ANSWER: YES. DRE Regulation 2970 says that you can.
FACTS ABOUT ADVANCE FEES FOR BROKER EXPENSES (From the DRE Bulletin, Spring 2026, not AI)
1. Before you can collect fees, you must send a copy of the agreement you will use, your accounting format, and any promotional materials to the California Department of Real Estate.
2. If they are complete, the DRE will issue you a “no objections” letter, and you can start. The regulations also state that you must understand that you have a fiduciary duty to any client who signs your agreement. Strong duty.
3. All fees collected must be placed in a designated Trust Fund, and the broker must follow all Trust Funds Regulations and additional requirements from Business and Professions Code 10146.
4. Advance fees must also be handled accordingly as described in Bus. & Prof. Code section 10146. Requirements include, but are not limited to, depositing advance fees into a trust account, providing quarterly accountings of trust funds to the principals, and withdrawing funds only when they are expended for the benefit of the principal or five days after verified accountings are mailed to the principal.
5. Commissioner Regulation 2972 states that you must give a quarterly accounting report that states what services were rendered, the amount of fees allocated or disbursed, and copies of any advertising.
6. If you violate any of the regulations or code sections, the client can sue for Triple Damages and reasonable attorney fees (that sounds like an oxymoron).
7. Additionally, advance fees for loan modifications on residential 1-4 unit properties are prohibited per Bus. & Prof. Code section 10085.6.
8. For more information about the requirements for advance fee agreements, see DRE’s publication:
https://dre.ca.gov/files/pdf/adv_fees_essential_elements.pdf
9. Now, you be careful out there, you hear.
10. If you enjoyed this email, there are hundreds more on our blog at https://www.duanegomer.info/
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