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CA RE Broker practice questions

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Question 1Practice of Real Estate and Disclosures

Under California's Transfer Disclosure Statement statute, a seller of a residential resale property must disclose:

  1. Only defects confirmed in writing by a licensed home inspector
  2. Only items the buyer asks about during the property showing
  3. Known material facts affecting the value or desirability of the property Correct answer.
  4. Only defects whose repair cost exceeds one percent of the price

Explanation

Civil Code section 1102 requires the seller of a residential resale property to disclose all known material facts affecting value or desirability, including defects the seller has not been asked about. The duty is triggered by actual knowledge, not by inspection reports or buyer questions.

Question 2Practice of Real Estate and Disclosures

When must the Disclosure Regarding Real Estate Agency Relationships be given to a prospective buyer or seller?

  1. Before the party signs an offer to purchase or a listing agreement Correct answer.
  2. At the close of escrow, as part of the final settlement statement
  3. Within three days after a purchase agreement has been signed
  4. Only if the party requests the disclosure in writing

Explanation

The agency disclosure must be provided as soon as practicable and before the buyer or seller enters into a contract for the services of the agent or signs an offer. Its purpose is to let the party choose an agency relationship with full information.

Question 3Practice of Real Estate and Disclosures

With respect to registered sex offender information, California law requires a broker to:

  1. Verify the criminal history of the seller before accepting the listing
  2. Check the Megan's Law database and print the results for the buyer
  3. Deliver the statutory notice that a sex offender database is available Correct answer.
  4. Give buyers a map of registered offenders living within one mile of the property

Explanation

Civil Code section 2079.10a requires the delivery of a statutory notice stating that information about registered sex offenders is available from local law enforcement and the state database. Neither the broker nor the seller has a duty to investigate or obtain that information.

Question 4Practice of Real Estate and Disclosures

Which item must a seller of a single-family residence certify is in place at the time of transfer?

  1. A home energy audit completed within the prior two years
  2. A roof certified by a licensed roofing contractor
  3. A whole-house water softener system
  4. Operable smoke detectors, plus a carbon monoxide device where required Correct answer.

Explanation

Health and Safety Code sections 13113.7 and 13260 require a seller to certify that operable smoke detectors are installed and that a carbon monoxide device is present where the law requires one, such as a home with a fossil-fuel appliance or attached garage.

Question 5Practice of Real Estate and Disclosures

A Mello-Roos Community Facilities District is best described as:

  1. A property tax abatement program available to senior homeowners
  2. A special district authorized to levy a parcel tax to finance public improvements and services Correct answer.
  3. A state income tax surcharge imposed on newly constructed homes
  4. A reserve account that an association maintains for routine maintenance

Explanation

Mello-Roos districts are formed under the Community Facilities District Act to finance infrastructure and specified services through a special parcel tax on the properties benefited. The tax appears as a separate line on the property tax bill and must be disclosed to buyers.

Question 6Practice of Real Estate and Disclosures

Which fiduciary duty prevents a broker from acquiring an interest in the principal's property or gaining an advantage over the principal?

  1. Loyalty Correct answer.
  2. Confidentiality
  3. Accounting
  4. Reasonable care

Explanation

The duty of loyalty requires the agent to act solely in the principal's best interest and bars self-dealing, secret profits, and the purchase of the principal's property without full disclosure and consent. The other duties address competence, safekeeping of funds, and protection of information.

Question 7Practice of Real Estate and Disclosures

For housing constructed before 1978, federal law requires the seller or agent to:

  1. Hire a certified risk assessor to clear the property before closing
  2. Give the buyer a 30-day right to rescind after any lead disclosure
  3. Disclose known lead-based paint hazards and deliver the EPA pamphlet Correct answer.
  4. Remove all lead-based paint before the transfer of title

Explanation

The federal Residential Lead-Based Paint Hazard Reduction Act requires disclosure of known lead hazards, delivery of the EPA pamphlet, and a ten-day opportunity for the buyer to test, unless the parties agree otherwise in writing. Abatement is never mandated by the disclosure rule.

