All real estate license applicants are required to meet eligibility standards set by the California Bureau of Real Estate (CalBRE). The licensing process includes a criminal background check to demonstrate an applicant is capable of performing their duties as a real estate broker or salesperson.
We take a closer look at CalBRE’s criminal screening process to identify criminal activities that result in denial of a license application — and conduct that does not prevent licensure.
Crimes that bar licensure
Real estate license applicants are required to disclose all prior convictions and pending criminal charges as part of the application process. Convictions include:
- a verdict of guilty by judge or jury;
- a plea of guilty;
- a plea of nolo contendere (no contest); and
- a forfeiture of bail in the courts of any state, commonwealth, possession or country.
The CalBRE further conducts a detailed background investigation via fingerprinting to ensure each applicant does not hold a criminal record that conflicts with the duties required of a real estate licensee. [Calif. Business and Professions Code §10177(b)]
According to the CalBRE, convictions that most commonly trigger denial of a license application include:
- assault with intent to commit rape;
- bribing a public officer or employee;
- criminal conspiracy;
- filing a false police or fire report;
- grand and petty theft;
- obtaining money by false pretense;
- sexually related conduct affecting a non-consenting observer or participant;
- possession of drugs for sale or transport;
- soliciting a lewd act from a minor or non-consenting adult; and
- tax evasion.
CalBRE’s review and “substantial relationship”
The CalBRE’s background check takes into account the type of each conviction before approving or denying an applicant.
Denial of a license is broadly recommended when the applicant:
- has a conviction of a felony or misdemeanor that is substantially related to the qualifications of a real estate licensee;
- has had administrative action taken against a business or professional license by a state or federal government agency; or
- fails to disclose any of the above criminal charges or disciplinary action.
For an applicant to be denied based on their criminal record, the crime needs to be substantially related to the qualifications, functions or duties of a real estate licensee. [Bus P & C §480]
A substantial relationship exists when the applicant’s criminal activity involves:
- fraudulently taking or appropriating another person’s funds or property;
- counterfeiting, forging or altering an instrument or making a false statement;
- willfully attempting to gain financial benefit through nonpayment of government taxes, assessments or levies;
- bribery, fraud, deceit or misrepresentation;
- sexual conduct affecting a non-consenting observer or participant;
- willfully violating or failing to comply with laws controlling professional real estate licenses;
- willfully engaging in a business activity without obtaining a license or permit required to carry out the activity;
- committing an unlawful act for financial or economic benefit, or with the intent of harming another person or property;
- willfully failing to comply with a court order;
- conduct that demonstrates repeated disregard for the law; or
- two or more convictions involving alcohol consumption or drug use when at least one of the convictions involves driving under the influence. [CalBRE Regulations §2910]
Thus, the CalBRE screens for criminal activity that indicates the applicant lacks the honesty and ethics necessary to carry out the functions of a real estate agent or broker, including handling funds and transaction documents, complying with all laws controlling real estate transactions and interacting with clients.
The CalBRE further considers the severity of each crime and the applicant’s rehabilitation efforts, such as:
- restitution paid to someone who suffered a loss from the applicant’s acts;
- payments of fines and penalties;
- completion of, or continued enrollment in, courses for economic self-improvement; and
- whether two years have passed since the most recent criminal conviction. [CalBRE Regs §2911]
A license applicant cannot be denied based on a pending charge or arrest. [Bus P & C §10177(b)]
These screening practices help protect the public from corrupt individuals who, based on past criminal activity, pose a risk to participants of real estate transactions and indicate the applicant cannot be trusted as an agent.
Delinquent tax and child support payments
In addition to screening for substantially related criminal convictions, the CalBRE is required to reject any applicant who:
- has an outstanding tax obligation over $100,000 due to the Franchise Tax Board (FTB) or the State Board of Equalization (BOE); or
- has not complied with a court order to pay child support.
If an applicant is delinquent in child support payments but otherwise qualifies for a real estate license, CalBRE may issue a temporary 150-day license. However, CalBRE requires clearance from the Department of Child Support Services within 150 days, and charges the applicant a $95 processing fee for the temporary license. [CalBRE Regs §2716.5]
An applicant who is ineligible for a license due to outstanding tax obligations may also receive a temporary license, which gives the applicant 90 days to satisfy their debt. If CalBRE does not receive a release from the FTB or BOE confirming the applicant’s payment, CalBRE will revoke the license. Applicants are not entitled to a refund of application fees. [Bus & P C §494.5(g)]
While these delinquencies do not indicate to the CalBRE the applicant is unfit for licensure the same way criminal convictions do, the delinquencies still act as an automatic block to application approval.
Noncitizenship and undocumented immigration
Since January 1, 2016, the CalBRE no longer denies license applicants based on citizenship or immigration status. Undocumented immigrant applicants may obtain a real estate license with an individual tax identification number (ITIN) — assuming all other licensing requirements are met.
The legal residency requirement was deemed arbitrary and incompatible with the CalBRE’s criminal screening process since undocumented immigration is not substantially related to the duties of a real estate licensee.
Unlike criminal convictions that demonstrate an applicant’s capacity for unscrupulous conduct, undocumented immigration alone does not indicate an applicant is a risk to the public and unfit to carry out the duties of a real estate licensee — the purpose of the state’s criminal screening process.
All things being equal, an undocumented immigrant with no criminal convictions is equally qualified for real estate licensure as a legal resident with no criminal convictions.
Thus, citizenship status has no bearing on whether an applicant is deemed eligible to undertake the duties and functions of a real estate licensee.
Ultimately, the CalBRE’s background check serves as a protective measure to reduce risk to the public and prevent criminal conduct in the real estate industry — all gleaned from the state’s comprehensive review of each applicant’s criminal history.