The Summer 2014 issue of the Real Estate Bulletin, produced by the California Bureau of Real Estate, announces that the Bureau has finalized its authority to issue citations and assess fines without first going through a lengthy, and sometimes expensive, process of administrative hearings. The details of the "cite and fine" program can be found in Business and Professions Code 10080.9 and Commissioner's Regulations 2907 (effective July 1, 2014). These codes not only set forth procedures for citing and fining errant real estate licensees, but also they provide for similar procedures to be applied to unlicensed persons who are doing things that require a license.
How will "cite and fine" work? The Bulletin explains it thus: "A citation or other formal action will be considered when a violation is found after an investigation, audit, or examination of a licensee's records by CalBRE in response to a complaint, through random selection of a licensee for an office visit, or from completion of a routine audit. Depending upon the nature (such as the level of seriousness and potential for harm) and type of the violation, the appropriate action will be determined."
The Bureau says that "a citation is likely the appropriate action" in cases of "relatively minor and technical violations, especially in those instances where there has been no injury or loss to a consumer...". They include in their examples of relatively minor violations "failure to disclose a real estate license identification number in their first point of contact advertising material". It seems a safe bet that another kind of violation that will make "easy pickings" and that will fit the "minor violation" criterion will be non-compliant signage such as signs that do not adequately identify the employing broker -- signs where the agent or team name is in very large print and the broker's name is in very small print.
The Bureau says that a citation will most likely "include an administrative fine assessed for each violation. The range of a fine -- or the total of a fine assessed to a licensee -- is set by statute at $0 to $2,500. The maximum fine amount for real estate licensees is $2,500 per citation..." (Fines assessed against non-licensees may go considerably higher.) "Before a fine amount is assessed, each violation is evaluated according to specified criteria, which helps establish an appropriate fine amount."
Suppose a citation has been received. "The citation will identify the violation(s) you committed, provide information on how to pay the fine, describe any corrective action needed (if necessary), and explain the process for contesting the citation, if you choose to." This process will be familiar to Californians who have already had experience with various traffic citations. It is a bit of a twist on the principle of being assumed innocent until proven guilty. You are presumed guilty unless you want to go to the time and expense of proving yourself innocent.
A cynic might perceive the cite-and-fine policy as a quick and easy way for the BRE to replenish its administrative coffers after years of budget cuts and restraints. But this is not so. "As for fines received by CalBRE, all money will go into CalBRE's Real Estate Consumer Recovery Account, which is used to assist victims of real estate fraud committed by licensed agents and brokers."
Offenders will appreciate the policy that "information regarding specific citations issued -- and any fines paid -- will not be posted on CalBRE's website, nor will such information be attached to one's individual public licensee website record." As it stands now, if there has been a hearing and a violation has been found, that information appears on the publicly-accessible website. Still, the information is public and can be obtained through a Public Records Act request.
The Bureau says that it "considers the issuance of citations an opportunity to help educate both licensees and non-licensees alike and to encourage and reinforce compliance with Real Estate Law." If that can be accomplished at a reasonable cost without a lot of hassle, it will be a good thing.
Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way.