California Real Estate Broker Exam — All Questions

Commissioner's Regulation 2773 requires a California licensee to disclose on all solicitation materials intended to be the first point of contact with consumers:

• a.The licensee's home address and the year the licensee first obtained a California license
• b.The licensee's eight-digit license number and the responsible broker's name✓
• c.The address of the Department of Real Estate office serving the licensee's county
• d.The commission rate the licensee customarily charges for residential listings

Regulation 2773(a) requires disclosure of the licensee's eight-digit real estate license identification number and the responsible broker's name as currently licensed on all first point of contact solicitation materials, and it lists business cards, stationery, licensee-controlled websites, flyers and mailers, electronic media advertisements, print advertising, and signs bearing the licensee's name. Business and Professions Code section 10140.6 is the underlying statute. The regulation calls for no home address, no Department office address, and no commission rate; indeed section 10147.5 forbids printing the rate in a form agreement.

Under Business and Professions Code section 10159.6 and section 10159.7, a California team name used by a salesperson and other licensees must:

• a.Consist only of the responsible broker's name followed by the office street address
• b.Be registered as a fictitious business name and issued its own separate broker license
• c.Include the surname of at least one member with the word associates, group or team✓
• d.Be approved in writing by the Department before it appears in any advertising

Section 10159.7(a)(3) provides that a team name is not a fictitious business name and needs no separate license if it is used by two or more licensees, includes the surname of at least one licensee member together with the term associates, group or team, and excludes terms such as broker or brokerage that would suggest an entity independent of the responsible broker. Section 10159.6 then requires the team name, the name and license number of at least one member, and the responsible broker's identity displayed as prominently as the team name.

Business and Professions Code section 10140.8, effective 1 January 2026, requires a California licensee who uses a digitally altered image in an advertisement for the sale of real property to:

• a.State that the image has been altered and give access to the original✓
• b.Obtain the seller's notarized consent before publishing the altered image anywhere
• c.Limit the alteration to the interior of the dwelling and leave exterior views untouched
• d.File a copy of both images with the Department within ten days of publication

Section 10140.8, added by AB 723, requires an advertisement or promotional material containing a digitally altered image to carry a reasonably conspicuous statement, on or adjacent to the image, that the image has been altered, together with a link to a publicly accessible website, URL or QR code clearly identifying the original unaltered image. Subdivision (b) excludes ordinary adjustments such as lighting, cropping and color correction that do not change the representation of the property. The statute requires no notarized consent, no interior-only limit, and no filing with the Department.

Business and Professions Code section 10148 requires a California broker to retain listings, deposit receipts, canceled checks, trust records and related transaction documents for:

• a.Three years, running from closing, or from the listing date if there is no closing✓
• b.Two years, running from the date the broker's license is next renewed after closing
• c.Five years, running from the date the deed is recorded with the county recorder
• d.Seven years, running from the date the escrow holder issues the closing statement

Section 10148(a) requires a licensed broker to retain for three years copies of all listings, deposit receipts, canceled checks, trust records and other documents executed or obtained in connection with any transaction requiring a broker license, and it fixes the start of the period at the date of the closing of the transaction, or at the date of the listing if the transaction is not consummated. The section also makes the records available for examination and audit and lets the Commissioner charge the broker for the cost of an audit after a final finding that section 10145 was violated.

Under Commissioner's Regulation 2729, a California broker may store required transaction records electronically only if the storage medium:

• a.Is nonerasable write once, read many (WORM) media✓
• b.Is backed up to a server physically located within the State of California
• c.Is inspected annually by a certified public accountant retained by the broker
• d.Permits the broker to correct clerical errors in a stored record at any time

Regulation 2729(a)(1) requires electronic image storage to be nonerasable write once, read many media that does not allow changes to the stored document or record, and the balance of the regulation requires regular course of business preparation, an identifiable custodian, a reliable indexing system with quality control, and retention for three years under section 10148. Subdivision (b) requires the broker to keep a means of viewing the records at the office and to provide paper copies at the broker's expense. Nothing turns on server location or an accountant's inspection, and the ability to alter a stored record is exactly what the rule forbids.

Commissioner's Regulation 2725 requires a responsible California broker to establish policies, rules, procedures and systems to review, oversee, inspect and manage which of the following?

• a.The continuing education transcripts of every licensee in the local trade association
• b.The personal finances and consumer credit reports of each affiliated salesperson
• c.Transactions requiring a license, documents, trust funds, and advertising of services✓
• d.The county recorder's index for every parcel listed by the brokerage in a calendar year

Regulation 2725 lists what reasonable supervision covers: transactions requiring a real estate license, documents that may have a material effect on the rights or obligations of a party, the filing, storage and maintenance of such documents, the handling of trust funds, advertising of any service requiring a license, familiarizing salespersons with anti-discrimination law, and regular and consistent reports of licensed activity. The regulation also requires a system for monitoring compliance. It says nothing about affiliated licensees' personal finances, association records or the recorder's index.

