California Real Estate Salesperson flashcards

A single agent must keep the client's confidential information, such as maximum offer price or motivation, secret from the opposing party absent client consent.

• Applies fully in single agency (non-dual) representation.
• Breach occurs even without financial harm to the client.
• Client consent can waive confidentiality for specific information.

Memory trick: 'What's said to your agent stays with your agent.'

The illegal mixing of client trust funds with a broker's personal or business funds, which is grounds for disciplinary action including license suspension or revocation.

• Commingling is prohibited even if no client loses money
• Distinct from 'conversion,' which is actual misuse of client funds
• DRE can audit trust accounts to detect violations

Memory trick: Mixing money means losing your license

A contract is void if its object or purpose violates a law or public policy, meaning it has no legal force from its creation.

• Void contracts cannot be ratified or enforced
• Illegal object is different from illegal formation, though both cause voidness
• No party has a right of action under a void contract
• Distinguish from voidable contracts, which are enforceable until rescinded

Memory trick: Void = 'Never Valid'; Voidable = 'Valid Until Voided'.

A personal, revocable permission to use another's land that does not create a permanent interest in the property.

• Revocable at the will of the landowner
• Does not run with the land or transfer to successors
• Contrast with easements, which are permanent interests

Memory trick: A license is just a ticket — good until it's revoked.

A detailed CEQA-mandated document analyzing a proposed project's significant environmental effects and evaluating alternatives and mitigation measures, required when a project may cause substantial environmental harm.

• Triggered by substantial evidence of significant environmental impact
• Prepared by the lead governmental agency overseeing project approval
• Alternative documents (Negative Declaration) are used when no significant impact is found

Memory trick: Big impact, big report — EIR for significant environmental effect.

A fully amortized loan has a fixed total payment, but the interest/principal split shifts over time as the balance declines.

• Early payments are interest-heavy
• Later payments are principal-heavy
• Total payment amount stays constant on a fixed-rate loan

Memory trick: Interest shrinks, principal grows as the balance flows.

A broker must reasonably supervise salespersons' activities and can be disciplined for inadequate supervision even without direct involvement.

• Based on Business and Professions Code 10159.2
• Applies to acts within scope of employment
• Broker discipline can occur independent of salesperson discipline

Memory trick: The broker is the umbrella — responsible for everyone standing under it.

If a seller discovers new material facts about a property after delivering the original TDS but before close of escrow, the seller must provide an amended TDS to the buyer.

• Amended TDS required for newly discovered material facts
• Triggers new rescission period (3 or 5 days)
• Failure to amend can lead to liability after closing

Memory trick: 'New fact, new form—amend before the storm (of closing).'

Brokers must reconcile trust fund bank balances against their separate accounting records on a monthly basis.

• Required under Commissioner's Regulations
• Detects shortages or errors quickly
• Failure to reconcile can trigger DRE discipline

Memory trick: Every month, balance the trust — or risk a DRE bust.

A reasonable modification is a physical change to the property (tenant-funded), while a reasonable accommodation is a change in rules/policies (landlord-funded), both required for tenants with disabilities.

• Modification = physical change, tenant pays
• Accommodation = policy change, landlord pays
• Landlord cannot unreasonably deny either request

Memory trick: 'Modify the building, Accommodate the rule.'

The reasonably probable use of a property that is legally permissible, physically possible, financially feasible, and maximally productive, resulting in the highest value.

• Four tests: Legal, Physical, Financial, Maximally Productive
• Applies to vacant land and as-improved analysis
• Forms the foundation for all three appraisal approaches

Memory trick: Legal, Possible, Feasible, Profitable—LPFP wins!

When a comparable property has a feature the subject lacks, subtract that feature's value from the comparable's price; when the comparable lacks a feature the subject has, add that value.

• Adjust the comparable, never the subject property
• Rule: Comp Superior → Subtract; Comp Inferior → Add
• Adjustments aim to make the comparable equivalent to the subject

Memory trick: CBS: Comp Better, Subtract!

