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Real Estate Exam Practice Test 2025:
Comprehensive Questions and Expert Answer
Explanations to Pass Your Licensing Exam
Question 1: When a person dies testate, the real property: a) escheats and is sold at an auction by the state. b) goes to the administrator. c) goes to his next of kin under the laws of succession. d) passes to beneficiaries as a devise. Correct Answer: d) passes to beneficiaries as a devise Rationale: When a person dies testate, it means they have left a valid will. In a will, real property is specifically gifted to beneficiaries through a provision known as a devise. Escheat (a) occurs when a person dies intestate (without a will) and has no heirs. An administrator (b) is appointed by the court to manage the estate of someone who dies intestate. While next of kin may inherit real property under the laws of succession (c) in the absence of a will, when there is a will, the property passes according to its terms as a devise. Question 2: If taxes on real property in Nevada become delinquent and remain unpaid, they constitute an involuntary lien on the property that is: a) inferior to all voluntary liens. b) inferior to a mechanics lien. c) superior only to liens recorded after the tax lien. d) superior to all other liens. Correct Answer: d) superior to all other liens Rationale: Real property tax liens have a high priority and are generally superior to all other liens, whether voluntary (like mortgages) or involuntary (like mechanics liens),
regardless of when they were recorded. This ensures the government's ability to collect property taxes, which are essential for funding public services. Question 3: George is selling his trade fixtures along with the building. Which of the following instruments will be used to convey title to the trade fixtures? a) Bill of sale b) Warranty Deed c) Chattel real d) Package Deed Correct Answer: a) Bill of sale Rationale: Trade fixtures are considered personal property, even though they are attached to real property for business use. Title to personal property is conveyed through a bill of sale. A warranty deed (b) is used to convey title to real property. Chattel real (c) is a legal term referring to personal property that is closely associated with real property, such as a leasehold interest, but it's not the instrument used to transfer trade fixtures. A package deed (d) is not a standard legal term for a conveyance instrument. Question 4: Which of the following is an encumbrance? a) Easement b) Deed restriction c) Lien d) All of the above Correct Answer: d) All of the above are encumbrances Rationale: An encumbrance is any claim, lien, charge, or liability that affects or limits the title to real property. An easement grants someone the right to use another's property. A deed restriction is a private limitation on the use of property. A lien is a financial claim against the property. Therefore, all of the listed items are types of encumbrances. Question 5: The Federal National Mortgage Association (Fannie Mae) functions in the secondary mortgage market to: a) buy mortgages originated by other lending institutions.
Correct Answer: d) All of the above are reasons special assessments differ from real property taxes Rationale: Special assessments are taxes levied on specific properties that directly benefit from a public improvement (a), such as paving a street or installing sewers (b). They are typically a one-time charge to cover the cost of that particular improvement (c), unlike general real property taxes which fund a wide range of public services on an ongoing basis. Question 8: A life estate permits the life tenant to do all of the following EXCEPT: a) lease it on a five year lease. b) will it to another. c) take out a mortgage on the property. d) All of the above Correct Answer: b) will it to another Rationale: A life estate is ownership limited to the lifetime of a specific person (the life tenant). Upon the death of that person, the estate terminates and passes to a remainderman or reverts to the grantor. Therefore, the life tenant does not have the right to will the property to another party. They generally can lease the property (a) or mortgage their life interest (c), but these actions are limited by the duration of the life estate. Question 9: Mr. Snook sold his fee simple estate to Mr. Dunn, but kept a life estate in the property based upon his own life and remained in possession. Mr. Snook then sold his interest to Mr. Britt and gave possession to Mr. Britt. When Mr. Dunn heard of the sale, he demanded possession of the property. Who is entitled to possession? a) The property escheats to the state. b) Mr. Britt, who may possess the property until Mr. Snook dies. c) Mr. Snook, since the life estate was based on his life. d) Mr. Dunn, since the sale to Mr. Britt cancelled the life estate. Correct Answer: b) Mr. Britt, who may possess the property until Mr. Snook dies. Rationale: Mr. Snook had a life estate, which is a transferable interest. He could sell his life estate to Mr. Britt. Mr. Britt now holds the right to possess and use the property for the duration of Mr. Snook's life. The underlying fee simple ownership belongs to Mr.
