From serving as the site of the gold rush in the 1800s to growing into a hotspot for entertainment and tech, California has a storied history in the United States. People love it for the weather, scenery, diversity, and opportunities. As a real estate professional, you get to help people find their places there.
That's why you must do everything you can to protect your real estate license. It starts with habitually familiarizing yourself with California real estate law and knowing where to turn for legal aid. Anytime you have questions or need support, schedule a consultation with the Lento Law Firm Professional License Defense Team by calling 888.535.3686 or by filling out this contact form.
Who is in Charge of Real Estate Licenses in California?
Real estate is such a major industry in California that there's an entire government department dedicated to it—the California Department of Real Estate (DRE). It focuses on supporting real estate professionals and consumers alike to ensure mutually beneficial relationships that make the best possible use of the state's lands and properties. This includes managing and enforcing rules and regulations for real estate license approvals, renewals, reinstatements, and more. Read on for a brief description of each field and its requirements under the DRE.
Real Estate Salesperson
Responsible for arranging transactions involving residential, commercial, and/or land, as well as real estate salespeople. Although it's typical for salespeople to handle only the selling or purchasing side, they can do both for the same transaction if all parties give written authorization.
To be eligible for a real estate salesperson license, applicants must first complete at least three college-level courses. One must cover real estate principles, and another should teach real estate practices. Applicants can choose the third course from a variety of adjacent topics, such as real estate appraisals, economics, accounting, mortgage loans, property management, and more.
This isn't to say that Californian real estate salespeople need to attend college. Rather, they must take at least 135 hours of real estate courses that would meet the standard of a college class. The DRE already has a list of approved programs.
After all this, the aspiring salesperson must pass both state and national real estate exams.
Property Manager
A lot of work goes into taking care of rental properties. You must know the ins and outs of leasing contracts, rent collection, building maintenance, office administration, hospitality, financial planning, conflict resolution, and sound investment practices. For that reason, property managers in California must have real estate licenses.
The process of becoming a property manager is similar to that of becoming a salesperson. However, after completing the courses and passing the exam, they must also obtain a property management certificate, which usually takes 18 to 24 additional months of education. They must hang their license with a brokerage that offers property management services as well.
Real Estate Broker
In many ways, real estate brokers are the same as salespeople. The main difference is that they take on more responsibilities, such as supervising agents and managing the daily operations of a real estate brokerage. Alternatively, they can choose to work for themselves, independent of a firm.
To become a broker in California, real estate professionals must have two years of documented full-time sales experience within the last five years. A four-year college degree with a major and/or minor in real estate studies would suffice as well. Lastly, they must pass a state broker exam.
What About Real Estate Appraisers?
Multiple factors go into a property's market listing price, including its size, age, location, condition, special features or amenities, historical significance, building code compliance, and local sales trends for similar properties. A real estate appraiser's job is to consider all these factors to calculate its value, and they don't need to work with a brokerage.
The licensure process for an appraiser differs greatly from that of other industry professions. In many states, appraisal licenses fall under the same umbrella as the department that handles professional or real estate licenses in general. California, however, has set up a separate entity called the Bureau of Real Estate Appraisers (BREA).
According to the BREA, appraiser hopefuls must finish 150 hours of industry-specific coursework, which includes a National Uniform Standards of Professional Appraisal Practice program. The DRE also requires that they complete 30 hours of college-level courses on real estate, finance, economics, and/or business administration, unless they already have at least two years of relevant experience in the field.
Along with all this, applicants have to document 2,000 hours of qualifying appraisal practice within 12 months. All of them must be supervised by a licensed appraiser.
What Counts as a Violation of a Real Estate License?
Both the DRE and BREA expect licensees to follow established rules and regulations designed to uphold a standard of quality and trustworthiness in their industries. Most code violations are the same or similar across their boards. Below is a list summarizing them.
Committing Fraud or Misrepresentation
A dishonest real estate professional can commit fraud or misrepresent themselves at multiple stages in their license application or career. They might lie about their qualifications, accept bribes, make false promises, charge illegal advance fees, embezzle from their companies, fudge calculations for property values or loans, or provide inaccurate or untrue information or advertising to their clients, among other things. Neither the DRE nor BREA tolerates any fraudulent actions.
Breach of Confidentiality
Consumers entrust much of their most personal and sensitive information to real estate professionals. They have a right to expect that their information will be safe in the hands of their agents, brokers, property managers, and appraisers. If any of these professionals are found to share or leak this information, they may become subject to investigation.
Violating the Fair Housing Act
The DRE and BREA demand all their licensed professionals to abide by the federal Fair Housing Act. All their services, advertisements, contracts, and calculations must ensure just, equitable, unbiased, and objective treatment for all their clients, regardless of age, sex, gender, orientation, race, background, nationality, ability, or marital status.
