B UREAU of R eal E state - PowerPoint Presentation

Slide1

B

UREAU of Real Estate forum

Renaissance Indian Wells

Indian Wells, CA

January 30, 2015Slide2

B

UREAU of Real Estate

Wayne BellReal Estate Commissioner Slide3

B

UREAU of Real EstateOperations Report

Tom Pool

Assistant Commissioner

Slide4

Financial Statistics

FY 2014-2015FIVE OFFICES/EXAM CENTERSSACRAMENTOOAKLANDFRESNO

LOS ANGELES

SAN DIEGO

$

49.2

MILLION BUDGET

7/1/2013 – 12/31/2013

7/1/2014 – 12/31/2014

Revenues

$24,201,000

$24,799,000

Expenditures

$20,535,000

$26,329,000Slide5

BUREAU OF REAL ESTATE BY PROGRAM AREA

JANUARY 2015Slide6

License Population

License Population Peak 11/2007: 549, 250License Population as of 12/31/2014: 402,758Slide7

LICENSING WORKLOAD

7/1/13 – 7/1/137/1/14 – 12/31/14% Change

Exams Scheduled

RES

18,536

21,646

17%

REB

4,410

3,969

-10%

New Licenses

RES

7,798

10,345

31%

REB

2,614

2,385

-9%

Renewals

RES

25,777

23,924

-7%

REB

14,296

13,897

-3%

Renewal Rate

RES

74%

74%

0%

REB

86%

85%

-1%

Total Licensees

406,377

402,758

-1%Slide8

MORTGAGE LENDING ACTIVITY

Need MLO Endorsement to Originate Residential LoansMLO Stats Jan. 2014

Jan. 2015

Approved Individuals

15,743

15,668

Approved Companies

4,179

4,595

Approved Branches

794

854

Total MLOs

20,716

21,117Slide9

SUBDIVISIONS

WORKLOADApplications for Public Report7/1/13 - 12/31/13

7/1/14 - 12/31/14

Final

1,311

1,186

Renewal

185

196

Amendment

99

140

Total Applications Received

1,595

1,522

TOTAL UNITS

7/1/13 - 12/31/13

14,088

7/1/14 - 12/31/14

16,212Slide10

ENFORCEMENT

WORKLOAD7/1/13 -12/31/137/1/14 – 12/31/14% Change

License Denials

76

183

141%

Disciplinary Actions

(Revocations, Surrenders, Suspensions, Public

Reprovals

)

466

588

26%

Desist & Refrain Orders

40

72

80%

Citations

-

29

-Slide11

Consumer Recovery Account

FY 11/12FY 12/13FY 13/14FY 14/15 YTD(6 Months)Claims Filed243180152114Claims Paid947710463Amount Paid$3,165,669$2,625,615$4,286,536$2,821,792Total Active Claims

429Slide12

BROKER SUPERVISION

Lissete Garcia, Staff Counsel12Slide13

Applicable Laws and Regulations

Bus. & Prof. Code Section 10159.2- Responsibility of Corporate Officer in ChargeRegulation 2725 – Broker Supervision over activities of his or her salespersons13Slide14

Broker-Salesperson

Relationship AgreementsMust be written. Contract provisions that attempt to limit liability for broker’s failure to supervise or salesperson’s wrongful acts committed while performing licensed activities are contrary to the law.14Slide15

Responsibilities

Salespersons can only perform licensed activities under the real estate broker that they are licensed under.All compensation must be paid from the broker.15Slide16

Fiduciary Duty

Licensees owe a fiduciary duty to exercise reasonable care, skill, and diligence to their principal. Misrepresentations, concealment, dishonest dealing, or fraud committed by a salesperson may lead to discipline of broker’s license for violations of the Real Estate Law, including for the failure to supervise. 16Slide17

Broker’s Responsibilities

Brokers are required to supervise the activities of salespersons and employees to ensure full compliance with the Real Estate Law.Brokers are required to review all documents prepared by the salesperson. Brokers are required to retain records for (3) three years. 17Slide18

Delegation of Duty to Supervise

Regulation 2724 allows a broker to delegate the responsibility of supervising unlicensed persons acting as apartment, hotel, motel, or trailer park managers under certain conditions.Case example: Property management18Slide19

Disciplinary Action

A broker may be subject to discipline if he or she fails to reasonably supervise the activities of his or her salesperson or, as the designated broker for a corporate broker, fails to supervise and control the activities of the corporation.19Slide20

Guilty Knowledge

Bus. and Prof. Code Section 10179 provides that no violation by a salesperson is grounds for the revocation or suspension of his or her employing broker unless, after a hearing, it is found that that the broker had guilty knowledge of the violation. 20Slide21

