RP: 2/Comissioner/Diff license/exemptions/how to get license

Flashcard maker : Lily Taylor
The California Bureau of Real Estate

“Our mission: To protect the public in real estate transactions and provide related services to the real estate industry.”

— The California Bureau of Real Estate

The California Legislature enacted the nation’s first real estate license law in 1917. Providing for the licensing and regulation of real estate licensees, this law continues to serve as a model for similar legislation in many other states.

Each state has its own real estate licensing laws and regulatory body. In California, this regulatory agency is the California Bureau of Real Estate, also known as the BRE. The MAIN purpose of the California Bureau of Real Estate is to protect the public. The BRE achieves this purpose through the enactment and enforcement of laws relating to real estate and by establishing requirements for the real estate salespersons’ and brokers’ licenses.

Through the BRE’s enforcement of the real estate laws, the public is protected from incompetent or downright dishonest real estate licensees. The goal is for the consumer to have confidence and trust in the honesty and capability of all practicing licensees, knowing that these licensees are being supervised by the BRE.

The revenue necessary to operate the BRE is derived from fees charged for real estate licenses, subdivision public reports, and various other permits issued by the Bureau. This revenue goes into the Real Estate General Fund, which we will discuss at the end of this unit. Employees operating from District Offices in five cities (Sacramento, Fresno, Los Angeles, Oakland, and San Diego) carry out the Bureau’s responsibilities as mandated by the Real Estate Law and the Subdivided Lands Law.

The Real Estate Commissioner governs the entire California Bureau of Real Estate. The California legislature, which gives the Commissioner his authority and power, used police power to create the position of Commissioner. Remember that police power is the right of the state to enact and enforce laws for the order, safety, health, morals, and general welfare of the public.

The California Eal Estate Commisioner
The California Real Estate Commissioner is appointed by the Governor, and serves as the chief executive of the Bureau of Real Estate.

The Commissioner has been given both the power and the means to issue regulations. The regulations serve as a means by which the Commissioner can more easily administer and enforce the Real Estate Law and the Subdivided Lands Law. The Regulations of the Real Estate Commissioner have the force and effect of law and, once issued, become a part of the California Administrative Code.

The Commissioner’s responsibility is to enforce these laws in a manner in which maximum protection for real estate consumers is achieved. In administering the laws and regulations, the Commissioner exercises judgment impartially, with fairness to both the consumer AND the industry.

The Commissioner’s mission, then, is to enforce the Real Estate Law and the Subdivided Lands Law in a manner that offers the maximum protection for persons dealing with real estate licensees and for purchasers of subdivided real property. The mission and the responsibility, as you can see, work toward the same end: protecting the consumers.

The Commissioner’s specific duties include but are not limited to the following:
The qualification of applicants and issuance of real estate licenses;
The investigation of complaints and, where appropriate, pursuit of formal action against licensees;
The investigation of non-licensees alleged to be performing acts for which a license is required;
The regulation of the sale or lease of subdivision interests; and
Through real estate broker and other license requirements, the regulation of dealings in mineral, oil and gas property and Prepaid Rental Listing Services.
Additional Commissioner Facts
In order to be appointed as Commissioner, the Commissioner candidate must have served for a minimum of 5 years as a real estate broker actively engaged in the real estate business in California, OR must possess 5 years’ related experience associated with real estate activity in California during the last 10 years.

The Commissioner’s annual salary is paid monthly out of the State Treasury upon a warrant of the Controller. The Commissioner is also allowed his actual and necessary expenses in the discharge of his duties.

The Commissioner’s principal office is located in the City of Sacramento, but he is allowed to establish branch offices in the City and County of San Francisco, the City of Los Angeles, and in other cities as he may deem necessary, and with the approval of the Department of Finance.

California law states that copies of all records and papers in the Commissioner’s office, which are certified under the hand and seal of the Commissioner, are to be received into evidence in all cases equally and with the same effect as the originals.

Note that in a situation in which an action or proceeding is brought by or against the Commissioner in regard to his work as such, the Attorney General will act as his attorney.

Near the end of this unit, we will discuss the Commissioner’s duties in regard to enforcing the provisions of the license law.

When a Real Estate License Is Required
A person must be LICENSED if he or she, for compensation (or the promise of compensation) and for another person, undertakes or negotiates to undertake any of the following actions:

Sells or offers to sell, buys or offers to buy, and solicits prospective sellers or purchasers of real estate.
Solicits or obtains listings of real estate.
Negotiates the purchase, sale, or exchange of real property or a business opportunity.
Assists or offers to assist in filing an application for the purchase or lease of property owned by the state or federal government.
Negotiates loans, collects payments, or performs services for borrowers or lenders or note owners.
Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.
Leases or rents; offers to lease or rent; places for rent; solicits listings of places for rent; solicits for prospective tenants; negotiates the sale, purchase or exchanges of leases on real property; or collects rents from real property.*

* Keep in mind that some managers and employees under the aforementioned section are exempt from the licensing requirement.

Managers and Employees Exempt From Licensing Law
The following parties are EXEMPT from the licensing requirements in California. These parties DO NOT need to be licensed as real estate salespersons or brokers because of the nature of their work (in order to carry out their jobs as such):

The employees of banks or other lending institutions;
The lenders who make federally-insured or federally-guaranteed loans;
Licensed personal property brokers;
Cemetery authorities;
Certain agricultural associations;
Certain collectors of payments for lenders or on notes for owners in connection with loans secured directly or collaterally by liens on real property;
Some clerical help (depending on the extent of the duties handled by the clerical personnel);
Resident managers of apartment buildings and complexes or their employees;
Short-term (vacation) rental agents;
Employees of certain lending institutions;
Employees of real estate brokers for specific, limited functions;

(See Sections 10131.01, 10133, 10133.1, 10133.15 10133.2, 10133.3, 10133.35, 10133.4, and 10133.5 of the Code for the license exemptions.)

Exemptions From License Requirements
In addition to the previous exemptions, note that the following UNLICENSED parties may solicit for the sale of real property IF the party is:

The property owner.
A person holding the power of attorney FOR the owner.
An attorney at law acting in the capacity of an attorney ON BEHALF OF the owner.
A receiver or other court appointee. (We will address the topic of receivers in Unit 12.)
A trustee who is selling the property under a deed of trust.

This means that the only unlicensed person who may solicit for the sale of real property is the owner and/or his legal representatives, NOT including his real estate salesperson/broker, since obviously a salesperson or broker is already licensed.

Acting Without a License
Should someone in California act in the capacity of a real estate salesperson without being licensed under the California licensing laws, that individual cannot receive any compensation for such acts. Section 10132 of the Code defines a real estate salesperson and the acts requiring licensure and employment by a real estate broker.

If an unlicensed person DOES act as a real estate salesperson or broker, he or she will be penalized under the law.

In addition to the unlicensed person being held accountable, if a broker has ALLOWED this person to operate under him and compensated this person for performing real estate activities that BY LAW require the person to possess a license, then that broker will ALSO be disciplined under the law. The Commissioner may impose a fine against any real estate broker who is found in a disciplinary hearing to have compensated an unlicensed person for performing such activities without a license. In addition, if said broker has compensated the non-licensed for the activities for which he is not licensed, that broker is guilty of a misdemeanor and may also be fined by the courts, under Sections 10138, 10139, 10139.5 of the Code.

Original Salesperson License
An original salesperson license is required for an individual who is to be employed as a salesperson under the control and supervision of a licensed broker. The license permits licensed activity only while in the employ of a broker. Salespersons’ licenses must be available for inspection in the broker’s main office. The salesperson can be compensated for work as an agent only by the salesperson’s employing broker – not by any other broker, other salesperson, client, or other person, according to Sections 10132 and 10137 of the Code.

