Disclaimer: This article is for informational purposes only and does not constitute legal advice. The information provided is based on California laws and regulations as of the date of publication, which are subject to change. Every situation is unique, and the outcome of any DRE application or appeal depends on its specific facts. Readers are strongly encouraged to consult with a qualified attorney specializing in California real estate or administrative law for guidance on their individual case. Contact the California Department of Real Estate directly at dre.ca.gov or 877-373-4542 for official information and requirements.

If your California Department of Real Estate (DRE) application is denied because of background issues—don’t panic.

A denial doesn’t always mean “permanent disqualification.” It starts a legal process, and if you act strategically, you can often turn that denial into a conditional or full license.

This guide explains what’s happening, why it happened, and—most importantly—what to do right now to fix it.

Things can and do change, however. Please be sure you check with the DRE at dre.ca.gov or call 877-373-4542 with questions.

Understanding the DRE Denial Process

The Department of Real Estate (DRE) may issue one of two types of notices if an issue is discovered during your background review via Live Scan, and each may have different timelines and procedures for requesting a hearing:

Notice of Denial of Application

• Document You Receive: "Notice of Denial of Application"
• Scenario: This is a Denial without a formal Statement of Issues (SOI).
• Governing Law: The procedure is governed by Business and Professions Code Section 485(b).
• Deadline to Request Hearing: You may have (check with your counsel) 60 days from the date of the notice to request a hearing.

Denial with Statement of Issues (SOI)

• Document You Receive: "Statement of Issues"
• Scenario: This is a Denial with a formal Statement of Issues (SOI).
• Governing Law: The procedure for responding to the Statement of Issues is governed by Government Code Section 11506.
• Deadline to Request Hearing: You may have (check with your counsel) 15 days from the date of service to file a Notice of Defense and request a hearing.

Pro tip: Always assume the shortest (15-day) window applies. Missing that deadline usually means automatic default denial and loss of hearing rights.

If you request a hearing in time, your case goes to the Office of Administrative Hearings (OAH) before an Administrative Law Judge (ALJ).

The ALJ issues a proposed decision, which the Real Estate Commissioner can adopt, modify, or reject.

The “Substantial Relation” Test — What the DRE Really Looks At

The DRE can deny a license under Business & Professions Code § 480(a) and California Code of Regulations § 2910 if the offense is “substantially related to the qualifications, functions, or duties of a real-estate licensee.”

Crimes Typically Considered Substantially Related

These involve dishonesty, fraud, or moral turpitude, directly affecting consumer trust:

• Mail fraud or wire fraud
• Grand theft, embezzlement, forgery
• Check fraud or identity theft

Crimes Sometimes Defensible as Not Related

Offenses unconnected to honesty, fiduciary duty, or financial handling, especially if old:

• A DUI from years ago with no repeat offenses
• Simple possession or non-property misdemeanors fully resolved

Strategy:

With the advice of your legal counsel and being honest, explain why your incident doesn’t touch honesty or fiduciary responsibility—those are the DRE’s core concerns.

Evidence of Rehabilitation — What the DRE Wants to See

Under Cal. Code Regs § 2911 , the DRE must consider whether you’ve demonstrated rehabilitation.

That means documented change, not just words.

Tip: Package your proof in a clearly labeled binder or PDF with exhibits (Exhibit A – Character Letters, Exhibit B – Restitution Proof, etc.). The easier it is to review, the more credible you appear.

How to Disclose Convictions the Right Way

Incomplete disclosure is one of the top reasons applicants receive a Statement of Issues.

Here’s how to handle it correctly on your DRE application:

1. Always answer “Yes” if appropriate.

Even if the conviction was expunged —you still must disclose it.

2. Attach a short, factual statement that includes:

• Case number and court name
• Date of conviction and completion
• What happened, what you learned, and what’s changed

3. Include proof: court minute orders, dismissals, program completions, and letters of reference.

✅ Sample Disclosure Statement:

“In 2015, I was convicted of a misdemeanor DUI (Case #XYZ123, Orange County Superior Court). I completed all terms of probation and education. Since then, I’ve maintained a clean record and volunteer with MADD as a mentor for first-time offenders.”

Attorney Help and Stipulated Settlements — Smart Middle Ground

Once a Statement of Issues has been filed, your case is handled by DRE’s legal counsel.

You should consider hiring an experienced administrative attorney who can often negotiate what’s called a Stipulated Settlement—a pre-hearing resolution.

What a Stipulated Settlement Is

A mutual agreement between you and the DRE allowing licensure under specific terms:

• Restricted or probationary license (e.g., quarterly supervision reports, limits on roles)
• Probationary period (typically 1–2 years)
• Possible upgrade to full license after successful completion

This avoids the uncertainty and cost of a full hearing and may get you licensed months sooner.

If You’re Denied — How to Reapply the Right Way

If your denial becomes final, you can reapply after the waiting period.
Make sure your new application includes:

• Updated letters of recommendation
• Documented community involvement since the denial
• Any new training, certifications, or awards
• Evidence of expungement or dismissal, if applicable

The DRE’s focus shifts heavily to “what have you done since last time?”—so show tangible progress.

Bottom Line

A DRE denial isn’t the end—it’s an opportunity to prove rehabilitation and integrity.
By understanding key codes,, fully disclosing your background, and submitting real evidence of reform, you can often turn a denial into a conditional or unrestricted license.

Key takeaway: Act fast, document everything, and build your case around trustworthiness—the DRE’s number-one concern.