Question 8Practice of Real Estate and Disclosures

The Natural Hazard Disclosure Statement informs the buyer whether the property lies in a:

  1. Census tract targeted for redevelopment by the city
  2. School district experiencing declining enrollment
  3. Special flood hazard area or a seismic hazard zone Correct answer.
  4. Neighborhood covered by a pending rent control ordinance

Explanation

Civil Code section 1103 requires disclosure of statutorily mapped hazards, including special flood hazard areas, potential flood areas, seismic hazard zones, earthquake fault zones, high fire hazard severity zones, and wildland areas. The statement addresses physical hazards, not social or economic conditions.

Question 9Practice of Real Estate and Disclosures

A buyer asks the listing agent whether a death occurred in the home within the last three years. Under Civil Code section 1710.2, the agent should:

  1. Answer only if the death was ruled a homicide by the coroner
  2. Decline to answer because an occurrence of death is never a disclosable fact
  3. Answer truthfully, because a death within the past three years must be disclosed when asked Correct answer.
  4. Refer the question to the seller's attorney and give no response

Explanation

Section 1710.2 creates no duty to volunteer the occurrence of a death, but if the buyer asks about a death occurring within three years, the seller and agent must answer truthfully. Deaths occurring more than three years earlier need not be disclosed at all.

Question 10Practice of Real Estate and Disclosures

Under Civil Code section 2079, a broker retained by the buyer owes the buyer the duty to:

  1. Guarantee that the property is free of construction defects
  2. Order a full engineering and soils report at the broker's own expense
  3. Warrant that the seller's written disclosures are complete and accurate
  4. Conduct a reasonably competent visual inspection of accessible areas and disclose material facts Correct answer.

Explanation

Section 2079 requires a broker to exercise reasonable care and diligence and to conduct a reasonably competent and diligent visual inspection of accessible areas, then disclose facts materially affecting value or desirability. The duty is one of care and disclosure, not a guarantee.

Question 11Practice of Real Estate and Disclosures

A broker acts as a dual agent with the written consent of both parties. During negotiations the broker must:

  1. Keep each party's confidential pricing information from the other party Correct answer.
  2. Withdraw from the transaction as soon as the parties' interests diverge
  3. Tell each party the other side's confidential reserve price
  4. Recommend that only one of the two parties obtain independent advice

Explanation

A dual agent may not disclose one party's confidential information, such as a willingness to accept a lower or pay a higher price, to the other party. The agent must treat both principals fairly and may not use confidential information to benefit one at the expense of the other.

Question 12Practice of Real Estate and Disclosures

A broker receives a buyer's cash deposit that is to be held until closing. The broker must:

  1. Deposit it in the broker's general business account for safekeeping
  2. Give the funds to the seller as soon as the offer is accepted
  3. Hold it in the broker's personal account until contingencies are removed
  4. Place the funds in a trust account or neutral escrow within three business days Correct answer.

Explanation

Trust funds must be handled as the contract directs and, absent contrary instructions, deposited into a trust account or neutral escrow no later than three business days after receipt. Commingling with the broker's own funds is prohibited.

Question 13Practice of Real Estate and Disclosures

Under the Commissioner's regulations, how long must a broker retain records of trust fund transactions and related documents?

  1. Seven years
  2. Five years
  3. One year
  4. Three years Correct answer.

Explanation

Commissioner's Regulation 2831 requires brokers to keep records of trust fund transactions, including transaction files, for three years from the date of the transaction. The records must be available for inspection by the Department of Real Estate.

Question 14Practice of Real Estate and Disclosures

Which practice best satisfies a broker's duty to supervise affiliated salespersons?

  1. Delegating all supervision to the office's most productive salesperson
  2. Requiring salespersons to sign independent contractor agreements each year
  3. Maintaining written policies and reviewing advertisements and transaction documents Correct answer.
  4. Reviewing transaction files only after the close of escrow

Explanation

A broker must exercise reasonable supervision over affiliated licensees, which the regulations implement through written office policies, review of advertising, and review of documents that create or close transactions. Supervision may not be delegated to an unlicensed or non-supervisory person.

Question 15Practice of Real Estate and Disclosures

In the sale of a home located in a common interest development, the seller must deliver to the buyer:

  1. A verbal summary of the association's house rules at the showing
  2. The governing documents, budget, and assessment and reserve disclosures Correct answer.
  3. A certified copy of every board meeting minute since construction
  4. Only the amount of the current monthly assessment

Explanation

Civil Code sections 4525 and 4530 require the seller to provide specified association documents, including CC&Rs, bylaws, the operating budget, assessment and reserve funding disclosures, and the statement of unpaid assessments. These documents give the buyer a complete picture of the financial and operational obligations.

