California Real Estate Broker Cheat Sheet

Property Ownership + Land Use

15% of exam
Estates + Vesting Encumbrances + Liens Land Use Controls California Property Taxes Property Tax Dates

Laws of Agency + Fiduciary Duties

17% of exam
Agency Types + Creation Fiduciary Duties Agency Disclosure Timing Fiduciary vs Third-Party Duty

Valuation + Financial Analysis

14% of exam
Valuation Formulas Principles of Value Depreciation + Obsolescence Value Approach Picker

Financing

9% of exam
Loan Instruments + Clauses Financing + Credit Laws Loan Types + Programs Foreclosure Path

Transfer of Property

8% of exam
Deeds + Title Escrow + Closing Grant vs Quitclaim CLTA vs ALTA

Practice + Mandated Disclosures

25% of exam
Trust Fund Rules Trust Fund Destination Supervision + Office Rules Advertising + Identification Fair Housing Laws Property Management + Rentals DRE Discipline + Recovery Which Disclosure

Contracts

12% of exam
Contract Essentials + Status Listing + Compensation Rules Purchase Contract Rules Listing Agreement Picker

Quick Facts

Exam CA DRE Broker
Questions 200 multiple choice
Time 4 hours
Pass 75% = 150/200
Choices Four per question
Exam fee $150 (re-exam $150)
License fee $450 original broker license
Pass rate 47% FY 2025-26
Education 8 courses, 360 hours
Experience 2 years salesperson
Blueprint RE 425 Rev. 6/25
Score report Only failures get scores

Property Tax Dates OW

No Darn Fooling Around: Nov, Dec, Feb, Apr
Nov 1: first installment due Dec 10: first delinquent Feb 1: second installment due Apr 10: second delinquent

Lands Act vs Map Act OW

Subdivided Lands Act

DRE administers
Public report required
Protects buyers

Subdivision Map Act

City or county
Tentative and final maps
Physical design
Selling versus dividing

Estates + Vesting OW

Fee simple Most complete ownership
Life estate Ends at measuring life
Severalty Sole owner
Joint tenancy Equal shares, survivorship
Tenancy in common Unequal shares, heirs inherit
Community property Spouses, equal halves
CP with survivorship Avoids probate CA
Tenancy in partnership Partners hold business realty
Leasehold Possession without ownership

Joint Tenancy Unities OW

PITT: possession, interest, time, title
Possession: equal right Interest: equal share Time: same moment Title: same document

Joint Tenancy vs Community Property OW

Joint tenancy

Four unities required
Right of survivorship
Any two people

Community property

Spouses only
Equal halves
Half is willable
Survivorship versus spousal share

Encumbrances + Liens OW

Easement appurtenant Runs with the land
Easement in gross Personal, no dominant tenement
Encroachment Unauthorized physical intrusion
License Revocable personal permission
CC&Rs Private deed restrictions
Mechanic's lien Unpaid labor or materials
Lis pendens Notice of pending lawsuit
Judgment lien Recorded abstract, 10 years
Homestead $300k-$600k base, indexed

Land Use Controls OW

Police power Zoning, no compensation owed
Eminent domain Taking with just compensation
Escheat No heirs, state takes
Variance Exception to zoning
Conditional use permit Special use allowed
Nonconforming use Legal before zoning changed
Downzoning Reduces permitted intensity
CEQA Environmental impact review
Subdivided Lands Act DRE public report
Subdivision Map Act Local map approval
Williamson Act Farmland tax relief
Coastal Commission Coastal development permits

California Property Taxes OW

Proposition 13 1% base, 2% cap
Reassessment Sale or new construction
Proposition 19 Base transfer for seniors
Supplemental bill Follows a reassessment
Homeowner exemption $7,000 assessed reduction
Lien date January 1 yearly
Installments due November 1, February 1
Delinquent after December 10, April 10
Documentary transfer tax $0.55 per $500
Mello-Roos CFD special tax
1915 Bond Act Assessment district bonds

Fiduciary Duties AG

OLDCAR: obedience, loyalty, disclosure, confidentiality, accounting, care
O: obedience L: loyalty D: disclosure C: confidentiality A: accounting R: reasonable care

Fiduciary vs Third-Party Duty AG

To your principal

Utmost care, loyalty
Confidentiality
Full disclosure

To other party

Honesty, fair dealing
Disclose material facts
No loyalty owed
Loyalty only to client

Agency Types + Creation AG

Special agent One deal, limited authority
General agent Ongoing, property manager
Universal agent Broad power of attorney
Express agency Stated written agreement
Ratification Approved after the act
Estoppel Conduct implies authority
Ostensible agency Principal's conduct creates it
Coupled with interest Principal cannot revoke
Subagent Serves the same principal

