Free California Real Estate Practice Exam 2026

California real estate exam sample questions and answers

6 of the 150 practice questions, one from each topic, with the answer explained.

1. 1. A home buyer wants title insurance protecting the buyer’s ownership interest, including any qualifying successors under the policy, rather than only the mortgage lender. Which should the buyer purchase?

   • A.A lender's (mortgagee's) title policy
   • B.An owner's title policy
   • C.An updated abstract of title
   • D.A one-year home warranty

   Answer: B. An owner’s title policy protects the insured owner against covered title risks, subject to policy limits, conditions and exclusions. A lender’s policy protects the lender’s interest. Review the policy’s continuation and successor provisions rather than assume every later transfer stays insured.

2. 2. An owner will close on a new home before receiving the proceeds from selling the current home. A proposed temporary loan will be repaid from those sale proceeds. What is its main purpose?

   • A.To transfer the current home to the lender without debt
   • B.To provide permanent rent assistance
   • C.To insure the owner against any decline in home value
   • D.To bridge the timing gap between the purchase and sale

   Answer: D. This is the purchase-before-sale purpose of bridge financing. The sale proceeds are the planned exit, not a guarantee that repayment will be possible.

3. 3. An apartment building has annual effective gross income of $120,000 and annual operating expenses of $48,000. Expenses exclude debt service and tax depreciation. Using an annual 8% capitalization rate, what is its value?

   • A.$900,000
   • B.$576,000
   • C.$1,500,000
   • D.$600,000

   Answer: A. NOI = $120,000 - $48,000 = $72,000, and value = NOI / cap rate = $72,000 / 0.08 = $900,000. Capitalizing the gross income ($1,500,000) is wrong because operating expenses must be deducted; debt service and depreciation are not.

4. 4. Two brokers agree that one will take listings only east of Main Street and the other only west. This antitrust violation is:

   • A.A tie-in agreement
   • B.Price fixing
   • C.Market allocation
   • D.A group boycott

   Answer: C. Dividing territories or customers among competitors is market allocation, which the Sherman Act prohibits. Price fixing is agreeing on commission rates, which must instead be set by negotiation between each broker and client.

5. 5. A valid lease option expressly requires a separate written purchase-election notice before its deadline. The tenant pays every rent installment but sends no election notice. Assume no waiver, extension or exception. Which conclusion follows?

   • A.The landlord must replace the option with a mandatory purchase contract
   • B.Full rent payment automatically exercises the option
   • C.Paying rent has not satisfied the separate purchase-election requirement
   • D.The tenant already owns the home because occupancy began

   Answer: C. Rent performance and option exercise are different acts under the stated agreement. The tenant has not completed the required election.

6. 6. An agent tells a buyer the roof is two years old without checking; it is actually 15. The agent may be liable for:

   • A.Negligent misrepresentation
   • B.Puffing
   • C.Nothing, since buyers must verify facts
   • D.Commingling

   Answer: A. An unsupported false statement about roof age can support a negligent-misrepresentation claim if the applicable legal elements are met. The statement is factual, unlike ordinary sales opinion. Civil liability still depends on matters such as lack of reasonable grounds, reasonable reliance, causation and loss; the stem says “may,” not that liability is proved.