California Real Estate Law - Q & A

(1) 12. The real estate commissioner conducts hearings in accordance with the A. Administrative Procedures Act B. Business and Professions Code C. Labor Code D. Public Resources Code

A. Administrative Procedures Act

(2) 11. Which is NOT a requirement of an agency relationship A. Compensation to the agent B. Contractual capacity of principal C. Loyalty of agent to principal D. Full disclosure by agent to principal

A. Compensation to the agent

(4) 19. The federal case that upheld fair housing was A. Jones v. Mayer B. Brown v. Board of Education C. Shelley v. Kraemer D. Wellenkamp v. Bank of America

A. Jones v. Mayer

(4) 24. Refusal to make a mortgage loan within a designated area is known as A. steering B. redlining C. blockbusting D. none of these

B. redlining

(4) 15. After collecting an advance rental fee of $75, you are unable to provide your client with a rental that suits her. When she requests a refund, upon expiration of her rental contract, you must return A. nothing, if you provided a list of at least 3 rentals B. $50 C. $25 D. $40

C. $25

(3) 4. A broker would MOST likely be responsible to salespersons for A. unemployment compensations B. minimum wages C. workers' compensation D. all of these

C. workers' compensation

(4) 11. A $5,000 fee that a broker charged for negotiating a three year second trust deed for $20,000 is A. usurious B. voidable C. illegal D. legal

D. legal

(3) 12. Which statement is FALSE regarding option listings A. If a property fails to sell, the broker must exercise the purchase option B. Prior to exercising the option, the broker must reveal all offers received C. The broker must reveal the amount of profit, if any, to the owner to exercise the option D. The owner must consent in writing to the agent's profit should the option be exercised.

A. If a property fails to sell, the broker must exercise the purchase option

(1) 6. Which constitutional amendment allows a homeowner to place a For Sale sign on his or her home A. The First Amendment B. The Fifth Amendment C. The Fourteenth Amendment D. The Twenty Sixth Amendment

A. The First Amendment

(1) 18. Which statement about lawsuits is NOT correct A. The defendant commences the action with a complaint B. A direct examination of a witness is followed by a cross examination C. Most lawsuits are settled before trial D. If there is a jury, the jury determines questions of fact

A. The defendant commences the action with a complaint

(4) 8. Broker Thomas, who was a member of the city planning commission, told his friend broker Jones that an area was to be rezoned from agricultural use to commercial use. Broker Thomas did not receive any consideration for this information. Broker Jones purchased several parcels in the area and made a profit when the zoning changed. Which broker has placed his license in jeopardy A. Thomas B. Jones C. Both Thomas and Jones D. Neither Thomas nor Jones

A. Thomas

(2) 15. A fiduciary relationship exists between A. a broker and his or her principal B. a seller and buyer C. both a and b D. neither a and b

A. a broker and his or her principal

(1) 3. Our system of statutes in California could best be described as A. civil law B. stare decisis C. equity D. constitutional law

A. civil law

(1) 10. The commissioner's regulations are A. considered to have the force and effect of law B. known as the real estate law C. included in the Business and Professions Code D. none of the above

A. considered to have the force and effect of law

(2) 2. An agency relationship could be created by all of the following EXCEPT A. court order B. verbal agreement C. implication D. ratification

A. court order

(2) 5. You made a statement that induced a person to act in reliance on that statement. The legal principle that now prevents you from asserting facts that are contrary to your previous declaration is known as A. estoppel B. ratification C. respondeat superior D. laches

A. estoppel

(3) 2. In selling listings of another broker, a real estate salesperson is directly responsible to A. his or her broker B. the owner C. the listing broker D. the multiple listing service

A. his or her broker

(1) 20. Equitable remedies include all below EXCEPT A. monetary damages B. reformation C. recession D. specific performance

A. monetary damages

(2) 6. Broker Thomas, who was not your agent, told prospective tenants that he was your agent to lease your property. Thomas leased your property, and you accepted the rent from the tenant. You CANNOT now deny the agency because of A. ratification B. interest coupled with agency C. waiver D. estoppel

A. ratification

(3) 5. Commission disputes between a broker and salespeople would likely be referred to the A. state labor commissioner B. court of appeal C. agency review board D. real estate commissioner

A. state labor commissioner

(1) 7. Laws governing ownership rights are set forth in A. state statutes B. local ordinances C. federal statutes D. the English common law

A. state statutes

(2) 23. All these events would terminate an agency EXCEPT A. the death of a corporate officer of the agent's principal B. agreement of the parties C. renunciation by the principal D. extinction of the subject matter

