1. Lesson 16: California Real Estate License Law Principles of California Real Estate

2. The Real Estate Law  California’s Real Estate Law: Statute adopted by legislature to regulate real estate profession.  Business & Professions Code sections 10000 to 10580

3. The Real Estate Law  California’s Real Estate Law: Statute adopted by legislature to regulate real estate profession.  Business & Professions Code sections 10000 to 10580 Protects public from incompetent, unethical, or dishonest agents.

4. Administration of Real Estate Law Dept. of Real Estate  Real Estate Law is administered by the Department of Real Estate (DRE). Department is a division of the Business and Transportation Agency.

5. Administration of Real Estate Law Dept. of Real Estate  Real Estate Law is administered by the Department of Real Estate (DRE). Department is a division of the Business and Transportation Agency.  Chief officer of the DRE is the Real Estate Commissioner.

6. Administration of Real Estate Law Commissioner  Real Estate Commissioner: appointed by the Governor

7. Administration of Real Estate Law Commissioner  Real Estate Commissioner: appointed by the Governor may not engage in real estate activities or have an interest in a real estate firm

8. Administration of Real Estate Law Commissioner  Real Estate Commissioner: appointed by the Governor may not engage in real estate activities or have an interest in a real estate firm must have been a real estate broker actively engaged in business in California for five years

9. Real Estate Commissioner:  grants and denies licenses  enforces the Real Estate Law Administration of Real Estate Law Commissioner’s duties

10. Real Estate Commissioner:  grants and denies licenses  enforces the Real Estate Law  issues rules and regulations to implement law  regulates the sale of subdivisions and business opportunities Administration of Real Estate Law Commissioner’s duties

11. Real Estate Commissioner:  grants and denies licenses  enforces the Real Estate Law  issues rules and regulations to implement law  regulates the sale of subdivisions and business opportunities  investigates non-licensees performing real estate activities  holds disciplinary hearings on Real Estate Law violations Administration of Real Estate Law Commissioner’s duties

12. Administration of Real Estate Law Advisory Commission  Real Estate Advisory Commission: appointed by the Governor 10 members, including 6 brokers and 4 members of the public

13. Administration of Real Estate Law Advisory Commission  Real Estate Advisory Commission: appointed by the Governor 10 members, including 6 brokers and 4 members of the public  Makes suggestions to Commissioner regarding policies and functions of the DRE.

14. Administration of Real Estate Law Attorney General  California Attorney General provides legal advice to Commissioner regarding the Real Estate Law.

15. Administration of Real Estate Law Attorney General  California Attorney General provides legal advice to Commissioner regarding the Real Estate Law.  Violations of the Real Estate Law prosecuted by district attorney of county in which they occur, not by state Attorney General.

16. When a License is Required  Anyone who acts or appears to act as a real estate broker or salesperson must have a real estate license.

17. When a License is Required Broker definition  The Real Estate Law defines a real estate broker as someone who engages in specified real estate activities: on behalf of another person, AND

18. When a License is Required Broker definition  The Real Estate Law defines a real estate broker as someone who engages in specified real estate activities: on behalf of another person, AND for compensation (or the promise of compensation).

19.  The real estate activities listed in the Real Estate Law’s broker definition include all of the following. When a License is Required Real estate activities

20.  Selling, buying, leasing, collecting rents from, or buying, selling, or exchanging leases on: real property, or business opportunities. When a License is Required Real estate activities

21.  Filing applications for the purchase or lease of federal lands. When a License is Required Real estate activities

22.  Soliciting borrowers or lenders, negotiating loans, promoting services in connection with loans secured by real property, or buying, selling, or exchanging real property securities. When a License is Required Real estate activities

23.  Listing, advertising, or offering real property or business opportunities for sale, lease, exchange, or financing. When a License is Required Real estate activities

24.  Engaging in the business of buying, selling, or exchanging 8 or more real property securities (e.g., land contracts or promissory notes) within one year. When a License is Required Real estate activities

25.  Collecting an advance fee to promote the sale or lease of real property or business opportunities. When a License is Required Real estate activities

26. When a License is Required Penalties for unlicensed activities  Penalty for an individual who acts as a real estate broker or salesperson without a license: a fine of up to $10,000, and imprisonment for up to six months

27. When a License is Required Penalties for unlicensed activities  Penalty for an individual who acts as a real estate broker or salesperson without a license: a fine of up to $10,000, and imprisonment for up to six months  Penalty for a corporation: $50,000 fine

