California Real Estate Chapter 16 Comprehensive Exam (Guarantee pass)

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 "in the business" if, during the course of one calendar year, you: -buy for resale, sell, or exchange eight or more land contracts or promissory notes secured by real property; or -make eight or more loans secured by one- to four-unit residential property using your own funds. Real estate Salesperson - ANSWER For a salesperson's license, the applicant must be at least 18, be honest and trustworthy, complete the required education, and pass the salesperson's exam. A salesperson is one who works for a broker and performs these same activities under the broker's supervision. A person who is licensed to work for and represent a broker in real estate transactions. A real estate salesperson is a person hired by a broker to do one or more of the acts listed in the broker definition given above. A salesperson's license permits real estate activity only while under the control and supervision of a broker. A salesperson can't act directly for a principal in a real estate transaction. Furthermore, a salesperson may receive compensation only from his own broker. Neither clients nor cooperating brokers may pay the salesperson directly. Instead, they are required to pay the salesperson's broker, who then pays the salesperson. "An MLO endorsement is required for salespersons (as well as brokers) who engage in residential mortgage loan brokerage activities. -A salesperson is someone who engages in the activities listed in the broker definition, but only as a broker's representative. -Works with and represents broker -Can't represent client directly without a broker -A salesperson must always receive compensation directly from her broker. -A salesperson may never receive compensation from a cooperating broker or a client. -The cooperating broker or client must pay the employing broker, and the broker then pays the salesperson. Types of licensees - ANSWER BROKER: -Individual, corporation, or partnership -Authorized to operate brokerage and represent clients -Authorizes the licensee to engage in real estate activities on behalf of another person for compensation. -It also authorizes the licensee to operate a brokerage business. -A broker's license authorizes the broker to employ other licensees (salespersons) to help her engage in real estate activities. -A broker licensed in California may negotiate in California regarding a transaction for out-of-state land. -She may also share a commission split with an out-of-state broker. SALESPERSON: -A salesperson is someone who engages in the activities listed in the broker definition, but only as a broker's representative. -Works with and represents broker -Can't represent client directly without a broker -A salesperson must always receive compensation directly from her broker. -A salesperson may never receive compensation from a cooperating broker or a client. -The cooperating broker or client must pay the employing broker, and the broker then pays the salesperson. Associate Brokers - ANSWER (Broker-salesperson) A person licensed as a broker may choose to work for another broker instead of operating her own brokerage. Such a broker is subject to essentially the same limitations as a salesperson. The associate brokers and salespersons who work for a particular broker are sometimes referred to as the broker's affiliated licensees. Affiliated licensees - ANSWER The associate brokers and salespersons who work for a particular broker Business Entities - ANSWER A real estate license can be issued to a corporation. At least one corporate officer must be designated to act as the broker under the corporate brokerage license. That officer must also be individually licensed as a broker, and can only act as a broker with respect to the corporate brokerage. While there is no "partnership license," a partnership may perform acts for which a broker's license is required, provided that every partner through whom the partnership acts is a licensed real estate broker. Penalties for Unlicensed Activities - ANSWER For any act that requires a real estate license, the penalty for acting without a license is a fine of up to $20,000 and/or six months' imprisonment for an individual, or a fine of up to $60,000 for a corporation. Note that it's unlawful for a broker to employ or compensate any unlicensed person for performing acts that require a real estate license. A broker who did so would be subject to disciplinary action and could have his license suspended or revoked. When a License Is Not Required - ANSWER There are numerous exemptions from the real estate licensing requirements. The exemptions generally cover those who are acting on their own behalf, those who are regulated by another agency (such as securities brokers), and those who are performing functions that don't require expertise. All of the following, among others, are exempt: 1. Those acting on their own behalf with respect to their own property. 2. A corporate officer acting on behalf of a corporation, or a general partner acting on behalf of a partnership, with respect to property owned, leased, or to be purchased or leased by the corporation or partnership. 3. A person acting under a properly executed power of attorney from the owner of the property. 4. An attorney at law providing legal services to a client. 5. A person acting under court order (for example, a receiver in bankruptcy or a trustee). 