The basic purpose of real estate law is _______ To prevent fraud Most of the laws which regulate the real estate industry are found in the _________ Business and Professions Code Real estate laws are passed under the authority of the _________ of government Police Power Regulates the real estate industry Bureau of Real Estate (BRE, CalBRE) Appointed by the governor to head the BRE Real Estate Commissioner To publish or make laws known Promulgate Real Estate Commissioner has the right to _______ regulations which control the actions of real estate licensees, and have the force and effect of _____ Promulgate Law Regulations a Real Estate Commissioner has the right to promulgate are found in the ______ California Code of Regulations Only a ________ can issue, restrict, suspend, or revoke a real estate license (a _____ cannot) Real Estate Commissioner Court A non-licensed person who performs acts that require a real estate a license would be prosecuted by _______ The District Attorney of the county in which the activity occurred Commission disputes are settled by _____, NOT  ______ Civil lawsuits The BRE Any person who does any real estate act for another, for compensation, or expected compensation, must have a ________ License A real estate license is required to ________ real property for the general public Manage A principal of real property acting for his own benefit (not working with an agent) does not need ________, unless he is buying or selling ______ loans in a calendar year A license 8 or more A competent person who is authorized to act on behalf of another Attorney in fact An instrument authorizing one person to act as another's agent, to the extent state in the instrument Power of Attorney An Attorney-in-fact may NOT _________ Deed property to himself A principal may terminate a power-of-attorney by ________ Revocation A trustee can conduct a trustee's sale on a trust deed without a __________ License Someone who works in a real estate office but performs clerical duties only Unlicensed assistant Activities considered illegal for an assistant to do without a real estate license (4) Phone call solicitations Choosing pest control company Giving borrowers advice about loans Creating ads without approval Without a real estate license, a property manager may manage __________ Only the property where he resides The owner of a 16 or more unit residential property must _______ or _______ Live in the property Have a resident property manager Requirements of a broker working under a fictitious business name (3) 1) File a "Fictitious Business Name Statement" in county where office is located 2) Publish the name in the newspaper 3) Have broker's license issued by the BRE after name approval A broker can designate a salesperson to manage an office and review contracts as long as _________ The salesperson has a minimum of 2 years of full-time experience (within the last 5 years) working for a broker When a salesperson shows a home listed on the MLS, the salesperson is directly responsible to ______ His employing broker A broker can share his commission with an out-of-state broker, an unlicensed buyer, or a seller, as long as __________ The broker discloses this to all parties The Real Estate Commissioner requires that every salesperson and every broker working for another broker have a ________ with the employing broker that must be kept for _____ after the termination of employment Written employment agreement 3 years Everyone in a broker's office must be insured as employees under the __________ Worker's Compensation Insurance Law A broker must notify the Commissioner upon _____ of a salesperson's license Transfer If a salesperson is fired for a violation of real estate law, the broker must immediately _____ Send the Commissioner a Certified written statement of facts If a broker changes any of his office addresses, he must send written notice to the Commissioner within ______ following the change The next business day When a prepaid rental service is moving its office, notice of the new address and phone numbers must be provided to all its clients ________ Prior to the move Upon termination of employment of the salesperson, a broker will return the license to the salesperson within _____ 3 days A broker must keep copies of listings, receipts, canceled checks, trust records, and any other transaction-related documents for ______ after the listing or closing date 3 years When a broker uses electronic documents and signatures, he must still provide paper copies upon request to ______ The BRE A separate checking account established by a broker to hold clients' money, with the purpose of not mixing clients' and broker's funds (comingling) and thus preventing legal issues Trust Fund Account A broker must place all funds received on behalf of principals in _____, _____, or _____ within ____ business days following receipt by the broker or salesperson