BILL ANALYSIS                                                                                                                                                                                                    Ó







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        |Hearing Date:May 2, 2011           |Bill No:SB                         |
        |                                   |53                                 |
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                      SENATE COMMITTEE ON BUSINESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                          Senator Curren D. Price, Jr., Chair
                                           

                         Bill No:        SB 53 Author:Calderon
                     As Amended:April 14, 2011          Fiscal:Yes

        
        SUBJECT:   Real estate licensees. 
        
        SUMMARY:  Would make several changes to California's Real Estate Law, 
        to give the Department of Real Estate more enforcement tools to enable 
        them to crack down against mortgage fraud and other real estate 
        violations, add safeguards to protect consumers who seek out services 
        from real estate licensees, and make technical changes, intended to 
        clean up certain portions of the Real Estate Law.  

         NOTE:   This measure was heard in the Banking and Financial 
        Institutions Committee on April 6, 2011, and passed out of Committee 
        by a vote of 6-1. 
        
        Existing Real Estate Law:
        
        1) Establishes in the Business, Transportation and Housing Agency 
           (BT&H) the Department of Real Estate (DRE), the chief officer 
           of which is the Real Estate Commissioner (Commissioner) and 
           specifies that the Commissioner, through the Department, is 
           responsible for the regulation of real estate transactions and 
           licensure of real estate agents, brokers and salespersons.

        2) Provides that the Commissioner shall enforce the provisions of 
           the Real Estate Law and has full power to regulate and control 
           the issuance and revocations, both temporary and permanent, of 
           all licenses to be issued, and to perform all other acts and 
           duties provided under the Real Estate Law.  (Business and 
           Professions Code (BPC)  § 10071)

        3) Makes any person, including officers, directors, agents or 





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           employees of corporations, who willfully violates or knowingly 
           participates in the violation of the Real Estate Law shall be 
           guilty of a misdemeanor punishable by a fine not exceeding ten 
           thousand dollars ($10,000), or by imprisonment in the county 
           jail not exceeding six months, or by a fine and imprisonment.  
           (BPC § 10185)

        4) Provides that the Attorney General (AG) shall render to the 
           Commissioner opinions upon all questions of law relating to the 
           construction or interpretation of the Real Estate Law, or 
           arising in the administration thereof that may be submitted to 
           him by the Commissioner.  The AG shall also act as the attorney 
           for the Commission in all actions and proceedings brought by or 
           against him under or pursuant to any provision of the Real 
           Estate Law.  (BPC § 10079)  

       5)Provides that any board, bureau, or commission within the DCA may 
          establish, by regulation, a system for the issuance to a licensee of 
          a citation which may contain an order of abatement or an order to 
          pay an administrative fine assessed by the board, bureau, or 
          commission where the licensee is in violation of the applicable 
          licensing act or any regulation adopted pursuant thereto.  Specifies 
          the procedures to be followed in both the issuance of the citation 
          and fine, and appeal of the citation or fine assessment.  This 
          citation and fine authority, however, does not prevent a board, 
          bureau, or commission from establishing by statute their own 
          citation and fine authority, as long as it is consistent with the 
          aforementioned procedures.  (BPC §  125.9)

       6)Provides that any board, bureau, or commission within the DCA may in 
          addition to the administrative citation system authorized by Section 
          125.9 (as against licensees, Item #5, above), may also be 
          established by regulation for issuance of an administrative citation 
          to an unlicensed person who is acting in the capacity of a licensee 
          under the jurisdiction of that board, bureau, or commission.  The 
          administrative citation system shall meet the requirements of 
          Section 125.9 above.  However, the establishment of an 
          administrative citation system for unlicensed activity does not 
          preclude the use of other enforcement statutes for unlicensed 
          activities at the discretion of the board, bureau, or commission. 
          (BPC § 148)

        7) Requires a real estate broker who intends or reasonably expects in 
           a successive 12 month period to negotiate a combination of 10 or 
           more transactions, as specified, in an aggregate amount of more 
           than $1,000,000, shall file reports as specified to DRE within 90 





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           days after the end of the broker's fiscal year or any additional 
           time as the Commissioner may allow for filing for good cause. (BPC 
           § 10232.2)

