Most Common Enforcement Violations Under California Real Estate Law

About DRE | Contact Us | Newsroom | Forms | Publications Statewide search: Search this site:
- Home
- Consumers
- Verify a License Find a real estate agent or broker
- Consumer Guides & Publications Helpful consumer related publications
- Filing a Complaint The complaint process, DRE's jurisdiction,
and how to file a complaint

• Homebuyers/Borrowers Helpful information for home buyers and borrowers
• First Home California Information and tips specifically for the first-time homebuyers

• Consumer Alerts Review Real Estate Consumer Alerts

• Complaint Resolution Program Request dispute resolution/assistance

• Consumer Recovery Account View Information about the Consumer
  Recovery Account

• County Recorder Alerts Be notified of recorded activity on
  your property

  • Licensees

• Verify a License Find a real estate agent or broker

• Disciplinary Actions View disciplinary actions taken against
  licensees and individuals for violations
  of the Real Estate Law

• eLicensing Self-schedule / reschedule an examination
  date, print a license certificate, renew
  a license, change of address

• Current Processing Times For Applications, Renewals, and License Changes

• Prepaid Rental Listing Services Apply for PRLS License, Description of Business,
  Contract Approvals, List of Licensees

• Licensee Alerts and Advisories Get urgent news and warnings, directly from DRE

• Real Estate Business Resources Advisories, Alerts, Compliance Manuals,
  Reference Materials

• SAFE Act/MLO Get an MLO license endorsement, fees, FAQs

• Cite & Fine Procedures, notices, disclosures, fine payment

  • Examinees

• Advice for Examinees Information every examinee needs to know before
  applying for the real estate exam

• Out-of-State Applicants Guidance for Out-of-State Examinees and
  License Applicants

• Current Processing Times For Applications, Renewals, and
  License Changes

• eLicensing Self-schedule or reschedule your examination
  date, print a license certificate, renew a
  license, change of address

• How & Where Exams are Scheduled Exam scheduling and availability criteria,
  locations, exam format by location

• Taking the Exam Duration, Format, Method, Required Identification,
  Security, Exam Results, Re-Taking an exam

• Education Course Availability Find statutory/pre-license course
  offerings & locations

• License Options for Military Members DRE Assistance for Military Servicemembers
  & Their Spouse/Domestic Partner

  • Developers

• Public Reports What You Need to Know about Marketing your
  Subdivision in California: The Public
  Report Process

• New Subdivision Filing List Monthly List of New Applications for
  Public Reports

• Time-shares Guidance for Marketing or Selling Timeshare
  Interests in California

• Homeowners Associations Operating Cost Manual for HOAs, budgets,
  FAQs, CID resources

• Master Geographic Letter Lists List reflecting subdivider compliance with
  locally administered laws and ordinances

August 26, 2025

DRE Highlights Most Common Enforcement Violations to Strengthen Consumer Protections and Licensee Practices

Sacramento, California – As part of its efforts to protect the public and ensure fairness in the real estate
industry, the California Department of Real Estate (DRE) urges real estate professionals and consumers to be informed of the most
common violations of the Real Estate Law that DRE acts against, along with practical guidance to help prevent violations.

1. Trust Fund Account and Record Keeping Violations

Trust fund handling and record-keeping are among the most common problem areas in real estate transactions. When brokers
are responsible for holding and maintaining trust funds on behalf of others, improper handling can lead to significant
penalties or even criminal charges. Common violations include commingling trust funds with business or personal funds,
failing to reconcile trust accounts regularly, and not maintaining proper records for each transaction.

Trust fund shortages can arise due to poor record-keeping or improper handling of client funds, such as commingling trust
funds with business or personal funds. Additionally, brokers are required to deposit trust funds promptly and timely into
the correct accounts—whether that be to the principal, a neutral depository (such as an escrow account), or directly into
the trust account as stipulated by Business and Professions (B&P) Code Section 10145. Failure to follow these procedures
can lead to serious penalties, including license suspension or revocation.

2. Failure to Supervise Violations

Brokers must exercise reasonable supervision over the activities of their salespeople and the operations of any
real estate corporation they are responsible for. Failing to supervise adequately can lead to violations and misconduct that
affect both the public and the broker’s license. This includes neglecting to monitor licensed and unlicensed activities within
the organization or allowing unqualified individuals to act without oversight.

3. Unlicensed Activity Violations

Employing unlicensed individuals or entities to perform real estate activities that require a license
is a serious violation. Brokers are responsible for ensuring that all individuals performing licensed activities are
properly credentialed. This includes verifying that salespersons have active licenses and maintaining proper systems
to track license renewals and continuing education requirements.

4. Misrepresentation Violations

Misrepresentations are false statements or the failure to disclose material facts in a real estate
transaction. Misrepresentations can be intentional or accidental, but both can lead to severe penalties. Failing to
provide accurate information or concealing key facts can result in harm to clients and legal consequences for the
broker or salesperson.

5. Criminal Conviction Violations

Pursuant to Business and Professions (B&P) Code Section 10186.2, a licensee is required to report to the DRE in writing
within 30 days from the date of any conviction, criminal complaint, information or indictment charging a felony, or
disciplinary action. Failure to make a report required by this section shall constitute a cause for discipline.

6. Advertising, First Point of Contact, Team Names, and Use of Fictitious Business Names Violations

Real estate professionals must adhere to strict regulations when advertising. This includes truth in advertising,
disclosure of license numbers, and using fictitious business names or team names properly. The use of misleading advertising, or failing to register and disclose these names appropriately, can result in
serious violations. Team names must be clearly associated with the broker, and advertisements must include necessary
information for transparency.

Key Takeaways for Avoiding Violations

• Educate yourself on the process: Being educated on the real estate transaction process can be helpful for consumers. Check out DRE Consumer publications and resources available.
• Make sure the broker has strong systems: Brokers should have clear office procedures for record-keeping, supervision, and compliance checks.
• Ask Questions: Agents are expected to disclose all required information. Ask questions if you don’t understand something.
• Be proactive: When using the services of a real estate salesperson or broker, do your research and verify their license. Take the time to learn about the real estate transaction process. xxx

The Department of Real Estate is the regulatory agency that enforces the Real Estate Law, Subdivided Lands Act, and Vacation Ownership
and Timeshare Act. DRE oversees the licensure of approximately 433,000 licensees. The Department’s mission is to safeguard and promote
the public interests in real estate matters through licensure, regulation, education, and enforcement. Consumer protection is its highest
priority. For more information, visit: www.dre.ca.gov.

This Google translation feature is provided for informational purposes only as DRE is unable to guarantee the
accuracy of this translation. Please consult a translator for accuracy if you are relying on the translation
or are using this site for official business.
Accessibility | Conditions of Use | Contact Us | Privacy Policy | Site Map Copyright © State of California Back to Top