Real Estate Principles

Real Estate Agent (Salesperson)

-Licensed to facilitate real estate transactions. -Work under a broker who is legally responsible for their actions.

Real Estate Broker

-More stringent license requirements -Have the option to work alone or have other agents work under them.

The Federal Fair Housing Act bars the use of any discriminatory actions a seller, landlord or property manager might take against a prospective buyer or tenant based on an individual's: 1. 2. 3. 4. 5. 6.

1. race or color 2. national origin 3. religion 4. sex 5. familial status 6. handicap

To renew their DRE license, real estate brokers and sales agents are to complete at least _______ hours of continuing education (CE) every four years.

45

A mobilehome, also called a manufactured home, is a structure: at least ________ feet in width, ________ feet in length or more than _________ square feet when transported in one or more sections; built on a permanent ______________ ; and designed to be used as a dwelling with or without a permanent ____________________.

8 feet in width, 40 feet in length, 320 sq feet. chassis (on-frame) foundation

Unruh Civil Rights Act

A California law which prohibits discrimination by a business establishment based on sex, race, color, religion, ancestry, national origin, disability or medical condition. A real estate practice is a business establishment.

Mortgage Loan Originator (MLO)

A Department of Real Estate (DRE) licensee who receives fees to arrange a consumer mortgage other than a carryback.

General Account

A broker or agent's personal or business account, not to be commingled with trust funds.

Dwelling

A building occupied or designed to be occupied as a residence by one or more families.

Federal Fair Housing Act of 1968

A collection of policies designed to prevent discrimination in the access to housing based on an occupant's inclusion in a protected class.

Civil Rights Act

A federal law which provides broad protections to numerous classes of individuals in the United States against discriminatory activities

Real Estate Agent

A person who, for compensation or in expectation of compensation, is employed by a licensed broker to do one or more of the acts of a licensed broker.

Principal

A person, an individual or an entity, acting as a buyer or seller, represented by a broker and their agents.

Agency Confirmation Form

A provision in all purchase agreements and counteroffers disclosing the agency of each broker in the transaction.

REALTOR®

A real estate agent, broker or an associate who holds active membership with the National Association of Realtors (NAR)

Familial Status

A status which indicates a household includes individuals under the age of 18.

Implicit Discrimination

Actions which are not openly discriminatory but yield discriminatory results.

Subaccount Ledger

An accounting document or file identifying the owner of trust funds and the amount held for the owner.

Owner's Statement

An accounting on the status, expenditure and location of negotiable trust funds provided to the owner of those funds.

Buyer's Agent

An agent representing the buyer. Also known as a selling agent

Seller's Agent

An agent representing the seller. Also known as a listing agent.

Exclusive Agent

An agent who is acting exclusively on behalf of only one party in a transaction.

Dual Agent

An agent who represents both parties (buyer and seller) in the same transaction.

Multiple Listing Service (MLS)

An association of real estate agents pooling and publishing the availability of their listing properties.

Subagent

An individual who has been delegated agency duties by the primary agent of the client, not the client themselves. (Agent of an agent)

Steering

An unlawful housing practice that includes words or actions by a real estate sales licensee intended to influence the choice of a prospective buyer or tenant

The government agency responsible for the registration of mobilehomes is the California _____________________ _____________________ ____________________ (HCD). Mobilehomes are registered with the _________ , unless the mobilehome is considered real estate

California Department of Housing and Community Development (HCD)

Agency Relationship

Exists between principal and agent, employer and employee.

Redlining

Failure to provide financing or insurance in certain communities based on the demographics of that community.

Real Estate Recovery Fund

Funds available to individuals who have obtained a final-court judgment against a licensee and are unable to recover the judgment from the licensee. Also known as the Consumer Recovery Account.

Senior Citizen Housing

Housing intended for individuals 55 or 62 years of age or older.

Trust Funds

Items which have or evidence monetary value held by a broker for a client when acting in a real estate transaction.

Mobilehome

Property designed to be used as a dwelling, classified as either personal or real property depending on the method of attachment to a parcel of real estate. Also known as a manufactured home.

The chief officer of the DRE is the _________________________________.