6. A trustee under a deed of trust. 7. With respect to mortgage loan activities, an employee or representative of a financial institution, insurance company, pension fund, federally approved housing counseling service, or cemetery authority; a licensed finance lender; or a licensed residential mortgage lender or servicer. 8. With respect to activities related to business opportunities, mortgage loans, or real property securities, a licensed securities broker-dealer. 9. A person performing clerical functions and not discussing the price, terms, or condition of property. 10. A manager of a hotel, motel, or trailer park, or employees of the manager. 11. A resident apartment manager, who manages the apartment complex in which she lives, or employees of the resident manager. 12. An employee of a property management company who is supervised by a real estate licensee working for the company. 13. Film location representatives, who negotiate for the use of property for photographic purposes. Unlicensed Real Estate Assistants - ANSWER Real estate brokers and salespersons sometimes hire a real estate assistant to help them with their work. It's not necessary for a real estate assistant to have a real estate license, as long as the assistant's duties fall within the exemption for a person performing clerical functions Unlicensed real estate assistants may provide factual information about a property to prospective buyers, but they aren't permitted to show the property or discuss the terms of a possible sale. They may prepare documents and advertising, as long as the licensee they work for reviews and approves the documents or ads before they're used. The Department of Real Estate has issued guidelines (currently available on the DRE website) explaining what unlicensed real estate assistants are allowed to do. Generally, they may provide factual information about a property to prospective buyers, but they aren't permitted to show the property or discuss the terms of a possible sale. They may prepare documents and advertising, as long as the licensee they work for reviews and approves the documents or ads before they're used. Unlicensed Property Management Assistants - ANSWER In addition to performing clerical functions, property management company employees supervised by a licensee are allowed to -show property to prospective tenants, -provide information about rental rates and lease provisions, -handle rental applications, -accept security deposits, and -collect rents. A broker may delegate responsibility for the supervision of a property management assistant to a salesperson with at least two years of full-time experience as a real estate licensee. License Qualifications - ANSWER Applicants for real estate licenses in California must meet several qualifications. By imposing these requirements, particularly the education requirements, the state tries to ensure at least a minimum level of competence for all real estate professionals. Salesperson's Qualifications - ANSWER For a salesperson's license, the applicant must be at least 18, be honest and trustworthy, complete the required education, and pass the salesperson's exam. To obtain a salesperson's license, an applicant must: 1. be at least eighteen years old; 2. be honest and truthful; 3. pass the licensing exam; 4. apply on the prescribed form; 5. pay the license fee; 6. be fingerprinted; 7. provide her social security number to the DRE; 8. submit proof of legal presence (documentation showing that she is in the United States legally); and 9. complete nine semester units of education, including -Real Estate Principles, -Real Estate Practice, and an elective chosen from the following list: -Legal Aspects of Real Estate; -Real Estate Appraisal; -Real Estate Financing; -Real Estate Economics; -General Accounting; -Business Law; -Escrow; -Property Management; -Real Estate Office Administration; -Mortgage Loan Brokering and Lending; -Common Interest Developments; or -Computer Applications in Real Estate. Broker's Qualifications - ANSWER For a broker's license, the applicant must be at least 18, be honest and trustworthy, pass the broker's exam, have two years' experience, and complete all the required education. To obtain a broker's license, an applicant must: 1. have two years of full-time experience as a real estate licensee within the past five years; 2. be at least eighteen years old; 3. be honest and truthful; 4 .pass the licensing exam; 5. apply on the prescribed form; 6. pay the license fee; 7. be fingerprinted; 8. provide his social security number to the DRE; 9. submit proof of legal presence (documentation showing that he is in the United States legally); and 10. complete 24 semester units (eight courses) of education, including: A. five required courses: -Real Estate Practice; -Real Estate Appraisal; -Legal Aspects of Real Estate; -Real Estate Financing; and either -Real Estate Economics or -Accounting; and three other courses chosen from this list: -Advanced Legal Aspects of Real Estate; -Advanced Appraisal; -Advanced Financing; -Real Estate Principles; -Property Management; -Escrow; -Business Law; -Real Estate Office Administration; -Mortgage Loan Brokering and Lending; -Common Interest Developments; or -Computer Applications in Real Estate. A broker's license applicant who takes both Real Estate Economics and Accounting has to complete only two additional elective courses, not three. The experience requirement (item one