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The Consumer Recovery Account

After completing a real estate transaction, some buyers may find that one or more violations have been committed by their agent or broker under the California Real Estate Law and Business and Professions Code. Some examples of violations include misrepresenting facts or intentional nondisclosure of critical information. In these cases, the buyer may file suit against the real estate licensee in an attempt to collect compensation for damages.

If the real estate licensee is found liable, but the buyer is unable to collect compensation through all reasonable means, the buyer may turn to the California Department of Real Estate and the Consumer Recovery Account to recover a portion of the payment owed. 

What is the Consumer Recovery Account?

The Real Estate Recovery Program under the Business and Professions Code details application requirements for the Consumer Recovery Account, as well as how the account is funded by real estate licensees. 

Additional fees are added to license renewals for every broker, salesperson, or prepaid rental listing service to provide sufficient funds for the Consumer Recovery Account. These fees are added if, by June 30th of any year, the Consumer Recovery Account balance is below $200,000. The Real Estate Commissioner is also authorized to transfer funds from the Real Estate Fund to the Consumer Recovery Account, if necessary, to pay a claim.

If the application is granted, the applicant will be paid for the actual and direct out-of-pocket loss resulting from the transaction. However, the statutory maximum is $50,000 per transaction and a maximum of multiple claims totaling $250,000 per licensee. If the claim amounts from multiple applicants exceed $250,000, the Department may file an action in court to prorate the payment among the applicants. 

Applicant requirements to recover damages from the Consumer Recovery Account

If an application for reimbursement is deficient, the Department will notify the applicant in writing within 15 days to reconcile. To apply successfully for reimbursement, the applicant must:

  • Obtain a final judgment regarding the suit
  • Make every reasonable effort to collect the judgment from all involved parties
  • Complete the application RE 807A
  • Notify the involved real estate licensee when filing the claim with the Consumer Recovery Account
  • Provide and deliver all requested documentation in person or by certified mail
  • File the application within one year of the date of the final judgment
  • Verify the real estate licensee had a valid license at the time of the violating transaction