Last week, this question was posed to California Real Estate Commissioner, Wayne Bell: “Is it a California licensing violation for a California real estate licensee to transact out of state sales in violation of the out of state licensing law?”
The occasion for Mr. Bell to be taking this and other questions was a webinar, Legal Live Webinar: Conversation with California Bureau of Real Estate Commissioner Wayne Bell, conducted on Tuesday, Sept. 5, by the California Association of REALTORS®. Attendance was open to any members, but the maximum capacity was 1,000. Questions were submitted in advance, but some, also, were taken from the participating audience. Commissioner Bell was joined by Sandri, Chief Deputy Commissioner and Lerner, Chief Counsel.
The answer to the question at hand was interesting and, perhaps to some, surprising. Before addressing the question directly, though, the commissioner made two points: (1) he suspected that most California licensees would not like it if persons from other states, without a California license, came into this state (either physically or via the internet) and transacted real estate business here; (2) California Commissioner Bell is in on-going contact with the real estate commissioners of neighboring states (Arizona, Nevada, Oregon, Washington) about matters such as this. Indeed, in his preliminary response to the question, Commissioner Bell noted that such a case was currently being investigated by the California Bureau of Real Estate.
Turning specifically to the question, Commissioner Bell noted two provisions of the California Business and Professions Code (B&P) that are specifically addressed to real estate practices. They are practically identical. First, there is B&P 10176. This section deals with fraud and misrepresentation. B&P 10176 spells out a variety of situations where it applies (e.g. using false promises to influence, persuade, or induce; comingling of funds; making substantial misrepresentations). It also includes Section (i) “Any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing.”
Similarly, B&P Section 10177 provides that a license may be suspended, revoked, or denied to a person who has knowingly allowed “… distribution, or circulation of a material false statemen or representation concerning his or her designation or certification of special education, credential, trade organization membership, or business…” And section (j) of B&P 10177 says this applies to anyone who has “Engaged in any other conduct, whether of the same or a different character than specified in this section, that constitutes fraud or dishonest dealing.”
As Commissioner Bell articulated it, the position of the California Bureau of Real Estate seems to be this: It is fraudulent to enter into another state without a license from that state and to operate unlawfully in that state. If a California licensee were to do so, he or she could be subject to punishment under B&P 10176(i) and/or B&P 10177(j).
Commissioner Bell acknowledged that the matter was not entirely clear and that it merited further investigation. Nonetheless, a word to the wise would be: Don’t Do It!