Introduction
Early real estate transactions were very simple. People transferred property
ownership by exchanging symbolic lumps of dirt for something of value. As life
became more complicated, however, there was a need for a more sophisticated
way to transfer real property.
At the same time, the need emerged for some kind of regulation of the practice
and the practitioners. Unethical people were taking advantage of the average
citizen’s lack of knowledge about real estate and the law.
Today, the California Department of Real Estate (DRE) protects consumers
and regulates real estate agents. Real estate agents are now licensed and
accountable for their actions.
As a licensee, you are regulated by the DRE. The following discussion of the
DRE and its related activities serves as the foundation for your career as a real
estate agent.
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California Real Estate Principles
Learning Objectives
After reading this unit, you should be able to:
• name the license requirements for real estate salespeople and brokers.
• list license renewal requirements for real estate sales associates and
brokers.
• explain the importance of government regulations in brokerage
transactions.
• discuss the operations of the Department of Real Estate (DRE).
• describe two license requirements.
• identify common violations and DRE enforcement policies.
• evaluate the importance of real estate continuing education.
The Real Estate Law
California has long been a leader in real estate trends. As a matter of fact,
the nation’s first real estate licensing law was passed in California in 1917. In
an attempt to create and maintain higher professional standards, and develop
greater trust from the public in general, the real estate industry has supported
legislation that protects consumer interests. As time went by, the law was
codified and organized into two parts of the Business and Professions Code.
Part 1 is titled “Licensing of Persons” and is called the Real Estate Law, which
we will discuss in this unit. Part 2 is titled “Regulation of Transactions” and
is called the Subdivided Lands Law.
The Real Estate Law, sometimes referred to as the license law, is designed
mainly for the protection of the public in real estate transactions where a
licensee is involved. When you hear the term, “Real Estate Law”, it means
the law that affects the licensing and conduct of real estate brokers and
salespeople. It must be seen separately from what is known as real property
law, law of agency, contract law, or other legal aspects of real estate ownership
and transfer.
Review - The Real Estate Law
• The two main purposes are to protect:
1. consumers from loss because of dishonest and incompetent agents.
2. the good standing of ethical agents from the adverse
publicity caused by unprincipled licensees.
• It pertains to the:
1. licensing of real estate brokers and salespeople.
2. conduct of real estate brokers and salespeople.
Unit 15 Getting and Keeping Your Real Estate License 529
The Real Estate Commissioner
The Real Estate Commissioner (Commissioner), appointed by the governor,
determines administrative policy, and enforces the provisions of the Real Estate
Law and the Subdivided Lands Law to ensure that the public is protected when
dealing with licensees and when purchasing subdivided real property. To be
appointed, the designee must have been a real estate broker for five years and
actively engaged in the real estate business in California.
The Real Estate Law is not upheld in a court of law but is enforced by the
Real Estate Commissioner at special hearings, which will be discussed later
in the unit. One of the jobs not assigned to the Commissioner is settling
commission disputes. That issue falls under the power of a court of law, and
must be handled through an attorney if the parties involved cannot settle the
matter agreeably.
Responsibilities of the Real Estate Commissioner
• Screen and qualify applicants for license
•
•
•
•
•
•
Issue, restrict, suspend, or revoke real estate licenses
Examine complaints against licensees
Pursue formal action against licensees, where appropriate
Monitor real property securities transactions
Regulate prepaid rental listing services
Regulate specific aspects of the sale of subdivisions
The Real Estate Advisory Commission
The Commissioner appoints a Real Estate Advisory Commission for consultation and advice on matters pertinent to the DRE. The Advisory Commission
is made up of 10 members: six licensed real estate brokers and four public
members. None but the Commissioner receives payment for tenure on the
Commission, which meets at least four times yearly.
Real Estate Licensing
Real estate brokers and salespeople are entrusted with people’s hopes, dreams,
and money. Consumers must have a great deal of confidence in the real estate
industry to place their trust in a broker or salesperson. With that in mind,
the state places strict requirements on those who wish to practice real estate
in the form of real estate licensing.
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California Real Estate Principles
As we have seen, the purpose of a
real estate license is to protect both
the consumer and the licensee. It is
important for both to understand the
obligations and restrictions of the different licenses that may be held. Any
person who wants to engage in the real
estate business and act as a real estate
broker or real estate salesperson within
the state of California must obtain a
license from the Department of Real
Estate (DRE).
Real estate brokers and salespeople
are entrusted with people’s
hopes, dreams, and money.
The two main types of real estate licenses are the broker’s license and the
salesperson’s license.
Terminology
Real Estate Broker
A real estate broker is someone who holds a broker license issued by the
Department of Real Estate. The license legally permits the broker to perform
any acts for which a real estate license is required. A real estate broker is also
an independent businessperson who can employ someone who holds a salesperson or a broker license. Brokers are legally responsible for all the business
actions of their employees.
Real Estate Salesperson
A real estate salesperson is someone who holds a salesperson license issued by
the Department of Real Estate. The salesperson must be employed by a real
estate broker in order to perform any of the activities that require a license.
Real Estate Sales Associate
Real estate sales associate is a term used to refer to employees of a broker.
They may hold either a salesperson or a broker license. A sales associate who
has a salesperson license must be employed by a broker. A person who has a
broker license may operate independently or put his or her license under an
employing broker and is then called a sales associate or broker associate.
Real Estate Agent
Both brokers and salespeople can be agents. A licensed broker is legally an
agent of the principal. A licensed salesperson is legally an agent of his or her
employing broker.
Unit 15 Getting and Keeping Your Real Estate License 531
When is a License Required?
Under section 10131 of the Business and Professions Code, a real estate broker
is someone who, for compensation, does perform or negotiates to perform one
or more of the acts requiring a real estate license. A salesperson, if employed
by a real estate broker, may also do any of the following activities.
Acts Requiring a Real Estate License
• Soliciting sellers
• Soliciting buyers
• Negotiating sales
• Negotiating leases
• Soliciting for tenants or rentals
• Negotiating sales contracts
• Negotiating loans
• Negotiating a promissory note secured by real property
• Negotiating exchanges
Unlicensed Person Penalties
No unlicensed person may receive payment for any act requiring a real estate
license. The fine for paying a fee to an unqualified person is $100 for each
offense. Prior to paying a commission, an escrow holder should require a broker
to present evidence he or she is a regularly licensed real estate broker at the
time such compensation is earned.
It is unlawful for any unlicensed person to
pose as a real estate broker or salesperson
or to advertise that he or she is a real
estate broker. The punishment for an
individual falsely claiming to be a broker
or salesperson is a fine of up to $20,000 or
imprisonment up to six months, or both. A
corporation is subject to a criminal fine not
to exceed $60,000.
