BILL NUMBER: AB 2602	CHAPTERED  07/21/06

	CHAPTER  107
	FILED WITH SECRETARY OF STATE  JULY 21, 2006
	APPROVED BY GOVERNOR  JULY 21, 2006
	PASSED THE ASSEMBLY  JUNE 29, 2006
	PASSED THE SENATE  JUNE 26, 2006
	AMENDED IN SENATE  JUNE 20, 2006

INTRODUCED BY   Assembly Member Lieu

                        FEBRUARY 24, 2006

   An act to amend Section 854.1 of, and to add Section 854.2 to, the
Financial Code, relating to real estate brokers.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2602, Lieu  Real estate brokers: deposits.
   Under existing law, a real estate broker, who accepts funds
belonging to others, is required to deposit those funds into a
specified trust fund account. However, existing law also provides
that benefits accruing from the placement in a noninterest bearing
account of a commercial bank of funds received by a real estate
broker who collects payments or provides services in connection with
certain loans shall inure to the broker, unless otherwise agreed by
the broker and lender.
   This bill would instead provide that those benefits shall inure to
the real estate broker if they are derived from the placement of
those funds in a noninterest bearing account of a financial
institution, as defined. The bill would also provide that benefits
accruing from the placement in an interest bearing account of a
financial institution of funds received by a real estate broker who
collects payments or provides services for an institutional investor
in connection with a loan secured by commercial real property may
inure to the broker, if agreed to in writing by the broker and
investor.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 854.1 of the Financial Code is amended to read:

   854.1.  Notwithstanding Section 10145 of the Business and
Professions Code or any other provision of law, but subject to the
limitations of Section 854, benefits accruing from the placement in a
noninterest bearing account of a financial institution of funds
received by a real estate broker who collects payments or provides
services in connection with a loan secured by a lien on real property
under subdivision (d) of Section 10131 or Section 10131.1 of the
Business and Professions Code shall inure to the broker, unless
otherwise agreed in writing by the broker and the lender or note
owner on the loan. A borrower shall receive at least 2 percent simple
interest per annum on impound account payments covered by Section
2954.8 of the Civil Code. For purposes of this section "financial
institution" means any institution the business of which is engaging
in financial activities as described in Section 1843 (k) of Title 12
of the United States Code.
  SEC. 2.  Section 854.2 is added to the Financial Code, to read:
   854.2.  (a) Notwithstanding Section 10145 of the Business and
Professions Code or any other provision of law, benefits accruing
from the placement in an interest bearing account of a financial
institution of funds received by a real estate broker, as defined in
Section 10131 of the Business and Professions Code, who collects
payments or provides services for an institutional investor in
connection with a loan secured by commercial real property may inure
to the real estate broker, if agreed to in writing by the real estate
broker and that institutional investor as to that loan.
   (b) For purposes of this section, the following definitions shall
apply:
   (1) "Commercial real property" means real estate improved with
other than a one-to-four family residence.
   (2) "Financial institution" means any institution the business of
which is engaging in financial activities as described in Section
1843(k) of Title 12 of the United States Code.
   (3) "Institutional investor" has the meaning set forth in
subdivision (i) of Section 50003.