Why this matters: The California Department of Real Estate (DRE) in their Spring 2026 Real Estate Bulletin reminds licensees of fiduciary duties, advance fee requirements and how to become a real estate broker.
Fiduciary duty first and foremost
By underscoring a real estate licensees’ fiduciary duty to their clients, the Department of Real Estate (DRE) Commissioner Chika Sunquist began the Spring 2026 DRE Bulletin.
Simply put, fiduciary duty means the care, loyalty and integrity that real estate brokers — and affiliated licensees acting as their agents — owe clients, assisting the client to make informed decisions about their real estate transactions. This special duty distinguishes real estate licensees from many other professions.
When licensees fulfill their fiduciary duties by clearly disclosing material facts to clients, safeguarding trust funds and consistently acting in their clients’ best interests, the licensee avoids complaints by clients to the DRE.
Commissioner Sunquist urges licensees to always review and fully perform their fiduciary duties owed the client.
Related video:
Read more about fiduciary duty.
Advance fees advance in popularity
Broker fees deposited with the broker before they are earned are called advance fees.
In response to an increase in advance fee materials submitted to the DRE, the DRE reminds licensees of two critical guidelines before collecting an upfront fee from a client before completing the work:
- The licensee needs to submit to the DRE for prior approval the advance fee agreement and materials they intend to use with clients.
- The receipt of advance fees is the receipt of trust funds which must be accounted for as trust funds.
Prior approval of advance fee arrangements
Before a broker may solicit, advertise for and agree to receive an advance fee, the paperwork the broker intends to present to clients is submitted to the DRE Commissioner for approval at least 10 calendar days prior to use. [Department of Real Estate Regulations §2970]
When the Commissioner, within 10 calendar days of receipt, determines the material might mislead clients, the Commissioner may order the broker to refrain from using the material. [Calif. Business and Professions Code §10085]
To be approved by the Commissioner, the advance fee agreement, and any materials intended for use with the agreement, must:
- contain the total amount of the advance fee and the date or event when the fee is earned and becomes due and disbursed to the broker;
- list a specific and fully detailed description of the services rendered to earn and disburse the advance fee;
- give a definite date for full performance of the services described in the advance fee agreement; and
- contain no false, misleading or deceptive representations. [DRE Regs. §2970(b)]
Further, the advance fee agreement may not contain:
- a provision relieving the broker from an obligation to perform verbal agreements made by their employees or agents; or
- a guarantee concerning completion of the intended transaction. [DRE Regs. §§2970(b)(4), 2970(b)(5)]
Related article:
DRE Hot Seat: Deceitful misrepresentations are not due diligence
Advance fee trust fund accounting
Advance fees are for deposit only into the broker’s trust account.
Trust funds always belong to the client of the broker, not the broker. Trust funds may not be withdrawn by the broker before earned and a statement is sent to the client. [Bus & PC §10146]
In addition to trust fund accounting requirements, a broker must send the client a verified accounting for the advance fees:
- no later than at the end of each calendar quarter; and
- at the time the representation agreement entered into by the broker and client is fully performed. [Bus & PC §10146]
The verified accounting for the advance fees will include:
- the name of the broker;
- the name of the client;
- a description of the services rendered or to be rendered;
- an identification of the trust fund account and where the advance fee is deposited; and
- the amount of the advance fee collected. [DRE Regs. §2972]
In addition, the verified accounting will include the amount disbursed for each of the following:
- charges for agreed-to services;
- fees paid to field agents and representatives; and
- overhead costs and profits. [DRE Regs. §2972(f)]
When an agreed-to service disbursed from the account is made for advertisement, the verified accounting will include:
- a copy of the advertisement;
- the name of the publication in which the advertisement appeared; and
- the number of ads published and the dates they appeared. [DRE Regs. §2972(g)]
Further, when the advance fee is for the arrangement of a mortgage, the verified accounting will include a list of the names and addresses of the persons to whom the information pertaining to the mortgage requirements was submitted, and the dates the information was submitted. [DRE Regs. §2972(h)]
The amounts placed in the trust account may be withdrawn:
- when expended for the benefit of the client; or
- on the fifth day after the verified accounting is mailed to the client. [Bus & PC §10146]
Related video:
Read more about advance fee accounting.
Capture market momentum: become a broker
The DRE Bulletin continues with an overview of how to become a real estate broker.
Agents with two years of full-time real estate experience within the past five years are eligible to upgrade their salesperson license to a broker license. In addition to the experience requirement, agents also need to take eight required courses.
Although it might not seem like it, an economic downturn is an ideal time to expand your career. This is especially true in a field like real estate heavily impacted by economic booms and busts.
Earning a broker license during a downturn positions you to take advantage of increased business when the market recovers, rather than waiting until the recovery is underway, and missing that upward momentum.
Staying in real estate during a downturn positions you to gain market share when activity rebounds. Advancing your career during a slowdown strengthens that position, especially as other brokers and agents leave the industry and clients return to the market.
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Experience requirement to become a broker
Experience requirements to become a real estate broker include:
- a minimum of two years full-time (40 hours per week) of licensed salesperson experience within the last five years;
- part-time (10 hours or more) experience as a licensed salesperson on a prorated basis. For instance, for 20 hours per week, it takes four years to equal two full-time years. For 30 hours per week, it takes about two years and eight months;
- a four-year degree from an accredited college or university with a major or minor in real estate; or
- equivalent experience as a California licensed salesperson, such as an escrow, title or loan officer, subdivider or speculative builder requiring real estate-related duties, appraiser or real estate licensee in another state or country.
Course requirements to become a broker
In addition to experience requirements, real estate professionals also must take real estate coursework and pass a state exam administered by the DRE.
To become a real estate broker in California, the applicant needs to pass the real estate broker exam by answering at least 75% of the questions correctly.
To sit for the broker exam, the applicant needs to successfully complete eight statutorily required college-level courses, including:
- an enhanced Real Estate Practice course which includes topics on implicit bias and fair housing, and includes an interactive participatory component where the licensee role plays as the consumer and the real estate licensee;
- Legal Aspects of Real Estate;
- Real Estate Finance;
- Real Estate Appraisal;
- Real Estate Economics or Accounting (when both taken, only two out of the three following elective courses are required); and
- Three courses out of the following:
- Real Estate Principles;
- Business Law;
- Property Management;
- Escrow;
- Real Estate Office Administration;
- Mortgage Loan Brokering and Lending;
- Advanced Legal Aspects of Real Estate;
- Advanced Real Estate Finance;
- Advanced Real Estate Appraisal;
- Computer Applications in Real Estate; and
- Common Interest Developments.
Applicants who are members of the California State Bar are exempt from course requirements, though they still need equivalent experience requirements to take the broker exam.
Those who hold a real estate salesperson license have typically completed two of the eight mandated courses — unless they took the enhanced version of Real Estate Practice, which makes three.
Thus, real estate salespersons only have five-to-six courses left to become a broker.
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