This is true, for property that is not real estate. Real property is almost always highly regulated by states codes. And in California in particular there is a very specific process if you have an agent with a state Real Estate License. No hand shake deals if seller has an agent.
There are potentially other laws that can lead to misrepresentation or even fraud. I’m skeptical that he has a case there, but I don’t know enough details to say with any certainty. (also I’m a layperson)