Practice/Disclosures

The Alquist-Priolo Earthquake Fault Zoning Act resulted in the establishment of Earthquake Fault Zones. How wide is the "typical" zone boundary? (a)1/4 mile (b)1/2 mile (c)3/4 mile (d)1 mile

(a) 1/4 miles The Alquist-Priolo Special Studies Zones Act of 1972, renamed the "Alquist-Priolo Earthquake Fault Zoning Act" in 1994, regulates development and construction of buildings intended for human occupancy in Earthquake Fault Zones. These zones span the "surface traces" of delineated active faults. The "typical" zone boundaries are set back approximately 660 feet on either side of the fault trace or 1/4 mile in width.

When converting an existing residential property to a condominium, existing tenants must be given: (a)180 days written notice. (b)30 days written notice. (c)12 months notice. (d)None of the above

(a) 180 days written notice Before approving the conversion of an existing residential property to a condominium, community apartment, or stock cooperative, the local government agency cannot give its approval unless each of the existing tenants is given written notice of the developer's intention to convert at least 180 days prior to the termination of the tenancy.

If a landlord is going to increase the rent, how does he/she need to notify the current tenant? (a)Deliver written notice in person or by regular mail (b)Verbally (c)Deliver the letter by Certified Mail (d)No notification is required

(a) Deliver written notice in person or by regular mail A landlord's notice of rent increase must be in writing. The landlord may deliver a copy of the notice personally or by regular US mail, with proper postage and addressed to the tenant at the rental unit.

Commingling is one of the greatest single causes for loss of license. Which of the following would NOT be considered commingling? (a)Holding an uncashed deposit check after acceptance of an offer when directed to do so by the seller. (b)Cashing a deposit check (made out to the buyer) and placing the money in the broker's safe, properly identified as being the deposit received from the buyer. (c)Depositing either cash or a check received as a deposit in the broker's personal account to be held until called for by the escrow officer. (d)Depositing money received by his/her client in the broker's personal account to pay miscellaneous expenses.

(a) Holding an uncashed deposit check after acceptance of an offer when directed to do so by the seller The correct answer is a: An exception to this rule is when a check is received from an offeror in connection with an offer to purchase or lease. In this case, the deposit check may be held uncashed by the broker until acceptance of the offer if the following conditions are met: The check by its terms expressly provides that it is not to be negotiated by the broker or if the offeror has given written instructions to the broker that the check shall not be deposited or cashed until acceptance of the offer, and The offeree is informed, before or at the time the offer is presented for acceptance that the check is being so held.

When a broker has a trust account, the name on the account must: (a)Name broker as trustee (b)Name an independent trustee (c)Name each person who has money in the account as trustee (d)Name the broker's accountant as trustee

(a) Name broker as trustee A trust account must: 1) Designate the account as a trust account; 2) Name the broker as the trustee for the account; the broker may never delegate his/her accountability for the trust account.

Brokerage A and Brokerage B agreed to charge all their clients the same percentage commission on all listings. This is a violation of the: (a)Sherman Act (b)Clayton Act (c)Robinson-Portman Act (d)Federal Trade Commission Act

(a) Sherman Act The foundation for federal Anti-Trust laws is the Sherman Act. The three types of anti-trust violations which are most important in the real estate industry are; 1) conspiracy to fix commissions; 2) imbalanced commission splits; and 3) conspiracy to boycott.

Which of the following is NOT included in Phase I of an Environmental Report? (a)Soil analysis (b)Interview neighbors (c)Aerial photos (d)Drainage patterns

(a) Soil Analysis The correct term is Environmental Site Assessment (ESA). In the United States, an environmental site assessment is a report which identifies potential or existing environmental contamination liabilities. The actual sampling of soil, air, groundwater and/or building materials is typically NOT conducted during a Phase I ESA.

All of the following are TRUE about a Certified Property Manager (CPM) EXCEPT: (a)The CPM designation can be given to an individual or a company. (b)Must be affiliated with the NATIONAL ASSOCIATION OF REALTORS®. (c)Have 3 years of qualifying real estate management experience as defined by IREM. (d)Pass the CPM Certification exam.

(a) The CPM designation can be given to an individual or a company A Certified Property Manager (CPM) is a real estate professional designation awarded by the Institute of Real Estate Management (IREM) and recognized by the National Association of Realtors (NAR). The CPM designation cannot be given to a company.

What is required of a pre-paid rental service when the business plans to move offices? (a)The company must inform clients of the new address before the move. (b)The company must inform the clients of the new address within 10 days of the move. (c)They must inform the clients within 5 days. (d)They must inform the clients within a month.

(a) The company must inform clients of the new address before the move If a prepaid rental listing service (PRLS) licensee or a real estate broker operating a prepaid rental listing service under his broker license proposes to move either the principal location or main office to a different address, he shall, prior to effecting the move, give notice of the address and telephone number of the new principal location or main office in a manner reasonably calculated to reach all of the prospective tenants with whom the PRLS licensee or broker has contracts that have not expired.

The fees charged for property management are usually: (a)a flat fee and a percentage of gross rents. (b)a percentage of net rents. (c)flat fee plus expenses. (d)flat rate.

(a) a flat fee & a percentage of gross rents Property managers can charge a flat fee and/or a percentage of gross rents. Usually when they take over a property, the manager may require the flat fee in order to bring the property up to market.