Providing Inadequate or Subpar Services
All real estate professionals must adhere to certain standards, and failing to meet them is a violation in the eyes of both the DRE and BREA. Salespeople, brokers, and property managers who don't fulfill their contracts or make multiple avoidable legal or technical errors may risk sanctions on their licenses.
Non-compliance with Law or Employer
Every real estate professional is obligated to comply with the state and federal laws associated with their license in addition to any policies and protocols established by their employer if they work with a firm or brokerage.
For example, salespeople and brokers must keep proper trust fund records and place the funds within the appropriate account within three days of accepting them. Every firm and brokerage may have its own process for ensuring this is done. Failure to fulfill this legal requirement and/or do so in accordance with the company's procedures could result in investigations and sanctions.
Unprofessional Conduct
Those looking to buy or lease real estate reasonably expect a certain level of respect. The DRE and BREA are likely to investigate and discipline industry professionals who are accused of harassment, profanity, assault, theft, discrimination, or other actions that hurt, upset, or traumatize consumers.
Acting Without Authority or Permission
Most real estate transactions are substantial and complex, so no real estate professional should act for their clients unless their license allows it and they have written authorization. Otherwise, they could make serious legal, financial, or technical mistakes, and the lack of a paper trail would throw every action's legitimacy into question. Any professional who acts outside their scope or without explicit, documented permission from their clients may be sanctioned.
Being Convicted of a Crime
The DRE and BREA both conduct background checks on both aspiring and current licensees. It depends on the type, circumstances, and age of the crime, along with other factors, but those who are found to have misdemeanor or felony convictions on their records are more likely to lose or be denied their licenses than others.
California's Disciplinary Process for Real Estate License Violations
If you're suspected of committing any of the aforementioned violations, the DRE or BREA may put you through a disciplinary process. No matter which department reviews your violation, you can expect it to go something like this.
Review of the Complaint
The California DRE accepts complaints filed against real estate salespeople, brokers, and property managers. Complaints regarding real estate appraisers are handled by the California Department of Consumer Affairs, which houses the BREA.
Either way, the appropriate department assesses the complaint and decides whether there's sufficient reason to proceed with an investigation. Otherwise, the complaint may end up dismissed.
Official Investigation
If the department suspects that the complaint has merit, they'll ask a qualified investigator to look further into the matter. They might gather evidence, conduct interviews with relevant parties, and obtain any other necessary information. Everything will be compiled into a report to be presented to the department.
Depending on the information that the investigator finds, the report might suggest that the real estate professional in question is innocent of the violations of which they were accused. The complaint would be dismissed.
However, if the report proves that the subject of the investigation is guilty, the department will take steps to fix the situation and discipline the offender.
Attempt at Resolution
Whenever possible and appropriate, the department prefers to settle problems and code violations without legal action or hearing committees. The DRE might direct complainants to its Complaint Resolution Program, which usually works for simple issues.
It's a little different for a real estate appraiser. The Department of Consumer Affairs allows the appraiser to defend themselves against the results of the investigative report, but they also hold a conference in which the appraiser is given the option to sign a consent order, indicating that they accept liability for the violation.
Formal Hearing
Perhaps the violation committed by the agent, broker, or property manager proves too complicated or serious for the Complaint Resolution Program or the appraiser refuses to sign a consent order. In these cases, the governing department will hold a hearing.
With the DRE, this involves evaluating the facts of the report and weighing them against other factors, such as mitigating circumstances or the licensee's history or background. The offender could argue in their defense as well.
Appraisers, on the other hand, must go before an administrative judge. They can present their own evidence, testimonies, and other items to convince the judge to dismiss the complaint. It's up to the judge to determine the appraiser's guilt and choose how to sanction them, if necessary.
Adjudication and Punishment
Whether you're a real estate salesperson, broker, property manager, or appraiser, the punishments for a guilty adjudication are basically the same. At best, the offender could be compelled to pay fees or fines, accept formal reprimands, and/or complete reeducation or probationary programs. At worst, their license could be suspended, restricted, or revoked.
Why Hire the Lento Law Firm?
Nothing about the disciplinary process for Californian real estate professionals is straightforward. Don't underestimate the impact of an investigation on your career. In the same way that you seek to protect your clients from poor treatment and bad real estate deals, protect yourself from sanctions that can derail your future.
If you're dealing with a complaint against you, set yourself up for success by hiring the Lento Law Firm Professional License Defense Team. They're adept at navigating the different processes and requirements for both the DRE and BREA, no matter the violation you're accused of committing. Plus, they're as committed to preserving your career as you are.
Get the Help You Need for Your Real Estate Career
California will continue attracting commercial and residential interests alike, making it one of the most exciting and lucrative areas for real estate experts. You should have a chance to be part of it. Get the Lento Law Firm Professional License Defense Team on your side now by calling 888.535.3686 or filling out a contact form.
