ISSUANCE OF A REAL ESTATE LICENSE IN CALIFORNIA FOLLOWING CRIMINAL CONVICTIONS

If you have been convicted of a crime and later you want to apply for a real estate license in California, will you be able to obtain your real estate license (assuming you pass the real estate exam)?  This is an important question that requires a look at the rules, laws and regulations that govern this situation.  This article will attempt to provide a general overview and general discussion of the factors the DRE may look at when determining whether or not they want to grant you a real estate license in California.

In California, the DRE will look at your application for a salesperson license to see what you have listed in Part D – “Background Information.”  Specifically, the following section which states “CRIMINAL CONVICTIONS“.  This is the section where you need to disclose ALL of your criminal convictions that have occurred in your past.  When I say ALL, I mean ALL.  Here is an example of what you must disclose if you want to try to secure your real estate license:

• All felonies that you have ever been convicted of (examples may include: murder, burglary, money laundering, any federal crime, tax evasion, rape, assault with deadly weapon, bribery, felony DUI, etc.)
• All misdemeanors you have ever been convicted of (examples may include:  shoplifting, drunk driving, larceny, writing bad checks, etc.)

Note that many people may ask or wonder “do I have to be convicted in order to have to report the crime on the DRE real estate application?”  NO is the short answer to that question.

In fact, here is what the CRIMINAL CONVICTION section of the DRE license application (form 435) reads:

“Convicted” as used in Item 1 includes a verdict of guilty by judge or jury, a plea of guilty, a plea of nolo contendere (i.e., “no contest”), or a forfeiture of bail in the courts (including military courts) of any state, commonwealth, possession or country. All convictions must be disclosed, no matter how long ago they occurred, even if the plea or verdict was set aside, the conviction dismissed or expunged, or you have been pardoned. Convictions occurring while you were a minor (under 18 years of age) must be disclosed unless the record of the conviction has been sealed under Section 1203.45 of the California Penal Code or Section 781 of the California Welfare and Institutions Code.

The DRE also has another publication that you can review that discusses the guidelines for reporting. You can find that in their Instructions to License Applicants handbook.

This handy booklet also addresses some of the issues relating to your disclosure requirements on the salesperson license application.

Specifically, in regard to reporting criminal convictions it states:

Honesty — License applicants must be honest and truthful. Conviction of a crime may result in the denial of a license. Failure to disclose any criminal violation or disciplinary action in an applicant’s entire history may also result in denial of a license.

This section makes it clear to the real estate applicant IF YOU ARE NOT SURE IF YOU SHOULD REPORT A CRIMINAL VIOLATION THEN YOU ARE BETTER OFF DISCLOSING IT.  If the DRE commissioner believes you are not being candid, this could cause you problems in getting a real estate license issued even after you pass your state examination.

In section XIII of the instructions to license applicants guide, the DRE offers this advice:

Answer truthfully and completely!

Read the questions on the application carefully and answer truthfully and completely. Provide ALL information requested. Failure to disclose disciplinary actions or crimes which occurred in your entire history may be considered an attempt to obtain a license by fraud or misrepresentation and could result in the denial of your license application. Irrespective of any advice that may be received from others, the license applicant alone is responsible for disclosing accurate and complete information.

When in doubt, disclose!

In the event you have one or more offenses to report, please take extra care to disclose all actions and convictions regardless of how long ago they occurred, or whether or not a conviction has been expunged under Penal Code Section 1203.4, or a similar statute. The failure to disclose charges/convictions will result in substantial delays in the processing of your application and may also result in denial of the license application.

“Convicted” includes a verdict of guilty by a judge or jury, a plea of guilty, a plea of nolo contendre, or a forfeiture of bail in the courts (including military courts) of any state, commonwealth possession or country). All convictions must be disclosed no matter how long ago they occurred, even if the plea or verdict was set aside, the conviction was dismissed or expunged or you have been pardoned. Convictions occurring while you were a minor (under 18 years of age) must be disclosed unless the record has been sealed under Section 1203.45 of the California Penal Code or Section 781 of the California Welfare and Institutions Code.

Carefully review your entire history and provide complete and accurate information.

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So that is a pretty comprehensive list of what you must disclose. If you get caught not disclosing something, expect big trouble in being able to obtain your real estate license.  You cannot say you weren’t warned.

Again, they are doing everything can to alert you of your obligation as a real estate license applicant.

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Now, there are some other things to look at in regard to the topic of what the DRE will be looking at, and what standards they may use in determining whether or not they will agree to issue a real estate sales or broker license to you.

California Business and Professions Code Section 10177 discusses grounds that may result in a denial or revocation of a real estate license in California:

Here one of the main points of this code section as it relates to criminal background:

The commissioner may suspend or revoke the license of a real
estate licensee, or may deny the issuance of a license to an
applicant, who has done any of the following........

(b) Entered a plea of guilty or nolo contendere to, or been found

guilty of, or been convicted of, a felony, or a crime substantially
related to the qualifications, functions, or duties of a real estate
licensee, and the time for appeal has elapsed or the judgment of
conviction has been affirmed on appeal, irrespective of an order
granting probation following that conviction, suspending the
imposition of sentence, or of a subsequent order under Section 1203.4
of the Penal Code allowing that licensee to withdraw his or her plea
of guilty and to enter a plea of not guilty, or dismissing the
accusation or information.