A. the death of a corporate officer of the agent's principal

(3) 9. A seller's broker may NOT inform a prospective purchaser that A. the owner will accept less than the list price B. the present use of the structure does not conform to zoning C. there are material defects in the improvements D. the building is on filled land

A. the owner will accept less than the list price

(3) 18. An agent would MOST likely have to inform a prospective purchaser about the A. triple murder in the home six months earlier B. race of the previous occupants C. former owner died of AIDS five years ago D. present owner having AIDS

A. triple murder in the home six months earlier

(4) 6. Which is NOT sufficient cause for the revocation of a real estate license A. Commingling of principal and personal funds B. Acting for more than one party in a transaction C. Making a substantial misrepresentation D. Making any false promises of a character likely to influence, persuade, or induce

B. Acting for more than one party in a transaction

(4) 2. Which person would require a real estate license A. An attorney in fact selling property of another B. An attorney at law taking a listing C. A paid administrator of an estate selling the decedent's property D. None of these

B. An attorney at law taking a listing

(3) 19. Which is an example of blind advertising A. Failure to advertise a location B. Failure to indicate that the advertiser is an agent C. Failure to include the name of the agent D. Failure to include the price

B. Failure to indicate that the advertiser is an agent

(3) 7. In presenting two identical offers requiring seller financing to an owner, which act of the broker would be wrong A. Mentioning that one buyer had only recently been hired after a long period of unemployment B. Mentioning that one buyer was black C. Mentioning that one buyer had substantially greater income D. Mentioning that one buyer had not given truthful credit information

B. Mentioning that one buyer was black

(1) 23. Which is NOT an advantage of voluntary arbitration A. Savings in money B. Right to appeal C. Savings in time D. None of these

B. Right to appeal

(3) 11. Which statement is TRUE regarding net listings A. They are illegal in California B. The broker must disclose the amount of commission to be received C. The broker's best interests would be served by setting as high a net price as possible D. None of these is true

B. The broker must disclose the amount of commission to be received

(1) 19. Money awarded to an injured person for damages received is called A. exemplary damages B. compensatory damages C. nominal damages D. specific performance

B. compensatory damages

(4) 4. A nonresident who wishes to obtain a California real estate license MUST A. first establish California residency B. consent to process service on the Secretary of State if the prospective licensee cannot be located within the state C. also be licensed in his or her state of residency D. be 21 years of age

B. consent to process service on the Secretary of State if the prospective licensee cannot be located within the state

(2) 14. A seller's agent, in selling a home, MUST A. get compensated by the seller B. disclose the agency representation to both buyer and seller C. do both a and b D. do neither a or b

B. disclose the agency representation to both buyer and seller

(2) 16. A seller's listing agent is required to A. reveal confidential information received from the other party B. disclose to a buyer all material facts known affecting value C. accomplish both a and b D. accomplish neither a nor b

B. disclose to a buyer all material facts known affecting value

(3) 1. Ethics would best be described as A. obeying the law B. doing what is right C. an agency duty D. treating all people the same

B. doing what is right

(4) 13. In advertising a mobile home, a broker used "no down payment" in the ads because he had arranged a separate loan to cover the down payment. The advertising was A. proper, because there was 100% financing B. expressly prohibited by law C. unethical but not illegal D. proper, if all loan terms were included in the ad

B. expressly prohibited by law

(2) 10. An agent failed to give an owner a copy of the agency disclosure form at the time the residential listing was taken. The most likely consequence for the agent will be A. a fine and/or prison B. inability to collect a commission should a sale be made C. automatic revocation of the agent's license D. no action because disclosure is required only upon sale

B. inability to collect a commission should a sale be made

(3) 20. In selling a commercial property, an agent's duty to the buyer includes A. informing the buyer of the results of a reasonablyr competent and diligent visual inspection B. informing the buyer that the zoning is not appropriate for the intended use C. telling the buyer the reason the seller is selling D. providing the buyer a disclosure statement regarding agency relationship

B. informing the buyer that the zoning is not appropriate for the intended use

(3) 6. A nonlicensee may properly be paid a finder's fee if he or she A. participated in negotiations B. introduced the parties to the licensee C. obtained the offer to purchase D. had a signed agreement to act as an agent of a broker

B. introduced the parties to the licensee

(1) 13. Decisions of the Bureau of Real Estate A. are binding and final B. may be appealed to the courts C. must be made unanimously by the commission D. must be concurred with by a majority of the commission