28. Types of Licenses Broker’s license A broker’s license allows a person to:  perform the previously listed real estate activities on behalf of another person for compensation

29. Types of Licenses Broker’s license A broker’s license allows a person to:  perform the previously listed real estate activities on behalf of another person for compensation  operate a brokerage business

30. Types of Licenses Broker’s license A broker’s license allows a person to:  perform the previously listed real estate activities on behalf of another person for compensation  operate a brokerage business  employ salespersons as affiliated licensees to help him or her engage in real estate activities

31. Types of Licenses Broker’s license  A licensed broker who works for another broker rather than starting her own brokerage is sometimes called an associate broker.

32. Types of Licenses Broker’s license  A licensed broker who works for another broker rather than starting her own brokerage is sometimes called an associate broker. There is no special “associate broker’s license.”

33. Types of Licenses Broker’s license  A licensed broker who works for another broker rather than starting her own brokerage is sometimes called an associate broker. There is no special “associate broker’s license.” While working as an associate broker, a broker has essentially the same status as a salesperson.

34. Types of Licenses Salesperson’s license  A salesperson can engage in real estate activities only as a broker’s representative.

35. Types of Licenses Salesperson’s license  A salesperson can engage in real estate activities only as a broker’s representative.  A salesperson cannot represent members of the public directly.

36. Licensing Exemptions  The following aren’t required to have a real estate license even if they are performing activities covered by the broker definition.

37. Licensing Exemptions  A person buying or leasing property: for himself, or on behalf of a group to which he belongs (such as a partnership).

38. Licensing Exemptions  An attorney in fact authorized by a recorded power of attorney.

39. Licensing Exemptions  An attorney in fact authorized by a recorded power of attorney.  An attorney at law, in the performance of her duties as a lawyer.

40. Licensing Exemptions  A person acting under court order, such as: the executor or administrator of an estate a bankruptcy trustee a guardian

41. Licensing Exemptions  A person acting under court order, such as: the executor or administrator of an estate a bankruptcy trustee a guardian  A trustee selling property pursuant to the power of sale clause in a deed of trust.

42. Licensing Exemptions  An appraiser making an appraisal.

43. Licensing Exemptions  An appraiser making an appraisal.  An employee of a financial institution in regard to real property securities.

44. Licensing Exemptions  An appraiser making an appraisal.  An employee of a financial institution in regard to real property securities.  A licensed securities broker or dealer with respect to business opportunity transactions.

45. Licensing Exemptions  A cemetery authority or its authorized agent.

46. Licensing Exemptions  A cemetery authority or its authorized agent.  A secretary, bookkeeper, accountant, or other employee of a real estate broker: performing purely clerical duties not discussing price, terms, or condition of property

47. Licensing Exemptions  The resident manager of an apartment complex.

48. Licensing Exemptions  The resident manager of an apartment complex.  The manager of a hotel, motel, or trailer park.

49. Licensing Exemptions  The resident manager of an apartment complex.  The manager of a hotel, motel, or trailer park.  A person who negotiates the use of property for photographic purposes.

50. Summary Real Estate Law  Department of Real Estate  Real Estate Commissioner  Real Estate Advisory Commission  Broker  Salesperson  Associate broker  Licensing exemptions

51. License Qualifications Salesperson Five requirements for salesperson’s license: 1.At least 18 years old 2.Honest and truthful 3.Pass state exam 4.Pay license fee 5.Complete 3 courses (9 semester units)

52. License Qualifications Salesperson Course requirements for salesperson’s license  Before exam: Real Estate Principles

53. License Qualifications Salesperson Course requirements for salesperson’s license  Before exam: Real Estate Principles  Before exam or within 18 months after licensing: Real Estate Practice, and an elective

54. License Qualifications Broker Six requirements for broker’s license: 1. At least 18 years old 2. Honest and truthful 3. Pass state exam 4. Pay license fee 5. At least 2 years of experience as salesperson in last 5 years, or equivalent 6. Complete 8 courses (24 semester units)

55. Course requirements for broker’s license: Real Estate Practice Appraisal Economics or Accounting Real Estate Law Real Estate Finance 3 electives License Qualifications Broker

56. Licensing and Renewal Applying for a license  Applicant must apply for license within one year after date of passing the exam.

