PDF NEW 2024 California Real Estate Trainers Workbook

California Real Estate Trainers
Department Of Real Estate

Components of your California State Exam
Property Ownership/Land Use

Laws of Agency & Fiduciary Duties
Valuations/Appraisals and Financial Analysis
Financing
Transfer of Property
Real Estate Practices and Disclosures
Contracts
Construction terms and more
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Component - 1
Property ownership/Land Use/ Regulations
There are two main types of Property, real property, and personal property.
Property is the rights or interest in the thing one owns. The first type of property,
real property, is immovable, such as a home attached to the ground. Parts of real
property are appurtenances, land, and fixtures and a load bearing wall.
The second type of property is personal property. Personal property are items
you own which are moveable. Anything you own which you can take with you is
personal property. Ladies, like your purse or shoes, men your backpack or cars!
Items which are not real property – are leasehold estates, leasehold estate is
renting or leasing not owning, owning would be real property.
Chose, is a French word for thing, which would be personal property.

Picked fruit is personal property, if still on the tree it is a fixture!
Emblements are annual crops produced by cultivation, legally belonging to the

tenant with implied rights to harvest and are treated as the tenant’s property. On
the test, corn – depends on relationship of the parties, landlord tenant, tenants
get the corn, purchase, buyer gets the corn because they’re paying for it. Got it!?
Again, Personal Property IS MOVEABLE and real property is IMMOVEABLE!
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Trade fixtures such as dental chairs, are personal property. As chattel real refers
to all personal property you own other than real estate which is real property. All
personal property can be alienated, hypothecated become real property –
Hypothecate explained is to pledge as security without delivery of title or
possession.
Fixtures – Chandler – Kim’s story – incorporated into the land or affixed to the
property. Fixtures are not incidental to the land; appurtenances are not
connected to the land rather they run with the land.
Fixtures are personal property which has been connected to real property – like
custom window coverings.
INCORPORATED INTO THE LAND - AFFIXED TO THE LAND -AN BECOME REAL
PROPERTY - NOT INCIDENTAL
DO YOU KNOW MARIA?
M – is for method of attachment- how was it attached?
A – Adaptability – can you removed it and secure it in another property
R – Relationship of the parties – landlord/ tenant or seller /buyer
I – Intention – what was the original intention.
A - What was in writing- agreement
Appurtenances are not fixtures- however they “run” with the land, you cannot
see them or touch them, but they go with the property, like a covenant.
Question: Do I need a separate contract for the water co stock? NO because it is
an appurtenance! (Repeated to remember, run with the land!)
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The cost and the time of attachment are not a factor- not cost/not time of
attachment.
Encumbrances affects or limits one’s title. If you have an encumbrance there is an

existing easement – Escondido water easement story!
There are two main types of encumbrances, Money, and non-money.

Money encumbrance is when the owner of the property has a lien or a
judgement- The lien could be a mortgage or a Trust deed. A judgement is the
owner was sued and the creditor placed an attachment onto the home.
In a Mortgage, there are two parties the Mortgagor who is the owner of the home
making the payments and the Mortgagee who is the lender, lending the money!
With a Trust Deed there are three parties.
Trust Deed – 3 Parties
Trustee is the 3rd Party with Fiduciary Duty to Beneficiary. The Beneficiary is the
BANK, and the Trustor is the homeowner.
Non-money – could be an easement- you cannot see the easement and there are
no costs. The easement goes with the land and the buyer will have the same
rights as the seller.
Question – The Smith Family – rights taken with a fence, what should they do?
Quiet Title Suit – suit will always be a lawsuit.
Encroachment – cockroaches? sue neighbor for trespassing – Garage question.
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Prescriptive easement -gives right to use also known as “easement by prescription
is a property right to use another’s land – this is acquired by open and notorious
use without possessing it. (5 years)
Dominant VS Servient tenement – explanation of the differences – space for notes
Only the Dominant tenement can remove the right to use with a quitclaim deed
WATER RIGHTS
Water safe for drinking – Is known as Potable water.
Appropriation? Is it appropriate to take water from a public stream or river?
Water beneath the surface of the land is percolating water.
Overlying rights – can an owner pump and use underground water?
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Riparian Owner – water moving like a watercourse or like a RIVER.
Littoral Owner – water standing in the same area as a lake or pond.
Types of estates:
Fee Simple estate is the most interest one can have in real estate. In most cases,
residential sales deal with fee simple. When a person purchases real estate on fee
simple, they can own the property as long or as little as they want, they have
indefinite duration (condo story, my condo purchased in the late 1970’s) Fee
simple gives the owner maximum rights of ownership in the property. One
reason investors purchase property is to leave to their heirs, as an estate of
inheritance. Although the property can be inherited, it does not mean that the
property is free of debts or encumbrances.
Freehold estate refers to ownership of real estate.
There are many different types of estates.

Definition of estate – the degree, quantity, nature, and extent of interest which a
person has in real property.
The estate for years – has a definite starting and ending date -example a business
renting a store from June to January or a family renting a vacation home from
September to January. Can be way less than a year or more than a year, the point
is, it is a defined period.
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Life estates are based on a person’s life! There are two main types of Life estates
– estate in reversion – reverting to the original person “reverts to the person who
gave it to the life estate holder, two parties! The second type of life estate had
three parties; this is an estate in remainder. The estate in remainder goes to a
different person than the person who gave it to the person whose life it was
based on. An example of remainder is I give my son a home based on his life,
when he dies instead of it coming back to me it goes to his sister. The sister is said
to have an estate in remainder.
What would happen if a tenant rented a home from an owner who only owned
the property as a life estate? The lease would only be valid for as long as the life
tenant is alive!
What happens if the life tenant sells the property while they have possession of it,
can they do this?
RESTRICTIONS ON ESTATES
Fee simple defeasible – Charity gift – alcohol rule – the owner gives a property to
a church youth group with the rules stating no alcohol can be sold or consumed
on the property.
Less than freehold estate is renting or leasing, not owning!
Environmental items
Smart growth means ecology friendly.
EPA superfund sites – toxic waste – establish liability - 1976
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Brownfields Economic Development Initiative – contaminated properties, HUD
program for redevelopment
Infill developer – looking to build on underutilized lots in populated areas.
Types of land use – Resort developments – timeshares- 55 plus, housing for the
elderly!
Restrictions – Private, Public and Governmental

