Tke Real,tu |ll1te Book of Adlifornia

t{6i
E

I
StateRea[Estate
DepartmentAct

EDwrN T. KDrsria
Cannrissioncr
t:lalt Iteal Est(te Detbtnent

fu"-d
 TlLeRe(LLtU
Blue Book ol Calilonia 337

The ltate Real Estate Act;

How It Functions
try l.lDwrN T. KETSER

HE feal ertrtc brokrr of aCeni hotrtsh r

;1;ii, 1f,xi*rnils:,Irui
n right
to."rv''p"'ii"ii'i; i;Tfil;,ri
1'ri"
*p-'.*''ilt;;"";i'ie:
ii i.lii'll-"tx.1"fliii;i"1s

i['*:*iii:$l;l*14ill:;il jj #r:n4i #{rt:,.. irx,

jll.''J1";:iJ".'fi
i;iplryt,?L,il""l l:;,,t"t,:,,*i",{Tijr:: lI
;"1{iiii:i: ; i :j *;":ri':: }'i ;:i;i'I"
aDClne\.er las been fair or just.

ri" +;"::;;all It js

,' .""" J s, ,n " - "li,l,'l|lii''i';".:"'lfi"",i"f

ili;,^"
lJ,;.Tll;
",.,ili;. i:.,:I ll; ji,J"'::
",ii,',:.':,;,;',r:,;'-ii,trl1,l
:,,ril" li",],ilil":,T ",'J,.
I'' i;: l?li,li,i,.,ii,f",Ill.,.,l;;r
.1;t'91;;;
-Ciii"
opelator.becomes_ano:t potent factor in the J _"r.
bxtesmuchto'.a.athe"ari*
aavarceraent
anaup-
il:ll,:i,,'J:fiil"'il*ffi'j

ti*T.:l,-;ffi
flil,:itJ",
rlt#ligri*T.F*uq,
Ii",;
_ a r r , . . . D uu n t ,. s h - iil'il, fj ;JJlii:ll
"'ixlT,:;:'"Ti,ifr J,x*:;ll:
o o . . . . s . . sl h F q , r c l , l i a so t h ^ n p " 1 vn n . l i t r e e . i t \
n e N r r rr r o rq ' l a F h i " c i - r r l r s l a n h o u , d . H p i . q u i t e l i k - r r o n r i t h e i
rris o\r'n ir,tp-ra"'s\vhcr.vpI onpoflr.ni1ypfes"It!
ilspl^,p\.pl|.luutl
rr oe ro.lta d.tr.m.rr' o{ his .l:pnr Ljndpr Lh. hw .l^" conmi"siorier
nas aLthorry. whFr."v^r Ilp quest'on is uj.ed rpgard:nA
r r p s - , t or F q r , r r . . u . h l r n o l r " r r " m r y d n - m n p r , s s a r vi n lhe,. uuJl.
,lpr,r.Il.ine
l l p ! ] i . r . . ,i s c f i 1 m n n r o n r s r s " i r , r h Fr " | . s r a r "
;*:lt:"' "'...h

*"#T",#1""1,,fii;:. ;;li JIl!I"i "J:i].,f;ii',', l"?ff:

rng rhe apporttmpnl rs an agcrj lorr.lient ihp broker "i1:,
rrust gi\c to
nrs clrFnl tha ben-fij of all IhA knowladgFlp may hrv" resardine
the
suoJAclmallpr of the agencywhirh \vouldconir:ourp10 his inijr"st.
A D r o K e r , r n n u r .u . d . r | l , t r $ . r l , o r o f r . i i l " s u . h L , r o \ \ l " d s ,
c.rinFd
338 The Reqlt! Bl,ueBook.of Csnlornia

