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Which of the following are reasonable expectations that the public holds towards estate agents as professionals? (i) Estate agents should possess adequate knowledge of the law and property transactions (ii) Estate agents should provide clients with truthful and reliable property information (iii) Estate agents should exercise due diligence and make active efforts to carry out clients' instructions and safeguard their interests (iv) Estate agents should never exert undue pressure or coercion on clients and should allow clients sufficient room and freedom to make their own decisions regarding property transactions
Why: The public's expectations of the estate agency profession encompass four dimensions: possessing professional knowledge, providing accurate information, diligently carrying out the client's mandate, and refraining from exerting undue influence on clients. All four are reasonable public expectations.
According to syllabus section 1.3.2, which of the following items are classified as "technical factors" (as distinct from housing policy 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) Regulations relating to mortgage lending (such as loan-to-value ratio caps) (iv) Macroeconomic data (such as GDP growth rate and employment/unemployment figures)
Why: According to syllabus section 1.3.2, "technical factors" affecting property prices include: interest rate levels, economic data indicators, seasonal fluctuations and mortgage-related policies. Interest rates directly affect mortgage interest costs and overall borrowing costs in the market, falling within the scope of technical factors (s. 1.3.2). Mortgage-related regulations (including loan-to-value ratio caps and stress test requirements) are also classified as technical factors (s. 1.3.2). Macroeconomic data indicators (such as GDP growth rate and unemployment rate) are categorised as "economic indices" and fall within the scope of technical factors (s. 1.3.2). Government land supply arrangements and land sale policies fall under the category of "housing policy and land policy" (s. 1.3.1) and are not technical factors. Therefore, (ii) is not included.
Kin-kwok is an estate agent and the sole proprietor of Wang Fat Estate Agency. In the course of his day-to-day estate agency business, he occasionally receives various monies on behalf of or for clients. In order to comply with the relevant provisions of the Estate Agents Ordinance and the Practice Regulations, which of the following must Kin-kwok do in respect of such monies received? (i) Deposit the monies into a trust account opened in the name of the client at an authorised institution (ii) Apply the monies to make payment to the relevant client (iii) Make the appropriate payment in accordance with prior written authorisation instructions provided by the client (iv) Issue a written receipt to the client within fourteen days of receiving the monies (v) Retain a copy of the receipt for at least three years after issuing it
Why: Any monies received on behalf of a client must be deposited into a trust account opened at an authorised institution (Practice Regulations, reg. 12(3)). Such monies may only be applied to: (a) make payment to the relevant client, or (b) make payment in accordance with prior written instructions given by the client (Estate Agents Ordinance, s. 43(3)(c)). An agent must issue a written receipt to the client 'immediately' upon receipt — there is no fourteen-day grace period (Practice Regulations, reg. 12(2)(a)). A copy of the receipt must be retained for at least three years (Practice Regulations, reg. 12(2)(b)).
Where a complaint against a licensee is found to be substantiated, which of the following disciplinary sanctions may the Estate Agents Authority impose on that licensee under the Estate Agents Ordinance? (i) Admonish or reprimand the licensee (ii) Fine the licensee HK$100,000 (iii) Suspend the licensee's licence for three years (iv) Revoke the licensee's licence (v) Attach specified conditions to the licensee's licence
Why: Under s. 30(1) of the Estate Agents Ordinance, the disciplinary sanctions available to the Authority include: admonition/reprimand, attachment of conditions to the licence, suspension of the licence (not exceeding 2 years), revocation of the licence, and a fine (up to a maximum of HK$300,000). The statutory maximum period of suspension is 2 years, not 3 years; accordingly, the three-year suspension in option (iii) does not conform with the Ordinance and is incorrect. A fine of HK$100,000 does not exceed the statutory maximum of HK$300,000; option (ii) is therefore correct.
