Renewal Fees Lowered for Brokers and Agents

About 75,000 California real estate brokers and agents will get a break on their license renewal fees starting next month.

Beginning Aug. 1, the state Department of Real Estate will reduce license renewal fees by $100 for agents and brokers, said Dan Garrett, the department’s assistant commissioner for legislation and public information.

The reduction brings the cost of renewing a four-year real estate license to $110 for brokers and $65 for real estate salespeople, Garrett said.

About one-quarter of the state’s 300,000 licensees--or 75,000 people--renew their licenses in any given year, he said.

State law requires the Department of Real Estate to reduce licensing fees if its financial reserves at the end of the fiscal year equal more than six month’s worth of the following year’s budget, Garrett said.

“This year we had an 11-month-plus reserve,” he said, which accounts for the steep drop in fees.

The law is designed to keep reserves low, thereby discouraging the state legislature from another raid on the coffers of the department.

In the lean years of the early 1990s, Garrett said, the legislature appropriated about $14 million of the department’s funds to nourish the state’s general fund, which is used to pay for necessities such as prisons and health programs.

Practice Deemed

Unconstitutional

Courts later deemed this practice unconstitutional and ordered the state to repay (with interest) dozens of “special fund” agencies whose funds were transferred to the legislature.

“Special fund” agencies are funded primarily by license fees or grants, not by taxes.

The court decision notwithstanding, the Department of Real Estate is obligated by state law to keep its reserves below a certain level, so legislators won’t be tempted to devour its budget.

Licensees who are not up for renewal this year cannot renew early to take advantage in the fee reduction, he said.

“[This] year, 75,000 or so folks are going to get this really cheap fee, and then the next year we might have to bump it up,” Garrett said.

Because the state has begun paying back the department the millions of dollars that were diverted into the general fund earlier this decade, and because state law requires the reserves be kept low, this is the second year officials have reduced license fees.

By the end of the fiscal year 1999-2000, the state should have finished repaying the Department of Real Estate. At that point, officials said, they hope to adopt a long-term, stable fee structure.

This year’s reduction also extends to late-renewal fees. In the year beginning Aug. 1, brokers who renew late will pay $165, down from $315 last year, and salespeople will pay $97, down from $247.

Fees for first-time licenses will also be reduced by $100.

License Prices

Peaked in ’96

Real estate licenses were at their most expensive just three years ago, when a broker’s four-year license cost $285 and a salesperson’s cost $240. Fees were stable from 1982 to 1994, Garrett said, and were only raised after department funds were appropriated into the general fund.

Licensing fees account for about 75% of the department’s $27 million annual budget. Fees support the department’s efforts to enforce real estate laws, run five district offices, respond to consumer complaints about licensees and oversee continuing education programs for real estate salespeople.

Licensees who have questions about fees can call the department’s licensing section at (916) 227-0931, or refer to the agency’s Web site at https://www.dre.ca.gov.