Using the California Legal Aspects of Real Estate Study Guide and related materials, we'll break down common pitfalls and solidify your understanding to help you ace your upcoming exams.
Tune in as we tackle these essential areas:
DRE & Licensing Insights:
- We'll clarify that the California Department of Real Estate (DRE) must investigate a complaint and file formal disciplinary action no later than three years after the licensee commits the violation.
- Understand the DRE's primary goals of public protection and efficient licensing/consumer services.
- Recall that the maximum payout from the Consumer Recovery Account is $50,000 for a single transaction.
- Differentiate between commingling (mixing personal and client funds) and conversion (illegally spending client funds).
- Review advertising regulations, including why ads by a licensee must disclose their licensed status (avoiding "blind ads").
Fair Housing & Ethical Practices:
- Revisit the Mrs. Murphy Exemption to the Fair Housing Act, which applies to owner-occupied one-to-four-family dwellings under specific conditions, allowing certain exemptions from the Act (but never discriminatory advertising).
- Understand what blockbusting is: inducing owners to sell by creating fear about protected classes moving into an area.
- Recall that housing for disabled residents MUST comply with the Fair Housing Act, although eviction is permissible if a tenant poses a direct threat to others.
- Review antitrust violations such as market or customer allocation, where competitors illegally agree to divide markets.
- Remember that subprime loans are not inherently predatory, though predatory lending often involves unfair and abusive loan terms.
Mastering Real Estate Finance:
- Identify the mortgagor as the borrower who uses a mortgage as a security instrument.
- Grasp the concept of a blanket mortgage, a loan secured by more than one collateral property.
- Understand that mortgage-backed securities are investment instruments collateralized by packaged mortgages.
- Crucially, the Closing Disclosure must be presented to a buyer within three business days before close of escrow.
- Recognize that the Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks for referrals for closing services.
- Clarify that a promissory note is secured by referencing a security instrument (like a mortgage or deed of trust).
- Learn about the power of sale clause, which allows a lender to take possession of a property without court approval in a nonjudicial foreclosure if a buyer defaults.
- Recall that the acceleration clause allows a lender to demand the entire loan amount due immediately upon default.
- Understand that the VA loan program is funded by a funding fee, as the VA guarantees loans rather than lending money directly.
- Remember that the Taxpayer Relief Act of 1997 created the capital gains exemption and allowed early IRA withdrawals for down payments, which some claim fueled the 2008 housing bubble.
- Review how to calculate the cost of points, where one point equals 1% of the loan amount.
- Recall that the FHA is the largest insurer of mortgages in the world and is funded by Mortgage Insurance Premiums (MIP) paid by borrowers.
Landlord-Tenant Law Essentials:
- Define an estate at will as a tenancy that allows occupancy with landlord consent and can be ended at any time by either party without notice.
- Understand the purpose of a demising clause in a lease, which grants the lessee temporary possession of a property.
Government Powers & Land Use:
- Identify the Superfund Amendments and Reauthorization Act (SARA) as the federal law that amended CERCLA, increased Superfund trust money, and established new environmental regulations.
- Recognize the Clean Air Act (CAA) as a federal law protecting against air pollution.
Contract Fundamentals:
- Reaffirm that a counteroffer is considered a rejection of the original offer.
Property Ownership & Transfer:
- California is technically a lien theory state, but primarily uses deeds of trust as the security instrument.
