CHAPTER 4 -- PRACTICE OF REAL ESTATE Flashcards
The California Real Estate Commissioner has the authority to:
(A) assess damages against real estate licensees who engage in fraudulent activities; (B) promulgate rules and regulations to promote the enforcement of the California real estate laws; (C) issue non-resident real estate licenses to states which prohibit their residents from holding California real estate licenses; (D) all of the above.
(B) promulgate rules and regulations to promote the enforcement of the California real estate laws
Where are most of the laws which regulate the real estate industry found?
In the Business and Professions Code
Mr. Nguyen does not have a real estate license. He runs an investment firm, advertising and selling properties for his clients. Since these transactions require a real estate license, who will prosecute him for this criminal violation of the real estate law?
(A) the local police; (B) the Real Estate Commissioner; (C) the State Attorney General; (D) the District Attorney of the county in which the activity occured.
(D) the District Attorney of the county in which the activity occured
The seller in a real estate transaction decided not to pay the commission to his real estate agent. Which of the following should the real estate agent do?
(A) file a vendor’s lien on the seller’s property; (B) file a complaint with the real estate commissioner; (C) file an action in civil court; (D) all of the above.
(C) file an action in civil court
What real estate acts require a license?
- Assisting buyers and sellers of real estate
- Answering detailed inquiries about real estate and financing
- Property management
Who does not need a real estate license?
- Principal (unless they handle 8 or more loans in a calendar year
- Attorney-in-fact
- Trustee (can conduct a trustee sale without a license)
- Unlicensed assistant (can’t solicit, choose the pest control inspector, or advise a borrower that they wouldn’t be approved for a loan)
- Resident property manager.
How many units in a residential property necessitates a resident property manager?
16 or more units
Who is authorized to manage real property for the general public?
(A) A Certified Property Manager; (B) a licensed real estate broker; (C) an affiliate member of the California Association of Realtors; (D) any responsible adult
(B) a licensed real estate broker
Someone who has been granted a “power of attorney” may NOT do the which of the following:
(A) deed a property to himself; (B) pay himself a commission; (C) deed the property to another; (D) sign the name of his principal to legal documents.
(A) deed a property to himself
When a real estate broker hires an unlicensed person for the purpose of creating advertising material, the broker must:
(A) allow the unlicensed person to create the advertising material as he/she sees fit; (B) read and approve all material before it is used; (C) approve the material in writing before it is used; (D) create the material him/herself and only use the unlicensed person to fine tune the material.
(B) read and approve all material before it is used
What are the three steps a real estate broker must take in order to operate an office using a fictitious business name?
- File a “Fictitious Business Name Statement” at the county recorder’s office.
- Publish the fictitious business name in the newspaper as required.
- Have a broker’s license issued by the Bureau of Real Estate after the name has been approved by the Commissioner
A licensed real estate salesperson is directly responsible to the:
(A) seller; (B) buyer; (C) employing broker; (D) none of the above.
(C) employing broker
How long must a real estate salesperson keep a copy of his employment contract with a broker after quitting the office?
(A) one year; (B) two years; (C) three years; (D) four years
(C) three years
The broker of a real estate office should know that Worker’s Compensation insurance is required for:
(A) only those employees paid more than minimum wage; (B) clerical personnel only; (C) employees over 21 years old only; (D) all employees of the broker.
(D) all employees of the broker
How quickly should a broker send the Real Estate Commissioner a change of address?
No later than the next business day following the change.
When must a broker return a license back to a salesperson after termination of employment?
Three business days
From what point must a broker keep all records from a transaction?
Three years from either the date of closing or, if the transaction is not consummated, from the date of the listing.
When a real estate broker fires a real estate salessperson for a violation of the real estate law, the broker must:
(A) notify the Real Estate Commissioner immediately by telephone; (B) notify the Real Estate Commissioner by certified written statement of facts within three days of the date of termination license; (C) do nothing, it is not the responsibility of the broker to inform the Real Estate Commissioner; (D) notify the Real Estate Commissioner forthwith by a certified written statement of facts.
(D) notify the Real Estate Commissioner forthwith by a certified written statement of facts.
