Important Update: DFPI and DRE Warn Real Estate Brokers About Improper Commission Disbursements

The California Department of Financial Protection and Innovation (DFPI) and the Department of Real Estate (DRE) are warning real estate professionals about a growing problem in real estate transactions. Some brokers are instructing settlement agents to pay personal or business expenses directly from commission funds using a Commission Disbursement Authorization (CDA). This practice can cross legal lines and create serious compliance risks.

California’s Real Estate Law and Escrow Law require escrow agents to handle funds only according to written instructions from the principals in a transaction—meaning buyers, sellers, borrowers, or lenders. Real estate brokers aren’t considered principals in escrow, and using commission money for personal bills, business expenses, or payments to unlicensed individuals could violate state laws and federal RESPA rules against kickbacks.

Investigations by the DFPI have uncovered escrow companies issuing payments for brokers’ personal costs like credit card bills, vehicle payments, tuition, and other unrelated expenses. These practices threaten the transparency, fairness, and integrity that protect consumers and professionals in real estate deals—and can lead to significant legal and financial consequences.

Both the DFPI and the DRE are actively monitoring these issues to keep California’s real estate market fair and compliant. It’s crucial for real estate professionals—and property owners—to work with trusted, licensed experts who follow proper practices.

At Keybox Properties, we specialize in leasing and managing high-value homes in Los Angeles’ most sought-after neighborhoods. Our team is committed to compliance, integrity, and protecting your investment. If you’re considering renting out your A+ property and want peace of mind that every detail is handled the right way, visit our website to learn how we can help you lease faster and manage with confidence.

For more details or official guidance, check out the Department of Financial Protection and Innovation and the Department of Real Estate websites.