Illinois Real Estate Exam Study Guide

Which of the following is an example of police power? A) Zoning laws B) Deed restrictions C) Easements D) Title insurance

A) Zoning laws

What type of loan is guaranteed by the government? A) Conventional B) VA C) Adjustable-rate D) Reverse mortgage

B) VA

Which fiduciary duty requires an agent to put the client’s interest above their own? A) Loyalty B) Disclosure C) Obedience D) Accounting

A) Loyalty

A property manager’s primary obligation is to the: A) Tenants B) Broker C) Owner D) State

C) Owner

What is the main purpose of a deed? A) Provide financing B) Transfer title C) Secure the property D) Establish boundaries

B) Transfer title

Which of the following best defines real property? A) Land only B) Land and personal property C) Land and everything permanently attached to it D) Fixtures only

C) Land and everything permanently attached to it

The Illinois Real Estate License Act is administered by the: A) Department of Financial and Professional Regulation B) Attorney General C) State Supreme Court D) Real Estate Commission

A) Department of Financial and Professional Regulation

What type of listing allows a seller to employ multiple brokers but only pay the one who produces a buyer? A) Exclusive right-to-sell B) Net listing C) Open listing D) Exclusive agency

C) Open listing

When is earnest money typically deposited? A) At closing B) Within 5 business days of contract acceptance C) After home inspection D) When the buyer signs the deed

B) Within 5 business days of contract acceptance

Which legal description uses meridians and base lines? A) Lot and block B) Metes and bounds C) Government survey D) Rectangular coordinate

C) Government survey

In Illinois how many hours of continuing education are required every two years for brokers? A) 6 B) 8 C) 12 D) 18

C) 12

What type of estate is created by a lease? A) Freehold B) Leasehold C) Fee simple D) Life estate

B) Leasehold

The income approach to value is most commonly used for: A) Residential property B) Farmland C) Commercial property D) Vacant land

C) Commercial property

Which of the following is a voluntary lien? A) Property tax lien B) Mortgage C) Judgment D) Mechanic's lien

B) Mortgage

A borrower has defaulted and the lender begins legal action to take the property. This is called: A) Redemption B) Foreclosure C) Defeasance D) Conveyance

B) foreclosure

What is the effect of recording a deed? A) It guarantees title B) It provides actual notice C) It makes the deed valid D) It gives constructive notice

D) It gives constructive notice

Which of the following is an example of an encroachment? A) A neighbor’s fence built across the property line B) A lien on a property C) A right of way D) A driveway easement

A) A neighbor’s fence built across the property line

A broker deposits earnest money into their personal account. This is an example of: A) Commingling B) Conversion C) Escrow D) Fraud

A) Commingling

A contract signed under duress is: A) Valid B) Voidable C) Void D) Enforceable

B) Voidable

An exclusive agency listing means the broker is paid: A) No matter who sells the property B) Only if the seller finds the buyer C) Only if the broker finds the buyer D) If the buyer is pre-approved

C) Only if the broker finds the buyer

What type of tenancy exists when tenants continue to occupy a property after their lease ends without the landlord’s consent? A) Tenancy at will B) Tenancy in common C) Tenancy at sufferance D) Periodic tenancy

C) Tenancy at sufferance

Which of the following statements about a quitclaim deed is true? A) It provides a warranty of title B) It guarantees clear ownership C) It conveys any interest the grantor has D) It includes title insurance

C) It conveys any interest the grantor has

Under RESPA

a Loan Estimate must be provided within how many business days of application? A) 1 B) 3 C) 5 D) 7

The purpose of a title insurance policy is to: A) Insure the property against fire B) Protect against future zoning changes C) Cover losses due to title defects D) Replace homeowner’s insurance

C) Cover losses due to title defects

In Illinois a sponsoring broker must review and initial contracts within how many days? A) 1 B) 2 C) 7 D) 10

B) 2

An example of external obsolescence is: A) Poor layout B) Outdated kitchen C) Nearby landfill D) Broken furnace

