BILL NUMBER: SB 1737 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 14, 2008
AMENDED IN ASSEMBLY AUGUST 12, 2008
AMENDED IN ASSEMBLY JULY 14, 2008
AMENDED IN ASSEMBLY JULY 2, 2008
AMENDED IN ASSEMBLY JUNE 23, 2008
AMENDED IN ASSEMBLY JUNE 11, 2008
AMENDED IN SENATE MARCH 27, 2008
INTRODUCED BY Senator Machado
(Principal coauthor: Senator Perata)
FEBRUARY 22, 2008
An act to amend Section 10176 of, and to add Sections 10087 and
10177.6 to, the Business and Professions Code, relating to real
estate.
LEGISLATIVE COUNSEL'S DIGEST
SB 1737, as amended, Machado. Real estate: brokers and
salespersons.
Existing law, the Real Estate Law, provides for the licensure and
regulation of real estate brokers and real estate salespersons by the
Real Estate Commissioner and provides that a willful violation of
that law is a crime. Existing law authorizes the commissioner to
direct a person to desist and refrain from activities that are in
violation of that law, as specified, and also authorizes the
commissioner to suspend or revoke the license of a real estate
licensee who performs or has been guilty of specified acts.
This bill would authorize the commissioner to suspend or bar a
person from a position of employment, management, or control for a
specified period if the commissioner finds that the suspension or bar
is in the public interest and that the person has committed or
caused a violation of the Real Estate Law or a rule or order of the
commissioner, as specified. The bill would also authorize the
commissioner to impose that discipline if the person has been
convicted of, or pleaded nolo contendere to, a crime or been held
liable in a civil action by final judgment, or any administrative
judgment by any public agency, if the crime or civil or
administrative judgment involves an offense involving dishonesty,
fraud, or deceit, or any other offense reasonably related to the
qualifications, functions, or duties of a person engaged in the real
estate business. In addition, the bill would authorize the
commissioner to suspend or revoke the license of a real estate
licensee who has been guilty of generating an inaccurate opinion of
the value of residential real property, requested in connection with
a debt forgiveness sale, in order to manipulate the lienholder to
reject the proposed debt forgiveness sale or to acquire a financial
or business advantage, as specified, or both.
Existing law requires listing and selling agents, as defined, to
provide sellers and buyers in a residential real property transaction
with a disclosure form, as prescribed, containing general
information on real estate agency relationships. Existing law also
requires the listing or selling agent to disclose to the buyer and
seller whether he or she is acting as the buyer's agent exclusively,
the seller's agent exclusively, or as a dual agent representing both
the buyer and the seller.
This bill would require a person or entity that arranges financing
in connection with a sale, lease, or exchange of real property and
acts as an agent with respect to that property to make a written
disclosure of those roles, within 24 hours, to all parties to the
sale, lease, or exchange and any related loan transaction.
By imposing additional requirements under the Real Estate Law, the
willful violation of which would be a crime, the bill would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10087 is added to the Business and Professions
Code, to read:
10087. (a) In addition to acting pursuant to the authority
provided under Sections 10086, 10176, and 10177, the commissioner
may, after appropriate notice and opportunity for a hearing, by
order, suspend, or bar from any position of employment, management,
or control, for a period not exceeding 36 months, a real estate
salesperson or real estate broker, or an unlicensed person issued an
order under Section 10086, if the commissioner finds either of the
following:
(1) That the suspension or bar is in the public interest and that
the person has committed or caused a violation of this division or
rule or order of the commissioner, which violation was either known
or should have been known by the person committing or causing it or
has caused material damage to the public.
(2) That the person has been convicted of or pleaded nolo
contendere to any crime, or has been held liable in any civil action
by final judgment, or any administrative judgment by any public
agency, if that crime or civil or administrative judgment involved
any offense involving dishonesty, fraud, or deceit, or any other
offense reasonably related to the qualifications, functions, or
duties of a person engaged in the real estate business in accordance
with the provisions of this division.
(b) Within 15 days from the date of a notice of intention to issue
an order pursuant to subdivision (a), the person may request a
hearing under the Administrative Procedure Act (Chapter 4.5
(commencing with Section 11400) of Division 3 of Title 2 of the
Government Code). If no hearing is requested within 15 days after the
mailing or service of that notice and none is ordered by the
commissioner, the failure to request a hearing shall constitute a
waiver of the right to a hearing.