B. may be appealed to the courts

(1) 24. The process whereby a third person works to resolve a problem but cannot impose a decision on the parties is known as A. arbitration B. mediation C. declaratory relief D. quiet title

B. mediation

(4) 3. A broker for a corporation who also wants to conduct a separate brokerage business MUST A. sell his or her corporate stock B. obtain a separate broker's license C. operate through another licensee D. return the corporate license to the commissioner

B. obtain a separate broker's license

(4) 17. In cases of noncompliance with the Bulk Sales Act, the party likely to b MOST adversely affected would be the A. seller B. purchaser C. creditors of the seller D. Franchise Tax Board

B. purchaser

(4) 1. A person would MOST likely contract the real estate commissioner to A. resolve a salesperson/broker commission dispute B. report fraud of a licensee C. obtain an opinion of the legality of a course of action D. arbitrate disputes between brokers

B. report fraud of a licensee

(2) 3. The relationship that exists between a broker and an owner under a listing is most likely a(n) A. employer employee relationship B. special agency C. universal agency D. general agency

B. special agency

(1) 2. Reliance on previous decisions is best described as A. common law B. stare decisis C. equity D. civil law

B. stare decisis

(1) 15. The California court that has original jurisdiction for a claim of $100,000 would be the A. California Supreme Court B. superior court C. small claims court D. court of appeal

B. superior court

(1) 16. Most real estate disputes are adjudicated in A. federal courts B. superior courts C. court of appeal D. the supreme court

B. superior courts

(2) 25. A principal CANNOT unilaterally terminate an agency when A. the agency is a written agreement B. the agency is coupled with an interest C. the principal has received benefits from the agency D. consideration is due the agent

B. the agency is coupled with an interest

(2) 12. The equal dignities rule concerns A. discriminating practices B. the requirement that certain agency agreements be in writing C. ratification of unauthorized acts D. the implied authority of an agent standing in the shoes of the principal

B. the requirement that certain agency agreements be in writing

(4) 22. A broker takes listings in an area where property values are going down because the neighborhood is changing, and there is a mass exodus of whites. Which of the following actions by the broker would be a violation of fair housing laws A. Advertising "Sell your property fast before you lose equity". B. Offering whites a lower commission rate to sell their property C. Both a and b D. Neither a or b

C. Both a and b

(4) 23. Which of the following is an example of steering A. Directing whites away from mixed race areas B. Advertising properties in black areas only in newspapers aimed at black readers C. Both a and b D. Neither a nor b

C. Both a and b

(2) 19. An agent exceeds a secret limitation in the agency agreement while dealing with a third party. Which statement would be correct A. The agent could be personally liable to the principal B. The third party could hold the principal liable for the agent's action C. Both a and b are correct D. Both a and b are not correct

C. Both a and b are correct

(1) 1. Most of California real estate law originally came from A. Spanish law B. Mexican law C. English common law D. the commissioner's regulations

C. English common law

(3) 13. A broker sold an apartment building to syndicate of which the broker was a member without informing the seller of this interest. Before closing, the owner discovers the broker's interest and refuses to sell. Which of the following choices would probably result from a suit to collect a commission A. The broker's license would be revoked B. The broker would get the commission C. No commission would be paid D. The buyer would obtain specific performance

C. No commission would be paid

(4) 16. Which of the following is NOT required to be included in the notice required under the Bulk Sales Act A. Name of seller B. Date and place of sale C. Sales price and terms D. All of these

C. Sales price and terms

(1) 5. The power of eminent domain is based on which amendment to the U.S. Constitution A. The First Amendment B. The Thirteenth Amendment C. The Fifth Amendment D. The Fourteenth Amendment

C. The Fifth Amendment

(3) 15. Two brokers agreed that they would not allow a third broker to show their listings. This would be: A. price fixing only B. a tie in agreement C. a Sherman Act violation D. market allocation

C. a Sherman Act violation

(1) 11. In adopting regulations, an administrative agency must provide for A. alternative remedies B. arbitration of disputes C. a public hearing D. all of these

C. a public hearing

(3) 14. During the term of an escrow a listing broker discovered that an addition to the building had been made without a building permit and that the addition was in violation of the building code. The broker should notify A. the buyer only B. the seller only C. both the buyer and seller D. neither, because the broker obtained this knowledge after the contract was entered into

C. both the buyer and seller

(1) 4. The Equal Credit Opportunity Act is best described as A. stare decisis B. common law C. civil law D. constitutional law

C. civil law

(3) 10. An agent need not disclose to an owner that he or so has received an offer when A. the owner has already accepted another offer B. the offer is verbal C. escrow has already closed D. the offer is less than the listing price