Under Commissioner's Regulation 2726, the written agreement a California broker must have with each salesperson must be dated, signed by the parties, and cover:

• a.Supervision of licensed activities, duties and compensation✓
• b.The salesperson's exclusive geographic territory within the county
• c.A minimum number of listings the salesperson will obtain each quarter
• d.The salesperson's agreement to indemnify the broker for any client claim

Regulation 2726 requires every broker to have a written agreement with each salesperson, whether licensed as a salesperson or as a broker under a broker-salesperson arrangement, dated and signed by the parties and covering material aspects of the relationship including supervision of licensed activities, duties and compensation. Territories, production quotas and indemnity clauses may be negotiated but none of them is what the regulation requires. The written agreement is a standard item examined in a Department audit, and its absence is itself a violation.

Business and Professions Code section 10179 provides that a California responsible broker's license may be suspended or revoked for a salesperson's violation only if:

• a.The violation occurred at a branch office rather than at the main office
• b.The salesperson's violation caused a consumer a monetary loss of any amount
• c.The salesperson was compensated by the broker for the transaction in question
• d.It appears at a hearing that the broker had guilty knowledge of the violation✓

Section 10179 states that no violation by a salesperson or an employee shall cause revocation or suspension of the responsible broker's license unless it appears on a hearing by the Commissioner that the broker had guilty knowledge of the violation. That protects a broker from automatic vicarious discipline. It does not protect a broker who failed to supervise, because section 10177(h) makes failure to exercise reasonable supervision an independent ground resting on the broker's own conduct. Consumer loss, payment of compensation and the location of the office are not the statutory test.

Business and Professions Code section 10178 requires a California responsible broker who discharges a salesperson for a violation that is a ground for discipline to:

• a.Notify the local trade association and the multiple listing service within ten days
• b.File a certified written statement of the facts with the Commissioner without delay✓
• c.Withhold any unpaid commissions until the Commissioner completes an investigation
• d.Publish notice of the discharge in a newspaper of general circulation in the county

Section 10178 requires that when a salesperson is discharged by the responsible broker for a violation of the disciplinary provisions of the article, a certified written statement of the facts be filed forthwith with the Commissioner by the responsible broker, and it authorizes discipline against the broker who fails to do so. The obligation runs to the Commissioner, not to a private association or listing service. Withholding earned compensation raises separate issues under the broker-salesperson agreement, and no publication requirement exists.

Which task may an unlicensed assistant in a California brokerage lawfully perform?

• a.Explaining the terms of a purchase agreement to a prospective buyer at an open house
• b.Typing a listing agreement from the licensee's notes and assembling the transaction file✓
• c.Negotiating the price and closing date directly with the cooperating brokerage
• d.Quoting the brokerage's commission and agreeing to reduce it for a hesitant seller

Business and Professions Code section 10133.2 exempts stenographers, bookkeepers, receptionists, telephone operators and other clerical help carrying out those functions, so clerical and administrative work is permitted. Explaining contract terms, negotiating price or closing dates, and quoting or adjusting compensation are all acts within section 10131 that require a license, because each involves advising or negotiating on behalf of another for compensation. The distinction the exam tests is between ministerial support and the exercise of judgment or negotiation.

Under Business and Professions Code section 10131.01, an unlicensed employee of a property management firm managing a residential apartment complex may, under a broker's supervision and control:

• a.Set the rental rates for vacant units and grant concessions the schedule does not authorize
• b.Sign listing agreements on behalf of the owner and negotiate purchase offers on the building
• c.Sell an individual condominium unit within the complex to an interested current tenant
• d.Show rental units, accept applications and deposits, and quote listed rates✓

Section 10131.01(a)(3) lists the permitted functions for such an employee: showing rental units and common areas, providing or accepting preprinted rental applications and answering questions about completing them, accepting credit check and administrative fees, security deposits and rents, giving information about rates and lease terms as set out in a schedule provided by the employer, and accepting signed leases. Subdivision (b) requires reasonable supervision and control. Listing, selling and negotiating a sale are licensed acts, and setting rates or granting unauthorized concessions goes beyond reading from the employer's schedule.

California real estate brokers are licensed and regulated under the Real Estate Law, Business and Professions Code Division 4, by the:

• a.County recorder for the county of the broker's office
• b.California Department of Financial Protection and Innovation
• c.California Association of Realtors
• d.California Department of Real Estate✓

The Department of Real Estate, headed by the Real Estate Commissioner, administers the Real Estate Law in Business and Professions Code Division 4 and the Commissioner's Regulations in Title 10 of the California Code of Regulations, and it issues, renews, suspends and revokes broker and salesperson licenses. The Department of Financial Protection and Innovation supervises escrow agents, finance lenders and other financial firms, which is a different licensing scheme. The California Association of Realtors is a private trade group with a voluntary code of ethics and no licensing power. A county recorder maintains the record of documents affecting title.

Which conduct falls under Business and Professions Code section 10176 rather than section 10177?

• a.Willfully using the term realtor while not a member of the organization
• b.Procuring a real estate license by making a material misstatement in the application
• c.Failing as a broker to exercise reasonable supervision over affiliated salespersons
• d.Commingling a client's funds with the broker's own money while acting as a licensee✓

Section 10176 reaches acts committed while performing or attempting to perform acts within the scope of a license, and subdivision (e) names commingling expressly. Section 10177 reaches conduct that need not occur inside a licensed transaction: subdivision (a) covers procuring a license by fraud or material misstatement, subdivision (h) covers a broker's failure to exercise reasonable supervision, and subdivision (e) covers willful use of the term realtor by a non-member. Keeping the two sections apart is a standard examination point, because the dividing line is whether the licensee was acting in a licensed transaction.