Which of the following defines the term "reconciliation?" (a)comparing two or more sets of records to determine whether their balances agree (b)periodically emptying an account to obtain a zero balance (c)making sure debits always equal credits (d)checking the chronological sequence of trust fund receipts and disbursements

(a) comparing two or more sets of records to determine whether their balances agree There is an interrelation between the trust fund bank account record, the separate beneficiary or transaction record, and the bank statement. If there is an entry made on one record, there must also be a corresponding entry on the other records. Reconciliation is the process of comparing two or more sets of records to determine whether their balances agree.

Which of the following would realize the greatest benefit from the Bulk Sales Law? (a)creditors (b)buyers (c)sellers (d)patrons

(a) creditors The major purpose of the bulk transfer status is to afford a merchant's creditors an opportunity to satisfy their claims against a merchant who owes them money before the merchant can sell his/her assets and vanish with proceeds of the sale.

A public report is good for five years from the: (a)date of issuance. (b)date the first lot is sold. (c)date of approval. (d)date of delivery to the buyer.

(a) date of issuance A public report is good for five years from the date of issuance

A licensee put a "blind ad" in the local newspaper. This ad does NOT: (a)identify the advertiser as a real estate licensee. (b)include the address of the property for sale. (c)include the licensee (d)disclose the selling price.

(a) identify the advertiser as a real estate licensee Blind advertising is advertising in which a licensee does not make clear that a real estate firm is acting for the owner. Applies to solicitation materials intended to be the "first point of contact" such as business cards, stationery, websites, advertising fliers, brochures, and email. Including advertisements on television, in print, or electronic media. The licensee can use "Broker," "Agent" or "Bro." or "Agt." or REALTOR®, but only by those who are actually REALTORS®.

A broker is representing a subdivider selling a new large subdivision of single family dwellings. The broker knows that conformity is the key to maintaining optimum value in the new subdivision. The broker and his salesperson decide that in order to achieve this goal they will quote higher prices to minorities than to other buyers. This would be: (a)illegal for the broker and the salesperson. (b)illegal for the seller. (c)not illegal for the broker or salesperson. (d)acceptable practice for all parties involved as this behavior is in the best interest of both the seller and buyers.

(a) illegal for the broker and the salesperson This is discrimination. The broker and salesperson are behaving illegally. The question does not indicate the seller knew of the broker's plans, so choice A is the best choice.

Someone that sells his findings, but is not accountable to another for the methods used is called an: (a)independent contractor. (b)general agent. (c)special agent. (d)attorney-in-fact.

(a) independent contractor An independent contractor is one who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as to how he or she performs the act.

To assure the accuracy of trust fund accounting records, they must be reconciled at least: (a)once-a-month (b)once every six months (c)once-a-year (d)once every two years

(a) once-a-month To assure the accuracy of trust fund records, they must be reconciled at least once-a-month, usually at the end of each month.

The Commissioner paid from the Recovery Fund for settlement of a claim based upon a judgment against a licensed broker. If the broker is bankrupt, he/she would be required to: (a)pay the fund back in full plus interest. (b)make monthly payments. (c)pay back only a certain percentage. (d)pay back nothing.

(a) pay the fund back in full plus interest No broker or salesperson shall be granted reinstatement until he/she has repaid in full, plus interest at the prevailing legal rate, the amount paid from the Recovery Fund.

The Real Estate Transfer Disclosure Statement (TDS) provides information regarding the: (a)physical condition of the property. (b)properties chain of title. (c)agency relationships between the parties to the transaction. (d)commission split between real estate agents.

(a) physical condition of the property As required by California Civil Code Sections 1102 - 1102.14, a transferee (buyer) of residential real property is entitled to a statement from the transferor (seller) which provides information regarding the physical condition of the property. (See Real Estate Transfer Disclosure Statement)

Which of the following is provided by the purchaser upon resale of a business? (a)resale certification (b)clearance receipt (c)disclosure form (d)All of the above

(a) resale certification A resale certificate allows a buyer (retailer) to purchase inventory without paying sales tax as long as the goods are going to be resold to customers. In the sale of a business, sales tax is not charged on stock-in-trade which was held for resale.

A landlord and a tenant entered into a two year lease on commercial retail space. Three months into the lease, the tenant realizes he is unable to continue paying the rent and asks the landlord to release him from the lease. The landlord agrees. This would be considered a(n): (a)surrender. (b)assignment. (c)abandonment. (d)default.

(a) surrender Surrender occurs when both the landlord and tenant agree to allow a termination of the lease. There is no financial liability on either the landlord or the tenant.

The real estate commissioner's authority to administer and enforce the real estate law is called: (a)the Commissioner's regulations (b)state legislation. (c)judicial precedent. (d)the Civil Code.

(a) the Commissioner's regulations The real estate commissioner issues regulations (Commissioner's Regulations) to aid in the administration and enforcement of the real estate law.

You are a California real estate broker. A prospect is referred to you by an out-of-state broker and a sale is consummated by you. You want to split your commission with the cooperating broker. Under the California Real Estate Law: (a)you may pay a commission to a broker of another state. (b)you cannot divide a commission with a broker of another state. (c)you can pay a commission to a broker of another state only if he/she is also licensed in California. (d)None of the above

(a) you may pay a commission to a broker of another state A California licensed real estate broker may pay a commission to a broker of another state.

Buyer Frank sued broker Sam for a misrepresentation in the sale of a single family residence. He was awarded a judgment but Broker Sam was bankrupt and unable to pay the judgment. Buyer Frank appealed to the Real Estate Recovery Account. Assuming the Recovery account agrees to pay Frank, he will receive a maximum of ______ for this single transaction. (a)$20,000 (b)$50,000 (c)$100,000 (d)$250,000

(b) $50,000 The fund will pay a maximum of $50,000 for a single transaction and $250,000 maximum for any one licensee. If the broker or salesperson is bankrupt, he/she will not be granted reinstatement until the fund is repaid in full, plus interest at the prevailing legal rate.

