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When Real Estate Agents Face Criminal Charges

Posted by Dmitry Gorin | Jul 31, 2024

Real estate agents entrusted with significant responsibilities and access to sensitive client information play a crucial role in the complex world of real estate transactions. Their duties extend beyond facilitating property transactions, often involving legal and financial aspects.

So, in California, when a real estate agent faces criminal charges, the potential repercussions extend far beyond the potential for criminal penalties. Real estate fraud occurs when someone commits fraud involving purchasing, selling, or financing real estate property, which could also apply to real estate agents.

When Real Estate Agents Face Criminal Charges
California real estate agents convicted of a moral turpitude crime can have their license suspended.

Whether filed under California state or federal laws, real estate fraud charges carry severe penalties. These can include hefty fines, restitution, and even imprisonment. The potential for such harsh repercussions underscores the gravity of real estate fraud.

Real estate fraud laws in California cast a wide net, covering various types of unlawful conduct. These include housing, mortgages, rental agreements, straw buyer schemes, flipping property, predatory loans, and more. The breadth of these laws underscores the serious consequences of engaging in fraudulent activities.

Real estate fraud can occur at any point in a transaction connected with the property, including foreclosure proceedings.

California has various statutes it can use to pursue charges, such as Penal Code 487 PC grand theft, Penal Code 532 PC theft by false pretenses, Penal Code 115 PC filing forged documents, and Civil Code 2945.4 foreclosure fraud.

Simply put, real estate fraud occurs when someone commits a dishonest act, resulting in an unjustified enrichment of themselves during a real estate transaction, including a real estate agent.

Anyone involved in the transaction can be charged with real estate fraud for illegal activities such as lying on applications or filing false documents.

For a licensed California real estate agent, being arrested and charged with a crime can lead to severe consequences, including potential disciplinary action and even losing your professional license. The California Department of Consumer Affairs (DCA) protects consumers by providing a safe and fair marketplace through oversight, enforcement, and licensure of professions.

A domestic violence conviction can affect professional licenses, such as a suspension or revocation of their license, because it's a crime of moral turpitude.

What is the Aftermath of Being Criminally Charged?

When a real estate agent in California is charged with a crime, the immediate concern is often the criminal penalties that may follow if convicted, and naturally so.

Real Estate Agent Arrested

Depending on the type and severity of the offense, these penalties could include fines, imprisonment, probation, community service, etc.

For a real estate agent, the implications of being charged with a crime can be profound, significantly impacting your professional life.

The California Department of Real Estate (DRE) has broad authority to regulate, oversee, and discipline licensed agents in the state. The DRE only needs to confirm a violation of the California Real Estate Law by applying the "preponderance of the evidence" standard (as opposed to "guilt beyond a reasonable doubt" in the criminal justice system).

The law authorizes the DRE to implement disciplinary action for criminal convictions. Still, they also generally have the authority to investigate any behavior or action that questions your honesty and integrity.

So even if you are granted leniency in criminal court as far as sentencing, the possibility exists that the DRE may impose any of the following penalties as a result of the charges, any of which may appear as a matter of public record:

  • Formal reprimand.
  • Fines.
  • License restrictions.
  • Probation.
  • Suspension of your license.
  • Permanent revocation of your license.

What is the Self-Reporting Mandate?

The California Real Estate Law also contains a requirement that licensed real estate agents must self-report any of the following to the DRE within 30 days of their occurrence:

  • Being indicted or charged with a felony.
  • Being convicted of any crime, and
  • Any disciplinary action imposed by another state licensing board or state/federal agency.

Although the courts may automatically send a report of your conviction to the DRE, failing to report these things yourself is a violation that can result in disciplinary action.

What Are the Types of Crimes that Can Endanger Your Real Estate License?

Technically, the DRE can discipline any real estate agent for any criminal conviction. However, the charges most likely to raise red flags are "crimes of moral turpitude."

"Moral turpitude" is a legal concept referring to conduct that contradicts community standards of justice, honesty, or good morals.

Crimes involving moral turpitude are viewed harshly because they reflect on the individual's character and trustworthiness, qualities essential for a profession built on client trust.

Crimes that can be classified as involving moral turpitude include, but are not limited to:

  • Fraud: Misrepresentation or deceit in financial dealings can severely impact clients and other stakeholders. For example, California Penal Code 602.9 PC defines the crime of unlawful renting of residential property without the owner's consent. 
  • Other White Collar Crimes: For example, embezzlement, insider trading, tax fraud, etc. These crimes directly undermine the integrity required in real estate transactions.
  • Domestic Violence: Acts of violence within domestic settings can reflect poorly on one's character and judgment.
  • Driving Under the Influence (DUI): Repeated offenses, in particular, may indicate a disregard for public safety and legal obligations.
  • Illegal Possession: Holding controlled substances without a prescription or possessing illegal items can suggest a lack of respect for the law.
  • Sexual Offenses: Any sex crime (including sexual assault, lewd conduct with a child, indecent exposure, etc.) can have a devastating impact on a career.

How Can an Experienced Criminal Defense Attorney Help You?

Since the DRE is less likely to call your real estate licensure in question if you're acquitted of the charges, your first line of defense (literally) is to seek the counsel of an experienced California criminal defense attorney to counter the charges against you-preferably one with specific experience defending licensed professionals. A good attorney can:

  • Evaluate the evidence against you and develop a solid defense strategy.
  • Look for opportunities to advocate for reduced or dismissed charges.
  • Help ensure that your constitutional rights are protected throughout the criminal process.
  • Assist in negotiating a plea deal, if appropriate, with minimized penalties; and
  • Advise on fulfilling your self-reporting obligations to the DRE with minimal consequences.
  • Refer you to a competent administrative law attorney for help defending your professional license (if the DRE decides to investigate).

It's worth noting that not all convictions necessarily result in disciplinary action being taken by the DRE. For example, a single DUI conviction may not be viewed as a crime of moral turpitude unless there are aggravating circumstances or multiple offenses.

However, never assume that seemingly minor criminal offenses will be treated lightly by the courts or the DRE, and always take steps to protect yourself accordingly. Contact our criminal defense law firm for additional information. Eisner Gorin LLP is based in Los Angeles, CA.

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About the Author

Dmitry Gorin

Dmitry Gorin is a State-Bar Certified Criminal Law Specialist, who has been involved in criminal trial work and pretrial litigation since 1994. Before becoming partner in Eisner Gorin LLP, Mr. Gorin was a Senior Deputy District Attorney in Los Angeles Courts for more than ten years. As a criminal tri...

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