Private restrictions are set by the developer or grantor, person granting the
property – These are known as deed restrictions which are private restrictions,
such as Homeowners Associations! The developer chooses what type of
properties to build and the rules and regulations of the community! Homeowners
Associations have major control and can take a home away from an owner
“foreclose” for breaching a condition making the penalties more severe for
violating a condition.
Public restrictions/controls
The Planning commission maintains the Master Plan and reviews ordinances but
does not regulate ordinances. All Cities have a Master Plan which is mandatory to
be reviewed every 20 years! The master plan reviews streets, zoning districts,
seismic issues, and futuristic planning.
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Subdivision Map Act – is administered by Cities and Counties
Local building codes vs County building codes
When building or remodeling a property, the local building codes must be

followed. The local building codes are to provide minimum standards, protecting
the public safety, health, welfare, and general wellbeing. Building standards are
in place to make sure building standards are met. If there is a conflict between
building codes, the one with the higher standard will be enforced.
Therefore, the MOST restrictive, restricts.
When developing a subdivision, the developer must follow the Subdivision land
laws, a subdivision must be 5 or more lots.
A subdivider, when developing, the subdivider must first AQUIRE THE PROPERTY –
Acquisition, then Approval from the City or County, finally, develop. In some
cases, the developer must get an environmental impact report. If the
environmental impact report comes in negative, the developer is good to go, so
NEGATIVE IS GOOD, this means, there is no negative impact on the environment.
The developer is required to get a Public Report approved by the real estate
commissioner. The public report must be given to anyone, any time it is
requested. The report is to ensure the builder can and will develop and not run
off with the deposits! The one thing the public report will not have information as
to the value of the property or if the buyers are getting a great deal! Finally, with
new development, the liquidated damages are the entire deposit!
What happens if the real estate commissioner wants to stop the builder? Desist
and refrain order.
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Types of properties developed in most areas.
Condominiums – built like apartments, usually stacked one above another,
condominiums are an undivided interest in common, with separate interest in
the airspace. Owners of condominiums, puds and co-ops all have common
interest in the airspace above their common areas. All three types of properties
have CC & R’s, Covenants, Conditions and Restrictions, these are the rules of the
community, and they are provided to the buyers from the sellers.
Governmental rights in Land

PPP – Police Power planning - Police power includes Zoning and planning, to
promote public health, safety, morals, and general welfare.
If at any time the city or the county changes the zoning, they cannot make a
homeowner change the property to the new current zone, the old, permitted
changes will be grandfathered in.
Eminent Domain is when the Government takes a homeowner’s property for
public use; however, two items must be done, number one, it must be for public
use and number two the government must pay the homeowner fair market price,
just compensation.
Escheat – cheated by the state! If an asset is left for more than three years with
no movement, it reverts to the state. A memory tool, think of the state cheating
the owner for not using their asset.
AQMD -before burning trash in your backyard, a homeowner must contact their
local air district first.
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Component #2 LAWS OF AGENCY AND FIDUCIARY DUTIES
Understand, the broker is the agent on all transactions. The sales agent is a
subagent of the broker. If you understand this clearly, the broker is the actual
agent on all the files in the office, you will understand the concept of how real
estate law works. The broker of record is fully responsible for all agents under
them. YOU, the salesperson, is responsible to the BROKER.
The client is the principal, and the principal appoints an agent.
Clients/customers are owed complete honesty and fairness.
Brokers (agents) must not keep any client’s secrets involving material facts.
Anything an agent knows which could affect the property’s value must be
disclosed. A Leaking roof, etc. Brokers cannot remain silent concerning material
facts. Material facts are items regarding the property, confidential information is
about the clients.
The relationship of loyalty and trust is similar to the relationship between a

Trustee and Beneficiary.
Types of Agency relationships
A Power of Attorney is a form of agency, the attorney in fact must record the
power of attorney.
Single agency – agent is client oriented.
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Dual Agency – talk about Dianne and Jason – Mira Loma
Dual Agency – must always be disclosed on residential property 1-4, industrial
properties and commercial.
One broker for both buyer and seller is legal in California. The Broker must have
knowledge and consent from both the buyer and the seller in writing. The broker
cannot share with the buyer the seller will sell for a lower price - explain – dual
with two salespersons “open house.”
Creating agency relationships

GET IT IN WRITING – Always, the best way is in writing.
Agency relationships are between two or more people with an agreement in

writing. Agency can NOT be established by two main ways, Subornation (deceit)
or NOT by a voluntary offer.
Special Agent – is a listing agent, with a signed listing agreement, Mike Dunn in
Irvine is a listing agent and dresses like Bond, James Bond!
Agent knocks on a seller’s door with an offer and ALREADY acted as his agent and
the actions are accepted, this is Agency by Ratification.
BROKERS can work for free, this is a gratuitous agent, however an agent
CANNOT, unless approved by your broker – discuss – Consideration is NOT
required, however, all fiduciary requirements are the same, paid or not!
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Subagency have the duty of the agent, to the seller only, …..the question ask you
about the seller's agent, remember the seller's agent has fiduciary duty to the
seller only and the buyer’s agent has fiduciary duty to the buyer only.
Although the contracts and disclosures required are made to protect the buyers
and sellers, it is important to know that many of the documents also protect YOU,
the agents and your broker. The Hold Harmless clause in the listing agreement
protests YOU. Discuss
If a seller knows something about their property and does not disclose it to you
or the broker, the agent is INNOCENT, unless you the agent or broker acquiesces.
Acquiesces means you agree with the seller to “hide” a default in the home.
Also, if the seller had an unlicensed contractor work on the home, such as a son-
in-law doing electrical work, then the house burns down, the agent is innocent.
When must an agent disclose agency -Disclosure of Agency is ASAP, on the test as
soon as practicable?
Agents are supposed to disclose all options to the principal when writing contacts.
First the agent discloses, then the principal ELECTS THE TYPE OF AGENCY, THEN IT
IS COFIRMED BY SIGNING, the memory tool is DEC.
Working with BUYERS – Buyer’s agent

The buyer’s agent has fiduciary duties to the buyer only! Buyer’s agreements are
around the corner – A Buyers agency requires the buyer’s consent – in writing.
As the buyer’s agent you/your broker has no fiduciary duty to the seller.
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OLD BUT ON THE TEST! Back in the day, a buyer’s agent had to accept the deposit
from the buyer and submit it to the seller’s agent. The seller’s agent then
accepted the deposit WITHOUT THE CONSENT OF THE SELLER, THIS ACT, causes
the seller’s agent to become the buyer’s agent for that one act of accepting the
check!
Your broker is responsible for your actions - when showing homes to buyers
NEVER PROMISE ANYTHING THE SELLER WILL DO. Promising the seller will paint
or do a repair without their permission is acting in excess and the damages will
be charged to you and/or your broker.
Present DAY how to write and offer vs past – discuss.
On the test – writing an offer – presenting the offer to the seller and the seller’s
agent – discussion.
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Sellers Agency
The Seller’s agent is the agent for the seller only, known as the listing agent. The
seller’s agent has fiduciary duty to the seller only. As the seller’s agent you must
never reveal any confidential information.
Offers as the listing agent- You must present all offers to your client, unless, and
offer is Frivolous or expressed instructions - If you have more than one offer,
present all offers at the same time. Present all written offers until close of
escrow.
On the seller’s side if the agent has a failed promise –the sellers can sue their
agent in Civil suit for damages. Promise of finding a home – story to push to an
accepted offer.
Never make a promise unless you can keep it! Talk about Newspaper ads- do not
advertise and promise to is actual fraud! Misrepresentation will result in
discipline, civil and possibly criminal.
Agency disclosure form – Is required as soon as practicable and must be done on

all residential sales with both the buyer and the seller. This form should be done
when we first meet with the seller or the buyer. Agency disclosure must also be
done on leases which are for more than one year.
Unlicensed Investor – thinking of investing? If you do NOT have a license, a secret