Under the provisions of AB 2429, salesperson examination applicants will be required to submit evidence of completion of a three semester, or quarter unit equivalent, college-level course in Real Estate Principles, Real Estate Practice and one additional course which should be chosen from the following list of courses:

Legal Aspects of Real Estate
Real Estate Office Administration
Real Estate Appraisal
Computer Applications in Real Estate
Real Estate Finance
Real Estate Economics
Property Management
Business Law
Escrows Accounting
Mortgage Loan Brokering
Lending Common Interest Developments

Examination applications that contain proper verification that the applicant has completed all three required courses will be entitled to take the examination and apply for a four-year license upon the successful completion of the salesperson examination.

Original Salesperson License Requirements
A candidate for an original real estate salesperson license must:

Be at least 18 years old to be issued a license (Surprisingly, there is no age restriction on taking the licensing exam.);
To obtain a real estate salesperson license, you must first qualify for and pass a written examination. Those who pass the examination are provided a license application which must be submitted to and approved by the BRE.
Provide Proof of Legal Presence in the United States;
Honesty — Applicants must be honest and truthful. Conviction of a crime may result in the denial of a license. Failure to disclose any criminal violation or disciplinary action in an applicant’s entire history may also result in denial of a license.

Applicant’s Education Requirements
Applicants who seek to obtain a 4-year salesperson license must complete the college-level Real Estate Principles course, the Real Estate Practice course, and ONE additional required, college-level course selected from the following college-level, required courses:

Legal Aspects of Real Estate
Real Estate Financing
Real Estate Appraisal
Real Estate Economics
Business Law
Property Management
Real Estate Office Administration
Mortgage Loan Brokering/Lending
Computer Applications in Real Estate
Common Interest Development (2004)

Remember that all licensing courses must be:

THREE semester-unit (or four quarter-unit) courses in length;
COLLEGE-level courses; and
Offered by an institution of higher learning accredited by the Western Association of Schools and Colleges or similar regional accrediting agency recognized by the United States Department of Education, OR by an equivalent course of study offered by a private vocational school approved by BRE, like REAL ESTATE EXPRESS.

Original Real Estate Broker License
The individual broker license entitles a natural person to conduct a brokerage business under his/her own name or, if so licensed, under a fictitious business name.

The applicant for an original real estate broker license must:

Be at least 18 years old;
Be honest and truthful;
Have been actively engaged as a real estate salesperson for at least two years during the five years immediately preceding the application OR prove that he/she has general real estate experience that is the equivalent of two years of full-time experience as a salesperson completed within a similar time period (We will explain this requirement in greater detail shortly.);
Have completed EIGHT COURSES in addition to the experience requirements (These specific courses are set forth on the next screen.); AND
Pass the qualifying examination.

Mandatory Broker Courses
As we stated on the previous screen, California Real Estate Law requires that every applicant for a real estate broker license must have successfully completed eight courses before taking the licensing exam. The courses are broken into two groups – the “mandatory courses” and the “elective courses.” Following are the five MANDATORY COURSES:

Real Estate Practice
Legal Aspects of Real Estate
Real Estate Financing
Real Estate Appraisal
Accounting OR Real Estate Economics

The following screen contains a list of ELECTIVE COURSES. In addition to taking the preceding five courses, a broker applicant must take three more courses, chosen from the list on the next screen, to fulfill the educational requirements.

NOTE: If the applicant completes both Accounting and Economics as listed in number 5, then only two courses from the electives list are required.

Elective Broker Courses
In addition to the mandatory educational requirements, a broker applicant must also complete any 3 COURSES of the following “ELECTIVE COURSES”:

Real Estate Principles
Business Law
Property Management
Real Estate Office Administration
Advanced Legal Aspects of Real Estate
Advanced Real Estate Finance
Advanced Real Estate Appraisal
Mortgage Loan Brokering and Lending
Computer Applications in Real Estate
Common Interest Development (2004)

Alternative Experience Requirement Options
There is another choice for applicants who wish to qualify for licensure as a broker. As an alternative to the experience requirements, the applicant may submit evidence of graduation from a four-year university (or college accredited by the Western Association of Schools and Colleges or similar regional accrediting agency recognized by the U. S. Department of Education) with a MAJOR or MINOR in real estate, as the equivalent of two years’ general real estate experience AND completion of the required real estate courses.

Some private vocational schools offer these required courses, both in residence (classroom) and through correspondence study. However, only those private schools formally approved by BRE may offer these courses for BRE credit.

Experience Qualification

Many candidates for a real estate broker license base their claims of qualification on two years of experience as a licensed real estate salesperson in California. However, keep in mind that this is not enough to fulfill the experience mandate. Even if the BRE’s records show that the applicant has been licensed for two or more years as a salesperson, the BRE also requires additional evidence of the salesperson’s having been actively employed as a real estate salesperson. To prove this, the BRE requires that the applicant’s employing broker(s) complete an Employment Verification, or RE 226, to provide additional evidence that an applicant has worked full-time as a salesperson for at least two years.

Once these verification forms are completed, they must be mailed with the application to the BRE. In certain circumstances, the applicant may not be able to obtain this proof of experience from his employing broker. In such a case, there is an alternative. That applicant’s experience may be corroborated on an Employment Certification, or RE 228, by at least two other individuals who were employed in a related real estate field AND were in a position to verify the applicant’s duties, employment dates, and other pertinent information. The applicant must remember to include an explanation as to why the employing broker of record cannot verify the salesperson’s experience.

The Employment Verification and Employment Certification forms should include sufficient detail to enable BRE to perform an evaluation. The BRE has the authority to conduct further inquiry if such inquiry is necessary in order to evaluate claimed experience.

Alternate Qualification Methods
An applicant who makes a claim of equivalent experience, in lieu of the two years of salesperson experience required for the broker examination, may base this claim on any combination of salesperson experience, equivalent real estate related experience, and education, which, considered as a whole, would satisfy the intent of the law.

Applicants must make claims of equivalent real estate-related experience by submitting a completed Equivalent Experience Verification, or RE 227. This form must be certified by employers or other responsible parties who have been in a position to verify the applicant’s employment status. This verification must include a clear, detailed description of the applicant’s duties and activities as they relate to the general field of real estate. Further information concerning the types of equivalent experience that the BRE considers acceptable for qualification purposes is contained in the most recent edition of the Instructions to License Applicants pamphlet, which can be found at any BRE office or online at http://www.dre.ca.gov/

For an applicant who has been licensed as a real estate salesperson in another state, the form RE 226 must be used to verify previous salesperson experience. If an applicant has been licensed as a real estate broker in another state, then the license law in California requires that TWO responsible parties submit a verification of this experience by completing form RE 228. The “responsible parties” in this situation are those persons who have been in a position to verify the applicant’s employment status. This might include other real estate brokers, title officers, or loan officers. This type of verification must include a clear, detailed description of the applicant’s duties/activities and indicate how the verifier is aware of the applicant’s employment record.

Any applicant who claims to be qualified on the basis of a college degree, with a MAJOR or MINOR in real estate, as the equivalent of two years’ general real estate experience, must provide proof through official transcripts of educational records.

Alternative Qualification Methods, Part Two
As we stated earlier, there are some cases in which an applicant may be able to claim his qualification by combining certain experience and education. This does not mean that someone who has taken two real estate courses and once worked as the unlicensed assistant of a real estate licensee would qualify for licensure. As with all standards set by the California license law, this requirement is strict regarding WHICH mixture of education and experience is deemed sufficient by the Commission, and each claim is reviewed on a case-by-case basis.

The Commission offers the following as an example. Let’s say that Tahoe candidate, Grant Dailey, has been actively engaged as a licensed salesperson in California for one year, had additional experience as an escrow officer, and also had certain education relating to real estate. Grant has a valid reason to make a combination claim for experience in this case.

