What counts as real property, and where the boundary with personal property sits.

• Real property — land, anything affixed, appurtenances, and that which is immovable by law.
• Personal property (chattel) — everything else. Movable.
• Fixtures — personal property that became real by attachment. Test with MARIA.
• Trade fixtures belong to the tenant and may be removed before the lease ends.
• Land includes rights above and below the surface: air, mineral, and water rights.

Your notes for this unit

How much you own, and how you hold it with other people.

• Fee simple absolute — the largest estate, indefinite duration.
• Life estate — lasts a lifetime, then passes to a remainderman or reverts.
• Leasehold — a possessory but less-than-freehold estate.

Your notes for this unit

Every route by which title moves from one owner to the next.

• Deed requirements: in writing, competent grantor, identifiable grantee, adequate property description, granting words, grantor's signature, and delivery and acceptance.
• Grant deed — implies the grantor hasn't already conveyed it and discloses no undisclosed encumbrances.
• Quitclaim deed — transfers whatever interest exists, with no warranties.
• Recording gives constructive notice; possession gives actual notice.
• Adverse possession — 5 years, open, notorious, hostile, continuous, plus paying the taxes.

Your notes for this unit

Claims against property that don't defeat ownership but do limit it.

• Liens — money encumbrances. Voluntary (trust deed) or involuntary (taxes, judgments, mechanics liens); specific (one property) or general (all property).
• Easements — appurtenant runs with the land and needs a servient and dominant tenement; in gross is personal to the holder.
• Encroachment — a physical intrusion across a boundary.
• CC&Rs — private restrictions, typically HOA-enforced.

Your notes for this unit

Four public powers that sit above every private title.

• PETE — Police power (zoning, codes, health and safety), Eminent domain (taking for public use with just compensation), Taxation, Escheat.
• Zoning — a police-power exercise. A variance permits a deviation; a conditional use permit allows a different use; a nonconforming use is grandfathered.
• Inverse condemnation — the owner sues because government action destroyed value without a formal taking.
• CEQA — environmental review for projects with potential significant impact.

Your notes for this unit

Four elements, four states of validity, and the remedies when one breaks.

• Elements: capable parties, mutual consent, lawful object, consideration.
• Void — no legal effect ever. Voidable — one party may rescind. Unenforceable — valid but no court will enforce it. Executory vs executed tracks performance.
• Statute of frauds — real property contracts and leases over one year must be in writing.
• Remedies: specific performance, damages, rescission, and liquidated damages where agreed.

Your notes for this unit

The four instruments you'll actually handle.

• Exclusive right to sell — broker is paid whoever sells. Requires a definite termination date.
• Exclusive agency — broker paid unless the owner sells it.
• Open listing — non-exclusive; only the procuring broker is paid.
• Net listing — legal in California but high-risk; the excess over a net figure is the commission.
• Option — a unilateral contract giving the optionee a right, not an obligation, to buy.

Your notes for this unit

Whom you represent, what you owe them, and when you must say so.

• Fiduciary duties — OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care.
• Created by express agreement, ratification, or estoppel.
• To third parties you still owe honesty, fair dealing and disclosure of material facts.
• Dual agency requires the informed written consent of both parties, and the agent may not disclose price terms without permission.

Your notes for this unit

The Finance course in miniature — note versus deed of trust, and the loan categories.

• Promissory note = the debt. Deed of trust = the security, with three parties.
• FHA insures, VA guarantees, conventional is neither. PMI once LTV exceeds 80%.
• Clauses to know: acceleration, alienation (due-on-sale), prepayment, subordination.
• California forecloses nonjudicially: NOD → 3 months → 20-day notice → sale.

Your notes for this unit

Application to funding, and the two disclosure clocks that govern it.

• Loan Estimate within 3 business days of application; Closing Disclosure at least 3 business days before consummation.
• Underwriting weighs the Four C's: credit, capacity, capital, collateral.
• Pre-qualification is informal; pre-approval is underwritten.
• RESPA Section 8 bans kickbacks and unearned fee-splitting.

Your notes for this unit

Three approaches to value, and which one fits which property.

• Sales comparison — the primary approach for single-family homes.
• Cost approach — for new or special-purpose property with few comparables.
• Income capitalization — for income-producing property. Value = NOI ÷ Cap rate.
• Four elements of value — DUST: Demand, Utility, Scarcity, Transferability.
• Highest and best use — legally permissible, physically possible, financially feasible, maximally productive.

Your notes for this unit

Federal floor, California ceiling — and California's list is longer.

• Federal Fair Housing Act protects race, colour, religion, sex, national origin, familial status, disability.
• California adds — via the Unruh Act and FEHA — marital status, ancestry, source of income, sexual orientation, gender identity and expression, age, genetic information, immigration status, and more.
• Prohibited practices: steering, blockbusting, redlining, discriminatory advertising, and refusing reasonable accommodation.

Your notes for this unit

A neutral third party holding everything until every condition is met.

• Escrow is a neutral depository acting on bilateral written instructions, and may not favour either side.
• Cancellation requires mutual agreement.
• Title insurance covers defects in title; CLTA is standard, ALTA/extended adds survey and off-record protections.
• Prorations divide taxes, interest and rents at closing.

Your notes for this unit

The tax rules that shape why people buy and when they sell.

• Section 121 exclusion — $250,000 single / $500,000 married, on a principal residence owned and occupied 2 of the last 5 years.
• 1031 exchange — defers gain on like-kind investment property. Not available for a personal residence.
• Depreciation — improvements only, never land, and only on income property.
• Proposition 13 caps the assessed-value increase and sets the base rate; reassessment follows a change of ownership or new construction.

Your notes for this unit

Leases, deposits, habitability, and the notices that end a tenancy.

• Leasehold estates: estate for years (fixed term), periodic tenancy, tenancy at will, tenancy at sufferance.
• Implied warranty of habitability — the landlord must maintain the premises as fit to live in.
• Security deposits are capped by statute and must be returned or accounted for within 21 days.
• 3-day notice for nonpayment or breach; 30 or 60-day notice to terminate a periodic tenancy depending on length of occupancy.
• Unlawful detainer is the eviction lawsuit. Self-help eviction is illegal.

