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Three year Statute of Limitations Defense for BRE accusations

Jan 1st, 2015 | By | Category: Real Estate Broker Law

Can the Bureau of Real Estate revoke or suspend my real estate license if I do not have business records from over three years ago?

3 year SOL accusations real estate broker

Introduction

We have talked about the obligation to keep and maintain ALL records of your California real estate business for THREE YEARS.  The rule is set forth in California Business & Professions Code Sec. 10148 which states:

10148.  (a) A licensed real estate broker shall retain for three years copies of all listings, deposit receipts, canceled checks, trust records, and other documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required. The retention period shall run from the date of the closing of the transaction or from the date of the listing if the transaction is not consummated. After notice, the books, accounts, and records shall be made available for examination, inspection, and copying by the commissioner or his or her designated representative during regular business hours; and shall, upon the appearance of sufficient cause, be subject to audit without further notice, except that the audit shall not be harassing in nature.

But what happens if you don’t have all your records?  Will this lead to an accusation?  A cite and fine case?  Is there a statute of limitations defense for missing records over three years old? This blog will attempt to discuss some of these issues.

BRE three-year statute of limitations defense / 10 year bar

Before suspending or revoking a real estate license, the Department must file an accusation notifying the licensee of the alleged grounds for possible disciplinary action and thereafter hold a hearing. (Cal. Bus. & Prof. Code § 10100).

The accusation must be filed not later than three years from the occurrence of the alleged grounds for disciplinary action. (See Cal. Bus. & Prof. Code § 10101.).  Section 10101 states:

10101.  The accusation provided for by Section 11503 of the Government Code shall be filed not later than three years from the occurrence of the alleged grounds for disciplinary action unless the acts or omissions with which the licensee is charged involves fraud, misrepresentation or a false promise in which case the accusation shall be filed within one year after the date of discovery by the aggrieved party of the fraud, misrepresentation or false promise or within three years after the occurrence thereof, whichever is later, except that in no case shall an accusation be filed later than 10 years from the occurrence of the alleged grounds for disciplinary action.

As such, there appears to be a 10 year absolute deadline to file an accusation.   The three-year limitations period commences on the date of the occurrence of the grounds for revocation or suspension. See California Real Estate Loans, Inc. v. Wallace (1993) 18 Cal.App.4th 1575, 1585, 23 Cal.Rptr.2d 462.)

Thus, for example, where the ground for license revocation or suspension is a final civil judgment for fraud, the limitations period commences on the date of the final judgment, “not the acts or omissions underlying that judgment.” Similarly, where the ground for revocation or suspension is the conviction of a crime involving moral turpitude, the limitations period commences on the date of the final judgment of conviction, not the acts or omissions underlying the judgment of conviction. See Karrell v. Watson (1953) 116 Cal.App.2d 769, 777–778, 254 P.2d 651.).

In determining the commencement of the limitations period, the statutory language focuses on the ground for discipline. It is the occurrence of the ground for discipline that commences the limitations period. Where the ground is the actual misconduct of the licensee, the misconduct commences the period. Where, however, the ground is a criminal conviction, a civil judgment or the disciplinary action of a regulatory agency, it is the final official action that commences the period.  See Herrera v. Dep’t of Real Estate, 88 Cal. App. 4th 776, 780, 106 Cal. Rptr. 2d 232, 235 (2001).

BP 2230.5 seven year statute of limitations

Typical property management records required to be kept for three years

By way of example, if you are a property management company in California, you need to keep detailed records of your business, going back at least three years.  This is to comply with section 10148.  Failure to comply with this requirement can lead to an accusation.  Here are some typical records that a property manager would want to keep (this is not an exclusive list):

1.  Property management contracts with residential or commercial property owners

2. Lease agreements with tenants

3. Tenant screening, applications, etc.

4.  Trust fund signature cards (cards that show who is the signor on the trust account)

5.  Deposit receipts, deposit slips

6. Cancelled checks

7. Maintenance receipts, emails with vendors, and invoices

8. Copy of all security deposits received

9.  Record of all trust funds received but not placed in broker’s trust account

10. Written authorizations from property owners

11.  Trust fund accounting records (separate beneficiary statements, general ledger, monthly reconciliations)

12.  Overage reconciliation records

13.  Copy of checks made payable to service providers

14.  Other real estate transactional records

15.  Pictures, listing information, advertising for rental properties

These are just a sample of some of the records a real estate agent will have.  If you are a residential or commercial broker, (or mortgage broker), obviously there are other records you will need to maintain.  But in general, you need to save ALL records of your real estate transactions for a minimum of three years.  We usually recommend you hang on to these records longer in case you are ever sued for a breach of fiduciary duty or financial elder abuse case.  It’s nice to have good records of your transactions so that you can defend yourself in a real estate arbitration, ethics case, or mediation.

Contact a DRE Defense Law Firm

This is only one defense that might be raised in response to a Department or Bureau of Real Estate licensing accusation.  There are others such as a lack of “guilty knowledge” by the broker.  Remember, the BRE has the burden to prove their case by “clear and convincing evidence” so it is important to mount your defense early and preserve all possible evidence.  To discuss your case contact us at (877) 276-5084.  While you may wonder if you need to retain real estate counsel if facing a BRE audit, we believe it is a sound response since you have the constitutional right of due process, this could help you in preventing a suspension or revocation of your real estate license.  To have one of our real estate litigators contact you, please fill out the contact form below and indicate the best time and number to call you.  We offer flexible legal fees in real estate cases.
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We are a business and civil litigation firm with a focus on copyright infringement cases involving illegal movie downloads (torrent cases such as London Has Fallen, ME2 Productions and Malibu Media defense), software audits (ex. Microsoft audits, SPLA, Autodesk audit notification letter, Siemens PLM defense, SIIA, Adobe and Business Software Alliance defense) and other software vendors threatening piracy and infringement. We also handle cases involving internet law, anti-SLAPP, media law, right of publicity, trademarks & domain name infringement, and we have a niche practice area handling California BRE licensing disputes, accusations, subpoena response, statement of issues and investigations. We have offices in San Francisco, Beverly Hills, Newport Beach, San Diego & Phoenix, Arizona and accept federal copyright and trademark cases nationwide. All content on our website is general legal information only and not a substitute for legal advice, and should not be relied upon. Decisions to hire counsel should not be based on advertising alone. Blogs, videos and podcasts are authored by Steve Vondran, Esq. unless otherwise noted. We can be reached at (877) 276-5084.

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