PRACTICE OF REAL ESTATE AND DISCLOSURES (INCLUDES SPECIALTY AREAS) (APPROXIMATELY 25% OF EXAM)

The Fair Housing Act allows for exemptions under a few specific circumstances:

- A privately owned single-family home where no broker is used and no discriminatory advertising is used; - Rental of an apartment where the owner is also an occupant, provided the advertising is not discriminatory; - Facilities owned by private clubs and leased non-commercially to members; religious organizations and leased non-commercially to members.

A person wanting to file a complaint must go through this process:

- Contact the local board of association - The complaint is given to the grievance comitee or forded to the professional standards hearing. - - - Which is conducted by a panel of realtors who members of the organization

In enforcing the provisions of the Real Estate Law, the Commissioner has the authority and full power to perform the following actions:

- Hold formal hearings to decide issues involving a licensee or a license applicant. - To issue, desist and refrain orders to stop activities that are in violation of the Real Estate Law or the Subdivided Lands Law. -To regulate and control the issuance and revocation, both temporary and permanent, of all licenses to be issued. -To adopt, amend, or repeal rules and regulations -To employ

Authority of the DRE was organized into the two Parts of Division 4 of the Business and Professions Code (or the "Code"):

1. Part 1, Sections 10000 to 10580 - Real Estate Law; 2. Part 2, Sections 11000 to 11200 - Subdivided Lands Law.

Filing Suit : A party must file a suit in court within ________ And May seek ___________.

2yrs of violation. May seek: restraining order; actual damages and punitive damages not to exceed $1,000.

How much is the max liability of the recovery account in one transaction and total against a licensee?

50,000 in one transaction and 250,000 total

VIOLATIONS OF CODE SECTION 10176:

>Definite termination date. >Secret profit. >Listing-option. >Dishonest dealing >Signatures of prospective purchasers.

Violations under Section 10177

>Obtaining a license by fraud. >Convictions >False advertising. >Violations of other sections; Franchise Investment Law; Corporations Code; Securities Law; >Misuse of trade name. >Conduct warranting denial. >Negligence or incompetence. >Supervision of salespersons. >Violating government trust. >Restricted license violation. >Inducement of panic selling.

A corporation is found guilty of charging purchasers advanced fees for securing mortgage loans on homes they have listed. What is the punishment for the violation?

A corporation violating this section of the penal code is punishable with a fine up to $50,000, while an individual can receive a fine up to $10,000 or 6 months' prison time or both.

MLS (Multiple Listing Service) is

A multiple listing service that contains descriptions of most of the homes that are for sale. This computer-based service is used to keep up with properties that are listed for sale.

What is required by a notary of the person signing the notarized document?

A right thumbprint of the person signing the deed, quitclaim deed, or deed of trust affecting real property.

Non-Working Status:

A salesperson may hold a license, but NOT perform acts requiring a license

Mineral, Oil and Gas Brokerage

A specialized branch of the general real estate brokerage business. - Since 1994, a real estate licensee who is interested in focusing on mineral, oil and gas transactions does not need a specialized license to work with MOG transactions.

While waiting in the lobby of the Fair Real Estate Company's office, Samir and Rhadika overhear an agent tell clients, "You wouldn't be happy in THAT neighborhood. It's very "colorful," if you know what I mean." Which ruling by the Supreme Court dealt with this issue?

All discrimination and appearances of discrimination in selling or renting residential property based on race and color is prohibited under the provisions of the Civil Rights Act of 1866, Jones v. Mayer.

Real Estate General Fund

An account that holds ALL the money collected from license and exam fees, and is used for the operating expenses of the CalBRE - 8% for the Real Estate Education and Research Fund - 12% for the Recovery Fund

A realtor is

Any real estate licensee who is a member of the National Association of REALTORS (NAR) and his affiliated state and local boards.

Lincensee

Anyone who is licensed to practice Real estate

All advertising and information that is made by a California real estate broker MUST STATE SO CLEARLY. Under the B&P Sections _____ & _____.

