The California State Bureau of Real Estate – Flashcards
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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.
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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 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.
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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.
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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.
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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.
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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 general responsibilities and mission give him a wide range of specific duties by which the aforementioned objectives are achieved.
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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: * Keep in mind that some managers and employees under the aforementioned section are exempt from the licensing requirement.
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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.*
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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):
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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;
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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:
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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.
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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.
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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.
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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
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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. 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.
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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.
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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.
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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
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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.
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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/
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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.