The fine for paying a fee
to an unqualified person
is $100 for each offense.
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California Real Estate Principles
Exemptions to the License
Certain exemptions from licensing requirements are allowed. The following
list shows many but not all of the people who are exempt from obtaining a
real estate license.
Real Estate License Exemptions
• A person who deals only with his or her own property
• A corporation that performs any of the specified activities through one of
its regular officers, who must receive no special compensation for doing
so
• Anyone holding a duly executed power of attorney from the owner of
property
• An attorney-at-law performing services in the regular course of business as
an attorney
• Resident managers of apartment buildings and complexes or their
employees
• Short-term (vacation) rental agents
• Employees of certain lending institutions
• Clerical employees of real estate brokers for specific, limited functions
• Licensed personal property brokers
• Any film location representative employed to arrange for the use of real
property for photographic purposes
• Cemetery authorities
• Certain collectors of payments for lenders or on notes for owners in connection with loans secured directly or collaterally by liens on real property,
provided such collectors annually meet exemption criteria
• Any receiver, trustee in bankruptcy or person acting under order of any
court
• Any trustee selling under a deed of trust
• Lenders making loans guaranteed or insured by an agency of the federal
government
• An employee of lending institutions, pension trusts, credit unions, or
insurance companies, in connection with loans secured by liens on real
property or a business opportunity
• Escrow agents collecting funds in connection with loans secured by liens
on real property when the funds are deposited in the escrow agent’s trust
account
Unit 15 Getting and Keeping Your Real Estate License 533
Steps in Getting a Real Estate License
Before an applicant for a real estate salesperson or broker license may obtain
a license, he or she must fulfill certain real estate education requirements and
then apply for and pass a real estate examination.
Basic Requirements for both Salesperson and Broker
• Be at least 18 years old
• Provide proof of legal presence in the United States
• Be honest and truthful
• Complete real estate course(s) as required by law
• Apply for the state examination on a form prescribed by the Commissioner
• Pass the qualifying examination
Additional Requirements: Salesperson License
A salesperson must submit proof of completion of three approved real estate
courses─Real Estate Principles, Real Estate Practice, and an elective selected
from the chart on the next page.
A salesperson must be employed by a licensed broker to perform acts regulated
by a salesperson license.
Additional Requirements: Broker License
An applicant for an original real estate broker license must meet specific
education and experience standards. A broker candidate must complete eight
approved real estate courses: five mandatory real estate courses (Real Estate
Appraisal, Real Estate Practice, Real Estate Finance, Legal Aspects of Real
Estate, and Real Estate Economics or General Accounting) and three electives
selected from the chart on the next page. If both Real Estate Economics and
General Accounting are completed, only two electives are required.
In addition, a broker candidate must also have two years of full-time licensed
real estate experience within the past five years or the equivalent. An acceptable equivalent includes a four-year degree from an accredited college.
Required Education
You must submit evidence, in the form of transcripts or certificates, that you
have completed the statutory license courses. Courses may be taken from a
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California Real Estate Principles
DRE-approved private vocational real estate school or from a college that is
accredited by the Western Association of Schools and Colleges or a comparable
regional accrediting entity. Unless the California Real Estate Commissioner
has granted prior approval, no private vocational real estate school outside
California may grant credit for the required prelicense courses. The required
number of hours for a statutory course is 45 hours if taken from a real estate
school. If taken at an accredited college, a course for three-semester units or
four­quarter units is acceptable.
Real Estate Courses
Salesperson
Broker
Real Estate Principles
Required
Elective
Real Estate Practice
Required
Required
Legal Aspects of Real Estate
Elective
Required
Real Estate Appraisal
Elective
Required
Real Estate Finance
Elective
Required
Real Estate Economics
Elective
Required
General Accounting
May waive
RE Economics
May waive RE
Economics
Business Law
Elective
Elective
Common Interest
Developments
Elective
Elective
Computer Applications in RE
Elective
Elective
Escrows
Elective
Elective
Mortgage Loan Brokering/
Lending
Elective
Elective
Property Management
Elective
Elective
Real Estate Office
Administration
Elective
Elective
Adv. Legal Aspects of
Real Estate
Not allowed
Elective
Adv. Real Estate Appraisal
Not allowed
Elective
Adv. Real Estate Finance
Not allowed
Elective
Unit 15 Getting and Keeping Your Real Estate License 535
Real Estate Education and Research Fund
The real estate industry depends on the public’s trust to perform its job. In
order to better serve the consumer, the Real Estate Education and Research
Fund was created for the advancement of real estate education. Like the Real
Estate Recovery Fund, money is collected from license fees for the Education
and Research Fund.
Real Estate Examination
The purpose of the real estate license examination is to make sure consumers
are protected in all transactions where they are to be represented by an agent.
License applicants must have knowledge of the English language, including
reading, writing, and spelling; and of arithmetical computations common to
real estate and business opportunity practices.
The salesperson exam has 150 multiple-choice questions and a maximum
time limit of 3 hours and 15 minutes. Examinees must correctly answer 70%
of the questions on the test to pass the salesperson examination and become
eligible for a license.
The broker examination has two 100-question multiple-choice tests administered in two sessions—2 ½ hours in the morning and 2 ½ hours in the
afternoon. Examinees must correctly answer 75% of the questions on the test
to pass the broker examination and become eligible for a license.
The exam tests an applicant’s general knowledge of real estate, appraisal,
finance, forms, and other fundamentals of the industry. The subject matter
covered in the examination is based on laws and procedures appropriate within
California. The following lists of examination topics are for informational
purposes and should not be considered totally comprehensive.
Subjects Tested on the Real Estate License Examinations
Area of Knowledge
Salesperson
Exam
Broker
Exam
Property Ownership and Land Use Controls
18%
15%
Laws of Agency
12%
12%
Valuation and Market Analysis
12%
11%
Financing
13%
13%
Transfer of Property
9%
10%
Practice of Real Estate and Mandated Disclosures
24%
27%
Contracts
12%
12%
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California Real Estate Principles
Examination Rules and Grading
Salesperson
Broker
Time
3 ¼ hours
5 hours
Number of multiple-choice questions
150
200
Passing score
70%
75%
Applying for the Examination
The applications and fee schedule for both the sales and broker license
examination can be obtained from the DRE website at http://www.dre.ca.gov.
A person has two years from the date the application is received to complete
all qualifications and take the examination. After the two-year period, the
application will expire and the applicant will have to resubmit everything
again and pay another fee.
A person applying for the salesperson examination fills out the salesperson
examination application and mails it to the DRE along with the appropriate
fee and proof of completion of three approved real estate courses—Real Estate
Principles, Real Estate Practice, and an elective.