57. Licensing and Renewal Renewing a license  License valid for 4 years.

58. Licensing and Renewal Renewing a license  License valid for 4 years.  Licensee renews by: completing continuing education requirements submitting application paying renewal fee

59. Licensing and Renewal Renewing a license  License valid for 4 years.  Licensee renews by: completing continuing education requirements submitting application paying renewal fee  Doesn’t have to take state exam again.

60. Licensing and Renewal Continuing education  State law requires continuing education throughout real estate career.

61. Continuing Education Salesperson’s first renewal  12 hours of continuing education required for first renewal of salesperson’s license.

62. Continuing Education Salesperson’s first renewal  12 hours of continuing education required for first renewal of salesperson’s license.  This must include one 3-hour course on each of these subjects: ethics agency trust fund handling fair housing

63.  45 hours of continuing education required for first renewal of broker’s license. Continuing Education Broker’s first renewal

64.  45 hours of continuing education required for first renewal of broker’s license.  This must include: the 12 hours of courses required for a salesperson’s first renewal at least 18 hours of courses designated as consumer protection courses Continuing Education Broker’s first renewal

65.  45 hours of continuing education required for all subsequent renewals, for both salespersons and brokers. Continuing Education Subsequent renewals

66.  45 hours of continuing education required for all subsequent renewals, for both salespersons and brokers.  This must include: a 6-hour short course on the four mandatory topics at least 18 hours of consumer protection courses electives (consumer service courses) Continuing Education Subsequent renewals

67.  A licensee is not required to fulfill continuing education requirements if: at least 70 years old, and has been a licensee in good standing in California for at least 30 years. Continuing Education Exemption

68. Licensing and Renewal Late renewal  License expires if licensee misses the 4-year renewal deadline.

69. Licensing and Renewal Late renewal  License expires if licensee misses the 4-year renewal deadline.  Grace period: License can be renewed within 2 years after expiration if a penalty is paid.

70. Licensing and Renewal Late renewal  License expires if licensee misses the 4-year renewal deadline.  Grace period: License can be renewed within 2 years after expiration if a penalty is paid.  After 2-year grace period ends: all license rights are lost former licensee would have to take state exam again and apply for a new license

71. Summary License Qualifications and Renewal  Requirements for salesperson’s license  Requirements for broker’s license  License renewal  License expiration  Continuing education requirements First renewal Subsequent renewals

72. Other License Provisions Location of licenses  Salesperson may work only under a broker’s supervision.

73. Other License Provisions Location of licenses  Salesperson may work only under a broker’s supervision.  Broker has custody of the salesperson’s license while the salesperson works for him.

74. Other License Provisions Location of licenses  Salesperson may work only under a broker’s supervision.  Broker has custody of the salesperson’s license while the salesperson works for him.  Licenses of broker and affiliated licensees are kept at the broker’s main office.

75. Other License Provisions Transferring a license  Broker or salesperson may terminate an affiliation at any time.

76. Other License Provisions Transferring a license  Broker or salesperson may terminate an affiliation at any time.  If a salesperson transfers to a new broker, the new broker must notify the DRE within 5 days.

77.  If salesperson quits or is terminated, broker must return the salesperson’s license to her within 3 days. Other License Provisions Termination of salesperson’s license

78.  If salesperson quits or is terminated, broker must return the salesperson’s license to her within 3 days.  If salesperson is discharged for conduct subject to disciplinary action, broker must provide statement of facts to Commissioner. Other License Provisions Termination of salesperson’s license

79. Other License Provisions Termination of broker’s license  If a broker’s license is suspended or terminated: the licenses of affiliated licensees are canceled, and

80. Other License Provisions Termination of broker’s license  If a broker’s license is suspended or terminated: the licenses of affiliated licensees are canceled, and should be returned to the licensees so they can be transferred to other brokers.

81. Other License Provisions New location or name  Broker must notify the Commissioner if brokerage: moves to a new location adds a branch office

82. Other License Provisions New location or name  Broker must notify the Commissioner if brokerage: moves to a new location adds a branch office  Broker or salesperson must notify the Commissioner if his or her name changes.

83. Other License Provisions Fictitious business names  A broker may conduct business under a fictitious name if broker: is licensed under that name files fictitious name statement with county clerk publishes notice in a newspaper

84. Other License Provisions Fictitious business names  A broker may conduct business under a fictitious name if broker: is licensed under that name files fictitious name statement with county clerk publishes notice in a newspaper  Statement expires 5 years after December 31 of the year in which it was filed.

