48 topics · Updated 2026-09-17
A breach victim may accept the breach as ending the contract or pursue: unilateral rescission; action for dollar damages; or action for specific performance. Acceptance may be chosen when damages are too limited or the other party is judgment proof.
To rescind for breach, one must rescind promptly after discovering the justifying facts and restore (or offer to restore) everything of value received, conditioned on the other party doing likewise. A court awarding rescission may require compensation as justice requires; a party may also independently accomplish a completed rescission.
A breach victim may recover damages plus interest (10% per annum) from vesting. Damages must be reasonable; exemplary/punitive damages are generally not allowed absent bad faith. The measure is compensation for all detriment proximately caused. Nominal damages (e.g., $1) may be awarded with no appreciable detriment. Specific formulas apply to breach of agreements to convey or purchase real property.
A residential landlord may enter only: in emergency; to make agreed/necessary repairs; to supply agreed services; to show the dwelling to prospective purchasers, mortgagees, tenants, workers, or contractors; where abandoned/surrendered; or by court order. The landlord may not abuse or harass; waivers are void. Except in emergencies, entry must be during normal business hours after reasonable notice - 24 hours is presumed reasonable.
The law implies a covenant that the landlord will not take action or omission disturbing the tenant's right to possession and quiet enjoyment. It does not protect against third parties beyond the landlord's control. A tenant must have a legal right to possession to claim breach; proper legal eviction after default is not a breach.
For dwellings, the tenant need not vacate to avoid rent - the California Supreme Court held there is an implied warranty of habitability requiring bare living requirements. The tenant must first give notice of defects and allow reasonable time to cure. This rule applies only to residential leases; commercial constructive eviction still requires surrender of possession.
If the landlord fails to maintain a residential property fit for occupancy after notice and a reasonable time, the tenant may either spend up to one month's rent on repairs (only twice in any 12-month period), or abandon the premises and be relieved of further rent and conditions.
To show the unit to prospective/actual purchasers, notice may be given orally if the landlord notified the tenant in writing within 120 days that the property is for sale. 24 hours is presumed reasonable; notice must include date, approximate time, and purpose. At entry, written evidence must be left inside the unit. Oral agreements for agreed repairs must set a date within one week.
Breach includes: physically evicting a tenant with legal right to possession; denying access; permitting a paramount-title party (e.g., foreclosing senior lender) to oust the tenant; or any disturbance rendering the property wholly or substantially unsuitable (e.g., harassment, unwarranted alterations, failing to make repairs). A tenant cannot claim constructive eviction if the tenant caused the defect.
A landlord must maintain: waterproofing/weather protection with unbroken windows/doors; working plumbing and gas; approved water supply with hot/cold running water; working heating; working electrical; clean grounds free of debris/vermin at commencement; garbage receptacles; maintained floors, stairways, railings; and a locking mail receptacle in residential hotels.
Every dwelling for human occupancy must have an operable smoke detector. The landlord installs and maintains it, but if it was operable when the tenant took possession, the tenant must inform the landlord if it becomes inoperable.
If the tenant fails these and it substantially contributes to uninhabitability, the landlord has no duty to repair: keep their part clean/sanitary; dispose of waste properly; properly use fixtures; not damage/deface the premises; and occupy only areas designed for living, sleeping, cooking, or dining.
In non-residential leases, the landlord has no implied duty to repair; obligations are per the lease. Typically the landlord maintains structural elements and the tenant maintains the rest; absent a covenant, the tenant takes the premises 'as is.' For legal compliance, Brown v. Green requires courts to analyze the lease and factors (term length, cost vs. rent, structural vs. non-structural, interference, foreseeability) to determine probable intent.
Unless agreed otherwise, permanent improvements and fixtures become part of the premises (landlord's property) at expiration. However, trade, manufacture, ornamental, or domestic fixtures may be removed by the tenant during or upon expiration, unless they are integral and cannot be removed without injury to the property.
