Free California Real Estate Practice Exam Questions (August 2026) 150+

A special agent is an agent hired to perform a specific duty. The real estate agent’s power and authority is limited to that specific task. Example: If you list a house on behalf of a seller, you are hired for one specific job – listing the house. Once that job is complete, then the agency relationship is over.

The income approach determines how much a property generates income for it’s owner, that income, or potential for income. This is used to calculate or identify the market value of the property. The income approach is primarily used for rental properties as not all properties normally generate income.

Appurtenant is an adjective meaning it is attached to something. If something is appurtenant, it belongs to something else, either attached to or by law. An appurtenant easement is a type of easement that “runs with the land.” These all would be considered appurtenant, other than a trade fixture. Remember, trade fixtures are pieces of equipment used in a business and can usually be easily removed.

A universal agent in real estate is an agent who can act on behalf of a principal. This form of agency has unlimited power.

All parties, both buyer and seller, must be informed of any material defect; even if it is discovered after the contract has been formed per California Licensing Law.

The buyer doesn't need to know the sellers getting a divorce. Lead paint, and flooding, however, both must be disclosed (nationally). State laws differ on whether a buyer is entitled to know about deaths. In Texas, deaths from natural causes, suicides, or accidents unrelated to the property do not have to be disclosed. However, deaths related to the condition of the property or violent crime on the property must be disclosed. Other states impose a duty on a stigmatized property in which there has been a suicide or murder.

Tax liens are imposed by the federal, state, or local government based upon back property taxes that are due. Not only can these seriously impact your credit report, but until they're paid off, they can prevent you from selling the property. Tax liens are involuntary and usually specific. The important thing to remember is the government always gets paid first in terms of money distribution.

Duress is the unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable.

If demand increases more than supply does, we get an increase in price. If supply rises more than demand, we get a decrease in price. If they rise or decrease the same amount, the price remains the same.

The person who hires or appoints an agent is called the principal. In plain terms, the principals in a real estate sales transaction would be the buyer and the seller.

Dedication in property law means the donation of your land. Dedication would be considered voluntary, while the others are all involuntarily.

Eminent Domain is a term used to describe the right of the government to takeover privately owned real estate usually despite the owners’ wishes. This often happens for land that is required for infrastructure like highways, major pipelines, railroads etc. The fifth and fourteenth amendments of the U.S. Constitution permit the government to exercise its power of eminent domain. Read More Here

Carbon monoxide is an odorless, colorless, gas created from burning fuels. If the system is used correctly and with proper ventilation, gas is controlled. However, if not there can be immediate and serious health risks. If inhaled, causes red blood cells to deprive the body of oxygen. Extreme exposure cuts off oxygen and cause death within 30 mins or less. It's a good rule of thumb to use a CO Detector on every floor, especially with floors with an open flame.

Liquidated damages are most likely to be found in purchase contracts. Remember, liquidated damages are the amount agreed to in advance that will compensate a party for any loss they suffer on a purchase contract.

A testate estate means that the decedent or deceased person left a will. An intestate estate means that the decedent did not leave a will. If this occurs then a probate court will determine the distribution of his or her property to the appropriate parties.

Communication of acceptance, because once acceptance is communicated to the offeree an executory contract is formed. Acceptance with communication does not create a contract, all parties must sign the offer to create a valid contract.

Trusts can be created during an individual's lifetime, or they can be established following someone's death. A trust is a three-party relationship in which the first party, the trustor or settlor, transfers a property upon the second party for the benefit of the third party, the beneficiary. The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustee can be an individual or a financial institution such as a bank.

Frontage is the boundary between a plot of land or a building and the road onto which the plot or building fronts. Frontage may also refer to the full length of this boundary. This length is considered especially important for certain types of commercial and retail real estate, in applying zoning bylaws and property tax.

When a property is owned by joint tenants, the interest of a deceased owner automatically gets transferred to the remaining surviving owners. For example, if three joint tenants own a house and one of them dies, the two remaining tenants each obtain a one-half share of the property. This is called the right of survivorship.

