TIPS TO AVOID DENIAL OF YOUR CALIFORNIA REAL ESTATE LICENSE APPLICATION
WHAT DO I NOW?
A Brief Overview
Of The Administrative Disciplinary Process
Of The Administrative Disciplinary Process
Steps In A Formal License Discipline/Denial Case
| I | How Does the "DRE" (now the Bureau of Real Estate or "BRE") License Discipline Work In California | VII | License Discipline and Public Records | |
| II | Real Estate Licensees Must Self Report To The BRE, A Felony Indictment Or Information, A Misdemeanor Conviction Or Pending License Disciplinary Action | VIII | Preparing For the Hearing | |
| III | Steps In A Formal License Discipline/Denial Case | IX | Appearing For the Hearing | |
| IV | Discipline | X | Decisions | |
| V | Official Notices During a Pending DRE Action | XI | Retaining An Attorney | |
| VI | Stipulated Settlement | |||
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III. Steps in a Formal License Discipline/Denial Case
A formal DRE case can be broken down into four steps.
STEP 1 - Pre-Filing Investigation. Typically investigators from the DRE investigate allegations of license violations (or convictions) and confer with their superiors concerning a referral to the DRE Legal Section for filing of an Accusation/Statement of Issues.
Real Estate Licensee Activities Violations - As you may be aware, if you already have a license, a DRE investigation of your licensed activities usually begins with an inquiry letter asking the licensee for an explanation and may include telephone or in-person interviews and requests to produce documents and to fill out statements. Some investigations of licensed activities are followed up by a DRE audit.
CRIMINAL CONVICTIONS - APPLICATIONS - If you are applying for a license, you are no doubt aware of the lengthy process and time you spent to get to the point where the BRE has filed a Statement of Issues against your license application. To summarize, you have received a letter from the BRE licensing section stating that your case had been assigned to a local district office for further investigation; you should have received a letter from the Deputy Commissioner/Special Investigator assigned to your case (sometimes no letter is sent); you have subsequently been contacted either by phone or mail by the Deputy Commissioner/Special Investigator asking you to fill out forms and to provide Court records and police reports; and finally you may have participated in a telephone or in-person interview Deputy Commissioner/Special Investigator (sometimes the Deputy Commissioner/Special Investigator does not conduct an interview). As of the middle of August 2013, the BRE has added another step to the end of this process in which the BRE License Flag Section issues a letter called a "NOTICE OF DENIAL." In the "NOTICE OF DENIAL" Letter, the BRE states an applicant's license application has been denied. However, the "NOTICE OF DENIAL" letter is the BRE's attempt to fool license applicants into believing that their application for a Real Estate license has been completely denied and there is no way that the applicant can be granted a license based on the license application they had submitted. In fact, currently, the "NOTICE OF DENIAL" Letter is the end of the investigative process and the beginning of the legal process for the applicant to obtain their real estate license. Please see section entitled Applications - "NOTICE OF DENIAL" Letter below.
APPLICATIONS - "NOTICE OF DENIAL" LETTER - As of the middle of August 2013, the BRE has added another step to the end of this process in which the BRE License Flag Section issues a letter called a "NOTICE OF DENIAL." Please be advised that the "NOTICE OF DENIAL" Letter is currently only being sent at the end of the investigative process, however, the BRE is internally discussing sending the "NOTICE OF DENIAL" letter just after they receive your application and before there is an investigation into your application, based upon internal guidelines yet to be developed. In the "NOTICE OF DENIAL" Letter, the BRE states an applicant's license application has been denied. However, the "NOTICE OF DENIAL" letter is the BRE's attempt to fool license applicants into believing that their application for a Real Estate license has been completely denied and there is no way that the applicant can be granted a license based on the license application they had submitted. In fact, currently, the "NOTICE OF DENIAL" Letter is the end of the investigative process and the beginning of the legal process for the applicant to obtain their real estate license. The "NOTICE OF DENIAL" Letter states that the BRE has denied the applicant's license application pursuant to Code sections 10100 and 485 of the Business and Professions Code. The "NOTICE OF DENIAL" Letter then states the reasons why the BRE enforcement section has made this determination through a series of check-marked boxes which specifies those reasons - if the box is checked, the BRE is basing the denial on the corresponding reason. Sometimes more than one box will be checked as sometimes the BRE will have more than one allegation to deny a license application. Thereafter, the letter states you have 60 days to request a hearing or your right to a hearing is waived. The letter then asks you if you are willing to withdraw your application. The letter than cryptically states if you do withdraw your application, the withdrawal will not reflect that your application was denied by the BRE. Currently, the "NOTICE OF DENIAL" Letter then states even though you have withdrawn your application you "may" be required to disclose that the BRE has denied your license application on any future application you make for any business or professional license. The letter has attached to it a "Notice of Withdrawal of Application for Licensure" form. The form states that the applicant withdraws their application and the applicant understands that he or she cannot apply for another real estate license for one year and there is no refund of the license fee. To make certain you recognize the forms, a copy of a "NOTICE OF DENIAL" Letter and the "Notice of Withdrawal of Application for Licensure" form can be viewed by clicking this link.