Trust account Neutral escrow depository Hands of principal entitled to them 3 When may a broker not place funds in a trust account? If there are written instructions from a buyer to hold a check unwashed until acceptance or rejection of offer A broker may not have more than $_____ of his own money in a trust account 200 Any employee who is authorized by a broker may make ____ from the trust account. If unlicensed, must be ______ in the amount of whatever he has access to Withdrawals Fidelity Bonded A broker must balance (reconcile) his trust fund account on a ____ basis. The account balance should match that of the ______ Monthly Broker's client liabilities Trust fund accounts of brokers must be in the name which appears on ______ The broker's license A salesperson may use his or her license only when ________ The license is being held by a licensed real estate broker Under CA Real Estate Law, a salesperson is considered to be _______ of a broker An employee Most real estate salespersons are considered to be ________ for income tax and social security tax purposes. Brokers report a salesperson's income as such to the IRS with a ______ form Independent contractors 1099 A salesperson may receive compensation for real estate acts from _______ only His employing broker It would be illegal for a salesperson working for a real estate broker to receive a referral fee from a _______ (4) Lender Loan broker Developer Seller When you pass the salesperson exam, you have _____ from the date of the exam to apply for the license 1 year A portion of the real estate license fees are put into a client _____ to portent the general public when they obtain ______ court judgments or arbitration awards against licensees Recovery Account Uncollectible REERA stands for Real Estate Education, Research, and Recovery Account Funds given out from the RE Recovery account are limited to _____ per transaction, and _____ maximum per licensee $50,000 $250,000 When funds are taken from the RE Recovery account, the licensee's license is ____ until _______ Suspended The recovery funds are repaid, plus interest A real estate applicant who appears on the state's list of child support obligors may be issued a _________, and a real license cannot be issued until _____ 150 day temporary license A release is obtained from the DA's office during the 150 days After obtaining a real estate license, both brokers and salespersons are required to renew their licenses every _______, and are required to complete courses covering ______ (5 topics, "AFTER") 4 years Agency Fair housing Trust fund handling Ethics Risk Management License renewal courses require ____ hours of education, ____ of which must be consumer protection courses 45 18 Licensees must renew their licenses within a ____ grace period if they wish to avoid taking the exam again 2 years In an ad offering "Mega Buck" trust deeds for sale, disclosing a specific yield is legal if the _______ specified in the note and the _____ from the outstanding loan balance are disclosed Actual interest Discount Licensees may advertise "secured trust deeds" as long as they disclose ______ To what extent the deeds are secured Advertising that does not disclose that an agent is representing a seller Blind advertising An ad placed in the newspaper by a real estate salesperson must also include ______ The name of the broker Ads like "Move right in!" when referring to a house that is in disrepair is an example of ______ Deceptive advertising A misleading map in an ad for a subdivision is considered _____________ False advertising Occurs when a broker exaggerates features of a property by giving his opinion about something in an ad Puffing Puffing is only misrepresentation if _____ Someone relies on it as fact A set of values by which individuals guide their own behavior and relationship to others Ethics An agent's relationship with customers, other agents, and the general public Ethics The unethical practice by a real estate licensee of withholding a new listing from the MLS until he has had time to find a buyer himself Pocket listing Options, net listings, and guaranteed sales are allowed in CA as long as the person involved in the transaction knows _______ The licensee's involvement The legal effect of such an agreement Violations of the real estate law, by a licensee or non-licensee, can result in _____ (3) $20,000 fine Six months in jail Loss of the real estate license When the Real Estate Commissioner believes a licensee has violated real estate law and has decided to take action against him, the Commissioner must first serve the licensee with ______ An accusation Failure to disclose material facts, or simply lying Misrepresentation The most common types of misrepresentation are _____ (3) Innocent Negligent Fraudulent A false statement about what the promisor is going to do, and considered actual fraud False Promise Acting as an agent for more than