Real Estate License Law
Fault zones around known earthquake fault lines must be disclosed to prospective buyers of certain properties in California. Typically, these zones are
1/4 mile wide (The disclosures are generally required if within 1/8th of a mile on either side of a known fault line, hence the zone is 1/4 mile wide)
When a real estate licensee negotiates the sale of a mobile home in California, written notice of transfer must be provided to the Department of Housing and Community Development within
10 calendar days
What is the maximum amount that may be ordered paid from the Recovery Fund to satisfy valid claims against a licensee, for judgments rendered after January 1, 1980
100,000
The Residential Earthquake Safety Disclosure must be provided to the buyer in a sale transaction involving a wood-frame structure, if the home was constructed in what year or earlier:
1960
A broker would not be required to maintain trust records in which of the following transactions:
A broker is always required to maintain trust records. He is not required to maintain a trust fund account
Which of the following is authorized to manage property for the general public
A licensed real estate broker (Managing property is considered a real estate act that requires the person to be licensed. Any agreement to manage property must be signed by a broker)
In order to negotiate the sale of an existing promissory note that is secured by real estate, working on behalf of another and for consideration, you must be:
A licensed real estate broker or salesperson
Which of the following is the best example of the practice known as "puffing"
A licensee exaggerates certain features or benefits of a property (Puffing involves exaggeration about the features or benefits of a property)
One of the following actions, taken in relation to advertising the sale of real property, is considered prima facie evidence by the Real Estate Commissioner in California as being misleading or deceptive advertising. Which one is so regarded:
A misleading map directing prospective purchasers to the site of a property for sale
Collecting rents, fixing up the property, and showing vacant units are the types of responsibilities that would be assumed by:
A resident property manager
A real estate licensee submits a license renewal application, but his name is on a list of obligors who have not complied with a court-ordered payment of child support. Which of the following is most nearly correct
A temporary renewal will be issued, but the licensee must pay the delinquent amount within 150 days (A temporary license will be issues when the applicant is on the list of obligors for delinquent child support. The license will be valid for no more than 150 days if proof of payment is not provided)
Hawkins wanted to purchase 200 acres of land for future subdivision, but did not have the necessary $65,000 cash. He persuaded his friend, Warner, to pay the $65,000 and purchase the land, and Warner then immediately signed a land contract for sale of the property to Hawkins for $88.000. This transaction would be
A valid purchase and resale (On the basis of the information given, no violation of the real estate law has occurred. A friend merely accommodated Hawkins in providing the "front money" to purchase the property, and will be paid for his act by a higher purchase price for the property)
When an agent took a listing she promised the seller that she would advertise the property in the newspaper until it was sold. The agent did not do the advertising that she promised. She is guilty of
Actual fraud (The Civil Code states that "A promise made without any intention of performing it" is actual fraud)
Under the terms of the Real Estate Law, a real estate salesperson is considered to be:
An employee of the broker
A licensed real estate broker may legally negotiate the sale of
Any registered mobile home (under the requirements of the Health and Safety Code, its considered real property)
The total positive balances due to all beneficiaries of a broker's trust fund account must at all times equal the account's
Balance
Upon discovering that a salesperson in his office was receiving a referral fee from a local lender for every real estate loan the salesperson referred to the lender, the broker of record in that office took only two actions: He discharged the salesperson, and he warned all other salespersons in the office never to accept such fees. Based only on the foregoing, which of the following is most nearly correct
Both broker and salesperson may be subject to disciplinary action by the Commissioner (The broker is responsible for the acts of the salespersons employed by the broker, and therefore both are subject to disciplinary action by the Commissioner)
In a published advertisement for real estate, which of the following inclusions is considered adequate notice that the ad has been placed by a real estate licensee
Bro.; Agt.;
When a broker hires a salesperson under a valid independent contractor agreement, which of the following is correct
Broker may be held liable for the salesperson's conduct in a real estate transaction
The real estate commissioner would not permit which of the following mortgage loan advertisements
Call our toll free number 1-800-for a loan" (According to the real estate commissioner's regulations a loan advertisement cannot imply that a person can obtain a loan over the telephone)
According to the California Bureau of Real Estate regulations, it is commingling when a broker
Deposits into the trust fund account a renter's check for the security deposit on an income property the broker owns (When the broker owns the property, the security deposits belong to the broker and depositing that money into the trust fund would constitute commingling, which is mixing the broker's money with his or her client's money)
The maximum commission a broker may charge for the sale of residential property
Determined by the broker's contract with his principal
If a real estate licensee misrepresents a property to a buyer while he is acting as an agent, he may subject himself to
Disciplinary action by the licensing authority, civil action, criminal action (A licensee is subject to three separate and distinct bodies of authority: (1) Real Estate Commissioner's Rules and Regulations (2) California Civil Codes; (3) California Criminal/Penal Codes. Action under, or by, one or two authorities does not exempt the licensee from action by the other authorities. This is not double or triple jeopardy.
