Tip 5a - California Upfront Fees CA Upfront Fee

Although advanced fees are permitted in California, all advance fee materials must be approved by the Department of Real Estate (DRE). In order for a broker to collect an advance fee, they must have a written agreement with the owner, outlining and obligating the broker to perform all the services promised.

IF YOU LIVE IN CA OR YOUR RESORT IS IN CA, MAKE SURE YOUR ADVANCE FEE AGREEMENT HAS BEEN APPROVED BY THE CA DRE.

The following essential elements are required for approval:
  1. Agreement must be in contract form with a line for both broker and owner to sign and date.
  2. Agreement must show the specific fee due and when it is payable.
  3. The fee must be prorated according to the services promised and a corresponding refund policy must be contained in the agreement.
  4. A time frame of when and what services will be performed and the fee earned must also be included.
  5. All fees collected must be placed into a trust account on behalf of the owner.
  6. Broker must use all of funds for the benefit of the owner and make payments only for services promised.
  7. Broker must provide the owner with verified accountings until the services have been completed.
     CALIFORNIA ALERT
               
     A greement in writing
          
     L ine for both signatures
          
     E xact fee prorations and accounting
          
     R efund policy
     T rust account     


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