Once the application is processed, the DRE will send notification of the examination date, time, and location. You can also check online at the DRE website
http://www.dre.ca.gov to see if your examination has been scheduled.
An applicant who fails to pass the state exam may apply for reexamination any
number of times by filing an application and paying the fee. The person must
take the exam within two years or file a new application and pay a new fee.
Upon passing the state exam, the applicant may apply for the salesperson or
broker license within one year of the examination date.
Applying for the License
After passing the real estate examination, the DRE sends either a broker or a
salesperson license application. Within one year after passing the examination,
you must complete and return the form along with the appropriate fee.
Unless you are currently licensed as a salesperson or hold a real estate license
that expired less than two years ago, there are other documents you will need
to include with your license application. You will need to submit one set of
classifiable fingerprints, proof of legal presence in the United States, and, if
you are an out-of­-state applicant, you must include an irrevocable Consent to
Service of Process.
Unit 15 Getting and Keeping Your Real Estate License 537
Fingerprint Requirements
An applicant for an original real estate license must submit one set of classifiable fingerprints. The fingerprints must be submitted electronically to the
state Department of Justice (DOJ) using the Live Scan Program, which takes
and transmits fingerprints to the DOJ and the Federal Bureau of Investigation
(FBI). Social Security numbers are now
required on examination applications so
fingerprint results can be processed. An
original license will not be issued until
a report from the DOJ and the FBI is
received either stating that there is no
criminal history or disclosing criminal
history information, which then must be
reviewed and evaluated. More information can be found on the DRE website at
www.dre.ca.gov.
Proof of Legal Presence
On August 1, 1998, the DRE began enforcing a federal law that requires all
applicants applying for an original, or renewal real estate license to submit
proof that they are either a United States citizen or a legal resident alien who
is entitled to receive a public benefit.
Although the most common document used to establish proof of U.S. citizenship is a birth certificate, there are other acceptable documents. For a list of
the most common documents which can be used to establish U.S. citizenship
or legal alien status, go to the DRE website at www.dre.ca.gov. Since it can
take a while to get a certified copy of a birth certificate, and possibly longer for
other kinds of documents, be sure to obtain the appropriate documentation as
early as possible to avoid processing delays. The document that is submitted
to establish legal presence must be accompanied by a completed state Public
Benefits Statement. A license certificate cannot be issued until the appropriate documentation showing legal presence is received and approved by the
DRE.
Out-of-State Applicants
A person does not have to live in California in order to become licensed in
this state, but you must take the appropriate written examination in California
and meet all other requirements. California has no reciprocity with any other
state to allow a waiver of any of the requirements to obtain a license.
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California Real Estate Principles
Out-of-state residents must file an irrevocable Consent to Service of Process
with the California Department of Real Estate. Brokers must maintain a
California business address if engaging in business in California, and salespeople must be licensed with a California broker if engaging in business in
California.
Types of Licenses
Currently the DRE issues real estate broker and salesperson licenses for a
four-year period. If a license is obtained by fraud, misrepresentation, or deceit,
the Commissioner may suspend the license, without a hearing, within 90 days
after its issuance.
Salesperson License
A salesperson license is required for people who will be employed as salespeople under the supervision of a licensed broker. A person may obtain a
salesperson license even if he or she does not intend to be employed immediately
by a broker. However, a salesperson without an employing broker may not
perform acts requiring a license. The salesperson license authorizes real estate
activity only if the salesperson is in the employ of a licensed broker.
Broker License
A real estate broker is a person who may run a brokerage business under his
or her own name, or under a fictitious business name. Any broker who places
his or her license with an employing broker is called a broker associate and
must have a written employment agreement.
Fictitious Business Name
A licensed real estate broker, corporation, or partnership may use a fictitious
business name (DBA) or any name other than their own. They must submit
a copy of a Fictitious Business Name Statement that is filed with the county
clerk’s office in the county where the principal place of business is located.
Each fictitious business name is an addition to the existing license, and it
will expire at the same time as the license. The broker’s main office license
certificate will show the multiple fictitious business names. All other business
locations will be designated as branch offices. For each additional business
location, the broker must obtain a branch office license permit. A broker and
his or her sales associates may work under any fictitious business name at any
business location maintained by the broker. Filing a Fictitious Business Name
Statement is good for five years from December 31st of the year filed.
Unit 15 Getting and Keeping Your Real Estate License 539
Corporate Real Estate License
A corporation may be licensed as a real estate broker as long as one officer of
the corporation is a qualified real estate broker and acts as the corporation’s
responsible designated broker-officer. Salespeople may be employed by a
corporate real estate broker as long as they are supervised by the designated
broker-officer.
Partnership
The DRE does not issue partnership licenses. A real estate business may be
run as a partnership as long as every partner through whom the partnership
acts is a licensed real estate broker. A salesperson may be employed by a broker
who is a member of a partnership formed by written agreement and may work
in any branch office managed by any one of the partners.
Broker’s Responsibilities
An active broker must maintain an office (home office is acceptable), and if
associate licensees are employed, the licenses must be available for inspection.
A broker must have written agreements with his or her sales associates,
whether licensed as a salesperson or as a broker associate. Licenses must be
available for inspection in the broker’s main office, not a branch office. A
broker must supervise his or her associate licensees (both sales associates and
broker associates). All contracts generated by the associate licensees must
be reviewed, initialed, and dated within five working days by the broker. A
broker can designate a salesperson with two years of experience within the
last five years to manage an office and review contracts as long as the broker
supervises the salesperson.
The broker must notify the Commissioner if a salesperson or associate broker
transfers his or her license to another broker. The broker must return the
license certificate to the salesperson or broker associate within three business
days following the transfer. The old broker must notify the Commissioner
immediately of the associate licensee’s departure; and the new employing
broker must notify the Commissioner within five days of arrival. If an associate
licensee is fired for cause, the broker must immediately send the Commissioner
a certified written statement of facts of the termination.
The broker must obtain workers’ compensation coverage either through the
state-recognized self­-insurance program or through a carrier recognized by the
California Department of Insurance for all employees.
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California Real Estate Principles
Mortgage Loan Originator License Endorsement
Beginning January 1, 2011 a Mortgage Loan Originator License Endorsement
(MLO Endorsement) must be obtained before a real estate licensee can
solicit or originate a loan application, or negotiate or offer to negotiate any
residential mortgage loans. This is in compliance with the federal Secure and
Fair Enforcement for Mortgage Licensing Act (SAFE Act). The SAFE Act
is intended to provide uniform national mortgage loan originator licensing
standards, which will require minimum licensing and education. It is also
designed to create a comprehensive national licensing database to enable
government and consumers to track loan originators and help prevent fraud.
