California Real State Principle Chapter 2

Easton v. Strassburger

- the court case that held that a seller and his or her agent must disclose to a buyer all facts materially affecting the value or desirability of the property. This decision led to the passage of the Seller Transfer Disclosure law.

Exemptions to the Anti-Discrimination Law

A Principal: A person who acts in their own behave. This can only occur for up to a 4plex (so 1 to 4 units of housing) only when the owner occupies on unit. The owner can not use the services of a licensee. A licensee can never discriminate! Under this circumstance it is not illegal to discriminate!

Misrepresentation

A false statement or lie that can render the contract void.

Department of Housing and Urban Development (HUD)

A federal agency that administers funding for projects related to housing. Someone can file a complaint of discrimination with HUD. Then HUD will file a law suite on the alleged victims behave free of charge.

Americans with Disabilities Act (ADA) Federal law

A federal law protecting the rights of individuals with physical or mental impairments. Businesses that open to the public make reasonable accommodation to individuals with disabilities.

Civil Rights Act of 1866 (Federal housing law)

A federal law that prohibits all discrimination on the basis of race. Note: Race only, so there is still discrimination allowed on the bases of Religion, National origin or ethnicity. Illegal to discriminate based on race only!

Civil Rights Act of 1964

A law that prohibited discrimination on the basis of race, color, national origin, or gender in any housing program receiving federal money. A Fair-housing poster has to be displayed at any business dealing with housing such a real estate office, lending office, developers or leasing office

Creditor

A person who regularly extends consumer credit that is subject to a finance charge, or is payable by a written agreement in more than four installments, not including the down payment, and to whom the obligation is initially payable, either on the face value of the note or contract, or by agreement where there is no note or contract.

Blind Advertising

An ad that remains anonymous as to who is advertising. When a licensee advertises property on the behave of another and does not include his/hers license status.

Trust Fund Handling

Clients Funds that touches the hand of anyone in the broker's office must end up in one of 3 places within 3 business days. They are 1.neutral escrow depository, 2. A Broker's trust Account (this is a segregated account that is created for client/customers funds only) or 3. The Principle for whom it was intended

Unruh Civil Rights Act - (California state law)

Commercial and Business establishments! Stricter than Federal law! All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.

Natural Hazard Disclosure Statement (California State law)

Document indicating property location in a hazardous area that must be provided by seller to buyer in California residential transactions of one to four dwelling units, with certain exceptions. Includes Fire, Flood and Earth quack

Holden Act (California State law)

I a Prohibition against discrimination in lending processes! Prohibition on Redlining! It is illegal to consider the racial, ethnic, religious or national origin composition of a neighborhood or geographic area surrounding a housing accommodation or whether or not such composition is undergoing change, or is expected to undergo change, in appraising a housing accommodation or in determining whether or not, or under what terms and conditions, to provide financial assistance.

Deceit

Making a statement of fact that you know not to be true. Making a statement of fact in which no one has the grounds to believe it is true, or failing to disclose a "material fact".

Common Real Estate Violations

Misrepresentation and Trust fund handling

Transfer Disclosure Statement (TDS) California State Law

Sellers and agents should use this form to disclose any known defects with the property. A mandatory disclosure prepared by a seller and given to prospective buyers setting forth any property defects known or suspected to exist by the seller, generically called a condition of property disclosure.

Rumford Act (California state law)

The Rumford Fair Housing Act was passed in 1963 by the California Legislature to help end racial discrimination by property owners and landlords who refused to rent or sell their property to "colored" people. Prohibition against Blockbusting

Regulation Z (Federal law)

The Truth in Lending Act of 1968 is a United States federal law designated to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed. Interest Rate an APR must be disclosed together (is the answer on the exam!)

Fraud

The intentional and successful employment of any cunning , deception, collusion, or artifice, used to circumvent, cheat or deceive another person whereby that person acts upon it to the loss of property and to legal injury.

Redlining

The refusal to lend money within a specific area for various reasons. Lending money has to be only objectified by the person's credit and not by racial, religion or ethnicity.

Annual Percentage Rate (APR)

The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.

Blockbusting

The use of prejudice to instill fear, or panic (also known as panic selling), in order to motivate individuals in a particular area or neighborhood to sell or dispose of their property because of the entrance, or potential entry, of a protected class. Using prejudice to motivate a person to sell their property.

Real Estate Settlement Procedures Act (RESPA) (Federal law) 2) To eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

This consumer protection statute helped eliminate kickbacks and referral fees that unnecessarily increased the costs of certain settlement services...? A consumer protection statute, first passed in 1974. The purpose of RESPA are: 1) To help consumers become better shoppers for settlement services.

Commingling

To mingle or mix, for example, a client's funds in the broker's personal or general account. Broker can not commingle his personal funds with the client! Note: with the only exception that the broker may deposit up to $200 from his personal funds to the clients account for the purpose to cover a service charges against that account and if the client gives a written consent to withhold those funds. The Balance on this account may not drop below the last deposit of 10000 for a given customer otherwise it would be commingling. Commingling is a misdemeanor and not a felony!

Steering

Using racial, ethnic, or religious criteria in suggesting, recommending, and/or influencing individuals regarding locations for the purchase or rental of a single family residence or rental dwelling. Suggesting to a person to buy property based on racial, ethnic or religious prejudice.

Does a seller need to disclose if a death has occurred on the property that he is selling?

Yes, only within 3 years of the sale. No if it was more than 3 years or if the dead person was afflicted with Aids or HIV than the seller is excused of disclosing the death all together. Even if the seller wants to disclose the death, he is prohibited of disclosing the AIDS or HIV condition because this is a discriminatory act.

Megan Law (Federal lAw)

a law passed in 1996 that requires convicted sex offenders to register with local law enforcement.

false advertising

advertising that is misleading in some important way, including the failure to reveal facts about possible results from using the advertised products

Lead Based Paint Disclosure (Federal law)

A federal requirement for residential property built prior to 1978

Material Fact

Any fact that would influence the decision of a reasonably prudent person.

Puffing

Are Opinions! Exaggerated or superlative comments or opinions. Examples: This a beautiful neighborhood, This is a spacious condo or there is a lot of closet space.

Trust Funds

Funds held by a real estate broker, in trust, for clients and/or customers. Not real estate sales person only the real estate broker can hold trust funds!

The unlawful practice of law

If a client asks you how to take title? you can not give legal or tax advise to clients. They need to consult a professional.

All the following trigger the full disclosure requirement except:

Interest Rate and APR

Conversion of funds

Occurs when the broker uses trust funds for his/her own use (lawful name: larsoning=stealing) and is a FELONY

Good Faith Estimate

The lender's estimate of the borrower's settlement costs; RESPA requires the lender to furnish it to the borrower at the time of loan application.