Remember that all claims of experience qualification for real estate broker licenses, including those based upon two years of full-time work as a licensed salesperson in California, are individually evaluated . The Commissioner, as you might expect, is the decision-maker in granting or denying such a claim. At this point, the candidate can expect one of the following decisions from the Commissioner:

If the Commissioner decides that the claim of qualification meets his standards, and approves the claim, then the candidate is scheduled for examination; OR
If the Commissioner finds that the claim of qualification falls short of his standards, then he rejects the claim.

If a candidate’s claim is rejected, then that candidate may still eventually qualify for a real estate broker license examination by working the required time as a salesperson. Often a claim of qualification is rejected, but the applicant is given a certain amount of credit toward the required two years as a salesperson. The candidate should take special care in the preparation of both the claim of qualification AND the required verification forms when submitting these forms to the BRE. This extra attention helps to facilitate the experience review process. The BRE may conduct further inquiry when evaluating experience.

The Broker’s Examination and License Application
The applicant who fails to qualify for a license because of lack of experience and/or educational prerequisites is not entitled to a refund of the fee paid with the application, but the fee does remain to the applicant’s credit for two years.

Once a broker applicant has provided the necessary proof of his/her qualifications in the realm of education and/or experience, it’s time for the next step, and it’s a BIG one: the broker’s qualifying examination. All applicants for an original broker license must take and pass this written examination before the license can be granted.

We will discuss this exam and its specific content and try out some sample questions in the next unit.

Once an applicant passes the examination, he/she is notified and then may apply for the original broker license.

Corporate Real Estate Licenses
In some cases, brokers will elect to do business as a corporation. A corporation may be licensed as a real estate broker, provided at least one officer of the corporation is a duly qualified real estate broker willing to act as the corporation’s responsible designated broker-officer. Along with the appropriate Corporation License Application and fee, the corporation must submit a Certificate of Status issued by the Secretary of State within the 30 days prior to the date the application is filed and a statement of officers as filed with the Secretary of State.

In addition to the previous application and fee for the corporation, EACH broker who is to act for and on behalf of a corporation as a broker-officer must submit a completed Corporation License Application and the appropriate license fee. Broker-officer applicants who currently hold an officer license for a corporation, but have never obtained an individual broker license, will be required to furnish evidence of completion of the current continuing education requirements that have been attained within the previous four years.

A Corporation Background Statement (RE 212) must be submitted by the designated officer of the original corporation license applicant for himself or herself, as well as for each director, the chief executive officer, the president, first-level vice presidents, secretary, chief financial officer, subordinate officers with responsibility for forming policy of the corporation, and for each natural person owning or controlling more than 10% of the corporation’s shares.

In the case of a foreign corporation, a Certificate of Qualification is required, executed within the 30 days prior to the date the corporation submits its application.

Corporate Real Estate Licenses, Part 2
Some corporations choose to do business under a “dba” or fictitious business name. This is permitted in California, provided that the corporation submits a copy of a Fictitious Business Name Statement as filed with the county clerk’s office in the county where the corporation’s principal place of business is located.

Note that if there is a change of the corporation’s name, then a Corporation Change Application, signed by a licensed officer, must be submitted to the BRE, along with a copy of the Amended Articles of Incorporation reflecting the name change and bearing the endorsed stamp of the California Secretary of State. If there is a change of salesperson, then the corporation must submit a completed Salesperson Change Application (RE 214) for each currently licensed salesperson to be placed in the employ of the corporation. If there is a change in the location of the main office or the mailing address, the corporation must submit a completed Corporation Change Application signed by a licensed officer.

The designated broker-officer of a corporation may be replaced by another qualified broker for the balance of the license period by submitting:

A completed Corporation License Application (RE 201) and Corporation Background Statement (RE 212); AND
A copy of the signed resignation of the officer leaving the firm, or a copy of the Resolution of the Board of Directors with the corporate seal, or a signed statement giving the date of death of the currently licensed designated broker-officer.

A new designated officer may be licensed upon receipt of a completed Corporation License Application, Corporation Background Statement, the appropriate license fee and statement that the currently designated broker-officer will remain with the firm as an “additional” officer. Broker-officer applicants without individual broker status will be required to furnish evidence of completion of appropriate continuing education requirements, attained within the previous four-year period.

Applications for Exams and Licenses
The following regulations apply to ALL applications for all examinations and for all licenses issued by the Commissioner. They are as follows:

The applications must be made on forms furnished by the BRE. Forms can be obtained at any of the BRE’s offices or by writing to the main office in Sacramento. Detailed instructions are furnished with the application forms.
An application for an examination or a license may be presented at any of BRE’s offices or (preferably) mailed to Sacramento.
The license application must be submitted along with:
The current license fee;
One fully completed and classifiable fingerprint card. (This will be explained in greater detail in an upcoming screen in this unit.); AND
The fingerprint-processing fee.

Important Note: Since January 1, 1995 , an original or renewal license may not be issued to any individual who has not provided a Social Security number. This requirement applies to real estate broker and officer licenses, real estate salesperson licenses, pre-paid rental listing licenses, and existing mineral, oil, and gas licenses. Corporations with regard to a federal tax identification number are EXEMPT from this requirement.

Applying for a Salesperson License
In the following unit, we will discuss the salesperson examination in detail. For now, we’ll bypass that and pretend that the license applicant – YOU! – has already taken the required three courses, and passed the salesperson licensing exam. The next step, then, is applying for the license.

Once an applicant has successfully passed the salesperson examination, he may apply for a four-year original license by submitting the following items within one year of passing the exam:

An application for the real estate salesperson license (RE 202);
The appropriate license fee;
One fully completed classifiable fingerprint card;
The fingerprint processing fee; AND
Transcripts showing completion of all of the required courses.

Filing the Exam and License Application at One Time
The newest amendments to Business and Professions Code Section 10150 ( Broker Examination and License Applications) and 10151 ( Salesperson Examination and License Applications) allow for the filing of a license application at the same time an applicant files to take a license examination, rather than the applicant having to file two separate forms at separate times. We will detail these changes in our final unit, which focuses on the most up-to-date amendments to the real estate laws in California. In this unit, we’ll simply give you the basics of what these law updates mean to you, the student.

The important elements of these changes are as follows:

Applicants for broker OR salesperson examinations OR licenses may apply and pay for the real estate broker or salesperson examination and license at the same time by submitting one application form and fee.
For either a broker or a salesperson, the license application WILL NOT be processed until the applicant has passed the examination.
If a broker or salesperson applicant changes his/her address, employer, criminal history or license history, he must file an amended supplement setting forth the current information with the Commissioner.

Fingerprint Requirement
The submission of fingerprints with a real estate licensing application is a state mandate that has continued to become more widespread throughout the United States, and California is no exception to this rule.

In California, an applicant for any real estate license must submit one set of classifiable fingerprints, acceptable to the State Department of Justice (DOJ). The only applicant who is exempt from this requirement is one who is either currently licensed by the BRE OR who has held a real estate license that expired less than two years ago.

For fingerprints to be considered “acceptable to the State Department of Justice (DOJ),” as noted above, the fingerprints must be submitted through the DOJ’s Live Scan Program, which involves the electronic taking and transmission of fingerprints to DOJ.

A Live Scan Service Request form (RE237) will be sent to all applicants who successfully complete the real estate examination. Once the form is received, the Live Scan applicant should take the Live Scan Service Request form to a participating Live Scan service provider. There is a fee for this service that is paid directly to the Live Scan provider. After that service provider takes the fingerprints, the applicant must submit the following to the Bureau of Real Estate:

A copy of the RE 237 with Part 4 completed;
The applicant’s completed original license application; AND
A check for the appropriate fee, which is currently $51.00, made payable to the DOJ.