Agency Three Steps AG

Disclose, Elect, Confirm
Disclose: deliver the form Elect: choose the role Confirm: state in contract

Fiduciary Duties AG

Obedience Follow lawful instructions
Loyalty Client interest first
Disclosure Reveal all material facts
Confidentiality Protect bargaining position
Accounting Track funds and documents
Reasonable care Competent, diligent service
Third-party duty Honesty and fair dealing
Visual inspection 1-4 units, accessible areas
Inspection suit limit 2 years from possession
Secret profit Undisclosed extra compensation

Agency Disclosure Timing AG

Listing agent Before signing listing agreement
Buyer's agent Before buyer signs offer
Seller's copy Before presenting the offer
Confirmation In or with contract
Property scope Residential and commercial
Leases covered Longer than one year
Dual agency Written consent from both
Price confidentiality Never reveal without permission
Buyer agreement deadline By offer execution

Elements of Value VA

DUST: demand, utility, scarcity, transferability
Demand: buyers want it Utility: serves a purpose Scarcity: limited supply Transferability: title can pass

Cap Rate vs GRM VA

Cap rate

Uses net income
Value = NOI/rate
Expense sensitive

GRM

Uses gross rent
Price / rent
Ignores expenses
Net versus gross

Value Approach Picker VA

Income producing property → Income approach ( Capitalize NOI )
New or special purpose → Cost approach ( Land added separately )
Single-family resale → Sales comparison ( Adjust the comparables )
Fast rent screen → Gross rent multiplier ( Ignores expenses )
Vacant land → Sales comparison ( Highest and best use )
Insurance replacement value → Cost approach ( Excludes the land )

Valuation Formulas VA

Cap rate NOI / value
Value NOI / cap rate
NOI Effective income - expenses
Effective gross income Gross income - vacancy
GRM Price / monthly rent
GIM Price / annual income
Cost approach Cost - depreciation + land
Age-life depreciation Effective age / economic life
Equity Value less liens
Commission Price x rate
Seller net Price less costs, loans
Profit percent Gain / original cost

Highest and Best Use VA

Legal, physical, feasible, most productive
Legally permissible Physically possible Financially feasible Maximally productive

Principles of Value VA

Substitution Cheapest equivalent sets value
Conformity Similar uses maximize value
Progression Better neighbors raise value
Regression Worse neighbors lower value
Contribution Value an improvement adds
Anticipation Future benefits drive value
Highest and best use Greatest net land return
Plottage Assemblage adds value
Change Value is never static
Supply and demand Scarcity lifts price

Depreciation + Obsolescence VA

Physical deterioration Wear, age, damage
Functional obsolescence Bad layout or design
External obsolescence Off-site cause, incurable
Curable Cost less than gain
Incurable Fix costs exceed benefit
Effective age Condition, not actual age
Economic life Years improvement adds value
Accrued depreciation Total loss from new

Trust Deed vs Mortgage FI

Deed of trust

Three parties
Power of sale
No post-sale redemption

Mortgage

Two parties
Judicial foreclosure
Redemption allowed
Trustee versus court

Foreclosure Path FI

Deed of trust default → Trustee's sale ( Nonjudicial and faster )
Notice of default recorded → 3-month reinstatement ( Cure stops the sale )
Notice of sale given → 20 days minimum ( Published, posted, mailed )
Five days before sale → Reinstatement ends ( Full payoff still works )
Lender wants deficiency → Judicial foreclosure ( Court supervised )
After judicial sale → Redemption period ( 3 months or year )

Loan Instruments + Clauses FI

Promissory note Evidence of the debt
Deed of trust Trustor, trustee, beneficiary
Mortgage Two parties, judicial foreclosure
Hypothecation Pledge, keep possession
Acceleration clause Whole balance due now
Alienation clause Due on sale
Subordination Lien accepts junior position
Assumption Buyer takes personal liability
Subject to No buyer liability
Novation New party replaces old
Reconveyance Trustee clears paid loan
Prepayment penalty Charge for early payoff

Financing + Credit Laws FI

TILA / Reg Z Discloses cost of credit
Loan Estimate Within 3 business days
Closing Disclosure 3 days before signing
Rescission right 3 days, refinance only
RESPA Settlement services, no kickbacks
ECOA No credit discrimination
MLDS Broker disclosure, 3 days
Article 7 reach First <$30k, junior <$20k
Article 7 commission 5%, 10%, or 15%
Article 7 costs 5% or $390, $700 cap
Usury limit 10% for nonexempt lenders
Seller carryback Financing disclosure required

