15 free questions from the Cinna RE real estate practice bank (103 in the app). Tap an answer to check it. The rationale opens right away.
A property manager's operating budget projects $120,000 in annual gross rental income and $42,000 in annual operating expenses. What is the projected net operating income?
Answer: A. $78,000
Net operating income equals gross income minus operating expenses: $120,000 - $42,000 = $78,000 (debt service is not an operating expense).
A property manager earns a 7% fee on monthly rents collected. If the building's units produce $25,000 in rent collected for the month, what is the manager's fee?
Answer: B. $1,750
The fee is 7% of collected rent: $25,000 x 0.07 = $1,750.
Two competing brokerages secretly agree to charge sellers the same commission rate in their market. This conduct is an example of which antitrust violation?
Answer: B. Price fixing
Price fixing occurs when competitors conspire to set, control, or maintain prices (such as commission rates) rather than letting each firm set them independently; it is a per se violation of antitrust law.
When a buyer gives an earnest money check to a salesperson, to whom does that money typically belong until the transaction closes or is terminated?
Answer: C. The party entitled to it under the contract terms
Earnest money belongs to the party entitled to it under the contract (buyer or seller depending on outcome); the broker merely holds it in trust and never owns it.
Under the ESIGN Act, a key requirement before electronic records may replace required paper disclosures to a consumer is that the consumer:
Answer: B. Affirmatively consents and has not withdrawn that consent
ESIGN requires that a consumer affirmatively consent to receiving records electronically (and demonstrate the ability to access them) before electronic delivery can satisfy a legal requirement to provide written disclosures.
Leaving a small amount of the broker's own money in the trust account specifically to keep the account open and cover bank service charges is generally:
Answer: B. Permitted in many jurisdictions as a limited exception to the no-commingling rule
Many jurisdictions allow a broker to keep a small, limited amount of personal funds in the trust account solely to keep it open or cover service fees, as a narrow exception to commingling rules.
Under most license laws, who is ultimately responsible for ensuring that a salesperson's advertising complies with the law?
Answer: B. The supervising or sponsoring broker
The sponsoring broker is responsible for supervising affiliated licensees, which includes ensuring their advertising complies with license law and is conducted in the firm's name.
When using an e-signature platform for a purchase contract, a best practice to manage risk and ensure enforceability is to:
Answer: B. Maintain an audit trail authenticating each signer's identity and timestamp
A reliable audit trail that authenticates each signer, records timestamps, and locks the document supports the validity of the electronic signature and protects against later disputes.
An agent is concerned that an emailed 'I accept your terms' from a buyer might count as an electronic signature. Under UETA, an electronic signature is best defined as:
Answer: B. Any electronic sound, symbol, or process attached to or logically associated with a record and executed with intent to sign
UETA defines an electronic signature broadly as any electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
When a licensee advertises a property for sale, the advertisement is generally required to disclose that the seller's representative is a:
Answer: B. Licensed real estate agent or brokerage
License law requires that advertising clearly indicate the property is being offered by a licensed agent or broker so the public is not misled into thinking it is a for-sale-by-owner.
A broker earns a $9,000 commission on a sale where the earnest money she held in trust was $3,000. At closing, how should the commission generally be paid to the broker?
Answer: B. The full commission is disbursed to the broker through the closing as earned funds, separate from the trust deposit's proper application
Commission becomes the broker's own money only when earned and disbursed at closing; the broker cannot help themselves to trust funds early, and the earnest money is applied per the contract.
A brokerage carries errors and omissions (E&O) insurance. As a risk-management strategy, E&O insurance is an example of which technique?
Answer: B. Risk transfer
Buying insurance is a risk-transfer technique because it shifts the financial burden of certain losses to the insurer rather than the brokerage absorbing them directly.
A broker fails to deposit an earnest money check into the trust account and instead leaves it in a desk drawer for three weeks before the offer is even accepted. The biggest concern with this practice is:
Answer: B. Failure to handle trust funds promptly and properly as required of a fiduciary
Brokers must handle trust funds promptly and according to instructions; failing to deposit funds in a timely manner violates the broker's fiduciary and recordkeeping duties.
A broker has a dispute between buyer and seller over who is entitled to the earnest money after a deal falls through. What is generally the appropriate action for the broker holding the funds?
Answer: B. Keep the disputed funds in the trust account until the dispute is resolved or directed by a court
When entitlement is disputed, the broker should retain the funds in trust and not release them until the parties agree, the matter is litigated, or a legal procedure (such as interpleader) resolves it.
Under the Telephone Consumer Protection Act and the National Do-Not-Call Registry, a licensee may generally call a consumer whose number is on the registry if:
Answer: A. The licensee has an established business relationship with that consumer
An established business relationship (for example, a recent transaction or inquiry) is an exception that allows contact even when the number appears on the Do-Not-Call Registry, within the time limits the rules allow.
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