profit is OK. If you are licensed you must disclose everything, even if you are NOT
the principal. An agent must disclose all relationships by blood or otherwise.
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Once there is an agency, can It be terminated?
There are several ways to terminate an agency.
COMPLETION OF A TASK
OWNER FILES BANKRUPTCY
LISTING EXPIRES
OBJECT OF THE AGENCY IS DISTROYED
DEATH OF YOUR BROKER
MUTUAL AGREEMENT
None of the above ways will cost the buyer or seller.
If the principal revokes the agency, then the seller or buyer revoking the contract
will be liable for damages.
Discuss
The one way the termination is not possible is by estoppel – which is a legal
binding document.
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Component #3 Appraisal – Valuation
The appraisal value is the analysis of facts which are gathered by the appraiser,
his data. The data is the sold properties in the last 3-4 months which are
comparable to the subject property. The main objective of an appraisal is to
support the sales price, make a loan or do a home improvement project.
Value is the present worth, ability of one commodity, with a person who desires
to purchase the property (desirous person)
The value of the property is not a fact, it is only the appraiser’s opinion.
The Market Value is not the cost of the property and NOT the assessed value, but
it is the most probable price or market price. The appraiser’s main concerns are
Marketability and acceptability. When starting the appraisal process, the
appraiser is most interested in the date the price was agreed on, he will have all
information from the purchase contract. Appraisers are not concerned with the
assessed value or the original cost. An appraisal is normally good for 90 days
(about 3 months), however on the test, it’s a given date!
The essential elements of value are Demand, Utility, scarcity, and transferability
(stud) or DUST.
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Land and improvements are known as the improved value of land or current
market value.
Can an appraiser appraise their own property? Only if they disclose their
interest. Appraisers can make or break a deal and they are held to strict
standards, if an appraiser uses unacceptable methods, it is a FELONY.
There are three main types of appraisals you need to know about on the exam.
The first one is the Market Data approach also known as the comparison
approach– the market data approach is the one most often used for residential
homes 1-4, and most used by licensees. This method is also used for vacant land
and rent schedules. This is where the appraiser uses sales prices of comparable
homes which have sold within one mile, 300 sq ft (about the area of a parking
space) in the past 3-4 months. Comparable homes must be similar and recent. In
the market data approach, the principle of substitution will be used, and
adjustments will be needed because no two properties are identical. The
appraiser will subtract features from the comparable homes, this is the hardest
part of the appraisal, adjusting for the differences. Once the appraiser has all his
data, he must reconcile the numbers to get the appraisal value, subtracting
features from the comparable properties. When there are no comparable
properties due to an inactive market or rapidly changing economic conditions,
the appraiser will possibly have to use the cost approach.
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With the Cost Approach there are two types of cost approaches, replacement,
and reproduction.
Look out for these terms on cost approach – building concepts such as “Quantity
survey, unit in place, SQUARE foot” The cost approach is better for new homes
not older homes with functional deficiencies.
The replacement cost is for special purpose properties. The appraiser must
calculate the cost of the new construction, (not the original cost to build) minus
the depreciation for the age of the building, then add in the value of the land.
When comparing the Market Data approach with the cost replacement approach
the cost approach will come in higher showing the upper limits of value. On the
cost replacement approach, the appraiser must use properties which are the
same utility, examples are a church for a church, what would it cost to build a
church if you are trying to get the value of a church?
On the cost REPRODUCTION approach – the properties must be AN EXACT

REPLICA. Look for 1910 house!
The builder wants to build a home but cannot decide if he should build a smaller
home or a larger home because of his needs a smaller home would be nice, but it
costs more per square foot to build a small home than a larger home.
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The Income Approach is for income properties, such as restaurants, commercial
buildings, apartments, etc. The main purpose is to convert income into value. The
best definition of the income approach is today's present worth of future value.
When the appraiser is calculating the value, he or she must deduct for vacancy to
arrive at the effective GROSS income and must deduct for management
expenses to arrive at the annual net income. At the end of the valuation, the
hardest, yet most important, difficult step is selecting a cap rate.
Gross rent multiplier is the SALES price divided by the GROSS monthly rent. The
answer on the test is the only one which starts with the word SALES. If you see
$308736, take it!
PRINCIPLES OF APPRAISING – There are three main principles of appraising you

need to know on your state exam. The principle of substitution, the principle of
regression and the principle of contribution.
The principle of contribution is how does it contributes to the property’s value.

On the exam it is a swimming pool – apartments – discuss – effect on the net
income.
Principle of Regression – how does a nearby substandard property affect your

property? Gas station or unkept home?
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The principle of substitution is used when substituting one property for another.
When gathering comparable properties for the market data/comparable
approach the properties should be similar enough to be substituted for the
subject property. Think about it no prudent person will pay more for the same
property if it has the same use, design, and rental income, because the lowest
price is always preferred.
Appraisal items you just need to know for the exam regarding value!
Why does real estate have value? Real estate has the most value when the
maximum utilization of available resources is used.
Increase in value – when people move into an area, the value goes up due to
demand, this is known as unearned increments.
When value goes up because of time this is appreciation.
Plottage, which is two or more units under common ownership.
Conformity, when buildings or homes conform, this is conformity. Therefore,

conformity to proper land use contributes the most to the maintenance of value.
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Certified General – insurance commercial? The little General Guy selling
insurance with a mustache! License for a $500,000 strip mall. What kind of
license? Certified General. (a memory tool)
The Narrative appraisal report is the most extensive appraisal report, however
the one thing you will not find in it is the type of financing available for the buyer.
The Type of value will be found in the statement of purpose.
Fee appraisers are still available to appraise properties without an AMC. An AMC
is an Appraisal Management Company. The AMC’s manage appraisers for most
residential purchase loans. Fee appraisers - flip – explain – self-employed.
California appraisers must take the Uniform Standards of Professional Appraisal

Practice UPAP, each time they renew their license. (Every two years)
You would normally hire a fee appraiser for information on vacant land or flip
properties. Highest and best use is the first step for vacant land. The appraiser
will analyze the site (site analysis) for the greatest net return and will have to
deduct for demolition. The appraiser will also inform the owner of the best use
for short term or interim use, when the property is expected to change uses.
Depreciation – is loss in value from any cause, it could be economic, functional,

or physical.
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Obsolescence is impairment of desirability, obsolescence is not wear and tear.
Functional vs Economic obsolescence

Functional is fixable! Inside your property lines. Two homes – my neighbor and I,
same costs, different values, functional – no two homes are exactly alike.
Example: An old store front is Incurable Functional Obsolescence
Economic Obsolescence is outside your property lines. Economic would not be

an outdated kitchen because that would be inside your property lines. Economic
obsolescence is the most difficult to cure because you have no control over it.
Effective age – Seeming younger or newer that it is due to continued

maintenance, on the test it is a home that is 15 years old which appears to be 6
years old because of continued maintenance.
Economic Life – Will the building earn sufficient income? My apartment building
in another state....
What does the Bureau of real estate appraisers do, TWO main items,
Investigate complaints and issue appraisal licenses.
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Additional Appraisal items – Real estate effects all aspects of property, residential
and commercial included businesses?
The Business Cycle – is PROSPERITY, RECESSION DEPRESSION AND EXPANSION
The Neighborhood Cycle – is DEVELOPMENT, STABILITY, DECINE AND