Your notes for this unit

Who regulates you, what you must do, and what gets your licence taken.

• The DRE, headed by the Real Estate Commissioner, enforces the Real Estate Law and adopts the Regulations of the Commissioner.
• A salesperson must be employed by a broker; the broker must supervise and keep a written agreement.
• Trust funds — deposit by the third business day; keep a columnar record; never commingle.
• Records retained 3 years. Advertising must identify the licensee and show the licence number; blind ads are prohibited.
• Discipline runs from reprimand to suspension to revocation, and the Commissioner may issue a desist and refrain order.

Your notes for this unit

Enough construction vocabulary to describe a house accurately and spot defects.

• Structure: footing, foundation, sill plate, joists, subfloor, studs, top plate, rafters, sheathing.
• Roof styles: gable, hip, gambrel, mansard, shed, flat.
• R-value measures insulating resistance — higher is better.
• Work is governed by building codes and requires permits and inspections; Title 24 sets energy standards.

Your notes for this unit

The calculations that appear on both the course final and the state exam.

Your notes for this unit

Real estate moves in cycles, and financing availability is itself one of the forces driving them.

• The cycle: expansion → peak → contraction → trough.
• Demand comes from population and household formation, employment, income, and interest rates.
• Supply comes from construction costs, land availability, entitlements, and labour.
• Real estate is local — national averages conceal county-level divergence.

Your notes for this unit

The Federal Reserve sets the price of money, and every lever runs in a direction you can be asked to predict.

• Open market operations — buying and selling Treasuries. The most frequently used tool.
• Discount rate — what the Fed charges member banks to borrow.
• Reserve requirements — how much banks must hold back rather than lend.
• The Treasury is not the Fed: Treasury handles the fiscal side — taxes, borrowing, issuing debt.

Your notes for this unit

Regulated depositories lending depositors' money — each favouring the term that matches its deposits.

Your notes for this unit

Everyone else in the lending market — and one distinction here is near-guaranteed.

• Mortgage bankers — originate and fund, then sell into the secondary market. Often keep servicing.
• Mortgage brokers — arrange loans between borrower and lender. They do not fund.
• Private lenders — hard money, trust deed investors.
• Seller carryback — the seller becomes the lender.
• Pension funds, REITs, syndicates, mortgage pools.

Your notes for this unit

Three categories, separated by who absorbs the loss if the borrower stops paying.

• Conventional — no government backing. PMI generally required once LTV exceeds 80%.
• FHA — government insured, not government made. Low down payment, MIP, county loan limits.
• VA — government guaranteed. Often no down payment, an entitlement and a funding fee. No PMI.
• Cal-Vet — California DVA, bond-funded, historically a contract of sale with the state holding title until payoff.

Your notes for this unit

Four acronyms, and only one of them is actually the government.

• Fannie Mae (FNMA) — buys conventional conforming loans. Shareholder-owned GSE.
• Freddie Mac (FHLMC) — GSE in the same role, originally serving thrifts.
• Ginnie Mae (GNMA) — a true government corporation within HUD. It guarantees securities backed by FHA, VA and RHS loans rather than buying loans.
• Federal Home Loan Bank system, and CalHFA for California first-time buyers.

Your notes for this unit

Anything behind the first — and position decides who gets paid.

• Second and third trust deeds, HELOCs.
• Priority runs by recording date and time, unless a subordination clause changes it.
• Purchase-money junior — the seller carries back a second to bridge the gap.
• Higher risk means higher rate, shorter term, and frequently a balloon.

Your notes for this unit

How the payment is built, and what happens to the balance over time.

• Fully amortized — level payments retire principal and interest by maturity.
• Straight / term — interest only, principal due in a lump.
• Partially amortized — ends in a balloon.
• Negative amortization — payment is less than accrued interest, so the balance grows.
• Points — 1 point = 1% of the loan amount. Points buy the rate down and raise lender yield.

Your notes for this unit

The most heavily tested unit in the course. Two documents, three parties, six clauses.

• Promissory note — the evidence of the debt.
• Deed of trust — the security instrument pledging the property.

Your notes for this unit

Deciding whether the borrower can pay and whether the property is worth the risk.

• The Four C's: Credit · Capacity · Capital · Collateral.
• LTV = Loan ÷ Value, using the lower of sale price or appraised value.
• CLTV — all liens combined against value.
• PITI — principal, interest, taxes, insurance, plus HOA and MI where applicable.

Your notes for this unit

The paperwork pipeline, governed by three federal acts and two three-day clocks.

• RESPA — Section 8 bans kickbacks and unearned fee-splitting; affiliated business arrangements must be disclosed.
• TILA — truth in lending and APR disclosure.
• Right of rescission — 3 business days, on refinances and HELOCs of a principal dwelling. Not purchase loans.

Your notes for this unit

Where existing loans are bought and sold, and the reason lenders can keep lending.

• Primary market — where loans are originated.
• Secondary market — where existing loans change hands.
• The purpose is liquidity: selling loans replenishes capital.
• Conforming meets GSE guidelines; jumbo / nonconforming exceeds them and prices higher.

Your notes for this unit

California's nonjudicial trustee's sale, step by step.

1. Borrower defaults.
2. Notice of Default (NOD) recorded.
3. Three-month reinstatement period — borrower may cure by paying arrears.
4. Notice of Trustee's Sale — published, posted and mailed at least 20 days before sale.
5. Trustee's sale — public auction, cash to the highest bidder.

Minimum realistic timeline: about four months.

Your notes for this unit

Borrowed money magnifies returns in both directions.

• Leverage — positive when asset return exceeds debt cost, negative when it doesn't.
• NOI = effective gross income − operating expenses, before debt service.
• Cap rate = NOI ÷ Value, so Value = NOI ÷ Cap rate.
• Depreciation — improvements only, never land.

Your notes for this unit

Where most people lose points. Work these until they're automatic.