while actiDg in this fiduciary capslity to his own benefit, to the detri-
ment of his pridcipal. A real estate broker is bound to his client and
must tell the truth under all conditions. Making any substantial mis-
representation or false promises will endanger the license of the
broker. He cairnot act for more than one party in a transaction,
without the knowledge of all parties. The old saying that .1{o man
can serve two masters" is appropriately applied in rea.l esiate trans-
actions as in any other line of business. ff both parties know and
have full knowledgethat the broke! is aciing for both of them it
pla,('esthem on their guard ind the). berause ol havingthjs knowl-
pdge,will enter inr-osucha transaclio'1 wirh morp.aulion and care,
b]rt when that fact is kept secret from or€ or both padies they are
thrown of their guard and the agent may favot one to the detriment
of the other. T'}le penalty for this oflens; is r€vocation of licens€.
The law imposeshonestd€alingin every particular upona licensed
real cstate broker. Any conductupon the part of the broker which
shall constitute dfuhonestdealing is sDfficientreasonfor the revoca-
tion of the offende/s license. Before the commissionermav revoke
the licensea heafing must be called giving thp otrenderth; oppor-
tunity to answerto the chargesfil€d againsthim. A hearing is held
at which both the complainantand the respondentare present,each
producingtheir own witnesses. A rec.ordof this hearing is taken by
a reporter and a transcript made. After the hea ng of the evidence,
if it appearsto the commissionerthat the allegationsate sustained,
the licenseo{ the offenderis revoked. Shouldthe ofienderfail to aD-
peal l,o answcr l,hechargesagainst him. after having beengiven due
notice, the teslimony of the complaining witnesses is taken and a de-
cision is made,either revoking the license,or dismissingthe case,as
the evidencemey walrant. Brokers slould tot fail to defend the
chargesthat inay be brought against them. The decisionof the real
estate commissionermighi have been quite different had they ap.
pearedand defend€dthemselvesand they would have avoidedthe un-
favorablepublicity suchas alwavs follows the revocationof a license.
Section20-B g;vesthe commissionerconsideHbleauthority over
land settlementprojects and subdivisions. This sectionmakes it a
public offensefor anyone to make false statementin the advertis-
ing matter used in the selling. It also makesit a public offellsefor
anyoneto fail to comply \trith any of the pfovisions of this act, or
who in any other respectvrilfully violatesor fails, omits or neglects
to obey,obseN€or comply with any order, permit, decision,demand
or requirement of the commissione!in this act. The penalty, if
found euilty, is imprisonmentin the state pdson or the county jail
for a ter.Innot to exceedtwo years,or a ffne not to exceedtwo thou,
sand dollars,or both.
The districi attorney, under this act, must prosecuteoffenden
upon the vritten requestor demandof the real estatecommissioner.
The authority given the r€al estate commissjonerunder this section
coversa large field. It must be usedwith discretion. The commis-
sionerwould have authodty to demandonly those things that might
be considered essential and fundamental in accomplishing the pur-
posesfor whichi the project or subdivisionis sold. Shouldland be
 :jjl9

ofiered for sale for.agricultural puryoses the commissionerwould

have autho ty to require thrt \iater in sufiicient quantities be pro-
vided. He lvould have authority to demand th:rt the drainage con-
ditions be such that $ould makc Dossible successful agr.icutture.
Failule to comply with :ll1 order to provide sufiicier)t r'ater or. proper
drainage {r.cilities \ould result in a demand upon th€ district at-
lornet to plosecLrtcthc offc der'-

QUDSTTONNAIRE

The law ploviding for. tho qualilicrtioDtest for.r.e.rlest.rtebfokcrs

re:rds that the re:rl estate commissjoner may lequire proot that the
applicaDt has a fair kno\ledge of the English lansuage, including
reading, writillg, spelling, element .y a thmetic, a fair understaDd-
ing ot the rudimeDtary principles of real estate convcyancing, the
g€neral purposes and general legal elt€ct of d€eds, mortgages, lard
contracts of sale, and leases,and a general and lair uDiler.standingof
the obligations betlvcen pfincipd and agent as \lell as of the provi,
sions of thc California Real Estate Act. It suggests celtain thirss
the real estate bloker ought to know.
I think it ro more th:u {ai1 to sive all persons:Lppllirs 1or a
license this oppoduDity ol in{orming themselves upon the valjous
subjects. Some brokers, \lhile thev have been in the business a long
time and have honestly fulfilled their responsibility to their clients,
who have also been complying Nith the lau'in every respect and ren-
dering their clients a real servicc, if &rlled upon nithout siven an
opportunity to inform themselves upon these questions, would likely
fail. Therefore, ir the beginning and in taking the first step to\txrd
making the real estate business a profession, I considererl it only fair
that these people should have an opportuDity to make such investiga-
tions as woukl enable them to expless in conclete folm the prinriples
they have beer observing du ng their entire carear.
S€ction9-A of the real estateact providesthlt ali applic:rnts{or
brokel license shall file, in .rddiiion to their qu€stiorn.rire, a sxtis-
factory bond to the people of the s Lte of Calilor'nia, duly executed
by sufficient surcty, ol sureties, to be appro\'€clby said commissioner
in the sum of $2,000.00- The bo)rdof any surety company recognizad
by thc state of Calilornia \l'ill be arcepted. Perso al suletl bonds
offered will b€ acceptcd whel.e there is person.rl justification by
sureties. It is impofiant that the sureties llnswer thcil justification
questionnaire ir full. These answe$ must be made undel oath. ,A.ny
person s$,ealing falsely subjects himself to prcsecution for perjul'y.
Wc intend to make irlvestigations as far as possible :1nd check the
tacts rvith the st:rtements made onder osth by lhe sureties.