Applicants who reside outside California may continue to submit fingerprints in ink using the California license applicant Fingerprint Card (BID 7).

The Personal Responsibility and Work Opportunity Act
Under the Personal Responsibility and Work Opportunity Act (“the Act”), which was passed by the United States Congress in 1996, states are required to eliminate a broad array of public benefits for illegal immigrants. The definition of a public benefit includes professional and occupational licenses issued to individuals by state agencies. In regard to the California Bureau of Real Estate, the term “public benefit” applies to original and renewal real estate salesperson and broker licenses; prepaid rental listing service licenses; and mineral, oil and gas broker licenses.

To implement the provisions of the Act, the BRE adopted Regulation 2718 effective August 1, 1998. This regulation requires proof of legal presence in the United States from all applicants who are applying for real estate licensure. Here are some basic points you’ll need to know about proof of legal presence:

“Proof of legal presence,” or a “proof of legal presence document,” is evidence showing that an individual actually has a LEGAL reason to be in the United States.
The requirement applies to applicants for both original and renewal licenses.
The law does NOT state that only U.S.-born individuals have the right to be licensed in the United States , but only that each person who wants to be licensed must have legal proof that he/she has the right to be here and to be licensed as a real estate licensee.
This proof need only be submitted one time, and should be submitted with a Public Benefits Form, or RE205.
California law requires that every applicant for licensure as a real estate salesperson, broker, officer, mineral, oil and gas broker, or prepaid rental listing service license, submit proof that the applicant has legal presence in the United States before an original or renewal license can be issued.

Proof of Legal Presence
For a citizen of the United States , acceptable documents to demonstrate proof of legal presence include, but are not limited to, the following:

A birth certificate or passport issued from:
Puerto Rico, on or after January 13, 1941;
Guam, on or after January 17, 1917;
U.S. Virgin Islands, on or after January 17, 1917;
Northern Mariana Islands, after November 4, 1986;
American Samoa;
Swain’s Island; or
District of Columbia;
A U.S. passport (expired or unexpired);
A Certificate of Naturalization;
A Certificate of Citizenship; or
A U.S. Citizen Identification Card (I-179, I-197).

Proof of Legal Presence for Aliens
An alien lawfully admitted for permanent residence under the Immigration and Naturalization Act (INA) must submit supporting documentation (legible copy of the front and back sides of the document) to establish legal presence including, but not limited to, one of the following categories:

For an alien lawfully admitted for permanent residence under the Immigration and Naturalization Act (INA), acceptable evidence includes:
INS Form I-551 (Alien Registration Receipt Card commonly known as a “green card”); or
Unexpired Temporary I-551 stamp in foreign passport or on INS Form I-94.
For an alien who is granted asylum under Section 208 of the INA, acceptable evidence includes:
INS Form I-94 annotated with stamp showing grant of asylum under Section 208 of the INA;
INS Form I-688B (Employment Authorization Card) annotated “274a.12(a)(5)”;
INS Form I-766 (Employment Authorization Document) annotated “A5”;
Grant Letter from the Asylum Office of INS; or
Order of an immigration judge granting asylum.
For a refugee admitted to the United States under Section 207 of the INA, acceptable evidence includes:
INS Form I-94 annotated with stamp showing admission under Section 207 of the INA;
INS Form I-688B (Employment Authorization Card) annotated “274a.12(a)(3)”; or
INS Form I-766 (Employment Authorization Document) annotated “A3”.

Neither this list nor the one on the previous page is comprehensive. A complete list of the acceptable documents needed to establish U.S. citizenship, and a comparable list of those acceptable documents needed to establish alien status, can be found on the BRE’s website, at http://www.dre.ca.gov/Licensees/LegalPresence.html.

License Renewals and Continuing Education
All California real estate licenses are issued for a period of four years. A license is renewable without examination, simply upon submittal of the appropriate fee AND evidence of completion of the required continuing education.

The continuing education requirement in California is 45 HOURS every four years to renew a license. This requirement applies to ALL REAL ESTATE LICENSEES IN CALIFORNIA.

The 45 CE hours must be fulfilled by attending courses, seminars, or conferences approved by the Commissioner for continuing education credit. Specifically, the 45 hours, within EACH 4-year renewable period, are broken down into the following:

3 hours of Agency;
3 hours of Ethics and Professional Conduct;
3 hours of Trust Fund Accounting and Handling;
3 hours of Fair Housing;
3 hours of Risk Management; AND
At least 18 hours of courses under the umbrella of Consumer Protection, if approved by the Commissioner for CE credit, including but not limited to the following: forms of real estate financing relevant to serving consumers in the marketplace; land use regulation and control; pertinent consumer disclosures; agency relationships; capital formation for real estate development; fair practices in real estate; appraisal and valuation techniques; landlord-tenant relationships; energy conservation; environmental regulation and consideration; taxation as it relates to consumer decisions in real estate transactions; probate and similar disposition of real property; governmental programs such as revenue bond activities, redevelopment, and related programs; business opportunities; mineral, oil, and gas conveyances; and California law that relates to managing community associations that own, operate, and maintain property within common interest developments, including, but not limited to, management, maintenance, and financial matters addressed in the Davis-Stirling Common Interest Development Act.
The update survey class must be an 8-hour course that covers the following topics:
Ethics, professional conduct, and legal aspects of real estate;
Agency relationships and duties in a brokerage practice;
Trust fund accounting and handling;
Fair housing; and
Risk management (again, this topic has been added, reflecting the addition of a risk management course to the mandatory CE courses, as discussed earlier).

All license renewal applicants must prove compliance with these CE requirements.

First-Time Salesperson Renewals
For ALL renewals, ALL renewal applicants, including salespersons, must satisfactorily complete a total of 45 clock-hours of approved offerings within the four-year period immediately preceding license renewal.

Here are a few additional facts regarding CE requirements in California real estate:

For current information on the CE requirements, a licensee may contact BRE’s Licensing Information Section, or obtain from any BRE office a copy of the brochure “Instructions to License Applicants.”
Information regarding successful completion must be listed on a Continuing Education Course Verification (RE 251) and forwarded with the application for renewal. The BRE does not accept an application for license renewal earlier than 60 days prior to the expiration of the license.
An individual who has been a licensee in good standing for 30 continuous years in this State and who is 70 years of age or older is exempt from the CE requirement.
A list of approved sponsors and their offerings may be reviewed, but not purchased, at any BRE office.

More About License Renewals
The application for license renewal must be postmarked prior to midnight of the expiration date of the current license to avoid a lapse in licensure and payment of a late renewal fee. Make sure you mail this out in plenty of time, and remember that, for the purpose of determining the date of mailing, postage meter stamps are not considered evidence of a postmark by the U.S. Postal Service.

If a broker’s license expires, the expiration will involve much more than simply the license and activities of that single broker. All licensed activities of the broker must cease, the broker’s salespersons are immediately placed in a non-working status, and any branch office licenses are cancelled.

Should this occur, the broker must go through several steps to bring his brokerage back to normal working order. First, he has to get his own license reactivated. The broker must then re-activate the license of each salesperson in the broker’s employ by submitting a Salesperson Change Application (RE 214). Finally, the broker must re-activate any branch office licenses by submitting a Branch Office Application (RE 203). As you can see, it’s best to file all application paperwork, with all necessary documentation and fees, in PLENTY of time to avoid your license expiring – especially if you’re a broker!

Late Renewal
Let’s look at what happens when the holder of a license fails to renew it prior to the expiration of the period for which it was issued. Now what? This person may legally renew the license within two years from such expiration by submitting a proper application, evidence of completion of the current continuing education requirements, and the appropriate late renewal fee.