When you hear life estate think of life and death. A life estate is an interest in real property which is held for the duration of the life of a designated person. It may be limited by the life of the person holding it or by the life of another person. This designated person is called a life tenant. This is kind of a trick question, in this case since Andrew created the life estate FOR his sister she is the life tenant, meaning it will last until her death. Read More Here

Economic life is the expected period of time during which an asset remains useful to the average owner. When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life.

The seller is usually entitled to keep the earnest money, because this is considered forfeiture of the contract. The only way the buyer can back out and get their earnest money back is if something happens with the inspection, appraisal, or they have a contract clause offering that protection.

Real Property is all things attached to the land and all the legal rights to it. Real property is usually things that are immovable such as the home itself or the buildings within the property line. There are some exceptions of items that can be moved but are still real property, like for businesses. Business-related items like mineral rights, or if you own a farming business it would include crops, barns, and stables. Those are all considered real property because it is part of the business.

Most real estate agents make money through commission. A commission is a fee paid to an agent for performing a transaction. A commission is usually a percentage of the property's selling price, although sometimes it can be a flat fee.

A warranty deed can include six forms of covenants for title. A warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer). The general warranty deed offers the grantee the most protection. With this type of deed, the grantor makes a series of legally binding promises (called covenants) and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land. Typically a warranty deed has five to six covenants.

Special use properties are properties that are there to "benefit the public," such as: Schools, Hospitals and Police Stations. These properties are described as different, because they are usually designed in a way that cannot fit in a typical zone. More examples include of religious facilities, nursing homes, assisted living facilities, hotels, truck terminals, meat processing plants, seed plants, and more. Think multiple buildings, large areas, etc.

It's the seller that must make the disclosure. It's real estate professionals' job to make sure all parties are in compliance with the law, but ultimately it's the sellers obligation.

The term “ad valorem” is Latin for “according to value,” which means that it is flexible and depends on the assessed value of an asset, product, or service. An ad valorem tax is charged by state and municipal governments and is based on the assessed value of a product or property. The most common ad valorem tax is the property tax, which is charged on real estate and personal property.

Often agencies compete with each other like any businesses due. They also sometimes work together on big projects and such. Brokerages connect using a multiple listing service (MLS). It connects listings together under one large umbrella.

Condominium often shortened to condo, is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. The answer is all the condominium owners in the form of percentage undivided interests because all condominium owners legally own a portion of all the facilities there.

The income approach is a real estate valuation method that uses the income the property generates to estimate fair value. It's calculated by dividing the net operating income by the capitalization rate.

When a purchaser signs a purchase agreement and gives the seller's broker a large check it is considered an offer. When a potential buyer is found, the agent must help them prepare an offer to purchase the property. The form itself is usually pre-drafted or preprinted. Forms vary from state to state. It is customary but not required for a buyer to provide a deposit when making an offer to purchase. This deposit is referred to as earnest money. It’s important the buyer understands the document as it becomes legally binding as soon as they sign it.

Appraisals are the best way to determine fair value. The overall appraisal process is based on a number of factors, such as its cost, the income it generates or its fair market value as compared to similar assets.

Dower and Curtesy was an old law. Oftentimes, back in the day, real property owned by a husband was typically not inherited by the wife nor was the wife's property inherited by her husband. Instead, the property would either go to the children or some other member of the husband or wife's line. Since the late 1800’s the law has been largely abolished, however some states still hold the law true. Today most states (Calirfornia included) abolished dower and curtesy and generally provide the same benefits regardless of sex.

An implied contract is a legally enforceable obligation that arises from one or more parties due to the parties actions, conduct, or circumstances. It has the same legal effect as an express contract, a contract between two or more parties that is willingly entered into and agreed upon verbally or in writing. An implied contract is presumed to exist but does not require written or verbal confirmation.

Intangible Deterioration. There is no such thing as intangible deterioration. All the others are forms of depreciation.

