One chapter describes the type and scope of the license examinations. Additionally, most bookstores and libraries contain a real estate shelf of publications which can be helpful in preparing for examination. Statewide search:. Search this site:. Home Consumers Verify a License Find a real estate agent or broker.
Next Question. Question 2: The state fiscal year falls between the dates December 31 to January 1, midnight. January 1 to December June 30 to July 1. July 1 to June 30, midnight. Explanation The fiscal year commences on the first day of July and ends with the 30th of June following.
Question 3: Which entity has the responsibility for determining property values for real property tax purposes? Explanation The primary function of the county assessor is to establish an assessment roll each year that reflects the assessed value of real property within the county. Question 4: An agent may collect a commission for a negotiated sale after the term of the listing contract expired if There is an alienation clause.
The agent sues the principal for liquidated damages. The contract contains a protection period clause The agent signs a release clause. Explanation A protection clause, also called a safety clause, in a listing agreement binds the seller to the payment of a commission to the broker if the property is sold within a period of so many days after the expiration of the listing to a person with whom the broker negotiated during the listing period.
Question 5: A lease based on gross income of the lessee is a Percentage lease. Gross lease. Net lease. Ground lease. Explanation A percentage lease is a lease on property, the rental for which is determined by the amount of business done by the lessee; usually a percentage of gross income together with a provision for a minimum rental.
Question 6: What best describes an attorney-in-fact? Explanation A power of attorney is a written instrument giving authority to an agent, called an attorney-in-fact. Question 7: There are several reasons why a contract can be voidable. However, a voidable contract is binding on the parties until it is Rescinded. Explanation Voidable means the contract is binding until some action is taken to rescind the contract.
A broker acting as the agent for the principal. The seller of a large tract of land. An attorney-in-fact acting for the principal. Explanation A broker acting as an agent would not likely be able to sue his principal for specific performance because the broker is not a party to his principal's contract. C is incorrect. Answer Choice "C" states the general rule for fixtures. But, because this restaurant equipment is used in the tenant's business, it will be considered a "trade fixture" that the tenant can remove before the end of the lease.
D is incorrect. The lessor is the landlord. The rule related to trade fixtures is not dependent upon a decision by the landlord. Incorrect answer. Please choose another answer. Control over real estate and land use by a government entity is called "public control. The government's police power over real estate includes things like: zoning, building codes, city planning, public health, public safety, and general welfare.
Answer Choice "B" is a classic example of Police Power. Here, the city exercised its Police Power to enhance public health and safety--by separating the new residential area from industrial activity. The state examiners frequently write questions trying to trick examinees into incorrectly lumping one of these other three powers into Police Power. A is incorrect. A Special Weapons and Tactics SWAT team uses specialized equipment and tactics to respond to criminal activity posing an elevated risk to the public or to law enforcement personnel.
That's an entirely different type of "police power. Under the power of Eminent Domain, the government can take private property for public purposes e.
In contrast, the government would not typically have to pay owners if there is a decline in value due to a zoning change. The state can exercise its power of Escheat when a parcel of real estate has been abandoned, or if the owner dies without a will and no heir can be found.
After 5 years, the real estate permanently escheats and belongs to the State of California. Test-Taking Tip: The state examiners may try to trick you into lumping one or more of these four, separate powers together.
Private control is exercised by a non-governmental entity. Private control usually "runs with the land. The restrictions may be limited to a single parcel of land or they might cover an entire subdivision. In , in the landmark case of Shelley vs. Kraemer, the U. Supreme Court held that the Federal Constitution prohibits racially-restrictive housing covenants in the United States. Therefore, limiting the sale of real estate to certain races, even with the goal of promoting diversity, is an example of illegal private control.
Test-Taking Tip: Restricting the sale or rental of real estate on the basis of race is never legally permitted in the United States. A, B, and D are all common examples of lawful private controls.
In CA, an "implied agency" can be created unintentionally or by accident, and without any written formalities. By guiding the prospective buyer on the negotiation tactics needed to purchase the Woodriver Drive property, the listing broker was engaging in the advisory conduct that should be reserved for clients, thus accidentally creating an implied agency relationship. An express agency is created by the oral or written agreement of both parties.
Here, the test question states that the subject of agency representation was never discussed. An unintended or implied agency can be created during a casual conversation where names have not been exchanged. An agency relationship can be created without compensation being discussed, or without even the expectation of compensation.
This is one reason why real estate licensees do everything possible to prevent an implied agency: An implied agency can create fiduciary duties owed by the real estate professional before there is any type of agreement related to compensation. Note: The listing broker was already the agent of the seller. By advising the prospective buyer and establishing an implied agency, the listing broker created an undisclosed dual agency with the seller and the prospective buyer.
An undisclosed dual agency is illegal, and will subject the listing broker to DRE discipline and the loss of any earned commission. In CA, disclosure is a fiduciary duty owed by an agent to a principal. Here, the agent is the listing broker and the principal is the seller. The listing broker owes the seller the disclosure of relevant and pertinent information pertaining to the listing broker's duties. One of the listing broker's duties is to counsel the seller as to a prospective buyer's ability to complete a sale.
Information related to the delinquent child support must be disclosed by the listing broker to Jon Brown as it pertains to Samantha Southerland's financial ability to buy the condominium. A, B, and D are incorrect. Real estate licensees owe both parties to a transaction the duties of honesty, good faith, fair dealing, and a full disclosure of all material facts related to the desirability or value of the property.