Broker Smith took a listing on commercial acreage and also received the right to purchase the property within 30 days. On the 28th day of the listing, the broker decided to buy the property. Before buying the property, he must
Disclose any outstanding offers, give the owner any material information, obtain written consent from the owner which acknowledges any profit or anticipated profit
A broker strongly recommends to her sales staff that they use the services of her in-house escrow company and an affiliated mortgage lender, for which they will receive extra compensation. With regard to disclosing this arrangement to clients, the salespersons are only required to:
Disclose the full amount of any additional compensation to b e received, and obtain the client's approval
In order to operate a competitive, yet profitable business, a real estate broker needs to be concerned with "desk cost." Which of the following most nearly represents the correct way to calculate desk cost
Divide the total operating expenses of the firm, including salaries, rent, insurance, etc.,by the number of salespersons.
Real estate brokers who own and manage local real estate office are required to have a written employment contract with
Each member of Their sales staff, including those who have a broker's license but do not have their own office
Under the Alquist-Priolo Special Studies Act a subdivider would be required to disclose to potential purchasers
Earthquake fault lines (The Alquist-Priolo Special Studies Act requires the subdivider to make certain disclosures if the property is near certain earthquake faults.
Broker Hammerman, while exempt from some provisions of the escrow law, is still prohibited from doing certain acts when acting as an escrow agent for a principal. With one exception, doing any of the following acts would probably be grounds for disciplinary action by the Commissioner. Which of the following acts would not violate real estate law:
Encouraging a buyer to alter escrow instructions, although such alterations have been initialed by all persons who signed the original instructions (No violation would occur if the broker encouraged alterations to the instructions which had been approved by all parties thereto)
When a real estate licensee fails to renew a license before it expires, the licensee
Has two years from the expiration to renew by paying a late fee, but will not be required to take the state exam again (There is a two-year grace period after the expiration of a license, during which the person may renew the license by paying a fee, without retaking the state exam. After the two years, the person would have to retake the exam)
A person sold his home and took back a note secured by a purchase money deed of trust. He selected a real estate broker from the telephone book and asked him to service this loan. If the broker takes on this duty, state law requires him to
Have a written authorization from the holder of the note
If a listing to sell a mobile home expires and is not extended or renewed, how long does the broker have to remove all yard signs and stop all advertising of the mobile home
He has 48 hours from the termination
Which of the following represents a fraudulent misrepresentation by an agent
His representation in an obvious falsehood, his representation is made with a knowledge of the falsehood, his representation caused the aggrieved party to enter into the contract
If the trust account contains trust funds belonging to more than one beneficiary, the broker may not disburse any funds without prior written consent of every principal who has funds in the account
If such disbursal will reduce the balance of the total funds in the account to an amount less than the various owners have on deposit (The Commissioner's regulations require the broker to secure such permission)
When the Real Estate Commissioner wishes to rescind approval of a new subdivision, he would likely do which of the following
Issue a desist and refrain order (If the Commissioner wants to rescind approval of the subdivisions, he wants the subdivider to immediately stop selling the parcels)
Broker Jones, who is not a member of any trade organization, has been using a new advertising slogan: "A new breed of Realtor." Concerning this practice
It is grounds for revocation or suspension of his real estate license (Anyone who is not a member of the National Association of Realtors cannot use the term "Realtor")
A broker advertises the sale of "Mega Bucks Trust Deeds" in a newspaper. In the advertisement he offers a specific yield which he arrives at by looking at his yield for the past year. Which of the following is true concerning this advertisement:
It is legal if he also gives the actual interest rate specified in the note and the discount from the outstanding principal balance
Broker Knorr advertised in the newspaper that anyone who bought a property listed with the broker would receive a free microwave oven valued at $500. Such action is
Legal, provided full disclosure is made to all interested parties. (Anything of value given to the buyer must be disclosed to all parties)
Owner Armstrong gave Broker Weeks an exclusive authorization to sell Armstrong's ranch. As part of the agreement, Broker Weeks agreed to advertise the ranch in a catalog that Weeks publishes and distributes to other real estate brokers. For this added service, Armstrong paid Broker Weeks $1,000 for this advertising service at the time Owner Armstrong signed the listing. Under current real estate law, this payment:
Must be deposited into a trust account and disbursed only to pay advertising expenditure incurred by Broker Weeks in advertising the ranch property.
