Real Estate Bureau Forum Operations Report
The Real Estate Bureau Forum Operations Report outlines various updates and discussions held at the Long Beach Convention Center. It covers revenues, expenditures, licensing data, and other key information relevant to the real estate industry in California for the fiscal year. The report showcases the financial health and operational activities of the CalBRE.
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Presentation Transcript
B BUREAU UREAU OF R REAL EAL E ESTATE F FORUM ORUM OF STATE Long Beach Long Beach Convention Center Convention Center Long Beach, Long Beach, CA September 29, 2016 September 29, 2016 CA
Opening Opening Remarks Remarks Commissioner Wayne Bell Commissioner Wayne Bell Sandra Knau, Assistant Commissioner Sandra Knau, Assistant Commissioner Licensing & Administration Licensing & Administration Enforcement Update Enforcement Update- - Rick Fong, Assistant Commissioner, Enforcement Rick Fong, Assistant Commissioner, Enforcement Audit Report and Update Audit Report and Update Dan Sandri, Assistant Commissioner, Audits Dan Sandri, Assistant Commissioner, Audits Consumer Recovery Account Consumer Recovery Account Steve Lerner, Steve Lerner, Assistant Commissioner, Legal Affairs Assistant Commissioner, Legal Affairs Q Q & A & A- - Wayne Bell and Panel Wayne Bell and Panel Operations Report Operations Report
Five District/Exam Offices Fresno Los Angeles Oakland Sacramento San Diego Authorized Positions: 326
B BUREAU UREAU OF R REAL EAL E ESTATE OPERATIONS REPORT OPERATIONS REPORT OF STATE Sandra Knau Assistant Commissioner Licensing & Administration
REVENUES Licensing-$36,671,954 Subdivisions-$8,387,758 Examinations-$4,010,334 Other- $2,401,120 Total Revenues-$51,471,166
EXPENDITURES Personnel-$30,191,602 DCA Pro Rata-$4,940,000 Facilities-$3,943,925 Other-$11,619,406 Total Expenditures-$50,694,933
Total Revenues - $51,471,166 Total Expenditures -$50,694,933 CalBRE s revenues exceeded expenditures by $776,233
Exams Scheduled FY 2015-2016 FY 2014-2015 RES REB 48,110 5,112 44,178 6,556 New Licenses RES REB 21,693 4,368 20,741 4,645 Renewals RES REB 48,095 (83%) 28,594 (91%) 50,773 (76%) 28,860 (86%) Total Licenses 408,357 402,013 Total MLO s 24,453 24,712
Total Licenses 600,000 542,267 519,941 483,250 500,000 447,642 423,080 410,701 408,357 402,937 402,013 400,000 300,000 Total Licenses 200,000 100,000 0 FY 07/08 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16
Document Types FY 2015-2016 FY 2014-2015 Percentage Change Final 3,171 2,609 21.54 Renewal 250 369 -32.24 Amendment 245 267 -8.23 Total Received 3,666 3,245 13%
The Bureau receives an average of 8,700 pieces of Licensing mail per month Over 104,400 pieces of mail per year 3 full time staff opening and processing mail
Always use the correct PO Box Number If completing a form, use the fill in features on the document from CalBRE website Make sure you review and sign the form
Contact: Sandra Knau Assistant Commissioner, Licensing & Administration Sandra.Knau@dre.ca.gov 916 263-7300
Complaint Resolution Program Cases Desist and Refrain Orders Investigations License Denials Licenses Surrendered License Suspended License Revoked Pro-Active Outreach Visits Public Reprovals 322 57 2,692 184 957 114 120 411 13
- Communication Break-Down During Short Sale Negotiations - Earnest Money Deposit Disputes - Failure to Communicate Offers by Listing Agents - Property Management Contracts Security Deposits Issues Lack of Record Keeping
Dishonest Dealings and Fraud - Licensing Compliance - Misrepresentation - Negligence or Incompetence - Unlicensed Activity -
Advertisement Issues Audit Related Co-mingling of funds Failure to establish trust account(s) Failure to maintain proper records Failure to reconcile trust accounts monthly Minor trust fund shortages Improper trust fund handling Unlicensed signatories on trust accounts
Broker Supervision Failure to provide Inadequate Licensing Compliance Misrepresentation Mortgage Loan Activity Failure to timely file quarterly and/or annual activity reports Negligence Non-existent DBA or Branch Office
Dan Sandri Chief Auditor
Other 10% Broker Escrow 6% Mortgage Loan 12% Property Management 72% 590 Audits Completed FY 2015-16
No Violations 21% Major Violations 27% Cite & Fine 9% Corrective Action Letter 8% Minor Violations 35%
7/1/14 6/30/15 7/1/15 6/30/16 Total Audits Closed 612 590 Total $ Shortage $6.90 million $13.31 million % Audits with Shortage 34.5% 36.4% #(%) with $10K+ Shortage 72 (11.8) 80 (13.6)
Mortgage Loan - Specific 5% Licensing - related 12% Broker Escrow - Specific 2% Disclosure 6% Other 3% Supervision 5% Trust Funds/ Records 67%
B&P Code 10145, Commissioners Regulation 2832: Trust Fund Handling Trust funds must be deposited within 3 business days into trust account. Account designation often the issue we look to the signature card. 10145 now spells out who can sign on a trust account
Commissioners Regulation 2832.1: Trust Fund Handling For Multiple Beneficiaries Trust Fund Shortage If using a trust account for more than one beneficiary, you must obtain all owners written permission PRIOR TO each disbursement that results in the use of their funds to cover the expenses of someone else.
