CA Real Estate Broker Exam Flashcards

Q: How is the California broker exam different from the salesperson exam?

The broker examination is 200 multiple-choice questions in 4 hours and requires at least 75 percent correct, while the salesperson exam is 150 questions and requires 70 percent. Both are drawn from the same seven content areas in the DRE's Examination Description (RE 425), but the broker version tests those areas at greater depth and difficulty, with heavy emphasis on trust fund handling, supervision of salespersons, and brokerage operations.

Q: What are the seven content areas and their weights on the broker exam?

Per the DRE: Property Ownership and Land Use Controls and Regulations 15%, Laws of Agency and Fiduciary Duties 17%, Property Valuation and Financial Analysis 14%, Financing 9%, Transfer of Property 8%, Practice of Real Estate and Disclosures (including specialty areas) 25%, and Contracts 12%. These 50 cards are distributed to match those weights.

Q: What is the California broker exam pass rate?

The DRE publishes exam results monthly in its Comparative Production Statistics (RE 149). For fiscal year 2025-26, 47 percent of the 2,414 broker examinations administered were passed, compared with 53 percent for salesperson examinations. The prior fiscal year was 48 percent.

Q: What do I need before I can take the broker exam?

You must be at least 18, complete eight college-level courses (Real Estate Practice, Legal Aspects of Real Estate, Real Estate Finance, Real Estate Appraisal, Real Estate Economics or Accounting, plus three approved electives), and document two years of full-time licensed salesperson experience within the last five years or qualifying equivalent experience. A four-year degree with a real estate major or minor can substitute for the experience, but never for the eight courses.

Q: What does the broker exam cost, and what happens if I fail?

Per DRE form RE 206 (Rev. 7/26) the broker examination fee is $150, re-examination is $150, rescheduling is $45, and the original broker license fee is $450 plus a $49 fingerprint processing fee. If you fail, you may apply to re-take after you are notified of the result, and there is no limit on attempts during the two years following your original application filing.

Q: Do I find out my score if I pass?

No. The DRE states the examination is qualifying in nature, so examinees who pass are not told their final score. Only unsuccessful candidates receive the actual score and the percentage of questions answered correctly in each subject area, which is why failing candidates can target their weakest content area on the retake.

Question 1

How many parcels trigger the Subdivided Lands Act, and what must be delivered to buyers?

Accepted Answer

Land divided into five or more lots or parcels for sale, lease, or financing. The DRE issues a public report, and a copy must be given to each prospective buyer, who signs a receipt, before that buyer is bound to purchase.

Question 2

Who approves maps under the Subdivision Map Act, and when is a full tentative and final map required?

Accepted Answer

The local city or county, not the DRE. A tentative and final map is required for subdivisions creating five or more parcels; qualifying smaller divisions use a parcel map. The Map Act governs physical design and dedications; the Subdivided Lands Act governs the sale.

Question 3

Under Proposition 13, what is the base tax rate and the cap on annual assessed value increases?

Accepted Answer

One percent of assessed value, with the assessed value rising no more than 2 percent per year. Value is reassessed to current market value on a change of ownership or new construction, which is why a buyer's tax bill can jump far above the seller's.

Question 4

What must a seller do when the property lies in a Mello-Roos community facilities district?

Accepted Answer

Make a good faith effort to obtain the special tax disclosure notice from the levying agency and deliver it to the prospective buyer (Civil Code 1102.6b). The Mello-Roos special tax is charged on top of the 1 percent Proposition 13 tax and is not capped by it.

Question 5

How is the California homestead exemption amount determined?

Accepted Answer

It equals the countywide median sale price of a single-family home in the prior calendar year, bounded by a floor and a cap that started at $300,000 and $600,000 when the rule took effect in 2021 (CCP 704.730). Both bounds adjust annually for California CPI inflation, so quote the current year's figures — for 2026 the floor is roughly $371,000 and the cap roughly $743,000.

Question 6

What is the difference between an easement appurtenant and an easement in gross?

Accepted Answer

An easement appurtenant benefits a dominant tenement and burdens a servient tenement; it runs with the land and passes automatically on sale even if the deed is silent. An easement in gross belongs to a person or company, such as a utility, and has no dominant tenement.

Question 7

How do riparian water rights differ from appropriative rights in California?

Accepted Answer

Riparian rights belong to the owner of land bordering a watercourse, are not lost through non-use, and cannot be sold apart from the land. Appropriative rights are granted by permit from the State Water Resources Control Board and can be lost through non-use.

