Real Estate License Course Notes

Agency in real estate is the legal relationship that lets a broker or salesperson represent a principal in a transaction. The principal may be a seller, buyer, landlord, or tenant. Once agency exists, the licensee owes duties that go beyond ordinary customer service because the licensee is acting on behalf of someone else.

• Do not treat fair housing as only race discrimination; familial status and disability protections are frequently tested.

• If the facts mention children in housing, think familial status.

Real property means land and things legally attached to it, while personal property means movable property that is not part of the land. The distinction matters because a real estate sale normally transfers real property, but personal property transfers only if the agreement includes it.

• Do not assume attachment alone decides fixture status; intent, adaptation, relationship, and agreement also matter.

• If an item is attached and intended to stay, fixture is likely; if installed by a tenant for business, consider trade fixture.

A real estate contract is enforceable only when the required elements are present. The usual elements are offer, acceptance, mutual consent, consideration, competent parties, lawful objective, and the legally required writing. If one element is missing, the agreement may be void, voidable, or unenforceable depending on the facts.

• A counteroffer rejects the original offer and creates a new offer.

• If acceptance changes material terms, it is a counteroffer.

A mortgage or deed of trust secures repayment of a real estate loan with the property. The borrower signs a note promising to repay and gives the lender a security interest. If the borrower defaults, the lender may use the security instrument to pursue foreclosure according to law.

• Do not confuse APR with the note interest rate; APR includes broader credit-cost disclosure.

• If the down payment is below 20 percent on a conventional loan, PMI is often the clue.

Professional conduct starts with fiduciary duty. A real estate licensee must protect the clients lawful interests, disclose material facts, follow lawful instructions, use reasonable care, keep confidences, and account for funds or property. Ethics questions usually test whether the licensee put the client and public duty ahead of convenience or personal gain.

• Commingling is mixing client funds with other funds; conversion is wrongful use or taking of those funds.

• If client money appears, think trust funds, trust account handling, and records.