Your notes for this unit

The vocabulary the rest of the course assumes.

• Scarcity — finite resources against unlimited wants. The root of all economics.
• Opportunity cost — the value of the next-best option foregone.
• Factors of production: land, labour, capital, entrepreneurship.
• Utility, and diminishing marginal utility — each extra unit adds less satisfaction.

Your notes for this unit

The engine of the whole course, with one wrinkle unique to real estate.

• Demand falls as price rises; supply rises as price rises. Equilibrium is the intersection.
• Elasticity — how responsive quantity is to a price change.
• Real estate supply is highly inelastic short-term: land is fixed and construction takes years.
• A shift in the curve differs from movement along it — shifts come from outside factors like income or population.

Your notes for this unit

Reading the business cycle, and knowing which numbers arrive early.

• The cycle: expansion, peak, contraction (recession), trough.
• GDP measures total output. Two consecutive quarters of decline is the conventional recession marker.
• Leading indicators — building permits, new orders, consumer expectations.
• Lagging indicators — unemployment rate, which confirms rather than predicts.
• Inflation and CPI; stagflation is stagnant growth with high inflation.

Your notes for this unit

The same Fed material as Finance Unit 2 — learn it once, answer it twice.

• Fed tools: open market operations (most used), discount rate, reserve requirements.
• M1 is the most liquid money; M2 adds savings and near-money.
• Loosening lowers mortgage rates and lifts housing demand; tightening reverses it.
• Fiscal policy — taxing and spending by Congress — is a separate lever from monetary policy.

Your notes for this unit

Why property markets misbehave compared to textbook markets.

• Real estate is an imperfect market: every parcel is unique, information is poor, transaction costs are high, and the goods are immobile.
• It fragments into submarkets by geography, price band and property type.
• Illiquidity — converting to cash takes time and costs money.
• Absorption rate and months of inventory gauge the balance of supply and demand.

Your notes for this unit

The national picture against which California is compared.

• Housing starts and permits are the standard production measures.
• Affordability indices weigh median price against median income and prevailing rates.
• Homeownership rate, vacancy rate, household formation.
• Filtering — older housing passing down to lower income groups as new stock is built.

Your notes for this unit

What actually drives income in this state, and therefore housing demand.

• Base industries: technology, entertainment, agriculture, trade and logistics, tourism, aerospace, healthcare.
• Base multiplier effect — each base job supports additional local service jobs.
• Migration — domestic and international flows, plus interstate out-migration driven by cost.
• High cost of living and constrained supply are the defining structural features.

Your notes for this unit

One state, many markets — and the divergence is the point.

• Coastal versus inland price gaps, and the commute-cost tradeoff that links them.
• Regional submarkets: Bay Area, Los Angeles basin, San Diego, Central Valley, Inland Empire, Sacramento.
• Supply constraints: entitlement difficulty, CEQA review, local opposition, land cost.
• Median price versus price per square foot — different stories from the same market.

Your notes for this unit

Who decides what may be built, and by what process.

• General plan — the long-range local blueprint; zoning must be consistent with it.
• Zoning, variance, conditional use permit, nonconforming use, downzoning, spot zoning.
• Subdivision Map Act (local design and improvements) versus Subdivided Lands Act (state buyer protection via DRE public report).
• CEQA — negative declaration or full EIR where impacts may be significant.
• Smart growth, infill, urban growth boundaries, development impact fees.

Your notes for this unit

The legal constraints that shape who lives where, and what can be built.

• Federal Fair Housing Act protected classes, plus California's broader Unruh and FEHA lists.
• Steering, blockbusting, redlining — know all three.
• CERCLA — liability for hazardous substance cleanup; innocent landowner defence.
• Disclosure regimes: lead-based paint (pre-1978), natural hazard, and environmental site assessments.

Your notes for this unit

How credit and tax policy shape demand.

• Rates set purchasing power; credit availability sets who qualifies at all.
• Proposition 13 — assessment cap and base rate, with reassessment on change of ownership or new construction. Creates a lock-in effect.
• Mortgage interest and property tax deductions subsidise ownership.
• 1031 exchanges and Section 121 shape when owners sell.

Your notes for this unit

What investors are actually buying, and the risks they price.

• Four returns: cash flow, appreciation, equity buildup, tax benefits.
• Leverage magnifies gains and losses alike.
• Risks: market, liquidity, interest rate, management, legislative, and vacancy.
• Risk and required return move together — higher risk demands a higher cap rate.

Your notes for this unit

The arithmetic of a small rental, line by line.

Your notes for this unit

Bigger properties, longer leases, and a lender ratio you must know.

• Lease types: gross (landlord pays expenses), net, and triple net (NNN) where the tenant pays taxes, insurance and maintenance.
• Percentage lease — rent tied to tenant sales, common in retail.
• DSCR = NOI ÷ annual debt service. Lenders want it comfortably above 1.0.
• Anchor tenants, tenant mix, and lease rollover risk drive value.

Your notes for this unit

The structural forces the course expects you to name.

• Chronic undersupply against household formation.
• Affordability pressure pushing demand inland and into rentals.
• Demographic shifts — ageing owners, delayed first purchases, multigenerational households.
• Remote work loosening the historic tie between job centre and residence.
• Climate and insurance risk — wildfire exposure now affects insurability and value.

Your notes for this unit

Where the numbers come from, and how to read them honestly.

• Sources: Census, BLS, FRED, C.A.R., DOF, MLS data.
• Case-Shiller tracks repeat sales; median price is affected by the mix of what sold.
• Seasonal adjustment, nominal versus real (inflation-adjusted), index base years.
• Correlation is not causation — a favourite conceptual question.

Your notes for this unit

Where the rules come from and who enforces them.

• Sources: federal and state constitutions, statutes, administrative regulations, and common law built from case precedent.
• Civil actions resolve private disputes; criminal actions punish offences against the state.
• California courts: Superior Court → Court of Appeal → Supreme Court.
• Alternatives to litigation: mediation (non-binding) and arbitration (binding, limited appeal).
• Statute of limitations caps the time to sue — 4 years on a written contract, 2 on an oral one.