C) Nearby landfill

Which of the following is NOT a test of a fixture? A) Adaptation B) Intent C) Relationship of parties D) Cost

D) Cost

A homeowner’s property is taken for public use and they are compensated. This is an example of: A) Escheat B) Condemnation C) Police power D) Eminent domain

D) Eminent Domain

Which document outlines the duties between a managing broker and a broker? A) Listing agreement B) Independent contractor agreement C) Sales contract D) Agency disclosure form

B) Independent contractor agreement

Which of the following is NOT a protected class under federal Fair Housing laws? A) National origin B) Age C) Religion D) Disability

B) Age

A contract that appears valid but cannot be enforced by either party is: A) Valid B) Void C) Voidable D) Unenforceable

D) Unenforceable

Which of these best defines a bilateral contract? A) One party makes a promise B) Both parties make promises C) Agreement must be in writing D) One party performs

B) Both parties make promises

Which of the following loans would most likely have a funding fee? A) FHA B) Conventional C) VA D) Adjustable-rate mortgage

C) VA

The Fair Housing Act prohibits discrimination based on all EXCEPT: A) Marital status B) Religion C) National origin D) Color

A) Marital status

What does it mean when a license is “inoperative” in Illinois? A) Expired B) Suspended C) Not associated with a sponsoring broker D) Permanently revoked

C) Not associated with a sponsoring broker

What is the primary purpose of an appraisal? A) Estimate insurance value B) Determine list price C) Estimate market value D) Calculate tax liability

C) Estimate market value

A special warranty deed contains: A) No warranties B) All warranties since origin of title C) Warranties only during grantor’s ownership D) Full title insurance

C) Warranties only during grantor’s ownership

What is the primary purpose of a home inspection? A) Appraise the value B) Identify needed repairs C) Issue a loan D) Negotiate commission

B) Identify needed repairs

The Real Estate License Act in Illinois requires that licensees disclose: A) The buyer’s credit score B) Agency relationships C) Loan terms D) Previous listing price

B) Agency relationships

In Illinois a licensee must disclose their agency relationship: A) Before showing property B) When writing an offer C) At closing D) After the inspection

A) Before showing property

A land contract is also known as: A) Contract for deed B) Lease-purchase agreement C) Mortgage assumption D) Option to buy

A) Contract for deed

A broker lists a home and later finds out it has lead-based paint. The broker must: A) Paint over the issue B) Disclose this to all parties C) Cancel the listing D) Report it to HUD

B) Disclose this to all parties

How long is the right of rescission for a home equity loan under Regulation Z? A) 1 day B) 3 days C) 7 days D) No rescission period

B) 3 days

What is the function of a comparative market analysis (CMA)? A) Establish property taxes B) Estimate value based on recent sales C) Confirm loan value D) Qualify the buyer

B) Estimate value based on recent sales

A property sold for $200

000 and the broker earned a 6% commission. What is the commission amount? A) $10

In Illinois

who must complete the Residential Real Property Disclosure Report? A) Seller B) Buyer C) Broker D) Home inspector

Which form of co-ownership does not include the right of survivorship? A) Joint tenancy B) Tenancy by the entirety C) Tenancy in common D) Community property

C) Tenancy in common

The maximum security deposit a landlord may charge in Illinois is: A) 1 month’s rent B) 2 months’ rent C) Unlimited D) Regulated by municipality

C) Unlimited

What does “time is of the essence” mean in a real estate contract? A) The buyer must move in by closing B) The agent must act ethically C) Deadlines are legally binding D) Time is flexible

C) Deadlines are legally binding

The purpose of escrow is to: A) Hold title insurance B) Store the deed C) Ensure contract terms are met before closing D) Lock in interest rate

C) Ensure contract terms are met before closing

How many hours of post-licensing education must a new Illinois broker complete? A) 15 hours B) 30 hours C) 45 hours D) 75 hours

