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