The Business of Real Estate

Question 1

A broker wanted to operate a real estate office under the fictitious name MLB Realty. Before operating under a fictitious name, the broker must…

Answer 1

obtain a DRE license bearing the fictitious business name.

Question 2

A salesperson tells his broker that he is quitting and plans to go to work for another broker. His present employing broker should…

Answer 2

give the salesperson his license and notify the Real Estate Commissioner immediately in writing.

Question 3

The Real Estate Law DOES NOT require licensing for the following three things:

Answer 3

• the resident manager of an apartment building or complex
• the manager of a hotel
• a real estate assistant who does not perform acts that require a real estate license

Question 4

Any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application, must be licensed as a…

Answer 4

Mortgage Loan Originator (MLO).

Question 5

The sale or lease of a business, including all or most of the assets or stock of the business is termed a…

Answer 5

business opportunity.

Question 6

In the sale of a business, bulk transfer laws pertain to…

Answer 6

inventory.

Question 7

What is required to operate as a Prepaid Rental Listing Service (PRLS) agent?

Answer 7

A written contract with prospective tenants.

Question 8

The following individuals are exempt from the real estate licensing requirements:

Answer 8

• a person selling his or her own property.
• an attorney-at-law rendering services in the performance of his or her duties as attorney.
• anyone holding a duly executed power of attorney from the owner of property.

Question 9

What type of background check does the Real Estate Commissioner and Appraisal Commissioner use?

Answer 9

Late child support

Question 10

In addition to the pre-license education requirements to become a real estate broker, an applicant must also

Answer 10

have been actively engaged as a real estate salesperson for at least two of the preceding five years, or equivalent.

Question 11

Before taking the licensing examination, the applicant must successfully complete

Answer 11

three college-level courses.

Question 12

The most heavily weighted subject matter on the salesperson and broker examination is

Answer 12

Practice of Real Estate and Mandated Disclosures.

Question 13

A licensee must take 45 hours of continuing education in order to renew the license. The 45 hours must include the following three things:

Answer 13

• Agency and Trust Fund Handling.
• Ethics and Fair Housing.
• Risk Management and Management & Supervision.

Question 14

The process through which disciplinary action is taken by the Department of Real Estate starts with an audit or an investigation of the licensee’s activities or alleged misconduct. What is the next step in the disciplinary process?

Answer 14

If warranted, an accusation is filed against the licensee.

Question 15

Commingling is one of the greatest single causes for loss of license. The following examples are considered commingling:

Answer 15

• Cashing a deposit check (made out to the broker) and placing the money in the broker’s safe, properly identified as being the deposit received from the buyer.
• Depositing either cash or a check received as a deposit in the broker’s personal account to be held until called for by the escrow officer.
• Depositing money received by his/her client in the broker’s personal account to pay miscellaneous expenses.

Question 16

An example that would NOT be considered commingling would be:

Answer 16

Holding an uncashed deposit check after acceptance of an offer when directed to do so by the seller.

Question 17

A licensee was farming a non-integrated neighborhood which was next to an integrated neighborhood by telling the owners that if minority people moved into their neighborhood, their property values would go down. This is an example of…

Answer 17

panic selling and blockbusting.

Question 18

All of the following are grounds for revocation or suspension of a real estate license:

Answer 18

• knowingly participating in the sale of a stolen mobile home.
• knowingly concealing a material fact in an application for registration of a mobile home.
• failing to deliver a properly endorsed certificate of title from the seller to the buyer.

Question 19

A licensee cannot lead an owner of real property, during listing negotiations, to believe that the licensee is precluded from charging less than the commission or fee quoted…

Answer 19

• Due to the law
• As a result of DRE regulations
• Because of the rules of an organization

Question 20

Agent Jones has an offer on a listing contingent on the buyer’s uncle approving the property since he will be financing the loan. Agent Jones hasn’t discussed this with the buyers, but assures the seller that there will be no problems regarding the uncle. After the seller accepts the offer, the buyers tell the agent that the uncle is out of town and they don’t know when he will return. By failing to explain the meaning and probable significance of the contingency in the offer, the agent has engaged in…

Answer 20

unlawful conduct.

Question 21

According to the Real Estate Commissioner’s suggestions for professional conduct, which of the following would be considered “desirable conduct?”

Answer 21

• Attempting to settle disputes with other licensees through mediation or arbitration.
• Submitting all written offers in a prompt and timely manner.
• Never claiming to be an expert in an area of specialization when in fact you are not.

Question 22

What is the maximum amount that could be recovered from the Recovery Fund for one salesperson?

Answer 22

$250,000

*The question is asking for the maximum amount that may be recovered, which is for any one licensee’s conduct. $50,000 for a single transaction, but $250,000 maximum for any one licensee.

Question 23

All of the following are true about professional trade organization:

Answer 23

• They help shape the law and the industry by establishing and enforcing standards of practice.
• They provide sources of information, training, and contact with other professionals.
• They provide an effective lobbying voice for their members.

Question 24

The following is NOT true about professional trade organizations:

Answer 24

They enforce the real estate law much like the real estate commissioner.

Question 25

The letters CMBA stand for

Answer 25

California Mortgage Bankers Association.

Question 26

California’s Real Estate Law is found in the:

Answer 26

Business and Professions Code.

Question 27

Every real estate broker must be licensed by the Department of:

Answer 27

Real Estate.

Question 28

A real estate broker’s license may be obtained by any of the following

Answer 28

-sole proprietorship.

-corporation.

-partnership.

Question 29

A real estate broker’s license may NOT be obtained by the following:

Answer 29

limited liability company.

Question 30

Under the Real Estate Law, a real estate salesperson works for a broker as an:

Answer 30

employee.

Question 31

A real estate salesperson is supervised by:

Answer 31

the employing broker only.

Question 32

The Real Estate Law allows a business opportunity to be sold:

Answer 32

by a real estate licensee.

Question 33

The following requires a real estate license:

Answer 33

• Negotiating a lease
• Presenting an offer
• Taking a listing

Question 34

Which does NOT require a real estate license?

Answer 34

Selling your own property

Question 35

The applicant for a real estate salesperson’s license must complete how many college-level courses before taking the licensing examination?

Answer 35

3 college-level courses.

Question 36

Real Estate licenses are renewable for a period of :

Answer 36

4 years.

Question 37

When a real estate license expires, licensed activity must cease but the license may be renewed up to:

Answer 37

2 years later.