California Real Estate Salesperson License, Practice Exams

The commissioner denies an application for payment. What may the claimant do?

1. Appeal to the commissioner for reconsideration within thirty days.
2. Apply to the superior court at any time while the judgment remains unsatisfied.
3. Apply to the superior court within six months of the notice of denial being mailed. ✓
4. Nothing; the commissioner's decision on an application is final.

Why: Business and Professions Code section 10472(a) lets a claimant whose application the commissioner has denied file a verified application in the SUPERIOR COURT for an Order Directing Payment Out of the Consumer Recovery Account WITHIN SIX MONTHS AFTER THE MAILING of the notice of denial. A California judgment takes the application to the court that entered it; a federal judgment takes it to a county that would have been a proper venue, or to Sacramento. The six months runs from the mailing, not from receipt.

Which of these is a state tax lien NOT invalid against?

1. A purchaser who took with knowledge of the lien. ✓
2. A holder of a security interest in the property.
3. A mechanics lienor whose lien arose earlier.
4. A successor in interest without knowledge of the lien.

Why: Reference Book chapter 16 states that a state tax lien on all real property in California is NOT VALID against four classes: a SUCCESSOR IN INTEREST OF THE TAXPAYER WITHOUT KNOWLEDGE of the lien, a HOLDER OF A SECURITY INTEREST, a MECHANICS LIENOR, and a JUDGMENT LIEN CREDITOR whose right, title or interest was acquired BEFORE the state tax lien was recorded. Knowledge is what takes a purchaser out of the first class, so the lien holds against them.

What sort of approval process must a local agency's accessory dwelling unit ordinance provide?

1. One that requires a public hearing before the planning commission.
2. One that includes only ministerial provisions for approval. ✓
3. One that allows discretionary review on design grounds.
4. One that requires the consent of adjoining property owners.

Why: Government Code section 66316 requires an existing or newly adopted accessory dwelling unit ordinance to provide an approval process that includes ONLY MINISTERIAL PROVISIONS. Ministerial means the agency applies fixed standards without exercising judgment, so there is no hearing, no discretionary design review and no neighbor veto. That is the mechanism by which the state has removed local discretion over these units, and it is the point most often tested.

Who decides the listing price, and what does the seller agree about undisclosed facts?

1. The seller decides, and indemnifies over facts concealed. ✓
2. The broker decides, on the seller's instructions as to the net required.
3. The seller decides, and the broker warrants the price is achievable.
4. The parties decide jointly, and each indemnifies the other.

Why: Reference Book chapter 20 says THE SELLER IS RESPONSIBLE FOR DETERMINING AT WHAT PRICE TO LIST AND SELL THE PROPERTY, and AGREES TO INDEMNIFY AND HOLD BROKER HARMLESS IN ACTIONS RESULTING FROM ANY MATERIAL FACT THE SELLER KNOWS BUT FAILS TO DISCLOSE. The price is the owner's decision and the concealment is the owner's risk; neither is the broker's to carry.

What does proof of an intentional violation of the fair housing article include?

1. Direct evidence of a stated discriminatory motive only.
2. A pattern of at least three comparable refusals.
3. A finding by the department following a formal investigation.
4. An act or omission showing an intent to discriminate. ✓

Why: Government Code section 12955.8(a) provides that proof of an intentional violation INCLUDES, BUT IS NOT LIMITED TO, an act or failure to act otherwise covered by the part that DEMONSTRATES AN INTENT TO DISCRIMINATE. The subdivision then explains when a person intends to discriminate by reference to the protected characteristics. Neither a stated motive nor a departmental finding is required, and the open wording means the listed route is not the only one.

What does the federal Act's blockbusting prohibition require beyond the representations themselves?

1. That the person induced actually sell or rent.
2. That the representations be untrue when made.
3. That the inducement be for profit. ✓
4. That the person making them hold a license.

Why: 42 USC 3604(e) makes it unlawful FOR PROFIT to induce or attempt to induce any person to sell or rent a dwelling BY REPRESENTATIONS REGARDING THE ENTRY OR PROSPECTIVE ENTRY INTO THE NEIGHBORHOOD of persons of a particular race, color, religion, sex, handicap, familial status or national origin. The words FOR PROFIT are a condition of the federal prohibition. An ATTEMPT suffices, the representations need not be false, and no sale need follow.

What does "discrimination" include for the housing provisions of FEHA?

1. Refusal to sell or rent, and nothing beyond an outright refusal.
2. Any distinction drawn between applicants for a housing accommodation.
3. Conduct that a conciliation council has found to be discriminatory.
4. Refusal to sell, rent or lease, among other conduct. ✓

Why: Government Code section 12927(c)(1) provides that DISCRIMINATION INCLUDES REFUSAL TO SELL, RENT OR LEASE HOUSING ACCOMMODATIONS, and goes on through the other conduct the paragraph enumerates. The word INCLUDES is doing work: the definition is not exhausted by an outright refusal, which is why conduct short of one - the terms offered, the information given, the steering - falls inside it.

For how long must a seller and agent keep the lead-based paint documentation?

1. Four years from completion of the sale.
2. Three years from the date of the disclosure.
3. Three years from completion of the sale. ✓
4. For as long as the seller owns other target housing.

Why: Reference Book chapter 20 gives THE RETENTION PERIOD, FOR SELLERS AND LESSORS AND FOR AGENTS, AS THREE YEARS FROM COMPLETION OF THE SALE, or from commencement of the lease or rental. It runs from the completion of the transaction rather than from the date of the paperwork, and it is shorter than the four years the Real Estate Law requires for a broker's transaction records generally, which is why the two are worth holding apart.

What must the "Notice Required by California Law" in a foreclosure consultant contract tell the owner?

1. That the owner may cancel the contract within three calendar days of signing it.
2. That the consultant is not licensed or approved by any state agency or department.
3. That the consultant can take no money until done, nor have them sign a lien or deed. ✓
4. That free assistance is available from nonprofit counseling agencies.

Why: Civil Code section 2945.3(b) prescribes a NOTICE REQUIRED BY CALIFORNIA LAW in at least 14-POINT BOLDFACE TYPE, naming the consultant and saying that they or anyone working for them CANNOT take any money from the owner or ask for money UNTIL THEY HAVE COMPLETELY FINISHED DOING EVERYTHING THEY SAID THEY WOULD DO, AND CANNOT ASK THE OWNER TO SIGN ANY LIEN, DEED OF TRUST OR DEED. The contract must separately tell the owner of the right to cancel, which runs for FIVE BUSINESS DAYS, not three calendar days.

Which act may one spouse NOT do alone with community real property?

1. Collect the rents that it produces.
2. Insure it against loss by fire.
3. Occupy it as the family residence.
4. Sell, convey, encumber or lease it. ✓

Why: Each spouse has equal management and control of community property, but the Reference Book's chapter 5 requires that each must join in the sale, transfer, conveyance, encumbrancing or leasing of community REAL property. The chapter draws the practical lesson for licensees directly: where real property is owned by two or more persons, obtain the signature of every person in title on listing agreements and on purchase and sale agreements.

