CA Real Estate Real Estate Practice and Ethics 1 — Questions and Answers
Question 1: Under California law, how long must a real estate broker retain transaction records?
- 1 year
- 2 years
- 3 years (Correct answer)
- 5 years
Correct answer: 3 years
California requires brokers to retain transaction records for a minimum of three years from the date of closing.
Question 2: Which term describes the illegal practice of directing buyers toward or away from neighborhoods based on race or ethnicity?
- Blockbusting
- Steering (Correct answer)
- Redlining
- Churning
Correct answer: Steering
Steering is the illegal practice of directing clients to or away from certain areas based on protected characteristics.
Question 3: A licensee who has a personal interest in a transaction MUST:
- Withdraw from the transaction immediately
- Disclose the interest to all parties (Correct answer)
- Charge a reduced commission
- Obtain DRE approval before proceeding
Correct answer: Disclose the interest to all parties
California law requires licensees to disclose any personal interest they have in a transaction to all parties involved.
Question 4: What is 'blockbusting' in real estate?
- Buying multiple properties simultaneously
- Inducing owners to sell by exploiting fears about changing neighborhood demographics (Correct answer)
- Redeveloping an entire city block
- Subdividing a large property into many smaller lots
Correct answer: Inducing owners to sell by exploiting fears about changing neighborhood demographics
Blockbusting is the illegal practice of inducing homeowners to sell by creating fears about minorities moving into the area.
Question 5: Under California real estate law, a listing agent owes which duties to the seller?
- Loyalty, disclosure, confidentiality, diligence, and accounting (Correct answer)
- Only honesty and fair dealing
- Only the duty to present all offers
- Loyalty only, as the seller is the principal
Correct answer: Loyalty, disclosure, confidentiality, diligence, and accounting
A listing agent owes the seller fiduciary duties including loyalty, disclosure, confidentiality, diligence, and accounting.
Question 6: What must a California real estate licensee provide to buyers and sellers at the first substantive contact?
- A purchase agreement
- The Disclosure Regarding Real Estate Agency Relationships form (Correct answer)
- A home inspection report
- An appraisal of the property
Correct answer: The Disclosure Regarding Real Estate Agency Relationships form
California law requires licensees to provide the Agency Disclosure form at the earliest practical opportunity to clarify representation.
CA Real Estate Real Estate Practice and Ethics 1
Under California law, how long must a real estate broker retain transaction records?