Free Practice Questions for Real Estate Massachusetts-Real-Estate-Salesperson Exam

The correct answer is B, Contract. A contract is a legally enforceable agreement creating obligations between parties.

Core contract requirements generally include competent parties, mutual assent through offer and acceptance, consideration, lawful purpose, and genuine consent. Certain real estate agreements also must satisfy the Statute of Frauds or other statutory formalities.

Consideration represents the bargained-for legal value exchanged between the parties. One party can promise money while the other promises to transfer property, perform services, grant possession, or undertake another legal obligation.

An easement is a property interest allowing specified use of another ' s land. A deed restriction limits the use of real estate. A mortgage lien secures a debt against property. Although each can arise from contractual arrangements, none is the general definition of a contract.

Candidates should also distinguish valid, void, voidable, and unenforceable contracts and understand unilateral versus bilateral and executed versus executory agreements.

Study Guide Reference: Contracts — Essential Elements, Consideration, Competency and Enforceability.

The correct answer is D, $38,400.

First calculate cubic feet:

36 × 200 × 12 = 86,400 cubic feet

One cubic yard equals:

3 feet × 3 feet × 3 feet = 27 cubic feet

Convert the warehouse to cubic yards:

86,400 ÷ 27 = 3,200 cubic yards

At $1 per cubic yard per month:

3,200 × $1 = $3,200 monthly rent

Annual rent:

$3,200 × 12 = $38,400

Therefore D is correct.

This problem tests volume, not floor area. If the rent had been stated per square foot, the height would not ordinarily be part of the calculation. Because the rental factor is explicitly expressed per cubic yard, all three dimensions must be used.

Candidates should remember that one square yard equals 9 square feet, while one cubic yard equals 27 cubic feet.

Study Guide Reference: Real Estate Calculations — Area, Volume, Cubic Measurements and Commercial Rent.

The correct result is $800, making A correct.

First determine assessed value:

$150,000 × 40% = $60,000 assessed value.

Next convert the assessment into $1,000 tax units:

$60,000 ÷ $1,000 = 60 units.

Apply the stated tax rate:

60 × $30 = $1,800 gross property tax.

Finally deduct the $1,000 exemption or credit expressly provided by the facts:

$1,800 − $1,000 = $800.

The candidate should not apply the $1,000 reduction to market value before calculating the assessment unless the question specifically describes an exemption from assessed value rather than a direct tax reduction. Here, the problem ' s intended calculation treats the stated $1,000 amount as a reduction from the computed tax.

The Massachusetts examination outline contains a dedicated Real Estate Calculations competency. Candidates should be comfortable moving between market value, as sessed value, tax rate per $1,000, exemptions, commissions, prorations, loan calculations, and similar numerical scenarios.

Study Guide Reference: Real Estate Calculations — assessed value and property-tax computations.

This describes a cooperative, making C correct. In a cooperative, residents generally do not receive a deed conveying fee ownership of their individual apartment. Instead, the cooperative entity owns the building, while the resident purchases shares or membership interests and receives a proprietary lease granting the right to occupy a particular unit.

The Massachusetts Board ' s official curriculum specifically explains that cooperative residents own shares in the corporation owning the building. The proprietary lease connects a defined number of shares with the shareholder ' s right to occupy a specified space and use common facilities. Monthly charges are commonly based on the number of shares and can cover maintenance, repairs, improvements, real estate taxes, and interest on the building ' s underlying mortgage.

A condominium is materially different: the unit owner ordinarily holds a deeded interest in the individual unit plus an undivided interest in common areas. The building-level financial structure described in the question—particularly shares plus an underlying cooperative mortgage—is characteristic of a co-op.

Massachusetts tax authority guidance also recognizes the stock-plus-proprietary-lease structure of residential cooperatives.

Study Guide Reference: Property Ownership — Condominiums, Cooperatives and Timeshares.

The correct answer is C. Federal environmental liability under CERCLA can impose substantial cleanup responsibility on owners of contaminated real estate even where the owner did not personally cause the original contamination.

An innocent-landowner or related statutory liability defense therefore requires considerably more than simply claiming ignorance. A purchaser generally must conduct all appropriate inquiries before acquisition into previous ownership and uses of the property and satisfy the applicable statutory requirements.

Commercial transactions commonly use an environmental site-assessment process, particularly a Phase I Environmental Site Assessment, as an important component of environmental due diligence.

