“Cite and Fine” Policy is at Work in California

A recent forum of the Orange County [California] Association of Realtors® focused on enforcement actions by the California Department of Real Estate (DRE). Chief among the topics was the department’s “cite and fine” policy. The presenter, Ms. Summer Goralik, is a former DRE investigator who now acts as a consultant to brokers on matters relating to DRE compliance issues (expertdrecompliance.com). She knows whereof she speaks.

The department’s “cite and fine” authority is found in California Business and Professions Code §10080.9 and Commissioner’s Regulations 2907.

A 2014 DRE Bulletin explains the workings of “cite and fine” this way: “A citation or other formal action will be considered when a violation is found after an investigation, audit, or examination of a licensee’s records by CalBRE [now, DRE] in response to a complaint, through random selection of a licensee for an office visit, or from completion of a routine audit. Depending upon the nature (such as the level of seriousness and potential for harm) and type of the violation, the appropriate action will be determined.”

The Department says that “a citation is likely the appropriate action” in cases of “relatively minor and technical violations, especially in those instances where there has been no injury or loss to a consumer…” Th ey include in their examples of relatively minor violations “failure to disclose a real estate license identification number in their first point of contact advertising material.”

Suppose a citation has been received. “The citation will identify the violation(s) you committed, provide information on how to pay the fine, describe any corrective action needed (if necessary), and explain the process for contesting the citation, if you choose to.”

Offenders will appreciate the policy that “information regarding specific citations issued – and any fines paid – will not be posted on the DRE website, nor will such information be attached to one’s individual public licensee website record.” Still, the information is public and can be obtained through a Public Records Act request.

There is a review process if an accused wants to contest the citation. The first level of review is a Citation Review Conference which is an informal review of the citation conducted by the DRE. If the citation and fines are upheld, the next level would be a formal administrative hearing before an administrative law judge. That can take both time and money. Clearly, it will often seem prudent simply to pay the fine.

Not much has been heard of “cite and fine” until lately. Ms. Goralik pointed out that in the months from July 2017 until March 2018 (most recent figures available), there have been 768 citations issued and $311,550 in fines collected. (The money collected, by the way, goes to the Real Estate Recovery Fund – for consumers – not to the Department’s operational budget.)

The emphasis of this activity has been on compliance issues with respect to the recently-issued advertising regulations. Real estate ads occur in a perfect venue for the application of “cite and fine”. A department investigator could stay home in his or her pajamas and compile lists (along with evidence) of non-compliant ads in the Sunday newspaper. Not to mention all the non-compliant websites and postings of listings.

Some prominent companies and agents have already felt the sting of the increased “cite and fine” activity. Others can expect to. It’s a good time to get compliant.


Leave a Reply