CA RE Broker cheat sheet

Transfer Disclosure Statement (TDS): required for residential 1-4 units; seller delivers before transfer; buyer may rescind within 3 days of personal delivery or 5 days of mailed delivery.

Natural Hazard Disclosure: required when the property lies in a statutory flood, fire, earthquake fault, or seismic hazard zone; buyer may terminate within 3 days if the report is delivered after the offer.

Agent visual inspection covers reasonably accessible areas only; observed material facts must be disclosed; it is not a contractor's inspection.

Civil Code 1710.2: a death on the property within 3 years before the buyer's offer must be disclosed; older deaths are not material facts.

Lead-based paint disclosure is required for housing built before 1978; the buyer receives a 10-day opportunity to test.

A Megan's Law notice must appear in residential purchase contracts for 1-4 units.

Mello-Roos community facilities districts and 1915 Act special assessment districts must be disclosed before the buyer signs.

No statute requires a seller or agent to verify square footage, but an inaccurate representation of size can support a misrepresentation claim.

A broker license expires 4 years from issuance; renewal requires 45 hours of continuing education, including mandated agency, ethics, fair housing, and risk-management/management courses.

A DRE public report is required before offering 5 or more lots in a subdivision; out-of-state subdivisions marketed in California also require a report.

Federal protected classes: race, color, religion, sex, national origin, familial status, and disability.

California additional protected classes: marital status, ancestry, source of income, sexual orientation, gender identity, genetic information, and military or veteran status.

The Unruh Civil Rights Act bars discrimination in all business establishments; the Holden Act bars redlining in residential lending.

The Sherman Antitrust Act bars price fixing, group boycotts, and market allocation among competing brokers.

RESPA Section 8 bars fees or things of value for referral of settlement services; affiliated business arrangements require disclosure.

TRID: Loan Estimate delivered within 3 business days of application; Closing Disclosure at least 3 business days before consummation.

Solicitation materials must show the licensee's name as licensed and the license identification number.

LTV = loan amount divided by the lesser of purchase price or appraised value.

Down payment = purchase price minus loan amount.

Monthly P&I = P x [i(1+i)^n] / [(1+i)^n - 1], where i is the monthly interest rate and n is the number of payments.

One point = 1% of the loan amount; discount points lower the interest rate, while origination points pay lender fees.

Front-end ratio = housing expense / gross monthly income; back-end ratio = total monthly debt / gross monthly income; conventional guidelines often use 28/36.

PMI is generally required above 80% LTV; the borrower may request cancellation at 80% and it terminates automatically at 78% under federal law.

NOI = gross income minus vacancy and operating expenses; debt service and income taxes are excluded.

Cap rate = NOI / value; value = NOI / cap rate; GRM = price / gross annual rent.

FHA allows 3.5% down with MIP; VA allows 0% down with a funding fee; conforming loans meet agency limits, jumbo loans exceed them.

Fiduciary duties: care, obedience, loyalty, disclosure, accounting, and confidentiality (COLDAC).

Agency arises by express agreement, implication, ratification, or estoppel (ostensible agency).

Dual agency requires informed written consent from both buyer and seller before the broker acts for both.

Listing types: exclusive right to sell (commission regardless of who procures the buyer), exclusive agency, and open listing.

A commission agreement must be in writing to be enforceable under the Statute of Frauds.

Confidentiality survives termination of the agency; loyalty and obedience end when the agency ends.

A licensee must disclose known material facts to all parties, including non-clients.

Compensation from more than one party requires disclosure and consent; undisclosed dual compensation is grounds for discipline.

Statute of Frauds: real property sale contracts, leases over 1 year, and commission agreements must be written and signed.

Contract elements: offer, acceptance, consideration, capacity, lawful object, and mutual assent.

A counteroffer terminates the original offer; acceptance must be communicated to the offeror.

Liquidated damages in a California residential purchase contract are capped at 3% of the purchase price.

Grant deed implied covenants: the grantor has not conveyed the property to another and it is free of undisclosed encumbrances.

Recording provides constructive notice; priority generally follows the order of recording.

Adverse possession in California: 5 years of open, notorious, hostile, continuous possession plus payment of taxes.

A deed requires delivery and acceptance; it must be written, signed by the grantor, and contain a sufficient property description.

Joint tenancy includes right of survivorship; tenancy in common does not, and community property with right of survivorship does.

Trust funds must be deposited into a trust account or neutral escrow within 3 business days of receipt.

No commingling: client funds cannot be combined with the broker's own funds; the account must be labeled trust or escrow.

Three-way reconciliation is performed monthly: bank balance, book balance, and individual ledger balances must agree.

Trust fund and transaction records must be kept 3 years and be available for DRE inspection.

The broker must provide reasonable supervision of salespersons, including written policies, transaction review, and advertising oversight.

Escrow is a neutral third party; escrow instructions are signed by the principals and good funds are required before closing.

Commission is payable at close of escrow unless a written agreement provides otherwise.

Licensed salespersons may be treated as independent contractors only with a written agreement; the broker remains responsible for their licensed activities.

Advance fees must be handled as trust funds under a written agreement and accounted for to the client.