An owner believes their property is subject to an unlawfully restrictive covenant. What does the Government Code provide?

1. A process by which the owner may have the covenant removed from the record. ✓
2. A right to damages against the person who recorded the covenant.
3. A right to have the whole declaration set aside by the court.
4. Nothing; the covenant must simply be ignored as void.

Why: Government Code section 12956.2 gives a person who holds or is acquiring an ownership interest of record in property they believe is subject to an unlawfully restrictive covenant a process for dealing with it on the record – which section 12956.1 calls REDACTION. The covenant is already void under Civil Code section 53; what the process changes is the public record, not the legal effect, and that is precisely why it is needed.

What is the effect of the equal housing opportunity clause in a listing?

1. It discharges the broker from liability for discrimination.
2. It binds the seller to accept any conforming offer received.
3. It satisfies the Commissioner's advertising regulations.
4. It is prima facie evidence of nondiscriminatory intent. ✓

Why: Reference Book chapter 20 says of the EQUAL HOUSING OPPORTUNITY CLAUSE that it IS PRIMA FACIE EVIDENCE OF NONDISCRIMINATORY INTENT, and adds the limit in the next sentence: THE PROOF OF COMPLIANCE IS, OF COURSE, THAT THE PARTIES ACT IN THE SPIRIT OF THE DECLARATION. A clause is evidence of intent; conduct is proof of compliance.

Under an exclusive right to sell, when is the broker entitled to a commission?

1. Whenever the broker or a cooperating broker procures the buyer.
2. Whenever the property sells, including after the listing expires.
3. Whenever it sells in the period, whoever procures it. ✓
4. Whenever the broker produces a buyer on the listing terms.

Why: Reference Book chapter 10 says the EXCLUSIVE RIGHT TO SELL AFFORDS THE BROKER THE GREATEST PROTECTION and makes them the sole agent for the sale, letting or encumbering of the property: the broker IS ENTITLED TO A COMMISSION PROVIDED ONLY THAT THE PROPERTY IS SOLD, RENTED OR ENCUMBERED DURING THE LISTING PERIOD, REGARDLESS OF WHO PROCURES THE BUYER. The owner relinquishes BOTH the right to list elsewhere AND the right to defeat the claim by selling personally.

How must the existence of window security bars be disclosed?

1. By a separate written notice signed by the buyer.
2. On the statutory transfer disclosure form itself. ✓
3. Orally at the first showing of the property.
4. Only where the bars lack a safety release mechanism.

Why: Civil Code section 1102.16 requires the disclosure of the existence of any WINDOW SECURITY BARS AND ANY SAFETY RELEASE MECHANISM on them to be made PURSUANT TO SECTION 1102.6 OR 1102.6a – that is, on the statutory Transfer Disclosure Statement form itself rather than by separate notice. Note that the existence of the bars is disclosable whether or not a release mechanism is fitted; the mechanism is a second thing to state, not a condition of the first.

Whose consent is needed to amend a declaration in a way that materially changes owners' rights?

1. The Real Estate Commissioner's, in writing, for as long as any lot in the project remains unsold.
2. The association's board of directors, by a majority vote taken at a duly noticed meeting.
3. The Commissioner's, in writing and in advance, while the subdivider holds a quarter of the votes. ✓
4. No one's; the declaration may be amended exactly as its own amendment clause provides.

Why: Business and Professions Code section 11018.7(a) makes no amendment of the declaration, bylaws, articles or other controlling instruments that would MATERIALLY CHANGE owners' rights of ownership, possession or use valid WITHOUT THE PRIOR WRITTEN CONSENT OF THE REAL ESTATE COMMISSIONER, during the period when the subdivider or their successor holds or directly controls AS MANY AS ONE-FOURTH OF THE VOTES that could be cast to make the change. Subdivision (b) bars consent where the change would create a ground for denying a public report.

How is a contract interpreted where its language is clear and explicit?

1. The parties' intentions govern, whatever the language says.
2. Custom in the trade governs where it differs from the language.
3. The language governs in every case without exception.
4. The language governs, unless it involves an absurdity. ✓

Why: Civil Code section 1638 provides that the language of a contract is to GOVERN ITS INTERPRETATION IF the language is CLEAR AND EXPLICIT AND DOES NOT INVOLVE AN ABSURDITY. The absurdity proviso is part of the rule, so an answer saying the language governs in every case without exception states the rule without its qualification, which is the commonest way of misremembering it.

What does a grant deed impliedly warrant?

1. That the grantor has not already conveyed, and has not encumbered it. ✓
2. That the grantor owns the property and that it is free of all encumbrances.
3. That the grantor owns the property, but not that it is unencumbered.
4. Nothing; the grantor conveys only such interest as they happen to have.

Why: Reference Book chapter 7 explains that because of the word GRANT, the grantor of a grant deed IMPLIEDLY WARRANTS THAT THEY HAVE NOT ALREADY CONVEYED TO ANY OTHER PERSON and that the estate conveyed IS FREE FROM ENCUMBRANCES DONE, MADE OR SUFFERED BY THE GRANTOR or anyone claiming under them, taxes, assessments and other liens included. It does NOT warrant that the grantor is the owner or that the property is otherwise unencumbered, and the warranty covers only encumbrances arising during the grantor's own possession. The warranties are implied because the law reads them in whether or not the form expresses them.

What must appear in a radio or television advertisement for a loan disseminated mainly in California?

1. The licensee's name and the words "real estate broker".
2. The Department of Real Estate number alone.
3. The department number and the unique identifier. ✓
4. The lender's name and the rate of interest offered.

Why: Business and Professions Code section 10235.5(a) forbids a real estate licensee or mortgage loan originator to place an advertisement DISSEMINATED PRIMARILY IN THIS STATE FOR A LOAN unless there is disclosed, IN THE CASE OF A RADIO OR TELEVISION ADVERTISEMENT, THE DEPARTMENT OF REAL ESTATE NUMBER AND THE UNIQUE IDENTIFIER assigned by the Nationwide Multistate Licensing System and Registry under which the loan would be made or arranged. The terms are defined by reference to section 10166.01.

A residential lease provides that it renews automatically if the tenant stays on. What is its status?

1. Void, automatic renewal clauses being prohibited in residential leases.
2. Voidable by the non-drafting party, unless the clause appears as required. ✓
3. Valid, automatic renewal being a matter left to the parties' agreement.
4. Valid, but only for a further term equal to the original.

Why: Civil Code section 1945.5 makes any automatic renewal or extension term in a residential lease – operating where the lessee remains in possession or fails to give notice of intent not to renew – VOIDABLE BY THE PARTY WHO DID NOT PREPARE THE LEASE, unless the provision appears in the lease in the manner the section prescribes. Voidable, not void: it is the non-drafting party who decides, which is the protection the section gives.

What is a protective or safety clause in a listing?

1. A promise to pay a commission if the owner withdraws the property from the market.
2. A promise to pay on a sale after expiry to someone the broker negotiated with. ✓
3. A promise to extend the listing where no buyer is found in the period.
4. A promise to pay the broker's costs if no sale takes place during the listing.