Loan Types + Programs FI

Conventional No government backing
FHA Insured, low down payment
VA Guaranteed for veterans
CalVet State buys, resells veteran
CalHFA First-time buyer assistance
ARM Index plus margin adjusts
LTV Loan / value ratio
PMI Conventional low-down insurance
Hard money Private equity-based loan
AITD Wraparound seller financing
Blanket loan Many parcels, release clause
Impound account Taxes and insurance reserve

Grant vs Quitclaim TR

Grant deed

Two implied warranties
No prior conveyance
No hidden encumbrances

Quitclaim deed

No warranties at all
Releases what exists
Clears clouds
Warranty versus release

Deeds + Title TR

Grant deed Two implied warranties
Quitclaim deed Releases interest, no warranty
Trustee's deed Issued after trustee's sale
Sheriff's deed Issued after judicial sale
Gift deed Love and affection
Valid deed Written, signed, delivered, accepted
Acknowledgment Notarized, needed to record
Recording Constructive notice to all
Chain of title Successive ownership record
Cloud on title Claim clouding ownership
CLTA Standard, record plus forgery
ALTA Extended, adds physical risks

CLTA vs ALTA TR

CLTA standard

Matters of record
Forgery, incompetence
No survey

ALTA extended

Adds physical inspection
Parties in possession
Unrecorded easements
Record versus off-record

Escrow + Closing TR

Escrow Neutral dual agent
Valid escrow Binding contract, conditional delivery
Escrow licensing DFPI licenses escrow companies
Broker exemption Own transactions only
Proration 360-day banker's year
Buyer debits Price and loan costs
Seller credits Price, prepaid taxes
FIRPTA 15% foreign seller withholding
CA withholding 3 1/3% of price
Withholding exemption Price $100,000 or less
Escrow complete All conditions satisfied

Trust Fund Numbers PR

3 days in, $200 rest, 25 days out
3 business days to deposit $200 broker funds allowed 25 days to take commission Reconcile every month

Commingling vs Conversion PR

Commingling

Mixing funds together
Records may exist
B&P 10176(e)

Conversion

Spending client money
Misappropriation
Revocation likely
Mixing versus taking

Trust Fund Destination PR

Broker receives buyer deposit → Trust account ( Within 3 business days )
Principal wants funds back → Hand to owner ( Same 3-day limit )
Transaction opens escrow → Neutral escrow depository ( Also compliant )
Salesperson accepts check → Give broker immediately ( No 3-day window )
Buyer says hold check → Keep it uncashed ( Written instruction, disclose )
Broker's own money → $200 maximum ( Service charges only )
Commission fully earned → Withdraw in 25 days ( Longer is commingling )
Disbursement causes shortage → Get written consent ( From every owner )

Trust Fund Rules PR

Deposit deadline 3 business days Key
Three destinations Owner, escrow, trust account
Salesperson receipt Give broker immediately
Broker's own funds $200 for service charges
Earned commission Withdraw within 25 days
Reconciliation At least once monthly
Beneficiary record Separate record per principal
Signatory bond Unlicensed signer must bond
Shortage consent Written consent every owner
Interest earned Belongs to the owner
Record retention 3 years from closing
Uncashed check Written instruction, disclose it

Broker vs Salesperson Exam PR

Broker exam

200 questions
4 hours
75% to pass

Salesperson exam

150 questions
3 hours
70% to pass
Longer and stricter

Which Disclosure PR

Selling 1-4 units → Transfer Disclosure Statement ( Cannot be waived )
Property in mapped zone → Natural Hazard Disclosure ( Six statutory zones )
Built before 1978 → Lead paint disclosure ( 10-day inspection right )
Inside a CFD → Mello-Roos notice ( Good faith effort )
Buyer asks about offenders → Megan's Law notice ( No duty to research )
Seller carries the note → Seller financing disclosure ( 1-4 residential units )
Taking a listing → Agency disclosure form ( Before signing listing )
Death occurred on property → Disclose for 3 years ( Not AIDS-related deaths )

Supervision + Office Rules PR

Regulation 2725 Written supervision policies
Regulation 2726 Broker-salesperson written agreement
Responsible broker Cannot delegate final responsibility
Branch office License each added location
Address change Report next business day
Designated officer Corporation's licensed broker
Salesperson license Held under employing broker
Independent contractor Still fully supervised
Unlicensed assistant No soliciting or negotiating

Advertising + Identification PR

License ID number Required on solicitations
NMLS ID Required for loan activity
Blind ad Hides licensee status
Fictitious name Register DBA with DRE
Team name Broker name must appear
First contact Identify yourself as licensee
Electronic ads Same rules as print
False advertising Grounds for discipline