Question 16Practice of Real Estate and Disclosures

When a listing advertises a home's square footage, the broker should:

  1. Describe the home as approximately sized and avoid stating any figure
  2. Use the county assessor's figure without further inquiry or explanation
  3. Round the number up to the nearest hundred for simplicity
  4. Identify the source of the measurement and be able to support it Correct answer.

Explanation

A broker who publishes a size figure should be able to substantiate it and should identify the source, such as an appraiser, an architect, or a licensed measurement professional. Misrepresenting size can create liability for misrepresentation even when the figure came from a third party.

Question 17Practice of Real Estate and Disclosures

Which fact known to the seller most clearly requires disclosure as a material fact?

  1. The seller paid below market value when the home was purchased
  2. Recurring water intrusion into the lower level during heavy rains Correct answer.
  3. The seller's plan to move to another state after the closing
  4. The seller's opinion that the neighbors are unfriendly

Explanation

Recurring water intrusion is a physical condition that materially affects value and desirability and must be disclosed on the Transfer Disclosure Statement and in the agent's own disclosures. Nuisance opinions, the seller's future plans, and the seller's purchase price are not material property conditions.

Question 18Practice of Real Estate and Disclosures

A buyer's broker will be compensated by the seller under the offer of compensation published in the multiple listing service. The broker must:

  1. Reduce the agreed fee whenever the buyer objects to the arrangement
  2. Disclose to the buyer the fact and amount of that compensation Correct answer.
  3. Refuse the compensation because only the buyer may pay a buyer's broker
  4. Keep the compensation arrangement confidential from the buyer

Explanation

A broker owes the buyer full disclosure of how and how much the broker will be paid, including compensation offered by the seller or listing broker. The buyer must understand the source of the compensation before agreeing to the representation.

Question 19Practice of Real Estate and Disclosures

A seller tells the listing agent that a bonus room was built without permits. The agent should:

  1. Disclose the unpermitted work to buyers and advise the seller to consult an attorney Correct answer.
  2. Keep the information confidential because the seller disclosed it in confidence
  3. Wait for the buyer's inspector to discover the problem after acceptance
  4. Advertise the room as part of the gross living area of the home

Explanation

Unpermitted construction is a material fact affecting value and desirability, and the agent has an independent duty to disclose it to prospective buyers. Because permit status can affect legal use and financing, the seller should also be advised to seek legal advice.

Question 20Practice of Real Estate and Disclosures

In a common interest development sale, how long does the association generally have to provide requested governing documents after receiving the seller's written request and payment of allowable costs?

  1. Ten days Correct answer.
  2. Twenty days
  3. Three days
  4. Five days

Explanation

Civil Code section 4530 requires the association to provide the requested documents within ten days of receiving the written request and any permitted fee. The deadline protects the buyer's review period and the seller's closing schedule.

Question 21Practice of Real Estate and Disclosures

Which transfer is exempt from the Transfer Disclosure Statement requirement?

  1. A sale of a single-family home listed in a multiple listing service
  2. A sale by an owner-occupant who has lived in the home for ten years
  3. A sale of a duplex by a licensed real estate broker
  4. A trustee's sale conducted following a foreclosure Correct answer.

Explanation

Civil Code section 1102.2 exempts certain transfers, including foreclosure trustee's deeds, transfers by operation of law, transfers between co-owners, and transfers to or from a government entity. Length of ownership, property type, or the use of an MLS does not create an exemption.

Question 22Practice of Real Estate and Disclosures

If the seller delivers the Transfer Disclosure Statement by mail after the buyer has already signed the offer, the buyer's right to rescind lasts:

  1. Ten days after delivery
  2. Five days after delivery Correct answer.
  3. Three days after delivery
  4. Until the close of escrow

Explanation

Civil Code section 1102.3 gives the buyer a right to rescind within three days after personal delivery of a late disclosure, extended to five days when the disclosure is delivered by mail. The rescission right must be exercised in writing before the period expires.