The process of valuing real estate is a challenging one. There are many different techniques and sources that can be used to arrive at an estimate of the cost. It requires extensive experience to achieve accurate results with all relevant factors present. Reconciliation is the final step in a real estate appraisal where the appraiser weighs each appraisal approach and determines which one is most relevant and should be used.

Remember, execution means the contract is closed and cannot be assigned. Only executory contracts can be assigned.

A double net lease is when two additional costs will be added to your base rent. Usually taxes and insurance costs are added to your monthly payment.

A property owner or homeowner can sue to obtain the required just compensation through the process of inverse condemnation. Inverse condemnation is the event in which the government takes private property but fails to pay compensation or just compensation. Read More Here

The rescission of a contract occurs when there is an agreement between the contracting parties to waive all the remaining duties and to terminate the contract. Basically, it would be returning the parties to the same legal position they were in before entering into the contract.

Acceleration is a term associated with mortgages. The acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if payments are not being made or there is a breach of contract. Usually, if a borrower isn’t making any payments on the property the acceleration clause will come into effect. Which demands immediate payment for the said property. It’s more of a legal clause that they add for protection to make sure borrowers aren’t taking advantage of them.

So in short, commingling refers to the act of mixing a client's funds with the broker’s own funds. Conversion is the unlawful misappropriation and use of a client’s funds by a licensee, see the difference? If your state allows commingling, and you misappropriate the funds, that's conversion. It's worth mentioning, both illegal commingling and conversion lead to criminal penalties and severe consequences.

Percentage lease which pertains to commercial real estate. A Percentage lease is a rental that is based on a percentage of the monthly or annual gross sales made on the premises. Percentage leases are common with large retail stores, especially in shopping centers.

Antitrust Laws are a collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. In retrospect, antitrust laws protect the consumer and are healthy for a stable economy. It’s important to know and understand the ones that deal with real estate as they directly relate to how you function as an agent.

Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. In our instance since the washer and dryer were included in the contract, the buyer may sue the seller for specific performance.

Under riparian rights, all landowners whose properties adjoin a river or stream, have the right to make reasonable use of it as it flows through or over their properties. The only limitation owners have is they cannot stop or prevent the flow of water. Riparian rights vary from state to state but most grant unrestricted use. Unrestricted use means owners have the right to access it for swimming, boating, and fishing, build docs, etc. Read More Here

In this example the answer is 3 months. Established business relationship means a relationship between a seller and a consumer based on….. “ the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months.” Per 16 CFR 310.2

A lease option is when a lease is combined with an option contract.

By definition, a servient estate is a parcel of land that is subject to an easement.

Commissions paid to real estate agents are negotiable, while many people believe that commission is always 6% it varies. That percentage is a percentage of the sale price of the home, also known as the selling price.

When a property owner dies and leaves no proper documented inheritance plan, the property ownership reverts to the government. Escheat ensures that property always has ownership. Escheat is part of the reason it's critical to have a will or when you are purchasing property you establish a clear right to survivorship. Read More Here

A general agency in real estate is where an agent has limited power. This is very common in property management situations.

A tenant who continues to occupy property after his or her rights have expired is said to occupying the property under an Estate at Sufferance.

Proration is the allocation or division of money items at the closing. Proration mainly comes into play when a seller prepays their home taxes for the year. Because they paid for the full year and are selling the property, the buyer will then owe the seller the remaining months of taxes.

The Federal Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more. You cannot have a listing that states looking for white people only. Or looking for married couples without children only. The interesting thing is though you can put language referring to sex. For example “Seeking female roommate.” However, it's only in cases of finding someone to share living spaces with. The “Mrs. Murphy” exemption provides that if a dwelling has four or fewer rental units and the owner lives in one of those units, that home is exempt from the FHA. “Mrs. Murphy” is the hypothetical elderly widow who has converted a portion of her home into a rental apartment to supplement her limited income.

The market data approach, also known as the sales comparison approach, involves comparing a property to other recently sold properties in the same area of similar size and condition. For residential real estate, the market data approach is typically regarded as the most accurate comparison method.