Loan originators registered in the national database will be provided with a
Unique Identifier number.
The program to obtain the MLO Endorsement is administered by the National
Mortgage License System and Registry (NMLSR). A licensee submits an
application for the MLO Endorsement to the NMLSR, successfully completes
the National and California-specific examinations, and submits fingerprints
and credit report authorization to the NMSLR. In addition, 20 hours of
pre-license education is required, but it does not have to be completed before
taking the National or State examination components.
MLO endorsements will be issued annually and expire December 31st each
year. The renewal requirements for a MLO license endorsement will include
a renewal request filed electronically through the NMLSR, a renewal fee, and
filing evidence of completion of 8 hours of annual continuing education (CE).
The CE completed to renew a MLO license endorsement cannot be used to
satisfy real estate CE requirements.
More information can be obtained from the California Department of Real
Estate website at www.dre.ca.gov or the NMLS Resource Center website at
http://mortgage.nationwidelicensingsystem.org.
Restricted License
The Commissioner will sometimes issue a restricted license. A restricted
license is a type of probationary license issued when a license has been suspended, revoked, or denied after a hearing. Typically, restrictions are placed by:
term (one month, three months, etc.), employment by a particular broker (for a
salesperson), limitation to a certain type of activity, requiring detailed reports of
each transaction, requiring the filing of a surety bond, or any combination.
If a real estate broker license is revoked or suspended by the DRE, any
salesperson licenses held by that broker are cancelled until the license is
transferred to a new employing broker.
Unit 15 Getting and Keeping Your Real Estate License 541
Review - License Facts:
• Brokers and salespeople are both licensees.
• Brokers are agents of the principal.
• Salespeople are agents of their broker (not the principal).
• A salesperson must be employed by a broker to be paid.
• A salesperson can only be paid by his or her employing broker.
Renewing a Real Estate License
In general, both types of licenses may be renewed by submitting the appropriate
fee and application, along with evidence of completion of 45 hours of DREapproved continuing education courses. Both broker and salesperson licenses
are valid for four years and may be renewed at that time upon payment of a fee
and evidence that the requirements for continuing education have been met.
If there are delinquent child support payments, a four-year license will not
be renewed or issued. The California Department of Child Support Services
prepares a list of people, called obligors, who owe child support payments. A
child support obligor may be issued a 150-day temporary license. During the
150 days, a person must show the DRE proof that the delinquency is cleared
and that he or she has been removed from the list, so that a permanent license
can be issued. In addition, a license may be suspended if a licensee’s child
support remains unpaid.
eLicensing
The DRE now offers eLicensing, an interactive online system that lets you
complete license renewal and change transactions via the Internet. The
following list includes many of the available transactions.
eLicensing Transactions
• Online Registration with DRE
• Mailing Address Changes
• Broker Main Office Address Changes
• Salesperson Requests To Change Employing Broker
• Broker Certification Of Salesperson Employment
• Salesperson/Broker License Renewals
• Duplicate License Requests
• Examination Services
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California Real Estate Principles
User-friendly features include customized menus, e­-mail confirmations, status
tracking of online transactions, and clear instructions. eLicensing is available
on the DRE website at http://www.dre.ca.gov/.
Late Renewal
A real estate license that has expired may be renewed within two years of the
expiration date. A two-year grace period for renewal is allowed as long as all
real estate activity has ceased during that time and a late fee is paid at the time
of renewal. There is no provision for an inactive license status. Two years after
a license expires, all license rights lapse, and the person will have to go through
the state examination process again to get another real estate license.
However, if a broker’s license expires, all licensed activities of the broker must
stop and all of the broker’s salespeople (if any) are immediately placed in a
non-working status. Any branch office licenses are cancelled. That means
no listing, selling, showing, leasing, or any licensed activity between the date
of license expiration and the date of late renewal. A commission may not be
claimed without a valid license. Once the broker has renewed his or her license,
all the salesperson licenses and branch office licenses must be reactivated.
When a salesperson is discharged for a violation of any of the provisions of
the Real Estate Law, the employing broker must immediately file a certified
written statement of the facts with the Commissioner.
Continuing Education
Each time brokers and salespeople renew their licenses—every four years—
they must present evidence of completing the required continuing education
(CE) courses.
Initial Renewal - Salesperson
Real estate salespeople licensed prior to 10/1/2007 renewing an original license
for the first time, must complete 5 separate 3-hour continuing education (CE)
courses in Agency, Ethics, Fair Housing, Risk Management, and Trust Fund
Handling.
Those salespeople licensed on or after 10/1/2007 must complete 45 clock
hours of DRE-approved CE courses. The required courses are 3 hours each of
Agency, Ethics, Fair Housing, Risk Management, and Trust Fund Handling.
In addition, 30 more CE hours must be completed, of which 18 hours must be
in the consumer protection category.
Unit 15 Getting and Keeping Your Real Estate License 543
Initial Renewal - Broker
There is a 45-hour CE requirement for the first renewal of a broker license.
The required courses are 3 hours each of Agency, Ethics, Fair Housing, Risk
Management, and Trust Fund Handling and 30 more CE hours of which 18
hours must be in the consumer protection category.
Subsequent Renewals - Broker and Salesperson
There is a 45-hour CE requirement for subsequent renewal of a broker or
salesperson license. Everyone must take the mandatory CE courses. The
balance of the required hours must include at least 18 hours of consumer
protection topics.
Initial Renewals
Salesperson prior to
10/1/07
Renewal Course
Salesperson after 10/1/07
Initial Broker Renewal
Hrs
Renewal Course
Hrs
Agency
3
Agency
3
Ethics
3
Ethics
3
Fair Housing
3
Fair Housing
3
Trust Fund Handling
3
Trust Fund Handling
3
Risk Management
3
Risk Management
3
Consumer Protection
0
Consumer Protection
30
Total Hours
15
Total Hours
45
Subsequent Renewals - Broker and Salesperson
Choice A - 45 hrs
Renewal Course
Choice B - 45 hrs
Hrs
Renewal Course
Hrs
Agency
3
Agency
0
Ethics
3
Ethics
0
Fair Housing
3
Fair Housing
0
Trust Fund Handling
3
Trust Fund Handling
0
Risk Management
3
Risk Management
3
Survey Course
0
Survey Course
6
Balance of CE Hours
30
Balance of CE Hours
36
Total Hours
45
Total Hours
45
Enforcing the Real Estate Law
The license law is only effective if it can be enforced. The Commissioner can
only investigate non-licensed people but can discipline licensed people.
