Practice of real estate and disclosures Flashcards
Requirements for licensing as a real estate salesperson include all, except:
a. ownership of property.
b. being eighteen years or older.
c. being honest and truthful.
d. getting fingerprinted.
a — Property ownership is not a requirement for obtaining a Department of Real Estate (DRE) license.
A real estate broker’s advertisements need to include:
a. the name of the broker and license number.
b. a statement that the advertiser is a broker or agent.
c. the address of the broker.
d. the number of years the broker has been licensed.
a — Without the disclosure of the broker’s name and license number, this type of advertisement is considered a prohibited “blind ad.”
An unlicensed assistant may:
a. show property to prospective buyers.
b. encourage a prospective client to use the broker’s services.
c. discuss the terms or conditions of a possible sale.
d. prepare a comparative market analysis (CMA) for a client
d — An unlicensed assistant may be employed to perform nondiscretionary administrative activities, such as write up documents including contracts and comparative market analyses (CMAs), as long as they are reviewed by the broker. However, most interactions with the public are not allowed.
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’s commission goes to the Real Estate Education Research and Recovery Fund.
b. The seller does not have to pay any commission.
c. The commission is split between the buyer and seller.
d. Roland gets his commission.
d — 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
Real estate licenses are issued for:
a. one year.
b. two years.
c. four years.
d. life.
c — A real estate license needs to be renewed every four years by completing 45 hours of continuing education
Robert, a developer who is unlicensed, hires Yvonne, a broker, to sell his properties. While Yvonne is out of town, Robert shows property, quotes prices and makes sales. Have Robert or Yvonne violated the Real Estate Law?
a. Yvonne has violated the Real Estate Law and can be fined $500.
b. Robert has violated the Real Estate Law and can be fined $500.
c. Both Robert and Yvonne have violated the Real Estate Law.
d. Neither Robert nor Yvonne has done anything wrong.
d — 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
Which of the following is true?
a. Every real estate broker needs to maintain a definite place of business in California.
b. An advertisement must include the licensee’s name and license number.
c. Both a. and b.
d. Neither a. nor b.
c — A licensee’s name and license number is required on all promotional materials, including business cards. Further, a broker needs to have a physical address on record with the Department of Real Estate (DRE) to receive mailings and be subject to state audits
A salesperson’s commission is paid by:
a. the seller.
b. the broker.
c. escrow.
d. the buyer
b — 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.
The prohibits an employer from discriminating against a person with a disability seeking employment based on their disability.
a. Civil Rights Act of 1964
b. Americans with Disabilities Act (ADA)
c. Civil Rights Acts of 1866 and 1870
d. Unruh Law
b — The Americans with Disabilities Act (ADA) protects against discriminatory conduct against a person seeking employment
Salesperson Sally advertised in a newspaper that anyone who bought a home through her services would receive a free home appliance valued up to $500. Such an advertisement is:
a. illegal under any conditions.
b. legal, provided the chance to win is disclosed.
c. legal, provided full disclosure is made to all interested parties.
d. illegal, since the value exceeds $300.
c — Disclosure is key to most such questions. Provided everyone is made aware of the promotion and its terms, this is a perfectly acceptable business practice.
A prohibition against a “For Sale” sign in a residential neighborhood:
a. is permitted, provided it applies to everyone in the neighborhood equally.
b. violates the Fifth Amendment.
c. violates the First Amendment.
d. violates the Fourteenth Amendment.
c — Prohibiting the display of “For Sale” signs is a violation of the First Amendment **freedom of speech right **and prohibits the free flow of truthful commercial information. A homeowners’ association (HOA) may impose reasonable rules about the posting of a For Sale sign, though cannot prohibit it.
A newspaper advertisement is considered “blind” when it:
a. doesn’t include the property address.
b. contains misleading information.
c. doesn’t state the sales price.
d. fails to state the fact the advertiser is a broker or agent and does not include their Department of Real Estate (DRE) license number.
d — The lack of licensee identification creates the blind ad
If a group of brokers agreed to divide a market area or set commission rates, it would:
a. be a cooperative business practice.
b. create an extra protection for consumers.
c. violate Real Estate Law.
d. violate Anti-Trust Law.
d — Any restraint of trade is a federal anti-trust violation.
Any suggestion by a licensee that the racial makeup of a neighborhood is changing to induce panic selling is an example of:
a. blockbusting.
b. steering.
c. redlining.
d. usury.
a — Blockbusting, also known as panic selling, is the prohibited practice of inducing a person to offer a dwelling for sale by creating fear over the changing demographics within the neighborhood.
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 — Creditors need protection from those who might attempt to walk away from their debt obligations
When purchasing a business, the buyer needs to be certain a certificate of clearance has been issued by the:
a. Secretary of State (SOS).
b. Department of Business and Transportation (DBT).
c. Alcoholic Beverage Control (ABC).
d. State Board of Equalization (SBOE).
d — The certificate of clearance, issued by the State Board of Equalization (SBOE), assures the buyer of a business opportunity that any taxes due have been paid.