on the list above) may be waived if the applicant either has the equivalent of two years of general real estate experience, or has a degree from a four-year college or university in a course of study that included specialization in real estate. To obtain a waiver, an applicant must submit a written petition to the DRE. License Application and Term - ANSWER License applicants must apply for their licenses within one year of the date they pass the exam (not the date they receive notice that they passed). Brokers' and salespersons' licenses must be renewed every four years. A mortgage loan originator endorsement for a real estate license must be renewed annually; the endorsement will expire each year on December 31. License Renewals - ANSWER Real estate licenses must be renewed every four years. There is a 45-hour continuing education requirement for renewal. Once an applicant has met all the license qualifications, including passing the exam, the next step is to apply for the license. License exam results are valid for one year. If the applicant doesn't become licensed within one year after the exam date, she will have to pass the exam again in order to obtain a license. Licenses are valid for 4 years. To renew her license, a licensee has to submit an application for renewal and pay a renewal fee. It isn't necessary to take another examination for renewal. Licenses are renewed by 1. completing the continuing education requirement, 2. applying to the Department of Real Estate, and 3. paying the appropriate fees. The licensee doesn't have to take another examination. The renewal application must be postmarked prior to midnight of the expiration date to prevent the license from expiring. However, the renewal application may not be filed earlier than 90 days before the expiration date. Resident aliens who don't have permanent status must submit proof of legal presence in the United States to the DRE every time they renew their license. Late Renewal - ANSWER A license that has expired within the previous two years may be renewed without retaking the licensing examination. The licensee must file a renewal application and pay a late renewal fee. If the license isn't renewed within the two-year grace period, all license rights are lost. This means that in order to be licensed again, the former licensee must meet all the requirements for original license applicants, including passing the licensing exam AGAIN. Continuing Education - ANSWER In addition to paying the renewal fee, licensees must submit proof that they have satisfied the continuing education requirements. All licensees (salespersons and brokers) are generally required to have completed 45 hours of DRE-approved continuing education courses within the four years preceding renewal. The specific course requirements depend on whether it's the licensee's first renewal after the license was issued, or it's a subsequent renewal. A real estate license can't be renewed unless the licensee fulfills the continuing education requirement. A special form that confirms attendance at the required courses must accompany the renewal application. A salesperson or broker renewing her license generally must have completed a total of 45 hours of continuing education courses during the previous four years.* The specific course requirements depend on whether it's the licensee's initial renewal or a subsequent renewal. ______________________________ * There's an exception for sales persons who were licensed before October 1, 2007; their initial renewal requires only 15 hours of continuing education (five three-hour courses covering the mandatory subjects: -ethics, -agency, -trust fund handling, -fair housing, -risk management) Initial Renewal - ANSWER When a salesperson or broker renews her license for the first time after it was issued, the 45 hours of continuing education must include: 1. five separate three-hour courses (15 hours total) on these mandatory subjects: -ethics, -agency, -trust fund handling, -fair housing, and -risk management; -and at least 18 hours of courses designated as consumer protection courses. -The remaining hours may be in consumer service courses (courses covering business skills that enable licensees to competently serve customers), or the licensee may take additional consumer protection courses. There is one exception to these requirements: they don't apply to salespersons originally licensed before October 1, 2007. For their initial renewal, those salespersons only have to take the five mandatory courses (15 credits total). Subsequent Renewals - ANSWER Each of a licensee's subsequent renewals (after the initial renewal) will also require 45 hours of continuing education within the previous four years. As with the initial renewal, the 45 hours must include at least 18 hours in consumer protection courses The five mandatory topics must also be covered for every subsequent renewal, but five separate courses are not required; they may be combined into one survey course. The specific course requirements are slightly different from the ones for the initial renewal, however. The 45 hours must include: 1. either 12 hours in separate courses on -ethics, -agency, -trust fund handling, and -fair housing, -or a six-hour survey course covering those four subjects; 2. one three-hour course in risk management; and 3. at least 18 hours of consumer protection courses. As with the initial renewal, the remaining hours may be in consumer service courses or additional consumer protection courses. For subsequent renewals that will be effective on or after July 1, 2011, items one and two on the list just given will be replaced with a single eight-hour survey course covering all five mandatory subjects (ethics, agency, trust fund handling, fair housing, and risk management). So a licensee will have to take the eight-hour survey course and at least 18 hours of consumer protection courses, with the remaining hours in consumer service courses or additional consumer protection courses. 