Dunn, but his right to possession is deferred until the life estate ends (upon Mr. Snook's death). Escheat (a) is irrelevant here. Mr. Snook (c) sold his interest. The sale to Mr. Britt did not cancel the life estate (d); it merely transferred the life tenant's rights. Question 10: An agent would be guilty of fraudulent misrepresentation when: a) the misrepresentation was based upon incorrect information given by the seller. b) the broker's claim that the property has the best view of the river was incorrect. c) the withholding of a material fact was meant to deceive and the buyer, acting upon the misrepresentation, entered into a purchase agreement. d) All of the above Correct Answer: c) the withholding of a material fact was meant to deceive and the buyer, acting upon the misrepresentation, entered into a purchase agreement. Rationale: Fraudulent misrepresentation requires intent to deceive and reliance by the injured party. Option a might be negligent misrepresentation if the agent should have verified the information, but not necessarily fraudulent if they acted in good faith. Option b is likely puffery (an exaggerated opinion) and not considered a factual misrepresentation. Option c clearly describes fraudulent misrepresentation: the agent intentionally withheld a significant fact to mislead the buyer, and the buyer acted on that deception to their detriment. The instrument of record to show that a mortgage is paid in full is a: Quitclaim Real Statement. Satisfaction of Mortgage. Deed Real Statement. Estoppel Certificate. - - correct ans- - Satisfaction of mortgage An ALTA extended coverage policy of title insurance would: cover encroachments after the date of issuance. be limited to stated conditions of title as of the date of issuance. cover easements created during the term of the policy. protect against all encumbrances placed on the property after issuance. - - correct ans-
- be limited to stated conditions of title as of the date of issuance.
hostile to the true owner's title. it must be under a claim of right or color of title. open and notorious use. confrontation with the owner. - - correct ans- - confrontation with the owner Unlicensed assistants may do which of the following: 1 Gather information for a CMA 2 Send out mailers for the broker they are employed by 3 Conduct telemarketing to schedule appointments in order to seek clients 4 Follow up with a buyer-client's lender at the request of the broker they are employed by 1, 2 and 4 only 1 and 2 only 1 only All of the above - - correct ans- - 1 and 2 only An Asian couple walked into Best Properties Real Estate and requested to see a specific house in a neighborhood that was known to have a significant number of Asian families. A licensee can lawfully assume the prospect is: unable to qualify for a loan in a different neighborhood. interested in a house in a minority neighborhood. a member of the Fair Housing Commission and should refuse to show the prospect any houses without further information. interested in a particular house because of its price, architectural style, or other amenities. - - correct ans- - interested in a particular house because of its price, architectural style, or other amenities. Which one of the following is not a violation of the Real Estate Settlement Procedures Act (RESPA)? Kickbacks
The buyer requiring the use of a specific lender Unearned fees The seller requiring the use of a particular title insurance company - - correct ans- - The buyer requiring the use of a specific lender (I think? Answer is not kickbacks or unearned fees) The best deed a grantee can receive, which gives the grantee the best possibly protection, is the: quitclaim deed. grant deed. bargain and sale deed. warranty deed. - - correct ans- - Warranty deed Which of the following statements concerning real estate finance is true? A trust deed is a security instrument that creates a lien on a property to secure a debt. A promissory note secures a trust deed. A promissory note hypothecates the title to the property. The trust deed is the evidence of debt. - - correct ans- - A trust deed is a security instrument that creates a lien on a property to secure a debt. A real estate licensee could be subject to disciplinary action under the real estate law for: failing to disclose a material fact to a principal. false advertising. failing to put a definite termination date in an exclusive listing agreement. All of the above - - correct ans- - A licensee could be disciplined for all of the above The doctrine of emblements refers to: the right of a homeowner to have one's property supported from beneath the land's surface.
