Legal Aspects of Real Estate
Concerning water rights in California, it is true that:
1. California is a system based upon the system of prior appropriation. 2. a water right is an appurtenance. The western states (including California) overruled the common law riparian and littoral rights by statute and enacted what is known as appropriative rights, which do not depend on land ownership. An appurtenance is a right to or interest that benefits the owner that belongs to or runs with the land, and includes air rights, water rights, solid mineral rights, oil and gas rights, and support rights.
Which of the following must be disclosed in the Real Estate Transfer Disclosure Statement (TDS)?
1. Easements affecting the property 2. A broken oven 3. Additions or alterations made without a permit 4. Neighborhood noise or nuisance problems The seller must disclose on the TDS such things as additions made without a building permit, easements, encroachments, the existence and functionality of appliances, fill dirt use, zoning problems, and neighborhood noise or nuisance problems.
Which statements ares TRUE concerning unit ownership?
1. Ownership in a cooperative usually requires purchase of shares of stock in the cooperative corporation. 2. Individual units in a condominium are conveyed and are financed as if they were single-family dwellings on separate pieces of land. A cooperative is created by forming a corporation, or less frequently a limited partnership, which sells shares to the unit owners. In a condominium, each unit owner secures individual financing to buy their unit and receives a deed conveying ownership.
Which of the following are real property ownership rights?
1. Possession 2. The right to exclude others from the property 3. Use The real property ownership rights are the right of possession, the right of enjoyment of the property, the right to control the property's use, the right to exclude others from the property, and the right to transfer ownership of the property.
If known, which of the following must be disclosed on the real estate Transfer Disclosure Statement?
1. Radon 2. Formaldehyde 3. Asbestos 4. Underground fuel storage tank The seller must include any environmental hazards he/she knows about on the TDS, including things such as lead-based paint, asbestos, radon, formaldehyde, underground storage tanks, and contaminated soil or water.
Which are protected classes under Unruh?
1. Religion 2. Ancestry 3. Sexual orientation The Unruh Civil Rights Act provides that 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, or sexual orientation are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.
Which statements are TRUE regarding the Mello-Roos Community Facilities Act?
1. The act authorizes the levying of special taxes to finance specific public facilities and services. 2. Special taxes may be levied that create a lien on real property of a seller of one-to-four dwelling units. The Mello-Roos Act authorized the formation of community facilities districts, the issuance of bonds, and the levying of special taxes to finance the specific public facilities and services. These special taxes become a lien on the property.
One of the essential requirements for a valid escrow is a binding contract which can be
1. a purchase and sale agreement. 2. an option agreement. 3. an exchange agreement. There must be a binding contract between the seller and the buyer. This requirement is usually met by delivering the fully executed real estate purchase and sale agreement and receipt for earnest money deposit to escrow. However, the contract delivered to escrow may also be an option contract, an agreement for the trade or exchange of real property under IRC 1031, or any other legal agreement that transfers an interest in real property.
The CalBRE has adopted regulations that prohibit licensees from discriminatory behavior based upon a person's
1. ancestry. 2. marital status. 3. religion. A number of regulations have been adopted by the Commissioner of the California Bureau of Real Estate to ensure that licensees do not engage in discriminatory behavior in the practice of their profession. These rules and regulations prohibit any discriminatory conduct on the part of a real estate licensee based upon race, color, sex, religion, ancestry, physical handicap, marital status, or national origin.
A listing contract between a broker and seller can be terminated by
1. bankruptcy of the seller. 2. incompetence of either principal or agent. 3. death of either party. Personal service contracts (e.g., a residential listing agreement) can be terminated upon the death, incompetency, or bankruptcy of the principal or agent.
Under the California Fair Employment and Housing Act (FEHA) it is illegal to discriminate against persons who rent or buy a home based upon
1. marital status. 2. disability including HIV and AIDS. 3. sexual orientation. Under FEHA, housing discrimination is also illegal in California. Persons who rent, lease, or buy a home are protected from discrimination based on their race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information of that person.
An offer can be terminated by
1. rejection by the offeree. 2. a counter offer. 3. revocation by the offeror. A seller (i.e., the offeree) can accept the offer as written, reject the offer outright, reject the offer by making a written counter offer, or do nothing and let the offer expire. The buyer (i.e., the offeror) can revoke the offer presented to the offeree if it has not been accepted.
The recording system
1. requires acknowledgements to prevent forgery in recorded documents. 2. is designed to provide public notice concerning the documents affecting the title to real estate The signature(s) of the grantor(s) must be acknowledged if the deed is to be recorded. It should be recorded as recording gives constructive notice to the world that the deed exists.
