Bureau of Real Estate #2: Enforcement Actions

By BPE Law Group Senior Attorneys,
Alexander W. Munn and Robert J Enos

The Bureau of Real Estate, or BRE, is charged with protecting the public against real estate agents and brokers who commit “bad acts” during their scope of representation of clients. With roughly 176,000 agents and 100,000 brokers in California, and tens of thousands of transactions, the BRE is stepping up its enforcement dramatically. In fact, the BRE initiated 70 actions in May 2015 alone.

This Article will give a general overview of enforcement actions taken by the BRE against current licensees.

What is an enforcement action? Typically the BRE is notified that a licensee has done a bad act in his or her representation of a client or the handling of a transaction. Notice may come from an anonymous source, a client, or another agent/broker. The BRE then assigns an investigator to the case, and begins gathering facts. The investigator may call the agent on the telephone, unannounced. Or, the investigator can make a surprise visit to the brokerage, seeking information and most critically, transaction files. A scary situation indeed.

We recommend not speaking with the investigator without first seeking counsel! You may inadvertently provide damaging information that will be used against you should the case proceed.

What is the BRE looking for? What types of violations?

Bad acts found in B&P sections 10130 et seq and Commissioners Regulations 2715 et seq. Some common violations are:

* Negligence or incompetence in performing licensed acts
* Fraud
* Failure to supervise salesperson
* Trust fund handling
* Making any substantial misrepresentation
* Secret profit or undisclosed compensation

Should facts warrant, the BRE then issues Accusations, similar to a lawsuit, outlining the various code sections that were violated and requested punishment, which can vary from a fine, a suspended license or outright revocation. A hearing is then conducted in front of an Administrative Law Judge. The BRE must prove, by clear and convincing evidence, that a violation was committed. A decision is then issued, usually within 30 days. If it is adverse to the licensee, it may be appealed to the Superior Court for reconsideration.

However, prior to the hearing the licensee can enter into a Stipulated Settlement which contains language which resolves the pending matter and likely steps to be taken in mitigation. This may be the best course for those who are facing the permanent revocation of their license.

As a final note, any Stipulated Settlement or decision will contain a “cost recovery” provision which allows the BRE to seek its investigation costs from the licensee. Depending on the number of allegations and severity of the Accusations, this could cost thousands of dollars.

In our next Article, we’ll cover preparation for meeting with the Investigator and appearing at the Hearing on the Accusation.

BRE Investigations are serious matters. If you are contacted by a BRE investigator, call us first. We can assist and represent you beginning at the interview stage through the hearing. Senior attorneys Alexander Munn and Robert Enos bring over 40 years combined litigation experience to assist agents needing such services. You can reach Alex at awmunn@bpelaw.com or you can reach Robert at rjenos@bpelaw.com. If you need more immediate assistance, please call our office at (916) 966-2260 to schedule a flat fee Consultation appointment

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.