B&P Sections 10235.5 and 10140.6

A real estate agent hires a black woman to walk her dog in an all-white neighborhood. He then places his real estate card in all the mailboxes on the block, offering to buy their houses right away at a discounted price. The goal is to convince the property owners that he is "helping them out," because their home values will decline due to the influx of minorities in the area. What form of discrimination is this?

Blockbusting: A process by which real estate agents convince white property owners to sell their houses at low prices because of fear that persons of color will soon move into the neighborhood.

Agreement between buyer/tenants & a broker

Buyer's/tenant's agency agreement

Mobile home dealers are licensed by the

California Department of housing and community development

Enacted laws prohibiting discrimination in the national housing market:

Civil Rights Act of 1866:; Executive Order 11063; Civil Rights Act of 1968 (Fair Housing Act)

original statue based on ONLY race

Civil rights act of 1866

Fair Housing Act-prohibited discrimination concerning the sale, rental and financing of housing based on race, ADDING religion, national origin and sex. (Includes regardless of sexual orientation and gender identity)

Civil rights act of 1968

What must the previous broker and new employing broker do when an agent is transferring?

Complete RE 214 - Salesperson Change Application.

The difference between a contract and a offer, is until the buyer & seller have both signed the _________, it is merely a ______.A _____ is what happens once an _____ is signed by both parties.

Contract; Offer; Contract; Offer;

When an agent is transferring to new broker, who must be notified?

DRE Licensing must be notified in writing agents transferring to new brokers, from both old and new, within 5 days.

Where can you find relevant changes in regulations & laws?

DRE.CA.GOV

Regulatory Ethics Standards : Article 2

Disclosure of pertinent facts

Forms of illegal discrimination

Discriminatory misrepresentation and advertising; - Providing unequal services; - Steering, blockbusting, redlining; - Restricting MLS participation.

banned racial and religious discrimination in housing built or purchased with federal aid

Executive order 11063

Regulatory Ethics Standards : Article 9

Get It In Writing

Howard, a licensee, has heard about a specialized area of real estate brokerage--the mineral, oil, and gas brokerage. Howard is trying to find his niche in the industry and believes this is the direction in which he needs to head. What specialized license does Howard need to work with mineral, oil, and gas transactions?

Howard does not need a specialized license to work with Mineral, Oil, and Gas transactions.

The Commissioner discovers in an audit commingling of trust accounts by a licensee. At what amount does the court issue a restraining order against the licensee?

In excess of $10,000

Agreement between the seeker and landlord and broker

Listing Agreement

Martha and Liz have applied for a mortgage. They both have excellent credit and very successful careers and they are perfect on paper. Martha and Liz are partners and are expecting the birth of their first child together. They are denied a loan. What's the violation here?

Martha and Liz have been denied the full protection of the Equal Credit Opportunity Act (ECOA). The ECOA is a part of the Fair Financing Laws.

Max, a licensee, accepts a bribe from ABC Title Company for referring clients. What is Max's possible punishment?

Max could go to prison and/or be fined $10,000 for each illegal transaction. - the licensee who accepts such bribery as an inducement to refer the title business, violates the Business and Professions Code, Section 10177.4.

______ mobile homes may only be sold by _____ licensed mobile home dealers.

New; duly;

Cheryl and Troy are closing on their home on Tuesday. Their brokerage represents the GoodHome Insurance Company. The couple have not yet decided what company will be handling their homeowner's insurance. Are they obligated to use GoodHome due to its affiliation with the brokerage?

No, they are not obligated to use any services recommended by the broker or agents licensed to the broker. Choosing a source of insurance is ONLY the client's choice.

What are the steps to convert a mobile home into real property, if it is possible?

Obtain a building permit; place the mobile home on a permanent foundation and obtain a Certificate of Occupancy. Also, a document stating the mobile home has been attached to a permanent foundation must be recorded.

Persons who feel they have been discriminated against under federal fair housing laws may file a complaint with the

Office of Fair Housing and Equal Opportunity (OFHEO), within one year of the violation.

After a license is revoked, that licensee cannot apply for reinstatement until after:

One Year

Greg, a licensee, fails to have his client sign off on the purchaser's counteroffer. Greg's client verbally approves the new terms, but Greg failed to obtain his signature. The deadline for signing the counteroffer is in one hour. Greg decides to sign his client's name. Which Penal Code Section addresses this crime, if it is a crime?