85. Other License Provisions Unpaid child support  DRE may not issue or renew license if applicant or licensee is on state’s list of persons who haven’t complied with court order regarding child support payments.

86. Other License Provisions Unpaid child support  DRE may not issue or renew license if applicant or licensee is on state’s list of persons who haven’t complied with court order regarding child support payments.  If licensee’s name is on list for 150 days, DRE may suspend license.

87. Special Licenses Corporations  A broker’s license may be issued to a corporation. License issued in the name of the firm.

88. Special Licenses Corporations  A broker’s license may be issued to a corporation. License issued in the name of the firm. One officer of the corporation licensed as the designated broker.

89. Special Licenses Corporations  A broker’s license may be issued to a corporation. License issued in the name of the firm. One officer of the corporation licensed as the designated broker. Designated broker must meet all qualifications for a broker’s license.

90. Special Licenses Restricted licenses  Commissioner may grant restricted license to licensee whose license has been suspended or revoked.

91. Special Licenses Restricted licenses  Commissioner may grant restricted license to licensee whose license has been suspended or revoked.  Restricted license may: have limited term restrict licensee to certain activities require licensee to affiliate with a particular broker

92. Special Licenses Prepaid rental listing service  Operator of a service that provides lists of available rentals must have: real estate broker’s license, or prepaid rental listing service license from DRE.

93. Special Licenses Out-of-state developments  To sell shares in an out-of-state timeshare, special permit from DRE required.

94. Special Licenses Out-of-state developments  To sell shares in an out-of-state timeshare, special permit from DRE required.  Lots in an out-of-state subdivision can be sold only if subdivision is registered with DRE.

95. Business Opportunities Business opportunity: The sale or lease of a business, including inventory, fixtures, and goodwill.

96. Business Opportunities Business opportunity: The sale or lease of a business, including inventory, fixtures, and goodwill.  Agent involved in sale of business opportunity: must have a real estate license, even if no real estate is involved.

97. Business Opportunities Business opportunity: The sale or lease of a business, including inventory, fixtures, and goodwill.  Agent involved in sale of business opportunity: must have a real estate license, even if no real estate is involved.  If shares of stock are involved, agent may also need a securities license.

98. Business Opportunities Franchise agreements  A franchise agreement is a common type of business opportunity.

99. Business Opportunities Franchise agreements  A franchise agreement is a common type of business opportunity.  Buyer pays a fee to operate a business under a franchisor’s brand name and marketing plan.

100. Business Opportunities Sales tax  Sale of business is subject to state sales tax if it involves transfer of personal property (such as inventory).

101. Business Opportunities Sales tax  Sale of business is subject to state sales tax if it involves transfer of personal property (such as inventory). Tax is seller’s responsibility, but buyer could face successor’s liability.

102. Business Opportunities Sales tax  Sale of business is subject to state sales tax if it involves transfer of personal property (such as inventory). Tax is seller’s responsibility, but buyer could face successor’s liability. Buyer should obtain Certificate of Clearance from Board of Equalization.

103. Business Opportunities Sales tax  Sale of business is subject to state sales tax if it involves transfer of personal property (such as inventory). Tax is seller’s responsibility, but buyer could face successor’s liability. Buyer should obtain Certificate of Clearance from Board of Equalization. Certifies that sales taxes have been paid.

104. Business Opportunities Bulk sales Bulk sale: Any sale, not in the ordinary course of business, of more than half of a seller’s inventory.

105. Business Opportunities Bulk sales Bulk sale: Any sale, not in the ordinary course of business, of more than half of a seller’s inventory.  Before bulk sale occurs, buyer must: record Notice of Intent to Buy notify the county tax assessor publish a notice in newspaper

106. Summary Special Licenses and Activities  Corporate license  Designated broker  Restricted license  Prepaid rental listing service  Business opportunity  Franchise agreement  Successor’s liability  Bulk sale

107. Disciplinary Action  Commissioner may take disciplinary action against licensee who violates the Real Estate Law.

108. Disciplinary Action Procedures  Procedures involved in disciplinary action: 1.Commissioner’s investigation 2.Written accusation 3.Administrative hearing

109. Disciplinary Procedures Commissioner’s investigation  Commissioner must investigate all verified written complaints against licensees.