Assume that a provisional agreement for sale and purchase contains a clause stating that both parties agree to the sale and purchase of the property on an "as is" basis. Which of the following statements correctly reflects the legal effect of such a clause? (i) The vendor warrants that all alterations and additions to the property as at the date of the agreement comply with the Buildings Ordinance (ii) The purchaser takes subject to any tenancy arrangements subsisting and affecting the property as at the date of the agreement (iii) The purchaser accepts that the property will be delivered in its actual physical condition as at the date the provisional agreement for sale and purchase was entered into
Why: An "as is" clause means that the property is sold and delivered in its actual physical condition as at the date the provisional agreement for sale and purchase was entered into. An "as is" clause covers only the physical condition of the property; it does not constitute any warranty by the vendor as to the legality of unauthorised building works under the Buildings Ordinance. An "as is" clause neither binds the purchaser to any existing tenancy affecting the property nor constitutes any representation or undertaking by the vendor regarding compliance with the Buildings Ordinance.
Under common law, which of the following are essential elements required for the formation of a valid contract? (i) Offer (ii) Acceptance (iii) Intention by all contracting parties to create legally binding relations (iv) Agreement on the method of resolving disputes arising from the contract (v) Consideration
Why: Under the common law framework, a valid contract requires four essential elements: Offer, Acceptance, Consideration, and an intention by all parties to create legal relations. An agreement on the method of dispute resolution is not an essential element for the formation of a valid contract.
A buyer client of an estate agent intends to sign a provisional agreement for sale and purchase in respect of a property held by a private limited company. The client wishes to ascertain whether there are any mortgages or charges over the property. Which of the following documents may contain the relevant information? (i) The articles of association of the vendor company (ii) The latest land search record of the property obtained from the Land Registry (iii) Details of the latest registered mortgages or charges of the vendor company obtained from the Companies Registry (iv) The certificate of incorporation of the vendor company (v) The business registration certificate of the vendor company
Why: A land search record from the Land Registry contains details of all encumbrances affecting the property, including mortgages, statutory charges, building orders and court orders. The Companies Registry maintains records of registered charges over a company's assets, including charges over land or interests in land. The articles of association, certificate of incorporation and business registration certificate do not contain any information relating to mortgages or charges over a specific property.
Landlord Chi-keung intends to enter into a one-year residential tenancy agreement with tenant Hiu-lam. A land search of the property reveals the following registered documents: (i) A legal charge registered by Fusion Bank (ii) A second legal charge registered by Yufeng Finance Company (iii) A memorial of unpaid management fees charge registered by the building's property management company (iv) A building order registered against the property by the Building Authority As the licensed estate agent acting for Hiu-lam, you should advise her to require Chi-keung to obtain prior written consent from which of the following parties before she formally takes up the tenancy?
Why: Mortgage agreements / legal charges typically contain a covenant prohibiting the mortgagor from letting the property to a third party without the prior written consent of the bank / mortgagee. If the landlord lets the property without the mortgagee's consent and the mortgagee subsequently takes possession, the tenant will be unable to continue occupying the unit. An agent should advise a prospective tenant to require the landlord to obtain written consent from all mortgagees (including both banks and finance companies) before signing the tenancy agreement. Approval from the building's property management company and the Building Authority is not a prerequisite for entering into a tenancy agreement.
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 individual units within the building (iii) The term of the relevant government land lease (iv) The saleable area of each unit in the building
Why: An Occupation Permit is issued by the Building Authority pursuant to the Buildings Ordinance (Cap. 123). The Occupation Permit typically records the approved use of each unit, the year of completion of the building, and the total number of units on each floor. The Occupation Permit does not contain any floor area information (whether gross floor area or saleable area), nor does it relate to the term of any government land lease.
A prospective purchaser wishes to buy a flat and asks his estate agent to ascertain the permitted use of a vacant site adjoining the flat. From which of the following documents can the estate agent obtain the relevant information? (i) The Outline Zoning Plan covering the area of the vacant site (ii) The Land Registry search records of the flat the prospective purchaser intends to buy (iii) The government lease of the vacant site
Why: The permitted use of land may be ascertained from the Outline Zoning Plan prepared by the Town Planning Board and from the government lease or conditions of grant. The Land Registry search records of the flat intended to be purchased do not contain information relating to the permitted use of adjoining lots.
Which of the following items would a standard valuation report generally cover? (i) Current mortgage interest rate (ii) Date of valuation (iii) Assessed value of the property (iv) Fee charged for preparing the valuation report
Why: A standard valuation report generally must state the date of valuation and the assessed value of the property. The prevailing mortgage interest rate and the fee charged for the report are not typically included as essential contents of a valuation report.
