CSLB General Building (B) — All Questions

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

• a.No matter who procures the buyer, including the owner✓
• b.Only if the listing broker finds the buyer
• c.Only if another broker finds the buyer
• d.Only if the owner personally sells it

An exclusive right to sell listing entitles the broker to a commission if the property sells during the term regardless of who finds the buyer, even the owner. It offers the broker the greatest protection and is the most common listing type. This differs from an exclusive agency, where an owner-procured sale earns no commission.CA Civil Code

An open listing given to several brokers at once means that:

• a.Only one broker may show the property
• b.Only the broker who procures the buyer earns a commission✓
• c.The seller cannot sell it personally
• d.All listed brokers split any commission

In an open listing, a seller may engage multiple brokers and only the one who actually procures the buyer earns a commission. The seller may also sell the property personally without owing any commission. This nonexclusive arrangement offers brokers the least protection.CA Civil Code

In a net listing, the broker's commission is:

• a.A fixed percentage set by law
• b.Always 6% of the sale price
• c.Any amount received above the seller's stated net price✓
• d.Paid by the buyer

In a net listing the seller sets a minimum net amount, and the broker keeps anything received above that figure as commission. Because it invites conflicts of interest, the broker must disclose the exact selling price and commission, and some states ban net listings. California permits them only with full disclosure.CA Business & Professions Code

For a real estate purchase agreement to be enforceable in California, it generally must be:

• a.Notarized
• b.Recorded
• c.Approved by the DRE
• d.In writing and signed by the parties✓

Under the statute of frauds, contracts for the sale of real property must be in writing and signed by the party to be charged to be enforceable. Oral real estate purchase agreements are generally unenforceable. The writing must contain the essential terms of the deal.CA Civil Code

A home sells for $500,000 at a 6% total commission. If the listing and selling brokers split it equally, each brokerage receives:

• a.$15,000✓
• b.$18,000
• c.$30,000
• d.$7,500

The total commission is 6 percent of $500,000, which is $30,000, and an equal split gives each brokerage $15,000. Commission is calculated on the final sale price. The split between listing and selling sides is set by agreement.

A sale closes on the first day of a 30-day month. Annual property taxes are $3,600, paid in arrears. Using a 360-day year, the daily tax proration amount is:

• a.$5
• b.$10✓
• c.$12
• d.$30

Annual taxes of $3,600 divided by 360 days equals $10 per day. Proration divides shared expenses like taxes between buyer and seller based on the closing date. A 360-day banker's year is often used to simplify the math.

A rectangular parcel measures 220 feet by 198 feet. Given that one acre equals 43,560 square feet, the parcel contains:

• a.0.5 acre
• b.0.75 acre
• c.1 acre✓
• d.2 acres

The area is 220 times 198, which equals 43,560 square feet, and dividing by 43,560 square feet per acre gives exactly 1 acre. Area of a rectangle is length times width. Memorizing 43,560 square feet per acre is essential for real estate math.

An investor buys a property for $250,000 and sells it for $300,000. The percentage of profit based on cost is:

• a.10%
• b.15%
• c.16.7%
• d.20%✓

Profit is $300,000 minus $250,000, or $50,000, and $50,000 divided by the $250,000 cost equals 0.20, or 20 percent. Profit percentage is typically figured on the original cost or basis. This measures return relative to the amount invested.

A salesperson receives 60% of the 3% commission their brokerage earns on a $400,000 sale. The salesperson's share is:

• a.$7,200✓
• b.$4,800
• c.$12,000
• d.$6,000

The brokerage earns 3 percent of $400,000, which is $12,000, and 60 percent of that is $7,200. Commission first goes to the broker, who then pays the salesperson their agreed share. Salespersons are always paid through their employing broker.