Question 8

What are the three steps of California's agency disclosure law, and which transactions does it reach?

Accepted Answer

Disclose (deliver the agency relationships form), Elect (choose seller, buyer, or dual agency), and Confirm (state the agency in or with the contract). It covers one-to-four-unit residential property and, since 2015, commercial real property as well, so the old residential-only shortcut is wrong.

Question 9

What may a dual agent never reveal without express permission?

Accepted Answer

Confidential information obtained from one client, including facts about that client's financial position, motivation, or bargaining position that could affect price (Civil Code 2079.21). Telling a buyer the seller will take less, or a seller the buyer will pay more, is the classic violation.

Question 10

What duties does a listing broker owe the principal versus the other party to the transaction?

Accepted Answer

To the principal: a fiduciary duty of utmost care, integrity, honesty, and loyalty. To the other party: honest and fair dealing, good faith, and disclosure of all facts materially affecting value or desirability that are known or reasonably discoverable, but no loyalty.

Question 11

What inspection duty does Easton v. Strassburger and Civil Code 2079 impose, and how long does liability run?

Accepted Answer

The listing and selling agent owe a reasonably competent and diligent visual inspection of the reasonably and normally accessible areas of one-to-four-unit residential property, and must disclose what it reveals. Suit must be brought within two years of possession, recordation, or close (Civil Code 2079.4).

Question 12

When must a buyer's agent have a signed buyer representation agreement, and how long may it last?

Accepted Answer

No later than the execution of the buyer's offer to purchase, and it may not run longer than three months from the date it was made for an individual buyer (Civil Code 1670.50, effective January 1, 2025). Entity buyers such as corporations and LLCs are exempt from the three-month cap.

Question 13

What is a secret profit, and why is it a disciplinary matter?

Accepted Answer

Any undisclosed compensation, commission, or profit a licensee takes from a transaction beyond the agreed fee. It is grounds for suspension or revocation under B&P 10176, so a broker buying a client's listing personally, or through a relative or entity, must disclose the principal interest in writing.

Question 14

How does an agency relationship terminate, and which one cannot be revoked?

Accepted Answer

By expiration of its term, mutual agreement, revocation, renunciation by the agent, full performance, destruction of the property, or the death or incapacity of either party. An agency coupled with an interest, where the agent holds a financial stake in the property, cannot be revoked by the principal alone.

Question 15

Who may pay a salesperson a commission in California?

Accepted Answer

Only the responsible broker under whom the salesperson is licensed. A salesperson may not accept compensation directly from a seller, buyer, cooperating broker, or escrow, and a broker may not compensate an unlicensed person for acts requiring a license (B&P 10137).

Question 16

Is a listing broker a general agent or a special agent?

Accepted Answer

Normally a special agent, hired for one transaction with limited authority, so the broker cannot bind the principal to a sale by signing on the principal's behalf. A property manager, by contrast, is usually a general agent with continuing authority over a range of acts.

Question 17

What is the capitalization rate formula, and how does the rate move value?

Accepted Answer

Capitalization rate equals net operating income divided by value, so value equals NOI divided by the rate. With NOI held constant, a higher cap rate produces a lower value: $60,000 NOI at 8 percent is $750,000, but at 10 percent it is only $600,000.

Question 18

What is a gross rent multiplier, and what does it ignore?

Accepted Answer

Sale price divided by gross rent, applied monthly for residential and annually for commercial. It ignores vacancy and all operating expenses, so it is a screening shortcut only and is unreliable when comparables have very different expense loads or vacancy.

Question 19

How does the cost approach estimate value, and when is it the best method?

Accepted Answer

Replacement or reproduction cost new, minus accrued depreciation, plus land value estimated separately. It is strongest for new construction and special-purpose property such as a school or church where sales comparables and income data barely exist.

Question 20

In the sales comparison approach, which property gets adjusted?

Accepted Answer

Always the comparable, never the subject. If the comparable is superior, subtract from its price; if the comparable is inferior, add to its price. Reversing the direction is the most common arithmetic error on income and appraisal questions.

Question 21

What are the three forms of depreciation an appraiser recognizes?

Accepted Answer

Physical deterioration (wear and tear), functional obsolescence (outdated design or layout), and external or economic obsolescence (off-site causes such as a new freeway). External obsolescence is always incurable because the owner cannot fix what is off the property.

Question 22

What is highest and best use, and what four tests must a use pass?