Remember that someone with an expired license may NOT work as a real estate agent OR collect a commission. In other words, there can be no licensed activity between the date of license expiration and the date of late renewal, or the individual could face disciplinary action..

Two years after a license expires, all license rights lapse. The individual will be required to re-qualify through the examination process before being licensed in real estate.

Child Support Regulations
Under Section 11350.6 of the Welfare and Institutions Code, the BRE may NOT issue or renew a full-term license if the applicant is on a list of persons (obligors) who have not complied with a court order to provide child support payments. Additionally, a license may be suspended if a licensee’s name remains on the list 150 days after notice.

Information concerning such individuals is provided to the BRE by the Department of Social Services, which obtains the information from the district attorney of each county in California.

A 150-day temporary license may be issued to an otherwise qualified applicant who is on the list of child support obligors. The applicant must be advised that the license applied for cannot be issued unless a release is obtained from the district attorney’s office during the 150-day temporary license period. If the applicant fails to submit an appropriate release to the BRE from the district attorney’s office within the 150-day period, all license rights cease. Only one 150-day temporary license may be issued. License fees submitted are not refundable. In order to be issued another license, all applicable statutory provisions must be met and another licensing fee must be submitted. Renewal applicants may have to submit a late renewal fee.

The BRE is regularly provided with a supplemental list of obligors, which identifies individuals who are more than four months delinquent in child support payments and then is matched against the BRE’s total license population. If there is a match of an existing licensee and the license is not due for renewal for at least six months, the licensee will be advised that the license will be suspended if the delinquency is not cleared within 150 days. The suspension will remain in effect until the delinquency is cleared.

The BRE will assess a $95 fee when the name of a license applicant or licensee appears on a child support obligor list or supplemental list.

Additional License Information
Here are a few additional regulations you should remember:

Non-Working Status: A salesperson may be issued and hold a license, but NOT perform acts requiring a license, without being in the employ of a broker. The license in such a case is given “non-working status” until the salesperson becomes employed by a broker and that broker notifies the BRE of such.

Mineral, Oil, and Gas Licenses: As of January 1, 1994, the BRE no longer issues original mineral, oil, and gas (MOG) broker licenses or permits. However, MOG activities, as defined in Sections 10507 and 10581 of the Code, can be performed by currently licensed MOG brokers, or by licensed real estate brokers. Licensed MOG brokers may apply for license renewal.

Partnerships: The BRE does not issue partnership licenses. A partnership may legally perform licensed acts, as long as EVERY partner through whom the partnership so acts is a licensed real estate broker.

Broker members of a partnership formed by written agreement may operate from branch offices of the partnership without obtaining an individual branch office license, as long as at least ONE member of the partnership is licensed at that location.

A salesperson whose employing broker is a member of a partnership formed by written agreement may perform licensed acts on behalf of the partnership from any branch office maintained by any one of the partners.

Restricted License
There are certain types of restricted licenses sometimes issued by the Commissioner when a license has been suspended, revoked, or denied after a hearing. These are considered probationary licenses and contain specific restrictions.

The Commissioner has the authority to restrict licenses by any of the following factors:

Term (one month, three months, etc.);
Employment by a particular broker (for a salesperson);
Limitation to a certain area or type of activity;
Requiring detailed reports of each transaction;
Requiring the filing of a surety bond; or
Other conditions or combinations of conditions.

License or examination fees must accompany the application for the different types of examination or licenses. Applicants or other interested parties should contact any BRE district office or visit the BRE’s Web site at http://www.dre.ca.gov/ to obtain information on the current examination or license application fees.

By law, fees paid to BRE in connection with licenses and examinations are not refundable (Section 10207). Therefore, a change of mind on the part of the applicant, rejection of a broker license examination application, examination failure, or failure to appear to take an examination will not result in refund of all or any part of the fee paid.

There are no fees to implement the following:

Address change;
Salesperson employment transfer;
Personal or corporate name change;
Adding or deleting fictitious business name;
Branch office; and
Duplicate license certificate.

On the next few screens, you will have the opportunity to review the current fee schedule in California, as it appears on the Bureau of Real Estate website:

Examination Fees

Salesperson Broker

Original Examination $60 $95

Re-Examination $60 $95

First Rescheduled Exam $15 $20

Subsequent Rescheduled Exam $30 $30

More Fees
Combination Examination and License Application Fees

This is for those applicants who want to file their examination and license application at the same time. For more information, salesperson applicants may review RE 435 and broker applicants may review RE 436.

Salesperson – Qualifies for exam by enrolling in or completing a Real Estate Principles course and submits evidence of completing the remaining two courses either with the initial application or prior to passing the examination:

Examination Fee $60

License Fee $245

Fingerprint Fee *

Total Due to BRE with RE 435 $305

* First-time applicants must be fingerprinted using a Live Scan service provider. http://caag.state.ca.us/fingerprints/publications/contact.htm. This requirement does not apply to broker applicants who currently hold a salesperson license.

* Original license or examination applicants who reside in California will pay a $49 fingerprint processing fee directly to the Live Scan fingerprint service provider. Original license applicants who reside out of state should submit the $49 fingerprint processing fee to the BRE with their application and license fee.

More Broker Fees
Combination Examination and License Application Fees (continued)

This is for those applicants who want to file their examination and license application at the same time.

Broker – Submits all required education and experience requirements with application:

Examination Fee $95

License Fee $300

Fingerprint Fee *

Total Due to BRE with RE 436 $395

* First-time applicants must be fingerprinted using a Live Scan service provider. http://caag.state.ca.us/fingerprints/publications/contact.htm. This requirement does not apply to broker applicants who currently hold a salesperson license.

* Original license or examination applicants who reside in California will pay a $49 fingerprint processing fee directly to the Live Scan fingerprint service provider. Original license applicants who reside out of state should submit the $49 fingerprint processing fee to the BRE with their application and license fee.

License Fees
License Fees

Original License Fees:

Salesperson – Either qualified for exam with all three courses or submits evidence of completing the remaining two courses with license application:

License Fee


Fingerprint Fee


Total Due to BRE



License Fee


Fingerprint Fee


Total Due to BRE


* Original license or examination applicants who reside in California will pay a fingerprint processing fee directly to the Live Scan fingerprint service provider. Original license applicants who reside out of state should submit the fingerprint processing fee to the BRE with their application and license fee.

Renewal and duplicate license fees
Renewal and Other Fees

Renewal Fees

Salesperson Broker

On-Time Renewal $245 $300

Late Renewal (within 2 years after license expiration date)
$367 $450

Duplicate License Fees

A fee of $15 is required for the following transactions:

To replace an existing or lost license certificate;
To obtain an updated license certificate following a change of main office or mailing address, or change of employing broker.

A license certificate is automatically generated for the following transactions without a duplicate license fee:

Requests for personal name change;
Change of designated officer of a corporation;
Adding/deleting fictitious business names;
Issuance of a new branch license; or
Issuance of an unconditional salesperson license following submission of educational requirements of Section 10153.4 of the Business & Professions Code.

Corporation Fees
Corporation License Fees:

When officer applicant is currently licensed by the BRE:

License Fee $300

When officer applicant has never been licensed by the BRE or applicant license expired more than two years ago:

License Fee $300

Fingerprint Fee *

Total Due to BRE $300

When corporation has expired or when officer applicant’s broker license has expired during the past two years:

License Fee $450

When the corporation is currently licensed and a substitution of a currently licensed additional officer is requested, no fee is required.

* Remember that original license or examination applicants who reside in California will pay a $49 fingerprint processing fee directly to the live scan fingerprint service provider, while out-of-state original license applicants will pay the $49 fingerprint processing fee to the BRE with their application and license fee.

