Updated 2/9/17 to clarify rule.
The California Bureau of Real Estate (CalBRE) issued a licensee alert reminding real estate brokers of their duty to submit the Escrow Activity Report to the CalBRE by March 1 of each year.
A real estate broker is required to report broker-controlled escrow activity — through their broker-owned escrow company — for the previous calendar year when:
- the broker engaged in escrow activities for five or more transactions; or
- the broker’s escrow activities — not income from the activities — exceeded $1 million. [Calif. Business and Professions (B&P) Code §10141.6]
According to the CalBRE, the number of real estate brokers properly filing the Escrow Activity Report has declined steadily since the reporting rule became effective in 2014. Only 143 brokers reported escrow activity for the 2015 calendar year, compared to:
- 161 brokers for 2014; and
- 206 brokers for 2013.
Thus, the CalBRE perceives there is widespread abuse of these reporting rules, estimating hundreds of brokers are not reporting their activity as required. This failure to comply has prompted the agency to take assertive action by conducting audits.
A broker who meets the above criteria and does not report their escrow activity to the CalBRE is subject to:
- a penalty of $50 per day for the first 30 days the report has not been received;
- a penalty of $100 per day on and after the 31st day the report has not been received, not to exceed $10,000 total; and
- disciplinary action against the broker’s license.
How to report escrow activity
All broker escrow activity needs to be submitted online through the CalBRE’s web site. Brokers submit their activity by filing the CalBRE’s form RE 890: Escrow Activity Report, located here.
Filing the report online is a simple process. Brokers will need to provide information regarding:
- the number of escrow activities completed;
- the total dollar amount of escrowed transactions;
- the locations where the escrow activities occurred;
- the total number of escrow officers involved;
- the name and contact information for each escrow officer; and
- information about escrow accounts held by the broker.