Free Real Estate Maryland-Real-Estate-Salesperson Practice Exam with Questions & Answers | Set: 4

Under the Uniform Commercial Code (UCC) Article 3 principles taught in real estate financing, a negotiable instrument (e.g., a promissory note) must be an unconditional promise or order to pay a fixed amount of money. Thus, if it does not contain an order to pay, it must contain a promise to pay. The amount must be fixed (not “flexible”), and while signatures are required for enforceability, notarization is not a UCC requirement for negotiability.

In Maryland, licensees must disclose material facts that are adverse, that they actually know, and that are physical to the property or the transaction—even to customers (non-clients). The MAAP framework (Material, Adverse, Actually known, Physical) is taught in pre-licensing to help practitioners decide what must be disclosed and to distinguish disclosable facts from confidential information or client motivations that must be protected. Examples include known structural defects, roof leaks, or latent physical conditions. This aligns with Maryland’s duties of honesty, disclosure of material facts, and prohibition against misrepresentation.

References (Maryland Pre-Licensing Core Content):

Maryland 60-Hour Course: “Real Estate Brokerage and the Law of Agency” (brokerage duties to clients and customers; disclosure vs. confidentiality; MAAP decision tool).

COMAR 09.11.02 (standards of practice: honesty; disclosure of material facts; avoidance of misrepresentation).

Business Occupations & Professions, Title 17 (grounds for discipline related to disclosure and misrepresentation).

Brokerage risk management includes cybersecurity best practices to protect client nonpublic information (e.g., transaction documents, IDs, financial data). Licensees are instructed to avoid unsecure/public networks and untrusted or suspicious websites, use secure/encrypted connections, maintain strong passwords and multi-factor authentication, and follow brokerage data security policies. Avoiding unsecure environments reduces exposure to malware, phishing, and interception.

The fair housing section explains that testing (often using paired testers) is designed to identify discriminatory housing practices that may not be visible to the public, such as unequal treatment in showings, terms, or availability disclosures. Testing compares how similarly qualified people from protected classes are treated relative to control testers, thereby uncovering hidden or subtle discrimination and supporting enforcement of fair housing laws.

Agreeing—or even coordinating—on a minimum commission or listing fee among competing brokerages is price fixing, a per se violation of antitrust law. Maryland pre-licensing emphasizes that competitors must not discuss or set commission rates, fees, or pricing policies; each brokerage must independently determine its fees.

Group boycotting = competitors conspiring to refuse to deal with a party.

Market allocation = dividing territories/customers.

Tie-in arrangement = conditioning sale of one product/service on purchase of another.

References (Maryland Sources / Pre-Licensing Core Content):

Maryland 60-Hour Course: “Real Estate Brokerage Operations” (antitrust compliance: price fixing, market allocation, group boycotts, tie-ins).

Sherman Antitrust Act principles as incorporated in Maryland real estate education.

COMAR 09.11.02 (ethical conduct; avoiding anticompetitive practices); MREC guidance on commissions being negotiable and set independently by each brokerage.

In Maryland, when a broker or brokerage firm represents both the buyer and the seller in the same transaction, dual agency may occur only with the informed written consent of both parties.

This consent must be initially obtained when the parties agree to representation and then reaffirmed in writing before either party signs the sales contract.

This ensures both understand the limitations on confidentiality and loyalty that dual agency imposes.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Maryland Agency Law section.

– Business Occupations and Professions Article §17-534.

– COMAR 09.11.07.07 – Consent to Dual Agency.

Under Maryland Business Occupations and Professions Article §17-322 and the Code of Maryland Regulations (COMAR) 09.11.02, the Maryland Real Estate Commission (MREC) may impose disciplinary action on a licensee who violates license law or the Commission’s Code of Ethics. Sanctions can include a formal reprimand, monetary fine, license suspension, or license revocation. Imprisonment does not apply to ethical or administrative violations unless accompanied by criminal fraud. Each case is reviewed individually by the Commission.

The loan-to-value (LTV) ratio compares the loan amount to the property’s appraised value or purchase price, whichever is less. An LTV of 90/100 (or 90%) means the borrower’s loan equals 90% of the property’s value, and the borrower provides a 10% down payment.

Lenders use the LTV ratio to assess risk and determine if mortgage insurance is required. Maryland’s pre-licensing course explains this formula in the “Real Estate Financing” section under “Loan Underwriting and Ratios.”

PITI is the standard mortgage-payment acronym: Principal (loan balance reduction), Interest (finance charge), Taxes (property taxes, typically escrowed), and Insurance (homeowner’s and, when applicable, mortgage insurance). Lenders use PITI to calculate housing ratios and total debt-to-income requirements during underwriting—core content in the financing section of Maryland’s pre-licensing course.

In subdivision and zoning review, density is evaluated using physical and regulatory site controls—minimum lot size, setbacks, yard requirements, lot coverage, height limits, open space ratios, and boundaries—to determine how many dwelling units may be placed per acre and how they’re arranged. While property values and federal approvals can be relevant to other processes, density determinations rest primarily on local zoning metrics such as setbacks and boundaries.