The warranty of habitability means that the landlord of a rented residential property must provide
1. stairways maintained in good repair. 2. hot and cold running water. 3. adequate weatherproofing. The warranty of habitability means that the premises must contain the following: Adequate weatherproofing, including unbroken windows and doors Plumbing and/or gas lines that conformed to local building codes when installed and have been maintained in proper working order Hot and cold running water, with fixtures and sewage disposal system approved under applicable law Heating system that conforms to applicable law when installed and maintained in proper working order Electrical lighting and other systems with equipment and wiring that conformed to building codes when installed and maintained in proper working order Building and grounds clean, sanitary, and free of debris, rubbish, rodents, and vermin at the onset of the lease and any areas under the control of the landlord be so maintained during the term of the lease Floors, stairways, and railings maintained in repair
The employment contract between the broker and affiliated licensees should include
1. the employment relationship. 2. the authority being given to the licensee. 3. all responsibilities and duties of the licensee. The agreement should clearly specify the actual duties to be performed in the office and in the field by the licensee, the relationship between the brokerage and its licensees, and the authority being given to the licensee.
A resident apartment manager is required when there are
16 or more units. Every residential property containing 16 or more units must have a resident manager.
A Lead-Based Paint Disclosure must be provided to a buyer by the seller if the seller's home was built prior to __________ .
1978 The seller must disclose the presence of any know lead-based paint and/or lead-based paint hazard in any house built prior to 1978.
The use of a road across real property without permission would cause a prescriptive easement in
5 years. An easement by prescription is created through long term use of land without the permission of the landowner. In California, the use of the land must be open and notorious, hostile, and reasonably continuous for a statutory period. The statutory period is five years.
In California, an agricultural lease can not be longer than
51 years. Agricultural land cannot be leased for more than 51 years.
If a tenant has lived in a leased property for at least 12 months, the landlord must give a ____ day notice to terminate the tenancy.
60 If a tenant has received more than three 72-hour notices in a 12-month period, the park landlord may evict a tenant with a 60-day notice.
Which one of the following is TRUE about a California real estate broker?
A broker should establish a policy and procedures manual. Each brokerage company operating in California should have a Policy and Procedure Manual. The broker must be active in a supervisory role, whether the licensee is an employee or independent contractor, and may hire unlicensed personnel as long as they do not engage in licensed real estate activity.
Which one of the following is FALSE regarding the formation of a contract?
A contract in the name of an entity that does not legally exist is valid. If a contract is entered into in the name of a legal entity that does not actually exist, such as a corporation that has no legal status, then the contract is void.
Which one of the following is correct with respect to a licensee's role in preparing a purchase and sale agreement for a buyer?
A licensee can fill in the blanks of the standard form agreement and prepare addenda at the request of the buyer. Real estate licensees are permitted to fill in the blanks in printed, standardized forms in connection with, and with respect to, transactions handled in the usual course of business. The licensee is to fill in the blanks or prepare addenda at the direction of the buyer.
Which one of the following is FALSE?
A listing agreement is a contract between the salesperson and the seller. A listing agreement is a contract between the seller and the salesperson's supervising broker. It is not an agreement between the seller and the salesperson. The subagent is the agent of an agent. Any licensee who is licensed under a broker is an agent of the broker who is the agent of the client.
Which one of the following statements is FALSE regarding listing contracts?
A listing contract can contain an automatic renewal provision. Listing contracts cannot contain automatic renewal clauses.
Which one of the following is MOST correct?
A listing salesperson must give to the seller a signed copy of the listing at the time of signing. A copy of the listing agreement must be given to the seller(s) at the time of signing. Failure to deliver a copy of the listing agreement to the seller at the time of signing may subject the licensee to CalBRE disciplinary action.
Which one of the following is TRUE about a California salesperson?
A salesperson is an agent of the broker and a subagent of the client. Any licensee who is licensed under a broker is an agent of the broker who is the agent of the client.
Which one of the following statements regarding community property is FALSE?
A spouse's separate property requires the consent of the remaining spouse if it is to be transferred or encumbered. A spouse's separate property is free from the interests and claims of the other spouse and it may be encumbered or transferred without the permission of the other spouse.
Which one of the following statements about a limited partnership is FALSE?
All partners, whether general or limited, are jointly and severally liable for the debts of the partnership. The general partners in a limited partnership are jointly and severally liable for the debts of the partnership. As a limited partner, that partner can only be liable for the debts of the partnership up to the value or extent of their ownership interest in the partnership.
In California, which of the following must be in writing in order to be enforceable?
An agreement employing an agent. An agreement for employment, an agreement for a purchase of real estate, or an agreement for a lease of real estate for longer than one year must be in writing. An agreement for a lease less than one year does not need to be in writing to be enforceable.
A broker hires a salesperson to engage in real estate activity under his/her license. What type of agreement will the broker and salesperson enter into in order to define this relationship?
An independent contractor agreement An employment agreement between a supervising broker and real estate licensee will typically be an independent contractor agreement.
The main California state agency charged with the enforcement of the real estate law is the
Bureau of Real Estate (CalBRE). The California Bureau of Real Estate (CalBRE) is dedicated to administering and enforcing the state's real estate licensing law.
