Welcome back to your quarterly real estate industry roundup! The Winter 2023 edition of the California Department of Real Estate (DRE) Bulletin starts the new year with a reminder on updated licensing requirements, new legislation and more.
Scroll ahead for firsttuesday’s digest of DRE notices for real estate professionals in Q1 2023.
DRE Commissioner Doug McCauley begins the first bulletin of the year with a behind-the-scenes look at licensing exams.
Seasoned licensees know the DRE’s exams do not fully prepare newcomers for the day-to-day tasks of selling homes. The Commissioner admits as much in the Bulletin, explaining exam questions are designed to evaluate for entry level competency with Real Estate Law.
But the function of the DRE’s licensing exams is better understood through the lens of consumer protection. Just as the DRE enforcement team protects consumers from agent malpractice, exams ensure only those with the knowledge and skill to adhere to relevant laws and regulations perform transactions.
The design process of these exams is as rigorous as the questions themselves. Thus, the Commissioner invites industry subject matter experts to volunteer their time and expertise to refine exam questions for the benefit of licensees and consumers alike.
Also in the spirit of consumer protection, the DRE reminds licensees of the changes to pre-license education per the newly-signed Senate Bill (SB) 1495. Starting January 1, 2024, all sales agents and brokers applying for the exam are required to complete the revised real estate practice course including education on:
firsttuesday shares the DRE’s commitment to a more equitable real estate industry and housing market. Click the related article ahead for our breakdown of the new requirements and order the Implicit Bias and Fair Housing Course for your license today.
Implicit bias and fair housing soon required for licensing courses
Along with SB 1495, the bulletin highlights nine new real estate laws taking effect in 2023 (or by the end of 2024).
Active agents and brokers need to keep track of:
California real estate: 2022 in review and a forecast for 2023
Continuing the vein of consumer protection, the DRE reminds Mortgage Loan Originators (MLOs) of their professional commitments to borrowers.
Just as agents and brokers are beholden to the client, MLOs are to honor their fiduciary duties to the borrower.
Under the Loan Originator Compensation (LO Comp) Rule, an MLO is violating their fiduciary duty to their client when pursuing higher interest rates in order to receive a higher commission. An MLO who puts their own monetary interest above the interest of their client will face consequences enforced by the DRE. Learn more about the LO Comp Rule.
Steering borrowers into mortgage products with unfavorable terms is a violation of the licensee’s duties. Impartial counseling ensures consumers adequately understand the mortgage products they are buying.
Additionally, brokers are to disclose all costs and expenses regarding the loan to their client and refrain from taking any undisclosed compensation.
When personal property is unclaimed and has had no activity (usually three years), California law requires it be reported to the State Controller’s Office (SCO).
Real estate is not included in unclaimed property. However, unclaimed property does include:
Further, the DRE outlines the five steps to reporting unclaimed property. To report unclaimed property, banks, insurance companies, and corporations need to:
Additionally, when brokerages have brokerage trust accounts bearing unclaimed funds, they need to make a good faith effort to:
Learn more about reporting unclaimed property.
To bring the bulletin all the way home, the DRE reminds agents and brokers of their fiduciary duty to their client once more — this time focusing on the final leg of home transactions.
Brokers and agents are to assist their clients before and after escrow is opened. They need to explain the necessary disclosures and any documents their client is to sign. As you guide clients through one of the most important purchases of their lives, take the time to ensure they understand their rights and responsibilities as homeowners.
When clients are properly informed, the DRE enforcement team has no reason to knock on your door.
Visit the DRE website to download the full Winter 2023 DRE Bulletin and sign up for the Quilix newsletter to receive the next DRE Bulletin Digest in your inbox!