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California Real Estate Principles
Non-Licensed Activities
Representatives of the Commissioner also investigate people or firms who
appear to be operating improperly, without benefit of a license, or who
subdivide land without complying with the subdivision laws enforced by the
Commissioner. If sufficient evidence of a violation is obtained, an Order to
Desist and Refrain is issued, or a complaint is brought, and the parties are
prosecuted in a court of competent jurisdiction.
Licensed Activities
The Commissioner enforces the provisions of the Real Estate Law and has the
power to restrict, suspend, or revoke the real estate license. Some violations
may result in civil injunctions, criminal prosecutions, or substantial fines.
When the Commissioner investigates a complaint, which may involve criminal
activities, it is the duty of the local district attorneys to prosecute all criminals
in their respective counties.
The Commissioner must follow the established legal procedures found in the
Administrative Procedure Act to discipline licensees.
Only the Commissioner—not the courts—can restrict,
suspend, or revoke a real estate license.
Investigation and Accusation
Usually an investigation of the actions of a licensee
is based upon receipt of a verified written complaint
from someone who believes a licensee, while acting
as an agent, has wronged them. Investigations
are made by the DRE’s Enforcement and Audit
Sections. The investigator takes statements from
witnesses and the licensee and obtains and verifies
documents. An informal conference may be called
to determine the validity and seriousness of the
complaint. If it appears that the complaint is of
a serious nature and that a violation of law has
occurred, an accusation is filed, and there may be
a formal hearing, which could result in suspension
or revocation of the license.
Investigations are
made by the DRE
and include taking
statements and obtaining
documents if needed.
Unit 15 Getting and Keeping Your Real Estate License 545
Formal Hearings
A formal hearing is held according to
the Administrative Procedure Act. The
accusation or statement of issues is served
upon the affected licensee. In the hearing,
the Commissioner is the complainant and
brings the charges against the licensee. The
licensee, known as the respondent, may
appear with or without an attorney. The
Commissioner’s counsel presents the case
to an administrative law judge who issues a
proposed decision based upon the findings.
The Commissioner may accept, reject,
or reduce the proposed penalty from the
administrative law judge and makes an
A formal hearing is held
official decision. Sometimes the charges
according to the Administrative
Procedure Act.
against the respondent (licensee) are
dismissed, but if the charges are sufficiently
serious, the license of the respondent is suspended or revoked. A person whose
license has been revoked or suspended must wait one year until he or she can
apply for reinstatement.
Recovery Account
A Real Estate Recovery Fund is a separate account funded through collection
of a fixed amount from each license fee. It assures the payment of otherwise
non-collectable court judgments against licensees who have committed fraud,
misrepresentation, deceit, or conversion of trust funds in a transaction. Under
specific conditions of law, the person with a qualifying judgment may seek
reimbursement from the Recovery Account for actual and direct loss to a
statutory maximum. Currently the amount paid will be $50,000 per transaction,
with a possible total aggregate maximum of $250,000 per licensee.
If the Commissioner pays a judgment on behalf of a broker or salesperson, the
license is automatically suspended. A suspended license will only be reinstated
after full reimbursement, plus interest, is repaid to the DRE.
Violations of the Real Estate Law
Staying informed is probably the most important task left to the real estate
agent. Real estate agents who make continuing efforts to learn and stay current
on issues concerning the real estate industry will have successful careers.
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California Real Estate Principles
Real estate agents must be prepared to meet the duties and obligations required
by law. If they do not comply, they may be subject to civil, criminal, and/or
Department of Real Estate action and penalties. All around the country, court
and legislatures are continuing to hold real estate agents accountable for their
activities. Increasingly, agents must know what and how to disclose—as well
as when, where, why, by, and to whom. The uninformed real estate agent is
highly vulnerable to court action in our consumer-oriented society.
The Real Estate Commissioner is empowered to adopt regulations to enforce
the Real Estate Law. Duly adopted regulations become part of the California
Code of Regulations and, in effect, have the force and authority of the law
itself. Real Estate Law is found in the Business and Professions Code.
Therefore, all licensees and prospective licensees should be thoroughly familiar
with the Real Estate Commissioner’s Regulations. They should be considered
in conjunction with the law, as they specifically outline procedures directed
and authorized by the statutes. The following is a partial listing of the Business
and Professions Code sections that are of utmost importance to those who
practice real estate.
The Business and Professions Code, Article 3, Section 10175 authorizes the
Real Estate Commissioner to enforce the Real Estate Law. Upon grounds
provided in this article and the other articles of this chapter, the license of
any real estate licensee may be revoked or suspended in accordance with the
provisions of this part relating to hearings.
Although most violations of Real Estate Law occur under sections 10176 and
10177 of the Business and Professions Code, we are including some of the other
sections that need discussion and mention. Section 10176 refers to actions
committed while conducting business under a real estate license. Section 10177
refers to circumstances when a licensee is not necessarily acting as an agent.
Section 10176: Violations When Acting as an Agent
in a Real Estate Transaction
The Commissioner may upon his or her own motion, and shall upon the
verified complaint in writing of any person, investigate the actions of any
person engaged in the business or acting in the capacity of a real estate licensee
within this state. He also may temporarily suspend or permanently revoke
a real estate license at any time where the real estate licensee, in performing
or attempting to perform any of the acts within the scope of this chapter, has
been guilty of any of the following:
Unit 15 Getting and Keeping Your Real Estate License 547
Section 10176(a) Misrepresentation
A great majority of the complaints received are about misrepresentation on
the part of the broker or salesperson. The failure of a broker or salesperson to
disclose to his or her principal material facts of which the principal should be
made aware is included as a cause for discipline under this section.
Section 10176(b) False Promise
A false promise and a misrepresentation are not the same thing. A misrepresentation is a false statement of fact. A false promise is a false statement about
what someone is going to do in the future.
Section 10176(c) Continued Misrepresentation
The Commissioner has the right to discipline a licensee for a continued and
flagrant course of misrepresentation or making of false promises.
Section 10176(d) Dual Agency
A licensee must inform all principals if the licensee is acting as agent for more
than one party in a transaction.
Section 10176(e) Commingling
Commingling is the mixing of the principal’s funds with the broker’s own
money. Commingling is not the same thing as conversion. Conversion is
misappropriating and using principal’s funds.
Section 10176(f) Definite Termination Date
A specified termination date is required on all exclusive listings relating to
transactions for which a real estate license is required.
Section 10176(g) Secret Profit
Secret profit cases usually arise when the broker already has a higher offer from
another buyer, but the seller is not aware of it yet. The broker makes a low offer,
usually through a dummy purchaser. The broker then sells the property to the
interested buyer for the higher price. The difference is the secret profit.