Your notes for this unit

The relationship that creates every duty you owe.

• Fiduciary duties — OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care.
• Created by express agreement, ratification, or estoppel; also by implication from conduct.
• Dual agency needs informed written consent from both parties, and price terms stay confidential.
• Vicarious liability — the broker answers for the acts of salespersons within the scope of employment.
• Terminated by performance, expiration, mutual agreement, revocation, or operation of law.

Your notes for this unit

The real-versus-personal boundary, and the rights bundled into land.

• Real property — land, that which is affixed, appurtenant, and immovable by law.
• Fixtures — test with MARIA: Method of attachment, Adaptability, Relationship, Intent, Agreement.
• Trade fixtures stay the tenant's and may be removed before the term ends.
• Bundle of rights — possession, use, enjoyment, exclusion, disposition.
• Rights extend above and below: air, mineral, water.

Your notes for this unit

The quantity of the interest, and how co-owners hold it.

• Freehold: fee simple absolute, fee simple defeasible, life estate.
• Less-than-freehold: the four leasehold estates.
• Joint tenancy — four unities (time, title, interest, possession) and right of survivorship.
• Tenancy in common — unequal shares permitted, no survivorship, passes by will.
• Community property and community property with right of survivorship.
• Partition — a court action forcing division or sale among co-owners.

Your notes for this unit

Formation, defences, and what a court will do when someone breaches.

• Elements: capable parties, mutual consent, lawful object, consideration.
• Void, voidable, unenforceable, executory, executed — know each.
• Defences to formation: fraud, misrepresentation, mistake, duress, menace, undue influence.
• Remedies: specific performance, compensatory damages, rescission, liquidated damages.
• Novation substitutes a new party or contract; assignment transfers rights but not always liability.

Your notes for this unit

The agreements that entitle a broker to be paid.

• Exclusive right to sell — paid regardless of who sells; must carry a definite termination date.
• Exclusive agency — no commission if the owner sells it.
• Open listing — only the procuring broker is paid.
• Net listing — legal in California but a fertile source of discipline claims.
• Procuring cause — the uninterrupted chain of events that produced the ready, willing and able buyer.
• A safety / protection clause preserves commission for a stated period after expiration.

Your notes for this unit

The purchase agreement and its relatives.

• Offer, acceptance, counter-offer. A counter-offer terminates the original offer.
• Contingencies — loan, appraisal, inspection — with removal deadlines and notice requirements.
• Option — unilateral; consideration buys the right, not the obligation, to purchase.
• Land contract / contract of sale — seller keeps legal title while the buyer holds equitable title.
• Time is of the essence makes stated deadlines material.

Your notes for this unit

California's disclosure regime is unusually broad — this unit is dense and heavily tested.

• Transfer Disclosure Statement (TDS) — seller's statement of known conditions. Cannot be waived on most residential 1–4 sales.
• Agent's Visual Inspection Disclosure (AVID) — the agent's own reasonably diligent visual inspection.
• Natural Hazard Disclosure — flood, fire, seismic and related zones.
• Lead-based paint — required for housing built before 1978.
• Mello-Roos and other special assessment districts.
• Megan's Law database notice — the statutory paragraph, and no duty to research.
• Death on the property — material for 3 years; a death from AIDS may not be disclosed.

Your notes for this unit

Deeds, recording, and the ways title moves without a sale.

• Deed requirements — writing, competent grantor, identifiable grantee, description, granting clause, signature, delivery and acceptance.
• Grant deed carries two implied warranties; quitclaim carries none.
• Recording gives constructive notice and establishes priority.
• Adverse possession — 5 years, open, notorious, hostile, continuous, plus taxes paid.
• Involuntary transfer — escheat, eminent domain, foreclosure, probate, adverse possession.

Your notes for this unit

Claims that limit title, and the order in which they get paid.

• Liens — voluntary or involuntary, specific or general.
• Property tax liens take priority over all others, regardless of recording order.
• Mechanics liens relate back to commencement of work; a notice of completion shortens the filing window.
• Easements — appurtenant versus in gross; created by grant, reservation, necessity, implication, or prescription (5 years).
• Homestead exemption shields a portion of equity from certain judgment creditors.
• Lis pendens — recorded notice of pending litigation affecting title.

Your notes for this unit

The finance material from a lawyer's angle — remedies and statutory protections.

• Note = the debt; deed of trust = the security, with trustor, trustee, beneficiary.
• Nonjudicial: NOD → 3 months → 20-day notice → trustee's sale. No deficiency judgment.
• Judicial: slower, may allow a deficiency, gives a statutory right of redemption.
• Anti-deficiency protection — purchase-money loans on owner-occupied 1–4 units.
• Clauses: acceleration, alienation/due-on-sale, prepayment, subordination, assignment.

Your notes for this unit

The neutral third party, and what its neutrality legally requires.

• Escrow is a neutral depository acting on bilateral written instructions — it is a limited agent of both parties.
• Instructions cannot be changed unilaterally; cancellation needs mutual agreement.
• Escrow Law licenses independent escrow companies; brokers, attorneys, title companies and lenders are exempt when acting in their own transactions.
• Title insurance — CLTA standard; ALTA/extended adds survey and off-record risks.

Your notes for this unit

Public power over private title.

• PETE — Police power, Eminent domain, Taxation, Escheat.
• Eminent domain requires public use and just compensation; inverse condemnation is the owner's suit when value is destroyed without formal taking.
• Zoning, variance, conditional use permit, nonconforming use.
• CEQA — negative declaration or EIR.
• Subdivision Map Act (local) versus Subdivided Lands Act (state, DRE public report).
• ADA — accessibility in places of public accommodation.

Your notes for this unit

California is tenant-protective, and the statutory detail is what gets tested.

• Four leasehold estates: estate for years, periodic tenancy, tenancy at will, tenancy at sufferance.
• Implied warranty of habitability — the landlord must keep the unit fit to live in.
• Security deposits — statutory cap, and accounting or return within 21 days.
• Notices: 3-day for nonpayment or breach; 30 or 60-day to end a periodic tenancy by length of occupancy.
• Unlawful detainer is the exclusive eviction procedure. Self-help eviction and utility shutoff are illegal.
• Retaliatory and constructive eviction — both give the tenant a claim.

