Laws of Agency and Fiduciary Duties
At approximately 17 percent this is the second-largest area on the broker examination. California codified its agency-disclosure scheme in Civil Code sections 2079.13 through 2079.24. AB 1289 (Stats. 2018, Ch. 907) renamed the parties on the statutory form to 'seller's agent' and 'buyer's agent' and extended the article beyond one-to-four residential units to commercial real property; AB 2992 (Stats. 2024, Ch. 516) amended section 2079.14 again and added the buyer-broker representation agreement in Civil Code section 1670.50.
The fiduciary duties and the standard of care
An agent owes the principal the fiduciary duties of loyalty, obedience to lawful instruction, confidentiality, reasonable care and diligence, accounting for money and property, and full disclosure of material facts. Civil Code section 2079.2 fixes the standard of care as the degree of care a reasonably prudent real estate licensee would exercise, measured by the knowledge required to obtain a California license. Business and Professions Code section 10176(g) makes taking any secret or undisclosed profit or failing to reveal the licensee's full compensation a ground for discipline, and section 10177(o) requires a buyer's agent to disclose a direct or indirect ownership interest in the property, including one held through a relative or an entity.
Creating the agency: listings and buyer-broker representation agreements
Civil Code section 1624(a)(4) puts an agreement employing a broker to buy, sell or lease real estate for compensation inside the statute of frauds, so a commission agreement must be written and signed by the party to be charged. Business and Professions Code section 10176(f) makes it a disciplinary offense to claim a fee under an exclusive agreement that lacks a definite, specified termination date. Since AB 2992 took effect on 1 January 2025, Civil Code section 1670.50 requires a written buyer-broker representation agreement, executed as soon as practicable but no later than the buyer's offer to purchase; it may not run longer than three months, may not renew automatically, and is void and unenforceable if it violates those limits.
Disclosing and confirming the relationship
Civil Code section 2079.14 requires the statutory Disclosure Regarding Real Estate Agency Relationships form. The seller's agent gives it to the seller before entering into the listing agreement; the buyer's agent gives it to the buyer as soon as practicable before the buyer-broker representation agreement and the offer are executed, and no later than the next business day after receiving an offer the agent did not prepare. Section 2079.17 then requires the relationship to be confirmed in the purchase contract or in a separate signed writing. Section 2079.21 forbids a dual agent, without express permission, from telling either side the other's confidential information about price — that the seller would take less or the buyer would pay more.
Duties to third parties and termination
Civil Code section 2079 imposes on the listing broker and cooperating brokers a duty to the prospective buyer of one-to-four residential units to conduct a reasonably competent and diligent visual inspection and disclose what it reveals; section 2079.3 excludes areas normally inaccessible, off-site areas and public records; and section 2079.4 caps the limitations period at two years from possession. An agency terminates by expiration of its term, mutual agreement, revocation, renunciation, completion of the purpose, or death or incapacity of either party — but revoking an agency coupled with an interest, or revoking in bad faith to avoid a commission, can leave the principal liable in damages.
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State-specific details
State exam facts
- State regulator
- California Department of Real Estate (DRE)
- Prelicensing education
- 8 statutory college-level real estate courses
- Passing score
- 75%
- Scored questions
- 200
- Time limit
- 240 minutes
Who regulates real estate brokers in California?
The California Department of Real Estate (DRE) licenses and regulates real estate brokers and salespersons. Unlike most states, the DRE develops and administers the broker exam itself at its own electronic exam sites rather than contracting with PSI or Pearson VUE.
What experience do I need before the California broker exam?
Broker applicants must show at least two years of full-time licensed salesperson experience within the prior five years, or an equivalent qualifying background — for example, a four-year college degree with a major or minor in real estate. Experience is documented on the DRE's Broker Experience form.
How is the California broker exam structured?
The California broker examination is a single 200-question multiple-choice test given over 4 hours (one 4-hour session). A score of 75% or higher is required to pass. Applicants must also complete eight statutory college-level real estate courses before qualifying.
Sources: https://www.dre.ca.gov/examinees/brokerexperience.html, https://www.dre.ca.gov/examinees/TakingExam.html
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