REVITALIZATION.
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Component #4 Financing and lending laws
Truth “N” lending Act came into be in the late 1960’s, enacted to protect
consumer by disclosing credit terms in a meaningful way. The party responsible
for disclosing the credit terms is the LENDER.
Never exempted from the Truth and Lending is Residential homes.
Because of the truth and lending act, lenders must disclose the interest rate on
the note which is the NOTE RATE and the APR which is the annual percentage
rate also known as the effective rate on your exam. The effective rate includes all
the costs to secure the loan, including but not limited to – discuss –
If a lender places an interest rate in an ad, the APR is required, on your exam it
will say the rate must be the Effective rate. The effective rate is the rate actually
paid (the apr) and the nominal rate is the rate on the note.
The two most important facts the lender must have in an ad are the finance
charge and the annual percentage rate. Triggering terms are terms which usually
have a number, like number of payments, amount of the payments, years of the
payments, etc., lenders must disclose the apr and all terms in their
advertisements, however if the advertisement only has the APR, then no other
disclosures are required. Again, Trigger Terms would include NO down payment
or how many months the loan is.
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On a purchase transaction there is NO right of recession. Once your buyers sign,

they record the same day or the next day! However, in a homeowner principal
dwelling, there is a three day right of recession.
Real Estate Settlement Procedure Act – RESPA
There are four main sections which pertain to real estate agents.
Section 6 – pertains to the Servicing of your clients’ loans.
Section 8 – pertain to KICKBACKS ON settlement service providers, NO KICKBACKS
it is a $10,000 fine and up to one year in prison. Paying and receiving referral
fees, agents cannot do it.
Section 9 – Title is supposed to be chosen by the BUYER.
Section 10 – Escrow or Impound- account accounting.
RESPA was established originally for accurate closing costs information. It applies
to 1-4 owner occupied residential properties. Lenders cannot charge anything for
disclosures, nothing!
Once your clients fill out an application with a lender and they move forward with
their loan, the lender has 3 business days to get the first disclosures out, which is
the Loan Estate at no charge. When reviewing the loan costs, the points used in
the financial services are used to adjust the investors' yields.
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Trust Deed and Mortgage
A promissory note is evidence of a debt, got a note, you got debt!

With a Deed of Trust, the Trustor is the borrower, remember in most cases the
OR is the Owner! The Trustor signs a note and deed of trust. The Beneficiary is
the BANK or the lender who loans the money. And The Trustee is a third party
with fiduciary duties to the Beneficiary.
The services the Trustee had two main jobs, one is to foreclose on the Trustor for
non-payment of the lien and two to send out the reconveyance deed when the
trustor pays off the lien in full. The lien must be removed 21 calendar days after
lien in paid in full and the request for full reconveyance has been made. In the
Note and Deed of trust, the Trustor (the borrower) gives clear power to the
Trustee to sell the home (asset) for non-payment.
Reconveyance Deed – once the trust deed is paid off the Trustee had 21 calendar
days from request to send out the reconveyance deed.
Types of notes and loans
Installment note – both principal and interest are paid in specific amounts and
intervals, usually 30 years and fully amortized, meaning completely liquidated at
the end of the term, paid off in full! In long-term loans the payment to the
principal increases while the interest amount decreases.
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On straight notes, the principal does not decrease because with a straight note
the payment is interest only with a balloon payment due at the end of the loan.
Some straight loans with balloon payments are also known as partially amortized
loans with the entire balance due at the end. (Explain 3/1, 5/1, 7/1 loans)
Conventional loans are usually conforming loans, conforming to Fannie Mae and
Freddie Mac guidelines. There are three main types of loans, conforming loans,
conforming high balance and Jumbo loans. Most step-up buyers use conventional
loans, they do not have to get private mortgage insurance if they have a down
payment which is more than 20 percent. When interest rates are low, most
buyers prefer a fixed rate loan, but when rates rise, buyers look at other options,
like ARM’s, adjustable-rate mortgages which adjust with the market.
With less than 20 percent down, convention loans will require PMI. All FHA loans
require mortgage insurance regardless of the down payment. With the above
statement loans are insured by either FHA or PMI
FHA LOANS were originally thought of as low-income buyers with bad credit, but
that is not the case. FHA was created to provide insurance for approved lenders.
As on most mortgage loans, like conventional loans, fha payments are made
monthly. For the EXAM an FHA loan cannot have a junior loan (2nd lien) In the
real world of real estate a 2nd in the form of a down payment assistance is
acceptable.
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FHA loans along with conventional loans both allow a gift from a close family
member for down payment and closing costs. Buyers can apply for their fha loan
at any mortgage company, on test the answer is “any MORTGAGEE”.
VA loans are the easiest way to help a Veteran purchase a home, there is no
down payment required and qualifications are much easier than both
conventional and FHA loans. Cal Vet is another type of VA loan where the veteran
applies with the Department of Veterans affair, the Department is the Vendor and
the Veteran is the Vendee, done on a purchase land contract.
For the test, the veteran must get a life disability life insurance policy.
Land contracts have several names, it could also be called an installment sales
contract. The Vendor executes equitable title to the vendee who had a little
more than a rental agreement until certain terms are met. The relationship of the
vendor to the vendee is similar to the Beneficiary to the trustor. If the vendee
defaults on the land contract there are two ways to cure, 1- Quiet title suit (suit is
a lawsuit) or two, a quitclaim deed.
CalHFA is one of the best down payment assistance programs for FIRST TIME
HOME BUYERS. CalHFA changes constantly, so if you are working with a buyer
who is planning on using a down payment assistance program make sure they
qualify prior to looking for a home. For the test, the money for CalFHA comes
from Tax-exempt government bonds. CalFHA stands for California Housing
Finance agency.
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Liens
The definition of a lien is a charge imposed. The lien is created by recording a

Trust Deed or a mortgage. In California we use have Trust deeds. (explain) Some
sellers will carry back a loan and it will be in second position; this would be a
voluntary specific lien.
Other types of liens are not from recording a voluntary loan, such as a mortgage
or trust deed. Liens which become attached to a property would be an
attachment caused by an involuntary action, such as a judgement.
A judgement from a creditor/lawsuit would be involuntary general lien, a

property tax lien would be involuntary specific lien. If you do not pay your
income taxes the IRS will put an involuntary general lien on all property you own.
Trust Deed is a Voluntary specific lien.
Mechanics liens are liens due to non-payment of construction costs to a

contractor or for non-payment of building materials.
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The confusing part of the Mechanics lien is that they can take priority earlier
than they are recorded! The main reason the mechanics lien can take priority is
because the contractor did not know the homeowner was not going to pay him!
The lien takes effect at the beginning of construction on new homes, even ahead
of intervening liens. On older homes the mechanics lien dates to the beginning of
the contract.
A mechanic’s lien must be verified and record to be valid. Verified means signed
under penalty of perjury.
A homeowner with a mechanic’s lien who never hired a contractor and did the
project on his/her own (DIY) would get a mechanics lien for non-payment of
supplies to the supplier for the materials.
Recording times for mechanic’s liens
60 days (about 2 months) to record the lien if the notice of completion is
recorded.
90 days (about 3 months) to record the lien if the notice of completion is NOT
recorded.
Construction loan funds are released after the lien period to pay the contractors
(60 or 90 days)
Negotiable instrument is NOT a Mortgage.
Trust deed sale for non- payment of a home loan

