Practice of Real Estate Flashcards
A salesperson is the subject of a written complaint to the California Department of Real Estate. It is
discovered that some Disclosure forms the client signed are not included in the office transaction file.
The salesperson:
A. Has violated the licensing laws
B. Has a reasonable time to produce the forms
C. Is subject to local Board of Realtors® sanctions
D. Has not violated anything if the consumers kept their copies
A. Has violated the licensing laws
- A licensed broker must retain the records of a real estate transaction at the main office for 3 years.
- This includes copies of all listings, purchase agreements, canceled checks, trust account records, correspondence, email, and other documents that are part of the transaction.
A licensee is found guilty of illegal discrimination in the rental of property the licensee owns personally and markets separately from the brokerage company.
The conviction:
A. Must be reported to the Department of Real Estate within 30 Days of conviction.
B. Has no impact on the licensee’s license since it did not involve the brokerage.
C. Must be reported to the licensee’s Broker who is required to report to the DRE within 15 days.
D. Fair Housing violations do not need to be reported to the DRE.
A. Must be reported to the Department of Real Estate within 30 Days of conviction.
- Under the Federal Fair Housing Act, there is no exempt status for a transaction involving an agent (whether they are selling their own property or someone else’s. Only non-agent FSBOs are exempt)
- California Statutory Law Section 10196.2 requires licensee to report within 30 days any felony or misdemeanor conviction to the DRE.
- Failure to notify is grounds for disciplinary action which could include license suspension or revocation.
A salesperson is found guilty of a license law violation. What is the maximum penalty that the Real Estate Commissioner can impose?
A. Suspension
B. Revocation and fine
C. Suspension, revocation, fine, and community service
D. Suspension, revocation, fine, and jail time
B. Revocation and fine
• The Commission could choose any or all of the following recourses against an agent:
– License suspension or revocation
– Public reprimand
– Additional continuing education as a condition of reinstatement
– A fine not to exceed $2,500 per violation
Which of the following actions would be a
violation?
A. Giving a housewarming gift to each client
B. Giving a door prize to a drawing winner at an open house
C. Conducting a game of chance or lottery with a home as a prize
D. Holding a drawing among the previous year’s
clients for a free Florida vacation
C. Conducting a game of chance or lottery with a home as a prize
- Giving a non-disclosed inducement is a violation
- Housewarming gifts, door prizes at an open house, and drawings among clients are all “thank you” presents, given after the fact or to everyone who attends
- It is always a violation for a salesperson to offer real estate or improvements to real estate as a prize in a game of chance of lottery
A salesperson receives a co-op offer on a listing. The salesperson contacts the out-of-town owner with the details and the owner decides to extend a counter offer. Before the first buyer acts on the counter, another offer is received from a different prospective purchaser. What is the salesperson’s responsibility regarding the second offer?
A. The second buyer must be told of the first offer
B. The first buyer must be told of the second offer
C. Both must be told of the other’s offer
D. Neither can be told of the other unless the seller specifically authorizes the salesperson to do so.
D. Neither can be told of the other unless the seller specifically authorizes the salesperson to do so.
Note the use of superlative words–must, always, never, greatest
- The listing salesperson’s duty is to his principal/seller. He cannot disclose anything (aside from material facts) to the buyers without the seller’s permission
- Furthermore, a seller might consider the fact that there is another offer, confidential information.
An agent has “for sale” signs on seven properties for which he does not have listings on.
The commissioner:
A. Can levy a $1,400 citation
B. Can levy a fine of $2,500 per sign
C. Cannot levy a citation since the property wasn’t really listed
D. Can only levy a citation after a hearing
B. Can levy a fine of $2,500 per sign
• The Real Estate Commissioner may levy a citation of up to $2,500 for each advertising violation
– Citations cannot total more than $2,500
– Citations must be paid in 30 days, unless a hearing has been requested within the 30 day period
– Failure to pay citations will result in an automatic license suspension
Which of the following concepts is covered on the Equal Opportunity in Housing poster displayed in a brokerage office?
