CA RE Broker flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Transfer Disclosure Statement

California seller's disclosure for residential one-to-four units listing known material defects; the buyer may rescind within three days of personal delivery or five days of mailed delivery before closing.

Natural Hazard Disclosure

Requires sellers of property in statutory flood, fire, earthquake fault, or seismic hazard zones to disclose; the buyer may terminate within three days if the report is delivered after the offer.

Death on property disclosure

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

Agent visual inspection duty

A licensee must perform a reasonably competent visual inspection of accessible areas and disclose observed material facts; this is not a contractor's inspection of inaccessible areas.

Megan's Law notice

Residential purchase contracts for one-to-four units must include a notice that registered sex offender information is available from local law enforcement or the state database.

Mello-Roos disclosure

Sellers must disclose when the property lies within a community facilities district subject to special taxes; the notice is delivered to the buyer before signing.

Broker license renewal cycle

California broker licenses expire four years after issuance; renewal requires forty-five hours of continuing education, including mandated agency, ethics, fair housing, and risk-management courses.

DRE public report

Required before offering five or more subdivided lots for sale in California; it discloses title, encumbrances, and completion status to protect prospective buyers.

Unruh Civil Rights Act

California law barring discrimination by business establishments, including real estate brokers, based on sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation.

Fair housing protected classes

Federal Fair Housing Act protects race, color, religion, sex, national origin, familial status, and disability; California adds marital status, ancestry, source of income, sexual orientation, gender identity, and military status.

RESPA Section 8

Federal law barring giving or receiving anything of value for referrals of settlement service business on federally related mortgages; violations carry fines and imprisonment.

Loan-to-value ratio

Loan-to-value equals the loan amount divided by the lesser of the purchase price or appraised value; it determines down payment and mortgage insurance needs.

Discount point cost

One discount point equals one percent of the loan amount; paying points upfront reduces the interest rate over the life of the loan.

Qualifying ratios

Lenders compare housing expense to gross monthly income (front-end, typically 28 percent) and total debt to gross income (back-end, typically 36 to 43 percent).

Cap rate formula

Capitalization rate equals net operating income divided by property value; investors use it to estimate value and compare income properties.

NOI calculation

Net operating income equals gross rental income minus vacancy and operating expenses, excluding mortgage debt service and income taxes.

PMI cancellation rule

Under the Homeowners Protection Act, a borrower may request cancellation of private mortgage insurance at 80 percent loan-to-value and it terminates automatically at 78 percent.

Fiduciary duties mnemonic

A broker owes care, obedience, loyalty, disclosure, accounting, and confidentiality, often remembered as COLDAC, to the principal in an agency relationship.

Dual agency consent

A broker representing both buyer and seller must obtain informed written consent from both parties before acting as a dual agent in the transaction.

Exclusive right to sell

The broker earns a commission regardless of who procures the buyer during the listing term; this is the most common residential listing agreement.

Ostensible agency

An agency relationship created when a principal's conduct leads a third party to reasonably believe that the agent has authority, even without an express agreement.

Agency disclosure requirement

California requires licensees to disclose whether they represent the buyer, the seller, or both before the parties enter a contract for residential property.

Statute of Frauds

Requires real property sale contracts, leases longer than one year, and commission agreements to be written and signed by the party to be charged.

Liquidated damages cap

In California residential purchase contracts, liquidated damages for buyer default may not exceed three percent of the purchase price.

Grant deed implied warranties

A grant deed implies the grantor has not previously conveyed the property to another and that the property is free of undisclosed encumbrances.

Joint tenancy survivorship

Joint tenants hold equal undivided interests with right of survivorship; when one tenant dies, the interest passes automatically to the survivors without probate.

Trustee's sale timeline

After recording a notice of default, the trustee must wait three months; the sale may be held no earlier than 20 days after the notice of sale is published.

Trust fund deposit deadline

A broker must place funds received on behalf of others into a trust account or neutral escrow within three business days of receipt.

Commingling prohibition

Brokers may not mix client trust funds with their own operating funds; the trust account must be separate and clearly labeled as trust or escrow.

Trust account reconciliation

Brokers must reconcile trust account records monthly, matching the bank balance, book balance, and individual client ledgers, known as a three-way reconciliation.

Records retention

Broker trust fund and transaction records must be retained for three years and made available for inspection by the Department of Real Estate.

Broker supervision duty

A broker must exercise reasonable supervision over affiliated salespersons, including written company policies, document review, and oversight of advertising.