(c) Upon receipt of a notice of intention to issue an order
pursuant to this section, the person who is the subject of the
proposed order is immediately prohibited from engaging in any
business activity involving real estate that is subject to regulation
under this division.
(d) Persons suspended or barred under this section are prohibited
from participating in any business activity of a real estate
salesperson or a real estate broker and from engaging in any
real estate-related business activity on the premises where a
real estate salesperson or real estate broker is conducting business.
Persons suspended or barred under this section are also prohibited
from participating in any real estate-related business
activity of a finance lender, residential mortgage lender, bank,
credit union, escrow company, title company, or underwritten title
company.
SEC. 2. Section 10176 of the Business and Professions Code is
amended to read:
10176. The commissioner may, upon his or her own motion, and
shall, upon the verified complaint in writing of any person,
investigate the actions of any person engaged in the business or
acting in the capacity of a real estate licensee within this state,
and he or she may temporarily suspend or permanently revoke a real
estate license at any time where the licensee, while a real estate
licensee, in performing or attempting to perform any of the acts
within the scope of this chapter has been guilty of any of the
following:
(a) Making any substantial misrepresentation.
(b) Making any false promises of a character likely to influence,
persuade or induce.
(c) A continued and flagrant course of misrepresentation or making
of false promises through real estate agents or salespersons.
(d) Acting for more than one party in a transaction without the
knowledge or consent of all parties thereto.
(e) Commingling with his or her own money or property the money or
other property of others which is received and held by him or her.
(f) Claiming, demanding, or receiving a fee, compensation or
commission under any exclusive agreement authorizing or employing a
licensee to perform any acts set forth in Section 10131 for
compensation or commission where the agreement does not contain a
definite, specified date of final and complete termination.
(g) The claiming or taking by a licensee of any secret or
undisclosed amount of compensation, commission or profit or the
failure of a licensee to reveal to the employer of the licensee the
full amount of the licensee's compensation, commission or profit
under any agreement authorizing or employing the licensee to do any
acts for which a license is required under this chapter for
compensation or commission prior to or coincident with the signing of
an agreement evidencing the meeting of the minds of the contracting
parties, regardless of the form of the agreement, whether evidenced
by documents in an escrow or by any other or different procedure.
(h) The use by a licensee of any provision allowing the licensee
an option to purchase in an agreement authorizing or employing the
licensee to sell, buy, or exchange real estate or a business
opportunity for compensation or commission, except when the licensee
prior to or coincident with election to exercise the option to
purchase reveals in writing to the employer the full amount of
licensee's profit and obtains the written consent of the employer
approving the amount of the profit.
(i) Any other conduct, whether of the same or a different
character than specified in this section, which constitutes fraud or
dishonest dealing.
(j) Obtaining the signature of a prospective purchaser to an
agreement which provides that the prospective purchaser shall either
transact the purchasing, leasing, renting or exchanging of a business
opportunity property through the broker obtaining the signature, or
pay a compensation to the broker if the property is purchased,
leased, rented or exchanged without the broker first having obtained
the written authorization of the owner of the property concerned to
offer the property for sale, lease, exchange or rent.
(k) Failing to disburse funds in accordance with a commitment to
make a mortgage loan that is accepted by the applicant when the real
estate broker represents to the applicant that the broker is either
of the following:
(1) The lender.
(2) Authorized to issue the commitment on behalf of the lender or
lenders in the mortgage loan transaction.
() Intentionally delaying the closing of a mortgage loan for the
sole purpose of increasing interest, costs, fees, or charges payable
by the borrower.
(m) Generating an inaccurate opinion of the value of residential
real property, requested in connection with a debt forgiveness sale,
in order to do either or both of the following:
(1) Manipulate the lienholder to reject the proposed debt
forgiveness sale.
(2) Acquire a financial or business advantage, including a listing
agreement, that directly results from the inaccurate opinion of
value, with regard to the subject property.
SEC. 3. Section 10177.6 is added to the Business and Professions
Code, to read:
10177.6. When an agent undertakes to arrange financing in
connection with a sale, lease, or exchange of real property, or when
a person or entity arranging financing in connection with the sale,
lease, or exchange of real property undertakes to act as an agent
with respect to that property, that agent, person, or entity shall,
within 24 hours, make a written disclosure of those roles to all
parties to the sale, lease, or exchange, and any related loan
transaction. For purposes of this section, "agent" has the same
meaning as defined in subdivision (a) of Section 2079.13 of the Civil
Code.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.