Your notes for this unit

The rules governing your own conduct.

• The DRE under the Real Estate Commissioner enforces the Real Estate Law and adopts the Regulations of the Commissioner.
• A salesperson works under a broker, who must supervise and keep a written agreement.
• Trust funds — deposit by the third business day, columnar records, no commingling, no conversion.
• Records retained 3 years. Advertising must identify the licensee and licence number; blind ads prohibited.
• Discipline: reprimand, suspension, revocation, desist and refrain orders, and civil or criminal referral.

Your notes for this unit

Who may appraise, under what standards, and why the licensing exists.

• USPAP — the Uniform Standards of Professional Appraisal Practice, the governing ethical and performance code.
• FIRREA — the post-savings-and-loan-crisis statute that created federal appraiser licensing requirements.
• California licensing runs through the Bureau of Real Estate Appraisers (BREA), with levels from trainee to residential to certified general.
• An appraiser must be independent and impartial; accepting a fee contingent on reaching a target value is prohibited.

Your notes for this unit

The arithmetic the rest of the course leans on.

• Mean is the average, median the middle value, mode the most frequent. Median resists outliers — which is why it's preferred for house prices.
• Area: rectangle = L × W; triangle = ½ × base × height. An acre is 43,560 sq ft.
• Range and standard deviation describe dispersion.
• Percentage change always divides by the original figure.

Your notes for this unit

What "value" actually means, and the forces that create it.

• Market value — the most probable price in an arm's-length sale with informed, unpressured parties.
• Other value types: assessed (for tax), insurable, investment, liquidation, going concern.
• DUST — Demand, Utility, Scarcity, Transferability. All four must be present.
• Four forces: physical/environmental, economic, political/governmental, social.

Your notes for this unit

Transaction context the appraiser must read correctly.

• Arm's-length transactions are the only reliable comparables. Family sales, foreclosures and short sales usually are not.
• Conditions of sale — seller concessions and unusual financing distort price and require adjustment.
• Title, encumbrances and easements affect the rights being appraised.
• The appraiser must state the interest valued: fee simple, leasehold, or leased fee.

Your notes for this unit

Market analysis as the appraiser performs it.

• Real estate is an imperfect market — unique goods, poor information, high transaction cost.
• Submarkets defined by geography, price band and type; comparables must come from the same one.
• Neighbourhood life cycle: growth, stability, decline, revitalisation.
• Absorption and marketing time gauge liquidity.

Your notes for this unit

A defined sequence, and the order matters.

1. Define the problem — property, rights, purpose, effective date, value type.
2. Determine the scope of work.
3. Collect and analyse data — general and specific.
4. Analyse highest and best use — as vacant and as improved.
5. Estimate land value separately.
6. Apply the three approaches.
7. Reconcile into a single value conclusion.
8. Report the opinion.

Your notes for this unit

Enough construction literacy to judge quality and condition.

• Structural sequence: footing, foundation, sill plate, floor joists, subfloor, studs, top plate, rafters, sheathing, roofing.
• Quality classes and effective age versus chronological age.
• R-value measures insulation resistance; Title 24 sets California energy standards.
• Environmental issues: asbestos, lead paint (pre-1978), radon, mould, underground tanks, and wildfire exposure.

Your notes for this unit

Two tiers of data, and where each comes from.

• General data — regional and neighbourhood: economics, demographics, government, environment.
• Specific data — the subject and the comparables themselves.
• Sources: MLS, public records, assessor rolls, title companies, cost services, direct inspection.
• Verify every comparable — an unverified sale is not usable.

Your notes for this unit

Valuing the land alone — required for the cost approach.

• Sales comparison — the preferred method where vacant-land sales exist.
• Allocation — apply a typical land-to-total ratio.
• Extraction — total value minus depreciated improvement value.
• Development (subdivision) method — project sellout, subtract costs and profit.
• Land residual and ground rent capitalization for income-producing sites.

Your notes for this unit

What it would cost to build it today, before deducting for age and wear.

• Reproduction cost — an exact replica, same materials and design, including any obsolete features.
• Replacement cost — equivalent utility using current materials and standards. The more common basis.
• Quantity survey — itemise every material and labour cost. Most accurate, most laborious.
• Unit-in-place — cost per installed component.
• Square-foot (comparative) method — cost per square foot from a cost service. Most common.

Your notes for this unit

Three kinds of loss in value, and only some can be fixed.

• Curable means the cost to fix is recovered in added value. Incurable means it isn't.
• Straight-line (age-life) method: effective age ÷ economic life × cost.
• The cost approach conclusion: land value + (cost new − depreciation).

Your notes for this unit

The primary approach for houses — and adjustments run one direction only.

• Select recent, nearby, similar, arm's-length sales.
• Adjust the comparables, never the subject.
• Comparable better than subject → subtract. Comparable worse → add.
• Paired sales analysis isolates the value of a single differing feature.
• Adjust for date of sale, location, physical characteristics, conditions of sale, financing terms.

Your notes for this unit

Converting an income stream into a value figure.

• Build the statement: gross scheduled income → less vacancy → effective gross income → less operating expenses → NOI.
• Value = NOI ÷ Cap rate.
• GRM = Price ÷ Gross rent — a screening shortcut that ignores expenses.
• Operating expenses exclude debt service, depreciation and capital improvements.

Your notes for this unit

One year's income versus the whole holding period.

• Direct capitalization — one year's NOI divided by a cap rate.
• Yield capitalization — discount all projected future cash flows plus resale to present value (DCF).
• Band of investment — a weighted cap rate blending the mortgage and equity positions.
• A higher cap rate means higher perceived risk and lower value for the same income.

Your notes for this unit

Turning three indications into one opinion — and never by averaging.