A landlord must give the lessee (tenant) a copy of the lease within: (a)5 days. (b)15 days. (c)25 days. (d)30 days.

(b) 15 days Under California Civil Code Sec. 1962, the landlord or rental agency must provide the lessee (tenant) with a copy of the lease or rental agreement within 15 days of signing in order for the lease to be binding.

The seller is required to deliver the "Homeowner's Guide to Earthquake Safety" to the buyer of any one-to-four unit property built prior to: (a)1953 (b)1960 (c)1968 (d)1975

(b) 1960 In addition to the earthquake disclosure requirements contained in Civil Code Section 1102 since 1991, sellers of one-to-four unit homes built before 1960 must deliver to the buyer, "as soon as practicable before the transfer", a copy of The Homeowner's Guide to Earthquake Safety and disclose certain earthquake deficiencies. The booklet contains a reporting form that may be used for this disclosure. The seller's real estate agent is to provide the seller of such a home with a copy of the booklet for delivery to the buyer.

A real estate licensee did not use diligence in researching problems with a home he had listed and failed to disclose these problems to the buyer. How long does the buyer have to bring a lawsuit against the agent? (a)1 year (b)2 years (c)5 years (d)7 years

(b) 2 years A lawsuit alleging a breach of a licensee's duty must be filed within two years from the date of occupancy or the date of recordation of the deed to the buyer or the date of close of escrow, whichever one occurs first.

Within how many days should a property manager send out the tenant's refund check with a receipt of deducted amount (if any)? (a)21 business days (b)21 calendar days (c)14 business days (d)14 calendar days

(b) 21 calendar days After a tenant moves out, a landlord has 21 calendar days to return the tenant's deposit in full, or mail or personally give to the tenant:

Which of the following qualifies as a "bulk transfer sale?" (a)A judicial transfer of a business including all stock used for resale, fixtures, licenses and leases. (b)A lumber company who transfers a substantial amount of lumber not in the ordinary course of business. (c)A subdivider who transfers an entire 50-parcel unimproved subdivision. (d)All of the above

(b) A lumber company who transfers a substantial amount of lumber not in the ordinary course of business A bulk sales would contain the words "not in the ordinary course of the transferor's business."

Which of the following would be considered a violation of the Fair Employment and Housing Act? (a)An owner of a single family residence who refuses to rent a room in his home for religious reasons. (b)Failure to include accommodations for handicapped people when constructing a new building. (c)An advertisement in a newspaper which states, "Catholic roommate wanted." (d)All of the above.

(b) Failure to include accommodations for handicapped people when constructing a new building Under the Fair Employment and Housing Act, failure to design or build a multi-family dwelling of four or more units in a manner that allows disabled persons access and use is considered discrimination.

After reconciliation of the trust account, a broker finds funds in the account for which he cannot determine ownership. The broker should: (a)Use these funds to offset account shortages (b)Have a separate ledger for the unaccounted money and leave it in the trust account (c)Remove it to avoid commingling with other client (d)Send it to the Department of Real Estate

(b) Have a separate ledger for the unaccounted money and leave it in the trust account Unexplained trust account overages are trust funds and unless the broker can establish the ownership of such funds, the funds must be maintained in the broker's trust fund account or in a separate trust fund account established to hold such funds (DRE Reference Book).

A property owner breaks one parcel of land into two parcels. This would fall under regulation of the: (a)Subdivided Lands Act. (b)Subdivision Map Act. (c)both (a) and (b). (d)neither (a) nor (b).

(b) Subdivided Lands Act Any lot division falls under local control of the Subdivision Map Act.

When leasing a commercial property that is merely a "shell" space, the landlord often agrees to spend a specific amount for a qualified tenant. This amount is properly designated as: (a)a rent abatement. (b)a tenant improvement allowance. (c)a security deposit. (d)earnest money.

(b) a tenant improvement allowance When the landlord or property manager allows a certain sum of money to the tenant to be used for improvements within the rental space, it is called a "tenant improvement allowance." This is usually only found with commercial leases.

Which of the following is required to operate as an advance-fee rental agent? (a)a real estate broker's license (b)a written contract with prospective tenants (c)a real estate salesperson's license (d)access to the Multiple Listing Service

(b) a written contract with prospective tenants An advance-fee rental agent collects a fee in advance from prospective tenants to find them suitable rental properties. An advance-fee rental agent must have a Prepaid Rental Listing Service license (PRLS), but real estate brokers are exempt from this license requirement. PRLS contracts must be in writing and approved by the Real Estate Commissioner.

The Alquist-Priolo Earthquake Fault Zone Act is concerned with: (a)all buildings in the entire state of California. (b)all residential buildings within an earthquake fault zone. (c)all buildings within an earthquake fault zone. (d)commercial buildings within an earthquake fault zone.

(b) all residential buildings within an earthquake default zone The Alquist-Priolo Earthquake Fault Zone Act was passed to prevent buildings constructed for human occupancy from being constructed astride active faults. The State Geologist has identified earthquake fault zones called "Special Studies Zones." Any development located within one of these Special Studies Zones (which is not exempt) must have a geologic analysis.

A subdivider must give a copy of the Commissioner's public report to: (a)anyone who intends to purchase one or more lots. (b)any person, at any time on request. (c)only purchasers of lots just before they sign the purchase contract. (d)only their salespeople.

(b) any person, at any time on request All prospective purchasers must be given a copy of the public report and be allowd to read it. A copy of the report must be given to anyone requesting a copy at any time. The Public Report may be referred to as a "White Paper" or "White Report" on the state exam.