California's real estate law is found in the
Business and Professions Code. Real estate laws and requirements for licensing are derived from the state's exercise of its police power to enact laws for the protection of the public's health, safety, and welfare. The California legislature responded to this need by enacting Business and Professions Code Sections 10000 to 11288.
Under single agency representation, which of the following IS NOT a common law fiduciary duty owed to the principal?
Compassion The common law fiduciary responsibilities owed during a single agency relationship are care, loyalty, accounting, accounting, obedience, and disclosure.
Which one of the following statements is FALSE regarding a planned unit development (PUD)?
Condominiums are considered to be PUDs. A planned unit development is a subdivision with the unit and the land under it owned by the individual owner. The common areas, such as the recreational facilities, open space, and other amenities, are owned by all the owners as tenants in common. The distinguishing factor between a planned unit development and a condominium is that in a planned unit development each property owner actually owns the land upon which their unit is situated. In a condominium, the unit owner only owns the airspace within their unit and not the land upon which it is situated.
Which is not a test to determine whether personal property is a fixture?
Cost Cost is not a test for determining if an item is a fixture. The tests used to determine if personal property has become a fixture include annexation, adaptation, and intention.
Which can be included in a final CalBRE order following an administrative hearing regarding misconduct of a licensee?
Depending on the nature and severity of the violation, the proposed decision and final CalBRE order will usually involve one of the following: 1. License suspension for a stated period, such as 30 days, 60 days, one year, and so forth 2. A fine instead of suspension 3. License suspension and a fine 4. License revocation and issuance of a restricted license for the remaining term of the original license. The terms of the restricted license will be that which the CalBRE deems necessary, taking into consideration the violations of the particular case that gave rise to the accusation. 5. License revocation
Which action CANNOT be performed by an escrow agent?
Draft legal documents. Among others, an escrow agent performs the following services in most real estate closings: Orders the preliminary report Disburses all funds to the appropriate parties Records the necessary documents, such as deeds, powers of attorney, and substitutions of liability and reconveyances, once all the conditions of the transaction have been met An escrow officer cannot do any of the following, including but not limited to: Offer legal advice regarding a transaction Correct or otherwise alter documents relating to a transaction
Which one of the following parties does NOT contribute to the completion of the Transfer Disclosure Statement?
Escrow agent The seller is the one who is mainly responsible for completing the TDS, but the listing agent and selling agent must disclose facts that they know about the property, even if the seller doesn't include it on the TDS. The escrow agent is a neutral third party that does not participate in completing the TDS.
Police power is the right of the government to seize private property for public use.
False Police power relates to the government's right to enact laws to protect the health, safety, morals, and general welfare of the community. The right to seize property for public use is called eminent domain.
Which one of the following is NOT the unauthorized practice of law?
Filling in the blanks on standardized real estate documents. A real estate licensee may fill in the blanks of a real estate purchase and sale agreement, a promissory note for earnest money, rental agreements, and most lease agreements. The licensee, however, is to fill in the blanks at the direction of a party to the transaction such as the seller or buyer.
Which one of the following statements regarding disclosure is TRUE?
HIV/AIDS cannot be disclosed even when asked; by law HIV/AIDS are not material facts that require disclosure. An owner of real property or his or her agent, or any agent of a transferee of real property, is NOT required to disclose either of the following to the transferee, as these are not material facts that require disclosure: (A) The occurrence of an occupant's death upon the real property or the manner of death where the death has occurred more than three years prior to the date the transferee offers to purchase, lease, or rent the real property. (B) That an occupant of that property was living with human immunodeficiency virus (HIV) or died from AIDS-related complications.
All sales of real estate must be reported to the
IRS. All sales of real estate must be reported to the Internal Revenue Service by the escrow agent.
Which one of the following is FALSE regarding agency agreements?
If either the principal or agent terminates the agreement, the remaining party can force the terminating party to perform. In the case of personal service contracts, if either the principal or agent terminates the agency agreement, neither party can force the other to perform.
Which one of the following statements about referral fees is TRUE?
In California, an unlicensed person can be paid a finder's fee for introducing a client to a licensee. There is no prohibition under California law so long as the finder does not perform any services requiring a license.
Which does NOT accurately reflect the duties of escrow agents?
In reviewing legal documents, they are to provide any missing clauses. The escrow agent has equal fiduciary duties to all the interested parties and cannot advocate or lobby for one party as opposed to any other. In their capacity as a dual agent, the escrow agent must always be neutral or impartial. Authorized by both the seller and the buyer, escrow instructions can be viewed as the blueprint that provides the written authorization for the escrow company as to how the transaction will take place.
Which is FALSE regarding a promissory note used in connection with a mortgage or trust deed?
It insures that the debt will be paid. The promissory note, outside of the promises given in the note, does not ensure that the debt will be paid.
