Free EAQE / SQE Practice Questions
16 sample questions · all 8 Parts · answers & explanations
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Which of the following are reasonable public expectations of estate agents? (i) Adequate knowledge of the law and property transactions (ii) Providing clients with accurate property information (iii) Exercising due care and diligence when carrying out clients' instructions (iv) Allowing clients sufficient time and freedom to make decisions
Why: (i) Correct: both vendors and purchasers expect estate agents to have adequate knowledge of the law and of property transactions (EALP Part 1, p. 10). (ii) Correct: the public expects agents to provide clients with accurate property information. (iii) Correct: the public expects agents to exercise due care and diligence in carrying out clients' instructions so as to protect their interests. (iv) Correct: the public expects agents to allow clients sufficient time and freedom to decide, never exerting undue influence or coercion. Therefore the answer is E.
Which of the following are "technical factors" (as distinct from housing and land policy) that influence property prices in Hong Kong? (i) The level of bank interest rates (ii) Government land sale and public auction policies (iii) Mortgage lending rules (such as loan-to-value caps) (iv) Macroeconomic data (such as GDP growth)
Why: (i) Correct: interest rates directly affect mortgage costs and borrowing costs, a technical factor (syllabus 1.3.2; EALP Part 6, p. 3). (ii) Incorrect: land supply and land sale policies fall under "housing policy and land policy" (syllabus 1.3.1), not technical factors. (iii) Correct: mortgage rules such as loan-to-value caps and stress tests are technical factors. (iv) Correct: economic indices such as GDP growth and the unemployment rate are technical factors. Therefore the answer is A.
Kin-kwok is the sole proprietor of Wang Fat Estate Agency and from time to time receives money on behalf of clients. Under the Estate Agents Ordinance and the Practice Regulations, which of the following must he do? (i) Deposit the money into a trust account opened at an authorised institution (ii) Apply the money to make payment to the relevant client (iii) Pay out the money in accordance with the client's prior written instructions (iv) Issue a written receipt to the client within fourteen days of receipt (v) Keep a copy of the receipt for at least three years
Why: (i) Correct: money received on behalf of a client must be deposited into a trust account opened at an authorised institution (Practice Regulations, reg. 12(3)). (ii) Correct: money in the trust account may be applied to make payment to the relevant client (reg. 12(4)). (iii) Correct: it may also be paid out in accordance with the client's prior written instructions. (iv) Incorrect: a written receipt must be issued to the client immediately; there is no fourteen-day grace period (reg. 12(2)(a)). (v) Correct: a copy of the receipt must be kept for at least three years (reg. 12(2)(b)). Therefore the answer is A.
Where a complaint against a licensee is substantiated, which of the following disciplinary sanctions may the EAA impose under the Estate Agents Ordinance? (i) Admonish or reprimand the licensee (ii) Fine the licensee HK$100,000 (iii) Suspend the licence for three years (iv) Revoke the licensee's licence (v) Attach specified conditions to the licence
Why: (i) Correct: the EAA may admonish or reprimand the licensee (Estate Agents Ordinance, s. 30(1); EALP Part 2, para. 11). (ii) Correct: the maximum fine is HK$300,000, so a fine of HK$100,000 is within the limit. (iii) Incorrect: suspension may not exceed two years; three years exceeds the statutory maximum. (iv) Correct: the EAA may revoke the licence. (v) Correct: the EAA may attach specified conditions to the licence. Therefore the answer is A.
If a provisional agreement provides that the property is sold on an "as is" basis, which of the following statements correctly reflect the legal effect of the clause? (i) The vendor warrants all alterations comply with the Buildings Ordinance (ii) The purchaser takes subject to tenancies subsisting at the agreement date (iii) The purchaser accepts the property in its actual condition at the provisional agreement date
Why: (i) Incorrect: an "as is" clause is not a warranty by the vendor as to unauthorised building works or Buildings Ordinance compliance. (ii) Incorrect: the clause concerns only the physical condition of the property and says nothing about existing tenancies. (iii) Correct: "as is" means the purchaser accepts the property in its actual condition as at the date of the provisional agreement, with no vendor warranty as to condition (EALP Part 3 p25). Therefore the answer is C.