one party in a  real estate transaction without the knowledge and consent of both parties--this will result in no commission! Undisclosed dual agency When an agent mixes a client's money with his own money, rather than depositing client's money into a trust account. Violates the Business and Professions Code, and is grounds for suspension or revocation of a license Commingling Stealing a client's money Conversion Illegal referral fees paid to real estate licensees by escrow, pest control, title, and home warranty companies Kickbacks When a broker wants to charge fees PRIOR to providing services, the advance fee contracts and ad materials must be submitted to the RE Commissioner for approval at least ______ before they are used 10 days Advance fees must be kept ____ until used In the broker's trust account When a broker receives an advance fee for publishing a special pamphlet advertising properties he has not listed for sale, he must give _______, upon demand, for any funds he has collected for the advertising Accounting to the seller An advance fee contract used in real estate transaction must include: (3) Description of services Total amount charged to client Date fee is to be paid An advance fee contract may NOT include ______ A guarantee that the transaction will be completed Any broker who negotiates a loan or the sale of real property involving a trust deed must have the trust deed recorded _________ BEFORE the funds are released from escrow If, in a trust deed sale, a lender gives written authorization for the release of funds before the trust deed is recorded, the broker must give the lender a written recommendation to record within ______ 10 days Any broker who services a loan by collecting payments must be authorized by __________ in ______ The lender Writing A broker may retain the payments he collects for a loan in his trust account for no more than _______ without written authorization for the lender 25 days One of a series of notes that is less than three years old and is secured by liens on parcels in a subdivision. Promotional Note After ______, a promotional note ceases to be promotional is no longer regulated as a real property security 3 years Property managers usually receive ______ plus _______ over the term of the lease Flat fee A percentage of the gross income The amount of a property manager's compensation is set by ________ between ______ and _____ Mutual agreement The owner The property manager The most essential document needed to establish the relationship between a property management company and the property owner Written Property Management Agreement ______ has the ultimate responsibility for periodic inspections and maintenance of rental property The owner When leasing industrial space, the owner and/or property manager is required to make sure the property complies with _________ All applicable building codes A national organization of individual property managers who have met exacting educational and experience requirements Institute of Real Estate Management (IREM) A member of the Institute of Real Estate Management is designated as a "_______" Certified Property Manager (CPM) 4 steps to converting a mobile home into real property 1) Obtain building permit 2) Attach mobile home to approved foundation 3) Record document reflecting that home has been affixed 4) Obtain certificate of occupancy A real estate license does not allow an agent to sell _____ Mobile homes, but he may handle the sale of _____ mobile homes, which happens when the mobile home has been ______ and ______ New  Used Sold to a buyer Registered with the Dept of Housing & Community Development A real estate licensee must withdraw any advertisement of a mobile home for sale/lease/exchange within ______ of his receipt of notice that the mobile home is no longer available 48 hours The document used to transfer and/or encumber a registered mobile home when it is NOT attached to a permanent foundation Certificate of Title (Certificate of Ownership) When a real estate broker sells a registered mobile home, the broker must give written notice of the transfer to the ______ no later than ______ after the sale Dept of Housing & Community Development 10 calendar days A real estate licensee may sell a mobile home once _______ It has been registered Personal property involving the sale or lease of both the inventory and good will of an existing business enterprise or opportunity Business Opportunity Business opportunities are classified as ______, and the document used to transfer title is _____ Personal property Bill of sale When purchasing a business, the buyer (transferee) should request a _______ from the _________ during escrow Certificate of Clearance State Board of Equalization A certificate of clearance in a business purchase is a __________, protecting the ______ from successor's liability for unpaid taxes Receipt proving the seller has remitted the