California Real Estate Chapter 16 Comprehensive ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED ANSWERS) ||ALREADY GRADED A+||NEWEST VERSION

California Real Estate Chapter 16 Comprehensive ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED ANSWERS) ||ALREADY GRADED A+||NEWEST VERSION Administration of the Real Estate Law - ANSWER California's Real Estate Law (also known as the license law) is contained in sections 10000 to 10580 of the Business and Professions Code. The purpose of the law is to regulate the real estate profession and protect the public from incompetent, unethical, or dishonest real estate agents. The Real Estate Law is administered by the Department of Real Estate (DRE), which is a division of the California Business, Transportation, and Housing Agency. The law is enforced by the chief officer of the DRE, the Real Estate Commissioner. The Real Estate Commissioner's job is to implement and enforce the provisions of the Real Estate Law in a way that will provide the maximum protection possible to members of the public who deal with real estate licensees. The Commissioner is given many broad powers to accomplish this end. The Commissioner has the power to adopt, amend, or repeal regulations necessary to enforce the Real Estate Law. These regulations have the force and effect of law. The Commissioner's regulations can be found in sections 2705 to 3109 of Title 10 in the California Code of Regulations. The Commissioner also has the authority to: -investigate non-licensees alleged to be performing activities for which a license is required; -screen and qualify applicants for a license; -investigate complaints against licensees; and -regulate some aspects of the sale of subdivisions, franchises, and real property securities. In addition, the Commissioner may: -hold formal hearings to determine issues involving a licensee, a license applicant, or a subdivider and, after such a hearing, suspend, revoke, or deny a license or stop sales in a subdivision; -bring actions for injunctions and claims for restitution on behalf of those injured by licensees who violate the Real Estate Law; and -bring actions to stop trust fund violations The Real Estate Commissioner is advised on legal matters by the state attorney general. County district attorneys are responsible for prosecuting violations of the Real Estate Law that occur in their county. The Real Estate Commissioner is appointed by the governor and serves at his or her pleasure. To qualify for the position of Real Estate Commissioner, a person must have been a real estate broker actively engaged in business for five years in California, or must have related experience associated with real estate activity in California for five of the previous ten years. The Commissioner and DRE employees are prohibited from engaging in professional real estate activities, and from having an interest in any real estate firm. Real Estate Law - ANSWER (California's real estate license law) (License law) The law that requires real estate agents to be licensed and that regulates their activities. A California statute that governs the licensing and business practices of real estate agents. Contained in sections 10000 to 10580 of the Business and Professions Code. The purpose of the law is to regulate the real estate profession and protect the public from incompetent, unethical, or dishonest real estate agents. The license law is made up of state statutes and administrative regulations issued by the Department of Real Estate. -The fundamental purpose of the license law is to protect buyers and sellers in real estate transactions. The license law is an exercise of the state's police power. The license law regulates the professional activities of real estate agents. It also establishes disciplinary procedures to penalize agents who engage in dishonest practices or who otherwise break the rules. The first part of this lesson describes who administers the license law and discusses licensing requirements. It covers the activities for which a real estate license is required, the different types of licenses, and license expiration and renewal. The second part of this lesson discusses the regulation of business activities. We'll discuss grounds and procedures for disciplinary action, as well as regulations concerning trust accounts, recordkeeping, and advertising. Finally, in the last part of the lesson, you'll learn about antitrust laws. Administration of License Law Real Estate Licenses -When Required -Types -Expiration & Renewal Rules & Regulations -Disciplinary Action -Business Practices -Antitrust Laws Department of Real Estate - ANSWER (DRE) California's real estate license law is administered by the Department of Real Estate, under the supervision of the Real Estate Commissioner. The state agency that administers the Real Estate Law. The Real Estate Law is administered by the Department of Real Estate (DRE), which is a division of the California Business, Transportation, and Housing Agency. The law is enforced by the chief officer of the DRE, the Real Estate Commissioner. Real Estate Commissioner - ANSWER The Commissioner grants or denies licenses, issues rules governing licenses, and enforces the license law. The Real Estate Commissioner is appointed by the Governor. The Commissioner may not engage in real estate activities or have any interest in a real estate firm. To qualify to be Commissioner, a person must have been a real estate broker actively engaged in business for five years in California. The Real Estate Commissioner's