In an effort to enforce trust fund handling requirements, the Real Estate Commissioner continuously: (a)sponsors lectures on trust fund handling throughout the state. (b)audits and examines broker's trust fund records on a state-wide basis. (c)calls brokers to keep them up to date on trust fund handling requirements. (d)changes the trust fund handling laws to keep brokers on their toes.

(b) audits and examines broker's trust fund records on a state-wide basis The Real Estate Commissioner continuously audits and examines broker's trust fund records on a state-wide basis.

A broker communicates information given to him by the seller to the buyer in full faith that the seller's information is true. It is later proven that the information was false, and the buyer rescinds. The broker is subject to: (a)discipline by the licensing authority (b)civil action (c)criminal action (d)all of the above

(b) civil action Even though the broker acted in good faith and was simply passing on information provided by the seller, he/she might still get sued (civil action). The real estate commissioner would not get involved unless it could be proven the broker committed fraud. This is not a criminal case.

A broker communicates information given to him by the seller to the buyer in full faith that the seller's information is true. It is later proven that the information was false, and the buyer rescinds. The broker is subject to:  (a)discipline by the licensing authority. (b)civil action. (c)criminal action. (d)all of the above.

(b) civil action Even though the broker acted in good faith and was simply passing on information provided by the seller, he/she might still get sued (civil action). The real estate commissioner would not get involved unless it could be proven the broker committed fraud. This is not a criminal case.

For his/her own protection, the purchaser of a business should obtain a: (a)resale certification. (b)clearance receipt. (c)sales tax exemption authorization. (d)use tax exemption form.

(b) clearance receipt To avoid any liability for unpaid sales tax, the purchaser of a business should obtain a clearance receipt from the state Board of Equalization stating that the sales tax has been paid through a particular date.

Which of the following allows a subdivider to enter into binding contracts with purchasers for lots but does not allow transactions to be completed? (a)final public report (b)conditional public report (c)white report (d)negative declaration

(b) conditional public report Because the public report may take months to compile, the subdivider may begin taking reservations for future purchases on the basis of an approved conditional public report (called the "pink report"). No sales can be closed or transaction completed, however until the final public report (called the "white report") is received.

A broker is handling the sale of a house for a seller. The broker gave the buyer the required disclosures. The disclosures failed to disclose something which was recorded with the county recorder. What kind of notice did the buyer receive? (a)Actual notice (b)Constructive notice (c)Physical notice (d)Title insurance notice

(b) constructive notice Recording a document gives constructive notice.

A blanket encumbrance exists on a large subdivision. The owner negotiates to pay off the loans on certain lots as they are sold. To accomplish this the beneficiary would execute a: (a)partial deed transfer. (b)deed of partial reconveyance. (c)quitclaim deed. (d)subordination agreement.

(b) deed of partial reconveyance Under the provisions of a blanket encumbrance, as each individual lot is sold, it is released from the blanket loan which is correspondingly reduced. The beneficiary (lender) requests the trustee to execute and record a deed of partial reconveyance describing the portion of the property released from the blanket loan.

Dividing office overhead by the number of salespersons gives: (a)broker dollar. (b)desk costs. (c)company dollar. (d)overhead.

(b) desk costs The term "desk costs" reflect the fact that salespeople do, in fact, make use of support staff, have telephone calls, need desk space, and take up some of the time of colleagues and managers. Overhead is divided by the number of salespersons NOT desks.

When a new real estate brokerage is establishing a website, the first step is: (a)hiring a programmer. (b)domain registration. (c)laying out the design. (d)arranging a host.

(b) domain registration The first step is registering the domain name. For example, in the URL https://www.XYZrealty.com, the domain name is XYZrealty.com.

A salesperson tells his broker that he is quitting and plans to go to work for another broker. His present employing broker should: (a)notify the real estate commissioner and hold the license until further notice from the commissioner. (b)give the salesperson his license and notify the real estate commissioner immediately in writing. (c)request cancellation of the salesperson's license. (d)call the other broker to confirm the change.

(b) give the salesperson his license and notify the real estate commissioner immediately in writing The Commissioner's Regulations state that upon termination of employment of a salesperson, the broker shall immediately return the license certificate to the salesperson and immediately notify the commissioner, thereof in writing.

A broker must have a written broker-salesperson agreement with each of his/her: (a)office employees. (b)licensees. (c)janitors. (d)affiliates.

(b) licensees Every broker must have a written agreement with each of his/her salespersons, whether licensed as a salesperson or as a broker under a broker-salesperson arrangement. The agreement shall be dated and signed by the parties and shall cover material aspects of the relationship between the parties, including supervision of licensed activities, duties and compensation.

Generally, a fact concerning a transaction is considered "material" if: (a)the seller elects to disclose the fact prior to consummation of the transacation. (b)prior knowledge of the fact would have prevented the other party from entering into the contract. (c)all parties to the transaction agree in advance that the fact is important. (d)the seller's agent determines that the fact warrants disclosure.

(b) prior knowledge of the fact would have prevented the other party from entering into the contract Material Fact: Generally, a matter is considered material if the other party would not have entered into the contract had he/she known the true facts.

The Subdivision Lands Law is administered by: (a)the Federal Government. (b)the Real Estate Commissioner. (c)city and county authorities. (d)state government.

(b) the Real Estate Commissioner The Subdivided Lands Law is directly administered by the Real Estate Commissioner. Its objective is to protect purchasers of property in new subdivisions from fraud, misrepresentation, or deceit in the marketing of subdivided lots, parcels, units and undivided interests in California.

