Transactions and Regulatory Committee
This material is for discussion purposes only and has not been approved by
the Transactions and Regulatory Committee, the Legislative Committee, Executive
Committee or the Board of Directors.
Issue: Should C.A.R. sponsor legislation to increase the
fines DRE is authorized to impose against licensees that are convicted in a
Action: Optional; difficult to implement in 2010.
1. Do Nothing.
2. Defer action now and consider for inclusion in C.A.R.'s 2011 sponsored
3. Support DRE-sponsored legislation to increase penalty levels, but not
introduce as C.A.R. legislation.
4. Sponsor separate legislation to increase the levels of fines and penalties.
5. Do Nothing
Status / Summary:
In 2009 the Legislative Analyst's Office released a report on DRE entitled
"Opportunities to Improve Consumer Protection" which included, among other
things, a recommendation that the maximum fines for violation of the real
estate law be increased. It did not contain specific recommendations for
increases. DRE has not been authorized by the Administration to sponsor
legislation to implement the LAO report recommendations.
Time is short. The deadline for introduction of legislation in the 2010
legislative session is February 19 (approximately two weeks after the Board of
Directors meeting). Whether an appropriate, capable, author can be found to
carry the legislation on short notice, or that a bill draft can make it through
the required administrative processes in time to be successfully sponsored in
2010 is problematic. In all likelihood, a sponsored bill would fare better as a
Discussion: DRE, like most regulators, has the ability in
statute to impose a variety of disciplinary measures ranging from public and
private reprovals, monetary penalties (civil fines), the imposition of a
limited license, or the suspension or revocation of a license for violation of
the real estate law. DRE has considerable flexibility to allow a licensee to
pay a fine in lieu of an actual suspension or revocation.
The existing law allows fines up to $10,000 in addition to orders of
restitution or revocation of the license. The LAO report suggests that the
fining authority of DRE is inadequate, but does not suggest an appropriate
adjustment. In a brief "concept' discussion, DRE indicates that current penalty
levels have not been adjusted since 1982. If existing caps were adjusted for
inflation alone, it would be a significant increase.
Is the inadequacy of fine amounts, and a resulting inadequate deterrent, a
significant problem? Does it merit sponsored legislation to correct?
Should C.A.R. sponsor legislation to increase fines? If so, when and how much?