BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1718|
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                                 THIRD READING


          Bill No:  AB 1718
          Author:   Hill (D)
          Amended:  As introduced
          Vote:     21

           
           SENATE BUSINESS, PROF. & ECON. DEV. COMM.  :  8-0, 6/18/12
          AYES:  Price, Emmerson, Corbett, Hernandez, Negrete McLeod, 
            Strickland, Vargas, Wyland
          NO VOTE RECORDED:  Correa

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  71-1, 4/30/12 - See last page for vote


           SUBJECT  :    Real estate broker licenses

           SOURCE  :     California Association of Realtors


           DIGEST  :    This bill repeals and recasts existing 
          requirements that must be met prior to the licensure of 
          real estate brokers, to provide that the Real Estate 
          Commissioner may grant an original real estate broker 
          license to an applicant who (1) has passed the real estate 
          broker license examination, (2) satisfied other specified 
          requirements, (3) either held a real estate salesperson's 
          license, or (4) holds an active membership in the State Bar 
          of California or has graduated from a four-year university 
          with a specialization in real estate. 

           ANALYSIS  :    
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          Existing law:

          1. Provides for the licensure and regulation of more than 
             483,000 real estate brokers, real estate salespersons, 
             and more than 22,000 mortgage loan originator license 
             endorsements by the Department Real Estate (DRE) in the 
             Business, Transportation and Housing Agency (BT&H).  The 
             Real Estate Commissioner (Commissioner), who serves as 
             the chief executive of the DRE, is appointed by the 
             Governor, subject to Senate confirmation.  The 
             Commissioner, through DRE, is responsible for the 
             regulation of real estate transactions and licensure of 
             real estate agents, brokers and appraisers.  (Business 
             and Professions Code (BPC) Section 10000 et seq.)

          2. Defines "real estate broker" as a person who, for 
             compensation or in expectation of compensation, does or 
             negotiates to do one or more of the following acts for 
             another or others:  (BPC Section 10131)

             A.    Sells or offers to sell, buys or offers to buy, 
                solicits prospective sellers or purchasers, solicits 
                or obtains listings of, or negotiates the purchase, 
                sale or exchange of real property or a business 
                opportunity.

             B.    Leases or rents or offers to lease or rent, or 
                places for rent, or solicits listings of places for 
                rent, or solicits for prospective tenants, or 
                negotiates the sale, purchase or exchanges of leases 
                on real property, or on a business opportunity, or 
                collects rents from real property, or improvements 
                from business opportunities.

             C.    Assists or offers to assist in filing an 
                application for the purchase or lease of, or in 
                locating or entering upon, lands owned by the state 
                or federal government.

             D.    Solicits borrowers or lenders, negotiates loans or 
                collects payments or performs services for borrowers 
                or lenders in connection with loans secured directly 
                or collaterally by liens on real property or on a 

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                business opportunity.

             E.    Sells or offers to sell, buys or offers to buy, 
                exchanges or offers to exchange a real property sales 
                contract, or a promissory note secured directly or 
                collaterally by a lien on real property or on a 
                business opportunity, and performs services for the 
                holders thereof. 
              
          3. Provides that the following conditions must be met for 
             issuance of a real estate broker's license:  (a) the 
             applicant must hold a real estate salesman's license for 
             at least two years and be eligible for renewal of that 
             license within five years of the application for a 
             broker's license; and (b) must be actively engaged in 
             the business of real estate salesperson during that 
             time.  (BPC Section 10150.6)

          3. Provides an exception to the above conditions, if the 
             applicant files a written petition to the DRE setting 
             forth his or her qualifications and experience to 
             include at least the equivalent of two years' general 
             real estate experience or graduation from a four-year 
             college or university course which included 
             specialization in real estate.  (BPC Section 10150.6)

          4. Allows for the immediate issuance of a broker's license 
             if either of the conditions in #3 above has been met and 
             the applicant passes the broker's license examination.  
             (BPC Section 10150.6)

          5. Provides that all real estate licenses issued by the 
             Commissioner shall be for a period of four years.  
             Applicants shall qualify in the appropriate examination 
             and satisfy all other requirements prior to issuance of 
             the license.  (BPC Section 10153.6)  

          This bill:

          1. Requires an applicant for an original real estate 
             broker's license to demonstrate to the Commissioner that 
             he/she has held a real estate sales person's license for 
             at least two years; qualified for the renewal of this 
             license during the previous five years; and was actively 

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             engaged in the business of real estate salesperson 
             during that time. 

          2. Deletes the Commissioner's authority to grant an 
             original real estate broker's license to an applicant 
             that has graduated from a four-year college or 
             university course, which included specialization in real 
             estate, and instead authorizes the Commissioner to treat 
             a degree from a four-year college or university, which 
             course of study included a major or minor in real 
             estate, as the equivalent of two years' general real 
             estate experience. 

           Background

          Existing law generally requires applicants for a real 
          estate broker's license to have, among other things, two 
          years of full-time experience in the real estate business.  
          It also contains alternative ways to demonstrate the 
          experience qualification by meeting any of the following: 

          1. A finding of equivalent experience and education by the 
             Commissioner; 

          2. Active membership in the State Bar; 

          3. A degree or "course" of study from a four-year college 
             which "included a specialization in real estate."

          This bill revises the alternative path to licensure as a 
          real estate by requiring a "major or minor concentration in 
          real estate" rather than a "specialization" in real estate.

          The University of California states that it does not offer 
          either a major or minor concentration in real estate.  
          However, the California State University system does offer 
          a concentration in real estate as part of it bachelor's 
          degree in Business Administration at the East Bay, Fresno, 
          Los Angeles, Northridge, Pomona, Sacramento, San 
          Bernardino, and San Diego campuses.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No


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           SUPPORT  :   (Verified  7/2/12)

          California Association of Realtors (source)

           ARGUMENTS IN SUPPORT  :    According to the bill's sponsor, 
          the California Association of Realtors:

            Unqualified individuals lacking sufficient experience are 
            able to get their real estate broker's license by 
            exploiting a loophole in current law that permits an 
            unrelated college degree to be substituted for actual 
            experience in real estate.  

            The ability of the Real Estate Commissioner to waive the 
            experience criteria in exchange for a four-year degree 
            has evolved into essentially a de facto policy wherein 
            all such requests are approved as opposed to reviewing 
            them on a case-by-case basis.  As such, individuals can 
            substitute any four-year degree, e.g., English, physical 
            education, chemistry, etc., for practical real world 
            experience.  

            Real estate brokers not only engage directly in real 
            estate transactions, but also supervise, hire, oversee 
            and review the work of other sales people.  Coupled with 
            the increasing complexity and intricate details of the 
            industry, real world experience is increasingly 
            important.  Barring that, an advanced degree with an 
            emphasis on real estate will better serve the public and 
            provide an important safeguard for consumers.


           ASSEMBLY FLOOR  :  71-1, 4/30/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Bonilla, Bradford, Buchanan, 
            Butler, Charles Calderon, Campos, Carter, Chesbro, 
            Conway, Dickinson, Eng, Feuer, Fletcher, Fong, Fuentes, 
            Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, 
            Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger 
            Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, 
            Knight, Lara, Bonnie Lowenthal, Ma, Mansoor, Mendoza, 
            Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, 
            Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, 
            Silva, Skinner, Solorio, Swanson, Torres, Valadao, 

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            Wagner, Wieckowski, Williams, Yamada, John A. Pérez
          NOES:  Donnelly
          NO VOTE RECORDED:  Blumenfield, Brownley, Cedillo, Cook, 
            Davis, Furutani, Logue, Smyth


          JJA:m  7/3/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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