The room of actual Estate (DRE) protects the general public in real estate transactions through licensing of world who desire to occupational in the industry, dissemination of details to the public, and enforcment of the actual Estate Law. As of January 2010, around 493,000 licensed genuine estate agents and brokers in California to be servicing an approximated 219,000 homes for sale. The number of licensees has declined by thousands during the decline of the real estate market. The department is housed in the Business, Transportation and also Housing Agency.

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No state had regulations dictating the buying and selling of actual property prior to 1917, when California began requiring sellers of residential or commercial property to experience an inspection process and obtain a state-issued license. But shortly ~ the legislature spreading the genuine Estate regulation that produced the California the supervisory board on real Estate (the DRE’s predecessor) that was declared unconstitutional by the lower courts. Two years later on the law’s validity to be upheld by the state supreme Court and also by 1923 the rechristened division of real Estate, under the room of Investments, began issuing patent examinations and overseeing subdivisions. Yet it did not have actually the power to revoke or suspend licenses for shady methods until 1945. Regulation the condominiums (1964) and time-shares (1981) was eventually added to the department’s responsibilities. In 1971, the department was renamed, when again, the department of actual Estate, shortly after being put under the government of the Business and Transportation Agency. (Housing was included to the agency at a later on date.) that year, the department began fingerprinting applicants for actual estate licenses.

The passage of Proposition 13 in 1978, capping annual property taxes at 1% that “full cash value,” did little to adjust life at the department of actual Estate, who biggest an obstacle in the 1970s was real estate brokers acting concurrently as mortgage brokers because that private, non-institutional lenders. (These loan carriers were forced to submit advertised loan to the DRE because that review and also to submit disclosure statements to purchasers and lenders start in 1983.)

Non-depository mortgage lending, i.e. Mortgage banking, to be under the DRE’s purview until 1996, when the state room of Corporations began issuing Residential Mortgage lending licenses under the California Residential Mortgage lending Act. This allowed licensed lenders to concern federally-related loans and also to company those loan or offer them to institutional investors. Both the room of Corporations and also the DRE issue mortgage broker licenses, but only mortgage lenders with a patent from the DRE may issue a direct loan to a borrower.

The state enacted legislation to combat real estate fraud in 1995. It was a voluntary regime for counties, which created funds for regulation enforcement for those that opted in. By 2007, an approximated 22 of the state’s 58 counties had actually joined but, follow to the legislature Analyst’s Office (LAO), only two counties filed the forced fraud reports documenting their tasks and the kind of those reports “diminish the quality and usefulness of the data.” 3 years later, after ~ a referral by the LAO the the state give the counties a nudge, 21 that an estimated 27 participating counties were reporting.

The financial downturn the 2008 turn the actual estate market upside down. Together a result, the federal federal government passed new legislation, well-known as the safe Act, aimed at shoddy residential lending. The for sure Act introduced a device for licensing and also regulating loan originators, i m sorry California legislators embraced effective January 1, 2011. Formerly, loan officers, likewise known together “loan originators,” were regularly just i was delegated salespeople through no unique training to help borrowers understand and also select the best loan. Worse still, in plenty of cases, loan companies hired “loan specialists” who had actually no license at all. Provisions of the plot include: criminal history & record information checks, federal originator I.D. Numbers, credit report checks, tracking of consumer complaints, national and state testing, nationwide pre-licensure and continuing education, bond and recovery money requirements, and also greater accountability to the public provided complimentary of charge via the internet. The safe Act applies to both current DRE license holders and brand-new licensees.

Real heritage Fraud prosecution (Legislative Analyst’s Office) (pdf)

History the the DRE (DRE website)

What that Does:

The room of actual Estate operates mainly through three programs: Licensing, Enforcement and Recovery, and Subdivisions. The Licensing routine conducts examinations to ensure that individuals who great to occupational in the actual estate sector meet details qualifications. The Enforcement and also Recovery regime conducts compliance audits of licensees and also administratively prosecutes violations of the actual Estate Law, together it is typically known. The Subdivisions program worries public reports v relevant details on subdivided lands for sale.

The state’s real Estate regulation exists generally for the security of the general public in actual estate transactions including the services of an agent. To this end, it develops the department of genuine Estate and also the commissioner as executive director of the department, and also rules that govern the qualifications and also conduct that licensees. The law, among other things, needs the commissioner come enforce that is provisions and also grants him the authority to take disciplinary actions against licensees who violate the law. In particular, the commissioner might revoke or suspend a license, or problem a monetary penalty for noncompliance with the law.