Why: Reference Book chapter 10 describes the PROTECTIVE OR SAVINGS CLAUSE: the seller AGREES TO PAY A COMMISSION IF THE PROPERTY IS SOLD WITHIN A PERIOD OF SO MANY DAYS AFTER EXPIRATION OF THE LISTING TO A PERSON WITH WHOM THE BROKER NEGOTIATED WHILE THE LISTING WAS IN EFFECT. Its usual condition is that THE BROKER FURNISH THE OWNER WITH A LIST OF PROSPECTIVE BUYERS with whom they negotiated, within a prescribed number of days after the listing expires.

A developer wishes to sell parcels in a subdivision for which a final map is required. When may a parcel actually be sold?

1. As soon as the tentative map has been approved by the legislative body.
2. As soon as the buyer's deposit has been placed in escrow.
3. At any time, the map requirement affecting only construction.
4. Not until the final map has been filed for record. ✓

Why: Government Code section 66499.30(a) forbids any person to sell, lease or finance any parcel for which a final map is required UNTIL THE FINAL MAP HAS BEEN FILED FOR RECORD by the county recorder. The model homes exception in (a) applies to starting construction, not to selling. Subdivision (e) allows an OFFER OR CONTRACT to sell that is expressly conditioned on approval and filing of the final map, but the sale itself still waits for the filing. Approval of the tentative map does not lift the bar.

Within what distance is a "neighborhood area" for the purposes of the ordnance disclosure?

1. One quarter mile.
2. One mile. ✓
3. Two miles.
4. Five miles.

Why: Civil Code section 1102.15 defines "neighborhood area" as WITHIN ONE MILE of the residential real property. The seller who has ACTUAL KNOWLEDGE of any former federal or state ordnance location within that area must give written notice as soon as practicable before transfer of title. The section also defines the location itself: an area identified by a federal or state agency as once used for military training which MAY CONTAIN POTENTIALLY EXPLOSIVE MUNITIONS.

What must an escrow holder do when a principal asks for legal advice?

1. Answer, so far as the escrow instructions supply the answer.
2. Refer the question to the title insurance company for an opinion.
3. Decline, and suggest that the parties consult an attorney. ✓
4. Answer, provided the same advice is given to both principals.

Why: Reference Book chapter 8's third escrow principle is that the escrow holder IS PROHIBITED FROM OFFERING LEGAL ADVICE AND MUST SUGGEST THAT DISAGREEING PARTIES CONSULT AN ATTORNEY, or a real estate broker where the matter is one that may be negotiated within the scope of the license. The holder may offer advice as agent and fiduciary WITHIN THE COURSE AND SCOPE OF THE INSTRUCTIONS, which is a narrower thing than advising on the parties' rights.

Within what period after a protected act may a landlord not retaliate against a tenant?

1. 60 days.
2. 90 days.
3. 180 days. ✓
4. 365 days.

Why: Civil Code section 1942.5(a) bars the lessor, WITHIN 180 DAYS of the triggering events it lists, from recovering possession, causing the lessee to quit involuntarily, increasing the rent or decreasing any services – where the retaliation is because the lessee exercised rights under the chapter or complained to an appropriate agency about tenantability.

A property is scarce and in demand, but its title cannot lawfully be conveyed. What follows for its value?

1. Its value is reduced but not eliminated by the restriction.
2. Its value is unaffected, transferability going to price alone.
3. It has no value, all four elements being essential. ✓
4. Its value is set by its utility to the present owner only.

Why: Reference Book chapter 15 states that none of the four elements alone will create value and that ALL must be present to achieve value for a property. Transferability is the one missing here: the chapter says the commodity must be transferable as to its use or its title. The four-element framework is conjunctive, which is exactly what this item tests – a candidate treating the elements as factors to be weighed will choose one of the partial answers.

Tenants in common have a unity of possession. What follows from it?

1. No cotenant may occupy the property without paying rent to the other cotenants for it.
2. No cotenant may sell an individual interest without the written consent of the others.
3. No cotenant may exclude the others or claim any specific portion of the property alone. ✓
4. No cotenant may be compelled to contribute to the cost of repairs made by another.

Why: Unity of possession, as the Reference Book explains it, means each owner has a right to possession of the whole, so none can exclude the others or claim a specific portion. The rent point runs the opposite way to charging an occupying cotenant rent: precisely because each has a right to possess, no tenant in common can be charged rent for using the land unless all the cotenants have agreed otherwise.

What does a violation of the exclusive listing limits mean for a licensee?

1. They are liable to a civil penalty payable to the homeowner.
2. They are deemed to have violated their licensing law. ✓
3. They commit a misdemeanor under the Real Estate Law.
4. They lose only the commission under that listing.

Why: Civil Code section 1670.12(e)(3) provides that ANY PERSON LICENSED UNDER THE REAL ESTATE LAW WHO VIOLATES ANY PROVISION OF THE SECTION SHALL BE DEEMED TO HAVE VIOLATED THAT PERSON'S LICENSING LAW - so the duration, renewal and recording limits are enforceable as discipline as well as through the voidness of the agreement. Paragraph (2) adds that a violation is also A VIOLATION UNDER SECTION 1770, which is the Consumers Legal Remedies Act's list of unlawful practices.

What does the Natural Hazard Disclosure Statement say about its own status?

1. It is a warranty by the seller as to the property's condition.
2. It is a warranty by the agent as to the accuracy of the zones.
3. It is not a warranty, though buyers may rely on it. ✓
4. It is neither a warranty nor a document a buyer may rely on.

Why: Civil Code section 1103.2(a) sets out the statutory form, and the form itself says the seller and the seller's agents or a third-party consultant disclose the information WITH THE KNOWLEDGE THAT EVEN THOUGH THIS IS NOT A WARRANTY, PROSPECTIVE BUYERS MAY RELY ON THIS INFORMATION in deciding whether and on what terms to purchase. Both halves matter: no warranty is given, and reliance is nonetheless expected – which is why accuracy is taken seriously without it becoming a guarantee.

A lender holds money in advance for taxes and insurance on a one- to four-family residence in California. What does the Civil Code require?

1. That the lender hold the money in a separate trust account.
2. That the lender pay interest on the amount held to the borrower. ✓
3. That the lender return any surplus within 30 days of each year's end.
4. That the lender limit the impound to one twelfth of the annual charges.

Why: Civil Code section 2954.8(a) requires every financial institution that makes loans secured by real property containing only a one- to four-family residence in this state, or purchases obligations so secured, and that receives money in advance for taxes, assessments, insurance or other purposes relating to the property, to PAY INTEREST on the amount held to the borrower. It is a California protection that has no federal counterpart, which is why it is examined.

How may a written contract be modified?

1. By a further contract in writing only, in every case and whatever the parties agree.
2. By any oral agreement, whether or not executed or paid for.
3. By conduct alone, provided both parties acquiesce.
4. In writing; by an executed oral agreement; or orally, for new consideration. ✓

Why: Civil Code section 1698 provides three routes: (a) by a CONTRACT IN WRITING; (b) by an ORAL AGREEMENT TO THE EXTENT THAT IT IS EXECUTED by the parties; and (c), unless the contract expressly provides otherwise, by an ORAL AGREEMENT SUPPORTED BY NEW CONSIDERATION, the statute of frauds still having to be satisfied if the contract as modified falls within it. An oral modification that is neither executed nor supported by new consideration does not qualify.

