November 29, 2022

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Real Estate Investing: Government Regulations

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Real Estate Investing: Government Regulations

As real estate investment continues to dominate in the financial world, there are incidents of frauds in the market. With the growing number of real estate agencies, the Government has woken up to the need of laws to regulate the real estate transactions. All the states as well as the District of Columbia have enforced laws for licensing, regulating, and code of conduct for the real estate agents. The real estate industry has strongly supported real estate licensing law.

Objectives of the Laws:

Prevention of fraudulent practices is the major objective of the real estate laws. The real estate world is vulnerable to abuses. Hence, the court has made it mandatory for the real estate sellers to disclose all the essential information to the buyers for consumer protection. This document containing all the facts is called public report.

Codes of Law:

On August 4, 1943, a legislative power of the Department of Real Estate (DRE) was categorized as two Parts of the Division 4 catering to the Business and Professions Code. Part 1 is now known as Sections 10000 to 10580. It is titled, “Licensing of Persons” and can be quoted as the Real Estate Law. Part 2 is called Sections 11000 to 11200. It is titled, “Regulation of Transactions” and can be quoted as the Subdivided Lands Law.

The Requirement of A Real Estate License:

Under the Sections 10131, 10131.1, 10131.2, 10131.3, 10131.4, 10131.45, and 10131.6 of the Real Estate Law, the activities of the broker are defined. Under Sections 10131 (d) and 10240, et seq. of the Real Property Loan Law, the activities of the mortgage loan broker are defined.
In the absence of a license, no compensation will be given to a person for carrying out any of the acts stated within the scope of a licensed broker. The law enforces penalties for an individual claiming to be a real estate broker without having a license. Any real estate broker who compensates a person without license for carrying out activities that call for a real estate license may be fined by the Commissioner. Further, a person who is found compensating an individual without license for services requiring a license shall be fined by the court and be found guilty of a crime under Sections 10138, 10139, 10139.5 of the Code.

Before going into a real estate transaction, it is better to get familiar with the rules and regulations pertaining to real estate. The buyer should know his or her rights to avoid sellers taking undue advantage. A well-informed buyer is able to get a fair deal from the real estate agents, and may even go to the court in case the agent strays from the law.

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