70/30 Continuing Education Exemption - ANSWER A licensee 70 years old or older isn't required to fulfill the continuing education requirement if he's been a real estate licensee in good standing in California for at least 30 years. (Any period during which the license was expired doesn't count toward the 30 years.) The licensee must submit proof that he qualifies for this exemption to the Department of Real Estate. Continuing Education for MLO Endorsement - ANSWER For the annual renewal of a real estate licensee's mortgage loan originator endorsement, the licensee is required to complete at least eight hours of continuing education every year. The eight hours must include -at least three hours on federal laws, -two hours on ethics issues (fraud, consumer protection, and fair lending), and -two hours on lending standards for nontraditional or subprime mortgage loans. Although a real estate license only has to be renewed every four years, a licensee with a mortgage loan originator endorsement must renew the endorsement annually. MLO endorsements will expire on December 31 every year. To renew an MLO endorsement, the licensee will be required to complete eight hours of continuing education each year. This must include at least three hours on federal laws, two hours on ethics issues (fraud, consumer protection, and fair lending), and two hours on lending standards for nontraditional or subprime mortgages. Miscellaneous License Provisions - ANSWER -Brokerage Offices -Location of Licenses -Termination of Affiliation -Transfer of Salesperson's License -Discharge for Disciplinary Cause -Termination of Broker's License -Address Changes -Fictitious Names -Child Support Delinquency Brokerage Offices - ANSWER A real estate broker licensed in California is required to have a place of business in the state. A broker may also have one or more branch offices. A separate license must be issued for each branch office. The broker can add or cancel a branch office by filing a form with the Department of Real Estate. A broker is required to hold the licenses of all of her affiliated licensees. These licenses, and also the broker's own license, must be kept at the broker's main office. Location of Licenses - ANSWER Real estate licenses must be held by the broker and kept in the broker's main office. The Department of Real Estate must be notified of any changes in affiliation, name, or location. A broker is required to hold the licenses of all of her affiliated licensees. These licenses, and also the broker's own license, must be kept at the broker's main office. Termination of Affiliation - ANSWER A salesperson is allowed to work only under the supervision of a broker. A salesperson's license is issued for a particular broker, and the broker has custody of the license while that person is affiliated with him or her. An affiliation may be terminated by either party—the broker or the affiliated licensee—at any time If a salesperson quits or is discharged by his broker, the broker is required to return the salesperson's license certificate to the salesperson within 3 business days. The broker must notify the Commissioner of the termination by submitting a form to the Department of Real Estate within 10 days. If a salesperson is discharged for conduct that is grounds for disciplinary action, the broker must also provide a statement of facts to the Commissioner. The broker's license may be suspended or revoked if she fails to report the termination. Transfer of Salesperson's License - ANSWER The Commissioner must also be notified when a salesperson transfers affiliation from one broker to another. The new broker is required to submit a notification form to the DRE within 5 days after the salesperson begins working for her. Before giving his license certificate to the new broker, the salesperson is supposed to cross out the name and address of the former broker, then write the name of the new broker and the address of the new broker's main office on the back of the certificate. The salesperson should also date and initial these changes. Discharge for Disciplinary Cause - ANSWER If a salesperson is discharged for conduct that is grounds for disciplinary action, her broker must file a certified written statement of facts with the Commissioner. If the broker fails to do so, his own license could be suspended or revoked. Termination of Broker's License - ANSWER If a brokers license is suspended or revoked, the licenses of all of the brokers salespersons are automatically canceled. They may transfer their licenses to other brokers. If a brokers license expires, the licenses of his salespersons are immediately placed on non-working status. This means they cannot engage in any real estate activities. The broker can reactivate them after renewing his own license Address Changes - ANSWER Licensees are required to maintain current addresses on file with the Department of Real Estate.