Fannie Mae is the largest investor in the secondary residential mortgage market.
Ginnie Mae is a government corporation that guarantees MBS but does not purchase mortgages.
Freddie Mac develops a secondary market primarily for conventional loans.
Private Mortgage Insurance Companies (MICs) insure conventional loans, making them more saleable.
Lenders replenish capital by selling loans to investors, banks, Fannie Mae, Freddie Mac, or Wall Street investment banks.
Wall Street securitized non-traditional (subprime) products that Fannie/Freddie/Ginnie would not accept.
Federal agencies issued guidance addressing non-traditional and subprime mortgage risks, adopted by California.
Ten characteristics make California attractive to suppliers of mortgage money.
Civil Code 1695 et seq. protects homeowners selling owner-occupied 1-4 unit residences subject to an outstanding Notice of Default to an equity purchaser. Required contract terms include purchaser info, consideration, payment terms, possession, rental terms, a Notice of Cancellation, and a Notice Required by California Law.
Civil Code 2945 et seq. governs consultants who assist owners in foreclosure. A foreclosure consultant performs services for compensation such as stopping a sale, obtaining forbearance, assisting reinstatement, or saving a residence. Exempt persons include attorneys, licensed brokers acting under 10131, and lenders.
Consultant contracts must include a Notice Required by California Law (14 pt bold) and a Notice of Cancellation. No fee may be paid until services are fully completed; no power of attorney or lien may be taken. Consultants must register with the DOJ and maintain a $100,000 surety bond.
An equity purchaser acquires title subject to a Notice of Default, unless for personal residence, by deed in lieu, by trustee's sale, by statute, by court order, or from a spouse/blood relative. Violations may result in treble damages, up to $2,500 civil penalty, and criminal fine up to $25,000 or jail.
A representative of a home equity purchaser must provide written proof of a valid California real estate license and be bonded by an admitted surety in twice the property's fair market value. However, a recent case made the bond requirement unenforceable and in doubt.
ECOA (Regulation B) promotes credit availability to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age (with capacity to contract), receipt of public assistance income, or good faith exercise of Consumer Credit Protection Act rights. It requires notifying applicants of actions taken (including denials), reporting credit histories in both spouses' names, retaining records, and providing appraisal report copies.
When a creditor takes action after receiving an application, a prescribed notice informing the applicant of reasons for denial or altered terms must be issued within 30 days of the decision. Record retention is 25 months from initial solicitation. Requiring a spousal signature simply because the individual is married amounts to substantive discrimination.
Under Regulation B, brokers who regularly refer applicants to creditors are 'creditors' for the general prohibition against discrimination and discouraging applications. When brokers submit applications to multiple lenders and one proceeds, remaining lenders have no duty to provide adverse action notice. A notice given by an MLB/MLO must disclose the identity of each creditor. Under California law, MLBs must give adverse action notice based on use of a consumer credit report, not receipt of a loan application.
The finance charge is the cost of consumer credit as a dollar amount, including any charge payable by the borrower or required by the lender as an incident to or condition of credit. The APR is a measure of the cost of credit as a yearly rate relating the amount/timing of value received to the amount/timing of payments, determined by either the actuarial method or the United States Rule method.
Finance charges include interest and time price differential; service/transaction/carrying charges; points (origination fees, commissions, loan discounts); appraisal/investigation/credit report fees (unless excluded); mortgage insurance premiums protecting the lender; charges for accepting the borrower's debt; and credit life/accident/health/property insurance premiums written in connection with the credit (unless excluded).
Excluded prepaid charges include application fees charged to all applicants; late/overlimit/delinquency charges; overdraft charges; participation fees; seller's points; and forfeited interest. Bona fide and reasonable real estate related fees are excluded: title exam, title insurance, survey, document preparation, notary, credit reports, and appraisal/inspection fees performed before settlement. Amounts paid into escrow/impound accounts are excluded (but prepaid interest is not).