If more than one licensed real estate broker is acting as an agent in a transaction, who is responsible to assure the delivery of the Real Estate Transfer Disclosure Statement (TDS) to the buyer? (a)The broker who represents the seller. (b)The broker who has obtained the offer made by the buyer. (c)The broker who holds a valid Listing Agreement with the seller. (d)The seller is ultimately responsible no matter how many agents are involved.

(b) the broker who has obtained the offer made by the buyer If more than one licensed real estate broker is acting as an agent in a transaction, the agent who has obtained the offer made by the buyer (buyer's agent) is responsible to assure the delivery of the statement to the buyer, unless the seller has given other written instructions for delivery. If the agent who obtained the offer is other than the listing agent, he/she must also fill out and sign the "Agent's Inspection" section of the form.

The most common violation of the Commissioner's Regulations concern: (a)fair housing violations. (b)trust fund accounts and records. (c)ethics and professional conduct. (d)agency disclosure.

(b) trust fund accounts and records Trust fund handling and record keeping violations is the most common problem area.

The maximum security deposit allowed by law for an unfurnished rental is: (a)1 times the rent (b)twice the rent amount (c)3 times the rent (d)1 1/2 times the rent

(b) twice the rent California state law defines maximum security deposit based on furnished vs. unfurnished (Civil Section 1950.5). Unfurnished rentals have a set limit that cannot exceed two months' worth of rent. Furnished rentals have a set limit that cannot exceed three months' worth of rent.

An unlicensed secretary in a real estate office can: (a)quote prices over the phone. (b)type listings and sales contracts for salespeople. (c)prepare and mail postcards for salespeople. (d)All of the above

(b) type listings and sales contracts for salespeople

Mr. Wiseguy salesperson introduces himself to the seller as being employed by a large, successful real estate company because he knew that the seller would only list with a licensee who is employed by a "large company." If Mr. Wiseguy does not work for a large company, but he said it just to be able to sell the property, his conduct would be considered: (a)lawful. (b)unethical. (c)professional. (d)fiduciary.

(b) unethical Since many buyers and sellers associate "bigness with safety," it is considered unethical to represent one's self as being protected by a large corporation franchise when such is not true.

When a licensee is employed as an independent contractor, the employing broker may still have to cover the licensee for: (a)unemployment insurance. (b)workers' compensation insurance. (c)errors and omissions insurance. (d)all of the above.

(b) worker's compensation insurance By law, all employers are required to maintain workers' compensation insurance for their employees for injuries occurring within the course and scope of the employment.

Complaints involving violations of discrimination should be reported to the: (a)Real Estate Commissioner. (b)Labor Commission. (c)Department of Fair Employment and Housing. (d)Department of Housing and Community Development.

(c) Department of Fair Employment and Housing Complaints involving violations of the Fair Housing laws are submitted to the Department of Fair Employment and Housing.

Which of the following is TRUE regarding trust fund accounting records? (a)Only manually produced accounting records are acceptable. (b)Only computerized accounting records are acceptable. (c)Either manually produced or computerized accounting records are acceptable. (d)Only professionally produced accounting records are acceptable.

(c) Either manually produced or computerized accounting records are acceptable

In addition to the Subdivided Lands Law and Map Act, there is federal control of subdivisions under the: (a)Unruh Act. (b)Environmental Impact Act. (c)Interstate Land Sales Act. (d)None of the above

(c) Interstate Land Sales Act In addition to state control under the Subdivided Lands Law and control under the Map Act, the federal government controls subdivisions under the Interstate Land Sales Act. The Act requires developers to file a development statement describing the details of a subdivision with the Secretary of Housing and Urban Development. The California public report can be substituted for the federal report.

A broker is representing a developer who has completed his project in a subdivision called "Ridgeway." The broker's advertisement states that people have "already won a free gift," but in reality, they must attend a sales seminar to receive the gift. This type of advertising is: (a)Legal without disclosure of the sales seminar attendance requirement. (b)Legal, because all the "winners" purchased units anyway. (c)Legal, if the ad states they must sit through a sales seminar in order to collect the gift. (d)Always illegal.

(c) Legal, if the ad states they must sit through a sales seminar in order to collect the gift When offering prizes or gifts, all requirements to be eligible to win must be stated in the advertisement.

A flood hazard exists when an area floods: (a)Once a year (b)Once in five years (c)More than twice in ten years (d)More than three times in ten years

(c) More than twice in ten years A flood hazard is an area which floods more than twice in ten years.

Regarding environment standards, Federal law requires the seller of a new home to disclose which of the following to the buyer?  (a)Type of windows (b)Thickness of the walls (c)R-rating (d)Type of foundation

(c) R-rating Federal law requires that a "new home" seller (including a subdivider) disclose in every sales contract the type, thickness, and R-value of the insulation which has been or will be installed. (Federal Trade Regulation Section 460.16; Public Resources Code Section 25402 et seq.)

When selling a business, real estate brokers need to know that the term successor's liability involves certain obligations to the: (a)Internal Revenue Service. (b)Department of Real Estate. (c)State Board of Equalization. (d)Department of Corporations.

(c) State Board of Equalization The term successor's liability refers to the purchaser's liability for the sales tax collected by the previous owner but not remitted to the state

The seller of a home died of AIDS in the hospital four days before the sale of the home. Which of the following is correct regarding the broker's obligated to disclose this to the buyer? (a)The broker is only required to disclose if the buyer asks. (b)The broker is not obligated to disclose whatsoever if the death was AIDS-related. (c)The broker is only required to disclose if the death occurred on the premises. (d)The broker is only required to disclose that a prior occupant was afflicted with AIDS, not the death.