A broker who holds client trust funds must generally deposit them into a neutral escrow depository or a trust account no later than:

• a.Within 30 days
• b.Three business days after receipt✓
• c.At close of escrow
• d.Only when the deal falls through

California requires a broker to place trust funds into a neutral escrow, a trust account, or into the principal's hands not later than three business days after receipt. Prompt handling prevents commingling and protects clients. The DRE audits trust fund records closely.CA Business & Professions Code

A property manager who collects rents and leases units for owners in California generally must:

• a.Be a licensed appraiser
• b.Hold a contractor's license
• c.Hold a real estate license or work under a licensed broker✓
• d.Register with the IRS only

Leasing property and collecting rents for others for compensation are licensed real estate activities in California, so a property manager generally must be a licensee or work under a broker. Resident managers of apartment buildings are a limited exception. Property management agreements should be in writing.CA Business & Professions Code

A licensee who tells prospective buyers false information about a competing listing to steer them to their own listing has most likely committed:

• a.Lawful advertising
• b.Permissible puffing
• c.A fiduciary duty to the buyer
• d.An unethical and possibly fraudulent act✓

Deliberately making false statements about another listing to divert buyers is dishonest dealing that violates professional ethics and California license law. It can constitute fraud or misrepresentation subject to discipline. Licensees must deal honestly with all parties.CA Business & Professions Code

Which of the following is an essential element of a valid contract?

• a.Lawful object and mutual consent✓
• b.Notarization
• c.Recording
• d.A real estate license

A valid contract requires capable parties, mutual consent, lawful object, and sufficient consideration. Notarization and recording are not required for a contract's validity. A purchase agreement missing an essential element may be void or voidable.CA Civil Code

An option contract in real estate gives the optionee the:

• a.Obligation to buy the property
• b.Right, but not the obligation, to buy within a set time and price✓
• c.Right to occupy without paying
• d.Immediate ownership of the property

An option grants the optionee the exclusive right, but not the obligation, to purchase the property at a set price within a stated period, in exchange for option consideration. The optionor must sell if the optionee exercises the option. If the option lapses unexercised, the consideration is typically forfeited.CA Civil Code

When a seller responds to a buyer's offer by changing the price, the seller has made a:

• a.Binding acceptance
• b.Ratification
• c.Counteroffer that rejects the original offer✓
• d.Novation

Changing any material term of an offer creates a counteroffer, which legally rejects the original offer and creates a new offer the other party may accept or reject. The original offer can no longer be accepted once countered. Acceptance must mirror the offer exactly to form a contract.CA Civil Code

Escrow closes on the last day of a 30-day month. The seller has already paid the full month's $900 of homeowner association dues. Using a 30-day month, the buyer owes the seller for how many days?

• a.30 days
• b.15 days
• c.10 days
• d.1 day✓

If the seller is responsible through the closing date and closing is the final day, the buyer owns only that last day, owing 1 day of the prepaid dues, which is $900 divided by 30, or $30. Proration allocates prepaid expenses between the parties. The exact day counted depends on the escrow instructions.

A house has a rectangular footprint of 40 feet by 50 feet. Its ground-floor area is:

• a.2,000 square feet✓
• b.1,600 square feet
• c.2,400 square feet
• d.900 square feet

Area equals length times width, so 40 feet times 50 feet equals 2,000 square feet. Square footage calculations are used for pricing, appraisal, and construction estimates. Always confirm which areas are included in the measurement.

An owner sells a property for $360,000, which represents a 20% loss from what she originally paid. What did she originally pay?

• a.$432,000
• b.$450,000✓
• c.$400,000
• d.$300,000

If $360,000 is 80 percent of the original cost after a 20 percent loss, then the original price equals $360,000 divided by 0.80, which is $450,000. Loss percentages are figured on the original cost. Set the sale price equal to the cost times one minus the loss rate and solve.

A brokerage charges a 5% commission on a $520,000 sale. The listing side keeps 40% and the selling side gets 60%. How much does the selling side receive?

• a.$10,400
• b.$13,000
• c.$15,600✓
• d.$26,000

The total commission is 5 percent of $520,000, which is $26,000, and the selling side's 60 percent share equals $15,600. Commission splits are negotiated between the brokerages involved. The listing side would receive the remaining $10,400.

For an unfurnished residential rental in California, the security deposit a landlord may collect is limited by statute. A landlord may NOT:

• a.Charge first month's rent
• b.Require a written lease
• c.Collect a cleaning fee at move-out for actual cleaning
• d.Charge a nonrefundable security deposit✓

California prohibits nonrefundable security deposits; all deposits must be refundable, subject to lawful deductions for unpaid rent and damages beyond normal wear. Statutory limits cap the total deposit amount. The landlord must return the deposit or an itemized accounting within a set period after move-out.CA Civil Code