May the payment of a commission be made conditional?

1. No; the commission is earned when a conforming buyer is produced.
2. Yes, but only on conditions relating to the broker's own performance.
3. Yes, and the seller bears the burden of proving the condition failed.
4. Yes, on any lawful condition, the broker bearing the burden of proof. ✓

Why: Reference Book chapter 10 says THE PAYMENT OF A COMMISSION UNDER A LISTING CONTRACT MAY BE MADE DEPENDENT UPON ANY LAWFUL CONDITION, and that THE BURDEN IS UPON THE BROKER TO ESTABLISH THAT THEY HAVE EARNED A COMMISSION BY FULFILLING ALL OF THE CONDITIONS. The chapter then supplies the counterweight: IF FULFILLMENT OF A CONDITION IS PREVENTED BY THE FRAUD OR BAD FAITH OF THE SELLER, or by collusion between the seller and others, THE BROKER MAY RECOVER EVEN IF THE CONDITION HAS NOT BEEN MET.

What did the Legislature find had been happening to homeowners in foreclosure?

1. Fraud, deception and unfair dealing by home equity purchasers. ✓
2. Systematic undervaluation of their homes by appraisers.
3. Refusal by lenders to accept reinstatement of the loan.
4. Delay by trustees in setting a date for the sale.

Why: Civil Code section 1695(a) declares that HOMEOWNERS WHOSE RESIDENCES ARE IN FORECLOSURE HAVE BEEN SUBJECTED TO FRAUD, DECEPTION AND UNFAIR DEALING BY HOME EQUITY PURCHASERS, that home equity is usually the greatest financial asset such homeowners hold, and that IN THE PERIOD BETWEEN THE COMMENCEMENT OF FORECLOSURE AND THE SCHEDULED SALE DATE homeowners in financial distress, ESPECIALLY THE POOR, ELDERLY AND FINANCIALLY UNSOPHISTICATED, are vulnerable. The chapter's whole shape follows from that finding.

What must a journal show, in a non-columnar accounting system?

1. All transactions in sequence, correlating with the ledgers. ✓
2. The balance owed to each beneficiary after every transaction affecting it.
3. The bank balance as affected by the transactions, in debits and credits.
4. The monthly reconciliation of the account with the bank statement.

Why: Reference Book chapter 21 describes the journal as A DAILY CHRONOLOGICAL RECORD of trust fund receipts and disbursements, which must RECORD ALL TRUST FUND TRANSACTIONS IN CHRONOLOGICAL SEQUENCE, contain enough information to identify each transaction, CORRELATE WITH THE LEDGERS so that the same figures are posted to the cash ledger and the beneficiary ledgers, and SHOW TOTAL RECEIPTS AND TOTAL DISBURSEMENTS AT LEAST ONCE A MONTH. The bank balance in debits and credits is the CASH LEDGER'S job; the balance owed to each beneficiary is the BENEFICIARY LEDGER'S.

Which of these is NOT one of the four elements of value?

1. Utility.
2. Listing with a broker. ✓
3. Scarcity.
4. Transferability of title.

Why: Reference Book chapter 15 names four elements of value, ALL of which must be present: utility, scarcity, demand together with the financial ability to purchase, and transferability. The chapter makes the point with examples – a thing may be scarce but without utility there is no demand, and air has utility and demand but is too abundant to have commercial value. How a property is marketed is not an element of value at all.

A spouse dies leaving no will. What happens to that spouse's half of the community property?

1. It passes to the surviving spouse. ✓
2. It passes to the children of the marriage.
3. It passes by intestate succession to all heirs.
4. It is divided among the heirs.

Why: Each spouse may dispose of his or her half of the community property by will; absent a will, Reference Book chapter 5 says title to the decedent's half passes to the surviving spouse. The right to will a half is what separates community property from joint tenancy, where the survivor takes regardless – so a candidate who knows only that "the spouse gets it" has the right answer here for the wrong reason.

Which of these is NOT a case in which the Civil Code deems a grant constructively delivered?

1. Where the parties at execution understand it to be delivered and the grantee may demand it.
2. Where it is delivered to a stranger for the grantee's benefit and the grantee's assent is shown.
3. Where it is delivered to a stranger for the grantee's benefit and assent may be presumed.
4. Where the grantor records the instrument without the grantee's knowledge. ✓

Why: Civil Code section 1059 gives two cases, and only two: where the instrument is by the parties' agreement at execution understood to be delivered under circumstances entitling the grantee to immediate delivery; and where it is delivered to a stranger for the grantee's benefit with the grantee's assent shown or presumed. Recording is not among them. Recording gives constructive NOTICE under section 1213, which is a different idea wearing a similar word.

By how much may a base year value be increased annually for inflation?

1. By up to one percent.
2. By up to two percent. ✓
3. By up to three percent.
4. By the full change in the CPI.

Why: Reference Book chapter 16 explains that the base year value is locked in place and adjusted upward by an inflation factor NOT EXCEEDING TWO PERCENT per year, based on the California Consumer Price Index. The cap is what matters: where the CPI rises faster, the increase is still limited to 2%, so an answer of the full change in the CPI describes the index without its ceiling. The ceiling is the whole protection Proposition 13 gives a long-term owner.

Are benefit assessments deductible on a California or federal income tax return?

1. Yes, in the same way as the ad valorem property tax on the land.
2. Yes, where the assessment appears on the property tax bill.
3. Generally not, though one that finances maintenance is deductible. ✓
4. No, whether it finances improvements or maintenance.

Why: Reference Book chapter 16 says benefit assessments are GENERALLY NOT CONSIDERED DEDUCTIBLE as a tax on either California or federal income tax returns, and draws the distinction federal tax regulations make between AN ASSESSMENT TO FINANCE IMPROVEMENTS AND ONE TO FINANCE MAINTENANCE: ONLY THE LATTER IS DEDUCTIBLE. The purposes for which benefit assessments are levied include lighting, flood control, transit, police and fire protection, county service areas and paramedics.

How long must a use continue, uninterrupted, before an easement by prescription arises?

1. 3 years
2. 5 years ✓
3. 10 years
4. 20 years

Why: Five years of continuous and uninterrupted use, where the use is hostile and adverse, open and notorious, exclusive in the sense of asserting a private right, and under some claim of right. Reference Book chapter 5 adds the distinction candidates most often miss: payment of taxes is generally NOT required for a prescriptive easement, though it is among the requirements for adverse possession and ownership of the land itself.

What is the effect on a license of incarceration following a felony conviction?

1. Automatic suspension while the licensee is incarcerated. ✓
2. It is automatically revoked once the conviction is final.
3. It is unaffected until the department completes a hearing.
4. It is suspended only where the felony related to real estate.