Test-Taking Tip: Be careful to distinguish "the fiduciary duty of disclosure" from the "disclosure of all material facts related to the property. The fiduciary duty of disclosure is not owed to an unrepresented member of the public. In contrast, the "disclosure of all material facts related to the property" is owed by a real estate licensee to both parties in a transaction, and does not depend on an agency relationship.
Study Online Instantly. In CA, the listing broker is a special agent, employed by the seller for a particular transaction or act i. A special agent is typically only an advisory position.
So, for example, while the listing broker can solicit offers and advise the seller as to the merits of each offer, the listing broker cannot accept an offer and bind the seller. In contrast, the real estate broker working as a property manager is a general agent. General agents are typically employed for ongoing businesses.
A, B, and D are correct statements. Test-Taking Tip: The salesperson or broker associate acts as a general agent to the broker of record. The Summary Report is an appraisal with a level of detail sufficient for lenders financing either the purchase or the refinance of residential property. The appraiser "summarizes" the information included in the work file of the subject property, and reports an estimate of the subject property's market value.
The self-contained report aka the "narrative report" is the most detailed and comprehensive type of appraisal. The appraiser would report and explain--rather than merely summarize--the information in the work file of the subject property. The Public Report for new subdivisions is not a type of appraisal. It is a disclosure statement issued by the DRE to inform the public about the new subdivision. With some exceptions, developers of new subdivisions of 5 or more units must apply to the DRE for the Public Report.
Without a Final Public Report from the DRE, developers are not allowed to close escrow on any real estate parcels in the new subdivision. A home inspection report is not a type of appraisal. A home inspector reports on the condition of a property's major systems and components e. None of the statements are correct. Per the principle of contribution, the value of an improvement aka a "component" is not what it cost, but what it adds to the subject property's value.
B and C are incorrect. These answer choices incorrectly use terminology from a different principle of appraisal, the principle of conformity. Per the principle of conformity, property values tend to stabilize when homes in a neighborhood are similar to each other. This principle theorizes that the value of a mansion in a neighborhood of small houses will fall, and this is called "regression. This method of valuation is called the Cost Approach. It involves the appraiser estimating the cost to build the improvements new, deducting for accrued depreciation, and, finally, adding the value of the land.
The Replacement Cost Approach is used to estimate how much it would currently cost to build the improvements with the same utility, using today's materials and labor skills. The estimate would include a cure for any outdated design i. The Reproduction Cost Approach would estimate how much it would cost to build an exact replica of the existing improvements, and the estimation would include--not correct--any outdated design.
The Market Data Approach aka the Sales Comparison Approach uses adjusted, recently-sold comparable properties to arrive at an estimate of the market value of the subject property. If comparables or comps aren't available, the Cost Approach is an alternative method of valuation.
The income approach is used to appraise income-producing properties. The test question directs you to select a method of valuation for properties that do not produce income.
A Mortgage is a security instrument, legal but infrequently used in California. There are two parties: The borrower is called the "mortgagor" and the lender is called the "mortgagee. The vowels in the words can serve as your memory aid. There are two "E"s in mortgagee and lender, and two "O"s in mortgagor and borrower.
The Deed of Trust has three parties: the trustor borrower , the beneficiary lender , and the trustee third party, acting on behalf of the lender. A promissory note is not a security instrument, but an instrument that documents the terms of a contract to pay back money lent at a specified time or on demand in a financial transaction.
The option contract is not used for loans. An option contract is typically between the owner optionor of a parcel of real estate and a prospective buyer optionee considering whether or not to buy the property. The owner promises not to sell the property to anyone else during the option term, and makes this promise for the nonrefundable "option fee. Why is this important? The Deed of Trust nearly always contains a "Power of Sale" clause. This clause gives the trustee the authority, on behalf of the lender, to sell the property if the borrower defaults on the terms of the loan e.
However, if the loan is paid in full, the trustee must "reconvey" bare legal title back to the former borrower. Since it was created in the s, the Federal Housing Administration FHA loan program has helped millions of Americans become homeowners when they cannot afford the down payment on a unit residence.
When a loan is FHA-insured, lenders will agree to a loan-to-value ratio of up to The test question stating that Chen and Wang only put a 3. This program of the federal government works by protecting lenders against loss in the event of borrower default. It does this through FHA mortgage default insurance.
The test question states that Chen and Wang turned to a government program for assistance, but a conventional loan is not guaranteed or insured by the government.
This insurance would protect the lender in the event of borrower default of the loan. Typically, it would not protect the lender for the entire outstanding balance of the loan.
Instead, PMI covers at least a portion of the deficiency between what is still owed on the loan and what the property sells for at the foreclosure sale. FHA is not a direct lender. The test question states that Chen and Wang had to purchase mortgage default insurance. The VA loan program is guaranteed by the government: Veterans who qualify for this government program do not have to purchase mortgage default insurance.
A package loan is secured not only by real estate, but also by personal property being sold with the real estate. Two examples of personal property that might be "packaged" with the real estate are: 1 furniture sold with model homes or vacation properties, and; 2 kitchen equipment being sold with a property used as a restaurant. Note: The legal term for personal property is "chattel.
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