Free CA Real Estate Broker Exam Flashcards

Land divided into five or more lots or parcels for sale, lease, or financing. The DRE issues a public report, and a copy must be given to each prospective buyer, who signs a receipt, before that buyer is bound to purchase.

The local city or county, not the DRE. A tentative and final map is required for subdivisions creating five or more parcels; qualifying smaller divisions use a parcel map. The Map Act governs physical design and dedications; the Subdivided Lands Act governs the sale.

One percent of assessed value, with the assessed value rising no more than 2 percent per year. Value is reassessed to current market value on a change of ownership or new construction, which is why a buyer's tax bill can jump far above the seller's.

Make a good faith effort to obtain the special tax disclosure notice from the levying agency and deliver it to the prospective buyer (Civil Code 1102.6b). The Mello-Roos special tax is charged on top of the 1 percent Proposition 13 tax and is not capped by it.

It equals the countywide median sale price of a single-family home in the prior calendar year, bounded by a floor and a cap that started at $300,000 and $600,000 when the rule took effect in 2021 (CCP 704.730). Both bounds adjust annually for California CPI inflation, so quote the current year's figures — for 2026 the floor is roughly $371,000 and the cap roughly $743,000.

An easement appurtenant benefits a dominant tenement and burdens a servient tenement; it runs with the land and passes automatically on sale even if the deed is silent. An easement in gross belongs to a person or company, such as a utility, and has no dominant tenement.

Riparian rights belong to the owner of land bordering a watercourse, are not lost through non-use, and cannot be sold apart from the land. Appropriative rights are granted by permit from the State Water Resources Control Board and can be lost through non-use.

Disclose (deliver the agency relationships form), Elect (choose seller, buyer, or dual agency), and Confirm (state the agency in or with the contract). It covers one-to-four-unit residential property and, since 2015, commercial real property as well, so the old residential-only shortcut is wrong.

Confidential information obtained from one client, including facts about that client's financial position, motivation, or bargaining position that could affect price (Civil Code 2079.21). Telling a buyer the seller will take less, or a seller the buyer will pay more, is the classic violation.

To the principal: a fiduciary duty of utmost care, integrity, honesty, and loyalty. To the other party: honest and fair dealing, good faith, and disclosure of all facts materially affecting value or desirability that are known or reasonably discoverable, but no loyalty.

The listing and selling agent owe a reasonably competent and diligent visual inspection of the reasonably and normally accessible areas of one-to-four-unit residential property, and must disclose what it reveals. Suit must be brought within two years of possession, recordation, or close (Civil Code 2079.4).

No later than the execution of the buyer's offer to purchase, and it may not run longer than three months from the date it was made for an individual buyer (Civil Code 1670.50, effective January 1, 2025). Entity buyers such as corporations and LLCs are exempt from the three-month cap.

Any undisclosed compensation, commission, or profit a licensee takes from a transaction beyond the agreed fee. It is grounds for suspension or revocation under B&P 10176, so a broker buying a client's listing personally, or through a relative or entity, must disclose the principal interest in writing.

By expiration of its term, mutual agreement, revocation, renunciation by the agent, full performance, destruction of the property, or the death or incapacity of either party. An agency coupled with an interest, where the agent holds a financial stake in the property, cannot be revoked by the principal alone.

Only the responsible broker under whom the salesperson is licensed. A salesperson may not accept compensation directly from a seller, buyer, cooperating broker, or escrow, and a broker may not compensate an unlicensed person for acts requiring a license (B&P 10137).

Normally a special agent, hired for one transaction with limited authority, so the broker cannot bind the principal to a sale by signing on the principal's behalf. A property manager, by contrast, is usually a general agent with continuing authority over a range of acts.

Capitalization rate equals net operating income divided by value, so value equals NOI divided by the rate. With NOI held constant, a higher cap rate produces a lower value: $60,000 NOI at 8 percent is $750,000, but at 10 percent it is only $600,000.

Sale price divided by gross rent, applied monthly for residential and annually for commercial. It ignores vacancy and all operating expenses, so it is a screening shortcut only and is unreliable when comparables have very different expense loads or vacancy.

Replacement or reproduction cost new, minus accrued depreciation, plus land value estimated separately. It is strongest for new construction and special-purpose property such as a school or church where sales comparables and income data barely exist.

Always the comparable, never the subject. If the comparable is superior, subtract from its price; if the comparable is inferior, add to its price. Reversing the direction is the most common arithmetic error on income and appraisal questions.

Physical deterioration (wear and tear), functional obsolescence (outdated design or layout), and external or economic obsolescence (off-site causes such as a new freeway). External obsolescence is always incurable because the owner cannot fix what is off the property.

The legally permissible, physically possible, financially feasible, and maximally productive use that yields the greatest net return to the land. Appraisers value land as if vacant and available for its highest and best use, even when the current improvement differs.

The Bureau of Real Estate Appraisers licenses and certifies appraisers; the DRE does not. A broker may prepare a competitive market analysis or broker price opinion, but must not present it as an appraisal or imply appraiser credentials the broker does not hold.

Broker-negotiated loans below the statutory thresholds: first trust deeds under $30,000 and junior liens under $20,000 (B&P 10245). Loans at or above those amounts are exempt from Article 7's commission and cost limits, though other disclosure duties still apply.

First trust deeds: 5 percent if the term is under three years, 10 percent if three years or more. Junior liens: 5 percent under two years, 10 percent from two to under three years, and 15 percent at three years or more (B&P 10242). Longer term, larger allowable commission.