job is to implement and enforce the provisions of the Real Estate Law in a way that will provide the maximum protection possible to members of the public who deal with real estate licensees. The Commissioner is given many broad powers to accomplish this end. The Commissioner has the power to adopt, amend, or repeal regulations necessary to enforce the Real Estate Law. These regulations have the force and effect of law. The Commissioner's regulations can be found in sections 2705 to 3109 of Title 10 in the California Code of Regulations. The Commissioner also has the authority to: -grant and deny licenses, -issue rules and regulations, -enforce the license law, -regulate some aspects of the sale of subdivisions and business opportunities, -investigate non-licensees alleged to be performing real estate activities, and -hold disciplinary hearings on license law violations -investigate non-licensees alleged to be performing activities for which a license is required; -screen and qualify applicants for a license; -investigate complaints against licensees; and -regulate some aspects of the sale of subdivisions, franchises, and real property securities. In addition, the Commissioner may: -hold formal hearings to determine issues involving a licensee, a license applicant, or a subdivider and, after such a hearing, suspend, revoke, or deny a license or stop sales in a subdivision; -bring actions for injunctions and claims for restitution on behalf of those injured by licensees who violate the Real Estate Law; and -bring actions to stop trust fund violations The Real Estate Commissioner is advised on legal matters by the state attorney general. County district attorneys are responsible for prosecuting violations of the Real Estate Law that occur in their county. The Real Estate Commissioner is appointed by the governor and serves at his or her pleasure. To qualify for the position of Real Estate Commissioner, a person must have been a real estate broker actively engaged in business for five years in California, or must have related experience associated with real estate activity in California for five of the previous ten years. The Commissioner and DRE employees are prohibited from engaging in professional real estate activities, and from having an interest in any real estate firm. Real Estate Licenses - ANSWER A common way of regulating an industry or profession is to require its members to be licensed. The state can try to ensure a licensed person's competence and exercise control over his professional activities by requiring education, testing, and recordkeeping, and by enforcing minimum standards of business conduct. -Rules and regulations that apply to real estate licenses. It's important for a licensee to know the following: 1) when a real estate license is required, 2) the difference between the various types of licenses, 3) individuals who are exempted from license requirements, 4) the qualifications for each type of license, and 5) the application and renewal process. When a License is Required - ANSWER The Real Estate Law requires anyone who is acting, advertising, or appearing to act as a real estate broker or as a real estate salesperson to have a real estate license. Real Estate Broker - ANSWER A broker under the license law is one who engages in certain activities for another person, for compensation. Those activities include selling, listing, or negotiating the sale of real property or business opportunities. Set forth in the license law is the key to understanding when a license is required. The law defines a real estate broker as someone who engages in certain activities: 1. on behalf of another person, AND 2. for commissions or other compensation, or the promise of compensation. A person who is licensed to represent others for compensation in real estate transactions. A real estate broker is a person who does or negotiates to do certain acts on behalf of another, for compensation or in the expectation of compensation. These acts include all of the following: 1. Sales, purchases, and exchanges 2. Leases 3. Advertising and listings 4. Government lands 5. Advance fees 6. Mortgage loan brokerage 7. Selling, buying, or exchanging loans or securities Sales, purchases, and exchanges - ANSWER Selling, buying, or exchanging real property or a business opportunity. Leases - ANSWER Leasing or collecting rents from real property or a business opportunity; or buying, selling, or exchanging leases on real property or a business opportunity. Advertising and listings - ANSWER Soliciting prospective sellers, buyers, or tenants, or listing real property or a business opportunity for sale or lease. Government lands - ANSWER Locating or filing an application for the purchase or lease of lands owned by the state or federal government. Advance fees - ANSWER Charging or collecting an advance fee to promote the sale or lease of real property or a business opportunity (by advertising or listing it, by obtaining financing, or in some other way). Are also considered trust funds. These are fees that a client may pay a broker in advance to defray anticipated costs, such as the advertising expenses associated with a listing, or as upfront compensation for services the broker will provide. While funds collected upfront for appraisal fees or credit report fees are not considered advance fees, they still must be treated as trust funds. Other types of funds in a broker's possession, such as general operating funds, earned real estate commissions, or rent from the broker's own real estate, aren't