Under common law, which of the following are essential elements for the formation of a valid contract? (i) Offer (ii) Acceptance (iii) Intention of all parties to create legal relations (iv) Agreement on how contract disputes will be resolved (v) Valid consideration
Why: (i) Correct: offer is one of the four essential elements of a contract (HKRE_EA01_40C p23). (ii) Correct: acceptance is an essential element. (iii) Correct: the parties must intend to create legal relations. (iv) Incorrect: an agreement on dispute resolution is not required for a contract to be formed. (v) Correct: valid consideration is an essential element. Therefore the answer is B.
A buyer client intends to sign a provisional agreement for a property held by a private limited company and wishes to confirm whether any mortgage or charge exists over it. Which of the following documents may contain the relevant information? (i) The vendor company's articles of association (ii) The latest land search record of the property from the Land Registry (iii) Details of the vendor company's registered charges from the Companies Registry (iv) The vendor company's certificate of incorporation (v) The vendor company's business registration certificate
Why: (i) Incorrect: the articles of association govern the company's internal management and contain no mortgage or charge details for a specific property. (ii) Correct: a land search record shows all encumbrances affecting the property, including mortgages, legal charges, building orders and court orders (HKRE sample question p53). (iii) Correct: the Companies Registry keeps records of a company's registered charges, including charges over land or interests in land. (iv) Incorrect: the certificate of incorporation only proves that the company has been incorporated. (v) Incorrect: the business registration certificate only proves that the company has registered its business. Therefore the answer is B.
Landlord Chi-keung intends to grant tenant Hiu-lam a one-year residential tenancy. A land search shows the following registered documents: (i) A legal charge registered by Fusion Bank (ii) A second legal charge registered by Yu Fung Finance Company (iii) A memorial of charge for unpaid management fees registered by the building management company (iv) A building order registered by the Building Authority As Hiu-lam's agent, you should advise her to require Chi-keung to obtain prior written consent from which party before taking up the tenancy?
Why: Mortgage deeds and legal charges usually contain a covenant that the owner must not let the property without the mortgagee's prior written consent; if the property is let without consent and later repossessed, the tenant cannot remain, so the agent should advise the tenant to require the landlord to obtain written consent from all mortgagees, banks and finance companies alike (HKRE_EA01_40C p36). Approval from the building management company or the Building Authority is not a prerequisite for a tenancy; the second mortgagee's interest is equally affected, so consent from the first mortgagee alone is not enough.
Which of the following information can be obtained from a building's Occupation Permit (commonly known as the 'OP')? (i) The total gross floor area of the building (ii) The approved uses of the units within the building (iii) The term of the relevant government lease (iv) The saleable area of each unit
Why: (i) Incorrect: the OP contains no floor area information. (ii) Correct: the OP, issued by the Building Authority under the Buildings Ordinance, records the approved use of each unit at completion, the year of completion and the number of units per floor. (iii) Incorrect: the lease term is found in the government lease or land register, not the OP. (iv) Incorrect: saleable area is likewise not shown in the OP. Therefore the answer is B.
A prospective purchaser asks an estate agent to check the permitted use of a vacant site adjoining the flat he intends to buy. From which documents can the agent obtain the information? (i) The Outline Zoning Plan covering the vacant site (ii) The land search record of the flat to be bought (iii) The government lease of the vacant site
Why: (i) Correct: the Outline Zoning Plan prepared by the Town Planning Board shows the planned use of land in the area. (ii) Incorrect: the land search record of the flat itself contains no information on the use of adjoining lots. (iii) Correct: the government lease or conditions of grant set out the user restrictions of the lot. Therefore the answer is D.
Which of the following items does a standard valuation report generally contain? (i) The current mortgage interest rate (ii) The date of valuation (iii) The assessed value of the property (iv) The fee charged for preparing the report
Why: (i) Incorrect: the mortgage interest rate is not a usual content of a valuation report. (ii) Correct: the date of valuation is the basis of all assumptions, and the report should not attempt to establish the future value of the asset (EALP Part 6 p6). (iii) Correct: the report arrives at a valuation based on the purpose, definition, date and property particulars. (iv) Incorrect: the fee is a matter of engagement between valuer and client, not a usual content of the report. Therefore the answer is B.