Restricted License and Miscellaneous Fees
Restricted License Fees:

When a restricted license application must be submitted as a result of an Order following a hearing or other formal action:

Salesperson License Fee $245

Broker License Fee $300

Officer License Fee $300

Corporation License Fee $300

Miscellaneous Fees

Certified License History: $20
Prepaid Rental Listing Service License: $100 plus $25 each additional location
Child Support Obligors: $95

Fees tend to be updated regularly. Always check with the BRE for the most recent fee schedule.

Miscellaneous Information
The following regulations apply to main offices in California:

A broker engaged in activities requiring a license must maintain an office or other definite place of business in California.
The broker’s license and the licenses of any salespersons employed by the broker must be available for inspection by the Commissioner or a designated representative at the broker’s principal place of business.
A broker who changes his/her main office address must forward a written notice to the BRE in Sacramento no later than the next business day, using a Broker Change Application (RE 204) [or Corporation Change Application (RE 204A)]. (No fee is required.)
The licensee may correct the license certificate by striking out the old address and typing or writing the new address in ink and dating and initialing the change.
The broker may obtain a new license certificate reflecting the address change by requesting a duplicate license on RE 204 or RE 204A.

The following regulations apply to branch offices in California:

A branch office license is required for each additional business location if a broker maintains more than one place of business in the State. The branch office license permits full operation from that office and must be available for inspection at the branch location.
Branch office licenses may be added or deleted by using RE 203 (Branch Office Application). (Again, no fee is required.)

A new license is issued for each additional branch office.

On the next screen, we will discuss the regulations for operating under a fictitious business name.

Fictitious Business Name
Earlier in this unit, we discussed the operation of corporations who operate under fictitious business names (dba). The California law says an individual or corporate broker can operate under a fictitious business name (dba) after the BRE issues a license bearing the fictitious name.

Before a license can be issued, the individual or corporation must forward to the BRE a copy of the Fictitious Business Name Statement (FBNS) as filed with the county clerk in the county where the broker maintains the principal business address. The broker must appear as the registrant on the FBNS. The broker must forward the appropriate change application (RE 204 for individual broker; RE 204A for corporation) to the BRE with the FBNS. The addition of a dba to a broker’s license does not affect the licenses of the salespersons in the broker’s employ.

An application for a license bearing a fictitious business name may be denied if the name:

Is misleading or would constitute false advertising.
Implies a partnership or corporation when a partnership or corporation does not exist.
Includes the name of a real estate salesperson.
Constitutes a violation of the provisions of Sections 17910, 17910.5, or 17917 of the California Code.
Is the name formerly used by a licensee whose license has been revoked?
Contains the word or designation “bank,” “banker,” “trust,” “trustee,” “trust company,” “insurance,” or “assurance,” “escrow,” or “savings.”

Multiple Fictitious Business Names
A broker who wants more than one fictitious business name is required to submit a change application (RE 204 or RE 204A) AND a copy of the FBNS filed with the county clerk for each fictitious business name. Each fictitious business name is an addition to the existing license, and the right to use it will expire at the same time as the license.

The broker’s main office license certificate will then display on its face the multiple fictitious business names. All other business locations will be designated as branch offices. A broker may use, and salespersons may work under, any fictitious business name at any business location maintained by the broker.

An FBNS expires at the end of five years from December 31 of the year in which it was filed in the office of the county clerk. When a new statement is required because the prior statement has expired, it does not have to be published unless there has been a change in the information required in the expired statement.

If a broker or corporation changes the licensed name and has a dba, a new fictitious business name statement must be submitted for each dba, with the new license name shown as the registrant.

Mailing Addresses and Non-resident Information
All mailings from the BRE will be addressed to the mailing address provided by the licensee. A separate mailing address – distinct from the business address of record – may be provided. It is the responsibility of a BROKER to notify the BRE of ANY change of address for the broker’s principal place of business or any branch office not later than the next business day following the change. Salespersons must keep their employing broker’s principal place of business address on file.

Both brokers and salespersons are required to maintain their mailing address of record on file at all times while licensed and during the duration of the two-year late renewal grace period. Should a licensee need to change her address, she must file a change of address notification (the RE 204 for brokers or the RE 214 for salespersons) for each license affected. Mailing addresses are considered public information and are available in a list format.

Non-Resident Information

Those license applicants or licensees who are out of state residents and wish to act as real estate licensees in the State of California must file a signed and notarized Consent To Service of Process (RE 234). Brokers who engage in licensed activities in California are required to maintain a California business address. If a broker does not engage in licensed activities in California, the broker must file an Out of State Broker Acknowledgment (RE 235). Likewise, any non-resident salespersons that engage in business in California must be licensed with a California broker.

License Transfers, Terminations, and Revocations
Transfer: To make a transfer of the salesperson’s employment, the salesperson and both his former AND new employing brokers must take the following steps:

The former employing broker must immediately notify BRE Licensing in Sacramento in writing.
The former employer gives the transferring salesperson his/her license certificate and signs a Salesperson Change Application.
Within 5 days, the salesperson and the new employing broker must complete RE 214 (Salesperson Change Application) and send it to the Bureau of Real Estate. Note that a new license certificate will not be issued.

Termination: When a salesperson is terminated by an employing broker for a violation of any of the provisions of the Real Estate Law, the employing broker must immediately file a certified written statement of the facts with the BRE.

Effect of Revocation or Suspension: Once a real estate broker license is revoked or suspended, the licenses of every real estate salesperson in the broker’s employ are automatically canceled. Such salespersons may transfer their licenses to a new employing broker.

Loss of License Status
Loss of License Status may occur:

When a person holding a license allows two years to elapse from the expiration date without applying for (late) renewal, submitting evidence of completion of the continuing education requirements, and paying the required fee.
If a license is revoked.

Prepaid Rental Listing Service License (PRLS)
A Prepaid Rental Listing Service License (PRLS) is in the business of supplying prospective tenants with listings of residential real property for rent or lease while collecting a fee at the same time or in advance of the time the listings are provided. Simplified, this license allows the licensee to collect for supplying a prospective tenant with a list of prospective rentals.

These regulations apply to those licensees operating under the prepaid rental listing service license:

An individual may obtain the 2-year license necessary to conduct PRLS activities. There is no examination required to obtain such a license.
PRLS activities do NOT include negotiation of lease or rental contracts, NOR do they allow the licensee to perform ANY other real estate activities.
A real estate broker can collect a prepaid fee without holding this type of license IF his PRLS activities are conducted at the broker’s regular place of business.

Introduction to the Enforcement of Real Estate Law
As you’ve probably realized, the California laws regulating real estate licensees and the practice of real estate are not located in one neat little bundle within the California Code. Rather, there are laws that affect real estate in various codes and acts. All licensees should be familiar with the following laws, regulations, and act.

The California Real Estate LAW, which regulates licensing and subdivisions in California, can be found in the “Business and Professions Code.
The Commissioner’s REGULATIONS are rules that are part of the California Administrative Code. These regulations have been established and are enforced by the Commissioner.
The Subdivided Lands Act, which is administered by the Commission. (We will discuss these later in this unit.)

A licensing and regulatory law is effective only to the extent of its enforcement. The Commissioner, as the chief officer of the Bureau, is duty-bound to enforce the provisions of the Real Estate Law.

The Commissioner’s Authority
The Commissioner has the authority to investigate the actions of any person engaged in the business or acting in the capacity of a licensee in California , and has the power to suspend or revoke the real estate license. Upon a verified written complaint, the Commissioner MUST investigate such a matter. However, it is at his discretion to decide whether he MAY (but is not required to) investigate such a matter on his own.

