California Real Estate SalespersonPractice of Real Estate and DisclosuresHard
A broker advertises a 'Guaranteed Sale Program' promising to purchase a seller's home directly if it does not sell within a specified time period. Under California law, what must the broker do before entering into a listing agreement using this program?
- AThe guarantee may only be offered on commercial properties, not residential
- BProvide the seller with a written disclosure explaining the specific terms and conditions of the guaranteed sale program
- CNothing additional is required beyond the standard listing agreement
- DObtain prior written approval of the program from the Department of Real Estate before advertising
Show answer & explanationAnswer & explanation
Correct answer: B. Provide the seller with a written disclosure explaining the specific terms and conditions of the guaranteed sale program
California law requires brokers offering a 'guaranteed sale' program to provide sellers a written disclosure of the specific terms, including the price the broker will pay and the conditions triggering the guarantee, to prevent misleading advertising.
Why the other options are wrong
- A. The guaranteed sale program disclosure requirement is not limited to commercial property.
- C. A standard listing agreement alone does not satisfy the special disclosure requirement for guaranteed sale programs.
- D. DRE pre-approval of specific advertising programs is not required; the disclosure obligation runs to the seller.
Guaranteed Sale Program Disclosure
Brokers advertising a guaranteed sale program must provide sellers a written disclosure detailing the specific terms of the guarantee before entering the listing agreement.
- Prevents deceptive advertising practices
- Disclosure must detail price and conditions of the guarantee
- Required under California advertising and listing regulations
Memory trick: Guarantee it in writing before you guarantee it in the ad.