Taxation, Licensing & DRE Regulation

California real-property tax is based on assessed value. The first installment is due November 1 and becomes delinquent December 10. The second installment is due February 1 and becomes delinquent April 10.

California's secured property tax is generally an ad valorem tax: the bill applies the local rate to assessed value. Under the ordinary county schedule, the first installment is due November 1 and delinquent after December 10; the second is due February 1 and delinquent after April 10. If a statutory due date falls on a weekend or holiday, statutory timing rules apply. Supplemental bills may have their own due dates.

The familiar general 1-percent limit under Proposition 13 is not the entire bill. Voter-approved bonded indebtedness and other authorized charges may appear in addition, while parcel taxes and special assessments can be separate line items rather than ad valorem taxes. Read the actual bill and distinguish assessed value, tax rate, installments, penalties, and non-ad-valorem charges.

Proposition 13 generally limits the ad valorem property-tax rate to 1 percent of taxable value, plus rates needed for qualifying voter-approved bonded indebtedness, and limits annual growth of a property's factored base-year value to no more than 2 percent. A change in ownership or assessable new construction can establish a new base-year value for the affected interest or improvement; it does not mean all debt incurred by an owner increases assessed value.

California's acquisition-value system generally starts with a base-year value at a change in ownership or completion of new construction, then allows annual inflation adjustments capped at 2 percent. If current market value falls below the factored base-year value, the assessment may be reduced to market value; subsequent increases remain subject to the applicable rules. Assessable new construction adds value for the new improvement, while ordinary maintenance and repair generally are not new construction.

The separate 1-percent rule concerns the general ad valorem rate, not the assessed-value calculation. Rates required to pay qualifying voter-approved bonded indebtedness may be added, so the total rate can exceed 1 percent. Borrowing against a property or taking out a mortgage does not, just by creating debt, add that loan balance to assessed value. Keep loan liability, assessed value, and voter-authorized tax-rate additions distinct.

A change in ownership can cause reassessment to current market value unless an exclusion applies. A completed new construction also triggers additional assessment. Supplemental assessments cover the period from the event to year-end.

A change in ownership generally causes reassessment of the interest that changes hands to its current fair market value as of the event, unless a statutory exclusion applies. A sale is common, but gifts, inheritance, entity transfers, and changes in beneficial ownership can also matter. A transfer may be only partial, so the assessor may reappraise only the changed portion. New construction is assessed separately when completed.

Exclusions have specific definitions, dates, conditions, and filing requirements; 'family transfer' is not a blanket exemption. Proposition 19 narrowed parent-child and grandparent-grandchild exclusions principally to qualifying family homes or farms, with value limits and occupancy/claim conditions. A supplemental assessment reflects a qualifying ownership change or new construction for the applicable part of the fiscal year, apart from the regular annual roll; budget for a separate supplemental bill.

California DRE regulates real-estate licensees. Salespersons must act under a responsible broker and cannot operate an independent brokerage. A real estate license generally runs four years.

California's Department of Real Estate licenses and regulates real-estate brokers and salespersons. A salesperson performs licensed acts under the responsible broker's supervision and cannot independently operate a brokerage. A license is generally issued for a four-year term, but the licensee must meet renewal and continuing-education requirements and remain properly affiliated to conduct licensed work.

A broker may also be responsible for associated broker-associates and other licensed activity under the applicable supervision rules. Verify active status and affiliation through official DRE records before a person performs licensed services. A license does not authorize every activity—mortgage lending, property management, appraisal, escrow, and other regulated work may involve additional laws or licenses.

A license is generally required when a person performs specified real-estate acts for another for compensation or expectation of compensation, subject to statutory exemptions. Compensation + acting for another is the key exam signal.

Business and Professions Code § 10131 describes broker activities that generally require a license when performed for another and for compensation or expected compensation. These include selling, buying, soliciting or negotiating a sale, leasing or renting, collecting rents, and specified loan-related services. The precise act and capacity matter; receiving money is not the only signal, and an unpaid person may still fall within a licensing rule depending on the facts and expectation.

Statutory exemptions are specific, not a general permission to perform brokerage work without a license. An owner dealing with the owner's own property, an attorney acting within professional duties, or an employee handling limited acts for an employer may fit a particular exemption, subject to its terms. Always identify who owns the property, for whom the actor works, what conduct occurred, and whether compensation was expected.

Responsible brokers must establish policies, procedures, and systems to supervise licensed activities. Supervision covers transactions, advertising, trust funds, teams, records, and compliance. Signing a policy manual is not enough if the system isn't used.

A responsible broker must exercise reasonable supervision over affiliated licensees and establish policies and procedures suited to the broker's business. Effective supervision includes systems for reviewing transactions and advertising, handling trust funds, retaining records, communicating expectations, and identifying compliance problems. The applicable duties arise from statute and regulation; a signed manual alone does not demonstrate that a working system exists.

Supervision is risk-based and continuing. A broker can delegate tasks but should define responsibilities, monitor performance, correct deficiencies, and preserve evidence of compliance. The exact level of oversight depends on the activity and facts, but ignoring warning signs or failing to maintain basic controls can expose the broker to DRE discipline. Supervision does not authorize an associate to violate the law or eliminate each licensee's own duties.

Business and Professions Code § 10148 generally requires a broker to retain covered transaction records for three years. The period runs from the date of closing if the transaction is consummated, and from the date of the listing—not its expiration—if the transaction is not consummated. Other laws or litigation holds may require longer preservation.

The statutory three-year period applies to copies of listings, deposit receipts, canceled checks, trust records, and other documents executed by the broker or obtained in connection with transactions requiring a real-estate broker license. For a consummated transaction, count from closing. If the transaction is not consummated, § 10148 specifies the date of the listing as the starting point. Do not replace that statutory anchor with the date the listing expires or the date a file is archived.

Retention is not just storage: records must remain sufficiently complete, secure, and accessible for lawful inspection or audit. Separate rules can govern trust-account records, tax, privacy, litigation holds, or other regulated activity and may require a longer period. If a dispute, subpoena, or investigation is pending, do not destroy records just because the ordinary three-year minimum has elapsed; apply the applicable preservation duty.

Misrepresentation, trust-fund violations, failure to supervise, dishonest dealing, and other statutory violations can result in DRE discipline. A private settlement does not eliminate regulatory consequences.

The DRE may investigate and discipline licensees for statutory or regulatory violations, including misrepresentation, dishonest dealing, trust-fund misconduct, and failure to supervise. Available discipline depends on the proved conduct and governing procedure; the possibility of discipline is not itself a finding of guilt. Licensees should respond truthfully, preserve records, and use counsel when a complaint or investigation raises legal exposure.

A private settlement resolves some or all disputes between private parties but does not control the state's regulatory authority. The DRE can assess conduct under licensing law even if the buyer and seller settle, a contract is rescinded, or no civil case is filed. Conversely, a complaint alone does not establish a violation; administrative findings and sanctions follow the applicable process.