DRE & LicensingIntermediateCalifornia Exam
What is 'self-dealing' and why is it prohibited for real estate licensees?
AA licensee representing themselves in a transaction, as required for license renewal in California
BWhen a licensee acts in their own financial interest at the expense of their client, violating the duty of loyaltyCorrect
CA licensee selling their own property without using a broker, consistent with Business and Professions Code licensing rules
DA licensee making their own investment decisions, under California Department of Real Estate requirements
Why When a licensee acts in their own financial interest at the expense of their client, violating the duty of loyalty Is Correct
Answer B: When a licensee acts in their own financial interest at the expense of their client, violating the duty of loyalty
Self-dealing occurs when a licensee uses their position to benefit themselves at the client's expense — such as secretly purchasing a client's property below value or directing business to entities in which they have an interest without disclosure. It violates the duty of loyalty and is grounds for license discipline.
Key DRE & Licensing Terms in This Question
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
State-Specific Concepts
License Law
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