We’re reporting on this bulletin a little late, so we’ll make this one quick (don’t worry folks, the next one will be along before you know it.)
The change back to DRE, and a request for help
As we’ve reported before, the California Bureau of Real Estate (CalBRE) will revert back to being the Department of Real Estate (DRE) on July 1, 2018. You won’t have to change your marketing materials to reflect the new acronym; DRE is more concerned with the disclosure of your license number than the letters that precede (or follow) it.
The DRE also requests that licensees be vigilant about reporting violations of the Real Estate Law. Specifically, DRE looks for:
- facts pertaining to the violation;
- the licensee or others who know of the violation to be witnesses in a disciplinary action stemming from the violation; and
- documents relating to the violation.
New real estate laws from the 2017-2018 session
- the DRE is coming back under its own authority (here’s the scoop behind it);
- a broker may now obtain insurance instead of a bond to cover misdeeds by an unlicensed assistant with access to the broker’s trust fund accounts;
- protecting homeowners who finance energy-efficient improvements through the Property Assessed Clean Energy (PACE) program; and
- a slew of bills addressing the dearth of low-income housing in California.
Are your first-point-of-contact materials compliant? In 2016, California passed a law requiring licensees to include their name, DRE license number, Nationwide Mortgage Licensing System (NMLS) ID number and their responsible broker’s identity on first-point-of-contact materials like business cards and stationary (a full list can be found in our write-up here). This requirement became effective January 1, 2018.
It’s a well-known fact that one of the greatest joys of being a real estate broker is arranging escrows for your transactions! (Right?)
The top two reminders to take away from the DRE Bulletin’s review of broker-controlled escrows are:
- A broker can only escrow deals for which they also represent a principal in the transaction. They can’t escrow third-party deals, or their own personal deals (i.e., their own property purchase) if they aren’t also acting as an agent in that transaction.
- Common issues the DRE has uncovered in broker-controlled escrows include:
- trust fund violations (you knew this was coming – trust fund violations are the most common type of broker violation, period);
- inadequate recordkeeping;
- lack of broker supervision; and
- undisclosed compensation.
These reminders come a year after DRE sent a licensee advisory warning brokers against hiring individuals who were otherwise barred from working in the licensed escrow industry. It’s on their minds – so if you escrow deals, or are thinking of doing so, give this bulletin a careful read.
Will the real broker-associates please stand up?
Beginning January 1, 2018, brokers with broker-associates in their employ were required to give written notice of this employment to DRE. We gave you some guidance on this back in October. DRE released a helpful FAQ in this bulletin going over some finer details such as:
- whether retroactive filing is required (a resounding yes);
- whether licensed corporate officers without separate individual broker licenses can be broker-associates for anyone but their current corporation (no); and
- when to add a branch office (brokers have to add the office of their broker-associate as a branch office, but not so the other way ‘round).
And that’s a wrap for this one. See you next time.