Before you read
Test yourself first: 5 questions
Question 1 of 5
Regarding property-condition disclosures, California has moved away from pure 'caveat emptor' (let the buyer beware) by imposing on sellers and their agents an affirmative duty to:
Answer: A. California has largely replaced caveat emptor with an affirmative duty to disclose known material facts affecting value or desirability that are not readily observable by the buyer. The duty is to disclose, not to repair or warrant.
Question 2 of 5
A fact that California courts and the DRE recognize as a material fact requiring disclosure to a buyer would most likely include:
Answer: D. A known chronic flooding or drainage problem affects value and desirability and is not readily observable, so it is a material fact that must be disclosed. The seller's motivation for moving and similar non-defect facts are generally not required property-condition disclosures.
Question 3 of 5
All first-point-of-contact solicitation materials and advertising by a licensee in California must include which of the following?
Answer: B. California law requires licensees to disclose their DRE license identification number on all first-point-of-contact solicitation materials (business cards, advertising flyers, etc.). This lets consumers verify licensure. Personal data like SSN is never required in advertising.
Question 4 of 5
California licensees must place trust funds into a trust account or neutral escrow within:
Answer: A. California requires trust funds received on behalf of others to be deposited (or delivered/held per instructions) within three business days.
Question 5 of 5
When a California licensee advertises a property or services, the advertisement must:
Answer: B. California advertising rules require licensees to disclose their licensed status so the public is not misled into thinking the agent is acting as a private party.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
Under Easton v. Strassburger and Civil Code 2079, the listing licensee must conduct a reasonably competent and diligent visual inspection of accessible areas and disclose any material defects found. Sellers must also disclose known material facts affecting value or desirability, and buyers should be informed of property-tax matters such as Prop 13 reassessment and any Mello-Roos special assessments.
Disclosures California Sellers and Licensees Must Make: FAQs
Is Disclosures California Sellers and Licensees Must Make on the real estate exam?
Yes. State License Law is a scored domain on the California real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does California test this differently?
California applies its own license law on top of the national portion. This page covers the California rules specifically, which is what the state section of your exam tests.