        8) Provides that the Commissioner may suspend or revoke a real estate 
           license, or deny the issuance of a license to an applicant, who has 
           violated any or the provisions of the Real Estate Law as specified, 
           or other laws as specified, or may suspend or revoke the license of 
           a corporation, or deny the issuance of a license to a corporation, 
           if an officer, director or person owning 10 percent or more of the 
           corporation's stock has violated any of those provisions as 
           specified.  (BPC § 10177)

        9) Entitles the applicant for a real estate license to continue 
           operating under his or her existing license after its expiration 
           date, if not previously suspended or revoked, and they have 
           complied with other requirements as specified.  Provides that if 
           the Commissioner determines that the applicant has not complied 
           with continuing education (CE) then the Commissioner may allow for 
           an extended period of time for compliance, or advise the licensee 
           that their license may expire for noncompliance and of their right 
           to a hearing.  (BPC § 10156.2)

        10)Makes it unlawful for any person to offer or sell any security in 
           an issuer transaction unless the sale has been qualified or the 
           security or transaction is exempted or is not subject to 
           qualification, as specified.  Exempts from qualification a 
           transaction that involves the sale of a series of notes secured 
           directly by an interest in real property or the sale of undivided 
           interest in a note secured directly by real property equivalent to 
           a series transaction.  Requires a real estate broker to indicate in 
           the real estate broker's transaction file the provisions of law 
           pertaining to qualification or exemption from qualifications under 
           which a transaction is being conducted and requires the broker to 
           file certain information with the Commissioner relative to 
           conducting these transactions that are exempt from qualification.  
           (BPC §§ 10237-10239.4)  
        Existing law, the Financial Code (FC):

        1)Authorizes licensed real estate brokers to act as escrow agents, 
          without obtaining an Escrow Law License, if the brokers are 
          performing acts in the course of, or incidental to a real estate 
          transaction in which the broker is an agent or a party to the 
          transaction, and in which the broker is performing an act for which 
          a real estate license is required. (FC § 17006)






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        Existing law, the Vehicle Code (VC):  

        1)Generally provides that all records of the Department of Motor 
          Vehicles (DMV) relating to the physical or mental condition of any 
          person, and convictions of any offense involving the use or 
          possession of controlled substances not arising from circumstances 
          involving a motor vehicle, are confidential and not open to public 
          inspection.  (VC § 1808.5)

        2)Provides specified government law enforcement entities with access 
          to records of the DMV.

        Existing law, the Government Code (GC):  Provides that notwithstanding 
        Section 1808.5 of the Vehicle Code, the board ÝBoard of Equalization], 
        as a board, individually, or through its staff, may obtain copies of 
        full-face engraved pictures of photographs of licensee directly from 
        the DMV for the purposes of enforcing the Revenue and Taxation Code. 


        This bill:

        1) Provides that in cases where a licensee may ignore or refuse to 
           obey an order of the court, or obey a subpoena, the Commissioner 
           may apply to the Superior Court, without the need to involve the 
           Attorney General, and the Court may issue an order requiring the 
           licensee to appear before the Commissioner to produce documentary 
           evidence, or to give evidence regarding an investigation.  Failure 
           of the licensee to obey the order of the Court may be punished by 
           the Court as contempt. 

        2) Grants to the DRE the authority to issue citations and/or citations 
           and fines to licensees found to have violated provisions of the 
           Real Estate Law.  Licensees would be authorized to appeal the 
           findings of any such citation through an administrative hearing 
           process.  Fines would be capped at $2,500 per violation.  Fines 
           collected would be deposited into the Real Estate Fund's Recovery 
           Account, where they would be available to reimburse consumers for 
           losses resulting from violations of the Real Estate Law. 

        3) Specifies that nothing prevents the Commission from also issuing an 
           order to desist and refrain from engaging in a specific business 
           activity or activities or an order to suspend all business 
           operations to a person who is engaged in continued or repeated 
           violations of the Real Estate Law.

        4) Provides that after the filing of a desist and refrain order or a 





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           bar order, or the commencement of a formal disciplinary action by 
           the Commissioner, and upon a finding by the Commissioner that 
           action is warranted for the protection of the public, and that 
           failure to act is likely to result in grievous harm to the public, 
           the Commissioner may make information public confirming the fact of 
           an investigation or proceeding regarding a licensee  or  unlicensed 
           person believed to be engaging in activities for which a real 
           estate license is required.  Provides that any release of the 
           information shall include language explaining that the person is 
           entitled to a hearing on the matter and the procedural aspects and 
           current status of the investigation or proceeding. 