trust funds, because the broker isn't holding them on behalf of someone else. -An advance fee is money that a real estate broker collects from a client in advance to cover expenses she expects to incur on the client's behalf, or as upfront compensation for services she has yet to provide. Advance fees must be handled in compliance with the trust funds rules we've discussed so far. They must not be commingled with the broker's own funds, and they must be deposited into the broker's trust account within three days after receipt. Before collecting advance fees in connection with any services, however, a broker must submit all of the materials she's planning to use in advertising or promoting those services to the Department of Real Estate for approval, along with the advance fee agreement she will be entering into with her clients. The DRE will review the materials to make sure that they give a full description of the services to be provided; state the total amount of the advance fee and when it must be paid; specify a termination date for the agreement; do not contain deceptive guarantees; and are not otherwise misleading. Once placed in a broker's trust account, advance fees generally can't be withdrawn until they're actually expended for the client's benefit or until five days after an accounting has been sent to the client. (This may be either a quarterly accounting or a final accounting after the agency has ended.) Mortgage loan brokerage - ANSWER Soliciting borrowers or lenders for or negotiating loans secured by liens on real property or business opportunities, or collecting payments or performing other services in connection with such loans. Selling, buying, or exchanging loans or securities - ANSWER Selling, buying, or exchanging real property securities, land contracts, or promissory notes secured by liens on real property or business opportunities, and performing services for the holders of contracts or notes. MLO Endorsement - ANSWER Real estate brokers may not engage in the activities listed in (Mortgage loan brokerage. Soliciting borrowers or lenders for or negotiating loans secured by liens on real property or business opportunities, or collecting payments or performing other services in connection with such loans), in connection with residential mortgage loans, unless the Department of Real Estate has added a special mortgage loan originator endorsement to their real estate license. The requirements for obtaining an MLO endorsement include obtaining a license through the Nationwide Mortgage Licensing System and Registry. An MLO endorsement will involve separate prelicense and continuing education requirements, apart from those required for a real estate broker's license. In addition, a real estate broker isn't allowed to accept compensation from a lender or a mortgage loan originator in a transaction involving a residential mortgage loan unless the broker has an MLO endorsement. That restriction applies even if the broker provides only real estate brokerage services, not mortgage loan brokerage services. A real estate broker may still take certain steps, like providing an application form and collecting information needed to process a loan application, without triggering the MLO endorsement requirements; the MLO requirements apply only to brokers who offer or negotiate loans for compensation. For the purposes of these MLO rules, a residential mortgage loan is a loan primarily for personal, family, or household use that is secured by a dwelling with up to four units -As the list indicates, real estate licensees may engage in mortgage loan brokerage activities. However, licensees are no longer allowed to act as residential mortgage loan brokers unless they have a mortgage loan originator endorsement added to their license. The requirements for the MLO endorsement include being licensed through the Nationwide Mortgage Licensing System and Registry. Unless she has an MLO endorsement, a real estate broker can't accept compensation from a lender or other loan originator in a transaction involving a mortgage loan. This is true even if she only provides real estate brokerage services. If she isn't being compensated, the broker may still take certain steps, like helping fill out a loan application form, without needing the MLO endorsement. Mortgage loan originator endorsement - ANSWER A special endorsement to a real estate license that authorizes the licensee to engage in mortgage loan brokerage and origination activities for compensation. The requirements for obtaining an MLO endorsement include obtaining a license through the Nationwide Mortgage Licensing System and Registry. An MLO endorsement will involve separate prelicense and continuing education requirements, apart from those required for a real estate broker's license. In addition, a real estate broker isn't allowed to accept compensation from a lender or a mortgage loan originator in a transaction involving a residential mortgage loan unless the broker has an MLO endorsement. Making or Selling Loans as a Principal - ANSWER As we said, the broker definition generally applies to acts performed on behalf of another. (Ex. Someone who is helping to sell another person's property is acting as a real estate broker, but someone selling her own property is not.) The broker definition also covers certain acts performed on one's own behalf, rather than on behalf of another. Specifically, it covers engaging as a principal in the business of making or selling loans secured by real property. You are considered to be