an adjustable interest rate for the first 15 years, and then a fixed interest rate. a due-on-sale clause. a higher loan-to-value ratio than a VA loan. - - correct ans- - a due-on-sale clause (I think. Answer is not a lower interest rate) An easement appurtenant to real property can be terminated by all of the following EXCEPT: prescription by the servient owner. release by the dominant tenement owner. merger of both the servient and dominant parcels. revocation by the servient owner. - - correct ans- - Revocation by the servient owner A special permit that would allow a land use that normally would be in violation with current zoning is called: a non-conforming use. an amendment. a plan modification. a variance. - - correct ans- - Variance A rectangular parcel of land that measures 2350' x 1780' should be advertised as containing how many acres? 792 acres 54 acres 146 acres 96 acres - - correct ans- - 96 acres A landlord has __________ to return a security deposit after a tenant moves out or to give a written explanation why it (or any part of it) was not returned. 7 days
60 days 14 days 30 days - - correct ans- - 30 days to return security deposit A lease based in part on the gross income of the lessee is known as: a percentage lease. a month-to-month lease. a gross lease. a net lease. - - correct ans- - A percentage lease In a township, Section 10 is located where in relationship to Section 15? Directly south of Section 15 Directly north of Section 15 One section north and four sections west of Section 15 One section south and four sections east of Section 15 - - correct ans- - Directly north of section 15 Generally, a deed that is not acknowledged: 1 is effective between the parties to transfer title. 2 will be accepted for recordation by the county clerk. Both 1 and 2 1 only 2 only Neither 1 nor 2 - - correct ans- - 1 only - effective between parties Jerry purchased a single family lot measuring 90' x 120'. The city requires a 20' setback on the front, a 15' setback along the sides, and a 10' setback at the back of the lot. What is the size house Jerry can build? 2,450 sq. ft.
Larry has transferred his leasehold estate to Joe. Larry has used the process of __________ to transfer his rights to Joe. assignment sublease surrender abandonment - - correct ans- - Assignment Cindy has just paid $460,000 for a building that will bring her a 9.75% return on her investment. What is the building's annual net income? $34, $36, $41, $44,850 - - correct ans- - $44, The market data approach is used by an appraiser to determine the estimated cost of replacement. building value less depreciation of the land. rate of anticipated appreciation. value of vacant land. - - correct ans- - Value of vacant land Which of the following are necessary to prove that a misrepresentation constituted a fraud? 1 The person making the misrepresentation knew that the statement was false and made the statement with the intent to deceive the other party. 2 The statement was regarding a material fact. 3 The party to whom the misrepresentation was made acted upon it to his detriment. 4 The statement was in writing. 2, 3, 4 only 1, 2, 4 only
1, 3, 4 only 1, 2, 3 only - - correct ans- - 1, 2, 3 only To take title in severalty, one must be purchasing: the property with a spouse. more than one parcel. an apartment complex. as the sole owner. - - correct ans- - As the sole owner An attorney-in-fact is best described as: any person having passed the bar examination. any individual having graduated from an accredited law school. a lawyer hired by a principal. any person authorized to represent another by the execution of a power of attorney. - - correct ans- - any person authorized to represent another by the execution of a power of attorney. An appraiser, in valuing the addition of a swimming pool that cost $43,000 six months ago, has attributed an increase in value to the property of $25,000. He has arrived at this figure under the principle of: anticipation. substitution. competition. contribution. - - correct ans- - Contribution An earnest money agreement is: a legally enforceable contract immediately upon the signature of the seller only. an option to buy which the purchaser may accept or reject.