110. Disciplinary Procedures Accusation  If investigation justifies formal action, Commissioner: files an accusation schedules administrative hearing

111. Disciplinary Procedures Accusation  If investigation justifies formal action, Commissioner: files an accusation schedules administrative hearing  Accusation: written statement of charges. Must be filed within 3 years after the violation.

112. Disciplinary Procedures Administrative hearing  Hearing conducted by an administrative law judge. Judge makes a proposed decision after hearing testimony.

113. Disciplinary Procedures Administrative hearing  Hearing conducted by an administrative law judge. Judge makes a proposed decision after hearing testimony. Commissioner accepts or rejects the proposed decision in making a formal decision.

114. Disciplinary Action Sanctions  If accusation proved, Commissioner may: suspend or revoke license, or impose fine of up to $250 for each day the license would have been suspended.  Maximum fine: $10,000

115. Disciplinary Action Appeal  Disciplined licensee may: request reconsideration from Commissioner, and/or appeal Commissioner’s decision to the superior court.

116. Disciplinary Action Temporary suspension  If license obtained by fraud, Commissioner may suspend license even before a hearing is held.

117. Disciplinary Action Temporary suspension  If license obtained by fraud, Commissioner may suspend license even before a hearing is held.  Suspension effective only until hearing is held and Commissioner makes final decision.

118. Disciplinary Action Prosecution and civil liability  Licensee disciplined by Commissioner may also face: criminal prosecution by county prosecutor civil suit by an injured party

119. Disciplinary Action Grounds  Grounds for disciplinary action include—but are not limited to—any of the following violations.

120. Disciplinary Action Grounds  Misrepresentation: Knowingly making false statements or failing to disclose material facts to a principal.

121. Disciplinary Action Grounds  False advertising or running blind ads. Blind ad: An advertisement placed by a real estate licensee that does not include a licensee designation and broker’s name.

122. Disciplinary Action Grounds  Acting as a dual agent without the consent of both parties.

123. Disciplinary Action Grounds  Commingling general funds with trust funds.

124.  Being convicted of a felony or misdemeanor involving moral turpitude. Disciplinary Action Grounds

125.  Making a secret profit on a transaction. Disciplinary Action Grounds

126.  Performing real estate duties incompetently or negligently. Disciplinary Action Grounds

127.  Engaging in discrimination, such as blockbusting or steering. Disciplinary Action Grounds

128.  As a broker: failing to exercise adequate supervision over affiliated licensees, or employing unlicensed persons. Disciplinary Action Grounds

129. Real Estate Fund  All license fees are placed in the Real Estate Fund.

130. Real Estate Fund  All license fees are placed in the Real Estate Fund.  Portions of this fund are earmarked for: the Education and Research Account the Recovery Account

131. Real Estate Fund Recovery account  Recovery Account is used to reimburse parties injured by a real estate agent’s: fraud misrepresentation deceit conversion of trust funds

132. Recovery Account Requirements  Injured party must: obtain a civil judgment against the agent, and show that the agent has no funds or assets that can be seized to pay the judgment.

133.  Recovery Account will pay: up to $20,000 for any one transaction up to $100,000 for any one licensee Recovery Account Limitations

134.  Recovery Account will pay: up to $20,000 for any one transaction up to $100,000 for any one licensee  Agent’s license suspended until the amount paid out is repaid to the Recovery Account with interest. Recovery Account Limitations

135. Summary Disciplinary Action  Grounds for disciplinary action  Sanctions  Appeal  Real Estate Fund  Recovery Account

136. Trust Accounts  Funds that real estate brokers hold in trust for clients: good faith deposits tenant security deposits collected rents advance fees

137. Trust Accounts  Funds that real estate brokers hold in trust for clients: good faith deposits tenant security deposits collected rents advance fees Advance fees: Fees a seller might pay in advance for expenses associated with a listing.

138. Trust Accounts Separate from general account  Broker must maintain one or more trust accounts to keep trust funds separate from broker’s own money.

139. Trust Accounts Separate from general account  Broker must maintain one or more trust accounts to keep trust funds separate from broker’s own money.  Trust accounts should be: opened in the broker’s name as licensed specially designated as trust accounts

140. Trust Accounts Deadline for deposit  Funds should be deposited in trust account no later than the third business day after they’re received.

141. Trust Accounts Deadline for deposit  Funds should be deposited in trust account no later than the third business day after they’re received.  Broker may pass a check directly from a principal to a third party or another principal without putting it in trust account first. Check should still be recorded in the broker’s trust funds records.

