Real Estate Chapter 2 Flashcards
What is the purpose of the DRE
The MAIN purpose of the California Department of Real Estate is to protect the public. The DRE achieves this purpose through the enactment and enforcement of laws relating to real estate and by establishing requirements for the real estate salespersons’ and brokers’ licenses.
The Real Estate Commissioner governs the entire California Department of Real Estate.
The California legislature, which gives the Commissioner his authority and power, used police power to create the position of Commissioner. Remember that police power is the right of the state to enact and enforce laws for the order, safety, health, morals, and general welfare of the public.
The California Real Estate Commissioner
is appointed by the Governor, and serves as the chief executive of the Department of Real Estate.
The Commissioner has been given both the power and the means to issue regulations.
The Regulations of the Real Estate Commissioner have the force and effect of law and, once issued, become a part of the California Administrative Code.
The Commissioner’s responsibility is
to enforce these laws in a manner in which maximum protection for real estate consumers is achieved.
The Commissioner’s mission,
is to enforce the Real Estate Law and the Subdivided Lands Law in a manner that offers the maximum protection for persons dealing with real estate licensees and for purchasers of subdivided real property.
The Commissioner’s specific duties include but are not limited to the following:
The qualification of applicants and issuance of real estate licenses;
The investigation of complaints and, where appropriate, pursuit of formal action against licensees;
The investigation of non-licensees alleged to be performing acts for which a license is required;
The regulation of the sale or lease of subdivision interests; and
Through real estate broker and other license requirements, the regulation of dealings in mineral, oil and gas property and Prepaid Rental Listing Services.
In order to be appointed as Commissioner,
the Commissioner candidate must have served for a minimum of 5 years as a real estate broker actively engaged in the real estate business in California OR must possess 5 years related experience associated with real estate activity in California during the last 10 years.
A person must be LICENSED if he or she, for compensation (or the promise of compensation) and for another person, undertakes or negotiates to undertake any of the following actions:
• Sells or offers to sell, buys or offers to buy, and solicits prospective sellers or purchasers of real estate.
• Solicits or obtains listings of real estate.
• Negotiates the purchase, sale, or exchange of real property or a business opportunity.
• Assists or offers to assist in filing an application for the purchase or lease of property owned by the state or federal government.
• Negotiates loans, collects payments, or performs services for borrowers or lenders or note owners.
• Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.
• Leases or rents; offers to lease or rent; places for rent; solicits listings of places for rent; solicits for prospective tenants; negotiates the sale, purchase or exchanges of leases on real property; or collects rents from real property.*
The following parties are EXEMPT from the licensing requirements in California. These parties DO NOT need to be licensed as real estate salespersons or brokers because of the nature of their work (in order to carry out their jobs as such):
• The employees of banks or other lending institutions;
• The lenders who make federally-insured or federally-guaranteed loans;
•Licensed personal property brokers;
Cemetery authorities;
• Certain agricultural associations;
• Certain collectors of payments for lenders or on notes for owners in connection with loans secured directly or collaterally by liens on real property;
• Some clerical help (depending on the extent of the duties handled by the clerical personnel);
• Resident managers of apartment buildings and complexes or their employees;
• Short-term (vacation) rental agents;
• Employees of certain lending institutions;
• Employees of real estate brokers for specific, limited functions;
following UNLICENSED parties may solicit for the sale of real property IF the party is:
• The property owner.
• A person holding the power of attorney FOR the owner.
• An attorney at law acting in the capacity of an attorney ON BEHALF OF the owner.
• A receiver or other court appointee. (We will address the topic of receivers in Chapter 12.)
• A trustee who is selling the property under a deed of trust.
This means that the only unlicensed person who may solicit for the sale of real property is the owner and/or his legal representatives, NOT including his real estate salesperson/broker, since obviously a salesperson or broker is already licensed.
Should someone in California act in the capacity of a real estate salesperson without being licensed under the California licensing laws
• that individual cannot receive any compensation for such acts.
• If an unlicensed person DOES act as a real estate salesperson or broker, he or she will be penalized under the law.
In addition to the unlicensed person being held accountable, if a broker has ALLOWED this person to operate under him and compensated this person for performing real estate activities that BY LAW require the person to possess a license, then that broker will ALSO be disciplined under the law.
The Commissioner may impose a fine against any real estate broker who is found in a disciplinary hearing to have compensated an unlicensed person for performing such activities without a license. In addition, if said broker has compensated the non-licensed for the activities for which he is not licensed, that broker is guilty of a misdemeanor and may also be fined by the courts, under Sections 10138, 10139, 10139.5 of the Code.
An original salesperson license is
required for an individual who is to be employed as a salesperson under the control and supervision of a licensed broker. The license permits licensed activity only while in the employ of a broker. Salespersons’ licenses must be available for inspection in the broker’s main office. The salesperson can be compensated for work as an agent only by the salesperson’s employing broker – not by any other broker, other salesperson, client, or other person, according to Sections 10132 and 10137 of the Code
Under the provisions of AB 2429, salesperson examination applicants will be required to submit evidence of completion of a three semester, or quarter Chapter equivalent, college-level course in Real Estate Principles, Real Estate Practice and one additional course which should be chosen from the following list of courses:
•Legal Aspects of Real Estate
•Real Estate Office Administration
•Real Estate Appraisal
•Computer Applications in Real Estate
•Real Estate Finance
•Real Estate Economics
•Property Management
•Business Law
•Escrows Accounting
•Mortgage Loan Brokering
•Lending Common Interest •Developments
A candidate for an original real estate salesperson license must:
- Be at least 18 years old to be issued a license (Surprisingly, there is no age restriction on taking the licensing exam.);
- To obtain a real estate salesperson license, you must first qualify for and pass a written examination. Those who pass the examination are provided a license application which must be submitted to and approved by the DRE.
- Provide a social security number or an individual taxpayer identification number.
- Honesty — Applicants must be honest and truthful. Conviction of a crime may result in the denial of a license. Failure to disclose any criminal violation or disciplinary action in an applicant’s entire history may also result in denial of a license.