Additional requirements can include lack of disqualifying affiliation with responsible parties, cooperation with governmental response actions, compliance with institutional controls, appropriate care concerning hazardous substances, provision of legally required notices, and responses to information requests.

Massachusetts also has its own contaminated-property liability and cleanup regime under Chapter 21E, making professional environmental review particularly important.

The older shorthand that the owner merely must have “no actual knowledge” is therefore legally incomplete.

Study Guide Reference: Land Use Controls and Regulations — Environmental Hazards, CERCLA and Environmental Due Diligence.

Asbestos is a mineral fiber once widely used in building insulation, roofing, and floor tiles due to its fire-resistant properties. It was valued in both residential and commercial construction as a flame retardant and insulator.

However, when disturbed, asbestos fibers can become airborne and inhaled, leading to serious health issues including asbestosis, lung cancer, and mesothelioma. Because of these risks, asbestos use in building materials is now heavily regulated under federal and state law (EPA and Massachusetts DEP regulations).

The other options are incorrect:

Water resistance (B) was not its primary benefit.

Air purification (C) and pest resistance (D) are not related to asbestos.

Correct answer: A: fire resistant.

The correct answer is C, a permanently constructed barn. Chattel is another term for personal property—movable property that is not legally part of the real estate.

A tractor and freestanding furniture are classic personal-property examples. A movable refrigerator can also remain personal property unless it has been incorporated into the real estate in a manner establishing fixture status.

A barn permanently constructed on land, by contrast, is an improvement to the real estate and normally transfers with the land when the property is conveyed.

Fixture analysis becomes more difficult when an object began as personal property but was later attached to the building. Courts and contracts can consider factors including the manner of attachment, adaptation to the property ' s use, relationship of the parties, and intention regarding permanence.

This distinction matters because a deed conveys the real estate and its fixtures, while personal property may need to be separately included in the purchase contract or conveyed through a bill of sale.

Study Guide Reference: Property Ownership — Chattel, Personal Property, Fixtures and Improvements.

A wraparound mortgage is a type of seller financing in which the new loan “wraps around” an existing loan. The buyer makes one combined payment to the seller, who continues paying the original loan while retaining the difference.

In this case:

The seller owes $20,000 at 7%.

The buyer wants to borrow $60,000 total ($20,000 existing + $40,000 new).

The new loan is structured at 10% interest, covering both debts.

This is exactly how a wraparound mortgage works: the seller finances the buyer’s loan, keeps the existing mortgage in place, and earns the difference between the interest rates.

The other options:

Blanket mortgage (A): covers multiple parcels.

Equity loan (B): based on homeowner equity.

Buydown (D): involves prepaying interest to reduce borrower’s rate.

Correct answer: C: wraparound.

The correct answer is C, 80%. On conventional financing, lenders commonly require private mortgage insurance when the borrower finances more than approximately 80% of the property ' s applicable value, meaning the down payment is less than about 20%.

PMI protects the lender, not the borrower, against part of the financial loss resulting from borrower default.

Candidates should distinguish this general origination rule from federal PMI cancellation provisions. Under the federal Homeowners Protection Act, qualifying borrowers can generally request cancellation when the mortgage reaches 80% of the home ' s original value if statutory conditions are satisfied. Automatic termination generally occurs at the scheduled 78% threshold for qualifying loans when required conditions are met.

FHA mortgage insurance is different from private mortgage insurance. FHA-insured mortgages use government mortgage-insurance requirements rather than conventional PMI.

Loan-to-value is calculated by comparing the loan amount to the applicable property value or purchase price under lender rules.

Study Guide Reference: Financing — Conventional Mortgages, Loan-to-Value Ratios and Private Mortgage Insurance.

The correct answer is B, $79,800.

Because the total commission is 6.5% and the two brokerage sides divide it equally, the listing broker receives:

6.5% ÷ 2 = 3.25% of the selling price

The listing broker received $2,593.50.

Therefore:

$2,593.50 ÷ 0.0325 = $79,800

Verification:

$79,800 × 6.5% = $5,187 total commission

Half of $5,187 is:

$5,187 ÷ 2 = $2,593.50

Therefore the answer is confirmed.

The question assumes an equal cooperation split solely for purposes of the calculation. Actual brokerage compensation and cooperative compensation are not fixed by Massachusetts law. Compensation must be determined by the applicable agreements and lawful brokerage arrangements.

Candidates should first isolate the effective percentage received by the party identified before solving backward for the sale price.

Study Guide Reference: Real Estate Calculations — Commission Splits and Sale-Price Calculations.