The exam publishes
its own weighting.

The exam publishes its own weighting

The salesperson licensing exam comes in two portions, scored separately: a national portion of 80 scored questions, and a state portion whose length varies. Most states let you keep a passed portion and retake only the one you failed, usually within a year. This site covers the national portion.

What makes this subject unusual is that the content outline is published, with the exact number of questions in each of eight areas. That is a blueprint, not a syllabus, and it tells you where to spend your time. Contracts and agency alone is a fifth of the paper.

Real property, personal property, and the thing in between

Real property is land, everything permanently attached to it, and the bundle of rights that comes with it. Personal property — chattels — is everything else, and it moves by bill of sale rather than by deed. The exam lives in the gap between them, because things cross it in both directions.

• The bundle of rights. Possession, control, enjoyment, exclusion and disposition. Most limits on ownership work by removing one stick from the bundle rather than by taking the whole thing.
• Economic characteristics. Scarcity, improvement, permanence of investment (fixity), and area preference (situs). Situs is the one that explains why identical houses have different prices.
• Physical characteristics. Immobility, indestructibility, and non-homogeneity (uniqueness). These three are why real estate needs appraisal at all: no two parcels are the same, so there is no commodity price.
• Air, surface and subsurface rights. All three are separable and can be sold apart from each other. Mineral rights severed from the surface are a common and genuinely surprising title problem.

Legal descriptions, and the arithmetic inside them

A street address is not a legal description. Three systems are used, and a valid deed needs one of them.

1. 1
   Metes and bounds.

   Directions and distances from a defined point of beginning, running the boundary and closing back at that same point. Used in the original colonies and wherever the land was settled before it was surveyed. A description that does not close is defective.
2. 2
   Rectangular survey, also called the government or Public Land Survey System.

   Principal meridians running north-south and base lines running east-west, dividing land into six-mile-square townships, each of 36 one-mile-square sections. Used in most states west and south of the original colonies.
3. 3
   Lot and block, also called the recorded plat or subdivision system.

   A reference to a numbered lot in a numbered block on a plat map recorded with the county. This is what almost every modern residential description actually uses, because the surveying was done once when the subdivision was platted.

Public and private limits on what an owner may do

Ownership is never absolute. Government retains four powers over every parcel, and private parties can attach further limits by agreement. The mnemonic for the government powers is PETE.

• Easement. A right to use another's land for a stated purpose. An easement appurtenant attaches to a dominant parcel and runs with the land to the next owner; an easement in gross belongs to a person or company, which is what a utility easement is. An easement by necessity arises when a parcel would otherwise be landlocked.
• Encroachment. A physical intrusion — a fence, a wall, an eave — across a boundary. A survey finds these; a title search does not.
• License. Personal permission to use land, revocable at will and not an interest in the land at all. A ticket to a ballgame is a license.
• CC&Rs and the HOA. Private restrictions recorded against a subdivision, enforced by the association or by neighboring owners. Where a private restriction and a public zoning rule conflict, the more restrictive one governs.
• Nonconforming use. A use that was lawful before the zoning changed and is allowed to continue — grandfathered. A variance is permission to depart from the rule because of hardship; a conditional or special use permit allows a use the zone contemplates subject to conditions.

Estates, forms of ownership, and leases

An estate is the degree and duration of a person's interest in land. Freehold estates are of indefinite duration and amount to ownership; leasehold estates are for a period and amount to possession.

• Lease types by how rent is computed. A gross lease has the landlord pay the operating expenses out of a flat rent; a net lease has the tenant pay some or all of them on top; a percentage lease takes a share of the tenant's gross sales, which is standard in retail.
• Liens. A lien is a charge against property as security for a debt. It is an encumbrance, not ownership. General liens attach to all of a debtor's property (judgments, income tax); specific liens attach to one parcel (mortgage, mechanic's lien, property tax).
• Lien priority is first to record, with exceptions. The big exception is ad valorem property tax and special assessments, which take priority regardless of when other liens were recorded. Mechanic's liens in many states relate back to the date work began rather than the date of filing, which is a second exception worth knowing.

Deeds, transfer of title, and why recording matters

A deed is the instrument that conveys title. Title is the ownership itself, not a document. The elements of a valid deed are narrower than people expect and the exam tests the edges.

• Elements of a valid deed. A competent grantor; a grantee named with certainty; a granting clause showing intent to convey; an adequate legal description; consideration recited; and the grantor's signature. Then delivery and acceptance during the grantor's lifetime, which is what actually transfers title.
• What is NOT required. The grantee does not sign. Recording is not required for validity between the parties. Nor, strictly, is acknowledgment before a notary — but without it the deed generally cannot be recorded, which is why it is always done.
• General warranty deed. The greatest protection: the grantor warrants the title against defects arising at any time, including before they owned it. The covenants are seisin, right to convey, against encumbrances, quiet enjoyment, further assurance and warranty forever.
• Special warranty deed. Warrants only against defects arising during the grantor's ownership. Standard from banks, estates and trustees, who cannot honestly warrant what happened before them.
• Bargain and sale deed. Implies the grantor holds title but warrants nothing unless covenants are added.
• Quitclaim deed. Conveys whatever interest the grantor has, which may be none, and warrants nothing at all. The right instrument for clearing a cloud on title and the wrong one for buying a house.

• Chain of title is the recorded history of ownership. An abstract of title is a summary of everything on record, and an attorney's title opinion is a judgment about what it means.
• Marketable title is title free of reasonable doubt and reasonably free of litigation risk — the standard a buyer can insist on. A cloud on title is anything that casts doubt on it.
• Quiet title is a lawsuit to settle competing claims and clear a cloud.
• Title insurance indemnifies against defects that already existed at the policy date. An owner's policy protects the buyer; a lender's or mortgagee's policy protects only the lender, for the loan balance, and is the one the buyer usually pays for without getting any protection from it.

Disclosure, environmental hazards, and where liability lands

The general rule in most states is now that a seller must disclose known material latent defects — problems that are not obvious on inspection and that affect value or desirability. Caveat emptor has been eroded almost everywhere, and a licensee who knows of such a defect generally cannot stay silent about it whoever they represent.

• CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, created the Superfund and, more importantly for a licensee, imposes liability that is strict, joint and several, and retroactive. A current owner can be liable for contamination they did not cause and did not know about.
• SARA, the Superfund Amendments and Reauthorization Act of 1986, added the innocent landowner defense — which is why commercial buyers commission a Phase I environmental site assessment. A Phase I is records, interviews and a site walk with no sampling; a Phase II is sampling and laboratory analysis.
• Brownfields are contaminated or potentially contaminated sites whose redevelopment is complicated by that liability. Federal and state programs exist specifically to cap it and get them redeveloped.
• Wetlands are protected under the Clean Water Act, and filling or dredging one generally needs a Corps of Engineers permit. The boundary is delineated by soil, hydrology and vegetation, not by whether it looks wet on the day you visit.
• Stigmatized property — a death, a crime, a rumour on the premises. Most states expressly relieve the licensee of any duty to disclose this, and disclosing a former occupant's illness can itself violate fair housing law. This is state portion material and the rules genuinely differ.