Not only does the Commissioner have the authority to suspend or revoke a license, but, as you might expect, he also has the power to deny a license to an applicant if that applicant does not meet all of the legal requirements to hold such a license. Remember that the applicant screening process includes the submission of that applicant’s fingerprints. If, through this evidence, it is found that the applicant has a criminal record or some other record that may reflect negatively on the applicant’s character, the Commissioner’s staff will make an investigation. In such a situation, a formal hearing may be ordered to determine whether or not the applicant meets the requirements of honesty, truthfulness, and a good reputation.

You should also note that the Commissioner also has the authority to require evidence of honesty and truthfulness from ALL of the following parties: the officers, directors and persons who own or control more than 10% of the shares of the applicant for a corporate real estate brokerage license.
In general, an investigation of a licensee is based upon a written statement from someone who believes he has been wronged by a licensee acting in the capacity of an agent. The following investigative procedures are followed by the Commissioner’s staff: Statements are obtained from witnesses, if any; a statement may be obtained from the licensee involved; bank records, title company records, and public records are checked as necessary. As part of the investigation, an informal conference may be called, and all parties concerned may be requested to attend for the purpose of determining the validity and seriousness of the complaint. If it appears that the complaint is of a serious nature and that a violation of law has occurred, an accusation is filed and there may be a formal hearing, which could result in suspension or revocation of the license.

Formal Hearings
The formal hearing is conducted in accordance with procedures set forth in the Administrative Procedure Act. The accusation or statement of issues is served upon the licensee, who is informed of the rights of an accused. In the hearing, the Commissioner becomes the complainant, and brings the charges against the licensee. The original complainant usually becomes a witness. The licensee, known as the respondent in the hearing procedure, may appear with or without counsel.

A record is made of the proceedings. The hearing is conducted according to rules of evidence, and the testimony is taken under oath. An administrative law judge from the Office of Administrative Hearings hears the case. The Commissioner’s case is presented by the Commissioner’s counsel.

Once the administrative law judge issues a proposed decision based upon the findings, the Commissioner may reject or accept the proposed decision, or reduce the proposed penalty and make an official decision. The respondent may petition for reconsideration, and has the right of appeal through the courts.

If the charges are not sustained at the hearing, they are dismissed. On the other hand, if the testimony substantiates the charges and they appear to be sufficiently serious, the license of the respondent is suspended or revoked. After a license is revoked, the person affected may not apply for reinstatement of the license until one year has passed.

Representatives of the Commissioner also investigate persons or firms who appear to be operating improperly, or without benefit of a license, or who subdivide land without complying with the subdivision laws enforced by the Commissioner. If sufficient evidence of a violation is obtained, an Order to Desist and Refrain is issued, or a complaint is brought and the parties are prosecuted in a court of competent jurisdiction.
On the following screen, we will discuss Sections 10176 and 10177 of the Regulations.

What are Sections 10176 and 10177?
Sections 10176 and 10177 of the Business Professions Code constitute the foundation for most license suspensions or revocations.

Section 10176 of the Business and Professions Code is the legal guideline for the actions of a real estate licensee performing or attempting to perform any of the licensed acts within the scope of the Real Estate Law. As a general rule, the licensee must have been acting as an agent in a real estate transaction before the section will apply.

Section 10177 of the Business and Professions Code, on the other hand, applies to situations in which the licensee involved was not necessarily acting in the capacity of an agent.

It is ESSENTIAL that all real estate agents follow closely the ethical and legal mandates set forth in Sections 10176 and 10177 of the Business and Professions Code.

Misrepresentation . Section 10176(a). Misrepresentation means that the licensee must disclose to his principal ALL material facts that the principal should know. If the licensee does not make such disclosures OR if he outright lies, there is a cause for disciplinary actions to be taken against him. Many complaints received by the Commissioner allege misrepresentation on the part of the broker or salesperson. Included also as a cause for discipline under this section is failure of a broker or salesperson to disclose to his or her principal material facts of which the principal should be made aware. If the misrepresentation was not important, and the person to whom it was made would have proceeded with the transaction anyway, the misrepresentation probably would not be material. However, an Attorney General’s opinion holds that damage or injury need not be present to support an action under this section. The reason is that the California Real Estate Law concerns the conduct of licensees rather than the settling of disputes about damages or injuries between licensees and their clients.
False promise . Section 10176(b). A false promise and a misrepresentation are not the same thing. A misrepresentation is a false statement of fact, while a false promise is a false statement about what the promisor is going to do. Many times a false promise is proven to be false by showing that the promise was impossible to perform and that the person making the promise knew it was impossible.
Continued misrepresentation . Section 10176(c). This section gives the Commissioner the right to discipline a licensee for “a continued and flagrant course of misrepresentation or making of false promises through real estate agents or salespersons.”
Dual Agency, or Divided Agency . Section 10176(d). This section deals with failure to inform all principals that the licensee is acting as agent for more than one party in the transaction.
Violations of Code Section 10176
Commingling . Section 10176(e). Commingling takes place when a broker has mixed the funds of a principal with the broker’s own money. (Don’t confuse commingling with conversion, which is the misappropriating and use of the principal’s funds. Conversion, of course, can be a more serious offense.) All funds must be kept separate.
Definite termination date . Section 10176(f). A specified termination date is required IN WRITING on all exclusive listings relating to transactions for which a real estate license is required.
Secret profit . Section 10176(g). Secret profit cases usually arise when the broker, who already has a higher offer from another buyer, makes a low offer, usually through a “dummy” purchaser. The broker then sells the property to the interested buyer for the higher price, with the difference being the secret profit.
Listing-option . Section 10176(h). A licensee who has used a form that is both an option and a listing must inform the principal of the amount of profit the licensee will make, and must obtain the written consent of the principal approving the amount of such profit, before the licensee may exercise the option. This section does not apply where a licensee is using an option only.
Dishonest dealing . Section 10176(i). “Dishonest dealing” is a sort of catch-all section similar in many ways to Section 10177(f), because it refers to a person who performed a licensed act without a license. The difference is that under Section 10176(i), the acts must have been those requiring a license, while there is no such need under Section 10177(f).
Signatures of prospective purchasers . Section 10176(j). Brokers must obtain a written business opportunities authorization to sell from a business owner before securing the signature of a prospective purchaser to any agreement providing for compensation to the broker if the purchaser buys the business.
Violations under Section 10177 of the Code
Obtaining a license by fraud . Section 10177(a). Misstatements of fact in an application for a license; procurement of a license by fraud, misrepresentation, or deceit (e.g., failure to reveal a previous criminal record).
Convictions . Section 10177(b). Criminal conviction for either a felony or a misdemeanor, which involves moral turpitude and is substantially related to the qualifications, functions, or duties of a real estate licensee. A court has defined moral turpitude as “everything done contrary to justice, honesty, modesty, or good morals.”
False advertising . Section 10177 (c). Includes subdivision sales as well as general property sales.
Violations of other sections . Section 10177(d). This section is the Bureau’s authority to proceed against the licensee for violation of any of the other sections of the Real Estate Law, the Regulations of the Commissioner, and the Subdivided Lands Law.
Misuse of trade name . Section 10177(e). Use of any trade name or insignia of membership in any real estate organization if the licensee is not a member of that organization.
Conduct warranting denial. Section 10177(f). An essential requirement to the issuance of a license is that the applicant be honest and truthful. If any of the acts of a licensee establish that a licensee does not possess these characteristics, Section 10177(f) will apply. This section also provides for disciplinary actions when a real estate licensee has either had a license denied or a license– issued by another agency of this state, another state, or the federal government–revoked or suspended for acts that, if done by a real estate licensee, would be grounds for the suspension or revocation of a California real estate license.
Negligence or incompetence . Section 10177(g). The Bureau proceeds in those cases where the licensee is so careless or unqualified that to allow the licensee to handle a transaction would endanger the interests of clients or customers.