Novation is the procedure in which an original contract is terminated and replaced with a new one. The legal process of novation makes it possible to transfer all contract benefits and liabilities from previous parties to a set of new ones. In plain terms, it’s a simple way to replace an old contract with a new one while maintaining most or all of its original properties. When you see any name transfers just think novation.

The California Department of Real Estate (DRE) is a California state agency focused on safeguarding and promoting the public interest in real estate matters through licensure, regulation, education, and enforcement.

Appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates.

No replacement cost, is the cost of replacing an asset or property. Reproduction cost estimates how much it would cost to exactly reproduce an asset or property to exact specifications. Reproduction cost looks at the cost of creating an exact replica, and should not be confused with replacement cost, which looks at the cost of replacing an insured property with one of similar functionality. Reproduction cost is more specific.

Eminent domain is the government’s constitutional right to take over privately-owned real for public use (usually despite the owners’ wishes). Eminent domain for the federal government is protected under the Fifth Amendment of the Constitution, while for state governments, it is protected under the Fourteenth Amendment. Mr Jay’s example is an example of eminent domain. Read More Here

Easements are appurentent meaning generally pass along with ownership changes in real estate, but there are several ways of legally terminating them. Expiration, release, merging, and abandonment of the easement are all ways to legally terminate the applicable easement. The servient estate serves the dominant estate and cannot terminate the easement even through revocation.

When contracting parties have signed a contract and both parties have done all they promised to do, it is called an executed contract or executed agreement.

A comparative market analysis is an examination of the prices at which similar properties in the same area recently sold. Agents can use a comparative market analysis for their clients to help them determine a price when selling or buying a home.

Technically speaking, if there is a high occupancy rate (higher than usual), rent may be too low. The theory of supply and demand supports this. Property managers need to be aware of this as one of their responsibilities is to make sure the rental property is at max profitability.

The comprehensive plan, aka, master plan is a document that is prepared by local government to guide growth and development. It is generally a plan looking 10 to 20 years into the future for the area. These plans can be found at many levels, from neighborhoods, to cities and counties on up to the state level, all across the US.

Real estate liens are financial claims against property. Liens can be divided into two categories: Voluntary and Involuntary liens. Involuntary liens aren’t created by the homeowner. It is a claim imposed against a property without the consent of its owner. Involuntary liens are placed usually by government revenue authorities for unpaid duties or taxes. Read More Here

Eminent Domain is a term used to describe the right of the government to takeover privately owned real estate usually despite the owners’ wishes. This often happens for land that is required for infrastructure like highways, major pipelines, railroads etc. The fifth and fourteenth amendments of the U.S. Constitution permit the government to exercise its power of eminent domain.

There is no limit to the number of properties you can sell in California. While the rest of the following are prohibited practices.

Fee packing, equity stripping, and balloon payment abuses are all examples of predatory lending practices. Predatory lending typically refers to lending practices that impose unfair, deceptive, or abusive loan terms on borrowers. While these practices are wrong, unfortunately sometimes they are perfectly legal.

The habendum clause is the statement in a contract that describes the rights and interests being given. It almost always begins with the words "to have and to hold."

A release clause is a contract provision (typically in a blanket mortgage) that allows for the freeing of all or part of a property from a claim through a proportional or full amount of the mortgage being paid off.

A Sole Proprietorship is one individual or married couple in business alone. Sole proprietorship's are the most common form of business structure. This type of business is simple to form and operate and may enjoy greater flexibility of management, fewer legal controls, and fewer taxes. However, the business owner is personally liable for all debts incurred by the business. A sole proprietor may purchase property for both personal and business use through his own name or through the name of his business. However, only personal property used in direct relation to business operations is viewed as a tax-deductible business expense.

A condominium is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. A condominium is often shortened to condo. What is the difference between a condo and a co-op? Well, a condo is a private residence in a multiunit structure that includes ownership of commonly used property. A co-op is also a multiunit building, but that’s where the similarities end. A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit.