Which of the following is FALSE regarding a mortgage or deed of trust?
It is the written evidence of a debt owed. A promissory note is the written evidence of the debt owed and the promise to pay that debt.
Which of the following factors will NOT be considered in determining whether an item is a fixture or personal property?
Its cost The rules to determine whether something is a fixture or personal property will be the method of attachment, the adaptability of the item, and the relationship between the parties to the lease.
When prorating California real property taxes in a closing statement, what date is used as the beginning of the tax year?
July 1 In California, the property tax year is from July 1 through June 30 of the following year.
Which one of the following contracts is a unilateral contract?
Option. An option is a unilateral contract by which a buyer is given the right to purchase a specified property at a specified price within a fixed period.
Which of the following statements best describes the concept of land ownership?
Ownership includes the land, fixtures, plus air space above and downward to the center of the earth. Ownership includes the land, all things natural and manmade permanently attached to it, plus a volume of space that extends from the surface boundaries of the property down to the center of the earth. The upper limits of the space owned are today defined as a reasonable distance into the atmosphere.
Which is an exclusive right belonging to the tenant?
Possession The lease agreement is a legally enforceable contract where an agent or owner of a property gives to another the exclusive right of possession of the property for an agreed-upon amount of time in return for money.
Which is an involuntary lien?
Property tax liens Examples of involuntary liens are judgment liens, construction liens (i.e., mechanic's liens), property tax liens, and special assessment liens.
The Subdivided Lands Law is administered by the
Real Estate Commissioner. The Subdivided Lands Law is administered by the Real Estate Commissioner.
The document that a seller must provide to a buyer about the condition of the property being sold is called the:
Real Estate Transfer Disclosure Statement. The California Civil Code Sections 1102-1102.17 provide that a buyer (transferee) is entitled to receive a statement from the seller (transferor) that provides information relating to the condition of the property the buyer is intending to purchase. This disclosure is to be made on a form known as the Real Estate Transfer Disclosure Statement (TDS).
In a lease agreement, which of the following is a promise that the tenant can use the property for the purpose for which it was rented without interference from the landlord?
Right to quiet enjoyment The right to quiet enjoyment is a promise that the tenant may use the property for the purposes for which it was rented without interference from the landlord. Sometimes this clause is inserted in the lease. If not specifically stated in the lease, the tenant under the common law, enjoys the implied right of quiet enjoyment during the lease term.
Which is FALSE regarding special assessments?
Special assessments do not create a lien on real property. Special assessments create a lien on the real property and, if not paid, the government can foreclose on the property.
Which one of the following is NOT a common contingency used for the benefit of the buyer?
Subject to the sale of the seller's property Some of the more common contingencies are approving of the property inspection, mortgage contingencies (i.e., can the buyer get a loan), and the sale of the buyer's existing property.
What is the meaning of novation?
Substitution of a new contract between the same or different parties When there is a novation, a new party is substituted for one of the original parties to the contract and the original party is excused from further performance.
Which would NOT be a violation of the Sherman Antitrust Act?
Telling a seller that their brokerage does not negotiate listing commissions The Sherman Antitrust Act does not require that commissions MUST be negotiable. That is a decision made by the brokerage firm. If the broker does not want to negotiate the terms of the commission stated in the listing agreement, then that is the responsible broker's decision. The law prohibits salespersons or brokers from stating that commissions are not negotiable because that is how it is done in the overall industry; implying that no matter where the seller goes, the commissions are not negotiable. Discussing commission rates with other licensees, telling the seller there's an industry-standard commission rate (see explanation above), or agreeing to exclude a rival brokerage are prohibited actions.
Which is a warranty given in a grant deed?
That the grantor has not transferred title to anyone else These warranties are that the grantor has not previously conveyed the title to the property to anyone else, and that there are no encumbrances on the property, such as liens, other than those the grantor has already disclosed to the grantee.
When escrow instructions differ from the sales contract, and the escrow instructions have been signed by both the buyer and seller, which is correct?
The escrow instructions take precedence. No matter what form the escrow instructions take, the escrow instructions may not contradict the terms of the real estate purchase and sale agreement and subsequent addenda unless both parties are in written agreement to do so.
Which is true regarding the advertising of a mobilehome for sale by a real estate licensee?
The mobilehome must be in an established mobilehome park or on a lot where its use may continue for a least one year. It is unlawful for a licensee to advertise or offer for sale a mobilehome that is not in an established mobilehome park or on a lot where its use may continue for at least one year.
Lead-based paint disclosures must be made in which of the following transactions?
The purchase of single-family residential structure and The purchase of a duplex Properties build before 1978 and sold at foreclosure and properties that are certified "lead-based paint free" by a federally authorized program are exempt from lead paint disclosure rules.
Who normally puts Covenants, Conditions, and Restrictions (CC&Rs) on a property's deed in a subdivision?