Under which of the following circumstances is the comparison method of valuation most reliable? (i) Market prices have surged by over 50% in the past twelve months (ii) Monthly transaction volume for similar properties is large and stable (iii) Properties of the same type share many similar physical and environmental features
Why: (i) Incorrect: sharp price swings make recent transaction prices a poor guide to value at the valuation date, undermining the comparison method. (ii) Correct: where the market operates rationally with a large monthly transaction volume and freely available data, the comparison method is an effective valuation method (EALP Part 6 p4). (iii) Correct: the comparison method is particularly suited to high-density housing estates with many similar units. Therefore the answer is C.
A residential tenancy agreement with one counterpart: term 5 years, monthly rent $100,000, first 2 months rent-free, with an option for the tenant to renew for 3 years at $120,000 a month. What stamp duty is payable?
Why: For a term exceeding 3 years, the rate under Schedule 1 of the Stamp Duty Ordinance is 1% of the annual or average annual rent; the renewal option's term and rent are ignored when stamping the original lease. The rent-free period leaves only 10 months' rent in the first year, so average annual rent = ($100,000 × 10 + $100,000 × 12 × 4) ÷ 5 = $1,160,000. Stamp duty = $1,160,000 × 1% = $11,600, plus $5 for the counterpart, totalling $11,605; $12,005 results from wrongly counting the rent-free months as rent.
A tenant has signed a two-year tenancy with an option to renew for two more years. To protect the tenant's interests, which of the following should an estate agent advise? (i) Authorise the estate agent to sign the tenancy on the tenant's behalf (ii) The tenancy should be stamped (iii) The tenancy should be registered at the Land Registry (iv) The tenancy should be lodged with the Building Authority
Why: (i) Incorrect: the tenancy should be signed by the tenant personally; there is no need to authorise the agent to sign. (ii) Correct: the Stamp Duty Ordinance requires a tenancy to be stamped within 30 days of execution (EALP Part 7 p6). (iii) Correct: a lease not exceeding 3 years at market rent is an overriding interest, but the renewal option must be registered at the Land Registry to be enforceable against third parties such as a new owner. (iv) Incorrect: there is no legal requirement to lodge a tenancy with the Building Authority. Therefore the answer is B.
Kin Kwok, sole proprietor and head-office manager of Wing Fai Estate Agency, will stay head-office manager after opening a new branch and must appoint a branch manager. Chi Wai and Hiu Lam are licensed salespersons with six and eight years' service; Fung Yi, a licensed estate agent, joined ten months ago. Who is eligible? (i) Kin Kwok (ii) Chi Wai (iii) Hiu Lam (iv) Fung Yi
Why: (i) Incorrect: Each office must be under the effective and independent control of an appointed manager (Estate Agents Ordinance s.38(1)(a)); Kin Kwok already manages the head office and one person cannot manage two offices without breaching 'independent control'. (ii) Incorrect: An appointed manager must hold an estate agent's licence; anyone who is not a licensed estate agent is ineligible (s.38). Chi Wai holds only a salesperson's licence; six years' service is irrelevant. (iii) Incorrect: Likewise Hiu Lam holds only a salesperson's licence; eight years' service cannot substitute for the licence type. (iv) Correct: Fung Yi holds an estate agent's licence and manages no other office, so she is eligible; length of service is not a criterion. The answer is therefore B.
Shun Fung Property Consultants Ltd has opened a new branch and appointed Mr Lam as its manager. Under the Estate Agents Ordinance, which of the following must Shun Fung do? (i) Apply to the EAA for a statement of particulars of business for the branch (ii) Notify the EAA within 31 days of opening that the branch is operating (iii) Notify the EAA of Mr Lam's appointment within 31 days of making it (iv) Have every director of the company obtain an estate agent's licence
Why: (i) Correct: A separate statement of particulars of business is required for each place of business and business name (Estate Agents (Licensing) Regulation reg.10). (ii) Incorrect: The Ordinance does not require a separate notice that a branch has opened; what must be notified are the statement of particulars and matters such as manager appointments. (iii) Correct: A licensed estate agent must notify the EAA in writing within 31 days of appointing or ceasing to appoint a manager (Estate Agents Ordinance s.40; EALP Part 2 p16 para 45). (iv) Incorrect: Not every director needs a licence: the company must have at least one director holding an estate agent's licence, and any director who carries on estate agency work must be licensed (s.20). The answer is therefore A.
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