142. Trust Accounts Receipt by salesperson  When trust funds are given to a salesperson, the salesperson should immediately: deliver the funds to her broker, or deposit the funds into her broker’s trust account.

143. Trust Accounts Good faith deposits  Exception to rule: Good faith deposit check can be held uncashed until buyer’s offer is accepted.

144.  Before seller accepts offer: good faith deposit belongs to the buyer Trust Accounts Good faith deposits

145.  Before seller accepts offer: good faith deposit belongs to the buyer must be returned to buyer if he demands it Trust Accounts Good faith deposits

146.  After offer accepted: broker may hold check uncashed only with seller’s written authorization Trust Accounts Good faith deposits

147.  After offer accepted: broker may hold check uncashed only with seller’s written authorization no part of the deposit can be refunded without seller’s written permission Trust Accounts Good faith deposits

148.  If transaction falls through and parties dispute who is entitled to the deposit: Broker files interpleader action and turns funds over to the court. Trust Accounts Good faith deposits

149.  If transaction falls through and parties dispute who is entitled to the deposit: Broker files interpleader action and turns funds over to the court. Court decides which party gets the deposit. Trust Accounts Good faith deposits

150. Trust Accounts Commingling  Commingling: Illegally mixing trust funds with personal funds.

151. Trust Accounts Commingling  Commingling: Illegally mixing trust funds with personal funds.  Conversion: Appropriating client funds for a broker’s own purposes. Conversion is a basis for theft charges.

152.  Funds in trust account should always equal the broker’s trust fund liability. Shortage or overage is a violation of the Real Estate Law. Trust Accounts Commingling

153.  Funds in trust account should always equal the broker’s trust fund liability. Shortage or overage is a violation of the Real Estate Law.  Exception: Broker may keep up to $200 of her own funds in a trust account to pay bank’s service charges. Trust Accounts Commingling

154.  If broker is owed a commission from trust funds, he may withdraw it directly from the trust account. Trust Accounts Commingling

155.  If broker is owed a commission from trust funds, he may withdraw it directly from the trust account.  Other expenses cannot be paid directly out of trust account. Example: salesperson’s commission Trust Accounts Commingling

156. Trust Accounts Interest-bearing accounts  Trust account can’t be an interest-bearing account, unless the owner of the trust funds requests that.

157. Trust Accounts Interest-bearing accounts  Trust account can’t be an interest-bearing account, unless the owner of the trust funds requests that.  Interest on trust account can’t accrue to the broker.

158. Trust Accounts Withdrawals  Trust accounts must be set up with the broker as trustee.

159. Trust Accounts Withdrawals  Trust accounts must be set up with the broker as trustee.  Broker may authorize withdrawals by: affiliated licensees unlicensed employees covered by a bond equaling the amount held in trust

160. Trust Accounts Trust account records Broker’s records must include: trust fund receipts and disbursements

161. Trust Accounts Trust account records Broker’s records must include: trust fund receipts and disbursements balance of each trust account

162. Trust Accounts Trust account records Broker’s records must include: trust fund receipts and disbursements balance of each trust account receipts and disbursements affecting each client or customer’s account

163. Trust Accounts Trust account records Broker’s records must include: trust fund receipts and disbursements balance of each trust account receipts and disbursements affecting each client or customer’s account balance owed to each client or customer

164. Trust Accounts Trust account records Broker’s records must include: trust fund receipts and disbursements balance of each trust account receipts and disbursements affecting each client or customer’s account balance owed to each client or customer  Receipts and disbursements must be in chronological order.

165.  Trust account records must be kept for at least 3 years after the date of closing. Trust Accounts Trust account records

166.  Trust account records must be kept for at least 3 years after the date of closing.  Records are subject to inspection by the Commissioner. Trust Accounts Trust account records

167. Recordkeeping  Other documents must also be available for 3 years after closing date (or listing date, if sale doesn’t close).

