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CA RE Broker · Cheat Sheet

Broker Supervision

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Cheatsheet: Broker Supervision, Trust Accounts & Record Keeping

Trust Account Rules at a Glance

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Commingling vs. Conversion

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Record Keeping Timeline

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Supervision Requirements Summary

  • Written employment agreement required with ALL licensees (employees AND independent contractors)
  • CCR §2725 = Reasonable Supervision Standard
  • Broker liable for salesperson misrepresentation even without knowledge if supervision was inadequate
  • Each branch office must have a designated broker-in-charge
  • Virtual office brokerages: same supervision rules, documented remote protocols required
  • Delegation to associate broker does NOT eliminate principal broker's liability
  • DRE can discipline broker for failure to supervise independent of any underlying harm

Continuing Education (Broker Renewal — Every 4 Years)

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Unlicensed Assistants: Can vs. Cannot

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RuleDetail
Account title"[Broker Name], Real Estate Broker, Trust Account"
Bank requirementFederally insured (FDIC/NCUA)
Earnest money deadlineDeposit within 3 business days of acceptance
Broker's own fundsOnly the minimum to maintain required bank balance
ReconciliationMonthly — bank balance must match sum of all client ledgers
DRE audit rightsAny time, no advance notice required
Disputed fundsHold; get mutual release OR file interpleader with court
ViolationDefinitionConsequence
ComminglingMixing client funds with personal/business fundsDRE discipline, fines
ConversionUsing client funds for personal/business expensesLicense revocation + criminal charges
Record TypeRetention Period
Transaction records (contracts, disclosures, correspondence)3 years from closing
Trust account records3 years
Employment agreements (salespersons)3 years after relationship ends
Advertising copies3 years
Property management records3 years from end of management
Mandatory TopicHours
Ethics3
Agency3
Trust Funds3
Fair Housing3
Risk Management3
Consumer Protection3
Electives30
Total45
CAN (Administrative)CANNOT (Licensed Activity)
Schedule appointmentsShow property
Prepare ad copy (for agent review)Negotiate price or terms
Answer phonesExplain disclosures
Deliver documentsSolicit listings or buyers
Enter MLS data under supervisionReceive transaction-based compensation

Referral Fees Quick Rules

  • Pay ONLY to licensed real estate agents
  • Out-of-state referrals: pay a licensed CA broker, who refers the client
  • Unlicensed finders/"bird dogs": ILLEGAL
  • RESPA §8: No kickbacks from title, escrow, or lenders on federally related loans

Property Management Trust Accounts

  • Separate account from sales trust account (required)
  • Security deposits: separate ledger from rental income
  • Return security deposit within 21 days of lease termination with itemized statement
  • Monthly accounting to property owners per management agreement

Aligned to the California DRE broker exam content outline.

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Sections in this topic

Supervision RequirementsTrust AccountsRecord KeepingOffice ManagementCa Broker Ab2992 LiabilityCa Trust Fund Reconciliation