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Brokers Exam > Chapter 6: Practice of Real Estate and Disclosures > Flashcards

Chapter 6: Practice of Real Estate and Disclosures Flashcards

1
Q

Monies collected on behalf of a client need to be deposited no later than how many business days after receipt?

A

Monies collected on behalf of a client need to be deposited no later than three business days after receipt.

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2
Q

What is the maximum the broker may maintain in an account to offset bank fees?

A

A broker may maintain a maximum of $200 in the account to offset bank fees.

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3
Q

Any employee may be authorized by the broker to withdraw monies from the trust fund. If the authorized person is not licensed, what do they need?

A

If the authorized person is not licensed, they need to have a fidelity bond for an amount equal to what they can access.

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4
Q

What does the Fair Employment and Housing Act (Rumsford Act) do?

A

Rumsford Act prohibits discrimination in supplying housing accommodations and is overseen by the Department of Fair Employment and Housing.

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5
Q

What does the Housing and Financing Discrimination Act (Holden Act) do?

A

Holden Act protects against discrimination in lending practices.

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6
Q

What does the Unruh Civil Rights Act do?

A

Unruh Civil Rights Act prohibits discrimination in businesses.

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7
Q

What is redlining?

A

Redlining occurs when lenders or insurance companies refuse to do business within a certain geographic area.

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8
Q

What is blockbusting also known as?

A

Blockbusting is also known as panic selling. It is an attempt to influence sales or rentals of real estate by exploiting the prejudices of property owners in a neighborhood.

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9
Q

Where must discriminatory complaints be filed and within what time period?

A

Complaints must be filed with the Department of Housing and Urban Development (HUD) within one year of the discriminatory act.

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10
Q

What is puffing?

A

Puffing refers to the exaggeration of a property feature that becomes misleading when a reasonable person perceives it as an absolute fact.

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11
Q

The Business Professions Code requires records to be kept for how many years?

A

A minimum of three years.

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12
Q

Electronic records are permitted so long as they are:

A

Non-erasable, “write-once, read many” (WORD) format.

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13
Q

Prior to July 2018, the Department of Real Estate (DRE) was known as what and was contained within what department?

A

Prior to July 2018, the Department of Real Estate (DRE) was known as the California Bureau of Real Estate (CalBRE) and was contained within the Department of Consumer Affairs.

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14
Q

What are the Real Estate Commissioner’s main responsibilities?

A

The Real Estate Commissioner’s principal responsibility is to enforce all real estate laws pertaining to real estate licensing and the Subdivided Lands Law.

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15
Q

Real estate regulations enforced by the DRE are part of the California Code of Regulations known as what?

A

Title 10.

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16
Q

What are disciplinary actions the DRE can take?

A

The DRE may fine, suspend, or revoke a license. Legal actions such as fraud are dealt with by the Justice Department.

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17
Q

Does the DRE hear commission disputes?

A

No, the DRE does not hear commission disputes, which are settled by civil lawsuits.

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18
Q

What is the minimum age to be eligible for a broker or sales license?

A

18 years old.

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19
Q

The 45-hours of DRE-approved continuing education that real estate agents and brokers need to complete consist of:

A
  1. Five mandatory 3-hour courses (15-hours) in the following subjects
    A - Agency
    F - Fair housing
    T - Trust funds
    E - Ethics
    R - Risk Management
  2. A minimum of 18-hours of consumer protection courses
  3. Remaining hours in consumer protection of consumer service
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20
Q

What dollar amounts is the Real Estate Recovery Fund limited, per transaction and per licensee?

A

The Real Estate Recovery Fund is limited to $50,000 for one transaction and $250,000 for any one licensee.

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21
Q

If Real Estate Recovery Fund satisfies a judgment against a licensee, the licensee’s licenses will be suspended and not reinstated until when?

A

A licensee’s license will be suspended and not reinstated until the licensee repays any amounts paid from the Real Estate Recovery Fund to satisfy a judgment against them, plus interest.

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22
Q

What is a net listing?

A

A net listing is a type of listing in which the agent’s fee is set as all sums received exceeding a net price established by the owner.

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23
Q

Does the DRE govern the sale or purchase of a business opportunity?

A

Yes.

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24
Q

To receive a fee for the sale of a business opportunity, it is necessary to hold a real estate license, unless the person receiving the fee is licensed as a:

A

Securities broker or deal by California or the United States.

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25
Q

The documents used in the sale of a business include a:

A
  1. Bill of sale
  2. Uniform Commercial Code Financing (UCC-1) for the personal property
  3. A deed for the transfer of real property
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26
Q

The transfer of more than one-half the business’s inventory of materials or goods to a person other than a customer of the business is called a:

A

Bulk sale

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27
Q

What is a certificate of clearance and who issues it?

A

In the sale of retail business, the buyer’s request for a certificate of clearance from the State Board of Equalization (SBOE) assures the sales tax has been paid up to the close of escrow.

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28
Q

When is escrow required in the sale of a business opportunity?