The subdivision developer When a subdivision is created by a developer, the developer drafts the full text of the CC&Rs and records them in the county recorder's office, which are given a record number that can be used to reference them in the future.
Which one of the following statements concerning riparian rights is TRUE?
They are the right to reasonable use of river water that touches one's land in some jurisdictions Water rights arising from a stream or river are known as riparian rights. Typically, under this doctrine, a property owner has the right to use and appropriate water from a stream or river only if the owner's property abuts the water.
Which one of the following is FALSE pertaining to solid mineral rights?
They cannot be sold separately from the land. Real property ownership rights start at the center of the earth and extend out through the surface for a reasonable distance into the air space above. Minerals are considered real property until they are extracted from the earth, at which time they become personal property. It is important to remember that mineral rights can be sold separately from the land.
Which statement is FALSE regarding tenants of mobilehomes?
They must be given 30 days' notice if there is to be a rent increase. Rent increase notices must be a minimum of 90 days.
Which one of the following statements is FALSE regarding Real Estate Investment Trusts (REITs) in California?
They must receive at least 50% of their investment income from real estate. REITs must receive at least 75% of their investment income from real estate.
A lawsuit begins when a plaintiff files a complaint with the court.
True A lawsuit begins when a plaintiff files a complaint with the court. A complaint describes the claim and the relief requested.
In most cases, a decision rendered in an arbitration proceeding is binding upon the parties.
True Arbitration is an alternative dispute resolution process in which an impartial third party hears the positions of the parties to a dispute and renders a decision. In most cases, the decision is binding.
Many civil lawsuits result in settlement once the discovery stage has been completed.
True At the end of the discovery stage, each side evaluates the strength of its case. At this stage the case may be resolved by settlement offers.
California's community property law originated with Spanish civil law.
True The concept of community property was imported from Spain.
California is the location of the Federal Circuit Court for the Ninth Judicial Circuit.
True The federal court system is divided into 13 regions, known as circuits. Each circuit has District Courts and an Appellate Court known as a Circuit Court. California is the location of the Circuit Court for the Ninth Judicial Circuit.
Under California law, property acquired by spouses during their marriage is owned as community property.
True Under community property law, property acquired during a marriage is owned equally by a husband and wife. California is a community property state.
Which of the below are the parties to a trust deed?
Trustor, beneficiary, and trustee The parties to a trust deed are the trustor, the beneficiary, and the trustee.
Which of the following in a lease agreement prohibits the tenant from destroying or damaging the property?
Waste clause Most rental or lease agreements have a provision against committing waste. To commit waste is to destroy or damage a property to the extent of decreasing its value.
If there is a difference in the degree of restriction between zoning restrictions and deed restrictions, which has priority?
Whichever is more restrictive Often, zoning requirements and restrictive covenants may address the same issue and therefore, may be in conflict with each other. When this is the case, the more restrictive of the two must be met.
"An agreement between competent parties upon legal consideration creating legally enforceable duties and obligations" is a definition of
a contract. In general, a contract is an agreement between competent legal parties to do some legal act or to refrain from doing some legal act in exchange for consideration.
Under a trust deed, once the trustor has paid the beneficiary in full, the trustee will be instructed to record
a deed of reconveyance. If the trustor (borrower) pays off the loan in full, as agreed, the beneficiary will direct the trustee to issue and sign a deed of reconveyance or reconveyance deed.
The greatest estate possible in real property is called
a fee simple estate. The fee simple estate, also known as fee simple absolute, is the greatest estate possible in real property, containing the greatest amount of rights.
An item that was once personal property but has become real property is known as:
a fixture. A fixture is an item that was once personal property but which has become real property by its permanent attachment to the real property.
Voluntary alienation occurs when:
a grantor transfers all or part of his/her interest in a property to a grantee. Voluntary alienation is the transferring of real property from one owner to another as a result of the desire of the owner to do so.
All of the following are non freehold estates, EXCEPT:
a life estate. A life estate is a freehold estate; the other estates are leasehold estates.
An easement across Smith's property is
a non-financial encumbrance. Nonfinancial encumbrances are those that limit or restrict the use of property itself. Nonfinancial encumbrances include such things as easements, profits, and private restrictions.
The best way to discover defects on a title is by:
a search of title. A title search will reveal the chain of title and any defects that may exist against the title.
A special permit that is issued to allow a land- use normally in violation with current zoning is called
a variance. A variance is authorization to build a structure that is otherwise prohibited by the zoning ordinance.
A clause in a promissory note that allows the lender to demand the entire principal due in the event of default is the
acceleration clause. In the event a borrower defaults on the note, the acceleration clause allows the lender to accelerate the payment of the loan by requiring that the entire principal balance of the note be immediately due and payable.
Gaining land by any natural or man-made cause is known as
accession. Accession is the acquiring of title to something that has been added to the property, either by man-made action or through the operation of natural geological processes.
