Real Estate P1

Real Estate

Land and permanent structures attached to the land; also called real property

Personal Property

Items not permanently attached to land like cars, jewelry, furniture

Residential Real Estate

Property used for residential purposes like homes and condos

Commercial Real Estate

Property used for business purposes like offices and restaurants

Industrial Real Estate

Property used for manufacturing, storage, and research

Land

Undeveloped or agricultural property

Special Purpose Real Estate

Public-use properties like schools, parks, and churches

Independent Contractor

Most California real estate agents; no taxes withheld and paid by commission

Employee

Worker whose manner and means of work are controlled by employer

1099

Tax form commonly received by independent contractors

Self-Employment Tax

Tax paid by independent contractors

Client

A person with a representation agreement with an agent

Customer

A person without a representation agreement

Fiduciary Duty

The highest duty under law requiring agents to act in the client’s best interests

Agency Relationship

Relationship created when principal consents and agent agrees to act on their behalf

C.A.R. Form

Disclosure Regarding Real Estate Agency Relationships

Seller’s Agent

Agent who represents only the seller

Buyer’s Agent

Agent who represents only the buyer

Dual Agency

agent/broker who represents both buyer and seller

Right-to-Sell Agreement

Seller agrees to compensate listing agent regardless of who sells property

Commission

Common way real estate agents are paid

AD vs AC

AD explains agency; AC confirms agency

Duty of Loyalty

Agent must put client’s interests first

Duty of Confidentiality

Agent cannot reveal confidential pricing information

Duty of Disclosure

Agent must disclose all material facts

Duty of Care

Agent must act competently and diligently

Trust Funds

Funds/property held for others in a transaction

Commingling

Illegal mixing of trust funds with personal/business funds

Trust Account

Account used to hold client trust funds

Purchase Deposit

Example of trust funds

Security Deposit

Example of trust funds

Broker Operating Funds

NOT considered trust funds

3 Business Day Rule

Broker must properly handle trust funds within 3 business days

Neutral Escrow

One place trust funds may be deposited

Before Offer Acceptance

Buyer controls deposit money

After Offer Acceptance

Funds handled according to contract and both parties’ instructions

Refund Rule

Buyer deposit cannot be refunded without seller’s written permission after acceptance

Personal Check Rule

Buyer’s check may be held uncashed until acceptance

Listing Agent Duties

Loyalty, confidentiality, disclosure, accounting, care, diligence

Buyer Agent Duties

Protect buyer’s interests and negotiate best deal

Dual Agent Restriction

Cannot disclose information giving either side advantage