Under Business and Professions Code section 10086, a person served with a desist and refrain order from the Real Estate Commissioner:

• a.Must cease the described activity immediately and may request a hearing within 30 days✓
• b.May continue the activity for 60 days while preparing a written response to the Commissioner
• c.Must file an appeal in superior court within 10 days or forfeit the right to be heard
• d.Is automatically barred from the real estate business for a period of five years

Section 10086(a) requires the respondent to cease the described activity immediately upon receipt of the order, and subdivision (b) allows a request for hearing within 30 days of service. If the respondent also verifies that the order precludes a substantial proportion of the business, the Commissioner must go to superior court within ten days for a restraining order or the respondent may resume pending the decision. Subdivision (c) deems the order rescinded if the hearing is not timely commenced. A five-year automatic bar does not exist; section 10087 allows a bar of up to 36 months after notice and an opportunity for hearing.

Business and Professions Code section 10186.2 requires a California licensee to report a felony charge, a criminal conviction, or discipline by another licensing authority:

• a.In writing, at the time the licensee next applies to renew the license
• b.In writing, within 30 days of the charge, conviction or disciplinary action✓
• c.Orally to a Department investigator within 5 business days of the event
• d.Only if the offense is substantially related to real estate practice

Section 10186.2 requires a licensee to report the bringing of a criminal complaint, information or indictment charging a felony, any conviction including a verdict or plea of guilty or no contest to a felony or misdemeanor, and any disciplinary action by another licensing entity of this state, another state or a federal agency. The report must be in writing within 30 days of the event, and failure to report is itself a cause for discipline. Waiting for renewal is too late, an oral report does not satisfy the section, and the duty is not limited to substantially related offenses.

Under California's Real Estate Law, the principal difference between a broker license and a salesperson license is that a broker:

• a.May renew the license without completing any continuing education
• b.Is exempt from the Commissioner's trust fund handling regulations
• c.May operate an independent brokerage and hold the client trust account✓
• d.May perform licensed acts for a member of the public without any license

A California broker may run an independent real estate business, employ salespersons and maintain the trust account, while a salesperson must be licensed to and act under a responsible broker and may accept compensation only from that broker under section 10137. Far from being exempt from the trust fund rules, the broker is the licensee those rules bind most directly, because the broker holds the money. Section 10170.5 requires continuing education from brokers and salespersons alike, with an additional management and supervision course for brokers. And no one may perform the acts in section 10131 for another without a license.

California real estate broker and salesperson licenses are issued for a term of, and renewed after:

• a.Two years, on completion of 12 clock hours of approved education
• b.Ten years, with no continuing education requirement of any kind
• c.One year, on passing the qualifying examination a second time
• d.Four years, on completion of 45 hours of continuing education✓

Business and Professions Code sections 10153.6 and 10153.7 fix the term of broker and salesperson licenses at four years, and section 10170.5 conditions renewal on completing 45 clock hours of continuing education during the four-year period preceding the renewal application. The first renewal must include specified three-hour courses in ethics, agency, trust fund handling, fair housing and risk management, plus a two-hour implicit bias course and, for brokers, a three-hour management and supervision course. Later renewals may use a nine-hour update survey course covering those subjects.

Business and Professions Code section 10150.6 lets a broker applicant satisfy the experience requirement by petition, and permits the Commissioner to treat which credential as the equivalent of two years of general real estate experience?

• a.A community college certificate in real estate earned within the previous five years
• b.A four-year college or university degree with a major or minor in real estate✓
• c.A current California general contractor license held for at least three years
• d.A completed Department-approved trust fund accounting course of forty-five hours

Section 10150.6(a) requires an original broker applicant to have held a salesperson license for at least two years within the preceding five years while actively engaged in the business. Subdivision (b) allows an applicant with the equivalent of two years of general real estate experience to petition the Department, and subdivision (c) permits the Commissioner to treat a degree from a four-year college or university whose course of study included a major or minor in real estate as that equivalent, and to consider degrees completed before the five-year window. A two-year certificate, a contractor license and a continuing education course are not the statutory equivalent.

Under Business and Professions Code section 10170.8, the continuing education requirement does not apply to a California licensee who:

• a.Has completed the eight statutory college-level courses required for the broker examination
• b.Holds an inactive license and performs no acts for which a license is required
• c.Has been a licensee in good standing for 30 continuous years and is aged 70 or older✓
• d.Is a member of the State Bar of California in active practice within the state

Section 10170.8 exempts a licensee who proves to the Commissioner's satisfaction that the licensee has been a real estate licensee in good standing for 30 continuous years in California and is 70 years of age or older, and it defines good standing to exclude anyone suspended, revoked, restricted, debarred, or who surrendered a license under investigation. Inactive status does not by itself excuse the education. The eight statutory courses qualify an applicant for the broker examination under section 10153.2 but do not substitute for renewal education. And section 10153.2(b) waives the pre-license courses for State Bar members, not the continuing education.

