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CA Real Estate Principles Ch. 1


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The term used when buyers had few protections from unscrupulous sellers and real estate agents.
The common-law doctrine of caveat emptor (a Latin phrase meaning "Let the buyer beware")
A significant event occurred in 1917 for California real estate. What was the event?
California became the first state to legislate licensing requirements for real estate brokers and sales-persons.
When California legislated the licensing requirements for real estate brokers and sales-persons what was and is it called?
The California Supreme Court upheld the Real Estate Act of 1919.
What allows the State of California to license real estate agents?
Police Power
What is Police Power
The state's licensing ability is an exercise of its Police Power to enact laws within constitutional limits to promote the public health, safety, and general welfare.
Real Estate Law is a common reference to what?
Division 4 of the Business and Professions code.
Where do the Business and professions codes come from?
California legislation compiled into books called CODES.
What are the two parts of the Business and Profession code?
Part 1 covers licensing.

Part 2 covers transactions and includes Subdivided Lands Law.
What will you find at
The complete text of all 29 volumes of the California Codes, as well as information on bills pending before the California Legislature.
What serves to clarify and interpret the Real Estate Law?
Regulations of the Real estate Commissioner
What is the primary purpose of the Real Estate Law and the Regulations of the Real Estate Commissioner?
To protect the members of the public with whom real estate licensees come into contact in the business activities.
What does the Real Estate Commissioner do?
The Real Estate Commissioner administers the DRE.
What are the prerequisites to be a Real Estate Commissioner?
Real Estate Broker in California for five years.

Engaged in some type or Real Estate activity for 5 of the past ten years.
How is the Commissioner appointed and what does he serve?
The Commissioner is appointed and serves at the Governor's discretion.
List 5 things that the Real Estate Commissioner assists the Department of Real Estate Staff members with.
Screening candidates for licensing

Prepares subdivision public reports

Conducts licensee disciplinary action

Investigates non-licensees performing activities for which a license is required

regulates nonexempt franchises and real property securities
Who determines administrative policy and enforces the policy in the best interest of those dealing with real estate licenses.
Real Estate commissioner
What does the Real Estate Advisory commission do?
The Real Estate Advisory Commission makes recommendations to the Commissioner on matters involving the DRE
How is the Real Estate Advisory comprised?
The Commissioner appoints ten members and he presides over their meetings. (Besides reimbursement of expenses they are not compensated)

6 of the Commission members must be licensed brokers in CA.

4 of the Commission members must be non licensed members of the public.
How many times per year does the Real Estate Advisory Commission meet and for what purpose?
The public Advisory Commission meeting are held four times per year and the commission members express their views of department policy and function and make recommendations to the Commissioner.
Their are two other ways that the Real Estate salesperson is referred to. What are they?
Real Estate salesperson is referred to as a sales associate and an associate licensee.
What is a Real Estate Brokerage?
A Real Estate Brokerage is a business in which real estate license related activities are performed under the supervision of a real estate broker.
A Brokerage may be set up as a Corporation as they long as they have done what?
For a brokerage to set up as a Corporation they must have appointed on responsible broker-officer.
What must the Corporation submit to the DRE?
The corporation must submit the-

The corporation license and application fee.

The Certificate of Status issued by the Secretary of State within 30 days prior to the submission of application

a statement of officers as filed with the Secretary of State
Sales-persons working for a Corporation may not do what?
Working for a Corporation the salesperson may not, individually or jointly, own or control a majority of the outstanding shares of stock of the corporation, either directly or indirectly.
A Salesperson of a Corporation can be an officer in the corporation under what circumstances?
A corporation salesperson can be an officer as long as the salesperson's supervising broker is an officer and director.
When a brokerage becomes a partnership does it need a license?
No license is needed for a brokerage to become a partnership.
What are the prerequisites for a brokerage to become a partnership?
Partnership perquisites are-

Every partner that performs the activities as a broker must be licensed as such.

Each b ranch location must have a licensed broker
What must the broker submit in order to work under a fictitious business name?
A fictitious business name statement must be filed with the county clerk in the county of the brokers principal business address and the Real Estate Commissioner must receive a copy.
What is a fictitious business name?
A fictitious name is any name other than that of a real estate licensee.
How long is the fictitious business name statement good for and what is commonly referred to as?
The fictitious business name statement is commonly referred to as the DBA (doing business as.

The statement is effective for 5 years from December 31 of the year filed.
Why would a commissioner refuse to allow the use of a DBA?
The commissioner may refuse the fictitious name if it is inappropriate or misleading.
What is the address to the DRE website?
What steps must be followed when a salesperson changes employment from one broker to another?
When a salesperson changes employment brokers-

The former broker must notify the DRE immediately, in writing.

The former employer must return the salesperson license with three days of termination and sign the Salesperson Change Application R?E Form 214/

R?E Form 214 must be completed by the salesperson and new employer within 5 days and sent to the DRE.
When a salesperson is discharged what must be done?
When a salesperson is discharged for violating the Real Estate Law, the broker must immediately file a certified, written statement of the facts with the Real Estate commissioner.
At what point is the salesperson's license activated?
The salesperson's license is activated after the name of the employing broker is provided to the DRE.
When a salesperson is hired by a broker what must written and why?
Real Estate Law requires a written agreement on the duties and compensation to be paid to the salesperson. It may be simply writing a statement of office policy and procedures.
What is a proprietary form?
The form is unique to the entity that created it. You will see a copyright notice on such forms. You cannot copy it without permission of the copyright holder.
What is wording dictated by state law?
Wording that is dictated by state law is statutory language.
How does the Real Estate law define a real estate salesperson?
The Law defines a real estate salesperson as someone who is employed for compensation (salary or commission)by a licensed real estate broker to perform acts that require a real estate license.
Who sets out the activities that require a Real Estate brokers license?
The Real Estate law sets out the activities that require a real estate brokers license.
Which law permits a real estate licensee (salesperson or broker) to represent someone else in real property transactions?
The Real Estate Law
The Real Estate Law permits real estate agents to handle certain transactions involving mobile (manufactured) homes under specific conditions. What are the conditions and what are the transactions?
The real estate agent can

mobile homes if the home is registered with the Health and Safety Code.

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