ContractsIntermediateCalifornia Exam

Under California law, a real estate commission agreement is enforceable only if it is:

AAgreed upon verbally by both parties, as typically drafted in a residential purchase agreement
BIn writing and signed by the party to be chargedCorrect
CApproved by the DRE, consistent with common contract law principles
DAt least 5% of the sale price, per standard contingency and disclosure practice

Why In writing and signed by the party to be charged Is Correct

Answer B: In writing and signed by the party to be charged

Under California's Statute of Frauds (Civil Code 1624), an agreement authorizing an agent to purchase, sell, or lease real property for compensation must be in writing and signed by the party to be charged (usually the seller) to be enforceable.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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