Free Real Estate Maryland-Real-Estate-Salesperson Practice Exam with Questions & Answers

A tax-deferred exchange, also known as a 1031 exchange, allows investors to exchange one qualifying investment or business property for another “like-kind” property and defer payment of capital gains taxes until the new property is sold.

This provision falls under Internal Revenue Code §1031.

In the Maryland pre-licensing curriculum, this is explained under the “Real Estate Financing and Investment” section to show how investors legally postpone capital gains recognition by following IRS guidelines.

For pre-1978 residential properties, federal law (Title X) requires disclosure of any known lead-based paint or hazards, provision of the EPA pamphlet, and a 10-day inspection opportunity (unless waived). Licensees must ensure required disclosure forms are completed and disclose known material facts, but they must not state lead exists if they do not actually know. Licensees are not responsible for abatement and must never assist in concealing hazards.

An option contract gives the optionee (Monique) the exclusive right to purchase a property within a specified period and under specific terms, but not the obligation to do so.

When properly executed and supported by consideration (the option fee), the option is a binding contract on the property owner (Mark) and any subsequent owners who take title with constructive notice of the existing option.

Therefore, when Monique exercises her valid option within the option period, Shelly must honor it—the property must be sold to Monique under the agreed terms.

The land use module distinguishes among zoning relief mechanisms:

A use variance permits a land use otherwise prohibited in the zoning district and typically requires proof of unnecessary hardship unique to the property.

An area (dimensional) variance addresses dimensional departures (setbacks, height) and usually requires practical difficulty rather than hardship.

A special use permit (special exception) authorizes uses listed as conditionally allowed if specific criteria are met.

A moratorium is a temporary halt on development.Because the question describes permission to conduct a prohibited use upon showing unnecessary hardship, the correct term is use variance.

Bulk zoning regulates the intensity of land use—controlling density through standards such as lot size, setbacks, height limits, floor-area ratio (FAR), and open-space requirements. Its primary purpose is to restrict density and prevent overcrowding, not to group similar uses (which is the role of traditional/Euclidean zoning). This is taught in the course’s Land Use Controls and Property Development section.

In a seller-agency relationship, the agent owes the client (seller) fiduciary duties, which include loyalty, obedience (lawful instructions), disclosure, confidentiality, accounting, and reasonable care. Practical responsibilities include advising the seller on pricing and marketing strategy, actively marketing the property, presenting offers, and negotiating in the seller’s best interests. Duties owed to buyers (customers) are limited to honesty and disclosure of material facts, not advocacy. Therefore, “Market and sell the property” reflects the seller’s agent’s core duty; negotiating for the buyer or representing the buyer would conflict with loyalty to the seller unless properly disclosed and permitted as dual agency under Maryland law.

An amendment is a written change or modification to an existing contract that is made after the original agreement has been executed.

All parties must agree to and sign the amendment for it to be legally binding.

This differs from an addendum, which is added before or at the same time as the contract and becomes part of the original agreement.

The Maryland course highlights amendments as critical tools in real estate practice for making mutually accepted changes—such as closing dates, purchase prices, or contingencies—without voiding the original contract.

Under Maryland’s agency law, a licensee must establish a relationship of trust, confidence, and loyalty with a client.

Meeting face-to-face helps the agent explain agency relationships, present the Understanding Whom Real Estate Agents Represent disclosure, and begin building rapport and confidence, which are critical in fiduciary relationships.

As emphasized in the Brokerage and Agency module, personal contact helps ensure informed consent and professional transparency—never to collect personal demographic or financial data outside proper procedures.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Law of Agency and Broker-Client Relationships section.

– Business Occupations and Professions Article §17-530 through §17-534.

Under “Leases and Property Management,” the course explains that a net lease requires the tenant to pay base rent plus some or all of the operating expenses, such as property taxes, insurance, and maintenance (often abbreviated as T, I, M). Variations include single-net (N), double-net (NN), and triple-net (NNN) leases.

A gross lease has the landlord paying most operating expenses, with the tenant paying a single rent figure. A percentage lease bases part of rent on the tenant’s gross sales (common in retail). A sublease is a transfer arrangement, not a lease type that determines expense responsibility.

References (Course Outline/Study Topics): Maryland 60-Hour Principles and Practices of Real Estate — “Leases and Property Management” (Gross vs. net vs. percentage leases; expense allocations).

Tenancy by the entirety is a special form of ownership available only to married couples in Maryland. It provides each spouse with an equal, undivided interest and includes the right of survivorship—if one spouse dies, the surviving spouse automatically owns the entire property.

However, when the couple divorces, the marriage relationship—essential for this ownership form—no longer exists. The law automatically converts the ownership to tenancy in common, unless otherwise specified in the divorce decree or a subsequent agreement.