PC 470, 473: addresses signing the name of someone else without the authority from that person and forging documents and then passing off any such falsified documents as genuine in order to defraud another.

The diversion of construction funds from their intended purpose; also, using a false voucher to obtain construction loan funds.

PC 484b-c

Unauthorized conversion of real estate into personal property and appropriation of the same.

PC 487b-c

Copying documents owned by a title company without permission, and with the intent to use them.

PC 496c

Removal of a structure from mortgaged real property, or after a foreclosure sale, with the intent to defraud or to injure the mortgagee or purchaser.

PC 502.5

Failure by debtor, upon sale of property covered by a security agreement, to pay to the secured party the amount due under the security agreement (or the proceeds, whichever is less).

PC 504b

The fraudulent appropriation or secreting of trust funds by a broker or other fiduciary.

PC 506

Jason has approached Sam about purchasing an acre of property that adjoins Jason's backyard. Sam has explained to Jason on numerous occasions that he is not interested in selling. Jason has resorted to telling Sam if he doesn't sell the land, he'll contact the authorities and accuse him of dealing drugs out of his home. Which Penal Code Section addresses this crime?

PC 518, 519: Obtaining property from another by threatening to accuse that person of a crime or to expose his/her secrets.

Making, benefiting by, or reaffirming falsification regarding anyone's financial information.

PC 532a

Offering/giving parcels of real property with tickets of admission or at drawings.

PC 532c

Giving a kickback of construction funds.

PC 532e

Fraudulently selling the same land twice to different persons.

PC 533

Willful concealment by a married person of the necessity for concurrence of a spouse in the sale or mortgaging of land.

PC 534:

Any false statement by a licensee to another regarding the price, other accounting, the quality or quantity of a property, or other lies, is a misdemeanor and may lead to fines and imprisonment.

PC 536:

The placement of advertising signs on public or private property without permission, except in the case of a legal public notice.

PC 556-556.2:

ABC Mortgage Company accepts a bribe from a licensee in exchange for approving mortgages for all of his clients. Which Penal Code Section addresses this crime?

PC 639-639a: Bribery of a lender to obtain credit, OR the acceptance of such bribery.

- Commercial bribery by a title insurance company, insurer, or controlled escrow company, or any employee of such companies, who pays, directly or indirectly, compensation or other valuable consideration to a licensee. - This violation is punishable by imprisonment and/or a fine of $10,000 FOR EACH illegal transaction.

PC 641.4: Also violating Insurance Code Section 12404;

Agreement between landlords and property management (brokers)

Property Management Agreement

Regulatory Ethics Standards : Article 1

Protecting the best interest of the client

involves the agency that is directed primarily toward the sale, exchange, lease, rental, financing, or managing of real property or a business opportunity, FOR COMPENSATION.

Real Estate Brokerage

An agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract.

Real Property Sales Contract

On September 24, the U.S. Justice Department announced a settlement after an investigation found that Hudson City Savings Bank was avoiding doing mortgage business with African Americans and Latinos between 2009 and 2013. If you lived in a majority-black or Hispanic neighborhood and you wanted to apply for a mortgage, Hudson City Savings Bank was not the place to go. What type of discrimination is this?

Redlining: a practice in which banks refuse to make loans to people living in certain geographic locations

Regulatory Ethics Standards : Article 16

Respecting Another agents relationship

Contract between seller & broker

Sale Contract

Sally, a licensee, has been asked to be the sales agent for a company selling new mobile homes. Can she sell these new mobile homes? If not, what sort of mobile homes can she sell?

Sally may not sell new mobile homes, but she may sell used mobile homes, if they have been registered with the State of California and are on a lot. She would have to become licensed by the California Department of Housing and Community Development to sell new mobile homes.

Agent Smith tells the Jacob family the Fernwood neighborhood is beautiful, attractive, and highly desirable. The next day, Agent Smith tells the Miller family that Fernwood is deteriorating, values are falling, and the school district is less than stellar. Name the form of illegal discrimination.

Steering : Channeling prospective buyers or tenants to particular neighborhoods based upon their race, religion, national origin, or ancestry.