Business and Professions Code section 10474 caps the liability of the Consumer Recovery Account, for applications filed on or after 1 January 2009, at:

• a.$20,000 for any one transaction and $100,000 for any one licensee
• b.$50,000 for any one transaction and $250,000 for any one licensee✓
• c.$50,000 for any one licensee regardless of the number of transactions
• d.$250,000 for any one transaction and an unlimited amount per licensee

Section 10474(b) sets the limits at $50,000 for any one transaction and $250,000 for any one licensee for applications filed on or after 1 January 2009, notwithstanding the number of persons aggrieved, parcels involved or judgments obtained. The $20,000 and $100,000 figures in subdivision (a) are the older caps for causes of action arising on or after 1 January 1980 that remain in the statute. Section 10474.5 provides that where the cap is insufficient to pay all valid claims against one licensee, the money is distributed pro rata.

Under Business and Professions Code section 10475, when the Commissioner pays a claim from the Consumer Recovery Account on account of a licensee, that licensee's license is:

• a.Unaffected, because the Account exists precisely to spare licensees personal liability
• b.Placed on restricted status for two years and then reinstated without further conditions
• c.Automatically suspended, and not reinstated until the amount is repaid with interest✓
• d.Revoked permanently, with no possibility of reinstatement at any future time

Section 10475 automatically suspends the license on the date of payment where the judgment was established by clear and convincing evidence of fraud, misrepresentation, deceit or conversion of trust funds, and bars reinstatement until the licensee has repaid the amount in full plus interest at the prevailing legal rate. It adds that a discharge in bankruptcy does not relieve the person of that disability. The Account protects consumers, not licensees, and section 10479 subrogates the Commissioner to the claimant's rights. Nothing in the section makes the loss of the license permanent once repayment is made.

Business and Professions Code section 10177.4 makes it a ground for discipline for a California licensee to receive compensation for referring customers to:

• a.A state-licensed general contractor engaged to repair the property after closing
• b.A cooperating brokerage that represents the buyer in the same transaction
• c.An escrow agent, pest control firm or title insurer✓
• d.An approved continuing education provider offering the mandated renewal courses

Section 10177.4 authorizes suspension or revocation where a licensee claims, demands or receives a commission, fee or other consideration for referring customers to an escrow agent, structural pest control firm, home protection company, title insurer, controlled escrow company or underwritten title company. Subdivision (b) excludes bona fide payments for goods or services actually furnished at reasonable value and moderate customary business courtesies. Sharing a commission with a cooperating brokerage is ordinary practice under section 10137, and referrals to a contractor or an education provider are not on the statutory list.

Business and Professions Code section 10050.1 states that in exercising its licensing, regulatory and disciplinary functions, the Department of Real Estate must treat which interest as paramount?

• a.The confidentiality of complaints filed against experienced licensees
• b.The financial stability of the brokerage firms the Department licenses
• c.Uniformity with the licensing standards adopted by neighboring states
• d.Protection of the public, whenever it is inconsistent with other interests✓

Section 10050.1 provides that protection of the public shall be the highest priority for the Department in exercising its licensing, regulatory and disciplinary functions, and that whenever protection of the public is inconsistent with other interests sought to be promoted, protection of the public shall be paramount. Section 10050 reinforces the point by making it the Commissioner's principal responsibility to enforce the law in a manner achieving maximum protection for buyers of real property and those dealing with licensees. Industry stability, interstate uniformity and complainant confidentiality are not the declared priority.

Under Business and Professions Code section 10142 and the Uniform Electronic Transactions Act, a California licensee who obtains a client's signature on a listing agreement:

• a.Must deliver a paper copy by certified mail regardless of what the parties agreed
• b.May deliver the required copy electronically where the parties agreed to do so✓
• c.May delay delivery until the transaction closes, provided the file records the delay
• d.Must file the signed agreement with the Department within five business days

Section 10142 requires the licensee to deliver a copy of the agreement to the person signing it as soon as reasonably practicable after the signature is obtained, and expressly permits electronic delivery in transactions conducted under the Uniform Electronic Transactions Act where the parties have agreed to proceed electronically. Certified mail is not required. Delaying to closing defeats the purpose of giving the signer the document. And listings are never filed with the Department, although Regulation 2729.5 requires the broker to retain the electronically signed copy under section 10148.

Under Civil Code section 1950.5 as it currently stands, the maximum security a California residential landlord may demand, in addition to first month's rent, is generally:

• a.An amount equal to one month's rent, whether the unit is furnished or unfurnished✓
• b.An amount equal to two months' rent if the unit is unfurnished and three if furnished
• c.An amount equal to three months' rent for any residential unit in the state
• d.Any amount the parties negotiate, since California sets no statutory ceiling

Section 1950.5(c)(1) limits security to an amount equal to one month's rent in addition to any first month's rent paid on or before initial occupancy, and it draws no distinction between furnished and unfurnished units. The older two-month and three-month rule was replaced, which is exactly the kind of change that leaves stale study material behind. Paragraph (5) allows two months' rent for a landlord who is a natural person, or a limited liability company all of whose members are natural persons, owning no more than two residential rental properties comprising no more than four units, and that exception does not apply to a service member.