After the nod (notice of default) is filed it is approximately 4 months to the sale
date. Three months waiting period, then once the date of the sale is published,
the notice of sale, usually the borrower has 21 days (about 3 weeks) to the sale
date.
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Reinstatement can be done by paying the entire amount due at least 5 days prior
to the sale date. The homeowner would get the amount due to stop the sale and
take a cashier’s check to the Trustee’s office.
The winner at the Trust Deed Sale does not get a Grant Deed, they get a Trustee’s
Deed.
Mortgage contracts - on a mortgage contract you have two parties, the

mortgagor, and the mortgagee. With the mortgage, there is not a trustee sale
there is a Judicial Court Foreclosure. With a court foreclosure, the lender/bank
can get a deficiency judgement, therefore some lenders do a court action.
Additional terms
Subordination clause – rights of the beneficiary are secondary. A subordination

clause is used with second lien loans. The example would be when a homeowner
has a first mortgage and wants to refinance the first, but, has a second loan as
well and wants to keep the second loan. To keep the second loan in second
position, while the new first take priority, the subordination agreement must be
obtained.
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Mortgage Bankers, mortgage companies, like to service the loans they make and
sell them on the secondary market. Mortgage companies can service their own
loans or sell them to a servicing company.
Mortgage Brokers – do NOT use their own money, they use wholesale lenders to
fund the loans. Mortgage bankers and mortgage brokers are the first contact on
the front end of the mortgage process.
The secondary mortgage market is the back end of the mortgage market. This is
where Fannie Mae and Freddie Mac fund the loans, not FHA
Mortgage loan contracts are where the two parties are involved, the mortgagor
and the mortgagee. The mortgagor is the homeowner, and the mortgagee is
the lender. With a mortgage, the foreclosure is done in court, this is known as a
Judicial foreclosure. With a Judicial foreclosure, the lender/creditor can get a
Deficiency Judgement. With a mortgage, there is a 1 year right of redemption.
Insurance companies are investors on the back end of the mortgage market.
Insurance companies do not like working with borrowers on the primary market,
therefore, insurance companies only do large loans. On the test, you may be
asked which investor will not make this small $190,000 loan, answer, insurance
companies. Which investor would make a $30000000 loan on a shopping center?
Answer, insurance companies!
Inflation is Cost of goods and services increasing over time.

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Component #5 Transfer of Real Property
Grant Deed – The grant deed is the most common way to transfer real property.
The primary purpose of the grant deed is to convey property. The sellers will
grant the property to the buyers, sellers are the Grantors, and the buyers are the
grantees. Once the sellers sign the Grant Deed it is executed and they will deliver
it to Escrow, where it will stay until it is recorded in the county where the
property is situated after the buyer’s loan funds. In most cases the Grant deed
will be recorded, but it does not have to be recorded FOR THE PURPOSE OF THE
TEST.
The grant deed must always be delivered and accepted.
Your lender expects you to stay on tile during the life of the loan, if you sell your
property, in today’s day in age, you pay off the lender and the buyer secures a
new loan. However, back in the late 1970’s early 80’s interest rates skyrocketed
to around 18 percent. Buyers wanted to buy, and sellers wanted to sell, but no-
one wanted to pay 18 percent, so creative financing was created. With creative
financing, the seller would NOT pay off the home and would convey the property
to the buyer and the buyer would make the payments on the loan to the seller,
who then would pay the bank. This act of not paying off the lender was alienating
the lender because the borrower conveyed the property. Alienation is the
opposite of acquisition.
Constructive notice – constructive notice is given in two forms.
1) Possession
2) Recording
The person who gets the property is the owner and the one who gave
constructive notice first.
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Looking at changing your name when you get married? When a single woman
gets married and already has a property, if she changes her name, she will have a
cloud on her title. If she wants to sell, she will need to do a Quiet title action,
which is a court action to remove a cloud and perfect the title.
The term et ux, means and wife.
Title vesting
Severalty means as an individual, you may see “John is holding his home as an
individual, what does that me, answer in severalty. Also, when you see two
people on a title, to cover the lenders, lenders write in the deed, that you have
liability “jointly and in severalty” so if one person dies or leaves the other is still
responsible!
Joint tenants – there are four unities of joint tenants, TIME, TITLE, INTEREST AND
POSSESSION. All people must get on title at the same time, have the same
amount of interest and be able to possess any part of the property – explain.
Note: Husband and wife ownership is not required in Joint tenancy
In joint tenants, none of the joint tenants can Will the property to an heir,
because of right of survivorship. If one of the joint tenants dies the other is free
of the others' unsecured debts.
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Tenancy in common – Jenny and Wayne story, can hold unequal interest, and can
Will to heirs. Right of possession must be equal. Jenny owed her home long
before Wayne came along. Wayne offers to buy into the property for $200K, he
gives Joanne $200k and is added to the tile, AT A DIFFERENT TIME, WITH
DIFFERENT SHARES OF INTEREST. They are on title as Tenancy in common.
Community property – six states are community property states, we are one of
them! If the Deed is in the of husband and wife, it is automatically community
property. A deed stating John and Kathy Smith as husband and wife automatically
is considered Community Property.
Quitclaim deed – this deed has no warranty; it conveys the rights of the Grantor
and removes a cloud and perfects a title.
Sublease – transfers possession not ownership

Escrow -Escrow is a third disinterested party. Buyers and sellers use escrow to
make sure the terms of the contract are met. Escrow law is found in the
California Financial Code. While in escrow, the seller delivers the grant deed to
escrow. During escrow if an escrow company gets written instructions from one
party, what should they do? Such as two termite reports? The escrow company
will need to get instructions from both parties and write up an escrow
amendment. Two termite reports – get written instructions from both sides.
Nearing the end of the escrow process, Escrow is authorized to call the buyers
lender for funding of the loan. The seller gets credit for pre-paid taxes and the
buyer gets a debt for the purchase price. If the buyer has an impound account
set up, these are recurring costs and will happen for the life of the loan. Once a
homeowner has over 80 percent loan to value (20% equity) the homeowner can
remove impounds on conventional loans.
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Title insurance – there are two title policies when a purchase of a home takes
place. The title policy the seller pays for protects the buyer and the title policy the
buyer pays for protects the lender for their loan. The title company’s most
concern is with the documents which appear in the chain of title. Once the title
officer reviews the chain of title, he/she will do a written summary of the
documents in the chain of title, this is known as the ABSTRACT OF TITLE. The
preliminary title report should show that the seller you are working with is the
trustor! The abstract of title will address marketability.
There are two main types of title policies.
1) The standard policy – CLTA -most buyers use.

2) The extended policy – ALTA – covers improvements on adjoining land.
The CLTA protects against forgery and improper delivery, there is no survey. The
ALTA is the American Land Title Association, and it covers improvements on
adjoining land. For an extra fee the Extended policy will cover survey issues and
water rights.
Type of policy that covers everything – none!
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Additional processes
A patent is what a buyer will receive when the buyer purchases land from the
government, they do not get a grant deed, they get a patent!
Avulsion is when land pulled away from property due to natural causes, such as a
dam breaks, water crashes down tearing away property.
However, accretion is when water creeps up onto property giving the owner more
land. One type of Accession is Accretion.
Intestate succession is when an owner of property dies without a will.

