The regulatory agency responsible for real estate licensing and regulation is the California Department of Real Estate, also known as the DRE. The main purpose of the DRE is to protect the public. The DRE achieves this purpose through the enactment and enforcement of laws relating to real estate and by establishing requirements for the real estate salespersons' and brokers' licenses.

The California Real Estate Commissioner is appointed by the Governor and serves as the chief executive of the Department of Real Estate. The Real Estate Commissioner governs the entire California Department of Real Estate.

If a person in California acts in the capacity of a real estate salesperson without being licensed under the California licensing laws, that individual cannot receive any compensation for such acts. Section 10132 of the Code defines a real estate salesperson and the acts requiring licensure and employment by a real estate broker.

If an unlicensed person does act as a real estate salesperson or broker, he or she will be penalized under the law. Any broker who knowingly allows an unlicensed person to operate under him or her and compensates the person for performing real estate activities that require a license, then that broker will also be disciplined under the law. 

The penalties for engaging in unlicensed real estate activity are a fine of up to $20,000 and/or six months imprisonment for an individual, and a fine up to $60,000 for a corporation. 

A salesperson license is required for an individual who is to be employed as a salesperson under the control and supervision of a licensed broker. The State of California has imposed several qualifications that a person must meet before he or she can obtain a real estate license.

The individual broker license entitles a natural person to conduct a brokerage business under his or her own name or, if so licensed, under a fictitious business name.

All California real estate licenses are issued for a period of four years. A license is renewable without examination, simply upon submittal of the appropriate fee and evidence of completion of the required continuing education.

The continuing education requirement in California is 45 hours every four years to renew a license. This requirement applies to all real estate licensees in California.

If a license holder fails to renew prior to its expiration, the person may legally renew the license within two years from such expiration by submitting a proper application, evidence of completion of the current continuing education requirements, and the appropriate late renewal fee.

Two years after a license expires, all license rights lapse. The individual will be required to re-qualify through the examination process before being licensed in real estate.

In certain situations, the Commissioner may issue or require special licenses such as a restricted license, non-working status, or mortgage loan license.

All licensees should be familiar with the following laws, regulations, and act.

• The California Real Estate Law, which regulates licensing and subdivisions in California, can be found in the "Business and Professions Code.”
• The Commissioner's Regulations are rules that are part of the California Administrative Code. These regulations have been established and are enforced by the Commissioner.
• The Subdivided Lands Act, which is administered by the Commission.

A licensing and regulatory law is effective only to the extent of its enforcement. The Commissioner, as the chief officer of the Department, is duty-bound to enforce the provisions of the Real Estate Law.

The Commissioner has the authority to investigate the actions of any person engaged in the business or acting in the capacity of a licensee in California and has the power to suspend or revoke the real estate license. Upon a verified written complaint, the Commissioner must investigate such a matter.

Any complaint must be filed within three years of the alleged violation. Investigative procedures followed by the Commissioner's staff include:

• Obtaining a statement from the accused licensee regarding the alleged violation
• Examining all records and documents pertinent to the transaction
• Interviewing all parties to the transaction about which the complaint was made

The Real Estate General Fund is an account that holds all the money collected from license and exam fees and is used for the operating expenses of the DRE.

The Recovery Fund is an account established as a last resort for a consumer who has obtained a final civil judgment or criminal restitution order against a real estate licensee based on fraud or certain other grounds. The consumer, who has suffered financial loss due to the wrongful act of a licensee in a real estate transaction, can receive payment of damages and arbitration from this fund, if the judgment hasn't been satisfied through the normal post-judgment proceedings.

Trust funds are money or other things of value that are received by the broker on the part of another person.

A broker who has received a buyer's money deposit and related instructions must take one of the following actions:

1. Give the money to the principal to the transaction.
2. Put it into a neutral escrow depository.
3. Put it into the broker's trust fund account at a bank or other financial institution.

Every broker must keep a record of all trust funds received, including uncashed checks held by the instruction of his or her principal.

The sum of the individual transactions must be compared to the trust fund balance every month, by a process known as reconciliation, to ensure that no fund deficiency or excess exists. Both a deficiency and an excess are violations of real estate law.

Commingling is the practice of mixing a client's money with the agent's personal funds and it is illegal.

Conversion, another illegal accounting practice, is the unlawful misappropriation and use of a client's funds by a licensee.

All trust fund records are subject to DRE inspection. Brokers must keep all records chronologically for three years from the date of the conclusion of a transaction or listing if the transaction does not close.

A real estate license gives the licensee the authority to sell business opportunities. A "business opportunity" is defined as the sale or lease of the business and goodwill of an existing business enterprise or opportunity. This also includes the business's stock, trade fixtures, and trade name, as well as a non-competition agreement and lease assignment.

The essential elements of a business opportunity sale are:

1. A bill of sale, which is the written instrument that passes the title to the personal property
2. Specific financial statements, such as a balance sheet and profit and loss statement.

Real estate syndication combines the money of individual investors, along with the management of a sponsor, to invest in real estate and achieve a good rate of return on that investment.

A real estate investment trust, also known as a REIT, is a type of company that sells securities specializing in real estate ventures, and requires a minimum of 100 investors. REITS were created to encourage small investors to combine their resources with the resources of others so the companies could, together, raise venture capital for real estate transactions.