A broker is required by law to keep a copy of a deposit receipt for a minimum of three years from:
(A) the date the deposit receipt was accepted by the seller; (B) the date of closing of the transaction; (C) the recording of the deed; (D) whichever date is earliest.
(B) the date of closing of the transaction
A real estate broker must keep records of all money received by him and/or anyone working for him in a book called:
(A) a profit and loss statement; (B) a closing record book; (C) a trust ledger; (D) a reconciliation book
(C) a trust ledger
Is a broker required to have a trust account?
No, not unless they are required to hold client’s funds for more than three days.
What is the limit of how much money a broker can have of their own money in a trust account?
$200
How long may a real estate licensee hold a deposit check from the buyer before it is placed in trust account, escrow, or returned to the buyer?
(A) one business day; (B) three business days; (C) before close of escrow; (D) a real estate licensee must immediately deposit the check in the broker’s trust account.
(B) three business days
An unlicensed employee of the broker who is authorized in writing by the broker may take withdrawals from the broker’s trust account provided the employee:
(A) maintains no personal funds in the trust account; (B) is covered by a fidelity bond for at least the amount of the funds to which the employee has access to at any given time; (C) has committed to get a real estate license within the next 6 months; (D) has been employed by the broker for at least 2 of the last 5 years.
(B) is covered by a fidelity bond for at least the amount of the funds to which the employee has access to at any given time
After a broker reconciles his client trust account, the broker’s client liabilities should match the trust account:
(A) overages; (B) shortages; (C) balance; (D) fidelity bond.
(C) balance
How long after passing the real estate exam do you have to apply for the license?
One year
The real estate law views the salesperson employed by a real estate broker as:
(A) an independent contractor; (B) a special agent; (C) a subagent; (D) an employee.
(D) an employee
The only person who can pay compensation to a real estate salesperson for real estate activities is:
(A) the seller; (B) the buyer; (C) his or her employing broker; (D) the escrow company only when escrow closes.
(C) his or her employing broker
When an applicant passes the real estate exam, how much time does he/she have to apply for the license?
(A) one year from the date of the exam; (B) one year from the date they received the results of the exam; (C) two years from the date of the exam; (D) two years from the date they received the results of the exam.
(A) one year from the date of the exam
What continuing education courses are required in order to renew your license?
A - Agency F - Fair Housing T - Trust fund handling E - Ethics R - Risk management
How often must you renew your license?
Every four years.
How many hours of continuing education courses are required?
45 hours (with a minimum of 18 of them must be in consumer protection courses)
After expiration, how long is the grace period within which you do not have to re-take the real estate license exam again?
There is a two year grace period.
Broker Wilson cheated clients in several real estate transactions and then disappeared. As a result of a lawsuit filed on one transaction, a client was awarded a $25,000 judgement against Broker Wilson. What is the maximum amount that client will be able to recover from the Real Estate Education, Research, and Recovery Account (REERRA)?
(A) $20,000; (B) $25,000; (C) $50,000; (D) $250,000
(B) $25,000
What will the Bureau of Real Estate do if someone is attempting to renew a real estate license and his name appears on a list of persons (obligors) who have not complied with a court order to provide child support payments?
(A) renew as a suspended license until paid; (B) renew as a temporary license, but the debt must be paid within 150 days; (C) renew for only one year, unless the licensee submits a letter from the D.A. that the debt has been paid; (D) the license cannot be renewed until the debt is paid.
(B) renew as a temporary license, but the debt must be paid within 150 days
When a real estate licensee is required to take 45 hours of continuing education courses to renew his/her license, included within the 45 hours of courses must be which of the following?
(A) Agency, Ethics, Trust Fund Handling, and Fair Housing; (B) Risk Management; (C) 18 hours of consumer protection; (D) all of the above.
(D) all of the above
What must include the disclosure of real estate license numbers?
- all solicitation materials
- real property purchase agreements
Must an ad placed in the newspaper by a real estate salesperson also include the name of the broker?
Yes, it must also include the name of the broker.
