California Real Estate Practice Exam

The Real Estate Loan Law permits real estate brokers to do all but which of the following?

1. broker loans for non-residential properties

2. charge negotiable commission rates on all loans

3. arrange loans for a commission

4. participate in direct lending activities

The correct answer is: charge negotiable commission rates on all loans

The Real Estate Loan Law governs the activities of real estate brokers concerning the brokering of loans, particularly in California. Real estate brokers are typically allowed to broker loans for both residential and non-residential properties, meaning they can operate in a broader market, which aligns with the first choice. Brokers are permitted to charge commission rates on loans, but these rates are not negotiable in the same manner that one might find in real estate transactions or sales of property. This is due to regulatory and legal frameworks that aim to ensure transparency and fairness in loan brokerages, thus making the charging of fixed commission rates more applicable. Arranging loans for a commission is also a permitted activity for real estate brokers, allowing them to facilitate the borrowing process on behalf of clients while earning a fee for their services. Participating in direct lending activities, however, typically requires a different licensing structure, such as that held by lenders or financial institutions. This designation is outside the scope of activities allowed under the Real Estate Loan Law for brokers. Thus, brokers cannot engage in direct lending as it involves different regulatory requirements and falls under various lending laws that govern those entities specifically.