Q: I was in escrow with a buyer’s agent who didn’t seem to know what he was doing. Just before close of escrow, I checked the DRE website and discovered that this person’s DRE license had expired. My broker said we could not pay this agent, and he just disappeared when I told him he was not getting paid. The deal almost fell apart. I was appalled that someone could be acting as a licensed agent; and he seems to be getting away with it. In talking to my REALTOR® friends, I heard many other stories of unlicensed agents posing as licensees. Isn’t someone doing something about this problem?
A: Actually, yes, but you must also do your part.
California law provides for a maximum fine for an unlicensed individual performing any acts requiring a real estate license of up to $20,000, and up to $60,000 if the violation is committed by an unlicensed corporation (Business and Professions Code §10139).
These violations can and will be prosecuted by county District Attorneys; the counties have an incentive to pursue these cases because they can share in any fines recovered for these violations.
PRACTICE TIPS
- On every transaction, as soon as there is an Accepted Contract, check the DRE website to see if the Agent on the other side of the transaction holds a valid broker’s license, or is an actively-licensed salesperson affiliated with a Broker who holds a valid license.
- If you discover an unlicensed person acting in any way as a real estate licensee, immediately contact your broker or manager. It is a violation of DRE law for any non-licensee to pay or receive a commission, or any compensation, for license activity.
- Then, your broker or manager should notify the DRE by filing a complaint against that person on the DRE website.
Only if we police our own industry can we stop unlicensed persons from taking business away from those of us who comply with the law.
DO NOT SHARE WITH CLIENTS OR OTHER THIRD PARTIES. This Weekly Practice Tip is attorney-client privileged and for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2019 11/01/19