While the Department of Real Estate (DRE) does not require specific steps to be taken for a broker to report the death of a salesperson or broker-associate who is listed under the broker’s license, there are a few best practices that brokers ought to initiate in the event of the death of a licensee associated with their license.

To report the death of one of their sales agents or broker-associates, a broker submits the following to the DRE:

  • a Salesperson Change Application [See RE 214];
  • a death certificate of the deceased licensee, or a signed statement specifying the exact date of death; and
  • a cover letter informing the DRE of the intention behind the submission.

These proactive steps towards informing the DRE of the changed status of a licensee – in this case, their death – clears the broker of the deceased licensee’s license. Here, the broker effectively removes the licensee from their roster, completely and fully.

Further, this communication to the DRE enables it to make this information publicly known. Thus, when a member of the public attempts to look them up on the DRE’s Public License Information lookup, the licensee will be listed as “deceased.”

Collecting a fee after a licensee’s death

What happens when a licensee dies after the event triggering the fee has occurred but before disbursement?

The answer depends upon whether the deceased licensee is a broker or an agent.

When an agent dies during a pending transaction before closing and disbursement of fees, their estate is entitled to the fee they earned. [Calif. Prob. Code §5000]

In the event of an agent’s death, the fee collected from a sale is delivered to the agent’s estate through the employment agreement between the employing broker and their agent. When employment is terminated during a pending transaction, a broker owes a reasonable portion of the fee resulting from the closed transaction to the agent – in this case, to the agent’s estate. [See RPI Form 505]

Agents are advised to write up a will to specify who is to receive uncollected fees.

When an employing broker dies, a trusted person is to be appointed with power of attorney so that they may designate another qualified licensed broker to fill the position of the deceased employing broker or broker-officer. This individual with power of attorney may be a spouse who holds a license or other licensed officer. [See RPI Form 447]

The new broker needs to submit to the DRE:

  • a complete Corporation License Application [RE 201];
  • a complete Corporation Background Statement [RE 212]; and
  • a signed statement with the date of death of the previous designated broker-officer.

However, when a replacement broker-officer is not appointed, the corporation license ceases to exist.

When a corporation is no longer licensed, a sales agent handling a pending transaction needs to be employed by a new broker and write up a new contract under this new broker and their client to collect a fee. The transaction will be unaffected as long as the new employing broker and client agree to the contract. In this rare case, the original brokerage may be entitled to a partial fee resulting from the new contract. The fee amount is determined on a case-by-case basis.

Reporting the death of a designated officer

Although the DRE does not have a hard policy on reporting the death of a licensee in general to the state, when the deceased licensee is a designated officer for a corporation, specific guidelines set by statute are triggered and need to be followed.

When a designated broker-officer overseeing a corporation dies, notice of the death and an application for a new designated officer is to be filed with the DRE before midnight of the 10th business day after the event. [Calif. Bus & P C §10158; See RE 201]

A corporation may operate as a licensee without interruption under its existing license when those steps are taken.

Preparedness and best practices

Informing the DRE about a licensee’s death is a part of best practices for brokers. Timely submitting the recommended paperwork to the DRE is the optimal way to announce the change of status for an agent or broker – death being a material change of status.

firsttuesday recommends keeping the DRE informed about the status of brokers and agents as a matter of best practices. When dealing with the death of a designated officer of a corporation, however, notice of the death and an application for a new designated officer needs to be filed with the DRE in order to continue operations.

Related article:

Death of an agent: What happens to fees delivered after death?