Here is what the BRE is not telling you. Prior to instituting the mailing of the "NOTICE OF DENIAL" letter in August of 2013 based upon a change in the laws, if the BRE wanted to deny a license application after the conclusion of the investigatory process, the BRE would automatically send your application with the investigative file to the BRE Legal Section, at which point a BRE attorney would file a "Statement of Issues" against your license application and you could request a hearing on the application or the BRE would issue a license in some form in a settlement of your matter. Although the BRE enforcement section and/or the BRE License Flag Section have made an initial determination that the BRE will oppose the license application, it does not mean you will not eventually get a license if you request a hearing and/or later settle your matter for a license in some form. Because there has been no administrative hearing on the case and the Real Estate Commissioner does not even know about the case, at that point, no final determination has been made as to whether you are going to get a license or not. Each case has individual facts and only an attorney (not currently working for the BRE) with vast experience can give an educated opinion as to the outcome. In all cases, it is the rehabilitation of the applicant and whether a conviction is substantially related to a real estate license which will determine if you are going to get a license or not, not the mere existence of felonies or misdemeanors in your past. It is my opinion that the "NOTICE OF DENIAL" letter process that was instituted by the BRE in August 2013 was meant to cut down on both investigative and legal costs and expenses of the BRE. If you do not ask for a administrative hearing within sixty days from the "NOTICE OF DENIAL" letter, you are legally denied a license and the BRE need not do anything further. I have helped many people obtain licenses, even after they had been told by their BRE Deputy Commissioner/Special Investigator during the BRE investigation that they would not get a license and to withdraw their application.
Currently, the BRE is also a bit misleading in their "NOTICE OF DENIAL" Letter when they state even though you have withdrawn your application you "may" be required to disclose that the BRE has denied your license application on any future application you make for any business license. Section 485 of the Business and Professions code clearly states it is a license denial. Therefore, the BRE License Denial Letter in which it states it is being issued pursuant to Section 485 of the Business and Professions Code is in fact a license denial if you do not request a hearing. Even if you withdraw your application after getting the BRE "NOTICE OF DENIAL" letter, your license application has been denied and you must disclose the denial in all future license applications in which there is a question asking if you have ever had a license denied. There is no "may" in having to disclose the denial, you are legally required to disclose the denial in any future applications for a professional license if those future applications ask if you have ever had a license denied. This requirement to disclose exists even if you withdrew your application after getting the "NOTICE OF DENIAL" Letter. Section 486 of the Business and Professions Code states that you are barred for one year from service of the "Notice of Denial" letter from reapplying for a license. This is true even after you have withdrawn your application or failed to ask for an administrative hearing. Because the BRE "Notice of Withdrawal of Application for Licensure" form states you are aware that you understand that you cannot apply for another real estate license for one year, it is clear that the BRE is applying Section 486 of the Business and Professions Code which means it is necessarily based on the authority in Section 485 of the Business and Professions Code (which means there is a license denial). The above code sections apply even if you are withdrawing your application for a real estate license because your license has been denied simply by the sending of the "NOTICE OF DENIAL" Letter. Lastly, the statement in the "NOTICE OF DENIAL" Letter which states that if you do withdraw your application, it will not reflect that your application was denied by the BRE, and the result is that it just means that the denial will not be posted in the BRE monthly Summary of Disciplinary Actions on the BRE website. Consequently, there will be no public record of the license denial. However, this obviously does not mean that the BRE will not keep an internal list of people who have been denied a license through their "NOTICE OF DENIAL" Letter process. I urge every license applicant who receives a "NOTICE OF DENIAL" Letter to request an administrative hearing since you have nothing to lose by having your day in court, while you potentially have a license to gain if you do request an administrative hearing.
Criminal Conviction - Licensee - If you have a license, you are no doubt aware of the process you have just gone through to get to this point. To summarize, you have been contacted either by phone or mail by the Deputy Commissioner asking you to fill out forms and to provide Court records and police reports; finally you have gone through an interview either by phone or in person with the Deputy Commissioner (sometimes the Deputy Commissioner does not do an interview).
STEP 2 - Service of an Accusation or Statement of Issues and a Notice of Defense. Attorneys on behalf of the DRE serve the licensee or license applicant with a notice, called an Accusation (for current licensees)/Statement of Issues (for license applicants), stating their intent to discipline/deny the licensee and the basis for such discipline. Upon receiving an Accusation/Statement of Issues, you should retain an attorney to immediately file the Notice of Defense in response to the Accusation or Statement of Issues to preserve your right to a hearing. If you do not file a Notice of Defense, the DRE will be able to automatically either revoke your license or deny your license application without having to conduct a hearing.
STEP 3 - Pre-Hearing Discovery and Negotiation. Depending on the DRE's backlog of cases and the anticipated length of the hearing, a case is scheduled for a hearing typically anywhere from 60 days to more than a year from the filing of the Notice of Defense. During this time the attorneys exchange information (called discovery) and usually attempt to negotiate a resolution to the case, called a Stipulated Settlement. Typically in a Stipulated Settlement, you would admit to some wrongdoing and accept some disciplinary consequences in exchange for leniency by the DRE and the issuance or retention of your license in some form. Cases that cannot settle go to hearing.
STEP 4 - Administrative Hearing and Decision. A formal Administrative Hearing is nearly identical to a full blown trial. Although it takes place in front of an administrative law judge with a court reporter, attorneys and witnesses present, there is no jury, the environment is slightly less formal, and the rules of evidence that strictly apply in criminal and civil cases are relaxed. After hearing the case, the judge typically takes the matter under submission and issues a decision approximately 30 days after the hearing ends. Thereafter, usually in taking an additional 30 days, the Real Estate Commissioner reviews the Proposed Decision and makes his determination. The Real Estate Commissioner may adopt the Proposed Decision of the administrative judge or reject it and substitute his own decision (which may happen if the Real Estate Commissioner has questions about the Proposed Decision). This discretion that the Real Estate Commissioner has may seem counterintuitive to what you know about the adjudicative process. If you are displeased with a final decision, you may file a Writ of Mandate, which is an appeal of the Real Estate Commissioner's Decision to the Superior Court.