C. escrow has already closed

(1) 14. Damages awarded by a court in excess of actual damages suffered by a plaintiff are known as A. liquidated damages B. nominal damages C. exemplary damages D. compensatory damages

C. exemplary damages

(4) 21. The Civil Rights Act of 1968, as amended, does NOT prohibit A. sex discrimination B. age discrimination C. housing reserved for the elderly D. discrimination against people with disabilities

C. housing reserved for the elderly

(1) 21. The remedy in which a person is ordered to cease and desist from an activity is known as A. reformation B. specific performance C. injunction D. none of these

C. injunction

(3) 17. The Easton decision about required disclosure does NOT apply to A. single family residences B. defects that would be discovered by a reasonable competent inspection C. nonresidential property D. patent defects

C. nonresidential property

(3) 8. A prospective buyer knows that the owner is considering accepting an offer from another party. He asks you, the listing broker, the amount of the offer so that he can exceed it. You should A. tell him, because it is in the owner's best interest B. tell him, because you must reveal all known facts to a buyer C. notify the owner of the request D. refuse to tell or to accept any offer unless the present offer is rejected

C. notify the owner of the request

(2) 4. An agency created by a principal who intentionally, or by want of ordinary care, causes a third person to believe another to be his or her agent who is not really employed by him or her would be a(n) A. express agency B. power of attorney C. ostensible agency D. special agency

C. ostensible agency

(3) 22. A listing broker is NOT ordinarily responsible for wrongful acts committed in the course of a sale by A. his employees B. his salespersons having independent contractor contracts C. other brokers acting as subagents D. none of these

C. other brokers acting as subagents

(4) 5. A three hour course in ethics is required to be taken A. prior to taking the real estate broker examination B. within 18 months of obtaining a salesperson's license C. prior to a salesperson's first license renewal D. for license renewals, but only after the first renewal for salespersons

C. prior to a salesperson's first license renewal

(3) 21. I told prospective purchasers, "You will love living in this neighborhood." After experiencing problems with their new neighbors, they sued the broker for this false statement. A court would likely determine the statement was A. criminal fraud B. misrepresentation C. puffing D. none of these

C. puffing

(1) 9. There is no uniform code for A. personal property B. commercial paper C. real property D. all of these items

C. real property

(2) 24. An agency for a stated period of time would be terminated prior to the expiration date by all these EXCEPT A. termination by the principal without cause B. termination by the agent C. refusal of the principal to accept an offer D. destruction of the subject matter of the agency

C. refusal of the principal to accept an offer

(2) 22. When broker Clyde died, he had 36 exclusive listings. The executor of his estate, who was also a broker, wanted to continue the business until it could be sold. The executor MUST A. notify the owners that he or she has taken over the duties of broker Clyde B. obtain Bureau of Real Estate approval for the substitution C. renegotiate all listings D. record his or her authority

C. renegotiate all listings

(4) 10. Which activity requires a real estate license A. Being a resident manager of an apartment complex B. Selling more than eight parcels of one's own real estate in one year C. Subdividing one's own property D. Acting as a mortgage loan broker

D. Acting as a mortgage loan broker

(4) 20. A nonprofit women's organization intends to develop housing for members. It will limit rentals to women and will give preference to unmarried mothers. This action would likely be a violation of the A. Civil Rights Act of 1866 B. Civil Rights Act of 1968 C. Rumford Act D. Acts in b and c

D. Acts in b and c

(3) 16. Which statement is TRUE about required disclosures to residential buyers A. There is a two year statute of limitations on disclosure B. The buyer also has a duty to exercise reasonable care C. The duty of inspection is limited to one to four residential units D. All of these statements are true

D. All of these statements are true

(2) 20. Which is TRUE about real estate agents' liability A. An agent will always be liable for disobeying a principal's instructions B. An agent will not be liable for a tort committed at the direction of the principal C. The principal will never be liable for acts of the agent after termination of the agency D. An agent can be held liable for a tort committed by the agent during the agency

D. An agent can be held liable for a tort committed by the agent during the agency

(2) 7. An undisclosed agent breached a contract with a third party. Which of the following is a true statement as to liability for the breach A. The agent could be held personally liable B. The principal could be held liable C. The agent and principal would be jointly liable D. Both a and b are correct

D. Both a and b are correct

(1) 8. The regulations of real estate licensees is covered in the A. Administrative Code B. Corporate Code C. Civil Code D. Business and Professions Code