Section 10176(h) Listing-Option
A licensee who has both a listing and an option to buy on a property must
inform the principal of the amount of profit the licensee will make and obtain
the written consent of the principal approving the amount of such profit, before
the licensee may exercise the option.
Section 10176(i) Dishonest Dealing
Dishonest dealing is a catch-all section similar to Section 10177(f). The difference is that under Section 10176(i) the acts must have been those requiring
a license, while there is no such need under Section 10177(f).
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California Real Estate Principles
Section 10176(j) Signatures of Prospective Purchasers
Brokers must obtain a written authorization to sell from a business owner before
securing the signature of a prospective purchaser to any such agreement.
10176.5(a) Real Estate Transfer Disclosure Statement
Violations
The Commissioner may suspend or revoke a licensee’s license if the licensee has
willfully or repeatedly violated any of the provisions of the Transfer Disclosure
Statement provisions.
Section 10177: Violations When Not Acting
as an Agent in a Real Estate Transaction
The Commissioner may suspend or revoke the license of a real estate licensee
or may deny the issuance of a license to an applicant, who has done any of
the following, or may suspend or revoke the license of a corporation, or deny
the issuance of a license to a corporation, if an officer, director, or person
owning or controlling 10% or more of the corporation’s stock has done any
of the following:
Section 10177(a) Obtaining a License by Fraud
The Commissioner may proceed against a licensee for misstatements of fact in
an application for a license and in those instances where licenses have been
procured by fraud, misrepresentation, or deceit.
Section 10177(b) Convictions
This section permits proceeding against a licensee after a criminal conviction
for either a felony or a misdemeanor which involves moral turpitude and is
substantially related to the qualifications, functions, or duties of a real estate
licensee. Moral turpitude would be perjury, embezzlement, robbery, and the
like.
Section 10177(c) False Advertising
Licensees who are parties to bait and switch and false advertising are subject
to disciplinary action.
Section 10177(d) Violations of Other Sections
This section is the Department’s authority to proceed against the licensee for
violation of any of the other sections of the Real Estate Law, the Regulations
of the Commissioner, and the subdivision laws.
Section 10177(e) Misuse of Trade Name
Only active members of the National Association of REALTORS® may use
the term REALTOR®. It is unlawful and unethical to misuse the terms
REALTOR® and/or Realtist or any trade name or insignia of which the licensee
is not a member.
Unit 15 Getting and Keeping Your Real Estate License 549
Section 10177(f) Conduct Warranting Denial
This is a general section of the Real Estate Law. Almost any act involving a
crime or dishonesty will fall within this section including the denial or suspension of a license issued by another government agency.
Section 10177(g) Negligence or Incompetence
Demonstrated negligence or incompetence, while acting as a licensee, is cause
for disciplinary action.
Section 10177(h) Failure to Supervise Salespersons
A broker is subject to disciplinary action if the broker, or the officer designated
by a corporate broker licensee, fails to exercise reasonable supervision over the
activities of the broker’s salespeople.
Section 10177(i) Violating Government Trust
A licensee may not use government employment to violate the confidential
nature of records thereby made available.
Section 10177(j) Other Dishonest Conduct
Any other conduct which constitutes fraud or dishonest dealing may subject
the one so involved to license suspension or revocation.
Section 10177(k) Restricted License Violation
Violations of the terms, conditions, restrictions, and limitations contained in
any order granting a restricted license are grounds for disciplinary action.
Section 10177(l) Inducement of Panic Selling
This is also called blockbusting or panic peddling. A licensee may not solicit or
induce the sale, lease, or the listing for sale or lease of residential property on the
grounds of loss of value, increase in crime, or decline in the quality of schools
due to the present or prospective entry into the neighborhood of a person or
persons of another race, color, religion, ancestry, or national origin.
Section 10177(m) Franchise Investment Law
A licensee may not violate any of the provisions of the Franchise Investment
Law or any regulations of the Corporations Commissioner Franchise Investment
Law.
Section 10177(n) Corporations Code
A licensee may not violate any of the provisions of the Corporations Code or
of the regulations of the Commissioner of Corporations relating to securities
as specified by the Corporations Code.
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California Real Estate Principles
Section 10177(o) Conflict of Interest
A licensee must disclose to the buyer of real property, in a transaction in which
the licensee is an agent for the buyer, the nature and extent of a licensee’s
direct or indirect ownership interest in that real property.
Section 10177.1. Obtaining a License by Fraud
Within 90 days of issuing a license, the Commissioner may without a hearing
suspend the license of any person who procured the issuance of the license to
himself by fraud, misrepresentation, deceit, or by the making of any material
misstatement of fact in his application for such license.
Section 10177.2. Mobile Home Sales Violations
When dealing with mobile homes/manufactured homes, a licensee could have
his or her license suspended or revoked if he or she is found guilty of any of
the following acts: committed fraud on an application for the registration of a
mobile home; did not deliver a properly endorsed certificate of ownership from
the seller to the buyer; knowingly purchased or sold a stolen mobile home; or
gave the Department of Housing and Community Development a bad check,
draft, or money order.
Section 10177.4. Referral of Customers for Compensation
A real estate licensee must not receive a commission, fee, or other consideration as compensation or inducement for referral of customers to any escrow
agent, structural pest control firm, home protection company, title insurer, or
controlled escrow company.
Section 10177.5. Fraud in a Civil Action
If a final judgment is obtained in a civil action against any real estate licensee
upon grounds of fraud, misrepresentation, or deceit with reference to any transaction for which a license is required, the Commissioner may, after hearing,
suspend or revoke the license of such real estate licensee.
Real estate agents must be prepared to meet
the duties and obligations required by law.
Unit 15 Getting and Keeping Your Real Estate License 551
Other Violations
Section 10137 and 10138 Employing or Paying an Unlicensed
Person
A broker may not pay a commission to an unlicensed person, except to a broker
of another state. A licensed salesperson may not accept compensation from
anyone except his or her employing broker. The broker may be fined $100.
Section 10140. False Advertising
Every broker, associate licensee, officer, or employee of any company who
knowingly authorizes or directs the publication, distribution, or circulation of
any written statement that is false or fraudulent is guilty of a public offense.
Punishment includes a $1,000 fine, imprisonment up to one year, or both.
In addition, a real estate licensee may have his or her license revoked by the
Commissioner. The district attorney of each county prosecutes all violations
in the counties in which the violations occur.
Section 10140.5. License Name and Designation
An advertisement must include the name of the broker and that he or she is
a licensed California real estate broker.