B) 45 hours

Who is responsible for determining property assessments in Illinois? A) The lender B) The county assessor C) The title company D) The appraiser

B) The county assessor

What does PMI protect? A) The borrower B) The seller C) The lender D) The appraiser

C) The lender

A property’s market value is: A) The tax value B) The highest possible sale price C) The price a buyer is willing to pay and a seller is willing to accept D) The price per square foot

C) The price a buyer is willing to pay and a seller is willing to accept

When must earnest money be deposited in Illinois? A) Immediately B) Within 24 hours C) Within 1 business day of contract acceptance D) At closing

C) Within 1 business day of contract acceptance

What is a net lease? A) Tenant pays no expenses B) Landlord pays all expenses C) Tenant pays rent plus some or all property expenses D) Rent adjusts with market rate

C) Tenant pays rent plus some or all property expenses

Which of these is a leasehold estate? A) Life estate B) Fee simple C) Tenancy for years D) Defeasible fee

C) Tenancy for years

A dual agency must be: A) Implied B) Oral C) Disclosed and agreed to in writing D) Avoided

C) Disclosed and agreed to in writing

The right to use land of another for a specific purpose is known as: A) Easement B) Encroachment C) Lien D) License

A) Easement

A mechanic’s lien is filed by: A) A seller B) A government agency C) A contractor or laborer D) A title company

C) A contractor or laborer

How long does a broker have to keep transaction records in Illinois? A) 1 year B) 3 years C) 5 years D) 7 years

B) 5 years

What is the purpose of a CMA (comparative market analysis)? A) Provide an appraisal B) Set property taxes C) Estimate market value for listing D) Adjust insurance coverage

C) Estimate market value for listing

Which of the following is NOT required for a valid contract? A) Offer and acceptance B) Earnest money C) Legal purpose D) Consideration

B) Earnest money

Which of the following best describes steering? A) Directing buyers to or away from neighborhoods based on race B) Showing only properties in a buyer’s price range C) Not disclosing a defect D) Charging higher rent to certain groups

A) Directing buyers to or away from neighborhoods based on race

A borrower pays off a mortgage early and is charged a fee. This is called: A) Prepayment penalty B) PMI C) Discount point D) Acceleration fee

A) Prepayment penalty

Which loan is insured by the federal government? A) VA B) FHA C) USDA D) Conventional

B) FHA

A deed restriction is enforced by: A) The zoning board B) The lender C) Court action D) The assessor

C) Court action

A short sale is when: A) The seller owes more than the property is worth B) The buyer is not pre-approved C) The lender has foreclosed D) The seller is behind on taxes

A) The seller owes more than the property is worth

In Illinois

who holds the earnest money? A) Listing broker B) Buyer C) Seller’s attorney D) Managing broker

What kind of property is covered under Illinois Landlord-Tenant law? A) Commercial property B) Single-family homes only C) Residential rental property D) Condominiums only

C) Residential rental property

A deed that offers no warranties is a: A) General warranty deed B) Special warranty deed C) Quitclaim deed D) Bargain and sale deed

C) Quitclaim deed

The primary purpose of a home warranty is to: A) Protect the buyer from defects after closing B) Replace title insurance C) Guarantee property value D) Provide mortgage insurance

A) Protect the buyer from defects after closing

An acceleration clause allows the lender to: A) Lower the interest rate B) Extend the loan term C) Demand full repayment if the borrower defaults D) Change the payment schedule

C) Demand full repayment if the borrower defaults

What is the purpose of RESPA? A) Regulate zoning B) Ensure ethical advertising C) Protect borrowers by requiring disclosure of closing costs D) Set maximum interest rates

C) Protect borrowers by requiring disclosure of closing costs

How is a mortgage lien prioritized? A) By borrower’s credit score B) By lender type C) By order of recording D) By property value

C) By order of recording

A broker represents both buyer and seller in the same transaction. This is called: A) Designated agency B) Single agency C) Dual agency D) Transactional brokerage