Why: Business and Professions Code section 10186.1(a) suspends a license or endorsement AUTOMATICALLY DURING ANY TIME THE LICENSEE IS INCARCERATED AFTER CONVICTION OF A FELONY, whether or not the conviction is under appeal, and requires the department to work out the duration on receiving the certified record of conviction and to notify the licensee. Whether the felony was SUBSTANTIALLY RELATED to the functions of a licensee is a separate question under subdivision (b), and it governs suspension beyond the incarceration rather than the automatic suspension during it.

For what does the Civil Code say an agent represents the principal?

1. All purposes within the scope of the agent's actual or ostensible authority. ✓
2. All purposes expressly stated in the instrument creating the agency.
3. All purposes the principal has ratified after the event in writing.
4. All purposes customary in the trade in which the agency is exercised.

Why: Civil Code section 2330 states both the reach and the consequence: an agent represents the principal for all purposes within the scope of actual OR OSTENSIBLE authority, and all the rights and liabilities that would accrue to the agent from transactions within that limit accrue instead to the principal. Ostensible authority counts equally with actual, which is what makes the scope wider than the instrument and is the reason a principal must be careful what they let others believe.

What are the essential terms of a listing agreement?

1. The parties, the property and the price, the commission being implied.
2. The parties, the property and the broker's license number.
3. The property, the price and the buyer's financing terms.
4. Parties, property, terms, fee, expiry date and signatures. ✓

Why: Reference Book chapter 10, under the essential elements of an agency agreement, lists SIX: THE NAMES OF THE PARTIES, THE IDENTITY OF THE PROPERTY, THE TERMS AND CONDITIONS OF THE SALE, LEASE OR LOAN, THE AMOUNT OF COMMISSION, THE EXPIRATION DATE OF THE AGENCY, and THE SIGNATURES OF ALL PARTIES. The property description need not be as detailed as in a conveyance, but MUST IDENTIFY THE PROPERTY WITH CERTAINTY: "my house on Tenth Street" serves if the owner has one house there and not if they have two.

What limit does the Financial Code place on a prepayment fee in a covered loan?

1. None may be charged at any time during the life of the loan.
2. None may be charged after the first 36 months from consummation. ✓
3. None may be charged after the first 12 months from consummation.
4. None may be charged after the first 60 months from consummation.

Why: Financial Code section 4973(a)(1) provides that a covered loan SHALL NOT include a prepayment fee or penalty AFTER THE FIRST 36 MONTHS after the date of consummation, and paragraph (2) permits one up to that point subject to the section's conditions. The 36 months is fixed in the statute rather than indexed, unlike the covered loan threshold itself, so it can be stated with confidence.

Information required by the disclosure article is delivered to the buyer by a public agency. What is the effect?

1. It is deemed to comply with the article and relieves the seller and agents. ✓
2. It has no effect; the seller must deliver the same information again.
3. It relieves the agents but not the seller.
4. It relieves the seller only where the buyer acknowledges receipt.

Why: Civil Code section 1102.4(b) provides that delivery of information required to be disclosed by the article to a prospective buyer BY A PUBLIC AGENCY or other person providing information required under the article SHALL BE DEEMED TO COMPLY with the requirements and SHALL RELIEVE the seller or any listing or buyer's agent of the obligation. The scheme is about the buyer receiving the information, not about who hands it over.

Which of these is NOT a way a restricted license may be restricted?

1. By term, so that the license expires on a date the commissioner sets.
2. By the geographic area within which the licensee may do business. ✓
3. By employment by a particular broker, where the licensee is a salesperson.
4. By conditions to be observed in exercising the privileges granted.

Why: Business and Professions Code section 10156.6 lets a restricted license issued under section 10156.5 be restricted in the ways the commissioner finds advisable in the public interest, and names three: BY TERM, TO EMPLOYMENT BY A PARTICULAR REAL ESTATE BROKER if the licensee is a salesperson, and BY CONDITIONS TO BE OBSERVED in exercising the privileges granted. Geography is not among them. Section 10156.5 is where the power comes from: a restricted license follows a hearing at which a violation justifying suspension or revocation, or a failure to show entitlement to the license applied for, has been found.

What CRIMINAL penalty applies to wilfully failing to execute and record a certificate of discharge?

1. A civil penalty of $500 payable to the borrower, and actual damages.
2. A misdemeanor: $50 to $400, or up to six months in jail. ✓
3. A misdemeanor, punishable by a fine of up to $10,000 or a year in jail.
4. None; the failure carries civil liability only.

Why: Civil Code section 2941.5 makes every person who WILFULLY VIOLATES SECTION 2941 guilty of A MISDEMEANOR punishable by a fine of NOT LESS THAN $50 NOR MORE THAN $400, or by IMPRISONMENT IN THE COUNTY JAIL FOR NOT MORE THAN SIX MONTHS, or both. The $500 forfeiture and damages in section 2941(d) are the CIVIL consequence, owed to the person affected, not the criminal penalty. Wilfully means SIMPLY A PURPOSE OR WILLINGNESS TO COMMIT THE ACT OR MAKE THE OMISSION.

A landlord who is a natural person owns two rental properties comprising four units in total. What security cap applies?

1. Two months' rent, without qualification.
2. Two months, unless the tenant is a service member. ✓
3. One month's rent, the exception applying only to a single property.
4. Three months' rent where any unit is furnished.

Why: Civil Code section 1950.5(c)(5)(A) permits up to TWO MONTHS' rent where the landlord is a natural person, or a limited liability company all of whose members are natural persons, AND owns no more than two residential rental properties collectively including no more than four dwelling units. Subparagraph (B) then disapplies the whole exception where the prospective tenant is a SERVICE MEMBER, so the general one-month cap returns for them.

What does the Government Code require each city and county to adopt for its physical development?

1. A comprehensive, long-term general plan. ✓
2. A zoning ordinance reviewed every five years.
3. A specific plan for each district within it.
4. A capital improvement program for public works.

Why: Government Code section 65300 requires each planning agency to prepare, and the legislative body of each county and city to adopt, a COMPREHENSIVE, LONG-TERM GENERAL PLAN for the physical development of the county or city – and of any land outside its boundaries bearing a relation to its planning. The general plan is the foundational document; zoning and specific plans are instruments that must then conform to it, which is the order the next several sections depend on.

A building encroaches a few inches over a boundary line, removal would be expensive, and the encroachment was an excusable mistake. What may a court do?

1. Deny removal and award damages to the owner of the land encroached upon. ✓
2. Order removal, since any wrongful encroachment must be abated by the builder.
3. Order the encroached-upon owner to convey the strip at its fair market value.
4. Deny any relief, since an encroachment measurable in inches is not actionable.

Why: Where the encroachment is slight, the cost of removal great and the cause an excusable mistake, Reference Book chapter 5 says a court may deny removal and award dollar damages instead. Two further consequences sit outside the answer choices: the local government would then require a boundary line adjustment or a variance to establish the zoning setbacks, and administrative remedies must be exhausted before a court can rule at all.

In the sales comparison approach, to which property is an adjustment made?

1. To the comparable, never to the subject property. ✓
2. To the subject property, never to the comparable.
3. To whichever property the appraiser judges the more atypical.
4. To both, so that each is brought to a common standard.