Under Civil Code section 1947.12, part of the Tenant Protection Act, an owner of covered residential real property may not raise the rent over any 12-month period by more than:

• a.3 percent, measured from the rent charged at the start of the tenancy
• b.10 percent plus the change in the cost of living, with no upper limit
• c.5 percent plus the cost-of-living change, or 10 percent if lower✓
• d.15 percent, provided the increase is imposed in a single step

Section 1947.12(a)(1) caps the increase at 5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower, measured against the lowest gross rental rate charged during the 12 months before the increase takes effect, and paragraph (2) limits an owner to two increments in any 12-month period for a continuing tenant. Subdivision (b) lets the owner set the initial rate freely for a new tenancy where no prior tenant remains. Subdivision (d) exempts deed-restricted affordable housing, dormitories, locally rent-controlled units with tighter caps, and housing issued a certificate of occupancy within the previous 15 years.

A California broker who manages residential rental property for owners and collects the rents is:

• a.Permitted to deposit the rents in the brokerage operating account until month end
• b.Exempt from the Real Estate Law because rent collection is a bookkeeping function
• c.Required to hold a separate property manager license issued by the Department
• d.Performing acts within section 10131(b) and holding those rents as trust funds✓

Section 10131(b) includes leasing, renting, placing for rent, soliciting listings of places for rent, soliciting prospective tenants and collecting rents among the acts requiring a broker license when done for another for compensation. Money collected on behalf of an owner is trust funds under section 10145 and must be handled under Regulations 2831 through 2835. California issues no separate property manager license; the activity is conducted under the real estate broker license. And depositing rents into the operating account is commingling, prohibited by section 10176(e).

A commercial lease under which the tenant pays a base rent plus its share of property taxes, insurance and common area maintenance is a:

• a.Ground lease, in which the tenant leases unimproved land and builds at its own expense
• b.Gross lease, in which the landlord absorbs all operating costs out of the rent received
• c.Percentage lease, in which rent is set as a share of the tenant's gross sales revenue
• d.Net lease, in which the tenant carries specified operating costs in addition to base rent✓

A net lease shifts specified operating expenses to the tenant on top of base rent, and where taxes, insurance and common area maintenance are all passed through it is commonly called a triple net lease. Under a gross lease the landlord pays the operating costs out of the rent collected, so the tenant's outlay is predictable. A percentage lease ties some or all of the rent to the tenant's sales and is common in retail. A ground lease covers land alone, typically for a long term, with the tenant constructing and owning improvements during the term.

Under Civil Code section 2079.13, 'commercial real property' for purposes of the agency disclosure article means all real property in California except:

• a.Property held by a corporation, limited liability company or limited partnership
• b.Homes, dwelling units, mobilehomes, vacant land and recreational vehicles✓
• c.Property that generates rental income of more than one hundred thousand dollars a year
• d.Property located outside an incorporated city and served by a private water system

Section 2079.13(c) defines commercial real property as all real property in the state except single-family residential real property, dwelling units subject to the residential landlord-tenant chapter beginning at Civil Code section 1940, a mobilehome as defined in section 798.3, vacant land, or a recreational vehicle as defined in section 799.29. The definition turns on the character of the property, not on the form of the owning entity, the amount of income produced, or the property's location relative to a city boundary.

A California licensee who sells a business opportunity, including its inventory and goodwill, is acting under:

• a.An exemption from the Real Estate Law, since no interest in land changes hands
• b.A separate business opportunity broker license issued by the Secretary of State
• c.The Subdivided Lands Law, which governs the sale of business interests to the public
• d.Business and Professions Code section 10131(a), which covers business opportunities✓

Section 10131(a) covers a person who for compensation sells, buys, solicits or negotiates the purchase, sale or exchange of real property or a business opportunity, so business opportunity brokerage falls squarely inside the real estate broker license. California issues no separate business opportunity license, and the Secretary of State does not license brokers. The Subdivided Lands Law concerns subdivision interests. And because the statute names business opportunities expressly, the absence of an interest in land does not create an exemption; the bulk sale rules in the Commercial Code apply in addition.

The California Real Estate Transfer Disclosure Statement required in most sales of one-to-four residential units is a disclosure of:

• a.The condition of the property and its known defects, completed by the seller✓
• b.The commission split negotiated between the listing and cooperating brokers
• c.The listing agent's disciplinary history with the Department of Real Estate
• d.The financing terms the buyer has arranged with the buyer's chosen lender

The Transfer Disclosure Statement in Civil Code sections 1102 through 1102.19 is a seller's written statement about the condition of the property, including known defects and a checklist of features and problems, with separate sections for the agents' visual inspection findings. It is not a disclosure about compensation, about the licensee's record with the Department, or about the buyer's financing. Section 1102(c) makes any waiver of the article void as against public policy, so the parties cannot agree to skip it in a covered transaction.