A contract in which only one party makes a promise, and acceptance occurs through performance of an act rather than a return promise.

• Open listings are typically unilateral contracts
• Acceptance = performance, not a promise
• Contrasts with bilateral contracts where both parties exchange promises

Memory trick: Uni = one promise; Bi = both promise

The transfer of contractual rights and duties to a third party; generally allowed unless prohibited or personal in nature, but does not release the original party without novation.

• Assignment differs from novation
• Original party remains liable unless novation occurs
• Contracts can restrict assignment via express clause

Memory trick: Assign passes duty, novation erases the original party

A contract is discharged when an unforeseen event, such as a change in law, makes performance objectively impossible or illegal through no fault of either party.

• Also called supervening illegality
• Differs from mere difficulty or increased cost of performance
• Releases both parties from further obligations

Memory trick: New law makes it illegal—the deal is dead, not delayed

An agency relationship automatically ends upon events like death, incapacity, or bankruptcy of the principal, without need for notice.

• Death or incapacity of principal terminates agency instantly
• Also occurs upon destruction of subject property or expiration of purpose
• Distinct from termination by mutual agreement or revocation

Memory trick: When the principal passes, so does the power to act for them.

The final step in the appraisal process where the appraiser analyzes the value indications from the three approaches and forms a single, supported opinion of value.

• Not a simple average
• Based on reliability, quantity, and quality of data
• Different property types favor different approaches

Memory trick: Reconcile = weigh, don't just average

A listing agent may disclose that multiple offers exist unless instructed not to by the seller, but must not disclose confidential offer terms without permission and must never lie about the existence of other offers.

• Seller controls whether existence of offers is disclosed
• Confidential terms require offeror's consent to share
• Misrepresentation about offers violates fiduciary duty and license law

Memory trick: Say offers exist, but keep the numbers a secret unless told to tell.

The fully indexed rate on an adjustable-rate mortgage equals the index rate plus the lender's margin.

• Index reflects a market benchmark rate (e.g., Treasury, SOFR)
• Margin is a fixed percentage added by the lender
• Rate caps may limit how much the rate can actually adjust

Memory trick: Index + Margin = Fully Indexed Rate.

Under Proposition 13, real property is reassessed to full market value (creating a new base year) whenever a change in ownership occurs.

• Change of ownership triggers reassessment to current market value
• New base year value then increases max 2% annually
• Certain transfers, like parent-child transfers, may be excluded under specific rules

Memory trick: New owner, new number — sale resets the base year value

California follows a race-notice recording system: a subsequent bona fide purchaser without notice of a prior unrecorded interest who records first has priority over the earlier purchaser.

• Buyer must lack notice (actual, constructive, or inquiry) of the earlier interest
• Buyer must also record first to win priority
• Failing to record promptly exposes the first buyer to loss of priority

Memory trick: Win the race to the recorder's office—but only if you didn't know

A facially neutral policy or practice that disproportionately affects a protected class can constitute unlawful discrimination even without discriminatory intent.

• No intent to discriminate required
• Statistical disproportionate effect is key evidence
• Landlord may defend with legitimate business necessity

Memory trick: Neutral rule, unequal result — that's impact, not intent.

A regulatory exception permitting a broker to keep up to $200 of personal funds in the trust account solely to cover bank service charges.

• General rule prohibits commingling personal and client funds.
• $200 exception is narrowly limited to bank charges.
• Exceeding this amount or using it for other purposes violates trust fund rules.

Memory trick: '$200 for the bank, not for your snack.'

The age of a property based on its condition and utility rather than its actual chronological age, used in depreciation analysis.

• Can be less than or greater than actual age
• Influenced by maintenance and upgrades
• Used with economic life to estimate depreciation

Memory trick: Effective age = how old it FEELS, not how old it IS

A required statement in California residential purchase contracts informing buyers that sex offender registry information is publicly available.