In general, a buyer may not withdraw an offer to purchase the seller's property
after receiving proper notification of the seller's acceptance of the offer. Typically a buyer may not withdraw an offer on a property after the seller has agreed to all of the terms of the contract (i.e., mutual assent). There are some exceptions that may allow a buyer to back out of an accepted contract such as misrepresentation or mutual mistake.
When the Real Estate Commissioner wishes to proceed against a licensee for a suspected violation of real estate law, the Commissioner must first serve the licensee with
an accusation. The Commissioner is empowered to launch an investigation and must do so if the verified complaint is made in writing by someone who alleges the wrongdoing by a licensee acting in his/her capacity as a real estate license. The written accusation must be filed within three years of the alleged unlawful act. An accusation is a written statement by the CalBRE of the charges, setting forth the acts that constitute a violation of the law.
A type of mortgage with interest rate changes during the life of the loan based upon a specified index is known as
an adjustable rate mortgage. An adjustable rate mortgage (ARM) is one wherein interest rate changes occur during the life of the loan generally based upon a specified index.
A corporation formed under the laws of California is
an artificial person. In the eyes of the law, a corporation is an artificial person who can legally enter into contracts, acquire, own, and transfer real and personal property, incur debts, and has liabilities.
A right short of an estate that gives someone the right to use the land of another for a specific purpose is known as
an easement. An easement is the legal right to enter and use the land of another.
The agreement that provides the most protection for payment of a commission for the listing broker is
an exclusive right to sell listing. Under the exclusive right to sell type of listing, the listing broker is paid a commission no matter who is responsible for the buyer's interest in the property. The exclusive right to sell provides the most protection for a listing agent.
An enforceable agency relationship can be entered into by
an individual appointed by the court to represent the interests of one who does not have legal capacity. Agreements that are entered into while one party is intoxicated or when a party is a minor (who doesn't have the legal authority to appoint another as an agent) can be voided. A person who is appointed by a court to represent one who doesn't have the legal capacity to act for himself/herself can enter into an agency relationship.
A type of listing agreement entered into with several licensees that provides for payment of a commission to the licensee who brings the buyer is known as:
an open listing. An open listing agreement allows the seller (the property owner) to employ any number of brokers at the same time. However, the seller would only owe a commission to the actual broker who sells property.
The term right of emblement relates to a tenant farmer's
annual crops. When the tenancy is for an indefinite period and the tenancy is terminated through no fault of the tenant, the farmer will be given the right to harvest the first crops that mature after termination. This is known as the right of emblement.
In order to be enforceable, a listing contract must meet all of the following requirements, EXCEPT
be recorded at the county recorder's office. Listing contracts must be in writing, state a definite expiration date, and be signed by the seller(s) and broker. They do not need to be recorded.
A loan secured by more than one piece of property is a
blanket encumbrance. A blanket encumbrance is a loan that is secured by more than one piece of real estate. The security instrument may be a blanket mortgage, trust deed, or land sale contract.
As defined in local zoning ordinances, a zone placed between two incompatible uses is known as a
buffer zone. A buffer zone is a zone placed between two incompatible uses.
Easements CANNOT be terminated:
by written withdrawal of the easement by the servient tenement. Easements may be terminated by any one of the following ways: By written release of the easement by the dominant owner By the merging of the dominant and servient lands into one parcel By abandonment of the easement by the dominant owner By the purpose for which the easement was created ceasing to exist By prescription if the servient tenant prevents the dominant tenant from using the easement for a statutory ten-year period By an expiration of the time for which the easement was created
Right-of-way easements, such as those acquired by public utilities, are usually called
commercial easements in gross. If the easement in gross is commercial it is not revocable and can be assigned. Common examples are sewer lines, gas lines, power lines, cable lines, and railroad tracks.
A tenant leased an apartment, but the landlord failed to provide heat during the winter because the tenant was always late with the rent. This is an example of
constructive eviction. Any act, failure to act, or threat to act or not act on the part of the landlord that interferes with a tenant's right to quiet enjoyment of the property is unlawful and considered to be an illegal eviction, known as a constructive eviction.
A lease CANNOT legally be terminated by
constructive eviction. The California Code of Civil Procedure establishes the procedures necessary for a legal eviction. An owner must follow these procedures and not resort to constructive eviction, which is illegal.
Recording a document gives
constructive notice. Recording gives constructive notice to the world that the document exists.
An executory contract is always a
contract that will be performed. An executory contract is one that has not yet been fully performed. An executed contract is one that has been fully performed by both parties.
On the closing documents the existing loan payoff is entered as a
debit to the seller. The seller's closing statement will reflect the seller's side of the transaction. The existing loan payoff is considered a charge (debit) to the seller.
An example of commingling is
depositing personal money with money being held on behalf of clients. Commingling personal money and/or property with the money or property being held on behalf of the client.
