California · state portion

California real estate law vocabulary

25 terms, defined plainly. Where a term is commonly confused with another, the definition says so — that confusion is usually the wrong answer.

Salesperson (California)

California's entry-level licence — correctly 'salesperson', not Florida's 'sales associate' or Texas's 'sales agent'. A salesperson must be employed by and act under a licensed broker.

DRE and the Real Estate Commissioner

The Department of Real Estate, headed by the Real Estate Commissioner, regulates California licensees under Business and Professions Code Division 4 and the Commissioner's Regulations (Title 10 CCR). California has a COMMISSIONER, not a commission that adopts rules.

Single combined exam

California's salesperson exam is ONE 150-question test written and administered by the DRE itself — three hours, pass at 70% (105 correct), four choices per item. No separately scored national and state portions.

Three business days (trust funds)

A broker must place trust funds with the owner of the funds, into a neutral escrow depository, or into the broker's trust account within THREE BUSINESS DAYS of receipt — B&P 10145 and Regulation 2832.

Commingling vs conversion

Commingling is mixing trust funds with the broker's own money, complete the moment the deposit is made. Conversion is actually applying those funds to the broker's own use. The exam tests them as separate violations.

Agency disclosure: disclose, elect, confirm

California's three-step agency process for residential property of one to four units, using the 'Disclosure Regarding Real Estate Agency Relationships' form. Confirmation is made in or with the purchase agreement.

Dual agency (California)

Lawful only with the informed WRITTEN consent of both parties. A dual agent must not reveal either party's willingness to move on price without permission. California has no transaction-broker status.

Transfer Disclosure Statement (TDS)

The seller's disclosure for residential property of one to four units. Court-supervised transfers such as probate sales are exempt. Delivered after the offer is signed, it carries a three-day right to terminate on personal delivery.

Natural Hazard Disclosure (NHD)

Discloses whether the property sits in designated statutory hazard zones — flood, fire, seismic. It identifies zones; it never certifies that a property is safe.

Three-year death rule

A death on the property must be disclosed only if it occurred within the preceding three years. Separately, an occupant's HIV or AIDS status must NEVER be disclosed, whatever the seller says.

Visual inspection duty

A licensee must make a reasonably competent and diligent visual inspection of residential property of one to four units and disclose material facts it reveals. It covers reasonably accessible areas only, and a seller cannot waive the licensee's own duty.

Consumer Recovery Account

California's fund paying claimants holding an unsatisfied judgment against a licensee for acts in a licensed transaction. A payment brings AUTOMATIC SUSPENSION of that licensee until repaid with interest.

Desist and refrain order

The Commissioner may issue one to stop conduct immediately, BEFORE any hearing. Suspension and revocation require the formal hearing process first.

Deed of trust (three parties)

California's standard security instrument: trustor (borrower), beneficiary (lender), and trustee holding bare legal title with a power of sale. That power enables NON-JUDICIAL foreclosure by trustee's sale, beginning with a recorded notice of default.

Anti-deficiency protection

California bars a deficiency judgment on purchase-money loans secured by owner-occupied dwellings of one to four units. It does not extend to commercial or investment lending.

Community property

California IS a community-property state and recognises community property WITH RIGHT OF SURVIVORSHIP as a distinct vesting, adding survivorship to community property's basis treatment. California does NOT recognise tenancy by the entirety.

Proposition 13

One percent base property tax rate on assessed value, with assessed value rising no more than two percent a year unless there is a change of ownership or new construction. A supplemental assessment bills the difference after a purchase.

Documentary transfer tax

California's county-level tax on recorded conveyances, calculated on the consideration paid.

Subdivision Map Act vs Subdivided Lands Act

The Map Act governs the physical division of land and local map approval. The Subdivided Lands Act is the DRE-administered consumer-protection statute requiring a PUBLIC REPORT before subdivided interests are offered. The exam swaps them deliberately.

Davis-Stirling Act

Governs California common interest developments — condominiums, planned developments and stock cooperatives — including the association and its governing documents. CC&Rs are private restrictions running with the land, enforced by the association rather than by government.

Net listing

PERMITTED in California, but the licensee must disclose the exact amount of profit before the principal becomes bound. An exclusive listing must also carry a definite termination date.

Advance fee

A fee collected before services are rendered to promote a sale or lease. California requires the materials to be submitted to the Commissioner in advance of use, and the funds are trust funds.

135 hours

California's pre-licence education for a salesperson: three college-level courses totalling 135 hours — Real Estate Principles, Real Estate Practice, and one approved elective.

CLTA vs ALTA title policy

A CLTA standard policy covers matters of record. An ALTA extended policy adds off-record risks a survey or inspection would reveal, such as boundary and occupancy problems.

Adverse possession (California)

Requires open, notorious, hostile and continuous possession for the statutory period AND payment of the property taxes throughout. The tax-payment element is the one candidates forget.