California escrow companies have a duty to determine that the brokers or agents to whom they pay commission checks actually do have a real estate license. This duty arises from California Business and Professions Code section 10138. It was confirmed recently in a Second District Court of Appeal case (Kangarlou v. Progressive Title ), in which the plaintiff had brought an action against the escrow company for having paid commissions to persons who did not in fact have valid California real estate licenses.
It is against the law in California to pay a commission or fee to an unlicensed person for performing services -- such as listing or selling a property -- for which a real estate license is required.
While escrow companies may have a duty to determine whether or not those alleging to be brokers or agents actually do have a license, for others it may simply be a matter of prudence. Not only do you not want to be paying an unlicensed person for performing real estate services, you might not even want to engage them to perform such services. One thing you can count on: if they don't have a license, they sure won't have errors and omissions insurance.
All of which leads to the question, how can you tell whether or not someone purporting to be an agent actually does have a license?
One simple method, of course, is to ask to see it. Every person who receives a real estate license also receives a wallet-size (non-picture) card that shows the type of license issued, the license number, and the expiration date. This is meant to be carried for identification purposes. Occasionally, some of the more vigilant guarded-gate communities will adopt the policy of requiring an agent to show this license in addition to whatever company business card they may carry.
After all, the mere possession of a business card is no more a guarantee that someone claiming to be a real estate agent actually does have a license, than would it guarantee that someone posing as a doctor or lawyer was properly licensed.
Of course, asking to see one's license i.d. card may be neither comfortable nor possible. Another way to check is by means of the Department of Real Estate website . At this user-friendly site, under DRE Records, one can look up anyone having a real estate license and determine their place of business, license status and expiration date, and, interestingly, any record of punitive actions.
To be sure, the website may not be a perfect source of information. It could contain mistakes, or be out of date by a day or two. But, let's face it, there's no perfect source of information.
One of the more common difficulties involved with attempting to check license status arises out of the use of fictitious names. A brokerage may be registered with the Department of Real Estate as the ABC Corporation, but it may do business under a fictitious name like Happy Homes Realty. Even though it is a violation of real estate regulations not to register a fictitious name with the department, sometimes it happens.
More commonly still, people use nicknames, and their licenses aren't registered that way. My license, for example, is Robert Hunt, not Bob. While most people would be able to figure that out, this is not the case for many nicknames -- especially if it's something like "Lefty."
The issue of nicknames and fictitious names has led the Department recently to consider requiring that the license number of agents and companies be included on all material such as cards, advertisements, and stationery. This would conform to practices in a variety of other businesses, and would provide an unambiguous reference that consumers (and escrow companies) could use to determine license status. Not such a bad idea.
