BILL NUMBER: SB 6 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Calderon
DECEMBER 6, 2010
An act to amend Sections 10176 and 11345.4 of, and to add Sections
10177.3 and 11345.7 to, the Business and Professions Code, and to
amend Section 1090.5 of the Civil Code, relating to real estate.
LEGISLATIVE COUNSEL'S DIGEST
SB 6, as introduced, Calderon. Real estate: appraisal and
valuation.
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 makes a willful violation of the act a
crime. Existing law authorizes the commissioner to temporarily
suspend or permanently revoke a real estate license when the licensee
has been guilty of generating an inaccurate opinion of the value of
residential real property in connection with a certain real estate
transaction in order to, among other things, acquire a financial or
business advantage that directly results from the inaccurate opinion
of value.
This bill would delete that provision and would instead prohibit
a licensee from providing an opinion of value of real property if his
or her compensation is dependent on or affected by that opinion of
value or if he or she has any interest in the property or
transaction. The bill would also prohibit a licensee who offers or
provides these opinions, for compensation or in expectation of
compensation, from knowingly or intentionally misrepresenting the
value of real property.
Existing law, the Real Estate Appraisers' Licensing and
Certification Law, provides for the licensure and regulation of real
estate appraisers and appraisal management companies and makes a
willful violation of the law a crime. Existing law prohibits an
appraisal management company from improperly influencing any
appraisal by engaging in certain activities.
This bill would revise that provision by prohibiting an appraisal
management company from improperly influencing any appraisal through
coercion, extortion, inducement, collusion, bribery, intimidation,
compensation, or instruction. The bill would specifically prohibit
certain acts, including, but not limited to, seeking to influence an
appraiser to report a minimum or maximum value for specified
property, implying to an appraiser that their retention depends on
their estimate of the real property value, excluding an appraiser
from future engagement because they reported a value that does not
meet or exceed a certain threshold, and conditioning compensation
paid to an appraiser on consummation of the real estate transaction.
The bill would also prohibit a person or entity preparing an
appraisal or performing appraisal management functions for certain
loan transactions from having a specified interest in the property or
the transaction for which the appraisal or functions are performed.
Existing law prohibits a person with an interest in a real estate
transaction involving an appraisal from improperly influencing or
attempting to improperly influence, through coercion, extortion, or
bribery, the development, reporting, result, or review of a real
estate appraisal sought in connection with a mortgage loan, and
specifies that a violation of this provision by a person licensed
under a state licensing law also constitutes a violation of that law.
This bill would instead make that provision applicable to a
valuation and would define a valuation as an estimate of the value of
real property in written or electronic form, other than one produced
solely by an automated model or system. The bill would also
enumerate specified prohibited acts under that provision, including,
but not limited to, seeking to influence a valuation preparer to
report a minimum or maximum value for specified property, implying to
a valuation preparer that their retention depends on their estimate
of the real property value, excluding a valuation preparer from
future engagement because they reported a value that does not meet or
exceed a certain threshold, and conditioning compensation paid to a
valuation preparer on consummation of the real estate transaction.
Because a willful violation of the bill's requirements 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 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.
( l ) 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. 2. Section 10177.3 is added to the Business and Professions
Code, to read:
10177.3. (a) No licensee shall offer or provide an opinion of
value of real property, for compensation or in expectation of
compensation, if his or her compensation is dependent on or affected
by the opinion of value of real property reached by that licensee.
(b) No licensee that offers or provides an opinion of value of
real property, for compensation or in expectation of compensation,
shall knowingly or intentionally misrepresent the value of real
property.
SEC. 3. Section 11345.4 of the Business and Professions Code is
amended to read:
11345.4. No person or entity acting in the capacity of an
appraisal management company shall improperly influence or attempt to
improperly influence the development, reporting, result, or review
of any appraisal by engaging, without limitation, in any of
through coercion, extortion, inducement, collusion,
bribery, intimidation, compensation, or instruction. Prohibited acts
include, but are not limited to, the following:
(a) Seeking to influence an appraiser to report a minimum or
maximum value for the property being valued. Such influence may
include, but is not limited to, the following:
(1) Requesting that an appraiser provide a preliminary estimate or
opinion of value for one or more properties prior to entering into a
contract with that appraiser for appraisal services related to that
property or properties.
(2) Conditioning whether to hire an appraiser based on an
expectation of the value conclusion likely to be returned by that
appraiser.
(3) Conditioning the amount of an appraiser's compensation on the
value conclusion returned by that appraiser.
(4) Providing an appraiser with an anticipated, estimated,
encouraged, or desired valuation prior to their completion of an
appraisal.
(a)
(b) Withholding or threatening to withhold timely
payment for an appraisal to an appraiser
because the person does not return a value at or above a certain
amount .
(b) Withholding or threatening to withhold future business for an
independent appraiser, including removal from approved panels of
appraisers.
(c) Expressly or impliedly promising future business, promotions,
or increased compensation for an independent appraiser.
(d) Conditioning the request for an appraisal service or the
payment of an appraisal fee or salary or bonus on the opinion,
conclusion, or valuation in an appraisal report, or on a preliminary
estimate or opinion requested from an independent appraiser.