• Reconciliation weights the approaches by relevance and data quality. Averaging is improper.
• Weight by property type: sales comparison for houses, income for investment property, cost for new or special-purpose.
• Report options under USPAP: appraisal report and restricted appraisal report.
• Every report states the effective date, the interest appraised, and its assumptions and limiting conditions.

Your notes for this unit

Valuing something less than the whole fee.

• Leased fee — the landlord's interest, subject to the lease. Leasehold — the tenant's interest.
• Contract rent versus market rent; the gap creates positive or negative leasehold value.
• Fractional interests — co-ownership shares often carry a discount for lack of control and marketability.
• Easements, life estates, air rights, mineral rights and timeshare interests each require their own treatment.

Your notes for this unit

What is being transferred, in escrow's vocabulary.

• Real versus personal property; fixtures tested with MARIA.
• Bundle of rights — possession, use, enjoyment, exclusion, disposition.
• Estates: fee simple, life estate, leasehold.
• Co-ownership: joint tenancy (survivorship), tenancy in common, community property — vesting must be stated exactly.

Your notes for this unit

The documents that move title, and why recording order matters.

• Deed requirements — writing, competent grantor, identifiable grantee, description, granting clause, signature, delivery and acceptance.
• Grant versus quitclaim deed.
• Recording gives constructive notice and fixes priority.
• Acknowledgment before a notary is required for recording.

Your notes for this unit

The definition, and the licensing map. This unit is the course's core.

• Escrow requires a binding contract between the parties and conditional delivery of documents and funds to a neutral third party.
• The escrow holder is a dual limited agent — agent of both, and of neither exclusively.
• It must follow written bilateral instructions exactly and may not give legal advice or negotiate.
• Escrow Law (administered through the DFPI) licenses independent escrow companies. Exempt: real estate brokers in their own transactions, attorneys for their clients, title insurers, banks and lenders.

Your notes for this unit

What a title policy actually promises.

• Title insurance indemnifies against defects existing at the policy date — it looks backwards, not forwards.
• Chain of title, the abstract, and the preliminary report (an offer to insure, not a representation of condition).
• Cloud on title — any claim impairing marketability; quiet title is the action to clear it.
• One-time premium paid at closing, not an annual renewal.

Your notes for this unit

Which policy covers what — a guaranteed comparison question.

• Standard exclusions: zoning and government regulation, eminent domain, defects created by the insured, and matters the insured knew of but didn't disclose.
• Endorsements extend coverage for specific identified risks.

Your notes for this unit

Escrow can only carry out a valid underlying contract.

• Elements: capable parties, mutual consent, lawful object, consideration.
• Statute of frauds — real property contracts must be written.
• Contingencies and their removal deadlines drive the escrow timeline.
• Escrow may not interpret ambiguity — it must ask the parties for clarifying instructions.

Your notes for this unit

How the transaction reaches escrow, and who the players are.

• Listing and purchase agreements, agency relationships and disclosure duties.
• Escrow coordinates agents, lenders, title, inspectors, appraisers and the parties.
• Brokers handling deposits must follow trust fund rules — deposit by the third business day.

Your notes for this unit

The intake step, and the order it proceeds in.

• Take the executed purchase agreement, assign an escrow number, and open a file.
• Order the preliminary title report; request demands and beneficiary statements on existing loans.
• Collect the earnest money deposit into the escrow trust account.
• Confirm vesting, legal description, and the identities of all parties.

Your notes for this unit

The document escrow actually obeys.

• Bilateral and signed by both parties; they govern escrow's every act.
• Unilateral amendment is impossible — changes need a signed mutual amendment.
• They set out disbursement authority, proration method, and closing conditions.
• Where instructions and the purchase agreement conflict, escrow must obtain clarification rather than choose.

Your notes for this unit

A genuinely testable California quirk.

• Northern California — escrow commonly handled by title companies; buyer often pays title premium; taxes and fees split by local custom.
• Southern California — independent escrow companies are more common; seller customarily pays the owner's title premium.
• Customs are negotiable, not legal requirements.
• Documentary transfer tax and city transfer taxes vary by county and municipality.

Your notes for this unit

Clearing every condition before anything records.

• Review the preliminary report and clear exceptions; obtain payoff demands.
• Confirm contingency removals, loan approval and funding conditions.
• Prepare the estimated closing statement and obtain signatures on deed and loan documents.
• Verify good funds — cashier's cheque or wire clearing before disbursement.

Your notes for this unit

The arithmetic of the closing statement. Expect calculation questions.

• Debit — a charge against a party. Credit — an amount in their favour. Each statement must balance.
• Buyer debits: purchase price, loan costs, prepaid items. Buyer credits: deposit, new loan proceeds.
• Seller credits: purchase price. Seller debits: payoffs, commission, transfer tax, prorated items owed.
• Prorations — taxes, interest, rents and HOA dues divided at closing. Interest on an assumed loan is paid in arrears.

Your notes for this unit

Coordinating with the lender, under the federal clocks.

• Loan Estimate within 3 business days of application; Closing Disclosure at least 3 business days before consummation.
• Escrow supplies figures to the lender and reconciles them against the CD.
• Loan documents are signed, then the lender funds; recording follows funding.
• Impound accounts are established at closing where required.

Your notes for this unit

The statutes escrow must apply, several with withholding consequences.

• RESPA — Section 8 bans kickbacks and unearned fee-splitting; Section 9 bars the seller requiring a particular title insurer.
• TILA / TRID disclosure timing.
• FIRPTA — federal withholding on dispositions by foreign persons.
• California withholding on certain out-of-state seller transfers.
• Escrow trust accounts must be separate, reconciled, and never commingled with operating funds.

Your notes for this unit

Escrows with moving parts a house sale doesn't have.

• Rent and security deposit transfers, and estoppel certificates confirming lease terms.
• Assignment of leases and service contracts.
• 1031 exchange — a qualified intermediary holds proceeds; the taxpayer may not touch them. 45 days to identify, 180 days to close.
• Commercial escrows add environmental review, ALTA survey, and entity authority documents.

Your notes for this unit

The unusual files, each with its own statute.

