DRE Hot Buttons for Summer 2018

The Department of Real Estate (yes, now back to DRE) is aggressively pursuing advertising, social media, and all “first points of contact” for violations of the new (January 2018) rules regarding advertising. It is imperative that all brokers self-audit the websites and marketing materials being used by their agents, both broker-associates and salespersons, to insure compliance with the law.

The new and very different advertising rules were included in Assembly Bill 1620 which was signed into law by Governor Brown in August 2016. It took until January 2018 for the law to be implemented as new regulations by the Real Estate Commissioner, and they have hit the ground running in finding violations and citing/fining the violators.

The basic rule is: “Put your DRE license number on everything!” The sub-text is: “Don’t put it in mice-type where no one can see it; make it no smaller than the smallest font on the advertising copy.” One of the Special Investigators told me that they are looking at this no differently than the regulators look at the requirement for contractors to prominently display their contractor’s license number on everything (even trucks and cars where their company name is displayed). I had a Special Investigator recently take a ruler and check that the advertising banner on a car used by a salesperson had the license number printed in a large enough font size!

For more detailed instructions on what is required for advertising compliance, the DRE has provided two new forms that lists the measures a broker, broker-associate or salesperson must take to ensure that the disclosures in their advertising materials conform to the new laws. For mortgage lending brokers, the RE-858 (License Disclosure Requirements for Mortgage Advertising) should be consulted and for other types of business activities, the RE-559 (License Disclosure Requirements for Advertising) contains the requirements.

Another big area on which the DRE is concentrating is in the use of and advertising of team names. This is where several agents from a company band together to work under a single branding. It doesn’t happen so much with mortgage companies, but is a growing trend with real estate companies, especially those who are linked to national franchises. Hardly ever are these teams set up correctly, from the naming of the team itself, to the way the teams are compensated and the way they advertise themselves. If anyone in your organization is using any such branding or using any name that isn’t one of your registered DRE names (corporate or dba), you need to make yourself familiar with the rules and regulations of such activities. The best information is obtained from the FAQ’s posted by the DRE on their website. Just search for “Team Names” from the search bar on the DRE website homepage and you will be directed to the proper information.

Additionally, the DRE is monitoring brokers/corporations to make sure they have added their broker-associates to their license. Always before, only salespersons showed up as “under” a broker, but beginning in January 2018, all broker-associates must also be attached to the broker/corporation. The new DRE form RE-215 (Broker-Associate Affiliation Notification) must be filed by each broker-associate and signed (original signatures) by both the responsible broker and the broker-associate. If you haven’t already taken care of this, do it today.

And, the continuing hot button in our part of the industry is the non-filing, erroneous filing or late filing of the quarterly and annual reports. A tremendous number of audits of mortgage brokers are triggered due to problems with these reports. Don’t let that next audit call be to your number for something you could have easily prevented!

Pam Strickland is an independent consultant who has helped California brokers prepare for and survive DRE audits since the mid-1990s. Don’t wait until the DRE calls you before you contact her to check you out and help you be bulletproof in case of an actual audit. She can be reached at pam@pamstrickland.com.