• Notice is required by statute in the purchase agreement itself
• Directs buyers to the DOJ Megan's Law website
• Agent is not required to independently investigate or disclose specific offender information

Memory trick: 'Megan's Law' = Must inform, Even though Agent doesn't investigate

Acceptance of an offer is effective when sent (mailed), but revocation of an offer is effective only when received by the offeree.

• Acceptance is effective upon dispatch, not receipt.
• Revocation is effective only upon receipt by the offeree.
• An offer can be revoked any time before acceptance is dispatched, unless it is an option contract.

Memory trick: Acceptance flies fast (mailed=binding); revocation must land (received=effective).

An agency relationship formed retroactively when a principal knowingly accepts the benefits of an unauthorized act performed on their behalf.

• Requires principal's knowledge of all material facts
• Differs from estoppel, which relies on third-party reliance
• Can validate a previously unauthorized act after the fact

Memory trick: Accept the benefit, ratify the act — even if it started unofficial.

A buyer has 3 days after personal delivery (or 5 days after mailing) of the Transfer Disclosure Statement to rescind the purchase agreement.

• 3 days if delivered in person
• 5 days if delivered by mail
• Rescission right applies only if buyer receives TDS after entering contract

Memory trick: In-person = 3, mail-drop = 5

An escrow holder is a neutral dual agent that must follow only the mutually agreed written instructions of both buyer and seller.

• Escrow cannot favor one party over another
• Any changes to instructions require agreement from all parties
• Escrow holds documents/funds until all conditions are satisfied

Memory trick: Escrow is the Switzerland of real estate—neutral to all

Under an open listing, only the broker who actually produces the buyer earns a commission; if the seller finds their own buyer while reserving that right, no commission is owed to any broker.

• Multiple brokers can hold open listings simultaneously.
• Only the procuring broker is paid.
• Seller can self-sell commission-free if the right is reserved.

Memory trick: Open listing: first to the finish line (or the seller alone) gets the prize.

An offer automatically terminates upon the death or incapacity of either party before acceptance is communicated.

• Applies even if offeree has no knowledge of death
• Distinguished from an option contract, which involves consideration
• No contract can form without both parties being capable at acceptance

Memory trick: Dead offeror, dead offer

California's FEHA provides broader housing discrimination protections than the federal Fair Housing Act, adding categories like marital status, sexual orientation, and source of income.

• Federal law covers 7 classes: race, color, religion, sex, national origin, familial status, disability
• FEHA adds marital status, sexual orientation, gender identity, ancestry, source of income, genetic information
• California law generally offers greater protection than federal minimums

Memory trick: Federal has 7, California adds more — FEHA is the 'plus' law.

Value = Monthly Gross Rent × Gross Rent Multiplier (GRM), used as a quick income-based value estimate.

• GRM derived from comparable sales/rents
• Simple but doesn't account for expenses
• Formula: Value = Rent × GRM

Memory trick: Rent times Multiplier = Market price

All real estate advertising by a salesperson must identify the employing broker's name and license number, not just the salesperson's own.

• Applies to print, business cards, online ads, signage
• Salesperson cannot advertise independently of broker
• Violations can result in DRE citations or discipline

Memory trick: No broker name = no legal claim to fame

A principal can always revoke an agent's actual authority, but if done wrongfully (breaching the contract), the principal may be liable in damages to the agent.

• Power to revoke ≠ right to revoke without liability.
• Agency ends immediately upon revocation.
• Broker's remedy is a damages claim, not specific performance.

Memory trick: 'You can always cut the string, but you might pay for the kite.'

Unlicensed personal assistants may perform clerical tasks but cannot engage in activities requiring a real estate license, such as negotiating or advising clients.

• Permitted: scheduling, answering phones, distributing pre-printed materials
• Prohibited: negotiating, advising on price/terms, explaining contracts
• Violations can expose both assistant and broker to license law penalties

Memory trick: Schedule, yes; negotiate, no license — no go

Landlords must waive no-pet policies and pet fees for tenants with disabilities who need assistance or emotional support animals.

