REAL ESTATE ARTICLES

For potential sellers and buyers of real estate, the question of whether or not one should retain the services of a real estate licensee is of paramount importance. Of greater significance is the selection of a real estate licensee who will effectively work with the seller or buyer.

Under California real estate laws, a license is required for individuals who act as real estate salespersons. A salesperson may not perform acts requiring a real estate license unless he or she is in the employ of a licensed broker.

For real estate brokers, license is likewise required. The broker must first qualify for, and pass, a written examination. Those who pass the examination are provided a license application which must be submitted to, and approved by the California Department of Real Estate (DRE).

California is currently enjoying a favorable real estate market. This encourages public interest in applications for real estate licenses and resulted in an increase of licensees by 9 to 11% per month in fiscal year 2003-04.

By the end of June 2004, there were already 393,750 licensees ready to serve prospective sellers and buyers of real estate properties. This number is projected by the DRE to reach 425,000 in fiscal year 2004-05.

This welcome development, however does not come without challenges to the DRE. The DRE has to address the matter of enforcing the provisions of Real Estate Law and Subdivided Lands Law to protect sellers and purchasers of real property, as well as, those transacting with real estate licensees.

As watchdog of consumers’ rights, the DRE’s Enforcement Section and Legal Section adopt two approaches in ensuring that consumers of real estate transactions are amply protected.

The first approach is to screen license applicants in order to ascertain their qualifications for a license. The Enforcement Section has to be satisfied that the applicants meet the required standards for knowledge, honesty and truthfulness.

Background investigations are conducted to determine if an applicant has prior criminal convictions or disciplinary actions taken by other agencies. Investigations of this nature may also be conducted even after an applicant has been granted a license. This approach aims to ensure that licensees would not be a risk to the public.

Those who have problems in their background, which would require further review before a license is issued, are referred to the Legal Section of the DRE. The Legal Section holds a formal hearing to determine whether a license should be issued.

The second approach is to investigate complaints lodged against real estate licensees. Consumers who have grievances against any person engaged in the business of, or acting in the capacity of a real estate licensee may file a verified written complaint to the Enforcement Section. The DRE has offices in Fresno, Oakland, Los Angeles and San Diego. DRE’s Los Angeles office is located at 320 West 4th Street, Suite 350
Los Angeles, CA 90013-1105.

Upon receipt of the complaint, the Enforcement Section reviews it to determine, if DRE has jurisdiction to resolve the matter. The complaint must involve a real estate licensee, subdivider, or unlicensed person who has performed acts that require a license. The issues should present a violation of the Real Estate Law and must be within the statute of limitations.

Once satisfied that it has jurisdiction over the matter involved in the complaint, the Enforcement Section assigns the case for investigation. The Enforcement Section has to develop a “clear and convincing” case that a violation of the Real Estate Law has occurred. If such a case is developed, the complaint is sent to the Legal Section, where disciplinary action is initiated by filing a Statement of Issues, when challenging an applicant’s licensure qualifications, or an Accusation, when seeking to suspend or revoke an existing license.

In the exercise of its investigatory and disciplinary functions, the DRE has the power to issue Desist and Refrain Orders to stop ongoing violations of the Real Estate Law or the Subdivided Lands Law.

For the fiscal year 2003-2004, the Enforcement Section reportedly received and screened 10,110 complaints; assigned 6,206 for investigation; closed (no discipline recommended) 4,540; referred 2,363 to the Legal Section for disciplinary action; and issued 213 corrective actions. The Enforcement Section has 3,663 pending cases under review.

The Legal Section reportedly received 1,222 investigative files, recommending some kind of legal action. The Legal Section filed 522 Accusations, which initiated disciplinary action to suspend or revoke licenses, and 1,130 Statements of Issues to deny applications for licensure.

Disciplinary actions prosecuted by the Legal Section reportedly resulted in the revocation of 307 licenses; suspension of 120 licenses; 73 voluntary surrenders of licenses; and denial of 875 applications.

While the investigative process can be time consuming, it is comforting for the real estate-selling and buying public to know that they have remedies in cases of abuse by real estate licensees and other persons acting in the capacity of said licensees. Whatever positive climate the real estate market is experiencing right now will become more encouraging, if the public and the real estate licensees work agreeably hand in hand.

(The Author, Roman P. Mosqueda, a real estate broker and attorney, provides free credit report repairs to clients of his law offices and realty and loan company.)