California Real Estate Practice Exam

Under the Truth-in-Lending Law, which advertiser is exempt from detailed disclosure requirements?

1. Broker advertising a property with an annual percentage rate

2. Consumer credit advertising by a financing institution

3. Homeowner advertising an assumable loan

4. Homeowner advertising his/her home subject to the existing loan

The correct answer is: Homeowner advertising his/her home subject to the existing loan

The correct answer pertains to the homeowner advertising their home subject to the existing loan. Under the Truth-in-Lending Law, certain transactions are exempt from detailed disclosure requirements, particularly when they involve personal advertising by homeowners regarding their own property. In this case, a homeowner advertising their home while it is still under an existing loan isn't involved in an activity that falls under commercial lending practices, thereby exempting them from the stringent disclosure obligations that apply to professional lenders and financial institutions. This exemption is in place since the Truth-in-Lending Act mainly focuses on protecting consumers from misleading advertising related to consumer credit offered by professionals and financial entities. Homeowners engaging in personal advertising are usually not engaging in the business of lending or credit; thus, they can communicate basic information about their property without the detailed financing disclosures required of commercial advertisers.