Supervision of salespersons . Section 10177(h). Disciplinary action may result if a broker fails to exercise reasonable supervision over the activities of the broker’s salespersons.
Violating government trust . Section 10177(i). Using Government employment to violate the confidential nature of records thereby made available.
Other dishonest conduct . Section 10177(j). Any other conduct that constitutes fraud or dishonest dealing.
Restricted license violation . Section 10177(k). Violation of the terms, conditions, restrictions, and limitations contained in any order granting a restricted license.
Inducement of panic selling . Section 10177(l). To solicit or induce the sale, lease, or the listing for sale or lease, of residential property on the grounds, wholly or in part, of loss of value, increase in crime, or decline in the quality of the schools due to the present or prospective entry into the neighborhood of a person or persons of another race, color, religion, ancestry, or national origin. This is also known as blockbusting.
Violation of Franchise Investment Law . Section 10177(m). Violation of any of the provisions of the Franchise Investment Law or any regulations of the Corporations Commissioner pertaining thereto.
Violation of Corporations Code . Section 10177(n). Violation of any of the provisions of the Corporations Code or of the regulations of the Commissioner of Corporations relating to securities as specified in the Corporations Code.
Violation of Securities Law. Section 10177(o). Failure to disclose to buyer the nature and extent of ownership interest a licensee has in property, which is the subject of a transaction in which the licensee is an agent for the buyer. Also, failure to disclose such ownership on the part of licensee’s relative or special acquaintance or entity in which licensee has ownership interest.

Other Penalty Sections
Additional sections in the Business and Professions Code provide for the revocation or suspension of licenses. These violations could be included under Section 10177(d) of the law. The following are brief summaries. However, do not pay excessive attention to the specific section numbers – only to the violations themselves.

Sections 10137 and 10138 – Employing or compensating any unlicensed person to perform acts requiring a license.
Section 10140 – False advertising.
Section 10140.6 – Advertising of acts that require a license must contain a designation disclosing that the licensee is performing such acts.
Section 10141 – Broker must cause notice of sales price to be given to both buyers and sellers within one month after the sale is completed.
Section 10141.5 – Specifies a broker’s responsibility for recording trust deeds.
Section 10142 – Licensee must give a copy of any contract to the party signing it at the time it is signed.
Section 10145 – Specifies licensee’s responsibilities in handling trust funds.
Section 10148 – Requires retention and availability for inspection and copying of all listings, deposit receipts, cancelled checks, trust records, etc. for a three-year period.
Section 10160 – Brokers shall retain and make available for inspection the licenses of salespersons in the broker’s employ.
Section 10161.8 – Broker must notify the BRE when a salesperson is employed or terminated.
Section 10162 – All active brokers must maintain a definite place of business in the State of California .

Section 10163 – Brokers maintaining more than one place of business must first procure branch office license(s).
Section 10165 – Failure to make licenses available for inspection and failure to maintain a place of business.
Section 10167 – Requires the licensing of individuals, other than real estate licensees, engaged in prepaid rental listing services and makes a willful violation of the law a misdemeanor.
Section 10176.5 – Violation of any of the Civil Code Sections (1102, et seq.), which deal with use of the Real Property Transfer Disclosure Statement.
Section 10177.1 – Suspension without hearing if license procured by fraud, misrepresentation, deceit, or by the making of any material misstatement of fact in the application for license.
Section 10177.2 – Violations while performing acts under Section 10131.6 (mobile home sales).
Section 10177.4 – Compensation for referring customers to escrow, pest control, home warranty, title insurer, or underwritten title company or controlled escrow company.
Section 10177.5 – Final judgment in a civil action against a licensee upon the grounds of fraud, misrepresentation, or deceit.
Section 10178 – Broker terminates a salesperson for cause and then fails to notify the Commissioner.

Section 10475 – Automatic suspension of a real estate license if the Commissioner pays a claim against a licensee from the Recovery Account. There can be no license reinstatement until full reimbursement, with interest, is made to the fund.

Remember that the Commissioner always has the authority to adopt regulations to aid in the administration and enforcement of the Real Estate Law and the Subdivided Lands Law.

The Regulations of the Real Estate Commissioner have the force and effect of the law itself. This is just one reason that it’s so important for both licensees and prospective licensees to possess a thorough knowledge of the regulations.

We’re drawing close to the conclusion of this unit, but we’re not quite at the end. We still have two topics to cover. First, we’ll take a brief look at the publications of the California Bureau of Real Estate. Second, we’ll read about the Real Estate Recovery Fund in California.

Bureau Publications
To aid the BRE in its role as a real estate licensing and law enforcement agency, the BRE has developed and published books and other guides to further assist its licensees and to encourage a high level of ethical and professional standards.

The Bureau publishes both a Reference Book and a Real Estate Law book. The law book contains the Real Estate Law, Subdivided Lands Law, Commissioner’s Regulations, and pertinent excerpts from the California codes.

In addition to these, the BRE also publishes the quarterly Real Estate Bulletin, a publication intended for the education of licensees by keeping them informed of the latest administrative provisions and the current practices in real estate and allied activities. This newsletter is distributed to all brokers and salespersons.

For information regarding the examination process and the issuance of original licenses, the Bureau publishes a pamphlet entitled, “Instructions to License Applicants.” This pamphlet is available, free of charge, at all district offices.

Finally, the Bureau publishes various consumer brochures and subdivision guides for the public.

Forms to order any of the Bureau’s current publications can be obtained at the district offices or by writing to Book Orders, Bureau of Real Estate, P.O. Box 187006, Sacramento, CA 95818-7006.

Real Estate General Fund and Recovery Account
The Real Estate General Fund is an account that holds ALL the money collected from license and exam fees, and is used for the operating expenses of the BRE.

However, 20% of the General Fund is specifically set aside to be divided as follows:

8% for the Real Estate Education and Research Fund (which we will discuss later in this course); and
12% for the Recovery Fund.

The Recovery Fund is an account established as a last resort for a consumer who has obtained a final civil judgment or criminal restitution order against a real estate licensee based on fraud or certain other grounds. The consumer, who has suffered financial loss due to the wrongful act of a licensee in a real estate transaction, can receive payment of damages and arbitration from this fund, if the judgment hasn’t been satisfied through the normal post-judgment proceedings, outlined as follows.

For payment to be made, the following regulations apply:

The judgment must be based upon intentional fraud or conversion of trust funds.
The licensee must have been properly licensed at the time the cause of action arose, and must have been performing acts requiring a real estate license.
The applicant must file the application within one year of the final judgment or criminal restitution order.
The applicant must show that he or she has made all reasonable efforts to satisfy the judgment from the assets of not only the judgment debtor but also all other persons who may have been liable in the transaction, such as the employing broker or the real estate company itself.

Payment From the Recovery Fund
Once the plaintiff files the payment application, the following regulations apply:

The BRE has 15 days to notify the applicant of any deficiencies in the application.
After the application is substantially complete, the BRE has 90 days within which to pay, compromise, or deny the claim.
If an application is denied, the applicant has 6 months within which to refile with the court that rendered the judgment.
If payment is made, the license of the judgment debtor is automatically suspended until he has repaid the amount, plus interest.

The license of the judgment debtor (the licensee whose actions caused the financial detriment of the consumer) is suspended until the Recovery Fund is FULLY REIMBURSED, PLUS INTEREST.

A judgment debtor who filed a timely response may file a writ of mandamus to challenge the suspension of his or her license.

The maximum liability of the Recovery Account in any ONE transaction is $50,000.00, and the total series of judgments against any INDIVIDUAL licensee is limited to $250,000.00.

California is known as one of the few states that ACTIVELY work to protect consumers against such fraudulent acts by real estate licensees.

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