Question 23Practice of Real Estate and Disclosures

A broker delivers a Natural Hazard Disclosure Statement prepared by a qualified third-party provider. If the report contains an error of which the broker was unaware, the broker is:

  1. Strictly liable for the error regardless of knowledge
  2. Generally not liable for the error Correct answer.
  3. Required to refund the commission to the buyer
  4. Liable only if the buyer relied on the statement in writing

Explanation

Civil Code section 1103.4 relieves the seller and the agent from liability for errors or omissions in the natural hazard disclosure when the information was provided by a qualified third party and the seller or agent was not personally aware of the inaccuracy. Actual knowledge of the error would remove that protection.

Question 24Practice of Real Estate and Disclosures

A listing agent is showing the seller's property to a buyer who has signed no agreement with any broker. The listing agent owes that buyer:

  1. A duty of loyalty and confidentiality regarding the seller's position
  2. The same fiduciary duties that are owed to the seller
  3. Honesty and fair dealing, including disclosure of known material facts Correct answer.
  4. No duties of any kind until a written agreement is signed

Explanation

An agent dealing with a buyer who is not the agent's client still owes honesty and fair dealing and must disclose known material facts about the property. Fiduciary duties such as loyalty and confidentiality run only to the agent's own principal.

Question 25Practice of Real Estate and Disclosures

A seller lists a property 'as is' and refuses to make any repairs. The seller's disclosure obligation is:

  1. Unchanged; known material facts must still be disclosed Correct answer.
  2. Limited to defects the buyer discovers before removing contingencies
  3. Eliminated, because the buyer accepts the property in its present condition
  4. Transferred to the buyer's inspector once the inspection contingency is removed

Explanation

An 'as is' sale addresses the seller's obligation to repair, not the obligation to disclose. The seller must still complete the Transfer Disclosure Statement and disclose known material facts, and an attempt to contract around that duty is generally unenforceable.

Question 26Practice of Real Estate and Disclosures

A broker lists a four-unit residential building for sale. Under Civil Code section 2079.10a, the required notice regarding the sex offender registry tells the buyer that:

  1. The broker must check the registry before showing the property to any prospective buyer.
  2. The notice is required only when the transaction involves a lease rather than a sale.
  3. The seller warrants the property is at least one mile from any registered offender's residence.
  4. The buyer should check the registry; neither the seller nor the broker has verified registry information. Correct answer.

Explanation

Civil Code section 2079.10a requires this notice in contracts for the sale and in leases of residential property with up to four units. It directs the recipient to the Attorney General's online registry and states that neither the seller nor the broker has verified registry information, so the buyer must do independent research.

Question 27Practice of Real Estate and Disclosures

Which term must appear in every written listing agreement for the sale of residential property?

  1. An automatic thirty-day renewal clause
  2. A definite termination date Correct answer.
  3. A liquidated damages clause
  4. A provision that the seller carry back a note

Explanation

Business and Professions Code section 10176(g) requires a listing agreement to contain a definite termination date, and an open-ended listing is grounds for disciplinary action. Renewal clauses, liquidated damages, and seller financing are optional business terms, not mandatory ones.

Question 28Practice of Real Estate and Disclosures

An unlicensed assistant working under a broker's supervision may perform which of the following tasks?

  1. Explain the terms of the purchase agreement to a buyer.
  2. Negotiate counteroffers on the broker's behalf.
  3. Show a listed property to prospective buyers.
  4. Deliver documents to the parties after the terms are agreed. Correct answer.

Explanation

An unlicensed assistant may perform clerical work and deliver documents once the parties have agreed on terms, as long as no discussion of terms occurs. Activities that require a license, such as showing property, explaining contract terms, quoting prices, or negotiating, may not be delegated to an unlicensed person.

Question 29Practice of Real Estate and Disclosures

The Transfer Disclosure Statement asks the seller to state whether the water heater is:

  1. Double-strapped, single-strapped, or not strapped Correct answer.
  2. Located within ten feet of a gas meter
  3. Insulated with a fire-rated blanket
  4. Covered by a manufacturer's warranty

Explanation

Health and Safety Code section 19211 requires water heaters to be braced, anchored, or strapped to resist earthquake movement, and the Transfer Disclosure Statement asks the seller to declare the strapping status. Warranty coverage, distance to the meter, and insulation are not the disclosure item.