Accepted Answer

The legally permissible, physically possible, financially feasible, and maximally productive use that yields the greatest net return to the land. Appraisers value land as if vacant and available for its highest and best use, even when the current improvement differs.

Question 23

Who licenses appraisers in California, and can a broker's opinion of value be called an appraisal?

Accepted Answer

The Bureau of Real Estate Appraisers licenses and certifies appraisers; the DRE does not. A broker may prepare a competitive market analysis or broker price opinion, but must not present it as an appraisal or imply appraiser credentials the broker does not hold.

Question 24

Which loans fall under Article 7, the Real Property Loan Law?

Accepted Answer

Broker-negotiated loans below the statutory thresholds: first trust deeds under $30,000 and junior liens under $20,000 (B&P 10245). Loans at or above those amounts are exempt from Article 7's commission and cost limits, though other disclosure duties still apply.

Question 25

What are the maximum Article 7 commissions a broker may charge for negotiating a loan?

Accepted Answer

First trust deeds: 5 percent if the term is under three years, 10 percent if three years or more. Junior liens: 5 percent under two years, 10 percent from two to under three years, and 15 percent at three years or more (B&P 10242). Longer term, larger allowable commission.

Question 26

When must a broker deliver the Mortgage Loan Disclosure Statement to a borrower?

Accepted Answer

Within three business days after receiving a completed written loan application, or before the borrower becomes obligated on the note, whichever comes first (B&P 10240). Delivering it at signing is too late if the application came in earlier.

Question 27

How long does a trustor have to reinstate after a notice of default is recorded?

Accepted Answer

From recordation of the notice of default until five business days before the date of sale in the recorded notice of sale (Civil Code 2924c). During those final five business days there is no reinstatement right, though a postponement of more than five business days revives it.

Question 28

What is California's documentary transfer tax rate?

Accepted Answer

Fifty-five cents per $500 of consideration or value, or any fraction of $500, which works out to $1.10 per $1,000 (R&T 11911). A city within a taxing county may impose half that rate. The tax applies to the price net of any existing liens the buyer assumes.

Question 29

How much must the first overbid be at a probate court confirmation of sale?

Accepted Answer

At least 10 percent of the first $10,000 of the original bid plus 5 percent of everything above $10,000 (Probate Code 10311). On a $200,000 accepted bid that means $1,000 plus $9,500, so the first qualifying overbid is $210,500.

Question 30

What does an ALTA extended policy cover that a CLTA standard policy does not?

Accepted Answer

A CLTA standard policy covers matters of public record plus forgery and incompetent grantors. An ALTA extended policy adds off-record risks a physical inspection or survey would reveal, such as rights of parties in possession, unrecorded easements, and encroachments, and it protects lenders.

Question 31

When may a real estate broker conduct escrow without an escrow agent license?

Accepted Answer

Only in a transaction where the broker is a party or is acting as agent performing acts for which a real estate license is required (Financial Code 17006(a)(4)). The exemption is personal to the broker, and the broker's escrow division must keep the trust fund records required by Regulation 2951.

Question 32

How soon must a broker place received trust funds, and what are the three permitted destinations?

Accepted Answer

Not later than three business days after receipt, into the hands of the owner of the funds, into a neutral escrow depository, or into the broker's trust fund account (B&P 10145). A salesperson who accepts trust funds must deliver them to the broker immediately, not within three days.

Question 33

In what two situations may a broker's own money sit in the trust account?

Accepted Answer

Up to $200 of broker funds to cover bank service charges, and earned commissions or fees collectible from the account, which must be withdrawn within 25 days of deposit (Regulation 2835). Anything else is commingling under B&P 10176(e) even if separate records are kept.

Question 34

Who may sign checks on a broker's trust fund account?

Accepted Answer

The broker, the designated broker-officer of a corporate broker, a salesperson or broker-associate specifically authorized in writing, or an unlicensed employee specifically authorized in writing and covered by a fidelity bond at least equal to the maximum trust funds accessible (Regulation 2834).

Question 35

What reconciliation does Regulation 2831.2 require, and how often?

Accepted Answer

The balances of all separate beneficiary or transaction records must be reconciled to the record of all trust funds received and disbursed at least monthly, except in months with no account activity. A dated written record of each reconciliation, naming the account and the liability to each beneficiary, must be kept.

Question 36

What consent does a broker need before a disbursement that would create a trust fund shortage?

