Licensing: activities requiring a license, exemptions, and qualifications

Start with the activity

California's Real Estate Law generally requires licensing when a person performs a listed brokerage act for another, for compensation or expected compensation. Payment can take different forms and arrive later. Soliciting or offering can count without a completed transaction. An individual selling that individual's own home generally is not acting for another.

Section 10131 covers sales, purchases, exchanges, listings and business opportunities; leasing and rent collection; specified government land assistance; real property secured loan services; and dealings in secured notes or real property sales contracts. Negotiating a neighbor's lease for promised services can trigger licensing just as a cash fee can.

Apply an exemption precisely

California exempts specified acts by a regular corporate officer or general partner involving the entity's property without special compensation; a holder of a duly executed power of attorney from the owner; an attorney rendering legal services; a receiver or other person acting under court order; and a trustee selling under a deed of trust. These defined roles do not confer general authority to operate a brokerage. An exemption cannot be used to evade the licensing law.

Match the license to the work

A salesperson works under a responsible broker and receives compensation for licensed acts through that broker. Independent contractor status does not authorize independent brokerage. California requires notice of the beginning and termination of broker affiliations. A real estate license does not replace a required mortgage loan originator endorsement.

Qualify before practicing

A California salesperson applicant must meet the minimum age requirement, complete required prelicensing education, demonstrate honesty and truthfulness, and pass the examination. Required subjects include real estate principles, real estate practice, and an approved additional subject. The examination covers language and arithmetic skills, instruments, agency, economics, legal duties, and ethics. Passing is a step toward licensure; the license must be issued before licensed activity begins. Broker applicants face additional education and qualifying experience requirements or an applicable alternative.

Collecting compensation

Under California section 10136, a person suing for compensation for licensed acts must allege and prove the required license existed when the cause of action arose. Later licensure does not simply cure an earlier licensing problem. Identify the act, test the exemption, and check the license and broker relationship.