(c) The broker is not obligated to disclose whatsoever if the death was AIDS-related The California Civil Code provides immunity from liability for failure to disclose that an occupant of a property if: 1) The death occurred more than three years before the offer to purchase, lease, or rent the real property; or, 2) The occupant of the property was afflicted with or died from AIDS.

When a broker keeps records electronically, the program he would use for record retrieval is: (a)RAM (b)SCORE (c)WORM (d)DOS

(c) WORM WORM means "write once read many." This indicates that the record cannot be changed once it is entered.

Which of the following documents DOES NOT need to be stored for 3 years? (a)unaccepted offers (b)accepted offers (c)advertisements (d)listing agreements

(c) advertisements It is the broker's responsibility to keep all transaction documents and records for at least 3 years.

The seller must disclose any material change in the condition of the property or the title that occurs or is discovered by the seller: (a)after close of escrow and within one year of ownership by the new buyer. (b)after close of escrow and within a reasonable amount of time, thereafter. (c)after the contract is executed and prior to the close of escrow. (d)None of the preceding

(c) after the contract is executed and prior to the close of escrow The seller must disclose any material change in the condition of the property or the title that occurs or is discovered by the seller after the contract is executed and prior to the close of escrow.

When the property of the borrower is not adequate security for the loan, the instrument the lender will most likely employ is a(n): (a)open-end mortgage. (b)closed-end mortgage. (c)blanket mortgage. (d)all-inclusive mortgage.

(c) blanket mortgage A blanket encumbrance is used to place a lien simultaneously on more than one property by a single financing instrument.

The transfer of privately owned land to the public under approval of the Map Act is called: (a)gifting. (b)condemnation. (c)dedication. (d)government taking.

(c) dedication Dedication is the transfer of privately owned land to the public with the intent that the land will be accepted and used for public use.

Each city or county appoints a Planning Commission because: (a)they must do so to appropriate funds. (b)the master plan requires it. (c)it is required by statute. (d)the board of supervisors orders it.

(c) it is required by statute The formation of a Planning Commission is required by state law.

The requirement of the seller to provide a "Natural Hazard Disclosure Statement" to the buyer covers: (a)all commercial property. (b)vacant land. (c)most residential property. (d)agricultural property.

(c) most residential property The Natural Hazard Disclosure Statement is now a legally required part of most residential property transactions.

A broker wanted to operate a real estate office under the fictitious name MLB Realty. Before operating under a fictitious name, the broker must: (a)publish the fictitious name in a newspaper of general circulation. (b)file under the Secretary of State. (c)obtain a DRE license bearing the fictitious business name. (d)file with the city as a fictitious business.

(c) obtain a DRE license bearing the fictions business name Although the other choices may be steps in obtaining a fictitious business name, the broker may not do business under a fictitious name until he/she has a DRE license issued in the fictitious name.

Which of the following must be kept on file by the broker for three years? (a)loan broker statement (b)real property security statement (c)receipt for copy of public report (d)All of the above

(c) receipt for copy of public report The broker/subdivider must keep the receipt and make it available for inspection by the Commissioner for three years from the date it is signed. Do not confuse the public report (which is good for five years) with the receipt

In the event the commissioner has conducted an audit which reflects commingling or conversion of trust funds in excess of $10,000, the court may: (a)imprison the licensee for not more than thirty (30) days. (b)automatically revoke the violator's license without a formal hearing. (c)restrain the licensee from doing business pending a formal hearing. (d)confiscate any and all commissions earned by that licensee during the preceding calendar year.

(c) restrain the licensee from doing business pending a formal hearing In the event the commissioner has conducted an audit which reflects commingling or conversion of trust funds in excess of ten thousand dollars ($10,000), the court may enter an order restraining the licensee from doing any act or acts in furtherance thereof, and from further exercising the privileges of his/her license pending further order of the court, provided that a hearing shall be held on the order within five days after the date thereof.

In the sale of a business, bulk transfer laws pertain to: (a)fixtures. (b)goodwill. (c)stock-in-trade. (d)All of the above

(c) stock-in-trade A "bulk sales transfer" is any transfer in bulk (not a transfer in the ordinary course of the seller's business) of a major part of the materials, inventory, or supplies of an enterprise (stock-in-trade).

When a deed contains discriminatory language or clauses: (a)the deed must be rewritten by the owner before the property may be sold. (b)the title company must re-write the deed. (c)the discriminatory words or clauses are unenforceable. (d)the clauses may be enforced, since they would be considered "grandfathered" into law.

(c) the discriminatory words or clauses are unenforceable Clauses which were written into deeds or CC&R's which allow discrimination are unenforceable. There is no requirement that the deeds or CC&R's must be rewritten.

What does the Homeowner's Guide to Earthquake Safety discusses? (a)Underground gas lines, electrical lines, and water pipes. (b)Existing fault lines and there exact location. (c)The most common weaknesses that can cause earthquake damage to a home. (d)The various earthquake insurance policies. Your answer: (c) is correct.

(c) the most common weaknesses that can cause earthquake damage to a home The Homeowner's Guide to Earthquake Safety describes the most common weaknesses that can cause damage to homes, in the event of an earthquake and provides the homeowner with basic information about finding and fixing those weaknesses.

When budgeting for a real estate office, the phrase "company dollar" means: (a)the money required to establish an office and run it for a given period of time. (b)the income of an office after all expenses are subtracted. (c)the income of an office after all commissions are subtracted. (d)None of the above

(c) the term "company dollar" is the amount leftover after all commissions have been paid out

According to the case of Easton v. Strassburger, a real estate broker is required to reveal: (a)all defects known and unknown. (b)those defects which are known by the broker. (c)those defects which are known or should be known by the broker. (d)only those defects which the seller has revealed.

