California Real Estate Broker Exam — All Questions

A managing broker collects rents and security deposits for several owners. How must these funds be handled?

• a.Deposited into the broker's operating account for convenience
• b.Held in a trust (property-management) account separate from the broker's own funds✓
• c.Kept as cash in the office safe until month end
• d.Applied first to the broker's management fee, then remitted

Rents and security deposits are trust funds belonging to others and must be held in a trust or property-management account separate from the broker's operating and personal funds. Placing them in the broker's operating account is commingling, and using them for the broker's benefit is conversion, both serious violations. The broker keeps a ledger for each owner, reconciles the account regularly, and remits per the management agreement rather than skimming fees first. Proper trust handling is a defining broker competency.

A retail store's lease sets rent as a base amount plus a percentage of the tenant's gross sales. This is a:

• a.Percentage lease✓
• b.Gross lease
• c.Net lease
• d.Ground lease

A percentage lease ties part of the rent to the tenant's sales, common in retail and shopping centers because the landlord shares in the store's success. In a gross lease the landlord pays the operating expenses out of a flat rent; in a net lease the tenant pays some expenses (taxes, insurance, maintenance) on top of base rent. A ground lease leases the land itself, often long term, so the tenant can build. Matching lease type to property type is a core property-management skill.

A tenant remains in the unit after the lease term ends, without the landlord's permission. What kind of tenancy is this?

• a.Estate for years
• b.Periodic tenancy
• c.Tenancy at sufferance✓
• d.Tenancy at will

A tenant who stays after the lease ends without the landlord's consent holds a tenancy at sufferance, the lowest leasehold interest; the former tenant is essentially a holdover the landlord may remove through lawful process. An estate for years has a fixed term; a periodic tenancy renews automatically period to period; and a tenancy at will continues only while both parties agree. A manager must know these distinctions to pursue the correct, lawful remedy rather than a wrongful self-help eviction.