Under which of the following circumstances would the comparison method of valuation be considered most reliable? (i) When the overall average property prices in the market have surged by more than 50% in the past twelve months (ii) When there is a substantial and consistently stable monthly transaction volume for similar types of properties in the market (iii) When a large number of similar physical and environmental characteristics exist among a particular type of property in the market
Why: The comparison method is most reliable when there is ample and stable transaction volume in the market and when comparable properties share highly similar characteristics. Conversely, dramatic price fluctuations undermine the accuracy and reliability of comparison-based valuations.
Calculate the stamp duty payable on a residential tenancy agreement (together with one counterpart) based on the following terms: • Lease term: 5 years • Monthly rent: $100,000 • Rent-free period: first 2 months rent-free • Renewal option: tenant may renew for 3 years at $120,000 per month
Why: For a lease exceeding 3 years, the applicable stamp duty rate is 1% of the annual rent or average annual rent. The renewal option (including its rent and term) is not taken into account when calculating stamp duty on the original lease. The rent-free period reduces the actual rent collected: only 10 months' rent is collected in the first year of the lease. Average annual rent calculation: ($100,000 × 10 + $100,000 × 12 × 4) ÷ 5 = $1,160,000. Total stamp duty payable: $1,160,000 × 1% + $5 (counterpart fee) = $11,605.
A tenant has signed a two-year tenancy agreement with an option to renew for a further two years. To protect the tenant's interests, which of the following actions should an estate agent advise the tenant to take? (i) Authorise the estate agent to sign the tenancy agreement on the tenant's behalf. (ii) The tenancy agreement should be stamped. (iii) The tenancy agreement should be registered at the Land Registry. (iv) The tenancy agreement should be lodged with the Building Authority.
Why: A tenancy agreement must be stamped in accordance with the Stamp Duty Ordinance (Cap. 117). A tenancy agreement containing a renewal option or purchase option should be registered at the Land Registry so that the option is binding on third parties (e.g. a subsequent purchaser of the property). A lease not exceeding 3 years at a market rent is an overriding interest and protects the tenant even without registration; however, a renewal option must be registered to be enforceable against third parties. There is no requirement for an estate agent to sign the tenancy agreement on behalf of the tenant, nor is there any requirement to lodge the agreement with the Building Authority.
Kin-kwok is the sole proprietor and principal office manager of Wing Fai Estate Agency, and is planning to open a new branch in Kwun Tong while continuing to serve as manager of the principal office. He needs to appoint a manager for the new branch. Chi-wai and Hiu-lam are both licensed salespersons who have been working for Wing Fai Estate Agency for six years and eight years respectively, while Fung-yee is a licensed estate agent who has been with Wing Fai Estate Agency for only ten months. Which of the following persons is/are eligible to be appointed as manager of the new branch? (i) Kin-kwok (ii) Chi-wai (iii) Hiu-lam (iv) Fung-yee
Why: Each place of business must be under the 'effective and independent' control of an appointed manager (Estate Agents Ordinance, s. 38(1)(a)). A branch manager must hold an estate agent's licence; a licensed salesperson does not satisfy this requirement. The same person cannot simultaneously act as manager of two places of business, as this would violate the requirement for 'independent control'. Length of service is not a determining factor; what matters is the type of licence held by the individual.
Shun Fung Property Consultants Limited has opened a new branch and appointed Mr. Lam as the manager of that branch. Under the Estate Agents Ordinance, which of the following are requirements that Shun Fung must comply with? (i) Apply to the Authority for a business details statement in respect of the new branch (ii) Notify the Estate Agents Authority that the new branch has commenced operation within thirty-one days from the date of opening (iii) Notify the Estate Agents Authority of Mr. Lam's appointment as manager of the new branch within thirty-one days from the date of his appointment (iv) Arrange for each director of Shun Fung to apply individually for an estate agent's licence
Why: A separate business details statement must be applied for in respect of each place of business and business name (Licensing Regulation, s.10). The appointment or revocation of appointment of a manager must be notified to the Authority within thirty-one days (Estate Agents Ordinance, s.40). There is no requirement to separately notify the Authority merely because a new branch has commenced operation. Not every director is required to hold an estate agent's licence; however, at least one director must be licensed, and any director who carries on estate agency work must be individually licensed (s.20).
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