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