A seller, without the buyer's consent, under an unrecorded contract of sale encumbers the land in an amount exceeding the present contract balance.

The Civil Code (CC 2985.2)

While there is a payment due on an obligation secured by the land, a seller under a contract of sale appropriates a payment received from the buyer to any purpose except payment on that obligation.

The Civil Code (CC 2985.3)

Who is ahead of the California Real Estate Department?

The Real Estate Commissioner

What is the major difference between the real estate business in general and a real estate brokerage?

The general real estate business consists of production, marketing, and financing of real property; a brokerage is directed primarily toward the sale, exchange, lease, rental, and financing for compensation.

The 1943 case People v. Sipper held what decision?

The selection and preparation of a mortgage or deed by a broker, in which a fee was charged, constituted the unlawful practice of law.

The person who manages the trust is known as

The trustee

Saffron and Serge have a mobile home in which they travel from city to city, town to town, selling pottery and playing music. One week they may be in Berkeley, the next Sacramento. The couple travel wherever their mobile home will take them. Which of the following is true?

To become real property, their mobile home must have a permanent foundation.

Regulatory Ethics Standards : Article 12

Truth In Writing

Equal Opportunity in Housing is a federal code that ensures that all

U.S. citizens have access to housing without discrimination.

Timothy has been hired by the estate of Tyler Wilbanks, who is recently deceased. Timothy has Power of Attorney and will be handling all the real estate affairs of the deceased estate. Which type of agent is Timothy?

Universal Agent

A realist is

a broker who is a member of both the local and national chapters of the Association of Real Estate Brokers.

A trust account is an account managed by

a person on behalf of a beneficiary.

The applicant for an original real estate broker license must

actively engaged as a real estate salesperson for at least two years during the five years immediately preceding the application; have completed eight courses (five mandatory and three elective courses).

Prepaid Rental Listing Service License (PRLS)

allows the licensee to collect for supplying a prospective tenant with a list of prospective rentals.

An arbitration complaint is generally over

an issue of money.

What the Civil Rights Act of 1968 Title VIII did was to add the protected classes of

color, religion, and national origin to the original Civil Rights Act of 1866. The original act (1866) is the one that prohibits discrimination based on race.

Sections 10176 and 10177 of the Business Professions Code

constitute the foundation for most license suspensions or revocations.

PC 487: grand theft

involves the theft of anything with a value of $950 or more and other items specified by statute regardless of their value.

PC 487: petty theft

involves the theft of anything with a value of less than $950 and other items specified by statute regardless of their value.

The California Business and Professions code sections 6125 and 6126 prohibits the practice of

law by any person who is not an active member of the state bar

fair financing laws

mortgage financing field to promote equal opportunity in housing.

A corporation may be licensed as a real estate broker if

one officer is a qualified real estate broker, who must submit a Corporation License Application and its fee.

Home Mortgage Disclosure Act is designed to

prohibit redlining.

Trade associations voluntary nonprofit organization to

resolve the industry's problems, promote its progress, and enhance its service.

Effective January 1, 1996, it is required that a notary public's journal include the ______ thumb print of a person signing a deed, quitclaim deed, or deed of trust affecting _______ _________.

right; real property

A trust account is set up as a means to

separate trust funds (monies belonging to persons other than the broker - e.g., principals and clients) from non-trust funds (monies belonging to the broker).

Applicants who seek to obtain a 4-year salesperson license must complete

the college-level Real Estate Principles course, the Real Estate Practice course, and one additional required college-level course.V

The only unlicensed person who may solicit for the sale of real property is

the owner or his legal representatives. Others may be penalized under the law by acting as such.

The California Department of Real Estate (DRE) protects

the public through the enforcement of laws and requirements for salespersons' and brokers' real estate licenses.

To litigate

to try in court; to engage in legal proceedings

One of the following must be submitted for the experience requirements to apply to be a broker:

• Employment Verification (RE 226) to prove work as salesperson for at least two years. • Employment Certification (RE 228) to prove work as real estate broker in another state. • Equivalent Experience Verification (RE 227) - major or minor in real estate graduation from a four-year university course is an alternative for experience requirements.