C) Dual agency

In Illinois a broker must renew their license every: A) Year B) 2 years C) 3 years D) 5 years

By April 30th of every even numbered year

An example of a material defect that must be disclosed is: A) Peeling paint B) Worn carpet C) Structural foundation cracks D) Dirty windows

C) Structural foundation cracks

What type of ownership is exclusive to married couples in Illinois? A) Joint tenancy B) Tenancy in common C) Tenancy by the entirety D) Community property

C) Tenancy by the entirety

Which of the following would require an Illinois real estate license? A) Selling your own home B) Acting as a property manager for pay C) Referring a buyer to another broker without compensation D) Purchasing investment property for yourself

B) Acting as a property manager for pay

The Illinois Human Rights Act prohibits discrimination based on: A) Political affiliation B) Citizenship C) Sexual orientation D) Marital status

C) Sexual orientation

The person who conveys real property to another is the: A) Grantee B) Grantor C) Trustee D) Mortgagee

B) Grantor

Which of the following is not required in a valid deed? A) Grantee’s signature B) Grantor’s signature C) Legal description D) Delivery to the grantee

A) Grantee’s signature

A life estate based on the life of someone other than the life tenant is: A) Life estate in reversion B) Life estate pur autre vie C) Legal life estate D) Fee simple defeasible

B) Life estate pur autre vie

What is an example of private land-use control? A) Zoning ordinance B) Deed restriction C) Police power D) Eminent domain

B) Deed restriction

The purpose of a title insurance policy is to: A) Protect the buyer from zoning changes B) Guarantee future value C) Cover defects in the title D) Ensure property boundaries

C) Cover defects in the title

What is the function of a managing broker in Illinois? A) Inspects property B) Supervises affiliated licensees C) Acts as a dual agent by default D) Assesses property value

B) Supervises affiliated licensees

What kind of lease includes increases tied to an index such as CPI? A) Gross lease B) Percentage lease C) Net lease D) Index lease

D) Index lease

An open listing means: A) The property is listed on MLS B) Only one broker can sell the property C) Multiple brokers may represent the seller but only the one who brings the buyer gets paid D) No commission is paid unless the owner agrees

C) Multiple brokers may represent the seller but only the one who brings the buyer gets paid

The Truth in Lending Act (TILA) requires disclosure of: A) Property taxes B) Fair market value C) Annual percentage rate (APR) D) Property condition

C) Annual percentage rate (APR)

In Illinois a real estate licensee may not be compensated directly by: A) The buyer B) Their managing broker C) Another sponsoring broker D) A leasing client

C) Another sponsoring broker

How long does a landlord have to return a security deposit for a unit in a building with 5 or more units in Illinois? A) 7 days B) 15 days C) 30 days D) 45 days

C) 30 days

What does the term “constructive eviction” refer to? A) A court order removing a tenant B) A tenant voluntarily leaves due to landlord’s failure to maintain property C) A notice to vacate D) A sheriff’s notice

B) A tenant voluntarily leaves due to landlord’s failure to maintain property

What is the primary characteristic of a land trust in Illinois? A) Trustee is always the lender B) Owner's identity is confidential C) It must be irrevocable D) Only for agricultural land

B) Owner's identity is confidential

A broker representing the buyer owes fiduciary duties to: A) The seller only B) The buyer only C) The managing broker D) Both buyer and seller

B) The buyer only

When a person dies intestate their property passes by: A) Will B) Title C) Law of descent and distribution D) Survivorship

C) Law of descent and distribution

A broker exaggerates features of a home to a buyer. This is an example of: A) Puffing B) Fraud C) Misrepresentation D) Coercion

A) Puffing

What is the purpose of zoning laws? A) Prevent tax fraud B) Control land use C) Limit title transfers D) Protect buyers

B) Control land use

In Illinois how long must brokers keep transaction records? A) 1 year B) 3 years C) 5 years D) 7 year

C) 5 years

Which of the following creates a lien against property? A) Easement B) Mortgage C) License D) Covenant

B) Mortgage