Real Estate Commissioner

Affiliated Business Arrangement (ABA)

Referral of a client to a financially controlled business whose earnings are shared with the broker which requires a written disclosure.

Agency Law Disclosure

Restatement of agency codes and cases which establish the conduct of real estate licensees. It is delivered to all parties in targeted sales and leasing transactions.

The __________ is available to individuals who have obtained a judgment against a licensee and are unable to recover the judgment from the licensee for losses caused while acting as an agent. a. Real Estate Recovery Fund b. Broker Protection Fund c. Homeowner Relief Fund d. Borrower Education Fund

a. Real Estate Recovery Fund

A residential landlord may not induce or attempt to induce an individual to offer, or abstain from offering, a dwelling to prevent the entry of certain classes of people into the neighborhood, known as: a. blockbusting. b. condemnation. c. redlining. d. steering.

a. blockbusting.

A(n) ___________ is housing intended for and solely occupied by persons 62 years of age or older, or intended and operated for occupancy by persons of 55 years of age or older. a. senior citizen housing project b. Section 8 housing project c. common interest development (CID) d. cooperative housing project

a. senior citizen housing project

Until __________ was added to the anti-discrimination laws in 1992, it was legal to exclude minors under the age of 18 from housing accommodations. a. implicit discrimination b. familial status c. religious preference d. senior citizen housing

b. familial status

Failure of the seller's agent to provide the seller with the Agency Law Disclosure prior to entering into the listing agreement may result in: a. payment of a $1,000 fine. b. the loss of their fee. c. jail time. d. the forfeiture of all funds in their trust.

b. the loss of their fee.

Funds belonging to others which a broker and their agents handle when acting in a transaction are called: a. broker fees. b. trust funds. c. bonds. d. security deposits.

b. trust funds.

A(n) _________ arises when a broker or their agent, acting on behalf of a client, has a competing professional or personal bias which hinders their ability to fulfill the fiduciary duties they have undertaken on behalf of their client. a. affiliated business arrangement (ABA) b. subagency c. conflict of interest d. implied agency

c. conflict of interest

A broker is required to regularly account to an owner on the status, expenditure and location of negotiable trust funds, called a(n): a. balance sheet. b. deposit receipt. c. owner's statement. d. amortization schedule.

c. owner's statement.

________ involves the restriction of a person seeking to buy or rent a dwelling in a community in a manner that perpetuates segregated housing patterns. a. Blockbusting b. Redeveloping c. Redlining d. Steering

d. Steering

The sale of a business opportunity consists of two transactions: the sale of the business, including _______________, ____________ ____________ and goodwill; and the sale of the _______ ___________ itself, whether a fee or leasehold interest, including the building and land.

inventory, trade fixtures, & real property

The conflict of interest in the broker's ownership is a _______________ _____________ requiring disclosure since the buyer's decisions concerning acquisition of the property might be affected.

material fact

When a new mobilehome is first purchased it is registered on a form provided by the HCD, referred to as the ______________ _________________ of the mobilehome.

original registration

Fundamental to a real estate agency are the _____________ duties a broker and their agents owe the principal. These duties are distinct from the _______________ duties owed by brokers and agents to all other parties involved in a transaction.

primary; general

A licensee acting solely as a ________________ on their own behalf when buying or selling property need not disclose the existence of their real estate license.

principal

An agency relationship is created in a real estate transaction when a _______________ employs a broker to act on their behalf

principal

An agent is an individual or corporation who represents another, called the _________________.

principal

Broker Qualifications: An agent who has held a real estate agent license for at least ________ years within the last five years may apply for a broker license.

two

The broker's agency can also be created by an oral agreement or conduct of the client with the broker or other individuals. However, fee arrangements are unenforceable if no _____________ agreement exists.

written

For causes of action which occurred on or after January 1, 2009, the threshold is $______________ for one transaction and $_______________ for any one licensee

$50,000 & $250,000

Department of Real Estate (DRE)

A government entity which oversees, regulates, administers and enforces California real estate law as practiced by licensees.

Disabled Person

Anyone who has a physical or mental impairment which significantly limits major life activities, has a record of disability, or is regarded as being disabled.