• Bulk sale of a business — UCC filings, inventory, alcohol licence transfer.
• Mobile / manufactured home — HCD registration rather than a recorded deed where not affixed.
• Probate and trust sales — court confirmation and authority documents.
• Short sale — lender approval is a condition precedent.
• New subdivision escrows require the DRE public report.

Your notes for this unit

How the title insurer decides what it will and won't insure.

• Title search and examination against the grantor-grantee and tax indices.
• Exceptions are removed by clearing the underlying matter or issuing an endorsement.
• Common problems: gaps in the chain, unreleased liens, defective legal descriptions, forged instruments, missing spousal signatures, unprobated estates.
• Mechanics lien risk requires indemnity where recent work has occurred.

Your notes for this unit

Escrow and title in a distressed transaction.

• California nonjudicial sequence: NOD → 3-month reinstatement → 20-day notice of sale → trustee's sale.
• A trustee's deed upon sale conveys to the successful bidder and wipes out junior liens — but not property taxes.
• Nonjudicial bars a deficiency judgment; judicial may allow one plus redemption.
• REO and short sale escrows carry lender-dictated terms and addenda.

Your notes for this unit

Why brokerages must adapt, and what usually forces it.

• Drivers: technology, consumer expectations, commission-model pressure, consolidation, regulation.
• Resistance to change comes from uncertainty, loss of status, and habit.
• Change management: communicate the reason, involve the affected, stage the rollout.

Your notes for this unit

The distinction the unit is built on.

• Leadership sets direction; management executes.
• Styles: autocratic, democratic, laissez-faire, and situational adaptation between them.
• Positional versus personal authority — title versus earned influence.
• Vision and mission statements as alignment tools.

Your notes for this unit

The classic functions, which the course will name.

• Planning, organising, staffing, directing, controlling.
• Delegation transfers authority but not ultimate responsibility.
• Span of control — how many people one manager can effectively supervise.
• MBO — management by objectives, with measurable targets.

Your notes for this unit

Getting information to move accurately through an office.

• Sender → message → channel → receiver → feedback, with noise at every step.
• Active listening and confirming understanding.
• Decision process: define the problem, gather data, weigh alternatives, decide, implement, evaluate.
• Documentation is both a communication tool and a legal defence.

Your notes for this unit

Reading conditions before committing resources.

• SWOT — strengths, weaknesses, opportunities, threats.
• External forces: economic cycle, interest rates, demographics, regulation, competitors.
• Competitive analysis — market share, service model, commission structure.

Your notes for this unit

Sizing the opportunity in numbers.

• Market share, absorption rate, average sale price, days on market, list-to-sale ratio.
• Farm area selection and turnover rate.
• Target market definition by geography, price band and client type.

Your notes for this unit

Turning analysis into targets.

• Strategic (long-range) versus tactical (near-term) planning.
• SMART objectives — specific, measurable, attainable, relevant, time-bound.
• Budget and pro forma projections; contingency planning.

Your notes for this unit

Legal form and licensing — the first genuinely testable unit.

• Forms: sole proprietorship, partnership, corporation, LLC, weighed on liability, tax and continuity.
• A corporation must hold its own broker licence, with a designated officer who is a licensed broker responsible for supervision.
• DBA / fictitious business name must be reported to the DRE.
• Branch offices require their own licence.

Your notes for this unit

The infrastructure that keeps files compliant.

• Transaction management, CRM, document retention and back-office systems.
• Checklists as the practical compliance mechanism.
• Data security and client confidentiality obligations.
• Electronic signatures are valid under UETA and E-SIGN.

Your notes for this unit

Brokerage economics, and one formula worth memorizing.

• Income statement (profit and loss), balance sheet, cash flow.
• Fixed versus variable costs; break-even analysis.
• Desk cost = total operating expense ÷ number of salespeople.
• Commission models: graduated split, 100% commission with desk fee, salary plus bonus.
• Company dollar — what remains after commissions are paid out.

Your notes for this unit

The policy manual, and the supervision duty behind it.

• A written policy manual sets standards and is a defence in disciplinary and civil matters.
• Broker supervision is a regulatory obligation: written procedures, review of transaction documents, oversight of advertising, trust funds and licensee conduct.
• Trust fund handling — deposit by the third business day, separate trust account, columnar records, monthly reconciliation, no commingling.
• Records retained 3 years.

Your notes for this unit

Promotion under California advertising rules.

• Blind advertising is prohibited — ads must disclose that the advertiser is a licensee and show the licence number.
• Team names must include the responsible broker's identity and follow statutory format rules.
• Truth in advertising — no false or misleading claims; fair housing rules apply to imagery and wording.
• Do Not Call and CAN-SPAM restrict cold calling and bulk email.
• The broker is responsible for reviewing licensee advertising.

Your notes for this unit

The classification question that trips everyone.

• Salespersons are typically independent contractors for tax purposes under a written IC agreement — but remain under the broker's supervision as a matter of licence law.
• Both statements are true simultaneously. Tax status does not reduce the supervision duty.
• Employment law — wage and hour rules, anti-discrimination, harassment prevention training, workers' compensation.
• A written broker-salesperson agreement is required and must be retained.

Your notes for this unit

Building the roster, lawfully.

• Sources: licensing schools, referrals, competitors, career changers.
• Interview questions must avoid protected characteristics — no questions on age, marital status, family plans, religion, national origin or disability.
• Verify licence status with the DRE before allowing any activity.
• Onboarding — policy manual, agreements, systems training.

Your notes for this unit

Keeping licensees competent and licensed.

• Continuing education is required for renewal on a four-year cycle, including mandated ethics, agency, trust fund handling, fair housing, risk management and implicit bias topics.
• Mentoring and structured training for new licensees.
• Designations and specialisation as retention tools.

Your notes for this unit

Managing individual production.

• Set measurable standards; track leading activity metrics, not only closed sales.
• Feedback should be specific, timely and behaviour-focused.
• Progressive discipline, documented at each step.
• Motivation is both intrinsic and extrinsic — compensation alone rarely fixes performance.