Willful Blindness

A broker who does not have guilty knowledge because he or she failed to supervise a salesperson, may still be disciplined for negligent supervision. 21Slide22

Case Example -

DiazBrokers are required to supervise all of salesperson’s licensed activities, not just those that benefit the broker or corporation. 22Slide23

DON’Ts

Fail to keep track of salesperson’s transactions.Fail to supervise branch office(s). Allow unlicensed entities to operate from your branch office.Allow your salespeople to work for or accept compensation from others for activities requiring a real estate license. 23Slide24

Bureau of Real Estate Audits

Tom PoolAssistant CommissionerSlide25

Types of Audits

Investigative - NewInvestigative Follow-UpInvestigative – OtherRoutine - NewRoutine - Follow-UpSlide26

Types of Audits Closed

Statewide – 2014Slide27

Types of Audits Closed

Statewide – 2010Slide28

Audits Closed by Activities

Statewide – 2014Slide29

Findings of Audits Closed, 1/1/14 – 12/31/14Slide30

Trust Fund Shortages - 2014

$6,483,772.45 in total trust fund shortages in 2014Breakdown by real estate activity:$5,622,492.02 – Property Management$194,663.82 – Mortgage Loans$568,899.64 – Broker Escrow$68,925.86 - Subdivisions$28,791.11 – Sales Slide31

Broker Supervision

The Basics:Policies, rules, procedures and systems to review, oversee, inspect and manageA broker shall establish a system for monitoring compliance with such policies, rules, procedures and systems. The form and extent of such policies, rules, procedures and systems shall take into consideration the # of salespersons employed and the # and location of branch offices. Slide32

Broker

SupervisionConsiderations:Do signed, dated broker-salesperson agreements include duties and supervision?Is there regular reporting by agents to the broker, or scheduled update meetings?Is there a separation of duties in the area of trust fund handling and accounting?Slide33

Broker Supervision

Considerations:Does broker look into activities of salesperson, broker-associates?Is there a visible, active presence?Is there a training program for salespersons?Given the private information contained in files, how are files secured?What does the trust account situation look like?Slide34

Bureau of Real Estate

Audit SectionContact:Dan Sandri – Assistant Commissioner, AuditsDan.Sandri@dre.ca.gov916 263-8704Slide35

Licensing

LEGISLATIONupdateTom PoolAssistant CommissionerLicensing & AdministrationSlide36

Processing Time Frames

Generally, on-time renewal applications are processed in received date order.  Licensees who submit their renewal on time can continue working pursuant to 10156.2 after license expiration date.Late renewals on a priority basis as those individuals can not work while their license is expired. Slide37

Processing TimeframesSlide38

The Career Compass

Wellington PendellThe Career CompassCE Provider Law Requires Written Exams/Students Must PassCalBRE Received ComplaintsResulting InvestigationsThe Career Compass Issued Certificates w/o Exams5/28/14 CalBRE Withdrew all of Course Approvals5/28/14 Instructor Wellington Pendell Lost Approved StatusLicensees were denied CE CreditActions Posted Slide39

The Career Compass

Wellington PendellContinued to Operate after May 28, 2014 by:Associating with an approved CE providerTina L. ParkerWayne RappGold Coast SchoolsInvestigation Findings:Knowingly disseminated advertising or promotion materials that include false and/or misleading statements or representations as to CAREER COMPASS’s authorization to sponsor or promote CE coursework.Slide40

The Career CompassSlide41

The Career CompassSlide42

The Career Compass

1/1/18, 2015 Desist and Refrain Order ServedOrder states that the Career Compass Inc, Wellington D. Pendell, Tina L. Parker and Wayne Rapp must:“Desist and Refrain from stating or implying that they, or any of them, are approved by the Bureau to act as a sponsor of an educational offering without having complied will all the provisions of Code Section 10170.4 and Section 3006 et seq. of the Regulations.”Slide43

Formal Actions

Against Course ProvidersSlide44

Course ProvidersSlide45

Legislation Update

AB 2540 (Dababneh) – Contact InformationRequires current:mailing addresstelephone numberelectronic mail addressApplies only to contact information that he or she maintains or uses to perform any activity that requires a real estate licenseUpdate within 30 days after making the change.Slide46

Legislation UpdateSlide47

Q&A

THANK YOUThis power point presentation will be made available in its entirety on the CalBRE website.www.bre.ca.govNext Meeting – TBASacramento, CaliforniaSlide48

Thank YOu