Agent

One who is authorized to represent another, such as a broker and client or sales agent and their broker.

_______________________ and accounting requirements are imposed on brokers when they receive, transfer or disburse trust funds.

Recordkeeping

Department of Fair Employment and Housing

State agency designated with protecting Californians from housing, employment, and public accommodation discrimination.

Fiduciary Duty

That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over their principal by the slightest misrepresentation, concealment, duress or undue influence.

Dual Agency

The agency relationship that results when a broker represents both the buyer and the seller in a real estate transaction.

Business Opportunity

The assets for a business enterprise including its goodwill. The term includes the sale or lease of the business and goodwill of an existing business enterprise or opportunity.

Blockbusting

The prohibited practice of a real estate licensee inducing a property owner to list their property for sale in response to a change taking place in the neighborhood demographics.

Bulk Sale

The transfer of more than one-half the inventory of a business' materials or goods to a person other than the business' customers.

Conversion

The unlawful appropriation of another's property, as in the conversion of trust funds.

Discriminatory Practice

Unequal treatment given to members of a protected class of individuals.

Conflict of Interest

When a broker or agent has a positive or negative bias toward a party in a transaction which is incompatible with the duties owed to their client.

Regardless of race, all citizens of the United States have the right to rent residential and commercial real estate under the federal: a. Civil Rights Act. b. Freedom of Information Act. c. Unruh Civil Rights Act. d. Proposition 13.

a. Civil Rights Act.

The chief officer of the Department of Real Estate (DRE) is the: a. Real Estate Commissioner. b. President of the United States. c. Governor of California. d. Real Estate Solicitor.

a. Real Estate Commissioner.

A residential mortgage primarily for personal, family or household use and secured by a deed of trust on a dwelling is known as a: a. consumer purpose mortgage. b. public project loan. c. adjustable rate mortgage (ARM). d. Zero Ability to Pay (ZAP) loan.

a. consumer purpose mortgage.

A(n) __________ is a broker who simultaneously represents the best interest of opposing parties in a transaction, e.g., both the buyer and the seller. a. dual agent b. secret agent c. subagent d. finder

a. dual agent

When a dual agency is established in a one-to-four unit residential sales transaction, the broker may not: a. pass on confidential pricing information to the opposing parties. b. communicate to one of the parties without the express consent of the other. c. collect their fee when the sale closes. d. disclose materials facts about the property which might dissuade the buyer from submitting an offer to purchase the property.

a. pass on confidential pricing information to the opposing parties.

California anti-discrimination law is enforced by the Department of Fair Employment and Housing and the: a. Department of Business Oversight (DBO). b. Fair Employment and Housing Commission. c. Department of Housing and Urban Development (HUD). d. Fannie Mae.

b. Fair Employment and Housing Commission.

The printing or publishing of an advertisement for the sale or rental of residential property that indicates a wrongful discriminatory preference is a violation of the: a. Unruh Civil Rights Act. b. Federal Fair Housing Act (FFHA). c. American with Disabilities Act (ADA). d. Equal Credit Opportunity Act.

b. Federal Fair Housing Act (FFHA).

A seller's broker and their agents have a ___________, owed solely to the seller who has employed the broker, to diligently market the listed property for sale. a. non-fiduciary general duty b. fiduciary agency duty c. implied agency duty d. limited general duty

b. fiduciary agency duty

An Agency Law Disclosure is provided each time any broker prepares a purchase agreement or: a. lease for less than one year. b. lease for more than one year. c. makes any contact with a client. d. independent contractor agreement.

b. lease for more than one year.

The documents used in the sale of a business include a ___________________, _______________________, and a ________________.

bill of sale, Uniform Commercial Code, deed

Failure to disclose a dual agency relationship can result in the loss of the ________________ ____________, liability for _____________ __________ incurred by the clients, and ________________ _____________ by the Department of Real Estate (DRE) on a complaint.

brokerage fee, money losses, disciplinary action

All real estate brokers and agents need to complete at least __________ of continuing education (CE) every four years to renew a license issued by the Department of Real Estate (DRE). a. 15 hours b. 30 hours c. 45 hours d. 50 hours

c. 45 hours

Agency in real estate related transactions includes relationships between brokers and their: a. principals. b. agents. c. Both a. and b. d. A real estate broker is never an agent.

c. Both a. and b.