Blockbusting, also sometimes referred to as "panic selling," is a discriminatory and illegal real estate practice. Blockbusting is when real estate agents try to increase their sales and profit by suggesting that people leave their neighborhoods before property values decrease. They may base their statements about these declining values on the race, ethnicity, or economic class of some of the people living in the neighborhood.

The agent should tell the seller to disclose the termite treatment on the property disclosure. Whether legally required or not (depending on which state you live in), you should always tell the seller to disclose termite damage. Regardless of the legality, letting buyers know about pest issues upfront protects anyone from a lawsuit down the line. Even with an “as is” sale, you'll need to disclose any known termite damage on the property.

The Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more. Changing terms of a sale because someone is Chinese is clearly illegal and a violation of The Fair Housing Act.

Consideration is anything of legal value that is offered in exchange by one party for something of value from another party. Common forms of consideration include money, property in exchange, work or a promise to perform. Without consideration, a contract is not valid.

Remember DUST and your essential elements of value. Demand: This means the desire to buy and an ability to pay. Utility: The item satisfies a human need or desire; such as shelter, income, or recreation. Scarcity: Limited in supply, as supply diminishes, value increases. Transferability: Able to transfer from one owner to another.

When contracting parties have signed a contract and both parties have done all they promised to do, it is called an executed contract or executed agreement. It's worth noting, most real estate transactions require execution. A sales contract, for example, is executed when the seller has transferred title to the buyer and the buyer has paid the seller. Execution must occur to finalize the agreement; without execution, a transaction is incomplete and therefore doesn’t exist.

A blind offer in real estate is a purchase contract written by a buyer without seeing the property. This is common in commercial properties such as apartment complexes, and it’s not uncommon in multi-family homes such as duplexes and fourplexes. It’s not typical in single-family homes or apartments.

In this example the answer is 18 months. Established business relationship means a relationship between a seller and a consumer based on….. “ the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months.” Per 16 CFR 310.2

Most real estate sales contracts include contingency clauses, making them voidable. A voidable contract is a legal agreement between two parties that may be unenforceable for any number of reasons. If a contract has a contingency it's voidable. It still can be considered valid but only after the contingencies are met or no longer exist.

The lot and black method identifies land by reference to lot and block numbers appearing on maps or a plat map. The lot and block survey system is a method used in densely populated metropolitan areas, suburban areas and suburbs. It is sometimes referred to as the recorded plat survey system or the recorded map survey system.

Equal Credit Opportunity Act (ECOA) is a regulation that aims to give all legal individuals an equal opportunity to apply for loans. The act prohibits creditors and lenders from considering a consumer’s race, color, national origin, sex, religion or marital status in deciding whether to approve their credit application. This act protects consumers from being wrongfully discriminated. No matter what type of person applies for a loan they cannot be turned away due to factors that are not directly related to their credit.

The general warranty deed offers the grantee the most protection. General warranty deeds protect homeowners from stakes and claims from previous people, from the beginning of time to right now. It also protects homeowners from any potential encumbrances. A general warranty deed grants an undeniable fact that this property is coming with no liens and no heirs they could potentially lay claim to the piece of property. Read More Here

As a licensed real estate agent, it is important to make sure all clients are treated in the same fair and honest manner. There should be no differences in services provided based on one person to another.

A bit of a trick question. Voidable contracts MAY be valid, often they appear valid but are not. Remember, voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects. Since the question says “may be” valid it is voidable.

Weather-related issues and normal wear-and-tear are generally not included in a builder's home warranty. Other items that a builder's warranty may not cover include: Household appliances. Defects resulting from work conducted by the homeowner or anyone else after the builder's work is completed. No warranty covers damages caused by natural disasters.

There are three different main approaches that appraisers use while they make an appraisal. They are the Market Data Approach, Cost Approach, and Income Approach. The Market Data Approach is also commonly called the sales comparison approach. The Cost Approach is also referred to as summation. And lastly, the Income Approach, is also known as capitalization. Each method has its own set of benefits. When applied together, the various valuation methods provide the best estimate of the value of the income-producing real estate under evaluation.