A

An escrow is required if the business opportunity includes a liquor license.

29
Q

A mobilehome, also known as a manufactured home, is a structure:

A
  1. At lease 8 feet in width, 40 feet in length, or more than 320 square feet when transported in one or more sections.
  2. Built on a permanent chassis.
  3. Designed to be used as a dwelling with or without a permanent foundation.
30
Q

Is a mobilehome considered real estate or personal property?

A

If a mobilehome is attached to a permanent foundation, it loses its personal property status and becomes real property since it is now a permanent fixture or an improvement to the real estate.

31
Q

What government agency registers mobilehomes?

A

The government agency responsible for the registration of mobilehomes is the California of Housing and Community Development (HCD), unless the mobilehome is considered real estate.

32
Q

A buyer has how much time to bring an action against a licensee for failure to disclose a known material fact on the Transfer Disclosure Statement (TDS)?

A

A buyer has 2 years to bring an action against a licensee for failure to disclose a known material fact on the Transfer Disclosure Statement (TDS).

33
Q

If the TDS is belatedly delivered to the buyer, how many days does the buyer have to terminate the offer in writing?

A

If the TDS is belatedly delivered to the buyer, the buyer has 3 days after personal delivery or 5 days after mailed delivery to terminate the offer in writing.

34
Q

Would the Transfer Disclosure Statement or the Natural Hazard Disclosure Statement disclose environmental hazards and physical deficiencies in the soil or property improvements?

A

The Transfer Disclosure Statement would disclose environmental hazards and physical deficiencies in the soil or property improvements.

35
Q

Is the death of a prior occupant required to be disclosed to the buyer?

A

If death occurred on the property within the last three years, disclosure is required.

36
Q

What needs to be included in all broker advertising?

A

The broker’s name and license number needs to be included in all advertising, otherwise considered a prohibited “blind ad.”

37
Q

Roland, a broker, arranges a sale and opens escrow. Before escrow closes, his license is revoked by the Department of Real Estate (DRE). What happens to Roland’s commission?

A

Roland gets his commission. The broker’s commission is earned when a ready, willing, and able buyer is found. Thus, since the broker was licensed at the time he procured a buyer as contracted for, he is able to collect his fee.

38
Q

Robert, a developer who is unlicensed, hires Yvonne, a broker, to sell his properties. While Yvonee is out of town, Robert shows property, quotes prices and makes sales. Have Robert or Yvonne violated the Real Estate Law?

A

Neither Robert nor Yvonne has done anything wrong. Robert is the owner of the property being sold. Thus, the sale is considered a for sale by owner (FSBO) transaction which does not require a license, as the private seller is acting for their own account, not as an agent of another.

39
Q

Who pays the salesperson’s commission?

A

A salesperson is “an agent of the agent” and always works for the broker who represents the principal. Thus, the commission is paid to the broker who then distributes the monies according to the terms of the salesperson/broker agreement.

40
Q

If a group of brokers agreed to divide a market area or set commission rates, it would violate what law?

A

Any restraint on trade is a federal anti-trust violation.

41
Q 
The Uniform Commercial Code, which pertains to a bulk sale transfer, exists primarily for the protection of?
A. Creditors
B. Buyers
C. Sellers
D. Customers
A

A. Creditors need protection from those who might attempt to walk away from their debt obligations.

42
Q

When purchasing a business, the buyer needs to be certain a certificate of clearance has been issued by the:

A

SBOE - State Board of Equalization

43
Q

A prospective buyer is interested in purchasing a vacant lot in a rural subdivision. The buyer wishes to know about sewer assessments, liens, utilities to the lot, blanket encumbrances and street maintenance. Who provides all of this information?

A

The Real Estate Commissioner issues a public report on all rural subdivisions containing this sought after information.

44
Q

If a licensee’s name is on a list of obligors who have not complied with a court-ordered payment of child support, the licensee’s renewal application will?

A

Renew on a temporary license, but the debt must be paid within 150 days.

45
Q

A buyer of a common interest development (CID) is entitled to receive all except copies of:
A. A homeowner warranty
B. The governing conditions, covenants, and restrictions (CC&Rs)
C. The homeowners’ association (HOW) bylaws
D. The HOA’s financial statement

A

A. A buyer of a condominium or property in a planned urban development (PUD) has the right to receive copies of all the association and subdivision information and documents. A homeowner warranty is an insurance policy that is purchased separately by the buyer.

46
Q

What is Alquist-Priolo Special Studies Act?

A

Earthquake law disclosure

47
Q

Under no circumstances may a real estate broker misrepresent a material fact to a buyer. If they do, the broker faces:
A. Disciplinary action by the Department of Real Estate (DRE)
B. Criminal action
C. Civil action
D. All of the above

A

D. A material fact is one that affects the value and desirability of a property. As such, the failure to disclose is a significant breach of the broker’s fiduciary duty to their client. If the failure to disclose rises to the level of fraud or deceit, the broker may be subject to civil or criminal penalties depending on the nature of the misconduct.