Section 10140.6. Disclosure of Licensed Status in Advertising
When advertising, a real estate licensee must disclose his or her license
identification number and, if that licensee is a mortgage loan originator,
the unique identifier assigned to that licensee by the Nationwide Mortgage
Licensing System and Registry. Additionally, the use of the terms broker, agent,
REALTOR®, loan correspondent or the abbreviations “bro.”, “agt.”, or other
similar terms or abbreviations is deemed sufficient identification to fulfill the
designation requirements of Section 10140.6 of the Business and Professions
Code. (Commissioner’s Regulation 2770.1)
Section 10141. Selling Price Disclosure
A broker must notify the buyer and the seller of the selling price within one
month after completion of the sale. It is usually done by the escrow company.
Section 10141.5. Recording Trust Deed
A broker (or escrow company) must record a trust deed created on the sale of
a property within one week of closing.
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California Real Estate Principles
Section 10142. Delivery of Agreement
A broker must give a copy of any contract to the party signing it at the time
that it is signed.
Section 10148. Document Retention
A broker must retain the following documents for three years from the date
of the closing or, if the transaction is not closed, from the date of the listing:
listings, deposit receipts, cancelled checks, trust records, disclosure documents,
and other related documents. A Mortgage Loan Disclosure Statement needs
to be kept for only three years.
Section 10175.2(a). Monetary Penalty in Lieu of Suspension
The Real Estate Commissioner may permit a real estate licensee to pay a
monetary penalty to the department in lieu of an actual license suspension.
Section 10178. Broker Must Report Discharge of Salesperson
for Violation
When any real estate salesperson is discharged by his or her employer for a
violation of any of the provisions of the Real Estate Law, a certified written
statement of the facts with reference thereto shall be filed forthwith with the
Commissioner by the employer. If the employer fails to notify the Commissioner
as required by this section, the Commissioner may temporarily suspend or permanently revoke the real estate license of the employer, in accordance with
the provisions of this part relating to hearings.
Section 10182. Reinstatement Examination
As a condition to the reinstatement of a revoked or suspended license,
the Commissioner may require the applicant to take and pass a qualifying
examination.
Section 10185. Violations Are Misdemeanors
Any person, including officers, directors, agents, or employees of corporations, who willfully violates or knowingly participates in the violation of this
division shall be guilty of a misdemeanor punishable by a fine not exceeding
$10,000, imprisonment in the county jail not exceeding six months, or a fine
and imprisonment.
Summary
Real estate licensees have many responsibilities. Initially, they must complete
qualifying courses and pass a real estate license examination. Later on they
have to complete continuing education courses to renew their licenses.
Licensees are also responsible to their broker, the Real Estate Law, and the
Department of Real Estate (DRE).
Unit 15 Getting and Keeping Your Real Estate License 553
Each real estate brokerage office must have one responsible broker who may
have salespeople or brokers working out of the office. A brokerage may be
incorporated or a partnership.
The cornerstone of real estate transactions is ethics and fair dealing. Real
estate licensees must obey the Real Estate Law and the Regulations of the Real
Estate Commissioner. The Real Estate Commissioner and the Department
of Real Estate (DRE) supervise the education, licensing, and conduct of real
estate professionals. Real estate licensees involved in business opportunities
need to be familiar with the Uniform Commercial Code.
Real estate regulations uphold the federal and state fair housing laws which
prohibit discrimination in housing and business establishments. Examples of
prohibited practices are blockbusting (causing panic selling by telling people
that values in a neighborhood will decline because of a specific event), steering
(the practice of only showing clients property in certain areas), and redlining
(the use of the location of the property to deny financing).
Real estate regulations uphold fair housing laws which prohibit
discrimination based on factors, such as age, race, sex, or religion.
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UNIT 15 Review
Matching Exercise
Instructions: Write the letter of the matching term on the blank line before its definition.
Answers are in Appendix B.
Terms
A. 45 hours
I. misrepresentation
O. Real Estate Law
B. accusation
J. obligors
C. blind advertising
K. panic peddling
P. Real Estate Recovery
Fund
D. branch offices
Q. real estate salesperson
E. conversion
L. Real Estate Advisory
Commission
F. false promise
M. real estate broker
S. secret profit
G. fictitious business name
N. Real Estate
Commissioner
T. two-year grace period
H. license law
R. restricted license
Definitions
1.�������� Another name for the Business and Professions Code, Part 1 entitled
“Licensing of Persons.”
2.�������� Another term for the Real Estate Law.
3.�������� Person appointed by the governor to determine administrative policy and
enforce the provisions of the Real Estate Law and the Subdivided Lands
Law.
4.�������� A 10-member commission that offers advice to the Commissioner on
matters pertinent to the DRE.
5.�������� Someone with real estate license who must be employed by a real estate
broker in order to perform any of the activities that require a license.
6.�������� Hours needed for subsequent renewal of broker or salesperson license.
7.�������� Type of probationary license issued when a license has been suspended,
revoked, or denied after a hearing.
Unit 15 Getting and Keeping Your Real Estate License 555
8.�������� A person listed by Child Support Services as delinquent in paying child
support.
9.�������� The period of time after a license that renewal is allowed, as long as all
real estate activity has ceased during that time and a late fee is paid at
the time of renewal.
10. ������ A separate account funded through collection of a fixed amount from
each license fee.
11. ������� A false statement of fact.
12.������� A false statement about what someone is going to do in the future.
13.������� Misappropriating and using principal’s funds.
14.������� Undisclosed profit made by a broker at his or her principal’s expense.
15. ������� Advertising that fails to disclose that the party is a licensee acting as an
agent.
Multiple Choice Questions
Instructions: Circle your response and go to Appendix B to read the complete
explanation for each question.
1. Broker Larwin held an open listing to sell a house that provided for Larwin to
receive a 6% commission. Larwin orally agreed to split the commission with
Broker Porter if Porter found the buyer. Porter did so, but at close of escrow
Larwin kept the entire commission. Under these circumstances, Porter:
a. has recourse by means of a civil suit.
b. has recourse under the Real Estate Law.
c. has recourse under the statute of frauds.
d. does not have a legal claim for a commission because Larwin had an
open listing.
2. The Department of Real Estate regards a salesperson’s relationship with a broker
as a(n):
a. employee.
b. independent contractor.
c. general partner.
d. limited partner.
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California Real Estate Principles
3. Someone places an advertisement for real estate services without listing a real
estate license number. In fact, the person does not have a real estate license. Such
an individual could be liable for prosecution by the:
a. Department of Real Estate.
b. local district attorney.
c. office of the Attorney General.
d. local law enforcement agencies.