The California Legislature created the __________ to oversee, regulate, administer and enforce the real estate law. a. Department of Home Finance b. California Bureau of Veterans c. Department of Real Estate (DRE) d. Department of Agriculture and Property

c. Department of Real Estate (DRE)

A broker's representation of a client, such as a buyer or seller, is best undertaken: a. with an oral agreement only. b. through coercion. c. on a written employment agreement signed by both the client and the broker. d. through ratification after acts requiring a license have been performed.

c. on a written employment agreement signed by both the client and the broker.

The DRE cannot issue or renew a real estate license if the applicant is on a list of persons not in compliance with ___________ ____________ orders provided by the State Department of Social Services. However, the DRE may issue a ________ day temporary license to an otherwise qualified applicant who is on the list of persons neglecting child support.

child support / 150

When a dual agency is established in a one-to-four unit residential sales transaction, and both parties are represented by the same broker, the broker may not pass on __________________ _____________ _______________ to the opposing parties. For example, when the broker is a dual agent, the broker and their agents may not tell the seller the price the buyer is willing to pay, or tell the buyer the price the seller is willing to accept.

confidential pricing information

A residential mortgage is any loan primarily for personal, family or household use, known as a _____________________ ___________________ _________________, secured by a deed of trust on a dwelling.

consumer purpose mortgage

The Agency Law Disclosure needs to be attached to which of the following documents and signed by all parties in targeted transactions? a. A purchase agreement. b. A seller's listing agreement. c. A lease agreement for a term exceeding one year. d. All of the above.

d. All of the above.

__________ practices are those which are not openly discriminatory, but result in discriminatory effects. a. Overtly discriminatory b. Harmlessly prejudiced c. Conflict of interest d. Implicit discriminatory

d. Implicit discriminatory

California's Unruh Civil Rights Act specifically prohibits discrimination on behalf of: a. educational institutions. b. government institutions. c. individuals. d. businesses.

d. businesses.

To be eligible for a broker or agent license, the applicant needs to be honest and truthful, complete mandatory education and: a. provide proof of legal presence in the U.S. b. be at least 21 years of age. c. have previously worked as an unlicensed assistant. d. pass the qualifying exam.

d. pass the qualifying exam.

All broker applicants need to complete ___________ statutory courses of three semester units or the quarter equivalent, unless exempt.

eight

Employment Exceptions based on Experience: experience as an ___________ or title officer; experience as a _____________ ______________ directly related to the financing or conveying of property; experience as a _______________, contractor or speculative builder, if the agent performed substantial duties relating to the purchase, finance, development and sale or lease of real property.

escrow; mortgage officer; subdivider

The primary duties a broker owes his client includes evaluating the _____________ impact, legal consequences, ______ ____________ and exposure to risk of loss inherent in all transactions.

financial impact, tax aspects

A real estate broker and real estate agent license is valid for __________ years from the date of issuance noted on the license certificate.

four

Broker Qualifications: The agent is required to have worked on a ________ time basis (at least ________ hours per week) as an agent during the two-year time requirement.

full time / 40

A seller's ____________ _________________ authorizes the listing broker to cooperate with other brokers. Thus, the seller's broker may share property information with other brokers and share any brokerage fee due from the seller.

listing agreement

Listing agreements do not authorize the seller's broker to delegate to other brokers the authority to also act on behalf of the seller to ______________ ______________ and obtain offers to purchase as the seller's agent.

locate buyers

To engage in the business of real estate as a real estate broker or agent, a person first obtains a ____________ ____________ ____________ issued by the __________.

real estate license; DRE

Two categories of broker obligations arise in a transaction, including: the ______________ or _____________ agency duties of an agent which are owed by a broker and their agents to their principal, known as __________ duties; and the _____________ duties owed by each broker to all parties in the transaction, requiring them to be honest and avoid deceitful conduct, known as ______________ duties.

special/primary; fiduciary general; general

Exceptions to Broker Qualifications: At least _______ years of general real estate experience; or graduated with a real estate-specific degree from a four-year college or university.

two