Potential Buyer Marshall seeks to purchase a home in anew subdivision. A licensee assists Marshall in securing a loan for such purpose from a savings and loan association, explaining to Marshall the loan processing costs that will be involved at closing. Under these conditions, when the loan is arranged, a copy of the HYD Booklet, "Settlement Costs and You"
Must be provided to Marshall by the lender within three days of the loan application (Lender is normally responsible for this service)
When a broker has two offers on the same property, both from salespeople within his office, and both with a deposit, he is placed in a dilemma. He decides not to present the second offer until the fist offer has been accepted or rejected by the seller. The seller is not informed of the second offer. The broker's action is
Not permissible
It is a requirement that most real estate records be kept for a period of three years, commencing from the date
Of the listing agreement, if the sale is not consummated or that a sale transaction closes
A real estate salespersons license has been suspended because money was paid out of the Recovery Account to a person who had a judgment against the salesperson. His license will not be reinstated until he
Pays the Recovery Account for the money it paid plus interest
Under California law, the Real Estate Commissioner has authority to do which of the following
Promulgate rules and regulations to enforce the California real estate laws (Imposing fines or revoking a license cannot be done without a hearing. The Commissioner does have the authority to promulgate (issue) rules and regulations)
Commingle has a meaning most completely opposite to
Segregate (To commingle means to mix)
Broker Jones has a listing to sell seller Smith's house. Broker Jones recieved an offer on the house and presented it to seller Smith who hesitates in accepting the offer. The broker promised Smith verbally to find Smith another suitable residence before escrow closed. On the basis of that, the seller accepted the offer. If broker Jones failed to perform during the time period, which of the following is most nearly correct?
Seller SMith could initiate a civil suit and the broker would be responsible for damages (Since the seller relied on the promise of the broker, the broker would be liable in civil court for breach of contract if he failed to perform. This is not one of the types of contracts which are required to be in writing by the Statute of Frauds)
The law permits a real estate licensee to act as an agent in the sale of some mobile homes. All of the following acts are grounds for discipline by the Real Estate Commissioner against a real estate salesperson's licenses, except
Selling, as agent, a mobile home which is greater than 8 feet in width and 40 feet in length (Real estate licensees can act as agents in the sale of a mobile home, but must be honest in their advertising, and must deliver title to the buyer)
The Alquist-Priolo Special Study Zone earthquake disclosure requirement applies to
Specific types of structures located in known earthquake fault zones (The Alquist-Priolo Act applies to specific properties in areas of known fault zones)
A licensed real estate broker working under a typical exclusive listing incurs several expenses. He is not entitled to be reimbursed for these expenditures, unless
Such expenditures were authorized by the principal
Which of the following federal laws requires public accommodations to be made accessible
The Americans with Disabilities Act
Jones, who does not have a real estate license, is the owner and president of an investment firm. He advertises and sell properties for his clients. Since these transactions involve real estate, who will prosecute him for violating the real estate law
The District Attorney
A broker's ad in a local newspaper says that if a buyer or seller will bring this ad to his office and either list or buy a property through him, that he will give that person $50. Which of the following is true:
The broker can give $50 to the buyer or seller
A broker's unlicensed assistant prepares a newspaper ad. According to the Business and Professions Code, which of the following is most correct.
