Contracts, 12% of the examination
Advance fee
Compensation claimed, demanded, charged, received, or collected before the licensed services covered by the fee have been fully completed.
A broker must submit the advance-fee agreement, accounting format, and related advertising materials to DRE at least 10 calendar days before use and may collect under the submitted arrangement only after DRE issues its no-objection letter. Advance fees are trust funds. The broker must provide verified quarterly accountings and may withdraw funds only as authorized by law, including when actually expended for the principal's benefit or after the statutory accounting period. Advance fees for residential one-to-four-unit loan-modification services are prohibited.
Test the distinction
A relevant question from Contracts, selected because its facts or explanation use this concept.
Under DRE's August 2026 guidance, what must a broker do before collecting an advance fee for promoting a sale?
Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanor under B&P Code section 123.
Primary sources
Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.