(c) those defects which are known or should be known by the broker The broker must do a competent, diligent visual inspection of the accessible areas and reveal all material facts. Competent implies that the broker should see certain defects that would be discovered by the ordinary standard of care. (See Easton v. Strassburger)

According to California Real Estate Law an unlicensed person may be paid a finder's fee: (a)as long as it is disclosed. (b)at the conclusion of escrow. (c)when it is given just to influence someone to do something. (d)Never

(c) when it is given just to influence someone to do something A finder's fee is allowed to be paid to an unlicensed person to influence them to do something; for example, to refer potential sellers or buyers to a real estate broker. The broker may NOT pay an unlicensed person to perform an act which would require a license.

When the real estate commissioner stops a real estate licensee from performing any act in real estate which requires a license, he would issue a(n): (a)desist and refrain order. (b)revocation declaration. (c)bar order. (d)order of cloture.

(c)bar order A Bar Order issued by the Real Estate Commissioner prohibits (debars) licensed or unlicensed persons from engaging in specified real estate related activities for a maximum period of 36 months.

What is the minimum square feet for a master bedroom? (a)9 x 10 (b)10 x 10 (c)9 x 9 (d)10 x 12

(d) 10x12 Master bedrooms are typically a minimum of 120 square feet (10 x 12), without taking into account closet space or a bathroom.

Properties built before which year DO NOT need a geological report? (a)1963 (b)1968 (c)1975 (d)1960

(d) 1960 Sellers of homes built before 1960, with one to four units of conventional light-frame construction, require the seller or agent to deliver to the buyer the "Homeowner's Guide to Earthquake Safety," and if the property is commercial the "Commercial Property Owner's Guide". If the buyer receives these booklets, neither the agent nor the seller is required to obtain a geological report. If the property is in an earthquake fault area, a Natural Hazard Zone Disclosure Statement must be delivered to the buyer.

Which of the following statements is TRUE regarding public reports? (a)A public report may be renewed under certain circumstances. (b)A copy of the public report must be given to anyone on request. (c)A copy of the public report must be displayed in the subdivision sales office. (d)All of the above

(d) All of the above All of the choices are true as to public reports. If all parcels have not been sold within five years of issuance of a final public report, it can be renewed for an additional five years. The Public Report may be referred to as a "White Paper" or "White Report" on the state exam.

When a "release schedule" is put into a blanket mortgage for a subdivision, the amount of the loan to be paid off for each lot would likely be proportionately larger for the first lots that are sold. The reason for this practice is: (a)to increase the security value of the remaining lots. (b)to compensate for the loss of security as the lots under the blanket encumbrances are removed. (c)to compensate for the loss of security due to the best lots being sold first. (d)All of the above

(d) All of the above All three of these choices are good reasons for requiring larger repayment when the first lots are sold under a blanket encumbrance.

Which of the following events would require the subdivider to notify the Real Estate Commissioner? (a)The subdivider changes lot sizes. (b)The subdivider changes provisions in the purchase contract. (c)The subdivider changes financing terms. (d)All of the above

(d) All of the above Any material change involving the subdivision must be reported to the Real Estate Commissioner. Examples of material changes include physical changes, changes in contracts, or changes in deed restrictions. New ownership of the subdivision would also constitute a material change.

A city's master plan would include: (a)circulation, including distribution of transportation facilities and public utilities. (b)land use in terms of population and building density. (c)noise problems, both existing and foreseeable. (d)All of the above

(d) All of the above Every city and county within California now is required by state law to adopt a comprehensive, long-term General Plan, also referred to as the Master Plan, for development within its jurisdiction. It usually includes background information on the area economy, its development, population growth, and existing land uses. The Government Code requires that every General Plan include provisions for land use, circulation, housing, open space, noise, and safety.

A landlord is trying to evict a tenant and serves an eviction notice. Under what circumstances could a tenant remain in the property? (a)The tenant has not had hot water for months. (b)Unlawful entry by the landlord. (c)The lessor failed to repair a weak staircase. (d)All of the above

(d) All of the above These are all examples of constructive eviction. When the landlord (lessor) engages in constructive eviction the tenant may move without giving the thirty day notice or may correct the situation by paying for the repair and deducting the bill from the rent. This is called "rental offset" and the tenant may do this twice in one 12 month period. The lessor may not evict a tenant if the problem is the lessor's fault.

A retired farmer decides to subdivide the 1,000 acres he owns into five 200 acre parcels to be leased for agricultural purposes. These parcels would be exempt from the requirements of the Subdivision Map Act if they contain: (a)more than 20 acres. (b)more than 60 acres. (c)more than 160 acres. (d)Any of the above

(d) Any of the above Land leased for agricultural purposes is exempt from the Map Act regardless of size.

Broker A meets the Brown family and the Browns make an offer on a house on Elm Street which is owned by Jones. The offer is contingent on the sale of the Brown's house on Main Street which is several counties away. Seller Jones accepted the offer. Broker A refers the Browns to Broker R for the sale of their Main Street home. A written compensation referral form is executed. According to Article 7 of the Code of Ethics, Broker A must disclose: (a)The compensation on Elm St. to both Brown and Jones (b)The compensation on Main St. to Brown only (c)Both the compensation on Elm St. and Main St. to Brown (d)Both the compensation on Elm Street and Main Street to Brown and Jones

(d) Both the compensation on Elm Street and Main Street to Brown and Jones According to Article 7 of the Code of Ethics, of the National Association of Realtors®, all compensation must be revealed to all principals in the transaction.