A borrower is a mortgagor while the lender is the mortgagee. A mortgagee is an entity that lends money to a borrower (also known as a mortgagor) for the purpose of purchasing real estate.

States may require additional information, but federally at the minimum, all advertising for property or services must include the broker firm's name. This is all for all advertising, social media included.

The primary public land-use control is zoning. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. Deed restrictions are limitations to the use of the property imposed by a past or current owner and are usually legally bound forever.

Reverse mortgages can provide much-needed cash for seniors whose net worth is mostly tied up in the value of their home. In this instance age does in fact matter you must be at least 62 years or older to qualify for a reverse mortgage. There is no minimum credit score requirement for a reverse mortgage, primarily because the main thing lenders want to know is whether you can handle the ongoing expenses required to maintain the house. Lenders will, however, look to see if you're delinquent on any federal debt.

Real estate police power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals, and general welfare. The most common example of real estate police power is zoning.

The term is used very often in real estate. Equity is the difference between the market value of your home and the amount you owe the lender who holds the mortgage. Your equity is the money you'd receive after paying off the mortgage if you were to sell the home.

In this situation, the new offer cannot be accepted unless the seller's counteroffer is withdrawn or hypothetically rejected. Remember, if a new offer is accepted two valid contracts could exist, so the first step must be to withdraw the counteroffer.

The rectangular survey system consists of principal meridian lines that cover most states in the US, running north to south and baselines running east to west. These principal meridian lines are named or numbered to identify their location. Using those lines for references, quadrangles are formed, which are smaller squares identifiable by where they are located near the principal meridian and baseline. This process continues, creating a smaller and smaller grid that can be used to identify the specific location of any property.

Remember. A Dominant Estate is a parcel of real property that has an easement over another piece of property. A Servient Estate is a parcel of land that is subject to an easement.

A balloon loan is a mortgage which does not fully amortize over the term. Amortization is when payments divide into equal amounts for the duration of the loan. A balloon loan is different as not all payments are the equally divided and the most substantial payments are called Balloon payments.

The acceleration clause is a contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract.

If Aaron can't get to his property from a public road without crossing over his neighbor Ron's property he is landlocked. He needs an easement for ingress and egress over Ron's property to be able to enter and exit the property. Read More Here

Property tax is an ad valorem tax assessed on real estate by a local government and paid by the property owner. Public services for real estate owners are paid by real property tax.

Title III prohibits discrimination on the basis of disability in the activities of places of public accommodations. Public accommodations are businesses that are generally open to the public such as restaurants, movie theaters, and schools. Title III also prohibits discrimination for commercial facilities like privately owned, nonresidential facilities such as factories, warehouses, or office buildings. Point being, Title III impacts commercial and public accommodations and makes sure they comply with the ADA Standards.

In California, the Holden Act prohibits discrimination related to housing financing. The Holden Act is state specific. Within this Act are additional requirements that licensees who provide financing services post a fair lending notice within public view and also provide a copy of that notice to financing applicants.

Since the offer includes all the personal property as well, Mrs Thompson is required to do a package loan. A package loan is a real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a fully furnished condominium.

Per California License law the maximum paid out of the Real Estate Recovery Fund is $50,000 for each transaction; and $250,000 for any one licensee.

The statute of frauds requires certain types of contracts to be executed in writing. The statute covers contracts for the sale of land, agreements involving goods worth over $500, and contracts lasting one year or more.

It is permissible to attach legal descriptions to the contract rather than writing them into the contract itself, but they must be attached. This is common with sales contracts with extensive and detailed legal descriptions.

Fixing is the practice of setting the price of a good or service to make a particular price a standard. So in our terms, real estate fixing is when competing agents meet up and agree on the same commission rates. Typically agencies set their commission rates depending on the price of the property. Any agreement even if it just implied with other brokerages to set a standard commission rate is a violation of the antitrust laws.

An addendum is an attachment to a contract that modifies the terms and conditions of the original contract. An example of an addendum being used would be if the parties wanted to add something to the original document. For instance, an individual who is purchasing a house may not want to purchase all of the furniture that is being left behind. However, after thinking about it further, he changes his mind.