A. Blockbusting
B. Voluntary affirmative marketing agreement (VAMA)
C. Agency disclosure requirements
D. Redlining
A. Blockbusting
• Blockbusting
– Inducing a homeowner to sell his/her home by suggesting the influx of minorities into the neighborhood (for example: panic selling)
• Steering – Directing a buyer to or from a neighborhood
• Redlining – Discrimination in lending or insurance
• VAMA – Board of Realtors® agreement.
– Not legally binding
A new licensee may legally begin selling real estate when:
A. The license is issued
B. He/she passes the DRE state final exam.
C. The license is registered with the Superior Court
D. He/she is approved by the local Board of Realtors®
A. The license is issued
- A new licensee may start practicing when the license is issued, not when he/she is told that he/she passed the test.
- Licensee must be employed by a Brokerage.
- Licenses are not registered – wrong answer!
What is puffing?
A. A misrepresentation that is legal
B. An exaggeration that is legal
C. An exaggeration that is an act of fraud
D. A misrepresentation that may constitute
fraud
B. An exaggeration that is legal
- Puffing
- Lawful exaggeration. “Great Mountain View”
- Misrepresentation
- Incorrect or unfaithful representation in the capacity of agent or official representative, as of a principal in a matter of business, or of constituents in legislation.
- Fraud
- intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right.
A sales licensee is sued over her actions in a real estate transaction and loses. The judgment is for $60,000. If the sales licensee is determined to have no assets, how much could the plaintiff collect from the recovery fund?
A. $60,000 by deficiency judgment
B. $50,000 per licensee
C. $2,500 per violation
D. $1,000,000
B. $50,000 per licensee
- Limit of the recovery fund is $50,000 per licensee per transaction.
- Maximum $250,000 over agent’s lifetime.
- Automatic license suspension
- Must repay fund with interest
Which of the following would be an exception to the requirement of licensing under California law?
A. A person that publishes rental listings
B. A regular employee of a custom homebuilder
C. A person who sells land in subdivisions
D. An apartment locator service
B. A regular employee of a custom homebuilder
• Who must have a license?
– Any person, partnership, corporation, who for a fee, sells, lists, leases, exchanges, or deals in the real property of others.
– Exceptions
• FSBO and regular employees of a property owner when dealing in the owner’s property
• Court appointed fiduciaries (for example: executors,
guardians)
• Certain government officials (for example: sheriff)
• Attorney-at-law, when practicing law
• Mobile home sales
Contracts, listing agreements, trust account records and other documents must be retained by a broker for what period of time?
A. As long as the business exists
B. Three years
C. Five years
D. Until audited by the California Department of Real Estate
B. Three years
• California Department of Real Estate Requires Records of all transactions must be kept on file for Three years
Unless renewed, a real estate sales licensee’s license expires:
A. December 31
B. One year from the date of issue
C. 4 years from the date of issue
D. On his/her first birthday following the initial date of issue and every third year thereafter
C. 4 years from the date of issue
• Each sales license expires every four years from the date of issuance.
A complaint is filed with the Division of Real Estate. How is the licensee notified of the formal hearing?
A. The licensee’s broker is called
B. By certified mail
C. By regular mail
D. By personal service (sheriff or bailiff)
B. By certified mail
- Licensee may be notified of the filing of a complaint by regular mail, but the notification of a formal hearing must be sent by certified mail so the Department of Real Estate knows the licensee has received the notice
- An informal meeting can be held if both the complainant and the licensee agree
- The Commissioner can order a formal hearing if an investigation shows grounds for possible suspension, revocation, or fine
A salesperson’s license must always be:
A. Carried in the small, card form
B. On file and available for inspection in the appropriate branch office
C. On file and available for inspection at the broker’s principal business location
D. On file with the Division of Securities
C. On file and available for inspection at the broker’s principal business location
- A salesperson is never to be in possession of his/her own license
- Upon passing the exam, the license is mailed to the broker, not the agent
- The broker’s license is displayed; the agent’s license is kept on file at the broker’s main office, not the branch office
