Entry by Glenn Freezman

California's "Advance Fee" laws

By Glenn Freezman on May 4, 2011 3:57 PM
Filed in: Rates, Fees & Commissions, State & Provincial Issues   11 Comments

Does the California Department of Real Estate allow our model?  Do they look at the payment for services as an "ADVANCE FEE"?

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11 Comments

Mollie Wasserman | May 4, 2011 4:02 PM

My understanding is that California law would not allow retainers. However, there is nothing wrong with charging a fee for services rendered - you draw up a contract, perform the services and get paid.

CA ACREs - please chime in and let me know if my understanding is correct.

Glenn Freezman | May 4, 2011 4:10 PM

Mollie, Is this where I humm the Jeopardy theme, while we await the answers.  Thanks. 

Vicki Lloyd | May 4, 2011 5:44 PM

That's an issue that has concerned me from the beginning.  With all the short sale & foreclosure avoidance schemes that have gone on, there is a lot of attention given to any advance fee service that has to do with real estate.

I'll come back with more comments later - I have to go show a house right now.

Glenn Freezman | May 5, 2011 9:38 AM

Vicki et al, I have a couple very interested realtors in the cali area that have concerns over the legality regarding the FTC and advnace fees.  I anxiously await responses, thanks in advance,

Glenn

 

Vyctoria Brooks | June 10, 2011 3:47 PM

Hi Mollie,

I just spoke Jason, a CAR attorney.  He said that as long as I'm performing licensed duties under my designated Broker; detail the services on a contract with a start and end date, I can charge for consulting services.  What's more, I have to draw a new contact for each service as it changes.  Example: I'm meeting with an investor on July 5th at an auction.  I have to draw up a contract detailing my services for that day.  After reviewing the contact with my client, have it signed and get paid.  If I have to return on July 6th, I have to write another contact...bla bla bla. 

I hope this helps.

Mollie Wasserman | June 10, 2011 3:51 PM

Vyctoria, on behalf of Glenn and all other CA ACREs, thanks!

Merv Forney | June 10, 2011 3:59 PM

Thanks for the update in California.

To keep life a little simpler, can you

  1. Have a master service contract with all the necessary boiler plate and include a clause that individual tasks will be agreed to in "task orders" that when approved (signed) they become part of the contract.
  2. Task orders would then simply define the service, schedule, fee and payment terms.

??????

Vyctoria Brooks | June 10, 2011 5:40 PM

Hi Merv,

A master service contract with all the necessary boiler plate items is a great idea and time worthy!!

Thanks.

 

Glenn Freezman | June 13, 2011 10:43 AM

Thanks Vyctoria and Merv, it is much appreciated. 

Don Gockel | October 10, 2011 7:18 PM

Great idea! Does anyone have somthing that they woud care to share?

Don Gockel | October 10, 2011 7:20 PM

Geez, it would be nice if I could spell. The word is "would" not woud!

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