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<p><em>What DRE's latest enforcement actions tell us about the basics we can't afford to skip.</em></p><p>The California Department of Real Estate just released its September enforcement summary: 39 actions in a single month. Two of them are worth reading if you manage property for others, or if you own property someone else manages.</p><h3>Case 1: Fake work orders, real losses</h3><p>A property management employee submitted thousands of fake work orders across roughly 1,100 rental units over 19 months. More than $820,000 was billed, and over $500,000 in client trust funds was paid out for work that was never completed or never needed. DRE revoked the license.</p><p>The scheme worked because no one was verifying that the work was real before the invoices got paid.</p><h3>Case 2: A broker loses his license after an audit</h3><p>A broker officer forfeited his license after a DRE audit found incomplete trust fund records, an unlicensed and unbonded person making withdrawals from the trust account, the broker not listed as a signer, an unreported salesperson, and a failure to supervise the brokerage.</p><h3>What these cases have in common</h3><p>Neither one is exotic. Both come down to basic controls that slipped: who can touch the money, who checks the paperwork, and whether anyone is looking at the books every month. As DRE put it, theft or mishandling of trust funds can mean rents don't cover needed repairs, insurance coverage is put at risk, and mortgage payments get missed. That is the owner's problem, even when it's the manager's mistake.</p><h3>If you're a broker or property manager</h3><ol><li><strong>Verify before you pay.</strong> Keep the invoice, the approval and proof the work was completed on file for every payment. If you can't show it, you didn't verify it.</li><li><strong>Control who can touch the money.</strong> Keep signers and withdrawal authority to a short list, and make sure the broker is on every trust account.</li><li><strong>Reconcile every month, on time</strong>. Clean, current books are your first line of defense, and they're what an auditor asks for first.</li><li><strong>Keep your DRE records current. </strong>Any salesperson added to or removed from your brokerage should be reported promptly.</li><li><strong>Document your process.</strong> DRE specifically recommends clean, thorough recordkeeping in case proof of work is ever requested.</li></ol><h3>If you're an owner with a property manager</h3><ol><li><strong>Ask where your money is held. </strong>Your funds should sit in a designated trust account, not mixed with the manager's own money.</li><li><strong>Ask who can withdraw. </strong>You should get a clear answer, and the broker should be one of the signers.</li><li><strong>Ask for monthly statements and reconciliations. </strong>You should see the bank statement, the ledger and the reconciliation, not just a summary.</li><li><strong>Ask how invoices get approved. </strong>A good manager can walk you through how a repair goes from request to approval to payment to proof of completion.</li><li><strong>Spot-check. </strong>Ask to see the invoice and the photo or sign-off for a recent repair. A manager with good controls will be glad to show you.</li><li><strong>Verify the license. </strong>Look up your manager and broker on DRE's online license database and check for past discipline.</li></ol><h3>Final<em> </em>thought</h3><p>Trust fund handling isn't the exciting part of this business, but it's what we're paid to get right. Owners: it's reasonable to ask these questions. Managers: make sure you'd be comfortable answering them.</p><p><em>Ed Zepeda is Principal and Broker of Strata Group Real Estate, a San Francisco commercial brokerage and property management firm focused on office, retail and light industrial properties under 40,000 square feet. If you'd like to talk about leasing or management for your property, <a data-mce-href="https://stratagroupre.com/contact" href="https://stratagroupre.com/contact">get in touch.</a></em></p><p><em>Source: <a data-mce-href="https://secure.dre.ca.gov/publicasp/EnforcementActions.asp?StartDate=9/1/2026&amp;EndDate=9/30/2026" href="https://secure.dre.ca.gov/publicasp/EnforcementActions.asp?StartDate=9/1/2026&amp;EndDate=9/30/2026" target="_blank" rel="noopener" data-mce-selected="inline-boundary">California DRE September 2026 enforcement actions</a>.</em></p>

Trust Fund Management Tips for California Property Managers and Owners

Strata Group Real Estate Inc.

Real estate brokerage and property management company providing services in management, leasing, and sales of commercial real estate in San Francisco. We deliver a boutique, hands on approach to owners of office, retail, and industrial properties in SF backed by over 15 years of commercial real estate experience.

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Trust Fund Management Tips for California Property Manage...