DRE Bulletin Digest: Spring 2023

Welcome back. The Spring 2023 edition of the California Department of Real Estate (DRE) Bulletin covers pre-license education changes, broker supervision requirements, the DRE’s complaint review process, and more.

Read on for firsttuesday’s digest of DRE updates for real estate agents and brokers.

Commissioner’s update

DRE Commissioner Doug McCauley begins this quarter’s bulletin with a focus on fair treatment of consumers and first-time homebuyers.

First-time homebuyers are often targets of fraud as they are ill prepared by education or experience to make the financial decisions required to buy a home. Essentially, a lack of financial literacy.

However, the presence of the diligent representation of an agent acting as their advisor with guidance on a transaction that is most likely the largest financial decision they will make during their lifetime helps bridge the gap.

In response to the need for improved financial literacy for tenants who become homebuyers, the DRE has launched a communications campaign to assist first-time homebuyers: First Home California.

First Home California will give consumers online access to a wide-ranging assortment of information, from how to select an agent and understanding mortgages, to disclosures and what to expect at closing.

Related video:

In the spirit of consumer protection and fair treatment toward members of the public, the DRE also reminds licensees of the changes to pre-license education per the newly-enacted Senate Bill (SB) 1495. Starting January 1, 2024, all sales agents and brokers applying to take a State Licensing exam are required to have completed an enhanced Real Estate Practice course. The new Practice course including education on:

bias — implicit and explicit;
the historical and social impacts of bias;
steps to recognize and address one’s own bias; and
fair housing laws — including an interactive participatory component.

firsttuesday is the first California school to obtain DRE-approval to provide California’s future agents and brokers with the SB 1495-compliant Real Estate Practice course. We remain one of very few providers able to offer the course.

Individuals applying to the DRE to become a salesperson or broker after December 31, 2023, need to submit a certificate of completion for the enhanced version of Practice. Without the certificate, their application will not be processed and they will not move on to sit for the state exam.

To get your enhanced Real Estate Practice course, visit firsttuesday’s Sales Agent Licensing Education page or Broker Licensing Education page.

Related article:

New California Real Estate Practice course fulfills 2024 requirements and beyond

Broker supervision requirements

The bulletin continues with a review of an employing broker’s supervision requirements under California Real Estate Law.

A licensed broker who employs other DRE licensees, such as salespersons or broker-associates, has a duty to:

supervise the real estate licensees who are affiliated with the broker;
establish internal policies, rules, procedures and systems to oversee, inspect and manage transactions, documents, trust funds, advertising, agents’ knowledge of fair housing laws and regular reports of their licensed agents’ activities;
use care when assigning supervisory authority to others, such as branch officers or division managers;
supervise advertising of any service for which a license is required;
ensure license requirements are met for all affiliates who perform activities requiring a license;
ensure unlicensed employees do not cross the line and perform activities requiring a real estate license; and
maintain written employment agreements between the broker and each employed agent or broker-associate, and unlicensed staff.

When any violation of the real estate law occurs in the operations of a corporation licensed as a real estate broker, the designated broker is the individual who suffers the consequences. The decision of an individual broker to serve as a responsible broker to qualify a corporation to hold a real estate broker license is not to be taken lightly. The obligations undertaken are fundamental, as a duty owed to the DRE, not clientele, to manage the operations and employees to comply with real estate law.

Related video:

The DRE’s complaint review process

In the 2021-2022 fiscal year, the DRE received 5,202 complaints. The majority were filed by consumers, although the DRE also received complaints from participants in the real estate industry, such as licensees and other regulatory agencies.

Related article:

The Corrective Action Letter: A licensee’s first stop on the DRE’s discipline train

The steps the DRE follows when a complaint is filed includes:

Complaint review, when the DRE staff analyzes each complaint received for potential violations of Real Estate Law or Subdivided Lands Law. When potential violations are found, the complaint is referred to an investigator;
Formal investigation, when a complaint is assigned for investigation and a special investigator contacts the complaining participant to introduce themselves, discuss the complaint or provide the DRE with more information;
Requiring clear and convincing evidence, as the burden of proof necessary for disciplinary action against a licensee exceeds that required to prove a case in civil court;
Investigation completed, which will either lead to no formal regulatory action, regulatory action due to minor violation, or regulatory action due to a major violation. No formal regulatory action leads to the closure of the complaint. Minor violations lead to a citation with a fine and order to correct the violation. Major violations will go through formal disciplinary process, and can result in a suspension, restriction or revocation of the DRE license;
Disciplinary hearing, which are presided over by an Administrative Law Judge independent from the DRE. Hearings are conducted similarly to a court trial, but without a jury; and
Final decision, which happens after the hearing is concluded, involves the Administrative Law Judge preparing a proposed decision which will be sent to the Real Estate Commissioner for consideration and final decision. The Commissioner may accept the proposed decision as the final decision or reject it and issue a Decision after Rejection as the final decision. When this happens, the Commissioner will provide the participants with an opportunity to submit additional arguments before rendering the final decision.

Related article:

DRE Hot Seat: False representations to influence, persuade or induce

Visit the DRE website to download the full Spring 2023 DRE Bulletin and sign up for the Quilix newsletter to receive the next DRE Bulletin Digest in your inbox!