The department’s attributes can be broken down right into seven areas:


You can’t be a genuine estate broker or salesperson in California without a license from the department of genuine Estate. License demands to offer include dedicated education and testing. A broker needs second two years experience selling.

Enforcement Program

Investigations room made through the Department's Enforcement and Audit part on the basis of composed complaints from the public alleging feasible violations that the genuine Estate legislation or the Subdivided floor Law. The department may take disciplinary activity if a violation has taken place. This activity may result in patent suspension or revocation the a license, issuance the a limited license or filing of one order to cease and desist. Part violations may result in polite injunctions, criminal prosecutions or an extensive fines.

Recovery money Reimbursement

When someone receives a judgment against a genuine estate licensee together a an outcome of fraud, misrepresentation, deceit or switch of to trust funds ~ above the part of a licensee acting as an agent in the transaction, under certain conditions, that person may it is in eligible for reimbursement indigenous the restore Account. The recovery Account is a separate account that the genuine Estate Fund. Currently, 12% of all patent fees built up go into this account.


Subdivision laws applied by the department assist ensure that subdividers provide to buyers what was agreed to at the time of sale. Before real residential or commercial property which has actually been subdivided deserve to be marketed in California, the subdivider must acquire a public report from the department. The general public report discloses to prospective buyers pertinent information around a certain subdivision. The subdivider must record an application along with supporting documents prior to a public report is issued. If enhancements to the subdivision room not finish at the time of filing the application, the subdivider must additionally submit proof to the department that sufficient financial arrangements have actually been created their completion.

Education and also Research

The department maintains a actual estate financial literacy program for young adult through an elderly citizens. That conducts workshops, promotes courses for college and produces educational product with the knowledge that such understanding not only offers greater understanding real legacy transactions, yet is the best weapon against fraud.

Mortgage Loan Activities

The room monitors specific activities of actual estate licensees doing service as mortgage lenders and mortgage brokers and, in some circumstances, needs that reports be it is registered to the department to guarantee broker compliance v the law.


The department offers countless publications of attention to consumers and also licensees, such together the actual Estate reference Book, which provides general information on many facets of real estate practice; and also the real Estate law book and CD, which contain the existing Real heritage Law, the Commissioner's Regulations, and pertinent excerpts from other California codes. The quarterly genuine Estate Bulletin, report on market issues and also recent changes in the actual Estate Law and also department policies, is furnished to every licensees.

For years the department’s sole function was licensing the state’s real estate sales professionals and also real legacy lenders, leaving any type of caveat emptor (“buyer beware”) involves for the cost-free market to kind out. Today, almost two-thirds that the DRE’s $48.4 million budget is specialized to “enforcement and recovery” actions, i.e. Investigating citizen complaints that unlawful command by license-holders and punishing misbehaving license-holders accordingly.

In addition to investigating complaints the misconduct through license-holders and real estate activity conducted by unlicensed salespeople or brokers, the department likewise periodically audits mortgage brokers, escrow accounts or other accounts where mishandling could an outcome in a far-reaching problem come the public.

About a 4 minutes 1 of the department’s budget plan is spent on “licensing and education.” This has background check of applicants seek mortgage broker or actual estate salesperson licenses and also ensuring the applicants fulfill minimum qualifications. Applicants must have completed prerequisite courses or seminars and passed a department-administered test. The department does not administer the required education classwork, which is offered through department-approved exclusive instruction.

As a publicly advocate, the department conducts education efforts aimed at making people aware of predatory loan scams, countless of i m sorry increased during the subprime mortgage meltdown that started in the so late 2000s. Due to the fact that non-English-speaking communities have been an especially vulnerable, the department has actually shifted considerable resources to Spanish-language outreach, developing radio and also television commercials concentrated on educating would-be homebuyers and refinancers. The state legislation that was passed to bring California right into compliance through the federal SAFE action by 2011 included a supplication aimed in ~ salesmen marketing “forensic loan audits” to homeowners encountering foreclosure. The prohibits any person native charging an upfront fees from a homeowner in link with a promise to modify the borrower’s residential loan or some other kind of mortgage loan forbearance. The DRE has issued subsequent fraud alerts concerning the practice and also in November 2010 the state filed a $60 million lawsuit against a pair of companies that engaged in the practice.

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The room was offered the power to “blacklist” a fraudulent lender or salesperson in 2009. Barred genuine estate experts are prohibited from engaging in a host of real estate-related activities, from loan to sales. A list of previous real estate experts who space “barred” is released on the department website.