D. Business and Professions Code

(3) 24. Which statement is TRUE of the buyer's duties A. Buyers have the same disclosure duties as sellers B. Buyers are required to complete a disclosure statement only for residential purchases C. Buyers are subject to Easton liability for nondisclosure D. Buyers have no duty to disclose material facts to the seller

D. Buyers have no duty to disclose material facts to the seller

(4) 7. Which is NOT grounds for disciplinary action by the real estate commissioner A. Failure of an agent to disclose an ownership interest in property being sold B. Failure to exercise reasonable supervision over the acts of salespersons C. Violation of the Franchise Investment Law D. Revealing to a buyer problems that make the property unsuited to his purpose

D. Revealing to a buyer problems that make the property unsuited to his purpose

(2) 13. Which statement is correct as to agencies A. To be valid, an agency requires consideration B. An agent who exceeds his or her authority will always be personally liable C. All agency duties must be expressly agreed to D. Some agency duties are implied

D. Some agency duties are implied

(3) 3. Which statement is NOT an IRS requirement for a real estate salesperson to be treated as an independent contractor so that the employing broker can avoid withholding taxes and Social Security contributions A. That the salesperson have a valid California real estate license B. That reimbursement be based solely on sales and not on hours worked C. That there be a written contract that the salesperson will be treated as an independent contractor for tax purposes D. That the salesperson work without supervision

D. That the salesperson work without supervision

(1) 22. A legal action to determine ownership rights in real property would be A. an injunction B. reformation C. a declaratory relief action D. a quiet title action

D. a quiet title action

(2) 21. When an agent commits a tort while carrying out agency duties, the A. principal has no liability for the tort B. principal would not be liable if the principal told the agent not to commit any torts C. agent is exonerated from liability for the tort because the act was committed in an agency capacity D. agent would be personally liable for the tort

D. agent would be personally liable for the tort

(2) 8. A selling agent can represent A. the buyer only B. both buyer and seller C. the seller only D. any of these

D. any of these

(4) 18. As a licensee dealing with people of other races, you should A. suggest that they could be better served dealing with agents of their own race B. be frank and honest in explaining the problems of locating in areas having few people of their race C. be proper and helpful, even though you would prefer they seek help elsewhere D. be completely "color blind" regarding race

D. be completely "color blind" regarding race

(4) 12. A broker's loan statement is prepared for the benefit of the A. broker B. Bureau of Real Estate C. lender D. borrower

D. borrower

(1) 17. Most lawsuits involving real estate matters can be described as A. criminal proceedings B. administrative agency actions C. common law actions D. civil actions

D. civil actions

(2) 18. Agents could be held personally liable if they A. claimed to be acting as a principal B. made false representations upon the directions of their principal C. exceeded their authority D. did any of these

D. did any of these

(4) 14. In selling mobile homes, a real estate broker may NOT A. have an office where six model homes are displayed B. advertise "no down payment" if the payment is to be borrowed C. fail to withdraw advertising within 48 hours of receipt of notice of nonavailability D. do any of these

D. do any of these

(2) 17. A dual agent MUST A. tell the buyer that the seller will accept less B. tell the seller that the buyer will pay more C. require compensation from both buyer and seller D. do none of these

D. do none of these

(3) 23. An agent may pay a fee to an unlicensed party who A. shows property B. negotiates sale or lease terms C. takes a deposit from a buyer D. introduces the buyer to the broker

D. introduces the buyer to the broker

(1) 25. Mediation could be described as A. empowering a third person to make a decision for you B. a judicial process C. both a and b D. neither a nor b

D. neither a nor b

(3) 25. Buyers MUST disclose to sellers A. any information they have of which the seller is unaware B. the purpose of their purchase C. other purchases they have made D. none of these

D. none of these

(4) 25. For a broker's violation of the Civil Rights Act of 1968, the courts would NOT A. issue a restraining order B. award actual damages C. award punitive damages D. revoke or suspend the broker's license

D. revoke or suspend the broker's license

(4) 9. The maximum amount a person can obtain from a licensee after obtaining a judgment against the licensee for a fraudulent acts is A. $20,000 B. $50,000 for each offense C. $250,000 D. the amount of the judgment

D. the amount of the judgment

(2) 1. A legal agency requires that A. the agent have the capacity to contract B. consideration flow from the principal to the agent C. all the agency duties be stated in writing D. the parties consent to the agency

D. the parties consent to the agency

(2) 9. A real estate agency disclosure form is NOT required to be given to the buyer and seller of a(n) A. single family home B. condominium apartment unit c. triplex d. office building

d. office building