California — Transfer of Property — California Real Estate — State Law Practice Test

This California Real Estate — State Law California — Transfer of Property practice set has 12 practice questions based on the official exam materials, each with an instant explanation.

Sample questions

Three questions from the California — Transfer of Property bank with the correct answer and an explanation. The practice quiz above draws 12 questions at random from the same bank.

1. In California, who is generally required to obtain an escrow license from the Department of Financial Protection and Innovation in order to act as an independent escrow agent?

   • An independent company that conducts escrows for compensation as its business — Correct answer
   • A bank or trust company acting in its ordinary business
   • A licensed title insurer handling the escrow incident to a policy it issues
   • A licensed real estate broker handling escrow in a deal where the broker is the agent

   Explanation: Under California's Escrow Law (Financial Code §17000 et seq.), an independent company that conducts escrows for compensation must be licensed by the Department of Financial Protection and Innovation as an escrow agent. The statute lists narrow EXEMPTIONS — banks, title insurers, attorneys, and (key for licensees) a licensed real estate broker handling an escrow in a transaction in which the broker is performing acts requiring a real estate license. So a stand-alone escrow business needs the license; an exempt person does not. Escrow agent（托管代理人）: the neutral third party that holds funds/documents and closes the transaction. Source: Cal. Financial Code §17000, §17006.

   Handbook: California Transfer of Property — Escrow licensing requirement (Cal. Fin. Code §17000)

2. Under the broker escrow exemption to California's Escrow Law, when may a licensed real estate broker conduct an escrow WITHOUT a separate escrow license?

   • Only in a transaction in which the broker is acting as the agent (or a principal) — Correct answer
   • In any escrow the broker chooses, advertised openly to the general public
   • For any residential transaction statewide, regardless of who the agent is
   • Only after posting a $100,000 surety bond with the county recorder

   Explanation: Financial Code §17006(a)(4) exempts a licensed real estate broker who performs escrow services ONLY in connection with a transaction in which the broker is a principal or is performing acts for which a real estate license is required (i.e., the broker is the agent in that same deal). The broker may not advertise or hold itself out as an independent escrow company to the public for unrelated deals. Broker escrow exemption（经纪人托管豁免）: a broker may escrow only its own brokered transactions. Source: Cal. Fin. Code §17006(a)(4).

   Handbook: California Transfer of Property — Broker escrow exemption (Cal. Fin. Code §17006)

3. What is California's documentary transfer tax rate that a county may impose on the recording of a deed conveying real property?

   • $0.55 for each $500 of value conveyed (i.e., $1.10 per $1,000) — Correct answer
   • $2.00 for each $500 of the gross sales price
   • A flat 1% of the full purchase price statewide
   • $0.55 for each $100 of the assessed value

   Explanation: Under the California Documentary Transfer Tax Act (Revenue & Taxation Code §11911), a county may impose a tax of $0.55 for each $500 (or fraction thereof) of the value conveyed, excluding the value of any liens or encumbrances remaining at the time of sale. That equals $1.10 per $1,000. Cities may add their own transfer tax. The tax is computed on the consideration/equity transferred, not the gross price when an existing loan is assumed. Documentary transfer tax（文件过户税）: a county tax on recording a deed. Source: Cal. Rev. & Tax. Code §11911.

   Handbook: California Transfer of Property — Documentary transfer tax rate (Cal. Rev. & Tax. Code §11911)