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National curriculum lesson 119 · Practice of Real Estate

Due Diligence and the Boundaries of Real Estate Practice

A capable licensee identifies the client's objective, gathers reliable transaction facts, checks source dates, discloses known material information, tracks contingencies, documents communications, and recommends qualified experts. The licensee should not diagnose structures or environmental hazards, locate legal boundaries, guarantee zoning, provide tax or legal opinions, or perform an appraisal outside authorized practice.

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Last reviewed August 2, 2026. Editorial standards.

What is the exam-ready answer?

A capable licensee identifies the client's objective, gathers reliable transaction facts, checks source dates, discloses known material information, tracks contingencies, documents communications, and recommends qualified experts. The licensee should not diagnose structures or environmental hazards, locate legal boundaries, guarantee zoning, provide tax or legal opinions, or perform an appraisal outside authorized practice.
Official syllabus mapping for Due Diligence and the Boundaries of Real Estate Practice
Roadmap lesson119 of 500
Official syllabus topicDue Diligence and the Boundaries of Real Estate Practice
Official PSI areaPractice of Real Estate
Published area weight12% of the 100-question national portion
Exam portionNational salesperson portion
Source editionPSI Georgia Candidate Information Bulletin dated July 1, 2026
Last verifiedAugust 2, 2026

The Rule

PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.

Complete lesson

Read each concept as part of one decision system. The exam often gives one accurate statement and three statements that belong to a nearby concept.

Reasonable investigation

Review the property, public and provided records, prior disclosures, contracts, permits, title items, reports, and obvious inconsistencies within the licensee's role. Do not ignore a red flag because the client did not ask the perfect question.

Source hierarchy

Use the authority responsible for the fact: recorder and attorney for title, surveyor for boundaries, building department for permits, planning office for zoning, inspector or engineer for condition, environmental professional for contamination, and tax adviser for tax consequences.

Practice boundaries

Licensees can fill approved forms and explain business terms within their training, but custom legal drafting, legal interpretation, engineering diagnosis, tax advice, and regulated appraisal opinions belong to qualified professionals.

Documentation and deadlines

Write down the question, source, date, response, limitation, referral, client choice, notice, and deadline. A referral made after the due-diligence period has little protective value.

Decision rule

Investigate and communicate within competence, then refer early enough for the expert's answer to affect the transaction.

Georgia-specific distinction

Georgia rules require competence, reasonable care, accurate dealing, and broker supervision. Georgia licensees should use Commission-compliant brokerage practice and closing counsel, surveyors, inspectors, engineers, appraisers, and tax professionals for work outside the real estate license.

Worked example

Scenario. A buyer asks whether an unpermitted basement apartment is legal and will qualify for rental income.

Reason it through. The question combines zoning, building permits, safety, appraisal, lending, landlord rules, and tax considerations beyond a broker's unilateral conclusion.

Answer. Document the intended use, obtain written government and lender answers, recommend appropriate specialists, and protect the buyer with a timely contingency.

Common exam traps

  • Guaranteeing legal use
  • Diagnosing a structure
  • Drafting custom legal remedies
  • Referring experts after deadlines

Original practice questions with detailed explanations

These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.

Question 1

Who should locate a legal boundary?

  1. A. Licensed surveyor
  2. B. Salesperson
  3. C. Photographer
  4. D. Home stager
Show answer and explanation →

Answer: A. Licensed surveyor

Boundary surveying is specialized licensed work, not an ordinary brokerage opinion.

Question 2

When is an expert referral most useful?

  1. A. Before the relevant contingency deadline
  2. B. After closing only
  3. C. After the issue becomes a lawsuit
  4. D. Only if the broker guesses first
Show answer and explanation →

Answer: A. Before the relevant contingency deadline

The client needs the expert result while contractual choices remain available.

Question 3

May a licensee promise that rezoning will be approved?

  1. A. Yes
  2. B. No
  3. C. Only in writing
  4. D. Only for cash buyers
Show answer and explanation →

Answer: B. No

Rezoning is a discretionary public process and cannot be guaranteed by a licensee.

Mastery tracking

Mark this lesson mastered only when every statement is true.

  • State the direct answer and decision rule without notes.
  • Explain every core concept in plain English.
  • Solve the worked example after changing one important fact.
  • Identify the Georgia distinction before reading answer choices.
  • Answer all three questions correctly and reject every distractor.
  • Repeat the topic in mixed practice on a later day.

Recommended next lesson

Continue with Mixed national practice questions. The curriculum sequence is complete. Test recall and application across content areas.

Return to the Practice of Real Estate hub to see every official branch and the complete lesson sequence for this content area.

Due Diligence and the Boundaries of Real Estate Practice questions

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Last reviewed August 2, 2026. Editorial standards.

Is Due Diligence and the Boundaries of Real Estate Practice on the Georgia real estate exam?

Yes. It belongs to PSI's Practice of Real Estate content area, which is 12% of the 100-question national portion. PSI publishes content-area weights, not a guaranteed question count for this individual lesson.

What is the main rule for Due Diligence and the Boundaries of Real Estate Practice?

Investigate and communicate within competence, then refer early enough for the expert's answer to affect the transaction.

What Georgia-specific distinction should I remember?

Georgia rules require competence, reasonable care, accurate dealing, and broker supervision. Georgia licensees should use Commission-compliant brokerage practice and closing counsel, surveyors, inspectors, engineers, appraisers, and tax professionals for work outside the real estate license.

How do I know I have mastered this lesson?

Explain the rule without notes, solve the worked example again with changed facts, answer all original questions correctly, explain every distractor, and repeat mixed practice on a later day.