Usury is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Currently, most states have usury laws in place and set a cap on the maximum amount of interest a lender can charge. These rates can vary significantly by state and may differ depending on the type of financial product you’re using. Usury is a form of predatory lending.

Forgery refers to the false making or material alteration of a legal instrument with the specific intent to defraud anyone. It is illegal and real estate agents must be aware of the action.

It is customary but not required for a buyer to provide a deposit when making an offer to purchase. This deposit is referred to as earnest money. The amount is completely up to the agreement between the parties. There is no law stating an earnest deposit has to be a certain amount.

A timeshare is a property with a divided form of ownership or use rights. These properties are typically resort building units, in which multiple parties hold rights to use the property, and each owner of the same accommodation is allotted their period of time. They differ from regular condominiums as they typically are exclusively for vacations.

If a dispute is pending, the court will likely issue an injunction preventing Mr. Joe from cutting down the trees until they are entirely resolved. Injunctions can be used to protect interests in real property. A court ordered injunction can be used to prevent a harmful action, stop ongoing or repeated conduct, or force a defendant to take action to prevent harm.

Functional obsolescence refers to the loss of property value due to an obsolete design feature. Outdated plumbing would be considered functionally obsolete because it is outdated. Who determines what is obsolete or not? Usually the buyer or homeowners. If a neighborhood is filled houses with new bathrooms and/or new plumbing, and your's isn't, It would be considered functionally obsolete. Read More Here

The Unruh Civil Rights Act provides protection from discrimination by all business establishments in California, including housing and public accommodations. The term “business establishments” may include governmental and public entities as well.

Lead-Based Paint Disclosure Rule (Section 1018 of Title X) requires that potential buyers and renters of housing built prior to 1978 receive certain information about lead and lead hazards in the residence prior to becoming obligated to buy or rent, and provides the opportunity for an independent lead inspection for buyers. Sellers, landlords, and agents are responsible for compliance.

Void contracts are not contracts because they lack an essential element of a contract and are thus unenforceable. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects.

According to the law of supply and demand, the first property sold would have sold for the lowest price. Remember generally speaking, when the supply of houses goes down, the price goes up, and vice versa.

Holding earnest money is only legal with written authorization, and even then it's best to deposit it as soon as possible. Having verbal authority is not good enough, and in many states is considered illegal.

Receiving compensation from both the buyer and the seller is not an antitrust violation. Dual agency is when one real estate agent represents both the buyer and seller in a transaction. While it may seem ideal from an agent’s perspective, it can lead to some significant risks, which is why it is illegal in eight states. In most states, though, dual agency is legal, but state laws have measures in place to protect parties that use it. Still even in states where it is illegal it is not classified as an antitrust violation, while all the other examples are.

Leo should use Contribution. Contribution is most commonly applied to determine how renovation and property changes may affect the property’s overall cost. In this case, since the owner wants a feasibility study, contribution would need to be used. Swimming pools are a common contribution example. It's worth noting the cost doesn't always equal the value to the home. For example, a pool could add $5000 to the value of a home but cost $10,000 to build.

Service Contracts are agreements between a customer or client and a person or company who will be providing services. A listing agreement is a service contract between the seller and the broker, or brokerage company.

Puffing is an extravagant claim made by sellers in order to attract buyers. Puffing is usually common for a lot of sales people. Real estate agents included. It’s one of those things that occur often. It happens in ads, stores, and pretty much everywhere sales happen. Puffing is legal as long as the statements are not fraudulent. Read More Here

In an exclusive right to sell listing the agent gets paid no matter who sells the property, regardless of whether it’s the agent or the seller. Knowing this, it's safe to assume this was an exclusive right to sell listing.

The surface rights are the rights to use the surface of the earth. Subsurface rights are the rights to the natural resources lying below the earth's surface. Interestingly an owner may transfer rights without transferring the subsurface rights. For example, a landowner can sell his rights to an oil and gas company in his land but still can own the land itself.

