DRE Files Accusation Against eXp Realty

Recently, the DRE filed an Accusation against eXp Realty. In today’s article, attorney Alex Munn explains just how easy to find yourself in trouble with DRE if you are not carefully monitoring compliance. The purpose of this article is to be informative related to compliance issues that the DRE routinely regulates.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.

Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to real estate law, please contact Alex or myself to setup a date and time.

DRE Files Accusation Against eXp Realty
By: Alex Munn, Esq.

eXp Realty, the cloud-based real estate brokerage, is now the largest residential broker by geography in the United States, with over 16,000 agents and brokers in North America. With the use of Facebook and individual websites of both brokers, agents and Teams, managing compliance issues presents a challenge. In March of 2019, the California Department of Real Estate filed an amended Accusation against eXp Realty of California, Inc., alleging numerous violations of various rules concerning marketing, team names and addresses. This Blog will address the Accusation and discuss practical tips on how to manage your own agents.

Two allegations concern the use of team names and the identity of the responsible broker. Although the use of Teams is common, the regulation of these Teams is ever changing. Business and Professions Code section 10159.6 provides that: advertising and solicitation materials that contain a team name, including print and electronic media, shall include in a conspicuous and prominent manner the team name and the name of the responsible broker. In some of the instances cited in the Accusation, the broker’s identity (eXp) was nowhere to be found.

Additionally, section 10159.6 also requires that Team name advertising contain, in a conspicuous manner, the license number of at least on member of the Team. Teams are low-hanging fruit for the DRE and violations are easy to spot and easy to prosecute. It is critical that the responsible broker review, on a periodic basis, all Team advertising to ensure compliance with these rules and set policies related to review of Team advertising and marketing materials when changes are made.

Branch offices also pose a risk to responsible brokers. Business and Professions Code section 10163 requires that each branch office obtain a separate license for each location. Many eXp brokers and agents have not obtained licenses for their individual locations. In the standard brink and mortar agency, multiple agents work out of a principal office which is usually licensed. However, with cloud-based brokerages where is the principal office to hang the license. Without that natural brick and mortar space it is far to easy to list a home office or remote office and completely forget about licensing requirement.

Another concern for the DRE was the use of the term “eXp Realty” – presumably the common abbreviated name for eXp Realty of California – by many agents in their advertising materials, including websites and Facebook pages. Real Estate Regulation 2731 states that a licensee shall not do business under a fictitious name in the conduct of any activity where a license is required. This may seem like a small point, but it’s simply another compliance issue that must be monitored by the responsible broker.

Business and Professions code 10161.8 requires that whenever a new agent or broker is hired or is no longer employed, the responsible broker must immediately notify the DRE of such change in writing. With such explosive growth, this requirement can be readily overlooked. The DRE found several examples with eXp. This requires a careful diligence. As agents are coming and going, a frequent and periodic review of the licensees should be reviewed to ensure compliance.

The rise of virtual brokerages, and the sheer size of some traditional “brick and mortar” brokerages poses significant challenges for today’s responsible brokers. Managing hundreds and sometimes thousands of agents, thousands of Facebook pages, websites and related marketing materials to ensure compliance with DRE regulations is a daunting task. It starts with each individual broker and agent knowing the relevant rules, but more importantly that responsible brokers have processes and procedures in place to remain vigilant to ensure compliance by the licensees whom they oversee.

This Amended Accusation is an example of the nuances that real estate licensees are required to comply with and the obligation by which responsible managers need to supervise the licensees. It remains to be seen, whether or not eXp Realty is found to be in violation of any DRE regulations. If found in violation what, if any penalties the DRE will seek to impose. Nonetheless, this should be a message to all responsible brokers to remain vigilant and ensure regulatory compliance of your brokerage.


The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

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.