BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 278
                                                                  Page  1

          Date of Hearing:   May 18, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  AB 278 (Hill) - As Introduced:  February 8, 2011 

          Policy Committee:                              Business and 
          Professions  Vote:                            9 - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill authorizes the Department of Real Estate (DRE) to 
          adopt regulations allowing the Real Estate Commissioner to 
          establish a system for issuing citations to licensees in 
          violation of Real Estate Law or any regulation adopted under 
          that law.  

           FISCAL EFFECT  

          1)DRE takes approximately 1,000 disciplinary actions per fiscal 
            year.  If 10% of those actions result in a citation and/or 
            fine at the proposed maximum of $1,000 each it would result in 
            approximately $100,000 in additional revenue for the Recovery 
            Account in the Real Estate Fund. 

          2)Workload associated with promulgating the required regulations 
            and establishing the new citations process would be minor and 
            absorbable within existing resources. 

           COMMENTS  

           1)Rationale  . The author's office argues that while the Real 
            Estate Commissioner has authority to enforce real estate law, 
            he or she has a relatively narrow number of options for 
            imposing discipline and penalties.  This bill would allow for 
            the issuance of a citation and a fine for relatively minor 
            violations that have not resulted in harm to the public. 

            AB 278 would provide a type of fix-it ticket that could be 
            levied without the necessity of a drawn out hearing and review 
            process.  The author notes, "While certainly appropriate for 








                                                                  AB 278
                                                                  Page  2

            more serious violations, such a time consuming process does 
            not serve either the general public or the regulated community 
            in the most efficient manner in all cases."   

           2)Background  . DRE licenses and regulates approximately 463,000 
            real estate professionals in California.

            Under existing law, DRE has the authority to take regulatory 
            action against a real estate licensee for committing an 
            unlawful act.  DRE may also censure an individual who lacks a 
            real estate license but is nevertheless performing duties for 
            which a license is necessary. 

            In administering and enforcing the Real Estate Law, the 
            Commissioner may issue regulations and hold hearings to 
            determine whether a licensee or license applicant has violated 
            real estate laws or regulations.  The Commissioner may 
            suspend, revoke or deny a real estate license or impose 
            monetary penalties if violations are substantiated through the 
            hearings process.  The Commissioner may also issue desist and 
            refrain orders in certain circumstances.

            In practice, for more serious violations, DRE files an 
            accusation, which initiates the disciplinary process that can 
            eventually result in suspension or revocation of a license, or 
            issues a desist and refrain order.  For less serious 
            violations, DRE issues a letter of corrective action.  The 
            citations authorized by this bill would act as an intermediate 
            option for the DRE.


           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916) 
          319-2081