The best guideline to determine whether an action is ethical can be found in:
a. state legislation.
b. the Business and Professions Code.
c. the Preamble of the National Association of REALTORS®.
d. what is in the best interest of the real estate licensee.
b — Real estate brokerage is a profession. Therefore, any question about proper business practice is controlled by the Business and Profession Code.
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. The source that provides all of this information is the:
a. county planning director.
b. county Board of Supervisors.
c. county engineer.
d. Real Estate Commissioner.
d — The Real Estate Commissioner issues a public report on all rural subdivisions containing this sought after information.
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 as a suspended license until paid.
b. be suspended until they have paid the delinquent amount.
c. renew as a temporary license, but the debt must be paid within 150 days.
d. be renewed for a one-year term only, unless the licensee submits proof from the District Attorney the debt has been paid.
c — On renewal of their license, failure to pay child support will cause a licensee to receive a temporary license allowing 150 days to resolve the arrears.
State regulations in California contain a statement that prohibits discrimination due to race, color, religion, marital status, national origin, or ancestry. Discrimination in which of the following areas would not be a direct violation of the Rumsford Act?
a. Unimproved land to be used for a home.
b. Vacant housing accommodations.
c. Four unit apartment building.
d. Unimproved land to be used for a commercial development.
d — The Rumsford Act applies to one-to-four unit residential properties as well as vacant land designated for residential use.
Commingling involves the mixing of one client’s monies with:
a. the brokerage firm’s general account.
b. other clients’ monies.
c. the sales licensee’s personal account.
d. Any of the above.
d — Commingling is the mixing of client’s monies with those of other clients or the agent. This is in contrast to conversion, which is the use of client funds by the agent or their office for their own use
In California, commission fees charged on residential properties cannot exceed:
a. 6% as set forth in the Real Estate Law.
b. an amount which is determined by the broker’s contract with their principal.
c. 8% of the total sales price of a residence.
d. any amount determined by local custom.
b — No government agency or private trade organization establishes fees. A broker’s fee is set between the broker and client.
A seller’s broker sold a property to a buyer. Four months later, when the first rains of the season began, the buyer discovered significant roof leaks. The buyer sued both the seller and the broker for the cost of repairs. The seller sued the broker in the same action since the seller had informed the broker numerous times that the building needed a new roof. The broker’s testimony in court revealed the broker was aware of the leaky roof but had not mentioned it to the buyer since the issue of the leaking roof was not mentioned by the buyer. What is the most likely result of the court action?
a. On the basis of the principle of caveat emptor, the buyer is not entitled to recover from either the broker or the seller.
b. The buyer may recover from the broker, but the seller would not be liable.
c. The buyer may recover from the seller, but the broker would not be liable.
d. The buyer may recover from both the seller and the broker. Further, the seller would recover in the suit against the broker.
d — The lack of disclosure between the broker and the buyer causes the broker to be the responsible party. Therefore, the buyer may recover from both the seller and the broker. Further, the seller may also recover from the broker since the broker was informed of the leaky roof by the seller and did not disclose it to the buyer. In actual practice, the seller would have disclosed the leaky roof in the Transfer Disclosure Statement (TDS).
A real estate broker takes listing on a residential property. The broker likes the property and chooses to buy it in the name of a separate investment company he owns. Which of the following statements is most correct?
a. The broker has failed to serve the client’s best interests and cannot collect a fee.
b. The broker may offer to purchase the property, but must first disclose to the seller that they are the buyer.
c. The broker may purchase the property, but may only accept half of his agreed-to fee.
d. The broker need not disclose his interest in the investment company, so long as he is not the sole owner of it.
b — Disclosure is the critical point in this question. There is nothing wrong with purchasing the property, provided the broker makes full disclosure to the client and receives their consent.
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 (HOA) bylaws.
d. the HOA’s financial statement.
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.
Under the Alquist-Priolo Special Studies Act, a subdivider is required to disclose to potential purchasers:
a. earthquake fault lines.
b. flood hazard zones.
c. environmental issues.
d. the existence of nearby military ordinances.
a — This is the earthquake disclosure law
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. Any of the above.
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.
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 seller in the transaction.
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.
A Natural Hazard Disclosure Statement (NHD) needs to be given to a buyer when a natural hazard exists. Which of the following does not trigger delivery of an NHD?
a. A property located in a very high fire hazard severity zone.
b. A property that contains lead-based paint.
c. A property located in an earthquake fault zone.
d. A property situated in a special flood hazard area.
b — A Natural Hazard Disclosure Statement (NHD) is required on all properties located in the areas specified in answer selections a, c and d. Lead-based paint is not a natural hazard and is provided on the sale of any residential property which was constructed pre-1978 using a Lead-Based Paint Disclosure.
