CA Practice & disclosures

California practice and mandated disclosure study cards

Review the transfer disclosure, natural-hazard, and broker conduct duties a California salesperson must handle with explanations tied to primary law.

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For conduct questions, identify the required disclosure or deposit step and the deadline before you compare answer choices.

Card 01

A California listing salesperson knows the home sits on a parcel outside a mapped flood zone but was advised it may still be in a special flood hazard area. Which disclosure issue is the salesperson most directly responsible for handling carefully?

Natural hazard and environmental disclosure obligations under the prescribed California disclosure forms
The lender's right to require title insurance
Re-siding the property before marketing
The escrow company's fee schedule

Reveal answer and explanation

Correct answer: Natural hazard and environmental disclosure obligations under the prescribed California disclosure forms

California requires sellers and their agents to deliver specific disclosures about natural hazards, including special flood hazard areas, through the prescribed disclosure forms and related procedures. A broker must use reasonable care to obtain and convey these facts to prospective buyers and cannot rely solely on a generalized disclaimer to avoid the duty.

California Department of Real Estate — Environmental and Natural Hazard Disclosures — Disclosure forms for special flood hazard areas and other environmental matters; agent's duty to obtain and convey hazard disclosures. Source checked 2026-09-05. Review by 2027-03-01.

Card 02

While holding a seller's earnest money deposit, a California broker deposits the funds into a trust account. What is the broker generally required to do with money received in a real estate transaction?

Deposit the funds promptly into a neutral escrow, trust, or other account and keep them separate from the broker's own funds
Spend them freely as operating capital until closing
Refuse to hold any earnest money at all in California
Deposit the funds into the broker's personal checking account as earned commissions

Reveal answer and explanation

Correct answer: Deposit the funds promptly into a neutral escrow, trust, or other account and keep them separate from the broker's own funds

California's Business and Professions Code directs a real estate broker who receives money belonging to others in a transaction to deposit the funds promptly into a neutral escrow, trust, or other account in a bank or recognized depository, and to keep them separate from the broker's own funds pending the transaction. Commingling or spending them is prohibited.

California Business and Professions Code — Trust account requirements for brokers — Business and Professions Code § 10145: deposit of transaction funds into a neutral escrow, trust, or other account, kept separate from the broker's own funds. Source checked 2026-09-05. Review by 2027-03-01.

Card 03

Before listing a California property, a salesperson holds a current salesperson license and is employed by a broker. Whose license is recording a valid California residential listing contract normally signed under?

The salesperson's own license, acting fully independently
The salesperson's employed broker's license
The buyer's lender
No license is needed to take a listing in California

Reveal answer and explanation

Correct answer: The salesperson's employed broker's license

In California, a salesperson must be employed by and act under the authority of a licensed real estate broker. Listing agreements and other documents a salesperson negotiates are generally taken in the name of the employing broker, who is responsible for the salesperson's acts within the scope of that employment.

California Business and Professions Code — Salesperson acting under a broker — Business and Professions Code § 10132: salesperson must be employed by a licensed broker and act under the broker's authority. Source checked 2026-09-05. Review by 2027-03-01.