Why this matters: The DRE’s Real Estate Bulletin informs licensees on rules of conduct, changing legislation and new licensing exams, which we digest to help you keep your practice and conversations current.
The Summer 2025 edition of the California Department of Real Estate (DRE) Bulletin explains the importance of mentorship for new licensees and the DRE’s Cite and Fine program, answers questions about trust fund signatory rules and provides reminders for filing the annual business activity report.
New agent mentorship
New sales agents fresh from their pre-licensing education uniformly lack the necessary pragmatic experience to advise buyers and sellers, as they have no knowledge of licensed activities beyond general real estate concepts. Theory versus application.
The “dumb agent” rule no longer cuts it for today’s more knowledgeable population of buyers and sellers.
Agents are expected to provide real value beyond access to the multiple listing service (MLS) — and that value is gained through experience.
In this bulletin, the DRE shines a light on the benefits for new licensees, singling out a mentorship program for Sacramento-area students interested in taking the DRE license exam.
Along with providing real-life experience, this 108-hour mentorship program stands in for the Real Estate Practice course required to register for the state exam. Community college students who complete the program also receive three college credit units.
The DRE is encouraging local brokerages to institute their own internal mentorship programs for new licensees. If you have a mentorship program you are proud of, the DRE wants your help and asks you to email them about it at [email protected].
Editor’s note — firsttuesday has advocated for a mandatory mentorship period before an individual receives their real estate agent license. Much like appraisers, who are required to have on-the-job training before they may begin providing services to consumers, firsttuesday believes an apprenticeship period for real estate agents will provide immense value to consumers. The proposed training will see each new sales agent assist a supervising broker in various types of transactions. After assisting more experienced agents, the trainee will serve as the lead agent for several transactions under the supervision of a responsible, supervising broker.
Looking to earn a California DRE license? Enroll in firsttuesday’s DRE-approved courses to Become an Agent at www.firsttuesday.us!
Cite and Fine
The DRE is taking this opportunity to remind licensees about their Cite and Fine program, used to address minor deficiencies and violations of Real Estate Law. The DRE uses this program to both correct issues and educate licensees about proper conduct.
The DRE most commonly issues citations for instances of:
failure of an employing broker to adequately supervise agents and associate brokers;failure of all licensees to notify the DRE of an address change;improper or missing license disclosures in advertising materials;failure of an employing broker to inform the DRE of newly affiliated salespersons or associate brokers;failure to register the use of fictitious business names;delinquent filing with DRE of threshold or business activity reports; anddeficiencies in a broker’s handling of trust funds and recordkeeping.
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DRE citations for violations require the licensee to correct the deficiency, but they may also require payment of up to $2,500. The fine amount varies based on the seriousness of the action and a history of previous deficiencies.
For example, an unlicensed individual performing services which require a real estate license is more likely to be fined the full $2,500 amount than someone who simply forgot to update their address with the DRE.
Further, an individual who both advertises fee interest in properties for sale and negotiates the terms for acquiring a leasehold interest may be subject to two separate citations — thus, they may be fined up to $2,500 for each deficiency (in this case, up to $5,000).
You might be wondering — what authority does the DRE have over collecting fines from unlicensed individuals? It’s not like the DRE can revoke their license!
Failure to pay the fine and correct the deficiency can cause:
the DRE to put a hold on your license (if you have one);a referral of unpaid fines to the Franchise Tax Board or even outside collection agencies; andcivil judgment or formal disciplinary action against the individual.
Related article:
DRE Hot Seat: Broker license suspended for failure to prevent unlicensed staff from conducting licensed activity
When an individual receives a citation they believe is unwarranted, they may respond to the citation with a request for Citation Review Conference (CRC). However, the DRE stresses they often receive these requests for review after the deadline indicated on the citation has passed. Therefore, it’s critical to respond to citations right away. [Calif. Business & Professions Code §10080.9]
Editor’s note — For more serious violations of Real Estate Law (i.e., when consumers are harmed by the licensee’s conduct), the DRE will issue formal disciplinary action which is made public on DRE’s Summary of Enforcement Actions page
Trust fund signatories
A broker handling trust funds is required to abide by guidelines established by real estate law.
A real estate broker ought not to handle trust funds until they are fully informed on the requirements for managing trust funds and accounting, then adhere to them closely.
Funds deposited by the broker into a trust fund account are only disbursed by the broker as instructed by the person entitled to the funds.
The withdrawal of trust funds may take place under the signatures of:
the broker who is the trustee of the trust funds;a sales agent licensed under the broker;another broker acting pursuant to a written agreement with the broker; oran unlicensed employee of the broker, when the broker has a fidelity bond or insurance coverage equal to or exceeding the maximum amount of the trust funds the employee has access to. [Bus & Prof §10145]
Property owners or other consumers of real estate licensee services are never authorized to sign on a broker’s trust fund account.
Related article:
DRE Hot Seat: Trust funds are held “in trust” and belong to another
Annual business activity report
Looking for a sure-fire way to ensure an audit?
Failure to file an annual business activity report is a signal for the DRE to audit a broker’s operation.
Business activity reports are necessary when the broker originates, arranges or services one or more mortgages secured by one-to-four unit residential property in a calendar year. [Bus & Prof §10166.07(a)]
The reports contain information about the brokers and agents under the broker’s supervision and a list of real estate related activities undertaken during the year, as well as information on the mortgages originations made, arranged or serviced by the broker.
Brokers need to submit their reports at the DRE’s website within 90 days of the end of their fiscal year. [Bus & Prof §10166.07(a)]
In this bulletin, the DRE answers some common troubleshooting questions received about using the website to submit annual business activity reports.
The DRE suggests brokers:
use a modern web browser, like Google Chrome, Microsoft Edge, Mozilla Firefox or Opera;clear their browser cache when encountering technical issues with the website; andtry a different device when technical issues persist.
When troubleshooting does not solve the problem, the DRE asks that you contact them at (877) 373-4532. Don’t let technical difficulties stop you from submitting your report — as an audit is sure to follow.
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