Adverse possession is when a person tries to acquire property against the will of
the true owner. To take adverse possession, one must do several things.
1) Against the will of the true owner

2) Pay taxes for 5 years.
3) Possess property open and notoriously.
Eminent domain is when the Government takes private property for public use;
the government must pay just compensation to the owner and use it for the
public.
Inverse condemnation happens when an owner sues the city for making changes
to zoning which lowers the property value.
Probate happens when an owner dies without a will their assets must go through
probate. The only way to get around probate is a living trust. In a probate court
the Judge “court” decides the commission to be paid.
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Tax and Taxation
Ad valorem is the name for how property taxes are based in the United States.
Property taxes are based on ad valorem, which means according to value.
Documentary transfer taxes are based on the consideration given.
January 1st before the fiscal tax year is when real property taxes become a lien.
Fiscal tax year in California is July 1st to June 30th (summertime!)
NO DARN FOOLING AROUND – STAND FOR First half taxes due November 1st, due
and paid by December 10th. 2nd installment is due February 1st, late after April 10.
If a homeowner fails to pay their property taxes and the taxes become a lien, the
property is sold to the state due to delinquent taxes, the homeowner then has
five years to stay and redeem. After the five-year period, the state then transfers
the property to deeded back to the county, at that time, the county has the tax
sale. In a tax sale the winning bidder gets a Tax Deed.
For the Exam, a homeowners' property taxes are ONLY reassessed when the
property is sold. In some cases, a property owner may feel they are over
assessed, in this case, the property owner can make an appointment with the
assessment appeals board for a review.
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Mello Roos Assessments are additional property tax assessment placed on newer
homes to lower the building cost for the developer. Mello Roos raises the
property taxes for the homeowner; therefore, Mello Roos must be disclosed by
the seller to the buyer. Mello Roos is only for the public interest and would not
pay for improvements on a Commercial strip mall.
FIRPTA – Foreign Investors Real Estate Property Tax ACT – buyer must withhold 15
percent of the sale price and send to the IRS.
Understanding TAXES
THE cost (purchase price) of the property is the basis used when a homeowner
sells their property. For federal income taxes, say the cost is $300K and you sell
your property for $800K, your capital gain is $500K. If you have lived on the
property for 2 years of the last five years and you're married NO GAIN, (the first
$500K is not taxable) if single $250K. explain. Area for notes.
To arrive at the adjusted cost basis, do not add in mortgage payments, they are
not costs. Add the concrete patio! Explain.
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Deductions you are allowed on personal residence are mortgage interest and
property taxes.
On income property, capital expenditures are added to the cost basis and
depreciated.
Sales leaseback – Hardware store owner needs a better write off, so he sells the
property, keeps the business, and can write off 100% of the future rents he will
be paying. Rent is the cost of doing business.
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Component #6 Real Estate Practice and Disclosures
Once you have passed your exam, you have a lot more to learn and do! The
practice of real estate is an on-going learning process. Continuing education must
be done to keep your license and once you have it, be smart, never let it go! The
classes you have for continuing education must be 45 hours (about 2 days) and
include 18 hours in consumer protection.
The license term is 4 years and once you have had your license for 2 years and
have been working full time, you may apply for your broker’s license. However,
some students, who have the required classes and a four-year college with a
major or a minor in Real Estate can skip the real estate license and go straight to
the Broker’s license, this rule was updated in 2013. Prior to 2013 majoring or
minoring was not a requirement.
Losing a real estate license
If a person obtained their license by fraud, the commissioner could revoke the
license within 90 days (about 3 months) without a hearing – explain.
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If you forget to renew your license before it expires, you are out of the business,
you cannot work until your license is renewed. You have a two-year grace period
at which time you cannot work until you take your continuing education and pay
your fees. If you do not renew your license within the period, you lose your
license and must retest!
Child support obligator - Child support is an obligation which should not be taken
lightly and is a court order. If a licensee had a court order to pay child support and
is behind in their payments, the real estate commissioner will still give you your
license, but you will have a 150-day TEMPORARY LICENSE to get your affairs in
order and catch up your payments!
Truth in advertising
Once you have your license, you need to market yourself! Even marketing has
many rules and regulations which must be followed. Before you start marketing,
you need a Broker. Your broker is responsible for you. Your broker will advise you
as to how to join the board of REALTORS. Once you join the board, you are and
can use the term REALTOR. However, if you misuse the term Realtor, you can
lose your license! (Revoke or suspend).
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Truth in Advertising requires a licensee to always tell the truth. When giving a
location it is important to give clear, correct directions. Misleading advertising
can be incorrect directions, such as a misleading MAP. Another advertising error
is not identifying one’s broker, this is a blind ad, and it is so important a licensee
can be suspended and even lose their license.
Always have your license number on all first contact information, business cards,
internet, etc. EVERYTHING!
Puffing – exaggerated features or benefits
Trust fund accounting
Trust funds in real estate today are used mostly for property management. Back
in the day all Brokerages had trust accounts. The Trust account’s main purpose is
to keep the client’s funds separate from the broker’s funds. The most important
reason for keeping the fund separate is in case of any legal action against the
broker! The broker is ALLOWED to keep up to $200 in the trust account, but only
for the maintenance of the account. The Trust fund must be reconciled by the
broker monthly. If at the end of the month, there is an overage, the unexplained
overage, must have a separate record and stay in the account. The broker is not
the only person able to remove money from the account, authorized persons can
be on the account to help the broker.
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Brokers cannot comingle funds into the account, therefore if the broker had his
own rental properties, he cannot manage his own property through his business.
Back in the day, when writing an offer, the sub-agent of the broker or the broker
had to get the deposit check upfront, prior to having the offer accepted! Having a
client's check in hand was a BIG responsibility! The proper place for the trust
fund checks to be done is to Escrow, the trust account or the owner of the funds!
Who owns the funds? The seller is the owner of the funds.
The owner of the funds is the seller, in most cases the offeree. The offeree can
hold the trust funds, but you must have a written agreement between the buyer
and the seller, the offeree, and the offeror! In most cases the office rules were to
have the deposit check/trust funds deposited within three business days or
delivered to the broker immediately, following the instructions of your broker.
Can you hold a check uncashed? YES! A check can be held uncashed if the client
requests you to hold the check until the offer is accepted.
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Record Keeping requirements.
Three years is the standard time for keeping records. Contracts and paperwork
must be kept from the time Escrow closes.
WORM – write once, ready many times.
DRE DISCIPLINARY ACTIONS