legal notice actual notice constructive notice public notice - - correct ans- - Constructive notice Which types of financing are synonymous? Portfolio Loans and Installment Loans Construction Loans and Bridge Loans Interim Financing and Construction Loans Take Out Loans and Junior Loans - - correct ans- - Interim financing and construction loans Certain economic principles are of considerable importance in the valuation of real estate. The principle, "No prudent man would pay more for a product than that for which he could buy a reasonable duplicate, allowing for no undue delay" is known as the: principle of conformity. principle of competition. principle of substitution. principle of balance. - - correct ans- - Principle of substitution What effect on value is typically the result of a homogeneous community? Causes values to decrease Builds an inherent instability into real estate values Causes values to increase Causes real estate values to be stable - - correct ans- - Causes real estate values to be stable Who has the authority to revoke a Nevada real estate license? The Real Estate Commission
The Nevada Real Estate Division The state Attorney General The National Association of REALTORS® if the licensee is a member - - correct ans- - The Real Estate Commission Which of the following is NOT a party to a trust deed? Grantee Beneficiary Trustee Trustor - - correct ans- - Grantee A subordination clause: allows the trustor to pay off the debt at any time without penalty. permits the trustor to borrow additional funds without initiating a new loan. states that any future loans will be subordinate to the existing loan. allows the borrower to obtain a future loan that will take lien priority over the existing loan. - - correct ans- - allows the borrower to obtain a future loan that will take lien priority over the existing loan. A lessee assigns all of his leasehold interest to another. That person becomes the landlord. sublessee. assignor. tenant - - correct ans- - Sublessee A holder of a leasehold estate is said to have: a life estate. a remainder estate. an estate of inheritance.
Raw land purchased on speculation - - correct ans- - (I think) A rental house held for investment purposes. Answer is not raw land Most contingencies in a real estate contract are inserted for the benefit of the: buyer. seller. escrow officer. real estate broker. - - correct ans- - Buyer Which of the following are included in the bundle of rights of real property ownership? 1 The right to tax and escheat to the state 2 The right to lease 3 The right to devise 1 only 2 and 3 only 2 only 3 only - - correct ans- - 2 and 3 only The Real Estate Settlement Procedures Act (RESPA) provides: a secondary market for mortgage loans. that real estate advertisements must include the annual percentage rate, including all charges. that real estate syndicates must obey "blue-sky" laws. that the mortgagor must be given an estimate of the closing costs before the time of closing. - - correct ans- - that the mortgagor must be given an estimate of the closing costs before the time of closing. The Foreign Investment in Real Property Tax Act (FIRPTA) applies to: the proceeds on the sale of property owned in a foreign country.
the purchase of real property by a foreigner. the purchase of property in a foreign country. the sale of real property by a non-resident alien. - - correct ans- - the sale of real property by a non-resident alien. A tenant who is three months delinquent in rental payments can be legally removed by: constructive eviction. placing locks on the doors and reclaiming the property. bringing a court action for unlawful detainer. filing a lis pendens. - - correct ans- - bringing a court action for unlawful detainer. Broker Billings received multiple offers on seller Sam's residence. Billings reviewed the offers and selected the one that had the quickest closing date, as he knew Sam was eager to close on the property. Sam, relieved to receive an offer with a 20-day closing, accepted the offer even though it was $5,000 below the listing price. Billings then communicated Sam's acceptance to the offeror and notified the other brokers that there was an accepted offer, but that he would be willing to present any offers rewritten as back up offers.Broker Billings: has acted within the scope of his authority as Sam's agent. is guilty of making false promises to the other offerors by suggesting they rewrite their offers as back up offers. acted appropriately because the offer with the quickest closing was in the best interest of Sam. violated real estate law by not presenting all offers for Sam's consideration. - - correct ans- - violated real estate law by not presenting all offers for Sam's consideration. A real estate broker may authorize an unlicensed sales assistant to: review purchase agreements. enter into listing agreements with sellers. schedule appointments with home inspectors.