But this begs the question, what is a “crime substantially

related to the qualifications, functions, or duties of a real estate
licensee?"

Commissioner's regulation 2910 helps illuminate the meaning of this phrase:

Article 18.5. Substantial Relationship and Rehabilitation Criteria 

2910. Criteria of Substantial Relationship.  

(a) When considering whether a license should be denied, suspended or revoked on the basis of the conviction of a crime, or on the basis of an act described in Section 480(a)(2) or 480(a)(3) of the Code, the crime or act shall be deemed to be substantially related to the qualifications, functions or duties of a licensee of the Department within the meaning of Sections 480 and 490 of the Code if it involves:

(1) The fraudulent taking, obtaining, appropriating or retaining of funds or property belonging to another person.

(2) Counterfeiting, forging or altering on of an instrument or the uttering of a false statement.

(3) Willfully attempting to derive a personal financial benefit through the nonpayment or underpayment of taxes, assessments or levies duly imposed upon the licensee or applicant by federal, state or local government.

(4) The employment of bribery, fraud, deceit, falsehood or misrepresentation to achieve an end. REGULATIONS OF THE REAL ESTATE COMMISSIONER 339 

(5) Sexually related conduct affecting a person who is an observer or non-consenting participant in the conduct or convictions which require registration pursuant to the provisions of Section 290 of the Penal Code.

(6) Willfully violating or failing to comply with a provision of Division 4 of the Business and Professions Code of the State of California.

(7) Willfully violating or failing to comply with a statutory requirement that a license, permit or other entitlement be obtained from a duly constituted public authority before engaging in a business or course of conduct.

(8) Doing of any unlawful act with the intent of conferring a financial or economic benefit upon the perpetrator or with the intent or threat of doing substantial injury to the person or property of another.

(9) Contempt of court or willful failure to comply with a court order.

(10) Conduct which demonstrates a pattern of repeated and willful disregard of law.

(11) Two or more convictions involving the consumption or use of alcohol or drugs when at least one of the convictions involve driving and the use or consumption of alcohol or drugs.

(b) The conviction of a crime constituting an attempt, solicitation or conspiracy to commit any of the above enumerated acts or omissions is also deemed to be substantially related to the qualifications, functions or duties of a licensee of the department.

(c) If the crime or act is substantially related to the qualifications, functions or duties of a licensee of the department, the context in which the crime or act were committed shall go only to the question of the weight to be accorded to the crime or acts in considering the action to be taken with respect to the applicant or licensee.

AS THIS SECTION POINTS OUT, THE DRE WILL LOOK INTO DRUG AND ALCOHOL ISSUES ESPECIALLY WHERE DRIVING IS INVOLVED.

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Section 2746 of the Commissioners Regulations discusses when a real estate broker may denied a real estate license.  This section states:

2746. Corporate Real Estate Brokers, Officers, Directors and Shareholders.  

(a) At the time of application for, or in the reinstatement of, an original real estate broker license, the designated officer shall file a background statement of information for each director, the chief executive officer, the president, first level vice presidents, secretary, chief financial officer, subordinate officers with responsibility for forming policy of the corporation and all natural persons owning or controlling more than ten percent of its shares, if such person has been the subject of any of the following:

(1) Received an order or judgment issued by a court or governmental agency during the preceding 10 years temporarily or permanently restraining or enjoining any business conduct, practice or employment;

(2) Has had a license to engage in or practice real estate or other regulated profession, occupation or vocation denied, suspended or revoked during the preceding 10 years;

(3) Engaged in acts requiring a real estate license of any state without the benefit of a valid license or permit authorizing that conduct during the preceding 10 years which have been enjoined by a court of law or administrative tribunal;

(4) Been convicted of a crime which is substantially related to the qualifications, functions or duties of a licensee of the Department as specified in Section 2910 of these Regulations (excluding drunk driving, reckless driving and speeding violations).

Hopefully this gives you an idea of what the DRE is looking for when deciding whether or not to issue a real estate license to a salesperson, or broker seeking licensing.

About Steve Vondran, Esq.

Mr. Vondran was a former mortgage loan officer prior to becoming an attorney.  He also has experience selling residential and commercial real estate (Daum Commercial Real Estate).   He has passed broker examinations in both Arizona and California and his practice centers around Business, Real Estate, and Social media legal matters with a particular focus on representing California and Arizona real estate brokers.

If you are facing a DRE hearing, audit, investigation, accusation, or simply seeking to have the DRE issue you a real estate license we are here to help.  We can help package your application up with a detailed history of all your criminal convictions, evidence of rehabilitation and submit you to the DRE.  Sometimes it is nice to have someone fighting for you and to tell your story in the best possible manner.  We can be reached at (877) 276-5084 for a discussion of your case.

Additional Resources

(1) DRE license applicant checklist

(2) Our firm website

(3) California Department of Real Estate website

(4) Here is a list of Frequently Asked Questions on this topic from the DRE website