48
Q

It is least likely to be a violation of the Real Estate Law for a broker to pay a portion of the commission to a(n):
A. Unlicensed assistant
B. A salesperson working for another broker
C. Unlicensed person who obtained the listing
D. Buyer or sell in the transaction

A

D. Paying a portion of their commission to a buyer or seller in a transaction is allowable provided full disclosure is made to all parties. Each of the other answer selections is against the law.

49
Q

Earthquake fault zones needs to be disclosed to prospective buyers of certain properties in California. Typically, earthquake fault zones are how wide?

A

Earthquake fault zone are a quarter of a mile wide.

50
Q

Which state agency is empowered to prevent acts of discrimination in housing accommodations in California due to race, color, sex, national origin, and ancestry?

A

The Department of Fair Employment and Housing is the state agency empowered to enforce Fair Housing Laws.

51
Q 
A broker chooses to employ their salespeople as independent contractors rather than employees. By doing so, the broker will save out of pocket expenses relating to:
A. Automobile insurance
B. Errors and omissions insurance
C. Social security
D. Advertising
A

C. A broker needs to pay into social security for an employee, but not for an independent contractor.

52
Q 
The purpose of a(n) \_\_\_\_\_\_\_\_, like an easement and a lease, is to grant the right to use property owned by another person.
A. Encumbrance
B. Personal privilege
C. Unlawful detainer (UD)
D. License
A

D. A license is a revocable right to use something, such as land. A license is appropriate is appropriate where the use of land is open and notorious in order to avoid an adverse possession claim.

53
Q

After an applicant passes the real estate licensing exam, they need to apply for a license within: needs to apply for a license within

A

An applicant needs to apply for a license within year of passing an examination.

54
Q

Who initiates an unlawful detainer?

A

An unlawful detainer (UD) action is the court procedure to force a tenant to vacate the rental space they do not have the right to possess. A lessor (landlord) is the aggrieved person who initiates this process against an individual who holds no right to occupy a property, such as a holdover tenant.

55
Q

Most real estate records need to be kept for a period of three years, commencing from what date(s)?

A

Record keeping commences from when the listing was signed or when the sale was complete (i.e. the close of escrow).

56
Q

What is a red flag?

A

A red flag is something that alerts an agent of a previously unknown potential physical problem with a property (i.e.a floor that is not level).

57
Q

When is a Transfer Disclosure Statement (TDS) form required?

A

The TDS form is required for one-to-four unit residential properties. It is completed by a seller regarding known facts. Not required in the instance of a foreclosure or for commercial properties.

58
Q

if a seller refuses to fill out their section of the Transfer Disclosure Statement (TDS), the seller’s agent is advised to:

A

Complete the listing agent’s portion of the TDS and deliver it to the buyer without the seller completing their section of the form. However, best practice would be for the seller’s agent to explain to the seller their obligation to accurately complete their portion of the TDS.

59
Q

The total positive balances due to all beneficiaries of a broker’s trust need to at all times equal the account’s:

A

Balance

60
Q

What is an interpleader action?

A

A court proceeding initiated by the holder of money or other property, often an escrow company, who claims no proprietary interest in it, for the purpose of deciding who among claimants is legally entitle to the property. Simply put, it is a legal process asking the court to resolve disputes between principals.

61
Q

Freddie, an unlicensed employee of a real estate broker, hands out door hangers and makes telephone solicitations seeking buyers and sellers. Under the real estate law, who are these activities unlawful for?

A

These activities are unlawful for both Freddie and his employing broker, as an employing broker is liable for any wrongful act conducted by their employee.

62
Q

When a real estate license expires, how long is the agent’s grace period in which they may reinstate their license?

A

Two years.

63
Q

A seller’s broker earns their commission when:

A

A seller’s broker earns their commission when the buyer who is ready, willing, and able has been found. The commission is generally received at the close of escrow.

64
Q

How is a right of first refusal different from a lease with an option to purchase?

A

Options and contracts obligate the seller and stipulate an agreed to price. A right of first refusal is a preemptive right to later buy a property at an undetermined price given to a tenant that does not compel the owner to sell.

65
Q

Sexual discrimination in housing is outlawed in sales and rentals under what act?

A

Gender is among the protected groups described in the Civil Rights Act of 1968.

66
Q

Title VIII, also known as the Federal Fair Housing Act, refers to:

A

Civil Rights Act of 1968

67
Q

A resident manager in an apartment building is required to have a contractor’s license for any repairs exceeding how much?

A

A resident manager who performs, orders, or oversees maintenance or repair projects costing $500 or more are subject to contractor licensing requirements issued by the California Department of Consumer Affairs Contractors State Licensing Board (CSLB).

68
Q

What is caveat emptor?

A

A Latin expression meaning “Let the buyer beware.”

69
Q

What is rent skimming?

A

When a speculator purchases a single family residence and collects and keeps rent without making payments on the underlying loan.

Brokers Exam (9 decks)

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