Practice of Real Estate and Mandated Disclosures
At approximately 25 percent this is by far the largest area on the broker examination, and DRE prints twenty subtopics under it — trust account management, fair housing, advertising, record keeping, supervision, unlicensed assistants, DRE jurisdiction and discipline, licensing and continuing education, the recovery fund, ethics, technology, property management, income property, specialty areas, the Transfer Disclosure Statement, natural hazard disclosure, material facts, inspection duties, reports, and serving diverse populations.
Trust funds
Business and Professions Code section 10145 and Commissioner's Regulations 2831 through 2835 govern client money. Regulation 2832 requires trust funds to reach the owner of the funds, a neutral escrow depository or the broker's trust account no later than three business days after receipt — the next business day if the broker is acting as an unlicensed escrow holder under the Financial Code exemption. Regulation 2831 requires a columnar record of all trust funds received and disbursed, 2831.1 a separate record for each beneficiary or transaction, and 2831.2 a reconciliation of the two at least once a month except in months with no activity. Regulation 2835 defines commingling and allows only two narrow exceptions: up to $200 of the broker's own funds to cover bank service charges, and funds partly the broker's that are withdrawn within 25 days.
Supervision, licensing and continuing education
Regulation 2725 requires a responsible broker to exercise reasonable supervision over salespersons and broker associates, including written policies covering transactions, documents, filing, trust funds, advertising, familiarizing salespersons with anti-discrimination law, and regular reports. Regulation 2726 requires a dated written agreement with each salesperson covering supervision, duties and compensation. Business and Professions Code section 10177(h) makes failure to supervise an independent ground for discipline. Broker and salesperson licenses run four years under sections 10153.6 and 10153.7, and section 10170.5 requires 45 clock hours of continuing education in each four-year cycle, including specified three-hour courses in ethics, agency, trust fund handling, fair housing and risk management, a two-hour implicit bias course, and for brokers a three-hour office management and supervision course.
Discipline, the Consumer Recovery Account, and advertising
Section 10176 reaches conduct in a licensed transaction — misrepresentation, false promises, undisclosed dual agency, commingling, secret profit, an exclusive listing without a definite termination date. Section 10177 reaches conduct outside a transaction and includes negligence or incompetence, failure to supervise, and misuse of the term 'realtor'. The commissioner may issue a desist and refrain order under section 10086, bar a person for up to 36 months under section 10087, or accept a monetary penalty in lieu of suspension capped at $250 a day and $10,000 per decision. The Consumer Recovery Account pays a defrauded consumer up to $50,000 for one transaction and $250,000 for one licensee, and payment automatically suspends the license until it is repaid with interest. Section 10140.6 requires the licensee's name, license identification number and responsible broker's identity on first-point-of-contact solicitation materials and on purchase agreements.
Mandated disclosures
The Transfer Disclosure Statement under Civil Code sections 1102 through 1102.19 is required in most transfers of one-to-four residential units; it cannot be waived, a late delivery gives the buyer three days to terminate if delivered in person and five days if delivered by mail or electronically, and non-compliance does not invalidate the transfer but exposes the violator to actual damages. The Natural Hazard Disclosure Statement under section 1103.2 covers six mapped hazards: a special flood hazard area, an area of potential flooding from dam failure, a high or very high fire hazard severity zone, a state responsibility wildland area, an earthquake fault zone, and a seismic hazard zone. Separate statutes require the Megan's Law database notice, a Mello-Roos or 1915 Act special tax notice, smoke and carbon monoxide alarm compliance, and delivery of the common interest development documents listed in Civil Code section 4525.
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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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