Question 30Practice of Real Estate and Disclosures

Along with the Transfer Disclosure Statement, the seller of a covered single-family home must deliver to the buyer:

  1. A Phase I environmental site assessment
  2. A soil contamination clearance report
  3. "Environmental Hazards: A Guide for Homeowners" Correct answer.
  4. The association's reserve study

Explanation

California law requires the booklet "Environmental Hazards: A Guide for Homeowners" to be delivered with the Transfer Disclosure Statement in covered residential sales. It explains common hazards such as lead, asbestos, radon, and formaldehyde; the other documents are not statutorily required in a routine home sale.

Question 31Practice of Real Estate and Disclosures

A listing agent completes the agent's section of the Transfer Disclosure Statement. The agent's statements must be based on:

  1. A home inspection report paid for by the buyer
  2. The county assessor's records and prior listings
  3. A visual inspection of the property and the agent's own knowledge Correct answer.
  4. The seller's answers, copied without comment

Explanation

Civil Code section 2079 requires the agent to conduct a reasonably competent and diligent visual inspection of accessible areas and to disclose facts materially affecting value. The agent's section therefore reflects the agent's own observations, not a restatement of the seller's answers or a reliance on public records.

Question 32Practice of Real Estate and Disclosures

A broker closes a sale and wants to thank a friend who teaches a homebuyer education class for sending the buyer to the broker. The friend holds no real estate license. The broker may:

  1. Pay a percentage of the commission.
  2. Not pay the friend compensation for the referral. Correct answer.
  3. Pay a flat referral fee of $500.
  4. Pay the fee if the friend signs a written referral agreement.

Explanation

Business and Professions Code section 10137 prohibits paying compensation for brokerage activity to an unlicensed person. A referral fee tied to a transaction is compensation for a licensed activity, and a written agreement cannot make an unlicensed referral arrangement lawful.

Question 33Practice of Real Estate and Disclosures

Under California law, the disclosure of the agency relationship and its duties must be provided to the party:

  1. Within three business days after the offer is accepted
  2. At the close of escrow, as part of the settlement statement
  3. Before the party signs a listing agreement or an offer to purchase Correct answer.
  4. Only when the party requests it in writing

Explanation

Civil Code section 2079.14 requires the agency disclosure to be given as soon as practicable and before the party executes a listing agreement, a buyer's offer, or a lease. Delivering it after acceptance, at closing, or only on request is too late to satisfy the statute.

Question 34Practice of Real Estate and Disclosures

A listing broker receives two written offers on the same day. The seller has not yet accepted either one. The broker must:

  1. Present both offers to the seller promptly and let the seller decide. Correct answer.
  2. Present only the offer the broker judges to be strongest.
  3. Hold the lower offer until the first offer is resolved.
  4. Return the second offer to the buyer unopened.

Explanation

A listing broker owes the seller the fiduciary duty to submit all offers promptly until the seller accepts one, even offers the broker considers weak. Withholding or delaying an offer without the seller's direction breaches the duties of obedience and disclosure.

Question 35Practice of Real Estate and Disclosures

A buyer's broker learns during negotiations that the buyer would pay $40,000 more than the offer price. After closing, the broker mentions this to the listing agent at a social event. The broker has:

  1. Breached a duty only if the buyer can show financial harm
  2. Breached the duty of confidentiality, which continues after the agency ends Correct answer.
  3. Acted properly because the fact was not material to the property
  4. Acted properly because the transaction had already closed

Explanation

The fiduciary duty of confidentiality survives termination of the agency, so a broker may not later reveal the principal's negotiating position or financial limits. The breach occurs when the confidence is disclosed, whether or not the principal can prove monetary loss.

Question 36Practice of Real Estate and Disclosures

While showing a home, a buyer's broker notices that the electrical panel contains fuses rather than circuit breakers and points it out. The buyer asks whether the system is safe. The broker should:

  1. Tell the buyer that the seller must replace the panel before closing.
  2. Advise the buyer to hire a licensed electrician to evaluate the panel. Correct answer.
  3. Assure the buyer that fuse panels are safe if they work.
  4. Say nothing further because the broker already mentioned it.

Explanation

The broker must disclose observed conditions that may affect value and recommend that the client consult an appropriate licensed expert on matters outside the broker's expertise, such as electrical adequacy. Offering a personal safety opinion without expertise creates avoidable liability.

Question 37Practice of Real Estate and Disclosures

At a listing appointment, a broker notices a freshly painted section of hallway ceiling directly below a bathroom. The seller says it was "just cosmetic." The broker should:

  1. Tell buyers at the open house that the ceiling was repainted.
  2. Wait until a buyer's inspector discovers the issue.
  3. Accept the seller's explanation and note nothing in the listing file.
  4. Advise the seller to disclose the painting and any past leak on the TDS. Correct answer.