Annually, whoever owns taxable property on January 1 (the lien date) becomes liable for a tax calculated at 1 percent of the “taxable” value of the property.

The primary public land-use control is zoning and issued by the government. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. The biggest difference is that the government does not write or enforce private controls but it does impose and enforce public controls like zoning.

A cash reserve fund is an account set aside by an individual or business to meet any unexpected future costs, as well as the future costs of upkeep. Property managers use these funds for variable expenses.

The execution date or date executed is the day the contract is signed. The effective date is the day the contract goes into effect. Both dates can both be found in a contract. In many instances, the execution and effective dates are the same; however, that is not the case in some circumstances. You might sign a lease today to move into an apartment, but you won’t be able to move in until the following week. The execution date might be today, but the effective date will be when you move into your brand new home. Many times, the execution date and effective date are the same, but again not always.

Don’t overthink this. He is no longer the listing agent, he MUST inform the caller that information. Anything else would be deemed unethical and potentially illegal.

The Gross Rent Multiplier is found by dividing the price of the property by its rent.

Percolation is the process of a liquid slowly passing through a filter. It's how coffee is usually made. For real estate, a percolation test is a test to determine the water absorption rate of soil in preparation for the building of a septic drain field or infiltration basin. The results of a percolation test are required to properly design a septic system.

Fixtures are personal property attached to the land to count as real property. Window blinds are screwed into the house, therefore they are considered a fixture in this example.

The overall appraisal process is based on a number of factors and appraisers usually use a combination of approaches but give weight to the most the most important. The income approach determines what a property generates in terms of income for its owner, that income, or potential for income. It is then used to calculate or identify the market value of the property. The income approach is primarily used for rental properties and this case would be given the most weight in the appraisal process.

The Superfund Amendments and Re-authorization Act of 1986 (SARA) was passed when the original act, CERCLA, expired in 1985. It amended the comprehensive environmental response, compensation, and liability act. The big change had to do with liability. When a property owner has been innocent of all involvement with a hazardous waste site, under certain circumstances, he may claim immunity from responsibility. In plain terms it allows truly innocent landowners to have immunity from legal liability. SARA also required EPA to revise the Hazard Ranking System to ensure that it accurately assessed the relative degree of risk to human health and the environment posed.

Under California law, sellers of homes built before 1960 must disclose known earthquake risks to buyers as part of the property sales process.

Closing is known by many names. Some areas of the country may call it settlement and transfer some may call it passing papers. The textbook name is for closing is closing.

An offer from a third party does not affect someone else's offer. A counteroffer by that offeree would affect an offer, however, as well as a cancellation or death of the offeror before the offer is accepted.

When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life. Economic life usually is shorter than physical life, as a structure generally will still physically exist but not be viable in the marketplace.

A non-exclusive buyer agency agreement allows buyers to hire more than one agent to find their home; however, buyers must inform each agent they work with that another agent is involved and whether they have shown them specific homes.

The principle of anticipation in appraisal is the principle that the value of property today is the present value of the sum of anticipated future benefits. It’s also worth noting that the principle of anticipation doesn’t always refer to monetary gain. It could also be emotional or mental gain.

The subordination clause in real estate establishes order of priorities of financial claims (liens). The subordination clause effectively makes the current claim number 1 to any existing claims that have already been recorded.

Disclosure statements, purchase contracts, and exclusive agency contracts are all legal documents but it is the listing agreement that clearly defines the relationship between the broker and seller.

Real estate has three physical characteristics that differentiate it from other assets in the economy: 1. Indestructibility meaning land cannot be destroyed or worn out. Its appearance may be altered but it always continues to exist. 2. Immobility meaning geographical location of the property remains the same & can never be changed, it is fixed. 3. Uniqueness or non-homogeneity meaning no parcels of real estate are exactly alike. Scarcity, improvements and permanence of investment are all economic characteristics of real estate.

Depreciation. Only the Cost Approach valuation process uses depreciation.

A satisfaction of mortgage is a document that confirms a mortgage has been paid off and details the provisions for the transfer of collateral title rights.