By Bob Hunt
Although the law is not entirely clear, the position of the California Bureau of Real Estate seems to be that it is fraudulent to do so.
In early September, 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, September 5, by the California Association of REALTORS®. Attendance was open to any members, but the maximum capacity was one thousand. Questions were submitted in advance, but some, also, were taken from the participating audience. Commissioner Bell was joined by Chief Deputy Commissioner Dan Sandri and Chief Counsel Steve Lerner.
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 ongoing 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 statement 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!
Bob Hunt is a director of the California Association of REALTORS® and a trustee of its Legal Action Fund. He is the author of Real Estate the Ethical Way. His email address is email@example.com.