Within three business days after receiving a completed written loan application, or before the borrower becomes obligated on the note, whichever comes first (B&P 10240). Delivering it at signing is too late if the application came in earlier.

From recordation of the notice of default until five business days before the date of sale in the recorded notice of sale (Civil Code 2924c). During those final five business days there is no reinstatement right, though a postponement of more than five business days revives it.

Fifty-five cents per $500 of consideration or value, or any fraction of $500, which works out to $1.10 per $1,000 (R&T 11911). A city within a taxing county may impose half that rate. The tax applies to the price net of any existing liens the buyer assumes.

At least 10 percent of the first $10,000 of the original bid plus 5 percent of everything above $10,000 (Probate Code 10311). On a $200,000 accepted bid that means $1,000 plus $9,500, so the first qualifying overbid is $210,500.

A CLTA standard policy covers matters of public record plus forgery and incompetent grantors. An ALTA extended policy adds off-record risks a physical inspection or survey would reveal, such as rights of parties in possession, unrecorded easements, and encroachments, and it protects lenders.

Only in a transaction where the broker is a party or is acting as agent performing acts for which a real estate license is required (Financial Code 17006(a)(4)). The exemption is personal to the broker, and the broker's escrow division must keep the trust fund records required by Regulation 2951.

Not later than three business days after receipt, into the hands of the owner of the funds, into a neutral escrow depository, or into the broker's trust fund account (B&P 10145). A salesperson who accepts trust funds must deliver them to the broker immediately, not within three days.

Up to $200 of broker funds to cover bank service charges, and earned commissions or fees collectible from the account, which must be withdrawn within 25 days of deposit (Regulation 2835). Anything else is commingling under B&P 10176(e) even if separate records are kept.

The broker, the designated broker-officer of a corporate broker, a salesperson or broker-associate specifically authorized in writing, or an unlicensed employee specifically authorized in writing and covered by a fidelity bond at least equal to the maximum trust funds accessible (Regulation 2834).

The balances of all separate beneficiary or transaction records must be reconciled to the record of all trust funds received and disbursed at least monthly, except in months with no account activity. A dated written record of each reconciliation, naming the account and the liability to each beneficiary, must be kept.

The written consent of every principal who owns funds in the account, before each such disbursement (Regulation 2832.1). The account balance must always equal aggregate trust fund liability, and a shortage discovered in a DRE audit is a frequent basis for revocation.

Three years from closing, or from the listing date if the deal never closed, for listings, deposit receipts, canceled checks, and trust records (B&P 10148). Records must be produced for inspection after notice, and on sufficient cause the DRE may audit without further notice.

Written policies, rules, procedures, and systems to review licensed transactions, documents affecting party rights, document storage, trust fund handling, advertising, anti-discrimination training, and regular activity reports, plus a system to monitor compliance. Duties may be delegated; overall responsibility may not.

A dated agreement signed by both parties covering supervision of licensed activities, duties, and compensation (Regulation 2726). It is required for broker-associates working under a broker-salesperson arrangement too, not only for salesperson licensees.

A separate branch office license is required for each additional place of business maintained in California (B&P 10163). A change in the location of the main or a branch office must be reported to the Commissioner no later than the next business day (Regulation 2715).

Name, DRE license identification number, and the NMLS unique identifier where one has been assigned (B&P 10140.6). This covers business cards, stationery, flyers, print, broadcast and electronic ads, and for-sale, for-rent, and open-house signs.

For claims filed on or after January 1, 2009: $50,000 per transaction and $250,000 in total for any one licensee. The licensee's license is automatically suspended on the date of payment and cannot be reinstated until the account is repaid in full with interest (B&P 10475).

45 clock hours within the four years before renewal, including separate three-hour courses in ethics, agency, trust fund handling, risk management, management and supervision, and fair housing, a two-hour implicit bias course, and at least 18 hours of consumer protection courses.

As soon as practicable before transfer of title. If it is delivered after the buyer has signed the offer, the buyer may terminate within three days of personal delivery, or five days if it was deposited in the mail or delivered as an electronic record.

A definite, specified date of final and complete termination. Claiming or receiving a commission under an exclusive agreement without one is grounds for suspension or revocation under B&P 10176(f), and the broker's compensation claim fails.

Exclusive right to sell: the broker is paid no matter who sells, including the owner. Exclusive agency: the broker is paid unless the owner sells without any broker. Open listing: only the broker who is the procuring cause is paid, and the owner may sell personally with no commission.

Up to 3 percent of the purchase price, when the dwelling has no more than four units and the buyer intends to occupy one at the time of contracting (Civil Code 1675). Above 3 percent the provision is presumed invalid unless the seller proves the amount was reasonable.

Contracts to sell real property, leases longer than one year, and any agreement employing a broker to buy, sell, or lease real estate for compensation (Civil Code 1624). An oral listing therefore gives the broker no enforceable claim to a commission, however clearly it was promised.

Actual consideration paid to the optionor, which cannot be nominal or merely recited. Until the optionee exercises it the option is unilateral, binding only the optionor, and the optionee has no obligation to buy and no equitable title.

Submit the agreement and all advertising, promotional, and soliciting materials to the Commissioner at least ten calendar days before publication or use (Regulation 2970). Advance fees are trust funds, so they go into the trust account and require a verified accounting to the principal.