If a subdivision project will have a significant effect on the environment, the government agency that approves the project may be required to prepare a(n): (a)Alquist-Priolo report. (b)Earthquake fault zone report. (c)Coastal Zone Impact Report. (d)Environmental Impact Report.

(d) Environmental Impact Report An Environmental Impact Report (EIR), authorized by the California Environmental Quality Act of 1970 (CEQA), may be required before subdivision approval if the project will have a significant effect on the environment.

As to running a business, which of the following is FALSE? (a)Assets - liabilities = net worth (b)Income - expenses = profit (c)Total sales = gross income (d)Gross income - profit = net income

(d) Gross income- profit= net income Statement of fact. Remember, you are looking for the incorrect choice.

It is important for a landlord to obtain all of the information on a rental application in order for the landlord to make a decision about renting to a particular person or to more than one person. A landlord thinks it is important to know whether or not a couple is married. Is it legal for the landlord to inquire whether or not a couple is married on the rental application? (a)Yes, as it may affect the couple's ability to pay rent. (b)Yes, because this is a moral issue. (c)It is legal, but might be considered unethical. (d)No, this would be considered discrimination.

(d) No, this would be considered discrimination It is considered discrimination to require disclosure of marital status on a rental application.

Realtor Ken hired an unlicensed person named Jose to hand out his brochures, fliers, and door hangers in his farm neighborhood. Ken also instructed Jose to go to his health club and hand out printed information. Property owner Mary, who has already listed her home with another broker, received a phone call from Jose talking about a possible meeting with Ken. Jose was using dialogue which was a scripted pitch written by Ken. Mary happened to record the conversation. Which of the following statements is correct? (a)This is perfectly acceptable for the unlicensed person and the broker. (b)The unlicensed person is performing acts for which a real estate license is required. (c)An unlicensed person may pass out brochures, but under no circumstances talk to a prospective client. (d)Realtors agree to work under the Realtor's Code of Ethics. It is unethical for a Realtor to solicit business from an owner who has a listing with another broker.

(d) Realtors agree to work under the Realtor's Code of Ethics. It is unethical for a Realtor to solicit business from an owner who has a listing with another broker The Realtor's Code of Ethics considers this to be unethical behavior. One Realtor may not solicit owners who have listed their property with another licensed real estate broker.

Seller Smith hires broker Jones to list his home. Neither have actual knowledge that the property is located in a hazardous earthquake, flood, or fire area, and for that reason they decide they will not make the Natural Hazard disclosure. After close of escrow the buyer checks with the county and finds out that a map exists that shows the property located within a particular hazard zone. Which of the following statements is correct? (a)Since the seller and seller's agent had no actual knowledge that the property was located in a hazardous area, they cannot be held responsible. (b)Since the buyer had the opportunity to hire a third-party professional to investigate this matter, the seller and seller's agent would be without fault. (c)Since there had never been a fire, flood, or earthquake in the area, the buyer has no recourse. (d)Since the map was available from the county where the property is located, the seller and his agent will be considered to have knowledge of the fact that the property is in a hazardous area.

(d) Since the map was available from the county where the property is located the seller and his agent will be considered to have knowledge of the fact that the property is in a hazardous area The Natural Hazard Disclosure must be made if the property is located on a list of parcels of properties located within a special hazard's area, or a map exists that specifies the property located within a particular hazard zone. If this information has been made available to the local jurisdictions where the property is located and the property is on either the list or map, the sellers and their agents will be considered to have knowledge of the fact that the property is in one of these high-sensitivity areas. This applies whether or not they have actual knowledge of that fact.

A broker may store records in which of the following formats? (a)paper (b)electronic (c)microfiche (d)all of the above

(d) all of the above In California, real estate brokers must hold on to their records for three (3) years. That means all listings, deposit receipts, cancelled checks, trust fund records and other documents executed in connection with any transaction must be kept. Records can be created and kept in electronic format or they can be converted to electronic format for storage purposes.

A real estate licensee's business card must include which of the following? (a)DRE license ID number (b)The abbreviations bro. or agt. (c)NMLS ID number if the licensee is a Mortgage Loan Originator (d)All of the above

(d) all of the above Solicitation materials intended to be the first point of contact with consumers" includes business cards, stationery, advertising fliers, and other materials designed to solicit the creation of a professional relationship between the licensee and a consumer, and excludes an advertisement in print or electronic media and "for sale" signs.

The Subdivided Lands Act applies to: (a)the owner of the subdivided property. (b)any subdivider engaged by the owner of the property. (c)any real estate licensee acting as an agent for the seller of a subdivision. (d)All of the above

(d) all of the above The Subdivided Lands Act applies both to the owner of the subdivided property and to any subdivider engaged by the owner of the property. The law also applies to any real estate licensee acting as an agent for the seller of a subdivision.

A Master Plan would be concerned with all of the following EXCEPT: (a)conservation. (b)noise. (c)land use. (d)deed restrictions.

(d) deed restrictions Deed restrictions are prohibitions against a property's use that are imposed in the grantee's deed.

The notice of sale required by the Bulk Transfer Law must include all of the following EXCEPT: (a)the name and address of the seller. (b)the description and location of the property. (c)the name and address where claims can be filed. (d)the final sales price.

(d) the final sales price In certain cases the final sales price may not be known yet (i.e., sale at auction).

Which of the following is NOT included in the Natural Hazard Disclosure Statement? (a)fire (b)flood (c)earthquake (d)weather conditions

(d) weather conditions Weather conditions are NOT considered a natural hazard.