Your notes for this unit

Measuring whether the plan worked.

• KPIs — listings taken, conversion rate, average sale price, company dollar, retention.
• Variance analysis — actual against budget, and why they differ.
• File audits as internal compliance review before the DRE does it.
• Client satisfaction data as a leading indicator of referral volume.

Your notes for this unit

Where brokerages actually get sued, and what limits the damage.

• Four responses: avoid, control, transfer (insurance), retain.
• E&O insurance covers negligent acts — not intentional misconduct or fraud.
• Highest-frequency claims: failure to disclose, misrepresentation, agency and dual-agency failures, and trust fund mishandling.
• Documentation is the primary defence. Written disclosure of material facts is the single best risk control.
• DRE audits examine trust accounts, records and supervision. Retain records 3 years.

Your notes for this unit

The licence, the broker relationship, and how you're paid.

• A salesperson must work under a broker; only a broker may operate independently.
• Independent contractor for tax purposes, yet supervised by the broker under licence law.
• Commission is negotiable and is earned per the written agreement.

Your notes for this unit

Federal floor, California ceiling.

• Federal: race, colour, religion, sex, national origin, familial status, disability.
• California (Unruh + FEHA) adds marital status, ancestry, source of income, sexual orientation, gender identity and expression, age, genetic information, immigration status and more.
• Steering, blockbusting, redlining are prohibited, as is discriminatory advertising.
• Reasonable accommodation and modification must be permitted for disability.

Your notes for this unit

Duty beyond the minimum the statute requires.

• Fiduciary duties — OLD CAR to the principal; honesty and fair dealing to everyone else.
• Conflicts of interest must be disclosed in writing — including buying for your own account.
• A licensee may not practise law, appraise for a fee without a licence, or give tax advice beyond competence.

Your notes for this unit

The single most disciplined-upon area in California practice.

• Deposit by the third business day following receipt, unless instructed in writing to hold an uncashed cheque.
• Held in a trust account in the broker's name as trustee, at a California depository.
• Commingling — mixing trust and personal funds — is prohibited. Conversion is worse.
• Columnar records and monthly reconciliation required; records kept 3 years.

Your notes for this unit

California's disclosure list is long, and the exam knows it.

• TDS — seller's known conditions; not waivable on most residential 1–4 sales.
• Natural Hazard Disclosure, Mello-Roos, lead-based paint (pre-1978).
• Megan's Law notice paragraph; no duty to research the database.
• Death within 3 years is material; AIDS-related death may not be disclosed.
• Water-conserving fixtures, smoke and carbon monoxide alarms, and defensible space where applicable.

Your notes for this unit

What you must disclose about yourself and what you saw.

• Agency Disclosure — disclose, elect, confirm, as soon as practicable.
• AVID — the agent's own reasonably diligent visual inspection of accessible areas.
• Principal status — disclose in writing if you're buying or selling for your own account.
• Disclose any compensation from a third party, including referral fees.

Your notes for this unit

Finding clients within the rules.

• Farming a geographic or demographic area; tracking turnover rate.
• Do Not Call Registry and CAN-SPAM limits on calling and emailing.
• Referrals and past clients as the highest-conversion source.
• Expired and FSBO prospecting, subject to DNC rules.

Your notes for this unit

Rules that apply to every medium, including social.

• Blind ads prohibited; disclose licensee status and the licence number.
• Team name requirements include the responsible broker's identity.
• No false or misleading claims; fair housing applies to images and wording.
• The broker must review licensee advertising.

Your notes for this unit

Listing the property and pricing it defensibly.

• Exclusive right to sell, exclusive agency, open, and net listings.
• Exclusive listings need a definite termination date.
• CMA — a broker's price opinion, not an appraisal.
• Deliver the seller's disclosures and set expectations on contingencies and timelines.

Your notes for this unit

Representation, qualification, and showing.

• Buyer representation agreement establishes the relationship and compensation.
• Pre-qualification is informal; pre-approval is underwritten.
• Never steer — let the buyer define their own criteria and areas.
• Disclose material facts you know or reasonably should know.

Your notes for this unit

The contract that drives everything downstream.

• Offer, acceptance, counter-offer — a counter terminates the original offer.
• Contingencies — loan, appraisal, inspection — with removal deadlines.
• Liquidated damages must be separately initialled; capped at 3% of purchase price on residential 1–4.
• Present all offers to the seller.

Your notes for this unit

From acceptance to recording.

• Escrow is a neutral depository acting on bilateral instructions; cancellation needs mutual agreement.
• CLTA standard versus ALTA/extended coverage.
• Prorations at closing; recording completes the transfer.
• Closing Disclosure at least 3 business days before consummation.

Your notes for this unit

The Finance essentials as they arise in practice.

• Note = debt; deed of trust = security, with three parties.
• FHA insures, VA guarantees, conventional is neither; PMI above 80% LTV.
• Loan Estimate within 3 business days of application.
• Due-on-sale blocks most assumptions.

Your notes for this unit

The tax facts clients ask about most.

• Section 121 — $250,000 single / $500,000 married, owned and occupied 2 of the last 5 years.
• 1031 exchange — investment property only; 45 days to identify, 180 to close.
• Proposition 13 assessment cap; reassessment on transfer or new construction.
• Documentary transfer tax on conveyance; depreciation on improvements only.

Your notes for this unit

Managing for an owner, and the tenant law that governs it.

• Management agreement sets authority, fee and reporting.
• Implied warranty of habitability; security deposits accounted for within 21 days.
• 3-day notice for nonpayment; unlawful detainer is the only lawful eviction.
• Fair housing applies fully to tenant selection and advertising.

Your notes for this unit

A California-mandated topic, and it does get tested.

• Implicit bias operates unconsciously and can produce discriminatory outcomes without discriminatory intent.
• It appears in practice through steering, uneven service levels, assumptions about qualification, and appraisal and lending disparities.
• Counters: consistent written procedures, objective criteria, letting clients define their own search, and self-audit of outcomes.
• Intent is not required for a fair housing violation — disparate impact is actionable.

Your notes for this unit