Broker Compliance

FAQ > Broker Compliance

A - General Business Practices

1. Are the broker's salespersons properly licensed?

All persons performing activities requiring a real estate license for compensation hold a valid real estate license. There are procedure in place to monitor the expiration dates of the licenses of salespersons.

2. Does the broker notify the Department of Real Estate upon the hiring and termination of salespersons?

Yes, the appropriate DRE forms (Salesperson Change Application (RE 214) or on line through the eLicensing System) are completed upon the hiring and termination of salesperson.

3. Does the broker have a written broker-salesperson agreement with each of his/her salespersons?

Yes, there are written agreements with each salesperson. The agreement is dated and signed by the parties and covers material aspects of the relationship between the parties, including supervision of licensed activities, duties and compensation.

4. Is the broker properly supervising?

Yes, the broker exercises reasonable supervision over the activities of all salespersons.

Reasonable supervision includes, as appropriate, the establishment of policies, rules, procedures and systems to review, oversee, inspect and manage.

5. Does the broker retain copies of all documents?

Yes, records are retained for a minimum of 3 years for all listings, deposit receipts, canceled checks, trust account records, and other documents executed in connection with any transaction for which a broker's license is required. The books, accounts and records can be made available for audit, examination, inspection and copying by a Department of Real Estate representative during regular business hours.

B - Trust Fund Handling

1. Is the bank account used for trust fund handling in the name of the broker as trustee?

Yes, the trust bank account lists RPM as the trustee.

2. Is the bank account used for trust fund handling an interest-bearing account?

No.

3. Are control records complete and accurate?

Yes, a record of all trust funds received, including uncashed checks, is maintained.

4. Are the separate transaction records complete and accurate?

Yes, a Separate Record for Each Beneficiary or Transaction is maintained. Records account for the funds received from, or for the account of, each beneficiary or each transaction and deposited to the trust fund bank account. These records are used to ascertain the total owed to each of the beneficiaries.

The records show in chronological sequence the following:

a) Date of deposit;

b) Amount of deposit;

c) Date of each related disbursement;

d) Check number of each related disbursement;

e) Amount of each related disbursement;

f) If applicable, dates and amounts of interest earned and credited to the account;

g) Balance after posting transactions on any date.

5. Is monthly reconciliation of the control records and separated records performed and documented?

The balance of all separate beneficiary or transaction records is reconciled with the record of all trust funds received and disbursed at least once a month. A record of reconciliation is maintained and it identifies:

Bank Account Name;
Account Number;
Date of Reconciliation;
Name of Beneficiary;
Trust Fund Liabilities of the Broker to each beneficiary.

6. Are trust funds deposited in a timely manner?

Yes, all trust funds are deposited no later than three business days following receipt.

7. Are authorized signatories either employed by the broker or licensed?

Withdrawals are made from the trust account only upon the signature of the broker or persons with written authorization from the broker.

8. Are broker's funds commingled with trust funds?

Funds belonging to a broker are not be commingled with trust funds. Commissions, fees, or other income earned by the broker, are withdrawn from the trust account within 25 days from the date of deposit .

CLICK HERE: See the California Broker Compliance Evaluation Manual