OREA's Enforcement Division is its investigative and enforcement arm, protecting consumers against unlawful and fraudulent conduct by appraisers through examination of applicant conduct, investigation of complaints, and disciplinary proceedings. Subject to review and approval of the Chief Deputy Director and Director, the Division may deny, restrict, or revoke a license and/or impose a fine of up to $10,000 for each violation of state law.
Trust fund liability arises when funds are received from or for the benefit of a principal. Aggregate liability equals the total positive balances due to all beneficiaries. Funds on deposit must always equal the broker's aggregate trust fund liability.
To ensure the trust account balance always equals liabilities, the broker should follow specific procedures for deposits, disbursements, and reconciliation.
As an agent, the property manager is subject to all legal restrictions imposed on agents plus those in the contract. Obligations include good faith and loyalty to the principal, performance with skill, care and due diligence, full disclosure of pertinent facts, avoidance of commingling, and refraining from personal profits without the principal's knowledge and consent.
It is good business practice to have a written contract with the owner setting forth both parties' responsibilities, including terms and period of the contract, management policies, fees, and the authority and powers granted by the owner to the agent. Standard forms exist for rental property management; building managers should have a special agency contract drawn by a qualified legal adviser.
The property manager normally engages maintenance workers, contractors, and subcontractors and must obtain each person's full name, address, and proper tax identification number. When annual compensation meets or exceeds the taxable amount, the proper IRS 1099 form must be sent to those individuals and to the appropriate governmental agencies.
In negotiating a listing, the licensee must make full disclosure and accurately detail all material information furnished by the seller. Where shares of stock are involved, the law imposes a duty on the broker to verify the accuracy and completeness of information (duty of due diligence). If the owner distorts, manipulates, or 'pads' records, the broker must point out this constitutes material misrepresentation and fraud, and must not participate.
Listings should be taken carefully after evaluating business location, operation, and the seller's records and financial statements for at least the last three years. The seller or the seller's accountant/attorney should furnish income/expense records, leases, insurance policies, inventory records, sales tax reports, and IRS schedules. If the seller resists a fair price evaluation and demands an unreasonable price, the listing should probably be turned down.
A listing is a written contract by which a principal employs an agent to perform duties such as selling real property. An agent holding a listing is bound by the law of agency with fiduciary obligations to the principal not existing between two principals.
In a net listing, compensation is not fixed; the agent retains money above the seller's accepted price. Failure to disclose the agent's compensation is cause for license revocation or suspension. Disclosure must occur before the principal binds himself; the selling price must be revealed to both parties in writing within one month of closing.
An open listing is a written memorandum authorizing a broker to sell described property, typically without a required time limit. It may be given to multiple agents concurrently. The commission goes to the broker who first produces a buyer or whose offer is accepted. The owner may sell personally without owing commission, and such sale cancels all open listings.
An exclusive agency listing names one broker who earns commission if that broker or any other broker effects the sale. Because it refers to an agency, the owner may personally sell without owing commission to the exclusive broker. Multiple written agreements could expose the owner to two commissions.
An exclusive right to sell entitles the named broker to commission if the property is sold within the term by the broker, any other broker, or the owner. It often includes a safety/protection clause for sales to buyers introduced during the term. Both exclusive types must have a definite termination date, or the broker's license is subject to discipline.
A broker earns commission when producing a buyer ready, willing, and able to purchase on the principal's terms, regardless of whether the sale closes, unless the contract expressly requires a completed sale. The broker must be the procuring cause; merely introducing parties is insufficient. Safety-clause claims arise for sales to introduced buyers after expiration.
An MLS is a cooperative service by a group of brokers, usually a real estate board, using a standard form (typically Exclusive Authorization Right to Sell). The listing broker turns in the listing to a central bureau distributed to all participants. Commissions are shared between cooperating brokers per the listing terms.
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