sales tax Buyer The buyer of a franchise is buying the right to ________ Conduct business under the seller's (franchisor's) marketing plan Law designed primarily to protect prospective franchisees when considering the purchase of a franchise Franchise Investment Law Franchisors would normally raise money from _____ (3) Loans Stock sales Franchise fees Escrow must be used in the sale of a business that includes a ________ Liquor license The US Supreme Court case decided in _____ upheld anti-discrimination laws on the basis of the ______ Amendment to the Constitution 1968 Thirteenth The Thirteenth Amendment is the basis of _____ throughout the United State Fair Housing laws Law that prohibits discrimination in housing transactions Title VIII of the Civil Rights Act of 1968 Title VIII of the Civil Rights Act of 1968 is also known as _________ or ________ Federal Fair Housing Act Federal Open Housing Law Complaints of discrimination according to the Fed Fair Housing Act must be filed with the ________ within _____ of the discrimination Dept of Housing and Urban Development (HUD_ 1 year The Civil Rights Act of 1968 allows victims of housing discrimination to enforce their rights by bringing a civil action in _____, _____, or a complaint filed with ________ Federal court State/local court HUD The Federal Fair Housing Act is enforced by _______ when a conspiracy exists to resist the law The US Attorney General CA State law that prohibits discrimination in supplying housing accommodations based on race, color, religion, sex, marital status, national origin, ancestry, age, familial status, or disability Fair Employment and Housing Act Another name for the (California) Fair Employment and Housing Act is ________ Rumford Act "Housing Accommodations," as described in the Fair Housing and Employment Act, refer to property consisting of ________ dwelling units Not more than 4 State agency created under the Fair Housing and Employment Act, responsible for enforcing fair housing laws on the state level Dept of Fair Employment and Housing Victims of discrimination according to the Fair Housing & Employment  Act have _____ to file a complaint 1 year If the Fair Employment and Housing Act is violated: (4) 1) The owner must complete the sale/rental 2) The complainant is entitled to the next available unit 3) Owner may be held liable for civil damages 4) Owner may be liable for up to $1000 in punitive damages The Fair Employment and Housing Act does NOT apply to ______ Renting or leasing to a boarder in a single-family house California state law that makes discrimination in lending practices illegal Housing Financial Discrimination Act The Housing Financial Discrimination Act is also called ________ The Holden Act The Housing Financial Discrimination Act prohibits ________ and _______ Redlining Lending institutions from charging an extra annual fee on loans to non-English speaking borrowers Charging higher interest rates or not lending in certain neighborhoods based upon suspect characteristics, such as race, age, national origin Redlining A California state law prohibiting discrimination by businesses Unruh Civil Rights Act Showing minority buyers homes that are only in segregated areas, and thus violates fair housing laws Steering The race, color, sex, national origin, or religion, of a buyer or tenant is not ________ and should not be disclosed by an agent to his principal, even if asked A material fact It is a violation of fair housing law for a landlord to discriminate against ______ tenants, or even to make any written or oral inquiry concerning the _________ of a prospective tenant Single Marital status Quoting ______ to minorities cause both a seller and his agent to be ____________ Incorrect prices Liable for damages in a lawsuit Discrimination in housing transactions based upon race, religion, color, marital status, national origin or sex, or the buyer/seller/etc., is considered ________ under the fair housing laws (3) Unenforceable Contrary to public policy Illegal A racial deed restriction is _______ and _______, but the sale is _____. Racial deed restrictions may be removed by ________ Unconstitutional Unenforceable Valid Court order Occurs when agents attempt to persuade neighbors to sell by telling them that members of another ethnic group are moving into the neighborhood Panic Selling Other names for Panic Selling Panic Peddling Blockbusting Panic selling is a violation of ______________ Both state and federal law A buyer of a home is _________ of discrimination when the seller and real estate agent conspired to discriminate by refusing to sell to a minority buyer NOT guilty A real estate broker is subject to discipline by the RE Commissioner, in violation of fair housing laws, if he __________ (2) Practices panic selling or steering Hires salespersons from only one ethnic group An agent is not guilty of discrimination if she refuses to show a home