The Commissioner has the authority to promulgate rules and regulations,
however the commissioner will not put you in jail, he will forward your case to the
District Attorney, who will prosecute for illegal activities.
Misrepresent a property to a buyer – discipline, civil and criminal.
Fair Housing
Discrimination – will result in violations which will be enforced by Federal, state

and commissioner’s regulations.
The Civil Rights Act of 1968 – no discrimination and unlawful eviction. If you feel
you were discriminated against, you can file a complaint for the violations of
Federal Fair Housing Laws with the Department of Housing and Urban
Development (HUD)
The Williamson act, also known as the California Land Conservation Act of 1965,
helps preserve agricultural and open space land. The government and landowners
entered into this agreement voluntarily, for tax deduction purposes.
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No bicycles are allowed – acceptable rental ad.
Steering is directing buyers to a nonintegrated neighborhood of their own

ethnicity. Blockbusting is when agents knock on doors and tell homeowners an
ethnic group is moving into the area, and it is sure to decrease the prices.
Redlining is when the bank refuses to lend money in a zip code because of the
ethnic composition.
Americans with disability act – Malls, theaters, businesses, etc.
The Rumford Act – not selling businesses, The Rumford act is for selling HOMES.
Complaints are filed with the Department of Fair Employment and Housing within
6 months.
The Unruh Act – discrimination by businesses
If a licensed agent is caught discriminating, the violation can result in Federal,

State and commissioners’ regulations.
California Coastal Commission – committed to protecting and enhancing

California’s coast and ocean, established in 1972, proposition 20, made
permanent in 1976.
When the salesperson is terminated - the broker must give back the license to the
salesperson. Explain
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Recovery account – single transaction $50K, Lifetime limit $250K, if the licensee is
suspended due to a payout on the recovery account, the licensee must pay back
the recovery account plus interest to reinstate their license.
Property management/Landlord tenant relationships
Who is authorized to manage property, the BROKER!
In commercial real estate who is responsible for emergency /safety measures?

The Property Management Company.
Document used to evict – The unlawful detainer and the notice to pay rent or
quit. Once your tenant has moved out, you must return the deposit within 21
days (about 3 weeks). Money which can be kept by the property manager/owner
of the property is for unpaid rent, repairs, and cleaning. If the property manager
keeps any of the funds, the manager/owner must document what they kept and
why with receipts.
How much for a security deposit? The first and last months are not acceptable,
the security deposit can be 2 months for an unfurnished property and 3 months
for a furnished property. What determines the amount of deposit? Furnished or
not!
AVID – AGENT VISUAL INSPECTION DISCLOSURE
Required by law – civil code 2079. Due to the Easton vs. Strasburger case, the
agent visual inspection must disclose all items seen in the inspection.
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TRANSFER DICLOSURE STATEMENT (TDS) TWO YEARS
The TDS must be filled out by the seller only and is required on all 1-4 units,
FISBOS and as- is properties. The TDS is not required on Bank owned properties.
The TDS should disclose all defects known and should be known; repairs are not
required to be disclosed on the test!
Agents can NEVER fill out the TDS for the sellers.
Amended TDS – rescind the contract, but not sue.
Defective TDS – Sue within two years.
The Natural Hazard Disclosure statement will disclose if your property is in a flood
zone or earthquake fault zone. A Flood Hazard is frequent if it is two times in 10
years.
ALQUIST PRIOLO ACT
Must disclose earthquake fault lines, this applies to Specific types of structures in
known earthquake fault zones – fault zones =1/4 mile wide.
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Basic Practice Items
Salesperson took an illegal referral fee, the broker may also be liable, if they had
guilty knowledge.
Illegal activity – you must contact the department of real estate within 30 days
(about 4 and a half weeks) of….
Buyer related to agent; agent must disclose to seller.
Broker appoints a manager for a branch office, the broker is relieved of direct
supervision – for the test!
Hud section 8 housing Choice voucher program – this program is for assistance
with affordable housing in the private market.
Salespersons are independent contractors, and the broker does not pay for social
security, however they do pay for workman’s compensation for both employees
and salespersons.
PRLS = Prepaid Rental Listing Service – this is a license which is issued for 2 years.
Seller to paint over water spots on ceiling, listing agent discloses the roof leaks if
known, liable!
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You help an investor find a rental property and they ask you to help them lease
out the property, but you do not know how, what do you do? Ask your broker for
help. Your broker should always be there for you to answer questions and review
all your contracts.
If you list a property in a Busy market and your listing do not sell, what is the most
probable reason? You overpriced it!
If you secured a 9-month listing, and your broker’s license gets revoked, your
listing terminates. Broker dies, leaving the business to his daughter, sellers and all
contracts of the office need to be resigned under the new broker.
DRE does not issue licenses to partnerships.
The licensee does not have to disclose that- they live in the neighborhood of the
property.
Agent liable for own actions, whether the principal is liable or not.
Agent is not liable for wrongful acts of the principal, unless the agent acquiesces
(gives in)
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Component #7 CONTRACTS
Legal essentials of a valid contract – capable parties, mutual consent, lawful

object, and consideration. You must have all four to be a valid contract. Valid
contracts have all four essentials.
Void contracts – a void contract was never valid in the first place! If missing even
one of the essentials, example – underaged parties, illegal consideration.
Consideration – valuable, good, sufficient, adequate
One party or obligation is substituted for another is known as NOVATION.
Contingency – Nature, duration, method removed – contingencies are found in

the purchase contract.
Contracts which do not have to be in writing are personal property listings or

leases for one year or LESS!
Party able to enter a contract, emancipated minor.
Mutual consent in a real estate contract – Offer and acceptance.
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Cloud mutual consent – Misrepresentation, threats, or duress
VOIDABLE CONTRACTS
Binding until rescinded, not illegal purpose, fraud, and misrepresentation
Actual fraud – intent to deceive.

Constructive Fraud – negligence
IF the buyer loses their ability to complete the purchase it is UNENFORCEABLE

If not to be performed within one year, must be in writing = statute of frauds
Purchase contracts
A buyer can sue for up to four years! The effective date is the date the final
acceptance is delivered to the offeror.
Signed by only one spouse – unenforceable.
As is – means the seller is not willing to make repairs and includes observable
condition only.
Seller backs out – fat chance! Buyer sues seller for Specific Performance
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On an owner-occupied property, the liquidated damages cannot generally exceed

3%.
When should the buyer receive a copy of the signed purchase contract – at the
time of signing.
Counteroffer – Know that a counteroffer is a rejection of the original offer!

Multiple counteroffers must be disclosed.
LISTINGS ARE BILATERAL EMPLOYMENT CONTRACTS! Must have competent

parties and the commission clause must be in 10-point bold font. If you/a
salesperson leaves your brokers office while you have a listing, the listing stays
with the broker.
Listing signed by only one spouse is – enforceable.
Types of listings
Exclusive listings – must have a definite termination date, an example of a

definite termination date is 90 days (about 3 months) from signing.
Exclusive Agency listing has been changed to Exclusive Listing with Sellers
Reserve! If the owner sellers no commission is paid to YOU
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Exclusive Right to Sell – when the property sells – commission is received.
Open Listing – REO listings with more than one broker, but the one who gets paid
is the one who brings the procuring cause.
Net Listing - Owner nets his proceeds before broker gets paid – explain.
PROTECTION PERIOD CLAUSE – Broker gets paid based on what happened after
listing expires.
What documents give you authority to get paid? The listing and it MUST BE IN
WRITING!!!!
False information from the seller – hold harmless clause in the listing contract.
Leases
Right of possession for paying rent. If leasing and it is not prohibited to sublease
the tenant my sublease or assign.
An unwritten lease for more than one year is unenforceable.
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Lessees who did not sign the lease may still be sued in law if they break their lease
because they have an implied contract – explain.
Percentage lease – landlord gets a percentage of the gross sales; this is usually
done in retail leases.
The maximum term for agricultural leases is 51 years.
Tenant pays fixed and variable expenses is a net lease.
Landlord does not maintain the property; the tenant is released by constructive
eviction.
Agreement to terminate the lease early -surrender, tenant vacates the property
early – abandonment!
Tenant stays after the lease has expired – estate at sufferance because the
landlord is suffering!
Commissions
Principal cancels before the listing expires – could owe two commissions.
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No written agreement to pay a commission, commission is permissible but not