Mello-Roos disclosures refer to
disclosure of notice concerning special tax or assessments. Mello-Roos authorized the formation of community facilities districts, the issuance of bonds, and the levying of special taxes to finance the specific public facilities and services. The seller of one-to-four dwelling units must make a good faith effort to obtain from the community facilities district a disclosure notice concerning the special tax and deliver that notice to the prospective buyer.
Using threats to force a person to enter into a contract involuntarily is known as __________ .
duress Duress is the threat of economic or physical harm leading a person to enter into a contract that they would not otherwise have entered into. The threat may be of harm to the contracting party or to a third party.
A non-financial encumbrance created by the intrusion of some structure or object across the property boundary is known as a/an
encroachment. An encroachment is a form of encumbrance created by the intrusion of some structure or object across the property boundary line. Common examples are a fence, a roofline, tree limbs, a driveway, or bushes.
When purchasing a cooperative unit, the purchaser receives all of the following, EXCEPT
fee simple title to the airspace of the unit and common interest in the common areas. Each shareholder has a leasehold interest in their unit. The ownership shares in a cooperative unit are allotted on a square footage basis and assessment of the common expenses of maintenance, taxes and insurance, and other items are based upon percentages of shares owned in relation to the total amount of shares issued.
A standard subdivision consists of subdivisions with ___________ parcels.
five or more The standard subdivision consists of five or more parcels or lots on less than 160 acres of land.
The CLTA standard form title insurance policy insures against
forgery of a deed. It insures matters of record not specifically excluded from coverage as well as matters not on record. Items not on record specifically insured against include forgery.
Under California law, the sale of a franchise is NOT exempt from registration with the Department of Business Oversight (DBO) if the
franchisor provides the franchisee with an offering prospectus at least 48 hours prior to entering into a binding franchise agreement. Exemptions apply if the franchisor has a net worth of five million dollars and the franchisor has 25 franchises consistently doing business during the five year period before the sale. The sale is also deemed exempt if the franchisee is selling his/her own franchise.
An exclusive right to sell listing contract
guarantees a commission to the listing broker no matter who brings the buyer if a sale occurs during the listing period. Under the exclusive right to sell listing, the seller employs one broker for a specific period. That broker is entitled to a commission regardless of how the listing is sold or by whom. This type of listing should be viewed as the most advantageous type of listing for both the broker and the seller. The net listing agreement provides that the broker can take any amount of sale proceeds over and above the agreed upon net sale price due the seller.
A copy of an executed offer to purchase must be given to the offeror
immediately upon obtaining the offeror's signature on the offer. Failing to give a copy of any contract to the person signing it at the time of signing may result in disciplinary action.
In terms of basic physical characteristics, land is properly be described as
immobile, indestructible and nonhomogeneous. The physical characteristics of real property are that real property is indestructible, immobile, and nonhomogenous.
A contract that results from neither a written nor oral agreement, but from the actions of the parties involved, is referred to as an
implied contract. Since implied contracts are not created by oral or written agreement, they must be deduced from the actions of the parties.
A landlord does NOT have to give a 24-hour notice to a tenant to arrange access to a rented premises
in an emergency. The landlord does not have to give a 24-hour notice for access in emergencies.
Neither the seller nor the agent is liable for any error, inaccuracy, or omission in the Transfer Disclosure Statement if the:
information provided was based on information received from a public agency or qualified expert. In transactions subject to the TDS disclosure requirements, sellers and agents may receive some liability protection from California Civil Code Section 1102.4 if they rely on information received from public agencies or qualified experts.
A trust deed
is a security instrument granting limited rights to the trustee. A trust deed is a security instrument for the payment of a promissory note. The instrument grants to a trustee for the life of the loan one stick of the bundle of rights, which is the limited power of sale in the event of borrower default.
When a real estate sales transaction is to be closed in escrow, the escrow officer
is neutral with respect to the interest of each party to the transaction. In their capacity as a dual agent, the escrow agent must always be neutral or impartial.
The borrower under a mortgage is known as the
mortgagor. The borrower is known as the mortgagor.
In order for a mobilehome to be considered real property, it
must be permanently affixed to a foundation. A mobilehome is considered to be personal property until the wheels have been removed and the structure has been mounted on a concrete pad or other type of permanent foundation. A mobilehome that is attached to a foundation is taxed as real property.
The type of lease that requires the tenant to pay a set amount, plus some or all of the building operating expenses, is known as a __________ lease.
net With a net lease, the tenant pays a set amount of rent and some or all of the expenses of operating the building for maintenance, repairs, etc.
An agency relationship is NOT terminated:
once a suit for specific performance is instituted. Agency relationships are personal in nature. A personal service contract cannot be used for a specific performance suit. The other three listed options are ways that a personal contract can be terminated.
Those that originate loans for real property are known as
primary lenders. The secondary mortgage market purchases loans from primary lenders. Primary lenders are those that originate the loan with the consumer.
