DRE Bulletin Digest: Summer 2022

Hello again! The Summer 2022 edition of the California Department of Real Estate (DRE) Real Estate Bulletin focuses on continuing education updates, a statewide housing plan, and the California Mortgage Relief Program, among other topics.

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

Adaptive reuse

DRE Commissioner Doug McCauley opens this quarter’s bulletin by advocating for adaptive reuse of property in California to meet its housing inventory goals by 2030. Commissioner McCauley specifically cites office-to-residential and retail-to-residential conversions as a critical yet underused housing production strategy.

The cost to adapt such properties for housing reuse, which includes installing the necessary electrical, mechanical, and plumbing systems, is prohibitively expensive. This is where Governor Newsom’s 2022-2023 proposed budget comes to the rescue. As the first ever initiative to pave the way for adaptive reuse, the budget allocates $410 million over two years to offset these costs.

Adaptive reuse is not a novel concept, but its implementation on such a massive scale is. To that end, the DRE funded two studies conducted by the UC Berkeley Terner Center for Housing Innovation, which helped identify the key architectural ingredients for a successful adaptive reuse project. To ready real estate professionals for this housing push, the DRE will include adaptive reuse topics in its exams to ensure the industry remains on the bleeding edge of housing legislation.

California Continuing Education updates

Just as in previous bulletins, the DRE once again reminds licensees of the upcoming Continuing Education (CE) changes. Passed at the end of 2021, Senate Bill (SB) 263 requires two hours of implicit bias training to be incorporated into continuing education. Further, the mandated three-hour Fair Housing renewal course has been restructured, including an interactive participatory component.

The new course requirements will apply to real estate agents and brokers with licenses expiring on or after January 1, 2023. The DRE has already begun reviewing submissions from providers and expects the new courses to be available for licensees in early fall of 2022.

Related article:

When you can expect to access the extra CE required to renew your California real estate license

To bolster compliance with these updated CE requirement changes, the DRE is stepping up auditing. Every day, the DRE randomly selects licensees to submit their course completion certificates. Failure to provide course completion certificates upon their request may result in a fine or disciplinary action.

The DRE advises licensees to retain copies of their course completion certificates for up to 5 years to be able to quickly respond in the event they are randomly selected for an audit.

If a certificate is misplaced, licensees are advised to get in touch with their course provider as they are required to retain records of attendance, registration, and final examination grades of each student for 5 years. Licensees may report course providers they believe to be in violation of continuing education regulations.

Editor’s note — firsttuesday students can locate their course completion certificates at any time by logging on to their student homepage.

Trust Fund Signatories

The DRE addresses two of the most frequently asked questions regarding signatories on trust fund accounts.

Q: Can a property owner sign on a real estate broker’s trust account?

A: The DRE points to Business and Professions Code (B&P Code) §10145. The relevant portion states that “all funds deposited by the broker in a trust fund account shall be maintained there until disbursed by the broker in accordance with instructions from the person entitled to the funds.”

Further, withdrawals from a trust account of an individual broker require that broker’s signature. In the case of a corporate broker, the signatory needs to be an officer through whom the corporation is licensed.

When authorized in writing by the individual broker or officer, withdrawals may be made with the signature of:

a real estate salesperson licensed to the broker;
another broker acting pursuant to a written agreement with the broker; and/or
an unlicensed employee of the individual broker — if the broker has fidelity bond or insurance coverage equal to at least the maximum amount of the trust funds to which the unlicensed employee has access. [B&P Code § 10145(a)(2))]

A property owner is generally not included in these guidelines. Any arrangements a real estate broker makes to add signatories to a trust fund account will not relieve them from responsibility or liability of the trust funds in their custody. Once a broker receives trust funds, they have a fiduciary responsibility to handle and account for them.

Q: Can a real estate broker sign on the property owner’s general account?

A: This depends on the duties the broker will perform. Will the broker be performing services that require licensure — and will they have access to trust funds? If so, they need to comply with B&P Code §10145. Having the real estate broker and the property owner both as signatories on the same general account does not meet these provisions.

Real estate professionals need to be proactive in complying with trust fund recordkeeping requirements, especially rules around signatures. This ensures the success of a broker’s real estate business while also protecting the public.

California’s Call to Action

The California Department of Housing and Community Development (HCD) has released their Statewide Housing Plan. This comprehensive roadmap tracks California’s progress towards its 2030 goal of building 2.5 million homes.

The plan also includes data on housing by income level and demographics, and information about what state and local governments are currently doing to address California’s chronic housing shortage. Be sure to bookmark the Plan to check for updates as new data and research becomes available.

DRE licensees will play an important role in tackling exclusionary practices and promoting equitable, climate-smart homeownership, especially for minorities and lower-income families.

California Mortgage Relief Program

The California Mortgage Relief Program, launched in December 2021, broadened eligibility for homeowners affected by COVID-19 who fell behind on their mortgage payments. The program has provided $32 million in grants for low to moderate incomes homeowners as of May 2022.

The program is a one-time grant —up to $80,000 per household— to cover past due mortgage payments directly paid to the homeowner’s mortgage servicer. The program has expanded to allow past due property taxes to be covered for eligible applicants.

Additionally, the scope of eligible applicants has expanded to include not only those who are behind on their mortgage payments, but those who are current — up to $20,000. The money does not need to be repaid and there is no cost to participate in the program.

California received $1 billion in federal funds for this program, which will continue until the funds are allocated — though no later than 2026. While there is no deadline to apply, homeowners in need are advised to apply as soon as possible.

Basic qualifications for mortgage and property tax relief include:

a household income at or below 150 percent of their county’s area median income (the program website has an AMI calculator);
a single-family home, condo, or permanently affixed manufactured home in California;
a pandemic-related financial hardship after January 21, 2020;
at least two missed mortgage payments before June 30, 2022, and delinquency; and
past due amounts of $80,000 or less at the time of application.

Basic qualifications for property tax relief only include:

either mortgage-free or current on mortgage payments; and
at least one missed property tax payment prior to May 31, 2022.

For additional information on mortgage relief options, point your clients to the HousingIsKey website.

California homeowners facing potential foreclosure are also encouraged to contact their mortgage service provider or a HUD-certified counselor at 800-569-4287.

That’s a wrap on the Summer 2022 Real Estate Bulletin! As always, download the full DRE Bulletin on the DRE website.