Why: Reference Book chapter 15 states it as a rule without exception: the adjustment is ALWAYS made to the COMPARABLE, not to the subject property. The logic is that the subject is the unknown being valued, so it supplies the standard while each comparable is adjusted toward it. This is the single most mechanical rule in the approach and the one candidates most often invert.

What may a financial institution not take into account when appraising a housing accommodation?

1. The prices recently obtained for comparable properties in the surrounding area.
2. The age and physical condition of the improvements on the security property.
3. The racial, ethnic, religious or national origin composition of the neighborhood. ✓
4. The zoning to which the security property and its neighbors are subject.

Why: Health and Safety Code section 35812 forbids a financial institution to consider the RACIAL, ETHNIC, RELIGIOUS OR NATIONAL ORIGIN COMPOSITION of the neighborhood or geographic area surrounding a housing accommodation, OR WHETHER THAT COMPOSITION IS UNDERGOING OR IS EXPECTED TO UNDERGO CHANGE, either in appraising the property or in deciding whether and on what terms to lend. The section ends by forbidding appraisal practices inconsistent with the Act, which is what stops the prohibition being evaded through a valuation.

Which of these WOULD constitute commingling under the Commissioner's Regulations?

1. Depositing up to $200 of the broker's funds to pay account service charges.
2. Depositing funds belonging partly to the principal and partly to the broker where separation is not reasonably practicable.
3. Leaving the broker's share in the account for up to twenty-five days after deposit where there is no dispute.
4. Depositing the broker's own funds to cover an anticipated commission. ✓

Why: Regulation 2835 prohibits commingling as used in Business and Professions Code section 10176(e) EXCEPT in the cases it specifies: reasonably sufficient funds NOT EXCEEDING $200 to pay service charges levied against the account; and funds belonging partly to the principal and partly to the broker where separation is not reasonably practicable, PROVIDED the broker's part is disbursed not later than TWENTY-FIVE DAYS after deposit and there is no dispute. Depositing the broker's own money against a commission not yet earned fits none of the exceptions (the third, in subdivision (c), concerns a threshold broker's loan-servicing trust account), so it is commingling.

A broker sells property belonging to a decedent's estate. What limits an exclusive right to sell?

1. It may not exceed 180 days, and needs the beneficiaries' consent.
2. It may not be granted at all; probate sales are open listings.
3. It may not exceed 90 days, and needs the court's permission. ✓
4. It may run for any period the estate representative agrees.

Why: Reference Book chapter 10 says the representative of a decedent's estate may initiate a probate sale by seeking offers directly or through brokers, and that THE REPRESENTATIVE, WITH COURT PERMISSION, MAY GRANT AN EXCLUSIVE RIGHT TO SELL THE PROPERTY FOR A PERIOD NOT TO EXCEED 90 DAYS under Probate Code section 10150. Acceptance of an offer is SUBJECT TO PROBATE COURT CONFIRMATION, and the sale must be advertised by publication or posting whether it is public or private.

What may the Commissioner do about a licensee's breach of the disclosure article?

1. Suspend or revoke for a wilful or repeated violation. ✓
2. Suspend or revoke the license for any violation, however minor.
3. Impose a civil penalty, discipline being reserved to the courts.
4. Nothing; the article's remedies are the transferee's alone.

Why: Business and Professions Code section 10176.5(a) lets the commissioner investigate an alleged violation of the transfer disclosure article ON THEIR OWN MOTION, and REQUIRES investigation ON A VERIFIED WRITTEN COMPLAINT from any person. The commissioner MAY SUSPEND OR REVOKE A LICENSE WHERE THE LICENSEE HAS WILFULLY OR REPEATEDLY VIOLATED the article. Wilfully OR repeatedly: a single inadvertent slip is not the target, and a pattern of them is.

In what form must an equity purchase contract be written?

1. In 12-point bold type, in English and the seller's own language.
2. In 10-point type, on the form the Commissioner prescribes.
3. In 10-point bold type, in the negotiating language. ✓
4. In any legible form, provided both parties sign and date it.

Why: Civil Code section 1695.2 requires every contract to be WRITTEN IN LETTERS OF A SIZE EQUAL TO 10-POINT BOLD TYPE, IN THE SAME LANGUAGE PRINCIPALLY USED BY THE EQUITY PURCHASER AND EQUITY SELLER TO NEGOTIATE THE SALE, and to be FULLY COMPLETED, SIGNED AND DATED BY BOTH PRIOR TO THE EXECUTION OF ANY INSTRUMENT OF CONVEYANCE of the residence. The conveyance cannot come first and the paperwork afterwards.

May the seller under a real property sales contract transfer the fee without assigning the contract?

1. No; neither may be transferred without the other. ✓
2. Yes, provided the buyer is notified in writing.
3. Yes, the fee being the seller's to deal with.
4. No, unless the buyer consents in writing to the split.

Why: Civil Code section 2985.1 forbids the split in both directions: the contract may not be transferred by the fee owner unless accompanied by a transfer of the real property, and the real property may not be transferred unless accompanied by an assignment of the contract. Keeping them together is what stops the buyer's contractual right and the legal title ending up in different hands, which is the exposure the whole 2985 series addresses.

Which of these is NOT something the Civil Code declares not to be a material fact requiring disclosure?

1. A death on the property more than three years before the offer.
2. The manner of a death occurring more than three years before the offer.
3. A death on the property within the last three years. ✓
4. That an occupant was living with HIV or died of AIDS-related complications.

Why: Civil Code section 1710.2(a)(1) declares two things not to be material facts: a death, or the manner of death, occurring MORE THAN THREE YEARS before the offer; and that an occupant was living with HIV or died from AIDS-related complications. The HIV and AIDS provision carries NO time limit at all. A death WITHIN the three years falls outside the protection, so the ordinary duty to disclose material facts is untouched for it.

How does USPAP define value, and what does the definition make of it?

1. The monetary relationship between properties and those who deal in them; never a fact. ✓
2. The amount asked, offered or paid for a property; a fact once stated.
3. The amount required to create, produce or obtain a property; a fact or an estimate.
4. The most probable price in a competitive and open market; a fact as of a date.

Why: Reference Book chapter 15 gives the three USPAP definitions together. VALUE is THE MONETARY RELATIONSHIP BETWEEN PROPERTIES AND THOSE WHO BUY, SELL OR USE THOSE PROPERTIES, and USPAP adds that it IS NEVER A FACT BUT ALWAYS AN OPINION of worth at a given time, which must always be qualified - market value, liquidation value, investment value. PRICE is the amount asked, offered or paid, and once stated it is a fact. COST is the amount required to create, produce or obtain a property, and is a fact or an estimate of fact.

What is the consequence if the trust account balance exceeds the aggregate trust fund liability?