TI'I! SICN

The larv plorides llrther iu section11-A thrt:! sign shall be dis

played upon the premises to indicate that the licenseeis a real estate
broker. The name of the irldividlral, lirm, or cotporation shall be
340 The Realta BIue Book.ol C&kfornia

clcariy show-nthereon. Thp purposeof lhis sign js to indicate jo the

putruc the character ol the busjnessthat is being conductedin ihe
office in question. li is upon the thmry that thJpublic has a rishi
to know when Lhey enter an office whar kind ol a businessis be-ins
conducted in thst office. Therefore. any sign that conveys that jn:
Ioimallon to a personentenng thaj office meels lhe rcquirementsof
rne raw. -the taw does not require any parlicular form as io the
wording, lhe size.or locrlion. exceprthat il shall be in a conspieuous
placc. A real estale broker can dpcide for himsplt whpther or not
the wording aad location of his sign is such that it inalicatesto a per-
son €nte ng his office that he is a licensed real estate broker. John
Doe, licensed real estate broker; or John Doe, licensed r.ealtor. would
conveysuch in{ormation.

DIBECTORY
The law providpsthat a real estale clirpcbr\. bullp{in.sivins rhe
namesoI all pemonsholding a rpal estarplicense,be issuediwice"earh
year. Thc commissionermay publish jherpwith such maller as he
may deem ppdinenl lo the act. Each licenscdbroker is entiued to
receive such dir€ctory v/ithout extra charge. It is our purpose to sive
such information with this directory as will be helpful to;ersons-en_
sased in the real estate bDsiness

CONST]TUTIONALIAY OF ACT

The supreme court of the state of Califomia and the suDreme

court ol the Urriled Srale{ halc borh uphcld I he prin.iplc of reatisl,ate
lr(pnsetaw lFgislarion. whilF lhera mal be somi po,ris in the license
raw upon whlch a question might be raised as jo consriiutionalityil
wrll not in an) way affect the generallaw. It scemsro me that under
lhe.rrcumslancesi( is simpl\ a waste ol time and monev for anvone
lo attacl lhe constilurionalily of the real eslare licenie law,;s il
standq tod_ay. We have at all times. whilp enforfing lhe punilive
le-alu.rpsol lhe act, endeavorcdto Carry out a construcljveprogaam
ol educatronas to the proper melhodq of.ondu(tjng a real ectale

T h e p u b l i c i s l e a r n i n g I h arlh e yc a r ,. o m e t o r h - r e a le s r a t Fd e u a n -
menl wilh their rerl F.latF {roublps. They are Ic6rrir,t morF and
morc what thay mry exppct from real estai. brokers. Many limes
pFoplehave come wjth imaginary glevancps. Afler hparjn-gthese
complaints and explaining to them the law and giving them ttuniler_
stand that the real estate broker has rights as weI as they, they have
gone away with a better understanding as to how to conduci their
own real estate business and also with a better opirion of the real
estate broker.
Il is seldomthal broker.s.$ho havirg had rhFir ticenq" rpvoked
rrd la,Fr r.instaled.betray the lrusl thar ;e placedin thcm. However,
there are a lew excepl;onsto this rule. Those brok.$ who have
broken faith in this respect, wilt find it extremely difficult to have
themselves reinstated again. There are many brokers whose licenses
 342 Tke ti,eaLt
! Rlu. Itoah ol Ctrliiomia

