RECOVERY ACCOUNT
The Recovery Account is a fund of last resort for a member of the public who has obtained a final civil judgment or criminal restitution order against a real estate licensee based on intentional fraud or conversion of trust funds and who has been unable to satisfy the judgment through the normal post-judgment proceedings.
The licensee must have been properly licensed at the time the cause of action arose, and must have been performing acts requiring a real estate license. The applicant must file the application within one year of the date the judgment or criminal restitution order became final and must show that he or she has made all reasonable efforts to satisfy the judgment from the assets of not only the judgment debtor but also all other persons who may have been liable in the transaction.
When an application for payment is filed, DRE has 15 days to notify the applicant of any deficiencies. When the applicant has provided sufficient information to determine whether the application qualifies for payment, the application is made substantially complete. After the application becomes substantially complete, DRE has 90 days within which to pay, compromise, or deny the claim. If an application is denied, the applicant has six months within which to appeal the denial by refiling the application with the court which rendered the judgment.
If payment is made, the license of the judgment debtor is automatically suspended until he or she has repaid the amount plus interest. A judgment debtor who filed a timely response may file a writ of mandamus to challenge the payment from the Recovery Account and the suspension of his or her license.
As to a particular transaction/licensee, Section 10474 of the Business and Professions Code sets forth the maximum liability of the Recovery Account. A portion of license fees are used to fund the Recovery Account.