1. A shortage, which must be corrected within 25 days.
2. Nothing, provided every beneficiary's balance is correct.
3. An overage, which must be paid to the Commissioner.
4. An overage, which may itself be commingling. ✓

Why: Reference Book chapter 21 says that if the trust account balance is LESS than the total liability there is A TRUST FUND SHORTAGE, in violation of Regulation 2832.1; and CONVERSELY, IF THE BALANCE IS GREATER THAN THE TOTAL LIABILITY, THERE IS A TRUST FUND OVERAGE AND THE BROKER MAY BE IN VIOLATION OF BUSINESS AND PROFESSIONS CODE SECTION 10176(e) FOR COMMINGLING. A discrepancy in either direction is a serious violation, and the chapter notes that many licenses have been revoked after an audit disclosed a shortage.

What must be disclosed to a borrower before they sign a mortgage or deed of trust on residential property of not more than four units?

1. In writing, the total interest and fees payable over the full term of the loan.
2. In writing, that a third party may request copies of default and sale notices. ✓
3. Orally, before signing, the identity of the intended assignee of the loan.
4. In writing, the lender's internal underwriting criteria for approving it.

Why: Civil Code section 2932.2 requires a mortgagee, beneficiary or authorized agent, for residential real property of NO MORE THAN FOUR dwelling units, to give the mortgagor or trustor, BEFORE THEY SIGN, a WRITTEN DISCLOSURE that A THIRD PARTY, SUCH AS A FAMILY MEMBER, HUD-CERTIFIED HOUSING COUNSELOR OR ATTORNEY, MAY RECORD A REQUEST TO RECEIVE COPIES OF ANY NOTICE OF DEFAULT AND NOTICE OF SALE. Such a request must comply with section 2924b.

What is a government lot?

1. A fractional parcel identified by number where a survey could not yield a full quarter section. ✓
2. A parcel the federal government has retained from the public domain and identified by number.
3. A parcel within a recorded subdivision that has been dedicated to a city or county for public use.
4. A parcel the county assessor has numbered on an assessor's map for the purpose of taxation.

Why: In the original government survey, lakes, streams and similar features created fractional pieces smaller than a quarter section, and those were identified by number; the lot number then became the legal description. Today acreage lost to correction lines and survey error is placed in the quarter sections along a township's western and northern boundaries, and those are also called government lots. Note the consequence the Reference Book's chapter 4 draws: a government lot does not necessarily contain a standard number of acres.

What is the simple interest on $4,650 for 75 days at 10 percent?

1. $96.88. ✓
2. $116.25.
3. $465.00.
4. $632.92.

Why: Reference Book chapter 26 works this exact problem by the long conventional method: principal times rate times days over 360, so $4,650 x 0.10 x 75/360 = $96.88. Each distractor is a real error: $116.25 divides by 300 rather than 360; $465.00 omits the time factor altogether and gives a full year's interest; and $632.92 is the answer to the chapter's OTHER worked example, the same note run for 1 year, 4 months and 10 days.

What does the limited partnership combine?

1. Limited liability and centralized management with partnership taxation. ✓
2. Limited liability for every partner with centralized management.
3. Unlimited liability for the investors with corporate taxation.
4. Partnership taxation with participation in control by every partner.

Why: Reference Book chapter 14 says the LIMITED PARTNERSHIP COMBINES MANY OF THE ADVANTAGES OF THE CORPORATE AND PARTNERSHIP FORMS: SOME OF THE CORPORATE ADVANTAGES OF LIMITED LIABILITY AND CENTRALIZED MANAGEMENT AND THE TAX ADVANTAGES OF THE PARTNERSHIP. The limited liability is not universal within it: under the Revised Limited Partnership Act a limited partner is not liable as a general partner UNLESS named as one in the certificate OR PARTICIPATING IN CONTROL OF THE BUSINESS.

What does the Commissioner's Regulations require of a responsible broker as to their salespersons?

1. Reasonable supervision over their activities. ✓
2. Daily review of every document each of them signs.
3. Personal attendance at each transaction they handle.
4. Written approval of each listing before it is taken.

Why: Regulation 2725 of Title 10 requires a responsible broker to exercise REASONABLE SUPERVISION over the activities of their salespersons and broker associates acting in the capacity of a salesperson. The standard is reasonableness, discharged through policies, rules, procedures and systems rather than through the broker's personal presence – which is what makes the other three options impossible in practice as well as wrong in law.

A direct contractor completes a project on 1 March. The owner records a notice of completion on 10 March. By what date must the direct contractor record a claim of lien?

1. 9 May, being sixty days after the notice of completion was recorded. ✓
2. 30 May, being ninety days after the work of improvement was completed.
3. 31 March, being thirty days after the direct contract was completed.
4. 9 April, being thirty days after the notice of completion was recorded.

Why: Civil Code section 8412 gives a direct contractor the EARLIER of ninety days after completion of the work of improvement or sixty days after the owner records a notice of completion or cessation. Ninety days from 1 March runs to 30 May; sixty days from 10 March runs to 9 May; the earlier controls, so 9 May. Recording the notice of completion is the owner's move and it SHORTENS the contractor's window, which is the point of recording it. The thirty-day figure belongs to claimants other than the direct contractor under section 8414 and is the trap here.

What standard does the Civil Code apply to a declaration, notice of default or notice of sale recorded in a foreclosure?

1. It must be signed by an officer of the servicer with personal knowledge.
2. It must be verified by a declaration under penalty of perjury.
3. It must be reviewed by counsel before it is recorded by the trustee.
4. It must be accurate, complete and backed by competent and reliable evidence. ✓

Why: Civil Code section 2924.17(a) applies to a declaration recorded under section 2923.5 or 2923.55, a notice of default, notice of sale, assignment of a deed of trust or substitution of trustee recorded by or on behalf of a mortgage servicer in a foreclosure subject to the requirements. The section requires such documents to be ACCURATE AND COMPLETE AND SUPPORTED BY COMPETENT AND RELIABLE EVIDENCE, which is the provision aimed at the practice that became known as robo-signing.

Which lenders are outside the licensing requirements for mortgage lending activity?

1. Banks, savings and loan associations, credit unions and insurers. ✓
2. Any lender making fewer than eight loans in a calendar year.
3. Any lender whose loans are secured by residential property alone.
4. No lender; the requirements apply to every person who makes such loans.

Why: Business and Professions Code section 10133.1(a) disapplies subdivisions (d) and (e) of section 10131, section 10131.1, and the mortgage loan articles commencing at sections 10230 and 10240, to persons doing business under any law of this state, another state or the United States relating to BANKS, TRUST COMPANIES, SAVINGS AND LOAN ASSOCIATIONS, INDUSTRIAL LOAN COMPANIES, PENSION TRUSTS, CREDIT UNIONS OR INSURANCE COMPANIES, and to their employees. Institutions regulated elsewhere are not regulated again here.

An agent exceeds their authority in a transaction. To what extent is the principal bound?

1. So far as the authorized acts can be plainly separated from the unauthorized. ✓
2. Not at all, the transaction being tainted by the excess throughout.
3. Entirely, the third person being entitled to rely on the agent's conduct.
4. So far as the principal has received a benefit from the transaction.

Why: Civil Code section 2333 supplies the test: when an agent exceeds authority, the principal is bound by the authorized acts SO FAR ONLY as they can be PLAINLY SEPARATED from the unauthorized ones. Separability is what decides it, so an excess woven through the whole leaves nothing to enforce while a distinct excess leaves the remainder standing. Benefit is the test for ratification under section 2310, not for this.