State Real Estate Department Act

c||,lt),t.t)lt 605;. slATtu.t.js t919, t)tcE 1!:52
'" rL;l,i'i,.,i,l;^:l.'.ir,l;l
;lil:ir,'i:'j.'l'::ri; li:;; ;i;h .;lil;liir,,ll'llir*
jiir;,,:r"t1::il':.:,lj:t
i:i:,i;t'::,,,i.iil,,i'l:.::ii:.,"i"':.'-'"."":::"li"r;;f;ii;:;
Ll.li.:;
i;iill;';irrr"iiii:riii:rii.ir]lll:r#rl. '"'"
l*.,1rr;.lliriri,l,,ii,1u,,r,

:ri:;ru;'i"',iili:iii,j
kli:ri:!,,1#',ll-i;i1* l#t.::
;i"Ji:iif:i:,lr]i:ii:i
, : : : , ;' . , , A:.;.1 , : , : ; "-.L1; 1 . , ' , ' : 1 . 1 . ' j::,1 , , . . , r ' : ; ; " " . , : . . "
irii"i,rrX, :lJ:r; l";".i;i""'ij:,":..:i,:";
11 ;:_.#;i;":t .,.it;.:..:;. " i ; , . ; , ! , . ; :
't
i*t:'fu;iii:,;l':,:;r1,i4. i, ;i;*it:,il',il
itir,i;T:i'
g,1;ir,;t'i
i;l'
; i1l-',;
i; :"1,""1a ;'i;,i;,i+i
iii;1:
;:i
ii; f,'l
l{d;;ri rir' ,"li;r: ",""i"r'"li::';i;*
:;' ;,r':;';
1;lil":";r'''..
ii;;;:;;';i;r ;1,r
; i i , Li;.lrj 'i".
,i'i;l:rfir,""il;;",,;
;;"."; jill"j'l."ih ::':rirr, ili3j
: ii;:i.:r":l.r'i':",i
rr!:i:,j r,l,rl:,,!,i;,".1.,;::;' "l,"i :;i:ri:
:r;
i;. ;;,1r*,;.".";;r;;"'l*
"r
il::r:"""r'i;t: ;,;,;ii:
",.i',',
.'":;;f";ilii;.]i.l:i'"ji'i,|"ij:".:"i.:::"i:.i.*.
:l ,*{r#j:;i";*rj*: :f;''.',ttg:ili:,:.jiJlJt
till"};i;",:",i,*iit
li.",ri:ulii
:j;".'r.;:
..:,";,''r:,l:,,f,i:l.:i:';:l:ll;.,'li::l,iitiii'l.1
:.i:-.i;
il:.l"*r;llj"ll"ri
;l"i:'i; ;";:il,?:r, , .ri I ;,,:l j,-
jll;:';;.;1
.:rjlrilr';"b.iili,i::
ijl,'j:ji;:] ,lr i: :::;' l;.: ,"."'f;f;;;;;
if,{i:r,i:,';r! l, ; r,'r"",irr
r r;":ii
r ;lr;ri.i;,il lr"l:i:
1l:"j.j,i,';:l!
il"r:,;''l'':l :'i
."
f:1.,,1j"*, ;., i15;i1"i
*il1:r,i r,i,*,i* .r,,,+;,
"i
l:r",:";,;i::.".
,;.,',"1.:" ""
itr'r;
i1i;;",;j;,.
';;i, 't lilri ,;','.*,,,,;".::,ij
^.;....-.,.",.,..
ilr:;]l:" .'--r".:.;. ".1,.,,,,11
ril'"1"1 {i;j;i J:!l::,' -jl':j :i::;;#,r';!:i ";iirii:"},{i;
j i:+l
l;: :""'ii"i' ;i ll'",;"
 TILeRe(dtu Bh& Book ol CaUfonri& 343

'J :-c, .!m"ni. 3.i nj n o ,-s ,, .." ,ir: srd r,.nr. d sa;
.'m''|,ne"r'raln

,.rr ,,r(.;-
ih. srrarics of iie

. n , , . , . _ r , . .i . r -

o '''' ''' h t'. ..,;

"3|

''.n.'l'"','
1! r rdrn,:rr.mhiD rt€

. . , ,i ,u r.rd_
cns"KM in bnsi.ess ro. rits ihan

h'-n.l.lntjr
bm',d,s ri+rse hainiains
ndi, ,s ne I L,\ h.d sutu
..nd ft! ..n.