Fair Housing Laws PR

Federal Fair Housing Seven protected classes
FEHA Broader California protections
Unruh Act Business establishments, all customers
Holden Act Bans lender redlining
Blockbusting Panic selling for profit
Steering Channeling by protected class
Redlining Denying loans by area
Source of income Includes housing vouchers
ADA Public accommodation access

Property Management + Rentals PR

Manager license Broker license managing others
Resident manager Required at 16 units
Security deposit One month's rent maximum
Small landlord Two months, narrow exception
Deposit return Within 21 days
AB 1482 cap 5% plus CPI, 10% max
Just cause After 12 months occupancy
Entry notice 24 hours written notice
Nonpayment notice 3-day notice to pay
Termination notice 30 or 60 days

DRE Discipline + Recovery PR

B&P 10176 Violations during licensed activity
B&P 10177 Grounds outside transactions
Desist and refrain Order stopping conduct
Restricted license Conditional, probation terms
Suspension Temporary license loss
Revocation License permanently taken
Recovery Account $50,000 per transaction
Aggregate cap $250,000 per licensee
Automatic suspension Until fund repaid, interest
Renewal cycle 4 years, 45 hours

Exclusive Right vs Exclusive Agency CO

Exclusive right to sell

Broker always paid
Owner sale included
Most protective

Exclusive agency

Owner sale exempt
One broker only
Commission at risk
Owner sale decides

Listing Agreement Picker CO

Seller wants full effort → Exclusive right to sell ( Paid regardless of seller )
Seller may sell alone → Exclusive agency ( Owner sale pays nothing )
Several brokers competing → Open listing ( Procuring cause paid )
Broker keeps excess price → Net listing ( Disclose before approval )
Representing a buyer → Buyer representation agreement ( Three months maximum )
Any exclusive listing → Add termination date ( Omission risks discipline )

Contract Essentials + Status CO

Valid contract Capacity, consent, object, consideration
Void No legal effect ever
Voidable One party may cancel
Unenforceable Valid but not provable
Bilateral Promise for a promise
Unilateral Promise for performance
Executory Not yet fully performed
Statute of frauds Must be in writing
Written action limit 4 years to sue
Oral action limit 2 years to sue
Assignment Rights pass, liability remains
Counteroffer Rejects and replaces offer

Listing + Compensation Rules CO

Exclusive right to sell Broker paid regardless
Exclusive agency Owner sale avoids commission
Open listing Procuring cause is paid
Net listing Excess becomes broker's fee
Termination date Required in exclusive listings
Safety clause Protects post-expiration sales
Procuring cause Uninterrupted effort producing buyer
Buyer agreement term Three months maximum
Entity buyers Exempt from month cap
Commission source Only employing broker pays

Purchase Contract Rules CO

Liquidated damages 3% presumed reasonable
Separate initials Required for damages clause
Contingency period 17 days, form default
Option Unilateral, consideration required
Option holder No equitable title yet
Advance fee DRE review, 10 days
Advance fee money Treated as trust funds
Acceptance Communicated to be binding
Time is essential Deadlines strictly enforced

Common Traps

Commingling vs conversion

Commingling mixes funds ≠ Conversion spends them

Passing score differs

Broker needs 75% ≠ Salesperson needs 70%

Deposit timing

Broker gets 3 days ≠ Salesperson delivers immediately

Which property adjusts

Comparables get adjusted ≠ Subject is never adjusted

Cap rate direction

Higher rate, lower value ≠ Lower rate, higher value

Who approves subdivisions

Map Act is local ≠ Lands Act is DRE

Who licenses appraisers

BREA licenses appraisers ≠ DRE licenses brokers

Mello-Roos and Proposition 13

Proposition 13 caps 1% ≠ Mello-Roos adds more

Reinstatement window

Ends 5 days early ≠ Payoff lasts until sale

Article 7 thresholds

First deeds under $30,000 ≠ Junior liens under $20,000

Exam is qualifying only

Failing candidates see scores ≠ Passing candidates see none

Last Minute

1. Broker exam: 200 questions, 4 hours
2. Passing score is 75 percent
3. Practice + disclosures is 25%
4. Agency 17%, ownership 15%, valuation 14%
5. Trust funds: deposit within 3 days
6. Broker may leave $200 only
7. Reconcile trust account every month
8. Keep transaction records 3 years
9. Value = NOI / cap rate
10. GRM uses gross rent only
11. Adjust comparables, never the subject
12. Grant deed carries two warranties
13. Transfer tax: $1.10 per $1,000
14. Recovery Account pays $50,000 maximum
15. Buyer agreements cap at 3 months
16. Exclusive listings need termination dates

California Real Estate Broker

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