Iowa Real Estate Practice Exam

10 sample questions, with answers explained

Every question above with its correct answer and the reasoning behind it. Read the explanations for the ones you answered correctly too. A lucky guess and knowing the rule look identical on a score report. These are sample questions from our larger bank.

1. 1. An Iowa broker cannot disburse every broker-held closing fund at closing. What should govern the later disbursement?

   • AA receptionist's notation about the expected payee
   • BA private instruction signed only by the broker
   • CAn escrow agreement signed by buyer and sellercorrect
   • DThe buyer's lender's usual policy without party agreement

   Why: 481 IAC 2013.2 requires a buyer-and-seller-signed escrow agreement directing later disbursement. The broker cannot replace the parties' directions with a unilateral office note.

   Transfer of title

2. 2. An Iowa manager is asked to sell the managed property. What additional authority is needed?

   • AOnly the tenant's oral permission
   • BOnly an unsigned sales advertisement
   • CNo authority because rent collection always includes selling
   • DSpecific compliant listing authority in the management agreement or a separate listingcorrect

   Why: 481 IAC 2015.1(3) permits a manager to act as sales agent only through a management agreement granting specific listing authority with required elements or a separate listing.

   Property management

3. 3. An Iowa property manager receives owner funds. What is the deposit deadline into the broker-controlled trust account?

   • AOnly when the owner asks for a statement
   • BNo later than 1 banking day after receipt
   • CNo later than 5 banking days after receiptcorrect
   • DNo later than 10 banking days after receipt

   Why: 481 IAC 2015.1 requires owner funds to reach the controlled trust account within 5 banking days after receipt. The manager cannot wait indefinitely for a statement request.

   Property management

4. 4. An Iowa broker learns of a material error in the firm's advertisement. What correction period does the rule provide?

   • A10 calendar dayscorrect
   • B30 calendar days
   • C60 calendar days
   • D3 calendar days

   Why: 481 IAC 2010.1 requires prompt correction within 10 calendar days after awareness of the material error or violation. The broker should not wait for a complaint or a completed sale.

   Practice of real estate

5. 5. An Iowa licensee has excess elective CE hours and wants to carry them into the next period. Which limitation applies?

   • AEvery excess hour carries, including all mandatory core hours
   • BNo elective hours may ever carry into the next period
   • COnly law-update hours may carry, up to the entire renewal total
   • DAt most 18 hours may carry, and none replace mandatory law-update or ethics hourscorrect

   Why: 481 IAC 2004.4 allows up to 18 hours from the previous period but excludes carryover toward mandatory law-update and ethics courses. Elective carryover cannot erase those requirements.

   Practice of real estate

6. 6. An Iowa manager has owner authorization to transfer between the owner's accounts. Is changing ledger entries alone sufficient?

   • AYes; all same-owner transfers are outside the rule
   • BOnly if the transfer occurs on a Friday
   • CNo; the rule requires the corresponding billing and receipt documentationcorrect
   • DYes; source documents are never required

   Why: 481 IAC 2015.1(7)(b) requires authorized same-owner transfers to be documented through billings and receipts, not ledger entries alone.

   Property management

7. 7. An Iowa-admitted attorney performs real estate-related services solely as an incident to practicing law. Which licensing treatment applies?

   • AThe attorney falls within the stated attorney exemptioncorrect
   • BThe attorney must obtain a salesperson license for every such act
   • CThe attorney must first join the seller's brokerage
   • DThe exemption applies only if the attorney owns the property

   Why: Iowa Code 543B.7 exempts an Iowa-admitted attorney acting solely as an incident to law practice. It is the professional capacity, not property ownership, that defines this exemption.

   Practice of real estate

8. 8. An Iowa former manager wants to send the owner's unobligated funds to a replacement manager. What owner authorization is needed?

   • AOnly the tenant's approval
   • BProper written authorization and written designation of the replacement managercorrect
   • CNo authorization because the managers know each other
   • DOnly an oral request by the replacement manager

   Why: 481 IAC 2015.1(5)(d) permits unobligated funds to another manager only with the owner's proper written authorization and designation.

   Property management

9. 9. An Iowa broker wants to use the client trust account to pay ordinary office expenses. What is allowed?

   • AThe account may pay salaries whenever it has a positive balance
   • BThe account may pay any expense approved by the office manager
   • CThe trust account cannot serve as a business operating accountcorrect
   • DOffice expenses may be paid if a client statement is sent

   Why: 481 IAC 2013.1 prohibits using client trust as an operating or personal account. A positive balance includes client liabilities and is not free working capital.

   Practice of real estate

10. 10. An unlicensed person brokers an Iowa sale for $300,000. What is the maximum civil penalty under this formula?

    • A$10,000
    • B$15,000
    • C$20,000
    • D$30,000correct

    Why: Iowa Code 543B.34(3) provides a civil penalty up to the greater of $10,000 or 10 percent of sale price for unlicensed brokerage, plus a cease-and-desist order. For $300,000, the 10 percent figure is $30,000.

    Practice of real estate