Explanation

The freshly painted area is a red flag the broker observed during the visual inspection, and the broker should recommend that the seller disclose any known moisture or leak history on the Transfer Disclosure Statement so the buyer can investigate. Accepting the seller's characterization or staying silent does not satisfy the broker's disclosure duty.

Question 38Practice of Real Estate and Disclosures

The seller tells the listing broker that the foundation has cracked and instructs the broker not to mention it because the buyer's inspector will probably miss it. The broker should:

  1. Say nothing but add a general disclaimer to the MLS remarks.
  2. Report the seller to the DRE and continue marketing the property quietly.
  3. Follow the instruction because the broker's fiduciary duty to the seller controls.
  4. Disclose the defect to the buyer or withdraw from the listing if the seller refuses. Correct answer.

Explanation

A broker may not participate in concealing a known material defect; the duty to disclose material facts to the buyer is not excused by the seller's instruction. If the seller insists on concealment, the broker should terminate the agency rather than market the property with the defect hidden.

Question 39Practice of Real Estate and Disclosures

A broker holds a buyer's $20,000 deposit in trust. The sale falls apart, and both the buyer and the seller demand the money. The broker should:

  1. Return the funds to the buyer because the buyer deposited them.
  2. Apply the funds to the broker's unpaid commission.
  3. Deliver the funds to the seller because the buyer defaulted.
  4. Keep the funds in trust and, if the parties cannot agree, file an interpleader. Correct answer.

Explanation

Funds whose ownership is disputed must stay in the trust account because the broker is not entitled to decide who owns them. The broker may disburse on written instructions signed by both parties or file an interpleader and let the court determine entitlement.

Question 40Practice of Real Estate and Disclosures

An owner retains a broker to lease a single-family house built in 1995. Which disclosure obligation applies to this transaction?

  1. A Natural Hazard Disclosure Statement must be delivered.
  2. A Transfer Disclosure Statement must be completed and delivered.
  3. The environmental hazards guide must be attached to the lease.
  4. The Megan's Law registry notice must be given to the tenant. Correct answer.

Explanation

The Transfer Disclosure Statement, the Natural Hazard Disclosure Statement, and the environmental hazards booklet are triggered by sales and other covered transfers, not by ordinary leases. Civil Code section 2079.10a requires the sex offender registry notice in residential leases as well as in sales.

Question 41Real Estate Law and Regulations

An applicant is applying for a California real estate broker license. Which experience requirement can the applicant satisfy?

  1. One year of full-time work as an unlicensed assistant to a broker
  2. Six months of full-time licensed real estate experience at any time before applying
  3. Two years of full-time licensed real estate experience within the eight years before applying Correct answer.
  4. A bachelor's degree in any field, with no licensed real estate experience

Explanation

Business and Professions Code Section 10151 requires at least two years of full-time licensed experience, or its equivalent, within the eight years immediately preceding the application. Specified college-level courses are also required, but education alone cannot substitute for the experience requirement.

Question 42Real Estate Law and Regulations

A California real estate broker is renewing a four-year license. How much continuing education must the broker complete?

  1. Twenty hours during each two-year period
  2. Eight hours at each renewal
  3. Forty-five hours during each four-year license period Correct answer.
  4. Fifteen hours for each year of the license period

Explanation

California licensees must complete 45 clock hours of continuing education during each four-year license period, including mandated hours in subjects such as ethics, fair housing, and risk management. The requirement applies to both brokers and salespersons.

Question 43Real Estate Law and Regulations

A seller tells her broker to list the home at $500,000 and to keep as commission anything the broker obtains above that amount. This arrangement is:

  1. unlawful, because California prohibits net listings Correct answer.
  2. lawful only for properties valued above $1 million
  3. lawful if both parties sign a written agreement stating the terms
  4. lawful only if the broker is the seller's exclusive agent

Explanation

A net listing gives the broker any amount received above a specified price and is prohibited in California. The prohibition rests on the conflict of interest created when the broker's compensation depends on a price the broker may influence and on the seller's not knowing the broker's true fee.

Question 44Real Estate Law and Regulations

In a sale of a single-family home, when must the seller deliver the Real Estate Transfer Disclosure Statement to the buyer?

