California Real Estate Practice Exam

Compensation from the Real Estate Recovery Account is limited to how much per transaction?

1. $20,000

2. $10,000

3. $30,000

4. $50,000

The correct answer is: $20,000

The correct answer is based on regulations surrounding the Real Estate Recovery Account, which is designed to provide compensation to consumers who have suffered losses due to the actions of a licensed real estate professional. According to California law, the limit for compensation from this account for a single transaction is set at $50,000. This means that if a consumer has a grievance involving a real estate transaction where they have incurred financial harm due to a licensed agent's misconduct, they can claim compensation up to this aforementioned limit from the Recovery Account. Additionally, the total amount that can be awarded to any individual claimant, cumulative across multiple transactions, cannot exceed $250,000. This structure is intended to protect consumers while still providing a cap that mitigates potential financial exposure for the Recovery Account itself. Thus, when considering compensation amounts, it's critical for real estate professionals and consumers alike to understand these specific limits so that expectations are managed in situations of loss due to professional misconduct.