How to surrender your California real estate license while an investigation or accusation is pending.
This real estate law blog discusses surrendering your real estate license in California when you no longer want to contest a filed accusation, or where a pending investigation is underway. This is not legal advice or a substitute for legal advice. Do not rely on this information before speaking with a real estate attorney in California.
There are some circumstances where seeking to surrender your real estate license is preferable to going through an investigation or audit. In these circumstances, you should contact your real estate counsel to discuss your case.
Can you surrender your real estate license if you are involved in a trust fund accounting investigation?
According to the code section cited below, you should be able to request that the DRE accept the surrender of your real estate license. Again, if you are, for example a property management company wishing to sell your property management business in California, you should realize that while you have the right to request surrender of your license, the BRE does not have to accept your tender of your license.
In addition, for those property managers or other real estate companies that want to sell their businesses, where a new real estate licensee takes over (ex. one of your licensed sales persons got their broker’s license and wants to buy your business) you should realize that the BRE could always accept your surrender, then turn around and request an audit of the buyer of the company. Being a licensed individual, the buyer would need to cooperate with the audit. This can raise many complicated legal issues, and at times issues such as conversion of funds, grand theft, and embezzlement issues can be raised. These require a close analysis of the facts to determine what the best course of action for the licensee is. Again, there are no hard and fast rules, these are just some general considerations when you are facing a real estate audit in California, and want to retire or surrender your license rather than fight.
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How to surrender your California real estate license to the Bureau of Real Estate (“BRE”):
Surrendering your CAL real estate license basically involves three basic steps:
1. Discuss your case with real estate counsel (this is always advisable)
2. Petition the Commissioners office to surrender (in writing) for both yourself indiviudal and/or your Corporate real estate license (both individual and corporate licenses are two separate licenses).
3. If accepted, the Commissioner will sign the Order (“Order Accepting Voluntary Surrender“) and you will relinquish your real estate rights (and may be asked to turn over your license certificate, brach office license certificates, and pocket card.
California Business & Professions Code Section 10100.2 (Surrender Real Estate License)
“A licensee against whom an investigation is pending or an accusation has been filed pursuant to Section 11503 of the Government Code may petition the commissioner to voluntarily surrender his or her license. The surrender of a license shall become effective upon acceptance by the commissioner and thereafter, a surrendered licensee may be relicensed only by petitioning for reinstatement pursuant to Section 11522 of the Government Code (see below). When deciding a petition for reinstatement, the commissioner may consider all relevant evidence, including affidavits.”
This section indicates that if you are facing a pending investigation (ex. a request for a property management or trust fund accounting audit) or a real estate license accusation has already been filed against you, then you have a right to petition the real estate commissioner to surrender your real estate license (for example, say you were on the verge of retirement or dealing with health problems and cannot proceed with a lengthy investigation) you can seek to turn in your license and if the commissioner agrees to accept your petition, you basically lose all your real estate licensing rights unless you move to seek re-licensing.
What happens when I surrender my real estate license?
When you surrender your real estate license, you are giving up your right to engage in licensed real estate activities in CA. In plain terms, this means you cannot buy or sell property, lease, originate mortgages, or engage in property management transactions. If you are caught engaging in unlicensed activities there is a “cite and fine” unit that could hit you for $2,500 per incident damages.
Here is a list of some things that are considered “unlicensed real estate activities” in the State of California. Also keep in mind the unauthorized practice of real estate without a license can be deemed a criminal offense (misdemeanor). See California Business & Professions Code Section 10130 which reads:
10130. “It is unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license from the department, or to engage in the business of, act in the capacity of, advertise as, or assume to act as a mortgage loan originator within this state without having obtained a license endorsement. The commissioner may prefer a complaint for violation of this section before any court of competent jurisdiction, and the commissioner and his or her counsel, deputies, or assistants may assist in presenting the law or facts at the trial. It is the duty of the district attorney of each county in this state to prosecute all violations of this section in their respective counties in which the violations occur.“
This makes it critical that brokers understand the importance of making sure your employees, assistants, and other unlicensed personnel are not engaging in “licensed activities” without a real estate license. Have them get the license, it will protect your California brokerage in the long run.
After I surrender my real estate license can I get it back at a later date?
You can petition to get your license back after you surrender it. See California Government Code Section 11522 which states:
11522. “A person whose license has been revoked or suspended may petition the agency for reinstatement or reduction of penalty after a period of not less than one year has elapsed from the effective date of the decision or from the date of the denial of a similar petition. The agency shall give notice to the Attorney General of the filing of the petition and the Attorney General and the petitioner shall be afforded an opportunity to present either oral or written argument before the agency itself. The agency itself shall decide the petition, and the decision shall include the reasons therefor, and any terms and conditions that the agency reasonably deems appropriate to impose as a condition of reinstatement. This section shall not apply if the statutes dealing with the particular agency contain different provisions for reinstatement or reduction of penalty.
Keep in mind, in many cases I have been told that a licensee should expect TWO YEARS as part of the “not less than one year” proposition, and this could be longer or shorter depending upon the facts and circumstances of your case. You will also want to keep in mind the California real estate rehabilitation factors when re-applying for your license rights.
Contact a CalBRE real estate license & defense lawyer
If you are facing a BRE audit, property management audit letter, or trust fund accounting investigation, give us a call to discuss your case. We have helped many California brokers and salepersons defend their real estate licenses. We can discuss surrendering or turning over your real estate license. We can be reached at (877) 276-5084 or by filling out the contact form below (please leave your name and phone number).
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