Ways to avoid trust fund shortages: Have adequate separation of duties between money handlers and accounting function. Be actively involved in accounting function. Establish written policies and procedures regarding supervision and monitor compliance. Do not allow negative balances. Be tough on the issue of NSF Checks
Commissioners Reg. 2831: Trust Fund Records To Be Maintained Usually related to incomplete or inaccurate Record of All Trust Funds Received and Disbursed. Must have the detail referenced in Reg. 2831(a).
Commissioners Reg. 2831.1: Separate Record for Each Beneficiary or Transaction Usually related to incomplete or inaccurate Separate Records. Must have the detail referenced in Reg. 2831.1(a). Must account for Unidentified Funds
Commissioners Reg. 2831.2: Trust Account Reconciliation This is a monthly reconciliation of Control Record to Separate Records. Do your monthly reconciliation between books and bank, THEN perform this REQUIRED reconciliation. See our PowerPoint demonstration on our website!
B&P Code 10159.2, Commissioners Regulation 2725: Officer/Broker Supervision Responsibility Policies, rules, procedures and systems to review, oversee, inspect and manage a system for monitoring compliance with such policies, rules, procedures and systems. A broker may use the services of brokers and salespersons to assist so long as the broker does not relinquish overall responsibility for supervision Image result for supervise
Current real estate license Including your salespeople Salespeople are registered under the broker s license Agents have broker/salesperson agreements All real estate records are maintained for at least 3 years. Each business location is licensed Fictitious business name is licensed Broker Supervision is Intact!
We continue to find: Trust Fund Shortages, Commingling and some Conversion on PM, BE audits Lack of Broker oversight Advance Fee Violations Falsification of bank records
Investigative Audits Property Management and Broker Escrow Audits Restricted Licensee Audits Results from 42 Recently Completed: Major Violations: 26% Minor Violations: 50% No Violations: 24% 20 of these audits had shortage findings
Contact: Dan Sandri Assistant Commissioner, Audits Dan.Sandri@dre.ca.gov 916 263-8704
LEGAL AND CONSUMER LEGAL AND CONSUMER RECOVERY ACCOUNT RECOVERY ACCOUNT Stephen Lerner Assistant Commissioner Legal Affairs
C Cal alBRE BRE LEGAL AFFAIRS LEGAL AFFAIRS DISPOSITION OF CASES DISPOSITION OF CASES Category 2016 (thru August) Desist & Refrain Orders 52 License Suspensions 39 License Surrenders 103 License Revocations 229 Case Dismissals 61 Public Reprovals 4 Stipulations & Waivers/Agreements 210 Application Denials 96 License Denials and Restrictions 8 Total
5 Most Frequent Violations - 2016 1. Improper Record Keeping (Failure to reconcile; failure to maintain accurate records; and incomplete transaction files) 2. Unlicensed Activities (Sales agents conducting broker activities without broker s license; property management without broker s license or supervising broker) 3. Fraud, Conversion and Misrepresentation 4. Trust Funds (Commingling; failure to deposit trust funds in trust account; failure to identity trust accounts; allowing non-licensees as signatories on trust accounts) 5. Failure of Brokers to Supervise
CALIFORNIA BUREAU OF REAL ESTATE S CONSUMER RECOVERY ACCOUNT
Category Total Claims Filed Disposition of Claims 76 81 74 $3,396,293.00 Paid Denied Amount Paid
Category REB 21 Corp. 9 Officer 11 RES 16 Total 57 License Suspensions
AB 1381 Exemption from Real Estate Law for Outdoor Advertisers 1. Still pending Governor s review 2. Existing law requires broker s license for buying/selling or leasing/renting of real property for another in expectation of compensation 3. Proposed legislation would exempt outdoor advertising representations
AB 1381 (Continued) 4. Outdoor advertising representative defined as: An employee of a corporation, LLC, or partnership; The employer holds a CalTrans license to engage in the business of outdoor advertising; The employee arranges for the lease/transfer of real property for his or her employer; The real estate transaction is solely for the placement of, access to, or operation of an advertising display.
AB 1807/2330 Removal of Discipline from Website 1. Signed by the Governor; 2. Existing law requires CalBRE to post status of every license on its website; Including all discipline. 3. Legislation authorizes the Commissioner to set up a petition process to remove license discipline from website;
AB 1807/2330 (Continued) 4. License discipline may be removed if: Licensee petitioners for removal; Pays a specified fee; 10+ years since discipline was imposed; Licensee has been rehabilitated and no longer poses a credible risk to the public.
AB 1807/2330 (Continued) 5. The Commissioner will adopt regulations: To set the fee; Create a petition process; Establish criteria to determine if the licensee has been rehabilitated and no longer poses a credible risk to the public. 6. Implementation date of January 1, 2018.
AB 2330 Broker Associate 1. Signed by the Governor; 2. Existing law requires CalBRE to post status of every license on its website: Including identifying salespersons affiliated with a broker. 3. Legislation will require brokers associated with and acting as salespersons for other brokers to notify CalBRE of their association or termination of association
AB 2330 Broker Associate 4. CalBRE will be required to display on its website the names of broker associates, including the brokers that they are associated with; 5. Implementation date of January 1, 2018.
SB 710 Team Names 1. Signed by the Governor; 2. Existing law permits use of team names provided: a. The name is used by two or more real estate licensees; b. The licensees represent themselves to the public as being part of a team, group or association; c. The name includes the surname of at least one of the licensee members of the team, group or association;