guaranteed!
No written extension of the listing, quite probably no commission!
Purchases of a timeshare – buyer has in 7 days to rescind.
Unilateral Contract
Options are unilateral contracts, the buyer in the option contract is the optionee
and is not bound to perform, but the seller is the optionor and must sell to the
optionee if the optionee decides to buy.
Option and Listing – the listing agent is the listing agent and the buyer and must
disclose all plans for the property to the seller.
Advance fee Contract – this is a contract where the broker gets paid prior to
selling the property for a flat fee. The broker cannot guarantee a transaction.
Submit materials to the Commissioner – not less than 10 days (about 1 and a half
weeks) before publication.
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Component 8 Construction terms/Termites/Mobile Homes
The average depth of a standard closet is 24 inches, 2 feet.
Bearing wall in a home is any angle, intact during remodeling and stronger.
Most destructive termite is the subterranean termite.
Structural pest control reports are given within 10 working days to anyone and
are filed with the structural pest control board.
There are two sections on a termite report – current infestation and future areas.
The areas where there is NO evidence of infestation are usually paid for by the
BUYER.
Crawl space – is the low space under the subfloor, with access to the plumbing
and electrical wiring. The typical size of the crawl space is 18 inches.
Topography is a concern to the developer if it raises the costs of construction.
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Horizontal parallel timbers which support the load of the ceiling, or the floors are
Joist.
The highest construction member of a framed home is the Ridge board.
Spreading at the base of the foundation – footing
Soils condition is not – deciduous.
Roof slopes on all four sides is a HIP ROOF
A/C unit had high energy efficiency ratio (eer) means the unit is more efficient.
Flashing – Sheet metal which protects the building from water seeping into the
roof.
Insulation is adequate – the inside of the exterior wall seems to be the same
temperature as the other partitions.
R-Value in insulation = the r value is the resistance to heat flow and must be
disclosed in new home sales
Turnkey project – ready for occupancy – move right in!
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Elevation sheets – the construction drawings showing the exterior view of a
building.
The information booth at the mall is the KIOSK.
Soils to fill in the trenches and brace the foundation is Backfill.
Cracks in the foundation and windows and door do not seem to close correctly –
soils engineering report.
Purpose of the architect’s plot plan – to guide the placement of construction.
Footings, piers, and subflooring are items one would find on a Foundation plan.
Old electrical wiring – not a substandard building
Ordinary repairs to broken equipment – corrective maintenance.
Commercial acres deduct for streets, curbs, and sidewalks.
Orientation -Position of building on site
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HVAC – heating venting and air conditioning
Hazardous gases in occupied residence – NOT Carbon dioxide
Percentage of consumers who search the internet before calling a realtor – 90%
Open house with big window – contemporary
Radon gas – open the door.
Percentage of agricultural land in California - 27%
MOBILE HOMES
Brokers can legally sell registered mobile homes.
Listing in a Mobil home park expires, advertising and signs must be removed
within 48 hours (about 2 days).
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Ad says “no down payment “if not true, illegal, and deceptive.
Broker cannot sell – brand new mobile homes.
Convert a mobile home from personal property into real property – get a building
permit, approved foundation, certificate of occupancy.
Document used to convey mobile home when real property – Grant Deed
Mobile home park – two or more lots, human habitation
Acronym - SAM Shared appreciation mortgage
CEQA – California Environmental Quality Act.
ROM – Rough order of magnitudes- estimates of the effort and cost involved in
completing a project. Effort and cost associated with the project.
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California Real Estate Trainers

Department Of Real Estate

Property Ownership/Land Use

Chose, is a French word for thing, which would be personal property.

Emblements are annual crops produced by cultivation, legally belonging to the

Again, Personal Property IS MOVEABLE and real property is IMMOVEABLE!

Encumbrances affects or limits one’s title. If you have an encumbrance there is an

There are two main types of encumbrances, Money, and non-money.

Encroachment – cockroaches? sue neighbor for trespassing – Garage question.

Dominant VS Servient tenement – explanation of the differences – space for notes

Water safe for drinking – Is known as Potable water.

Appropriation? Is it appropriate to take water from a public stream or river?

Water beneath the surface of the land is percolating water.

Overlying rights – can an owner pump and use underground water?

Freehold estate refers to ownership of real estate.

There are many different types of estates.

Less than freehold estate is renting or leasing, not owning!

Infill developer – looking to build on underutilized lots in populated areas.

Restrictions – Private, Public and Governmental

Local building codes vs County building codes

When building or remodeling a property, the local building codes must be

Governmental rights in Land

The relationship of loyalty and trust is similar to the relationship between a

Types of Agency relationships

Single agency – agent is client oriented.

Creating agency relationships

Agency relationships are between two or more people with an agreement in

Working with BUYERS – Buyer’s agent

Present DAY how to write and offer vs past – discuss.

Agency disclosure form – Is required as soon as practicable and must be done on

Unlicensed Investor – thinking of investing? If you do NOT have a license, a secret

There are several ways to terminate an agency.

On the cost REPRODUCTION approach – the properties must be AN EXACT

PRINCIPLES OF APPRAISING – There are three main principles of appraising you

The principle of contribution is how does it contributes to the property’s value.

Principle of Regression – how does a nearby substandard property affect your

Conformity, when buildings or homes conform, this is conformity. Therefore,

California appraisers must take the Uniform Standards of Professional Appraisal

Depreciation – is loss in value from any cause, it could be economic, functional,

Obsolescence is impairment of desirability, obsolescence is not wear and tear.

Functional vs Economic obsolescence

Example: An old store front is Incurable Functional Obsolescence

Economic Obsolescence is outside your property lines. Economic would not be

Effective age – Seeming younger or newer that it is due to continued

The Business Cycle – is PROSPERITY, RECESSION DEPRESSION AND EXPANSION

The Neighborhood Cycle – is DEVELOPMENT, STABILITY, DECINE AND

On a purchase transaction there is NO right of recession. Once your buyers sign,

Real Estate Settlement Procedure Act – RESPA

Trust Deed and Mortgage

A promissory note is evidence of a debt, got a note, you got debt!

Types of notes and loans

The definition of a lien is a charge imposed. The lien is created by recording a

A judgement from a creditor/lawsuit would be involuntary general lien, a

Mechanics liens are liens due to non-payment of construction costs to a

Negotiable instrument is NOT a Mortgage.

Trust deed sale for non- payment of a home loan

Mortgage contracts - on a mortgage contract you have two parties, the

Subordination clause – rights of the beneficiary are secondary. A subordination

Inflation is Cost of goods and services increasing over time.