CA RE Broker key terms

A statutory form that the seller of most one-to-four unit residential properties must complete and give to the buyer, listing known defects, malfunctions, and conditions that affect the property's value or desirability.

A report, prepared from official hazard maps, telling a buyer whether a property sits in a mapped flood, fire, seismic fault, landslide, or other designated hazard zone, so the buyer can investigate further.

Any information that could reasonably influence a buyer's or seller's decision about price or terms, or the property's value; a licensee who knows such a fact must disclose it rather than conceal it.

A notice used in residential sales and leases stating that information about registered sex offenders is available from local law enforcement, and that the agent has no duty to investigate or verify that information.

A seller or agent must disclose a death that occurred on the property within three years before the transfer; a death from AIDS is not required to be disclosed and need not be revealed even if asked.

An extra tax levied by a community facilities district to repay bonds issued for local infrastructure; because it is not part of the regular property tax bill, buyers must receive a specific written notice about it.

The obligation of the listing and selling agents to conduct a reasonably competent visual inspection of areas that are normally accessible and to disclose defects they observe, without moving furniture or inspecting hidden areas.

The official who heads the Department of Real Estate, administers the licensing law, adopts regulations, investigates complaints, and imposes discipline such as suspension, revocation, or fines on licensees.

A disclosure document issued by the Real Estate Commissioner that a developer of five or more lots or units offered to the public must provide to buyers before they sign a purchase contract.

Federal and California statutes that bar discrimination in selling, renting, or financing housing because of race, color, religion, sex, national origin, familial status, disability, and additional characteristics protected under state law.

An illegal practice in which an agent persuades owners to sell quickly and cheaply by suggesting that members of a protected class are moving into the neighborhood and will lower property values.

An illegal practice of guiding prospective buyers or tenants toward, or away from, particular neighborhoods based on race or another protected characteristic rather than on their stated needs and qualifications.

A fund maintained by the Department of Real Estate from licensee payments that reimburses consumers who hold a final court judgment against a licensee for fraud or misrepresentation but cannot collect it from the licensee.

The loan amount divided by the property's value or purchase price, whichever is lower, expressed as a percentage; lenders use it to measure risk and set rates, insurance, and approval terms.

Insurance a lender usually requires on a conventional loan when the down payment is less than twenty percent; it protects the lender against default, not the borrower, and the borrower may request cancellation as equity grows.

The cost of credit stated as a yearly rate, including certain finance charges and fees, that lenders must disclose under federal truth-in-lending rules so borrowers can compare competing loan offers.

A federal rule that bars giving or receiving anything of value for referring settlement service business, such as title, escrow, or appraisal work; payments must be for services actually performed.

The constitutional limit on the interest a lender may charge. A loan made or arranged by a licensed real estate broker is generally exempt, but other disclosure and fair lending rules still apply.

A fee equal to one percent of the loan amount that a borrower pays the lender up front to obtain a lower interest rate, effectively prepaying interest to reduce monthly payments.

A rough valuation tool calculated by dividing a property's price or value by its gross annual rental income; a lower multiplier suggests a higher income return relative to price.

A property's net operating income divided by its price or value, shown as a percentage; investors use it to compare the income return of different properties and to estimate value.

The heightened obligations an agent owes a principal, commonly summarized as care, obedience, loyalty, disclosure, accounting, and confidentiality; they require putting the principal's interests ahead of the agent's own.

A situation in which one broker represents both the buyer and the seller in the same transaction; California requires the informed written consent of both parties, and the broker may not favor either side.

A listing giving one broker the right to a commission no matter who finds the buyer during the listing period, including the owner; it must have a definite termination date and be signed by the owner.

The rule that certain agreements, including a sale of real property, a lease longer than one year, and a contract that cannot be performed within a year, must be written and signed by the party to be charged.

A condition written into a contract that must be satisfied or waived, such as an inspection, appraisal, or loan approval, for the parties to remain obligated to complete the transaction.

A sum agreed in advance as a reasonable estimate of the loss from a breach; in a typical California residential purchase, the seller may keep the buyer's deposit, usually capped at three percent of the price.

The most common deed for transferring California real property; the grantor implies that the property has not already been conveyed to someone else and is free of encumbrances created by the grantor, except those disclosed.

A three-party security instrument in which the borrower gives bare legal title to a trustee who holds it for the lender until the debt is repaid, allowing foreclosure without going to court if the borrower defaults.

Filing a document such as a deed or deed of trust with the county recorder so the world is deemed to know of it; priority between competing interests generally follows the order of recording.

A right held by one person to use another's land for a limited purpose, such as a driveway, utility line, or access path; it is an encumbrance that usually runs with the land.

A separate bank account where a broker deposits money belonging to clients or others, such as buyer deposits and rents, never mixed with the broker's own operating funds.

Illegally mixing client money with the broker's personal or business money, or mishandling beneficiary funds in a trust account; it is one of the most serious violations a broker can commit.

Money a broker collects before services are completed, such as a retainer or up-front listing charge; the broker must have a signed written agreement and hold unearned funds in trust.

The designated broker's duty to oversee the activities of licensees working under the brokerage, review their documents, and keep a transaction file containing the records for each deal.

The rule that a broker must keep transaction documents and trust account records, such as listings, offers, closing statements, and account reconciliations, for three years after the transaction or record date.

A neutral third party who holds funds and documents and carries out the parties' written escrow instructions exactly, releasing money and title only when every condition in those instructions has been met.