A California seller delivers the Transfer Disclosure Statement by mail after the buyer has already signed an offer. Under Civil Code section 1102.3 the buyer may terminate the offer within:

• a.Three days after delivery, by oral notice of termination to the escrow holder
• b.Five days after delivery, by written notice to the seller or the seller's agent✓
• c.Seventeen days after delivery, matching the standard investigation contingency period
• d.Thirty days after delivery, by recording a notice of rescission with the county recorder

Section 1102.3 gives the buyer three days after delivery in person, and five days after delivery by mail or by electronic record where the parties agreed to transact electronically, to terminate the offer by delivering a written notice of termination to the seller or the seller's agent. Because this delivery was by mail, the period is five days. Oral notice is not what the statute permits, and the escrow holder is not the recipient it names. The seventeen-day figure is a contract contingency period rather than a statutory right, and nothing is recorded to exercise this termination.

A California seller in a covered one-to-four unit sale fails to deliver the Transfer Disclosure Statement at all. Under Civil Code section 1102.13, the consequence is that:

• a.The transfer is void from the outset and title automatically revests in the seller
• b.The transfer stands, but a willful or negligent violator owes actual damages✓
• c.The buyer may rescind at any time within ten years of the close of escrow
• d.The escrow holder becomes liable for the buyer's damages as a matter of law

Section 1102.13 states that no transfer subject to the article shall be invalidated solely because of a failure to comply, but that any person who willfully or negligently violates or fails to perform a duty prescribed by the article is liable in the amount of actual damages suffered by a transferee. So title stands and the remedy is money. There is no automatic revesting, no ten-year rescission right, and the escrow holder does not assume the seller's disclosure duty. Business and Professions Code section 10176.5 separately lets the Commissioner discipline a licensee who willfully or repeatedly violates the article.

Which hazard is NOT one of the six listed on the Natural Hazard Disclosure Statement set out in Civil Code section 1103.2?

• a.A high or very high fire hazard severity zone identified by the state
• b.An area of potential flooding shown on a dam failure inundation map
• c.A methane gas hazard zone designated by a local district✓
• d.An earthquake fault zone delineated under the Alquist-Priolo Act

The statutory form lists six hazards: a special flood hazard area of any Zone A or V type designated by FEMA, an area of potential flooding shown on a dam failure inundation map, a high or very high fire hazard severity zone, a state responsibility wildland area that may contain substantial forest fire risks, an earthquake fault zone, and a seismic hazard zone. Methane zones are a local disclosure concern in some California jurisdictions but they are not on the statutory natural hazard form. The fire hazard line was broadened to cover high as well as very high severity zones effective 1 January 2025.

Under Civil Code section 1103.4, a California seller and the agents are relieved of further duty on a natural hazard item when:

• a.The listing agent notes in the file that no hazard maps were readily available
• b.The buyer signs a waiver acknowledging that no hazard research was performed
• c.The property lies outside the boundaries of any incorporated California city
• d.The information is delivered by a public agency or a qualified expert✓

Section 1103.4(b) provides that delivery to the prospective buyer of the required information by a public agency, or by another person providing information as specified, complies with the article and relieves the seller, the seller's agent and the buyer's agent of any further duty as to that item. Subdivision (c) extends the same protection to a report prepared by a licensed engineer, land surveyor, geologist or natural hazard expert. A waiver does not work here, and neither the property's location nor a file note about map availability discharges the duty.

A California seller's agent knows a fatality occurred on the property four years ago. Under Civil Code section 1710.2 the agent:

• a.Must disclose the death in writing on the Transfer Disclosure Statement in every case
• b.Has no duty to volunteer the death, because it occurred more than three years ago✓
• c.Must disclose the death only if the buyer is financing the purchase with an insured loan
• d.May state truthfully that no death occurred, since the statutory period has run

Civil Code section 1710.2 provides that no cause of action arises against an owner or an agent for failing to disclose that an occupant of the property died on it, or the manner of death, where the death occurred more than three years before the offer to purchase. Section 1710.2(a)(1)(B) adds that an owner or agent is likewise not required to disclose that an occupant “was living with human immunodeficiency virus (HIV) or died from AIDS-related complications,” an exemption that carries no three-year limit. Note the shape of the rule: the statute lists both items as matters an owner or agent “is not required to disclose... as these are not material facts that require disclosure,” and bars any cause of action for not disclosing them. It lifts a duty; it does not impose a ban on disclosing. The immunity is also from a duty to volunteer, not a license to lie: subdivision (d) says the section “shall not be construed to immunize an owner or his or her agent from making an intentional misrepresentation in response to a direct inquiry” about deaths on the property, and a direct question answered falsely would expose the agent under sections 10176 and 10177.

Civil Code section 2079.10a requires a California contract for the sale of one-to-four residential units, and residential leases, to contain a notice about:

• a.The identity of the mortgage servicer for any loan the buyer assumes
• b.The average utility costs incurred by the property in the prior calendar year
• c.The number of building permits issued for the property since construction
• d.The Department of Justice internet database of registered sex offenders✓

Section 2079.10a requires the Megan's Law notice, in not less than 8-point type, telling the reader that information about specified registered sex offenders is made available to the public through a Department of Justice internet website. Subdivision (b) provides that once the notice is delivered, the lessor, seller or broker need not supply additional information about the proximity of registered offenders. Utility costs, permit history and servicer identity may be negotiated disclosure items or material facts in a given transaction, but none of them is the subject of this statutory notice.