to a minority buyer ONLY WHEN _____ The seller is away and has requested no showings period The law which requires equal access to public buildings for handicapped persons Americans with Disabilities Act (ADA) Program of the HUD that is intended to make affordable housing available to very low-income individuals/families, senior citizens, and persons with disabilities by providing rent subsidies to private landlords Section 8 Program A seller must provide a buyer with a _______, which discloses the condition of the property (after seller makes a reasonable inspection of the property). Includes both condition of improvements and condition of the land Transfer Disclosure Statement (TDS) A seller must give a TDS to the buyer of _____ residential units, even when selling the property "______," or when an owner sells his home as a "______" 4 or less As is For sale by owner A Transfer Disclosure Statement is NOT required for: (6) Husband-wife transfers Probate sales Foreclosure sales Bankruptcies REO's When one co-owner sells to another co-owner If a seller refuses to fill out the TDS truthfully at the time of the listing, the agent should _____ Not take the listing In addition to the seller filling out the TDS, the agents involved in a transaction must _______ Also do visual inspections of the property and add anything else they see _______ is responsible for delivering the TDS to the buyer, and it should be delivered ____ The broker who procured the offer As soon as practicable before transfer of title A buyer has _____ to sue a real estate licensee for failure to disclose known defects in the TDS 2 years If the TDS or amended TDS is delivered after the execution of an offer, the buyer has _____ after delivery in person, or _____ if by mail, to terminate the offer in writing 3 days 5 days A TDS must include _____ of which the seller is aware, including radon, lead-based paint, asbestos, etc. Environmental hazards If either the seller or seller's agent gives a buyer the "Environmental Hazards" pamphlet, neither the seller nor the agent has to ______ Say anything else about environmental hazards, assuming no awareness of such a problem A California court decision which led to the creation of the Transfer Disclosure Law Easton v. Strassburger Statement that must be given to a buyer who is entitled to the TSD. The seller must also make these disclosures when selling any property in flood zones, earthquake fault zones, etc. Natural Hazard Zone Disclosure Statement The Natural Hazard Zone Disclosure Statement must be made when selling any property in the following areas: (6) Special Flood Hazard Area Area of Potential Flooding Very high fire hazard severity zone Wildland area Earthquake fault zone Seismic hazard zone An area in which an earthquake may cause strong ground shaking, soil liquefaction, or landslides Seismic Hazard Zone Natural hazard area that contains substantial forest fire risks and hazards Wildland Area An area shown on a map that would be inundated if a dam failed Area of potential flooding In regards to the Natural Hazard Zones, there is no such thing as a "_______" Zone Severe Weather Hazard The Homeowner's Guide to Earthquake Safety must be given to the buyer of any real property improved with a residential dwelling built prior to ______, and consisting of ___ units, any of which are of ___________ construction January 1, 1960 1-4 Conventional, light-frame The Commercial Property Owner's Guide to Earthquake Safety must be given to the buyer of any masonry building with ____ frame floors or roofs built before ______. This guide is also given to ____ property buyers Wood January 1, 1975 Residential Guides that include maps and information on geologic and seismic hazard conditions for all areas of the state, explanations of the related structural and nonstructural hazards, and recommendations for mitigating the hazards of an earthquake Earthquake Safety Guides Exemptions for the obligation to deliver the Earthquake Safety Guides are very similar to the exemptions of the _______ TDS If a buyer receives a copy of the Homeowner's Guide to Earthquake Safety, neither the seller nor the broker are obligated to _______, the one exception being that they both must disclose that a property is ________ Provide additional info regarding geologic/seismic hazards In an earthquake fault zone The buyer of housing built prior to 1978 must be given a ________ prior to entering into a contract to purchase the home, otherwise the buyer has the right to _____, and the seller/agent who violates this may be subject to _____ penalties Lead-based Paint Disclosure Cancel the contract Civil and/or criminal Refers to housing built prior to 1978 that must be accompanied with a lead-based paint disclosure Target Housing Target housing does NOT include pre-1978 housing which is designated for ________, unless ______ reside there The elderly or handicapped Children