How is a component part of a property valued, under the principle of contribution?

1. At the cost of installing it, less accrued depreciation.
2. At its replacement cost as at the date of the appraisal.
3. In proportion to its contribution to the value of the whole. ✓
4. In proportion to the floor area it occupies within the whole.

Why: Reference Book chapter 15 states the principle of contribution as valuing a component part IN PROPORTION TO ITS CONTRIBUTION TO THE VALUE OF THE WHOLE – not at what it cost and not at what it would cost to replace. The chapter's superadequacy example makes the practical point: a pool costing $60,000 to build where the market will pay $10,000 for it has contributed a fraction of its cost, and that gap is functional obsolescence.

What are the three columnar records the Commissioner's Regulations prescribe?

1. A journal; a cash ledger; and a beneficiary ledger for each account.
2. All funds received and paid out; a record per beneficiary; and funds not deposited. ✓
3. All trust funds received; all trust funds disbursed; and the monthly reconciliation.
4. A record per transaction; a record per property managed; and the bank statement.

Why: Reference Book chapter 21 names three columnar records: the COLUMNAR RECORD OF ALL TRUST FUNDS RECEIVED AND PAID OUT for the trust fund bank account, the SEPARATE RECORD FOR EACH BENEFICIARY OR TRANSACTION, and the RECORD OF ALL TRUST FUNDS RECEIVED - NOT PLACED IN BROKER'S TRUST ACCOUNT. The first two are required where funds are received and deposited; the third where they are received and forwarded instead. The journal, cash ledger and beneficiary ledger are the alternative, non-columnar system.

What is the drawback of the breakdown method of measuring depreciation?

1. It cannot separate physical deterioration from functional or external obsolescence.
2. Minor or obscure depreciation is hard to measure, and rental loss hard to prove. ✓
3. It cannot be used at all where the improvements are more than fifty years old.
4. It can be applied only to income-producing property.

Why: Reference Book chapter 15 calls the cost-to-cure or observed condition method THE MOST REFINED METHOD of examining complex causes and cures of depreciation, and then states the cost of that refinement: IT CAN BE DIFFICULT TO CALCULATE MINOR OR OBSCURE DEPRECIATION ACCURATELY, and MEASUREMENT BY RENTAL LOSS IS SOMETIMES DIFFICULT TO SUBSTANTIATE. The chapter suggests combining it with the straight line method: take normal depreciation as if the property were not unduly depreciated, then add the excess deterioration and obsolescence.

Who is an "agent" for the purposes of the listing article?

1. A licensed real estate broker, or a mobilehome licensee. ✓
2. Any person authorized by a seller to market their property for compensation.
3. Any real estate licensee, whether broker or salesperson.
4. A person licensed as a real estate broker, and no one else.

Why: Civil Code section 1086(b) defines an agent for the article as ONE AUTHORIZED BY LAW TO ACT IN THAT CAPACITY FOR THAT TYPE OF PROPERTY who is LICENSED AS A REAL ESTATE BROKER under the Real Estate Law, OR IS A LICENSEE AS DEFINED IN SECTION 18006 OF THE HEALTH AND SAFETY CODE, which is the mobilehome provision. Subdivision (a) imports the Real Estate Law's own definitions, so the article's vocabulary is the licensing statute's vocabulary.

What is the nature of the relationship between a broker and a client whose funds the broker holds?

1. A debtor and creditor relationship for the sum held.
2. A bailment, the broker holding as bailee for reward.
3. A contractual relationship governed solely by the written agreement.
4. An agency relationship, carrying with it a fiduciary duty. ✓

Why: Regulation 2830 opens by characterizing it: the relationship between a broker and a client for whom the broker holds funds in trust IS AN AGENCY RELATIONSHIP, and as agent the broker OWES A FIDUCIARY DUTY to the client regarding the handling of the trust. The characterization does the work – it is why any benefit belongs to the client and why commingling is a breach even where nothing is lost.

A purchase is not completed by the date set for the close of escrow. What obligation does the Civil Code place on buyer and seller?

1. To extend the escrow by a reasonable period before any funds are released.
2. To return deposited funds to whoever is entitled. ✓
3. To submit the dispute to the escrow holder for determination.
4. To divide the deposited funds equally between them.

Why: Civil Code section 1057.3(a) places the obligation on BOTH the buyer and the seller who enter into a contract to purchase and sell real property: to ensure that all funds deposited into an escrow account are RETURNED to the person who deposited them or who is otherwise entitled to them under the contract, if the purchase is not completed by the date set for close of escrow or any duly executed extension. The escrow holder is a stakeholder and is not given power to adjudicate.

The broker who must deliver cannot obtain the disclosure document. What does the Civil Code require?

1. Complete the disclosure from the broker's own knowledge of the property.
2. Decline to proceed with the transaction until the document is produced.
3. Obtain the transferee's written waiver of the disclosure requirement.
4. Advise the transferee in writing, and keep a record of it. ✓

Why: Civil Code sections 1102.12(b) and 1103.12(b) provide that where the broker responsible for delivery CANNOT OBTAIN THE DISCLOSURE DOCUMENT AND DOES NOT HAVE WRITTEN ASSURANCE FROM THE TRANSFEREE THAT IT HAS BEEN RECEIVED, THE BROKER SHALL ADVISE THE TRANSFEREE IN WRITING OF THEIR RIGHTS to the disclosure, and shall MAINTAIN A RECORD OF THE ACTION TAKEN to effect compliance in accordance with Business and Professions Code section 10148. The duty is to inform and to document, not to guess at the contents.

When must the seller's agent provide the agency relationship disclosure form to the seller?

1. Before presenting the seller with any offer to purchase.
2. Within three business days after the listing agreement is signed.
3. At the same time the purchase contract is executed by both parties.
4. Before entering into the listing agreement. ✓

Why: Civil Code section 2079.14(a)(1) requires the seller's agent to provide the form specified in section 2079.16 to the seller BEFORE ENTERING INTO THE LISTING AGREEMENT. The timing is the point of the subdivision: the disclosure is meant to inform the decision to engage the agent, so a form delivered after the listing is signed has missed its purpose as well as the statute. Confirmation of the relationship at contract is a separate requirement under section 2079.17.

What must a broker licensed under a fictitious name containing "escrow" include in advertising?

1. The term "a non-independent broker escrow" following the name. ✓
2. The broker's license number and the words "escrow services".
3. A statement that the escrow is regulated by the Commissioner of Corporations.
4. The name of the title insurance company issuing the coverage.

Why: Reference Book chapter 8 records Commissioner's Regulation 2731(d): a real estate broker may not use a fictitious name containing the word ESCROW, or any name implying that escrow services are provided, UNLESS THE FICTITIOUS BUSINESS NAME INCLUDES THE TERM "A NON-INDEPENDENT BROKER ESCROW" FOLLOWING THE NAME, and must include that term in any advertising, signs or electronic promotional material. The chapter adds that a broker may not advertise conducting escrows under the exemption without saying the services are only in connection with the brokerage business.