A California broker learns from a neighbor that the subject property flooded twice in the last five years, a fact the seller has not disclosed. The broker should:

• a.Disclose the information to the buyer, because it materially affects value✓
• b.Keep it confidential, because it came from someone outside the transaction
• c.Disclose it only after the buyer removes the physical inspection contingency
• d.Ask the seller to decide whether the information should be passed along

The statutory agency disclosure form obliges the agent, to buyer and seller alike, to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to or within the diligent attention and observation of the parties, and Civil Code section 2079 imposes an inspection and disclosure duty toward the prospective buyer. Repeated flooding is squarely material. The source of the information does not make it confidential, and section 2079.21 defines confidential information as facts about a client's own position rather than facts about the property. The seller cannot waive the agent's duty.

A California listing agent repeats a seller's statement that the converted garage was permitted, without checking. The permit was never issued. The agent's exposure arises principally because:

• a.Business and Professions Code section 10148 makes an unverified statement a records violation
• b.Civil Code section 2079.3 requires an affirmative search of the local building department's permit records
• c.The agent guarantees the accuracy of every statement a seller makes on the disclosure form
• d.The standard of care in Civil Code section 2079.2 requires the diligence of a reasonably prudent licensee✓

Section 2079.2 measures the agent by the care a reasonably prudent licensee would exercise, and repeating a significant unverified claim about permits, when the improvement is visibly a conversion, falls below that standard even though section 2079.3 excludes an affirmative inspection of public records or permits from the statutory visual inspection. The prudent course is to disclose the source and advise the buyer to investigate rather than to assert the fact. The agent is not a guarantor of the seller's statements, and section 10148 concerns record retention rather than verification.

In a California sale of a condominium unit, Civil Code section 2079.3 limits the agent's statutory visual inspection to:

• a.The unit offered for sale, if the common interest disclosure sections are complied with✓
• b.The unit, the common area, and the association's reserve study and financial statements
• c.The entire project, including every building the association is obliged to maintain
• d.Nothing at all, because a common interest development is exempt from the inspection duty

Section 2079.3 states that where the property is a unit in a planned development, a condominium or a stock cooperative, the inspection does not include more than the unit offered for sale if the seller or the broker complies with Civil Code sections 4525 to 4580. Those sections require delivery of the governing documents, the association's assessment and financial information and related items, which is how the buyer learns about the rest of the project. The inspection duty is limited rather than eliminated, and it does not extend to the whole development.

Business and Professions Code section 10141 requires a California broker, after the closing of a transaction in which title is conveyed through the broker, to inform the seller and purchaser in writing of the selling price within:

• a.One month, unless an escrow closing statement disclosing the information is rendered✓
• b.Ten days, in every case, regardless of what escrow delivers to the parties
• c.One week, together with a copy of the recorded deed from the county recorder
• d.Sixty days, together with a copy of the broker's trust account reconciliation

Section 10141 requires the broker, within one month after the closing, to inform or cause the seller and purchaser to be informed in writing of the selling price, including a description of the property and any added money consideration in an exchange, and it provides that a closing statement rendered by an escrow holder disclosing that information is compliance. The separate one-week duty in section 10141.5 concerns causing a deed of trust to be recorded or delivered to the beneficiary. Ten-day and sixty-day periods and trust account reconciliations belong to different provisions.

Business and Professions Code section 10153.2 now requires the broker examination applicant's Real Estate Practice course to include:

• a.A component on implicit, explicit and systemic bias, and a fair housing component✓
• b.A component on Spanish-language contract drafting for residential transactions
• c.A component on federal immigration status verification for prospective tenants
• d.A component on international investment reporting to the Department of the Treasury

Section 10153.2(a)(1)(A) requires the Real Estate Practice course to include a component on implicit bias covering the impact of implicit, explicit and systemic bias on consumers, the historical and social impacts of those biases, and actionable steps students can take to recognize and address their own implicit biases, together with a component on federal and state fair housing laws with an interactive participatory element in which the applicant role-plays as both consumer and professional. Section 10170.5 carries a parallel two-hour implicit bias course and three-hour fair housing course into continuing education.

Which set lists the essential elements of a valid California contract?

• a.A written instrument, a notary acknowledgment, recording and delivery
• b.Capable parties, mutual consent, a lawful object and sufficient consideration✓
• c.An offer, an appraisal, a title report and a signed escrow instruction
• d.Utility, scarcity, demand and transferability of the subject matter

Civil Code section 1550 requires parties capable of contracting, their consent, a lawful object and a sufficient cause or consideration. A writing is required only for the categories listed in the statute of frauds, and notarization, recording and delivery relate to conveyances rather than to contract formation. An appraisal, a title report and escrow instructions are transactional steps that follow a binding contract. Utility, scarcity, demand and transferability are the four elements of value in appraisal theory, which belong to a different subject entirely.

