California Bureau of Real Estate Opens Its Books

The California Real Estate Commissioner, Wayne Bell, believes in transparency and he practices it.  To that end, the recently-released Fall issue of the Bureau’s Real Estate Bulletin contains a thorough and readable report of its activities for the FY (fiscal year) 2016-2017 which was July 1, 2016 – June 30, 2017)  The Commissioner expresses at the outset his hope that the information. “…is of interest and worthwhile, and provides you with a fuller understanding of the fiscal state, operations, programs, and outcomes of CalBRE.”

We applaud the Commissioner’s efforts to make the information available; and, knowing that more than a few readers of this publication may not have seen the Bulletin, we reproduce some of the report’s highlights here.

The Bureau maintains 5 district offices: Sacramento, Oakland, Fresno, Los Angeles, and San Diego.  It has 332 employees.  Its FY 2016-17 was $52,639,000.  Revenue totaled $52,128,255 and expenditures were $51,639,000.

The Bureau of Real Estate is one of those special arms of government, like the Department of Fish and Wildlife, that does not rely on the state’s general fund.  Its income is generated by such things as licensing and special activities.  In FY 2016-17, CalBRE received $4,205,683 from examination fees and $37,641,210 for licensing.  It collected $8,299,377 for processing subdivisions.

Income from licensing and examination activities is, not surprisingly, influenced by market conditions, although there tends to be some lag.  Salespersons exam applications increase about 10% in FY 2016-17 from the year before.  License renewals have remained steady with 81% for salespersons and 89% for brokers.

The total license population at the end of FY 2016-17 was 415,458.  That is approximately one licensee per 94 Californians.

Another way to look at the number of licensees is to keep in mind that, as the report says, “Each section of the California Bureau of Real Estate (CalBRE) – although performing separate functions – has the common goal of consumer protection.”  Remember, the Bureau reported 332 employees. That divides up to 1,251 licensees per Bureau employee.  A lot to keep track of …

One of the most significant consumer protection activities of the Bureau is the conduct of audits.  The audits most focus on the handling of trust funds – whether or not licensees are properly handling funds that actually belong to their clients and customers.  There are two kinds of audits: investigative – which either arises from a complaint or from a previous investigation; and routine – which is proactive and often directed towards firms that handle a high volume of trust funds.

In the 2016 – 17 fiscal year, the department closed 364 investigative audits and 234 routine ones.  Of those 598 audits, 28.6% (171) uncovered shortages where the account did not contain as much of the client’s money as it should have.  The total dollar amount of shortages found?  $10,250,906

Undoubtedly, the activities of the Bureau that concern most licensees are those of the enforcement and legal division.  From a statistical perspective, however, it is quite unlikely for a licensee to receive either a citation (which is typically for a minor violation) or a referral for a legal action.

In FY 2016-17, 4,282 complaints were received.  714 resulted in citations being issued, 1,265 were referred for legal action, and 1,394 were referred for investigation.

Investigations and legal actions are time-consuming processes, likely to spread out over more than one fiscal year.  Many actions that were concluded in FY 2016-17 were begun in earlier years.  They included: 350 license revocations, 160 suspensions, 142 desist and refrain orders, and 232 license denials.

So, there is a glimpse of what CalBRE has been doing.  It is good and refreshing of them to make the information so readily available.  It’s a two-way street as well.  If you have a suggestion for the Bureau, let them know at www.calbre.ca.gov.

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