The a!!ricat,on
snd re-ftb."ir-
 Th n.attU titiu Ra,,Lnl Cnlil,, &
"144

*+ilg*$#rl*i['q;,",s,t
$-*;;irtt*sl+q*rtl*q{I":
1i;;= i;-:;'. i1i,;,;j1a1111'
11i'".1;;,i =:r;;;;;':*", ;'
;li l ":ir:,:,:::ir;rl;iyir;";;
:l i+li iir,!'i"l{i";til
"l :l ri;"i1!
'iq',:l;:fi";l1:lrr'i
';i,i,;''
:*r;',;..i::lt
;;,i';',i"i;y;.'ji,,l5
l,",Ji*:
l"i,; iirll,i;i";l;.,r.i
"";rl,o.r
lffi l",,ilio*:l::;
(r) ii).
rl'$;'i''uir6;1
a sar.smrr.3 f.s shall b. iwo donr.s.

;illiitfi,rt-t*qttlt'.r*':;
,,,1i.1""11""fi"11i'i'i;ixi:'"ii';'i:1,;i;'':,1"D:::ffi:i1',i1,",{":1:i
:i"Ji;':."..x"
""."'"

fllir ir:'r l i
:-Jj:,{':#iid#$ird
1i;f:ii{[uq;6;;;:3,."11*;+f+i
ii,T"lr :il::!rl''i;''*'t-
iiii:i il ;rr';lrl
t "' "'" ir:r;r ;lt-,ii;ji"i
i:ili"' * -l,it_rli'n.i:;il'j'+:,ii
i/.:..'$
*l"",rrii{""xll}"li:;}li!{iii,:}r..x""i"r.:rr:.;,}ri.;i,}".:"
qru$
*iiilr;*r"slq*i{ql{-".";i*,i$'t'r:i,:"l
*,r"+:ll"*;$r"+,++
;lii;'tlri "*l',l;l-d*rfl
*-:i",:+la+,i,
riii*"'j:,:lilllt# r:
ilili{,r"rliiiil:l';::i.
f:';:fr;1j!"*;*;
The RealtLtBlue Booh ol C(LLifo|nia
346 '1ke Reeltlt Bllrc Book ol
C'tllifankL

. IP. .nn.!.,oaP, . nd dP!.s

sec. r5. No viotriior

jurisdiciion, !nd said con-

of the di*ri.r '!.,n.t !i e3rh t.uiry rb

jair .r sirie prison ror a term

said.irtincai.
!r,jc( \vhidr arpfovar rtry b.

.t ihe Fr.je.r:

or th. proj.(r
.iTc.t ihe projecl

irn- !.oj.{r and

 TheRealtuBtue Book ol Califonia 347

reou|edr.betn.
re8'"s'a'.'omnsl|oneldhaxbeen.

.o b" borrA by

, ubri dion. adrc.rseminr.

srti!en sra.irer
€very pe'son *,ho,
. u. o reriea con.dnini
pubtishes .r dtsblbutes
!o be 'ssued, circnlacd, or rv}]o, in trny

of the cohhis-

or Lh; d,..rfr I

-hd' ' \.;urd

. A n , . r , , , i t s u q d ,5 r d r h r a ! .
sec!lons, srbsecttons. sen

shd r,.c.si.e iher€ofr ro creai€

h , h " D , rv r , o i !
 The R&11! Bt e Book al Colilo))tie 341

have been revoked who have never been reinstated. No person after
having his license revokeil need ever come to the department for r€-
instatemeDt unless he comes with a repentant heart. He must show
evidence of his faith by his work and not come unless every wrong
of which he has been found guilty has been mrde fight, and wit}l a
recommendation tbr reinstatement from the persons $,rolrged.Among
the large majo ty of brokels and salesmenwe have had no trouble at
all. They unconsciously al1d without efiolt comply with the law be-
cause they are right and sound in their- business ethics. We do,
Itowever, notice a change in the attitude of those people who ax€ in-
cljned to side step as opportunity presents itsel{. T'hey are all leam-
ing to have a very heaithlul respect for the authority of the state
real estate commissioner. Through the efforts ol the organized real
estate men o{ the state in their educationsl work and in the loyal
suppoft given by both the real estrte brokers and the public to th€
real estate department the standard of the real estate business has
reached s place where the public is looking for the real estate man in-
stead of "lookins out 1br him."
The Ieal estate department has Lecomea real active, constructive
part of the state govemment of the state of California.