• Applies under both federal Fair Housing Act and California law
• No pet deposit or extra rent may be charged for assistance animals
• Landlord may request reliable documentation of disability-related need, not medical records

Memory trick: Support animals aren't 'pets' — no fee gets set

An administrative approval permitting a property owner to deviate from specific zoning ordinance requirements (such as setbacks or lot coverage) due to unique hardship related to the physical characteristics of the lot.

• Granted based on unique hardship, not general convenience
• Does not change the zoning classification itself
• Must not grant special privilege inconsistent with the surrounding zone

Memory trick: Variance = 'vary' the rule for a uniquely shaped lot's hardship.

A seller or agent may rely on a natural hazard expert's report to satisfy NHD disclosure duties and is not liable for undiscovered errors absent actual knowledge.

• Encourages use of professional NHD companies
• Protects broker from liability for hidden report errors
• Does not eliminate duty to disclose known hazards

Memory trick: Trust the expert's map, unless you knew it was wrong.

Fees collected in advance of performing real estate services are trust funds and must be deposited and used only for the specific purposes stated in the advance fee agreement.

• Advance fee agreements may require DRE review before use
• Funds must be deposited into trust account, not general funds
• Broker must account for how advance fees are spent per the agreement

Memory trick: Advance fees stay in trust until they're truly earned.

A broker can be held legally responsible for the wrongful acts of a supervised salesperson committed within the scope of the salesperson's employment, even without personal knowledge.

• Applies to fraud, misrepresentation, and other torts.
• Does not require broker's personal knowledge.
• Salesperson remains individually liable as well.

Memory trick: The boss answers for the employee's lies made on the job.

California law requiring developers offering five or more subdivided lots for sale or lease to obtain a Public Report from the DRE before marketing or selling, disclosing material facts to protect buyers.

• Applies to subdivisions of 5 or more lots/units/interests
• Buyer must receive the report and has right to rescind within specified time if not given
• Enforced by the California DRE, distinct from the Subdivision Map Act's Final/Parcel Map process

Memory trick: 5 or more lots? Get the DRE's Public Report before you sell a single spot.

Under CCP 337, a lawsuit for breach of a written contract in California must be filed within 4 years of the breach.

• Oral contracts have a 2-year statute of limitations (CCP 339)
• Time period runs from date of breach
• Applies to real estate purchase agreements as written contracts

Memory trick: Written = 4 years, oral = 2 years

A responsible broker must reasonably supervise the licensed activities of salespersons, including reviewing transaction documents, and failure to do so is grounds for discipline.

• Broker must review contracts and disclosures
• Supervision failure is independently disciplinable
• Applies even if salesperson, not broker, committed misconduct

Memory trick: 'No review, no reprieve—broker's watch must never leave.'

A broker may only place client trust funds in an interest-bearing account with prior written consent from all parties who have an interest in the funds.

• Written consent from all interested parties required
• Broker generally may not personally benefit from interest earned
• Account must be clearly identified as a trust account

Memory trick: 'No signature, no interest.'

The value of a modest property increases when it is located among higher-valued properties.

• Opposite of regression
• Common in appraisal of homes in mixed-value neighborhoods
• Neighboring property values influence subject value

Memory trick: Small house climbs up next to big houses (progression).

A report showing the current condition of title and stating the terms under which a title company is willing to issue insurance; it is not a policy or a warranty of title.

• Issued before closing to disclose liens, easements, and exceptions
• Not a contract or insurance policy itself
• Buyer/lender reviews it to clear objectionable items before closing

Memory trick: A preview, not a promise.

A method of estimating accrued depreciation by dividing effective age by total economic life and applying that ratio to the reproduction/replacement cost.

• Formula: Depreciation = (Effective Age ÷ Economic Life) × Cost New
• Assumes uniform annual depreciation
• Common in the cost approach to appraisal

Memory trick: Age over Life times Cost equals loss!

The highest form of ownership, granting unlimited duration and full rights of use, transfer, and inheritance with no conditions attached.

