DRE & LicensingIntermediateCalifornia Exam
A California broker who employs salespersons is required to have a written independent contractor agreement with each salesperson that includes:
AA guaranteed minimum salary, consistent with Business and Professions Code licensing rules
BA provision that the salesperson's income is based on production rather than hours workedCorrect
CHealth insurance benefits, under California Department of Real Estate requirements
DA non-compete clause preventing the salesperson from switching brokers, per standard DRE licensing procedure
Why A provision that the salesperson's income is based on production rather than hours worked Is Correct
Answer B: A provision that the salesperson's income is based on production rather than hours worked
Under IRS and California requirements for independent contractor status, the written agreement must specify that the salesperson's remuneration is based on sales production rather than hours worked. This is a fundamental requirement for the independent contractor classification.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Transfer TaxA tax imposed by state or local governments when real property ownership is transferred, typically based on the sale price.
Fair Housing ActFederal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
State-Specific Concepts
License Law
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