4. Which of the following is required to hold a current and valid California real estate
license?
a. Mortgage loan broker
b. Resident manager of an apartment building
c. Trustee conducting a trust deed foreclosure sale
d. Short-term (vacation) rental agent
5. A broker must have a written contract with which of the following employees?
a. Secretaries
b. Janitorial service
c. Brokers acting as salespeople who do not have their own office
d. All of the above
6. If a real estate licensee is listed as an obligor by the California Department of Child
Support Services, can he or she renew his or her real estate license?
a. No, the DRE revokes the license of anyone who owes child support.
b. Yes, the DRE is not concerned with the obligor list.
c. No, whenever a person is listed as an obligor for delinquent child support, all
licenses, including the driver license, are canceled.
d. Yes, the licensee may be issued a 150-day temporary license.
7. A licensed salesperson gave notice of leaving the real estate brokerage office to the
salesperson’s employing broker. What, if anything, must the broker do with the
salesperson’s license?
a. The broker leaves the license unmarked and gives it to the next broker who
employs the salesperson.
b. The broker returns the license to the salesperson and notifies the Real
Estate Commissioner.
c. The broker marks the license inactivated, returns it to the salesperson, and
notifies the Real Estate Commissioner.
d. The broker marks the license cancelled and mails it to the Real Estate
Commissioner.
Unit 15 Getting and Keeping Your Real Estate License 557
8. In the course of his or her duties, a real estate salesperson might prepare or sign
documents or legal instruments that may have a material effect on the rights or
obligations of those entering the transaction. The supervising broker must review,
initial, and date these documents or instruments within five days or before the
close of escrow. However, the broker may delegate these duties to a salesperson to
review items prepared by other salespeople provided that the delegated salesperson
has:
a. been employed by that same broker for at least two years full time.
b. been employed by that same broker for at least two years full time and has
completed at least 18 units of college­-level courses related to real estate.
c. at least two years full-time experience as a real estate salesperson within the
past five years.
d. at least two years full-time experience as a real estate salesperson within the
past five years and has completed at least 18 units of college­-level courses
related to real estate.
9. A broker holding an unrestricted license negotiated the sale of real estate. The
broker defrauded the buyer during the sales transaction. The defrauded buyer
brought a civil suit against the broker on grounds of fraud and was awarded a final
judgment. The Real Estate Commissioner:
a. may suspend the broker’s license when the Commissioner receives a copy of
the final judgment of the court.
b. must wait to take action until the buyer files a formal complaint with the
Commissioner.
c. may suspend the broker’s license until a formal hearing is convened.
d. may hold a hearing but may not suspend or revoke the license until the
hearing is concluded.
10. A broker assured a client that a loan could be found at 5% even though there were
no such loans available. When it came time to sign the agreement, the rate offered
was 7%. The buyer felt he had to accept the loan because he had already given
notice at his apartment complex.
a. The broker acted unethically.
b. The broker acted illegally.
c. The broker acted legally.
d. The doctrine of caveat emptor applies.
11. By law, a broker must keep a copy of the deposit receipt for at least three years
from:
a. the first date on the deposit receipt.
b. the closing of the transaction.
c. the recording of the deed.
d. whichever of the above is earliest.
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California Real Estate Principles
12. Davis did not have a real estate license but negotiated a contract with Taylor to
buy Taylor’s 20-acre lot for $5,000/acre. Taylor accepted Davis’ offer. During
negotiations, Davis himself was offered $20,000/acre by a third party for the
same 20 acres. Davis did not disclose this fact to Taylor and went ahead with the
purchase. Davis later sold the 20 acres to the third party for $20,000/acre. Taylor
subsequently learned that Davis resold the lot. Under these circumstances, an
attorney will probably advise that:
a. Taylor may rescind the contract if Taylor reimburses the third party for
expenses incurred in the transaction.
b. Taylor has no recourse against Davis.
c. Taylor has a cause of action against Davis because Davis had special
knowledge of the property that was not disclosed during the transaction.
d. Taylor must show that the third party had knowledge of the realistic
property value.
13. A licensed real estate salesperson regularly accepted a fee for every client she
referred to a lender who signed up for a new mortgage loan. When her employing
broker discovered this arrangement, the broker took two steps: (1) The broker
fired the salesperson. (2) The broker explicitly warned the rest of the office not to
engage in such practices. Who, if anyone, is liable for disciplinary action?
a. No one. The Real Estate Law was not violated.
b. Only the broker can be disciplined.
c. Only the salesperson can be disciplined because the broker had no guilty
knowledge of the offense.
d. Both the salesperson and broker can be disciplined.
14. If an employing broker discharges a salesperson for violating a provision of the Real
Estate Law, the broker:
a. must notify the Real Estate Commissioner within three days of the
termination of the salesperson.
b. must telephone the Commissioner immediately.
c. must notify the Commissioner immediately by mailing a certified written
statement of the facts.
d. is under no duty to inform the Commissioner.
15. Broker Kim, who is not a member of any trade organization, has been trying out a
new advertising slogan: “A new breed of Realtor.” This practice is:
a. grounds for revocation or suspension of her real estate license.
b. permissible, providing the word “realtor” is not capitalized.
c. acceptable as long as she is not licensed in more than one state.
d. a violation of the Fair Housing Laws.
Unit 15 Getting and Keeping Your Real Estate License 559
16. An advertisement for a listing placed by a real estate salesperson must include the:
a. name of the employing broker.
b. employing broker’s name and address.
c. salesperson’s name.
d. both (b) and (c).
17. Broker Pat has a property listed for nine months without success. He believes
the property is 10% overpriced, and he knows that major structural repairs are
required. Pat writes and pays for the following advertisement to run in a local
newspaper: “Charming 2 BDRM Victorian. Move in right away! Wait `til you see
the price! Ready for you! Call Pat at 555­-1212.” What, if anything, is wrong with
the advertisement?
a. There is no asking price: Regulation Z was violated.
b. It was unlawful because Pat knew structural work was required and the ad
did not state this.
c. It was unethical to advertise for overpriced property.
d. The newspaper publisher would be liable for damages if anyone purchased
the property as a result of the advertisement.
18. A blind ad does not disclose:
a. the price of the property.
b. that the party placing the ad is a licensed broker or salesperson.
c. the name of the seller.
d. the address and size of the property.
19. A broker who holds a valid listing on a property places the following classified
advertisement in the local newspaper: “FOR SALE: 3 bedroom, 2 bath home,
swimming pool. $129,000. Telephone 555-1234.” The advertisement is an
example of a __________ad.
a. silent
b. display
c. qualified
d. blind
20. After close of escrow, the actual selling price of the property must be disclosed to
both buyer and seller within:
a. 5 business days.
b. 10 business days.
c. 15 days.
d. 1 month.
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California Real Estate Principles