The broker is required to read the entire advertisement prior to publication
The bank account used by a broker to hold his clients' trust deposits must be properly set up in the name of
The broker, as trustee
A dual agency is legal if
The buyer and seller consent to it
When budgeting for a real estate office, the phrase "company dollar" means
The income of an office after all commissions are subtracted
When a real estate licensee advertises properties on the Internet (world wide web), which of the following best describes the licensee's responsibilities
The licensee must exercise proper supervision over any non-licensee who responds to inquiries (Any non-licensee who responds to inquiries must be supervised by the licensee)
Which of the following is primarily responsible for disclosure to the buyer of an existing Mello-Roos tax assessment on a parcel of real property
The seller
The principle difference between the various required Natural Hazard Disclosures and the Transfer Disclosure Statement (TDS) is that
The seller and/or the seller's agent must consult published maps of known hazard areas to detect and disclose relevant hazards, whereas the TDS requires disclosure of all known property defects
Bob, a real estate agent, refers buyers to Bug-B-Gone Termite Company, and the company pays him a referral fee for each inspection sold. Which of the following is correct
This arrangement is prohibited under the Real Estate Law
If a licensee places the following ad in a newspaper, which of the following would describe the ad? "Three bedroom, two-bath, pool and spa--$167,000 555-1234."
This is blind advertising ( Since this ad has no wording in it which indicates that it was placed by an agent rather than an owner, it would be considered blind advertising)
Agent John has given seller Henry an offer that includes the phrase "All kitchen appliances are to be left with the house and become the personal property of the buyer." Henry accepts all of the other terms of the offer, but objects to leaving the appliances. John crosses out that item and initials it on the contract on behalf of the buyers. He does this despite the fact that the buyers are on vacation and cannot be consulted about this. Such action would most accurately be classified as
Unlawful conduct (It would be illegal for the agent to change the terms of the buyer's offer without the express consent of the buyer)
Jesse, an unlicensed employee of a real estate broker, hands out door-hanger flyers and makes telephone solicitations, seeking buyers and sellers. Under the real estate law, his activities are
Unlawful for both Jesse and the employing broker (While handing out door-hanger flyers would not require a license, telephone solicitations would require a license. Both the broker and the salesperson have violated the real estate law)
According to the Seller Transfer Disclosure Act, a broker can
Visually inspect the property and reveal pertinent information (The Seller Transfer Disclosure Act requires the broker make an inspection and reveal the results to the buyer. While the broker may have the right to do the other acts, the referenced law does not grant those rights)
In the parts of California where wood-destroying pests are fond, a structural pest control report is required
When buying residences financed by FHA or Va loans
When a licensee negotiates a loan secured by real property, the licensee must deliver a mortgage loan disclosure statement to the borrower
When it is signed by the borrower
When is it legally permissible in California to sell property with an "as is" provision in the purchase agreement
When the buyer is provided with a Transfer Disclosure Statement and informed of all known property defects prior to making an offer
When renting residential property, the amount of a security deposit which a lessor may legally charge from a lessee is determined in part by which of the following
Whether the unit is furnished or not (If the unit is furnished, the lessor can charge a higher deposit than if it is not)
Georgene Creason is selling time-shares in her Wildacre subdivision. She mailed advertisements to 10,000 people, offering them the chance to win a prize, but did not reveal that in order to be eligible, the person must visit Wildacre and listen to a sales presentation. All of the prize winners had become owners in Wildacre. Is there anything wrong with this situation
Yes; anyone offering prizes or gifts must reveal any required attendance at a sales presentation when offering the prize or gift (Any required visit or attendance at a sales presentation must be disclosed when offering the gift or prize)