• Largest estate recognized in real property law
• Freely inheritable and transferable
• No conditions or limitations restrict the owner's rights

Memory trick: 'Absolute' means no strings attached — total ownership forever.

Total accrued depreciation combines curable physical deterioration (cost to cure) with incurable depreciation calculated on the remaining cost after curable items are removed.

• Curable items are valued at cost to cure
• Incurable rate = effective age ÷ total economic life
• Apply incurable rate to remaining cost after subtracting curable amount

Memory trick: Fix what's curable first, then age the rest.

An arbitrary rezoning of a small parcel of land that is inconsistent with surrounding zoning and the general plan, typically benefiting only that owner.

• Often challenged and invalidated by courts as improper
• Usually inconsistent with the city's general plan
• Differs from a legitimate zoning change serving broader public interest

Memory trick: A single spot rezoned just for one owner — that's spot zoning.

A nonpossessory right to use another's land (servient tenement) that benefits an adjacent parcel (dominant tenement) and automatically transfers with ownership of the dominant parcel.

• Requires two parcels: dominant (benefited) and servient (burdened)
• Runs with the land and passes to future owners automatically
• Cannot exist without both a dominant and servient tenement

Memory trick: Appurtenant easements are like a package deal — the right travels with the land, not the person.

The listing agent must give the seller the statutory Agency Disclosure Form before the listing agreement is executed.

• Governed by Civil Code 2079.14
• Selling agent must give it to buyer as soon as practicable before offer signed
• Purpose is informed consent regarding agency relationships

Memory trick: Disclose before you close the deal, not after.

The highest legal duty of trust, loyalty, and care an agent owes a principal, equivalent to that of a trustee toward a beneficiary.

• Includes loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care
• Higher than ordinary contractual or tort duties
• Breach can result in loss of commission and liability for damages

Memory trick: Trustee treats beneficiary's money like treasure — agents must too.

California law requiring a lender holding a note secured by real property to pursue foreclosure on the security as the sole (or first) remedy before obtaining a personal judgment against the borrower.

• Prevents multiple lawsuits over the same secured debt
• Failure to foreclose first can cause lender to lose security rights
• Works alongside antideficiency statutes (CCP §580b, §580d) to protect borrowers

Memory trick: One debt, one lawsuit — security comes first.

Puffing is exaggerated opinion not intended to be taken literally, while misrepresentation is a false statement of material fact that can create liability.

• Puffing: subjective, non-actionable ('best neighborhood').
• Misrepresentation: false, specific, verifiable fact ('roof replaced').
• Agents are liable for material factual misstatements, not opinions.

Memory trick: 'Puff is fluff; fact is a whack (of liability).'

A buyer who is prepared to purchase on the seller's terms and has the financial capacity to do so; procuring such a buyer entitles the broker to commission even if the seller refuses to sell.

• Commission earned upon procurement, not necessarily upon closing.
• Seller's refusal to sell does not forfeit broker's commission.
• Applies when buyer meets exact listed price/terms.

Memory trick: 'RWA' buyer = Real Win for Agent, deal or no deal.

A form of co-ownership where property acquired for partnership purposes is held collectively by the partnership, with no individual transferable interest.

• Each partner has equal right to use property for business purposes
• No partner may transfer their interest individually
• Upon a partner's death, interest passes to surviving partners, not heirs

Memory trick: Partnership property stays with the business, not the individual.

Under Civil Code §1942, a tenant may repair a habitability defect and deduct the cost from rent, limited to one month's rent and twice per 12 months.

• Applies to substantial habitability defects
• Landlord must have reasonable notice and time to repair first
• Limited to twice in any 12-month period

Memory trick: Fix it twice a year, one month's rent — no more, no fear.

A CEQA document stating that a project, after initial study, will not have a significant effect on the environment, thereby avoiding the need for a full EIR.

• Follows an initial study finding no significant impact
• Less costly and time-consuming than an EIR
• A 'mitigated negative declaration' is used if minor impacts can be mitigated below significance

Memory trick: No harm found? Say 'Neg Dec' and move on.