168. Recordkeeping 3-year requirement  Three-year requirement applies to: listing agreements deposit receipts

169. Recordkeeping 3-year requirement  Three-year requirement applies to: listing agreements deposit receipts rent collection receipts bank deposit slips

170. Recordkeeping 3-year requirement  Three-year requirement applies to: listing agreements deposit receipts rent collection receipts bank deposit slips canceled checks and supporting papers agency disclosure statements

171. Recordkeeping 3-year requirement  Three-year requirement applies to: listing agreements deposit receipts rent collection receipts bank deposit slips canceled checks and supporting papers agency disclosure statements transfer disclosure statements property management agreements

172. Recordkeeping 4-year requirement  Records that must be kept for 4 years: mortgage loan disclosure statements real property security statements

173. Recordkeeping Broker-salesperson agreement  A broker-salesperson agreement must be: in writing kept on file at broker’s office retained for reasonable time after termination of the relationship

174. Recordkeeping Copies to signators  An agent must provide each client or customer who signs a document with a copy.

175. Recordkeeping Broker’s review  Broker must review documents prepared or signed by affiliated licensees.

176. Advertising  False advertising and other violations of advertising laws are: violations of the Real Estate Law misdemeanors

177. Advertising Blind ads Blind ad: An advertisement placed by a real estate agent that does not: include the broker’s name, and/or state that it was published by a real estate licensee.

178. Advertising Blind ads Blind ad: An advertisement placed by a real estate agent that does not: include the broker’s name, and/or state that it was published by a real estate licensee.  Blind ads are illegal.

179.  If a licensee is listing her own property for sale, she doesn’t need to include her broker’s name. Ad still must state that she is a real estate licensee. Advertising Blind ads

180. Advertising Loans and notes  Ads for loan products must be approved by the DRE before publication.

181. Advertising Loans and notes  Ad for a promissory note: can’t promise a yield or return different from the rate specified on the note,

182. Advertising Loans and notes  Ad for a promissory note: can’t promise a yield or return different from the rate specified on the note, unless it also reveals the discount at which the note is being sold.

183.  Ad for a loan may not: use a phrase like “guaranteed” without describing how the loan is secured Advertising Loans and notes

184.  Ad for a loan may not: use a phrase like “guaranteed” without describing how the loan is secured imply that the loan:  can be approved over the telephone  is endorsed by a government agency Advertising Loans and notes

185. Advertising Inducements  If attendance at a sales presentation is required in order to receive a gift or prize, those terms must be disclosed.

186. Advertising Inducements  If attendance at a sales presentation is required in order to receive a gift or prize, those terms must be disclosed.  If an inducement is given to one party in a transaction, that’s a material fact that must be disclosed to all parties.

187. Advertising Inducements  If attendance at a sales presentation is required in order to receive a gift or prize, those terms must be disclosed.  If an inducement is given to one party in a transaction, that’s a material fact that must be disclosed to all parties.  Inducements are always forbidden in loan transactions.

188. Summary Trust Funds and Recordkeeping  Trust account  Deadline for deposit  Good faith deposit check  Commingling  Recordkeeping requirements  Blind ad

189. Antitrust Laws  Antitrust laws limit anticompetitive behavior in the marketplace.

190. Antitrust Laws  Antitrust laws limit anticompetitive behavior in the marketplace.  The primary antitrust law is the federal Sherman Act, passed in 1890.

191. Antitrust Laws  Antitrust laws limit anticompetitive behavior in the marketplace.  The primary antitrust law is the federal Sherman Act, passed in 1890.  1950 Supreme Court case decided that the Sherman Act applies to real estate activities.

192. Antitrust Laws Penalties  Penalties for Sherman Act violations: Individual: fine of up to $350,000, and/or 3 years of imprisonment. Corporation: fine of up to ten million dollars.

193. Antitrust Laws Violations  Three main categories of antitrust law violations: price fixing group boycotts tie-in arrangements

194. Antitrust Laws Price fixing Price fixing: The cooperative setting of prices by two or more competitors.

195. Antitrust Laws Price fixing  Agents from different brokerages should never discuss commission rates.

196. Antitrust Laws Price fixing  Agents from different brokerages should never discuss commission rates.  Broker may discuss commission rates with: affiliated licensees, or another broker if it’s in connection with a commission split

197.  A real estate agent should never tell a client that a commission rate is non-negotiable. Antitrust Laws Price fixing

198.  A real estate agent should never tell a client that a commission rate is non-negotiable.  Preprinted forms that specify a particular commission rate are prohibited. Antitrust Laws Price fixing

199. Antitrust Laws Group boycotts Group boycott: An agreement by two or more competitors to exclude another competitor from the marketplace.

200. Antitrust Laws Tie-in arrangements Tie-in arrangement: An agreement to sell one product only on the condition that the buyer also purchases a different (or tied) product from the seller.

201. Summary Antitrust Laws  Sherman Act  Price fixing  Group boycotts  Tie-in arrangements