A California seller signs a purchase agreement while under threat of physical harm from the buyer. The contract is:

• a.Void from the beginning, because a contract signed under threat has no legal existence
• b.Voidable at the option of the seller, because consent obtained by duress is not free✓
• c.Valid and enforceable, because the seller's signature appears on the document
• d.Unenforceable by either party, because both signed the same defective instrument

Consent must be free, mutual and communicated. Consent obtained by duress, menace, fraud, undue influence or mistake is not free, and the contract is voidable at the option of the injured party rather than void. That distinction matters: a voidable contract stands until the injured party rescinds, so the seller could choose to affirm it. Contracts that are void from the outset include those with an unlawful object or made by a person judicially determined to be of unsound mind. A signature alone does not cure defective consent, and the wrongdoer cannot claim the defect.

Under Civil Code section 1624, which agreement must be in writing and signed by the party to be charged?

• a.A lease of real property for a term longer than one year✓
• b.A month-to-month rental agreement for an unfurnished apartment
• c.An agreement to pay a contractor for repairs completed in six weeks
• d.An oral promise to sell a used automobile for eight thousand dollars

Section 1624(a)(3) requires a writing for an agreement leasing real property for a period longer than one year, or for the sale of real property or an interest in it, and section 1624(a)(4) covers an agreement employing a broker for compensation. A month-to-month tenancy runs for less than a year at a time and may be oral. A repair agreement performable within a year is outside subdivision (a)(1). A sale of goods is governed by the Commercial Code, whose own writing requirement applies at a different threshold and is not part of Civil Code section 1624.

A California buyer's offer is met with a seller's response changing the closing date and raising the price. Legally the seller has made:

• a.A ratification, which validates the buyer's offer as originally submitted
• b.A qualified acceptance, which binds both parties on the buyer's original terms
• c.A conditional revocation, which suspends the buyer's offer for a reasonable time
• d.A counteroffer, which terminates the buyer's original offer and creates a new one✓

Acceptance must be absolute and unqualified. A response that changes any term is a counteroffer: it rejects and terminates the original offer and puts a new offer before the original offeror, who is then free to accept, reject or counter again. There is no such thing as a qualified acceptance that binds on the original terms. A revocation withdraws an offer rather than suspending another party's offer. And ratification is the adoption of an act previously done without authority, such as a principal approving an unauthorized act of an agent.

A California purchase agreement is fully performed by both parties at closing. The contract is then described as:

• a.Executed, meaning both parties have completely performed their obligations✓
• b.Executory, meaning something remains to be done by one or both parties
• c.Voidable, meaning one party retains the power to rescind after performance
• d.Unilateral, meaning only one party ever made an enforceable promise

An executed contract is one that has been fully performed by all parties, which is the state a purchase agreement reaches at closing. An executory contract is one in which performance remains outstanding, which describes the agreement during the escrow period. Voidable describes a defect in consent rather than a stage of performance. A unilateral contract is a promise exchanged for an act rather than for a return promise, which describes an option rather than a purchase agreement in which both sides make promises.

Under an exclusive right to sell listing, the California broker earns the commission if the property sells during the listing term:

• a.Only if the seller expressly approves payment at the close of escrow
• b.Only if the broker or a cooperating broker produces the buyer
• c.Only if the buyer was first shown the property by the listing broker
• d.Regardless of who produces the buyer, including the seller acting alone✓

An exclusive right to sell listing entitles the broker to the agreed compensation on a sale during the term no matter who produces the buyer, the seller included. An exclusive agency listing reserves the seller's right to sell personally without a commission, which is the second option. Limiting payment to buyers the broker personally showed describes an open listing's procuring cause analysis rather than an exclusive right to sell. And a listing is a binding contract, so the seller cannot condition earned compensation on later approval.

A California net listing provides that the broker keeps everything above a stated net figure to the seller. Such a listing:

• a.Is permitted, but the broker must disclose the amount of the profit✓
• b.Is prohibited outright by the Real Estate Law in every California transaction
• c.Requires prior written approval from the Real Estate Commissioner before use
• d.Converts automatically into an exclusive right to sell listing by operation of law

California permits a net listing, but Business and Professions Code section 10176(g) makes taking any secret or undisclosed compensation, commission or profit, or failing to reveal the full amount of the licensee's compensation before or at the meeting of the minds, a ground for suspension or revocation. Because the broker's profit under a net listing is unknown until a price is agreed, the disclosure duty is where brokers get into trouble. The form is not prohibited, no Commissioner approval exists for it, and no statute converts it into another form of listing.

A California exclusive listing contains a safety clause, sometimes called a protection or extender clause. Its function is to:

• a.Guarantee the broker a minimum fee even if the property does not sell at all
• b.Allow the seller to cancel the listing without cause at any point during the term
• c.Preserve the broker's commission if a registered prospect buys after expiration✓
• d.Extend the listing term automatically for successive periods until the property sells

A safety clause protects the broker's commission for a stated period after expiration where the buyer is someone the broker introduced to the property and identified to the seller in writing, usually within a short window after the listing ends. It prevents a seller and a prospect from waiting out the listing. It does not create a cancellation right for the seller, does not guarantee a fee where no sale occurs, and does not extend the listing itself; an exclusive listing must still carry a definite termination date under section 10176(f).