A broker advertises the sale of a “Mega-Buck Trust Deeds” in the newspaper. In the ad, the broker offers a specific yield arrived at by looking at the yield for the past year. This ad is:
(A) not subject to regulation under law; (B) legal only if the BRE has confirmed the yield; (C) legal if the ad also gives the actual interest rate specified in the note and the discount from the outstanding principal balance; (D) illegal according to the Truth-In-Lending law.
(C) legal if the ad also gives the actual interest rate specified in the note and the discount from the outstanding principal balance
Upon going to work for a real estate broker, Janet, a licensed real estate salesperson, advertised in the newspaper that anyone who bought a property through her would receive a free microwave oven valued at $300. Her offer is:
(A) legal, as long as full disclosure is made to all interested parties. (B) legal, provided that only a chance to win the microwave in a drawing is actually given to the buyer; (C) illegal under all circumstances; (D) illegal, since the value of such a gift cannot exceed $200.
(A) legal, as long as full disclosure is made to all interested parties.
A salesperson runs an ad in a newspaper. The ad must contain:
(A) the name and address of the salesperson; (B) the name and address of the broker; (C) the name of the broker and the name of the salesperson; (D) the name of the broker.
(D) the name of the broker
What must the Commissioner serve the licensee with if they believe a they have violated real estate law and decided to take action against them?
An accusation
Which of the following is a correct statement about puffing?
(A) puffing is always illegal; (B) puffing is unethical unless it is approved by the broker; (C) puffing is only an opinion of value of a specific property as of a given date; (D) puffing is considered misrepresentation if a reasonable person would consider it a statement of fact, rather than an opinion.
(D) puffing is considered misrepresentation if a reasonable person would consider it a statement of fact, rather than an opinion
The word “ethics,” when used in a discussion of real estate agents, most nearly means:
(A) trust and honesty; (B) the values that guide an agent’s relationship with customers, other agents, and the general public; (C) knowledge of the law; (D) held in highest esteem by other agents.
(B) the values that guide an agent’s relationship with customers, other agents, and the general public
When an agent withholds a new listing from other agents and/or the MLS in order to attempt to sell the listing herself, it is considered unethical and described as:
(A) commingling; (B) a pocket listing; (C) making a secret profit; (D) the fiduciary duty of the agent.
(B) a pocket listing
What are the most common types of misrepresentation?
- innocent
- negligent
- fraudulent
A real estate licensee misrepresented his relationship with a large real estate firm in order to impress a prospective buyer. The agent’s action would be considered:
(A) appropriate business practice; (B) legal, but unethical; (C) illegal; (D) legal only if a sale results from his relationship with the buyer.
(C) illegal
An agent promised his buyer a 7.5% loan, but at close of escrow pressured the buyer to accept an 8% loan. The buyer gave in to the agent’s pressure and accepted the 8% loan. The agent’s conduct was:
(A) legal; (B) illegal; (C) usual; (D) unusual.
(B) illegal
Which of the following is commingling and also violates the law regulating trust funds?
(A) a broker put the tenant’s security deposit in his client trust account for tenant, and the broker owns the apartment building being managed; (B) a broker put a buyer’s deposit in the broker’s general account; (C) a broker put the tenant’s security deposit in his client trust account and the broker’s client owns the apartment building being managed (D) a broker put the rent he collected in his client trust account and the broker’s client owns the apartment building being managed.
(B) a broker put a buyer’s deposit in the broker’s general account
How far in advance do Advance Fee Contracts need to be approved by the Real Estate Commissioner?
10 calendar days before they are used.
What three things must be included on an advance fee contract in a real estate transaction or when listing a business opportunity?
- A description of the services to be performed
- The total amount of the advance fee to be charged to the client
- The date the fee is to be paid
What can an Advance Fee Contract NOT include?
A guarantee that the sale, lease, or exchange will be completed.
If the 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 how many days?
Within 10 days
If a broker is servicing a loan for a lender, what is the maximum amount of time that they can retain the payments in their trust account?
25 days without written authorization from the lender.
Advance fee contracts must be submitted for approval to the real estate commissioner:
(A) at least five days before they are used; (B) at least ten days before they are used; (C) not less than five days after they are used; (D) not less than ten days after they are used.
(B) at least ten days before they are used