  1. No later than seven days after the close of escrow
  2. As soon as practicable before the transfer of title Correct answer.
  3. Only if the property is located in a common interest development
  4. Only when the buyer submits a written request for it

Explanation

Civil Code Section 1102 et seq. requires the seller of most residential one-to-four unit properties to deliver the Transfer Disclosure Statement as soon as practicable before transfer of title. If it is delivered late, the buyer's remedy is a statutory right to terminate, not an exemption from disclosure.

Question 45Real Estate Law and Regulations

Under California law, when must the 'Disclosure Regarding Real Estate Agency Relationships' be given to the party the agent will represent?

  1. Before the buyer signs an offer or the seller signs a listing agreement Correct answer.
  2. At the closing, together with the settlement statement
  3. Only when the broker is acting as a dual agent
  4. Within three days after the offer has been accepted

Explanation

Civil Code Section 2079.16 requires the agency relationship disclosure to be provided to the buyer or seller before that party enters into a contract for the broker's services or an offer to purchase. The purpose is to let the party know whom the agent represents before any commitment is made.

Question 46Real Estate Law and Regulations

A broker receives a buyer's good-faith deposit under a purchase agreement. How may the broker handle the funds?

  1. Place them in a trust account or with a neutral escrow depository Correct answer.
  2. Use them for office marketing expenses as long as a ledger is kept
  3. Hold them in the broker's personal savings account until closing
  4. Deposit them in the broker's general operating account and repay them at closing

Explanation

Funds held for others must be placed in a trust account with a bank or other recognized depository or with a neutral escrow. Deposit of trust funds in the broker's own operating or personal account constitutes unlawful commingling.

Question 47Real Estate Law and Regulations

A tenant died peacefully in a home that the owner now wants to sell. The death occurred four years ago. What must the seller disclose to a prospective buyer?

  1. The seller must disclose the death unless ten years have passed
  2. The seller must disclose the death only if the buyer asks about it
  3. The seller must disclose any death that has ever occurred on the property
  4. The seller need not disclose the death, because it occurred more than three years ago Correct answer.

Explanation

Civil Code Section 1710.2 provides that a death on the property occurring more than three years before the buyer's offer need not be disclosed, with a limited exception for deaths related to HIV or AIDS. Within the three-year window, the seller must disclose the death if the buyer asks.

Question 48Real Estate Law and Regulations

Under California's Fair Employment and Housing Act, which of the following actions by a landlord is unlawful discrimination?

  1. Refusing to rent to an applicant because the applicant smokes cigarettes
  2. Refusing to rent to a family because it includes two young children Correct answer.
  3. Requiring a larger security deposit from an applicant with a poor credit history
  4. Setting a maximum occupancy limit based on the unit's size and applicable law

Explanation

Familial status is a protected characteristic under the Fair Employment and Housing Act, so a landlord may not refuse to rent to a household because it includes children. Smoking, credit history, and lawful occupancy standards are not protected characteristics.

Question 49Real Estate Law and Regulations

A broker obtains signed consent from both the buyer and the seller to act as a dual agent. Which statement best describes the broker's obligations?

  1. The broker may act for both parties without consent as long as the arrangement is noted in the multiple listing service
  2. The broker may represent both parties but must reduce the agreed commission by half
  3. The broker's duty of loyalty shifts entirely to whichever party the broker decides to favor in negotiations
  4. The broker must obtain informed written consent from both parties and may not pass one party's confidential information to the other Correct answer.

Explanation

Dual agency requires the informed written consent of both principals, and even with consent the broker may not disclose one party's confidential information to the other. The broker owes limited duties to both sides and must remain neutral rather than advocating for one against the other.

Question 50Real Estate Law and Regulations

An agent representing a buyer learns that the buyer would pay up to $50,000 above the asking price. The agent should:

  1. Keep that information confidential and not disclose it to the seller or the listing agent Correct answer.
  2. Disclose it to the seller as a material fact affecting the transaction
  3. Reveal it only if the buyer forgets to object
  4. Tell the listing agent so that negotiations can move quickly

Explanation

An agent owes the principal a statutory fiduciary duty of confidentiality, and the buyer's willingness to pay more is confidential information. Disclosure would harm the buyer's negotiating position and may occur only with the buyer's informed consent.