The transfer of land owned by a government entity to a private party is known as
public grant. Any transfer of land owned by a government entity to a private party is known as a public grant.
The north-south lines that are parallel to the prime meridian are known as
range lines. Range lines are the north-south lines that are parallel to the prime meridian.
The phrase time is of the essence is most likely to be found in a:
real estate purchase and sale agreement. A "time is of the essence" clause in a real estate purchase and sale agreement sets the date/time that the transaction will close unless modified by the parties involved
With certain exceptions, a property tax lien has priority over other interests in real property
regardless of when they were recorded. Property taxes and special assessments are a priority lien ahead of all others regardless of the recording date or the year for which the taxes or assessments are due.
A quitclaim deed is frequently used to
remove a cloud on a title A quitclaim deed is used to release any interest the grantor may have in the property on the date of the deed.
The Costa-Hawkins Rental Housing Act greatly reduced the impact of rent control with respect to
single-family dwellings. The California Legislature passed the Costa-Hawkins Rental Housing Act preempts local rent control laws with respect to the following properties: New housing units with a certificate of occupancy issued after February 1, 1995 Single-family dwellings Multi-unit dwellings in areas with vacancy control, except where the tenancy is terminated by the landlord's service of a termination notice or a change in the tenancy's terms
The simplest form of business ownership is a:
sole proprietorship. A business owned by one individual is known as a sole proprietorship. The individual can operate the business under his or her own name, or may elect to operate the business under an assumed or trade name. It is the simplest form of business ownership because there is only one owner.
Ms. Green-Smithisler purchased a property with the provision in the sale agreement that the seller would give her a warranty deed. At closing, the seller refused to provide better than a bargain and sale deed. If Ms. Green-Smithisler insists on buying the property and for the seller to provide a warranty deed, she can attempt to force the seller to do so by filing a suit for
specific performance. Specific performance is granted by a court of equity by ordering the breaching party to perform his or her contract duties. The court could also order the opposite of specific performance and order the breaching party to refrain from doing a specific act.
In California, Real Estate Law is enforced by
the Real Estate Commissioner. The Real Estate Commissioner's duties are to implement and enforce the California real estate laws.
The highest court, also known as the court of last resort, is
the United States Supreme Court. The United States Supreme Court is the court of last resort. It generally operates under discretionary review, meaning that it can pick and choose cases (through grants of writ of certiorari) and hear only the non-frivolous appeals that present truly novel issues.
The enforcement of the laws setting standards for construction methods and materials is accomplished by way of
the building permit system An owner must obtain a building permit from the city or county before constructing a new building or repairing, improving or altering an existing structure. The permit allows officials to inspect the building plans to verify that building codes and zoning ordinances have been satisfied and to inspect the completed construction before a certificate of occupancy is issued.
If Don has a permanent right to travel across Bob's land, Don's property is
the dominant tenement. A minimum of two adjoining parcels of land is required to create an easement appurtenant. When created, one parcel of land will benefit or receive the right of use, and is known as the dominant tenement.
Voluntary alienation is
the right to transfer an interest in real property. Voluntary Alienation is the transferring of real property from one owner to another.
During the term of a land sale contract
the seller retains actual legal title until the debt is retired in full. The land sale contract is a form of seller financing in which the buyer takes possession of the property and makes payments on its purchase, but does not receive legal title to the property until the debt is retired. The seller retains actual legal title, and the buyer has equitable title.
The term waiver is best defined as
to voluntarily give up or surrender a right. A waiver as it relates to a contract is the act of voluntarily giving up or surrendering a right contained within the contract.
When a purchase and sale agreement has been signed by the buyer and given to the seller's agent along with an earnest money check, the
transaction is considered an offer until the seller accepts the agreement and the acceptance is communicated to the buyer. A real estate purchase and sale agreement is just an offer until the seller accepts the buyer's agreement and that acceptance is communicated back to the buyer.
Cases relating to real estate matters are first brought at the
trial court level. Cases regarding real estate matters or real estate-related issues are first brought at the trial court level.
The Easton case led the California legislature to require expanded duties of a real estate licensee to a third party to include all of the below, EXCEPT:
utmost loyalty and lawful obedience. A real estate licensee is required to conduct a reasonably competent and diligent visual inspection of the property for sale and to disclose the facts to third parties that such an investigation would reveal. Licensees are required to disclose any material facts that he/she knows about the property or could easily know of, and to treat third parties with honesty and good faith.
A deed that has been executed and delivered but not recorded is
valid. Recording the deed does not change its validity. Recording the deed creates a presumption that the document is valid.
If a salesperson quits or is discharged by his/her broker, the broker is required to return the salespersons license certificate to the salesperson
within three days. If an affiliated licensee terminates or transfers to another broker, the current employing broker must notify the CalBRE through its eLicensing system or in writing, and return the licensee's license to the licensee within three days of termination.