Accepted Answer

The written consent of every principal who owns funds in the account, before each such disbursement (Regulation 2832.1). The account balance must always equal aggregate trust fund liability, and a shortage discovered in a DRE audit is a frequent basis for revocation.

Question 37

How long must a broker keep transaction records, and what audit power does the DRE have?

Accepted Answer

Three years from closing, or from the listing date if the deal never closed, for listings, deposit receipts, canceled checks, and trust records (B&P 10148). Records must be produced for inspection after notice, and on sufficient cause the DRE may audit without further notice.

Question 38

What does Regulation 2725 require of a responsible broker supervising salespersons?

Accepted Answer

Written policies, rules, procedures, and systems to review licensed transactions, documents affecting party rights, document storage, trust fund handling, advertising, anti-discrimination training, and regular activity reports, plus a system to monitor compliance. Duties may be delegated; overall responsibility may not.

Question 39

What written agreement must exist between a broker and each salesperson?

Accepted Answer

A dated agreement signed by both parties covering supervision of licensed activities, duties, and compensation (Regulation 2726). It is required for broker-associates working under a broker-salesperson arrangement too, not only for salesperson licensees.

Question 40

When does a broker need a branch office license, and how fast must an address change be reported?

Accepted Answer

A separate branch office license is required for each additional place of business maintained in California (B&P 10163). A change in the location of the main or a branch office must be reported to the Commissioner no later than the next business day (Regulation 2715).

Question 41

What identifying information must appear on a licensee's solicitation materials?

Accepted Answer

Name, DRE license identification number, and the NMLS unique identifier where one has been assigned (B&P 10140.6). This covers business cards, stationery, flyers, print, broadcast and electronic ads, and for-sale, for-rent, and open-house signs.

Question 42

What are the Consumer Recovery Account payment limits, and what happens to the licensee?

Accepted Answer

For claims filed on or after January 1, 2009: $50,000 per transaction and $250,000 in total for any one licensee. The licensee's license is automatically suspended on the date of payment and cannot be reinstated until the account is repaid in full with interest (B&P 10475).

Question 43

What continuing education must a broker complete for a first license renewal?

Accepted Answer

45 clock hours within the four years before renewal, including separate three-hour courses in ethics, agency, trust fund handling, risk management, management and supervision, and fair housing, a two-hour implicit bias course, and at least 18 hours of consumer protection courses.

Question 44

When must the Transfer Disclosure Statement be delivered, and what if it arrives late?

Accepted Answer

As soon as practicable before transfer of title. If it is delivered after the buyer has signed the offer, the buyer may terminate within three days of personal delivery, or five days if it was deposited in the mail or delivered as an electronic record.

Question 45

What term must every exclusive listing contain, and what is the penalty for omitting it?

Accepted Answer

A definite, specified date of final and complete termination. Claiming or receiving a commission under an exclusive agreement without one is grounds for suspension or revocation under B&P 10176(f), and the broker's compensation claim fails.

Question 46

Who owes a commission under an exclusive right to sell, an exclusive agency, and an open listing?

Accepted Answer

Exclusive right to sell: the broker is paid no matter who sells, including the owner. Exclusive agency: the broker is paid unless the owner sells without any broker. Open listing: only the broker who is the procuring cause is paid, and the owner may sell personally with no commission.

Question 47

How large a liquidated damages deposit is presumed valid in a residential purchase contract?

Accepted Answer

Up to 3 percent of the purchase price, when the dwelling has no more than four units and the buyer intends to occupy one at the time of contracting (Civil Code 1675). Above 3 percent the provision is presumed invalid unless the seller proves the amount was reasonable.

Question 48

Which real estate agreements must be in writing under California's statute of frauds?

Accepted Answer

Contracts to sell real property, leases longer than one year, and any agreement employing a broker to buy, sell, or lease real estate for compensation (Civil Code 1624). An oral listing therefore gives the broker no enforceable claim to a commission, however clearly it was promised.

Question 49

What makes an option to purchase enforceable, and what kind of contract is it?

Accepted Answer

Actual consideration paid to the optionor, which cannot be nominal or merely recited. Until the optionee exercises it the option is unilateral, binding only the optionor, and the optionee has no obligation to buy and no equitable title.

Question 50

What must a broker do before using an advance fee agreement?

Accepted Answer

Submit the agreement and all advertising, promotional, and soliciting materials to the Commissioner at least ten calendar days before publication or use (Regulation 2970). Advance fees are trust funds, so they go into the trust account and require a verified accounting to the principal.

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