(c) Implying to an appraiser that current or future retention of
that appraiser depends on the amount at which the appraiser estimates
the value of real property.
(d) Excluding an appraiser who prepares an appraisal from
consideration for future engagement because the appraiser reports a
value that does not meet or exceed a predetermined threshold.
(e) Conditioning the compensation paid to an appraiser on
consummation of the real estate transaction for which the appraisal
is prepared.
(e)
(f) Requesting the payment of compensation from an
appraiser for purposes of enabling that appraiser to achieve
higher priority in the assignment of appraisal business.
(f) Requesting that an appraiser provide an estimated,
predetermined, or desired valuation in an appraisal report, providing
to an appraiser an anticipated, estimated, encouraged, or desired
valuation in an appraisal report, or requesting that an appraiser
provide estimated values of comparable sales at any time before the
appraiser completes an appraisal report.
(g) Nothing in this section prohibits a person or entity acting in
the capacity of an appraisal management company from doing any of
the following:
(1) Asking an appraiser to do any of the following:
(A) Consider additional, appropriate property information,
including information about comparable properties.
(B) Provide further detail, substantiation, or explanation for the
appraiser's value conclusion.
(C) Correct errors in an appraisal report.
(2) Obtaining multiple valuations, for purposes of selecting the
most reliable valuation.
(3) Withholding compensation due to breach of contract or
substandard performance of services.
SEC. 4. Section 11345.7 is added to the Business and Professions
Code, to read:
11345.7. No person or entity preparing an appraisal or performing
appraisal management functions in connection with a mortgage loan
transaction may have a direct or indirect interest, financial or
otherwise, in the property or the transaction for which the appraisal
or appraisal services functions are performed.
SEC. 5. Section 1090.5 of the Civil Code is amended to read:
1090.5. (a) No person with an interest in a real estate
transaction involving an appraisal a
valuation shall improperly influence or attempt to improperly
influence the development, reporting, result, or review of that
valuation , through coercion, extortion, or
bribery, the development, reporting, result, or review of a
real estate appraisal sought in connection with a mortgage loan
intimidation, compensation, or instruction.
For purposes of this section, a valuation is defined as an estimate
of the value of real property in written or electronic form, other
than one produced solely by an automated valuation model or system
. Prohibited acts include, but are not limited to, the
following:
(1) Seeking to influence a person who prepares a valuation to
report a minimum or maximum value for the property being valued. Such
influence may include, but is not limited to:
(A) Requesting that a person provide a preliminary estimate or
opinion of value prior to entering into a contract with that person
for valuation services.
(B) Conditioning whether to hire a person based on an expectation
of the value conclusion likely to be returned by that person.
(C) Conditioning the amount of a person's compensation on the
value conclusion returned by that person.
(D) Providing to a person an anticipated, estimated, encouraged,
or desired valuation prior to their completion of a valuation.
(1)
(2) Withholding or threatening to withhold timely
payment for an appraisal a valuation .
(2) Withholding or threatening to withhold future business for an
independent appraiser, including removal from approved panels of
appraisers.
(3) Expressly or impliedly promising future business, promotions,
or increased compensation for an independent appraiser.
(4) Conditioning the request for an appraisal service or the
payment of an appraisal fee or salary or bonus on the opinion,
conclusion, or valuation in an appraisal report, or on a preliminary
estimate or opinion requested from an independent appraiser.
(3) Implying to a person who prepares a valuation that current or
future retention of that person depends on the amount at which the
person estimates the value of real property.
(4) Excluding a person who prepares a valuation from consideration
for future engagement because the person reports a value that does
not meet or exceed a predetermined threshold.
(5) Conditioning the compensation paid to a person who prepares a
valuation on consummation of the real estate transaction for which
the valuation is prepared.
(5)
(6) Requesting the payment of compensation to achieve
higher priority in the assignment of appraisal
valuation business.
(6) Requesting that an appraiser provide an estimated,
predetermined, or desired valuation in an appraisal report, providing
to an appraiser an anticipated, estimated, encouraged, or desired
valuation in an appraisal report, or requesting that an appraiser
provide estimated values of comparable sales at any time before the
appraiser completes an appraisal report.
(b) Subdivision (a) does not prohibit a person with an interest in
a real estate transaction from asking an appraiser to do
doing any of the following:
(1) Asking a person who performs a valuation to do any of the
following:
(1)
(A) Consider additional, appropriate property
information , including information about comparable properties
.
(2)
(B) Provide further detail, substantiation, or
explanation for the appraiser's person's
value conclusion.
(3)
(C) Correct errors in the appraisal
a valuation report.
(2) Obtaining multiple valuations, for purposes of selecting the
most reliable valuation.
(3) Withholding compensation due to breach of contract or
substandard performance of services.
(c) If a person who violates this section is licensed or
registered under any state licensing or registration law and the
violation occurs within the course and scope of the person's duties
as a licensee or registrant, the violation shall be deemed a
violation of that law.
(d) Nothing in this section shall be construed to authorize
communications that are otherwise prohibited under existing law.
SEC. 6. 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.