fined but transactions remain valid D) The broker is solely liable Answer: B Rationale: Unlicensed activity is prohibited. Contracts negotiated by an unlicensed salesperson are voidable at the buyer’s or seller’s option, and the salesperson cannot claim a commission. Question 9 When a yacht is sold “as is” in California, the salesperson must: A) Provide no disclosures B) Still disclose known material defects C) Only disclose defects if asked D) Provide a warranty of seaworthiness Answer: B Rationale: “As is” limits implied warranties but does not relieve the seller or broker from disclosing known material defects that affect safety or value. Active concealment is illegal. Question 10 A salesperson receives a $10,000 deposit check made out to the brokerage. The salesperson must: A) Endorse and cash it immediatelyB) Give it to the broker by the end of the next business day C) Hold it in the salesperson’s desk until closing D) Mail it directly to the seller Answer: B Rationale: All funds must be delivered to the broker promptly—generally by the end of the next business day—to be placed in the trust account. The salesperson never holds funds personally.