        5) Requires a real estate broker who engages in escrow activities for 
           five or more transactions within a year, as specified under FC 
           17006 (Item # 1, Financial Code, above), or whose escrow activities 
           exceed $1,000,000 within a year, shall file with the DRE a report 
           within 60 days providing certain information as specified.  
           Provides that the real estate broker may also file consolidated 
           reports that include all of the information as specified in Section 
           10232.2 (Item # 7, Real Estate Law, above).  Provides for penalties 
           for failure to submit the report, and for suspension of revocation 
           of the realtor's license for failure to pay penalties imposed.

        6) Makes findings pursuant to the information provided to DRE, as 
           specified in Item # 5 above, that in order to allow the DRE to 
           fully accomplish its goals, it is imperative to protect the 
           interests of those persons submitting information to the DRE to 
           ensure that any personal or sensitive business information that 
           this act requires of those persons to submit is protected as 
           confidential information.

        7) Provides that the Commissioner may delay renewal of a license 
           pursuant to any acts as specified in Section 10177 (Item # 8, 
           above), and that any decision to delay renewal of a license shall 
           toll the expiration of that license until the results of any 
           pending disciplinary actions against the licensee are final, or 
           until the licensee voluntarily surrenders his, her or its license, 
           whichever is earlier.

        8) Specifies that the Commissioner may also delay renewal of a license 
           pursuant to any acts as specified in Section 10177 (Item # 8, 
           above), even though the licensee has fulfilled the requirements for 
           licensure pursuant to Section 10156.2 (Item # 9, above); including 
           fulfilling their CE requirement.

        9) Would require a real estate broker to submit a copy of information 





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           in the real estate broker's transaction file relative to securities 
           qualification, or exemption from securities qualification, pursuant 
           to a transaction involving secured notes on real property (see Item 
           # 10, above) to any investor from whom the real estate broker 
           obtains funds in connection with the transaction or other provision 
           of law pertaining to these types of transactions.  Recasts and 
           updates certain provisions and clarifies the repeal of specified 
           provisions relative to these transactions.

        10)Provides that the DRE may obtain copies of full-face engraved 
           pictures or photos of individuals directly from the DMV and allows 
           the Commissioner access to records of the DMV for purposes of 
           enforcing the Real Estate Law and the Subdivided Lands Law.

        11)Clarifying and technical changes to certain enforcement provisions 
           of the Real Estate Law.

        
        FISCAL EFFECT:   Unknown.  Legislative Counsel has keyed this bill as 
        "fiscal." 

        


        COMMENTS:
        
        1.Purpose.   This measure is sponsored by Authors.  The Authors 
          indicate that this bill makes several changes to California's Real 
          Estate Law, to give the DRE more enforcement tools with which to 
          crack down against mortgage fraud and other real estate violations, 
          and add safeguards to protect consumers who seek out services from 
          real estate licensees.  This bill also makes technical changes 
          intended to clean up certain portions of the Real Estate Law.
        
        2.According to the Authors, this Measure Specifically Provides the 
          Following Enforcement Enhancements and Changes to the Real Estate 
          Law: 
        
             a.     Enhance DRE's ability to obtain, have access to, and 
               examine the books, accounts and records of Real Estate 
               Licensees.
              Problem:   Current Real Estate Law requires real estate brokers to 
               retain copies of all books, accounts, and records related to 
               any transaction for which a real estate broker license is 
               required.  Brokers are required to retain these books, 
               accounts, and records for at least three years, and to make 





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               them available for examination, inspection, and copying by the 
               Commissioner or his or her designated representative during 
               regular business hours, after notice by the Commissioner or his 
               representative.  

             If, after appropriate notice, a real estate broker refuses to 
               allow the Commissioner or his or her representative access to 
               the broker's books, accounts, or records, DRE is authorized to 
               seek an administrative subpoena to compel the production of 
               those books, accounts, or records.  If a real estate broker 
               continues to refuse access, even after being presented with an 
               administrative subpoena, DRE may seek to enforce the subpoena 
               in a Superior Court.  However, because the law requires DRE to 
               be represented by the Department of Justice in all civil court 
               matters, DRE must request, and the Department of Justice must 
               agree, to represent DRE in cases where DRE seeks to enforce a 
               subpoena in a Superior Court.  The problem then becomes time 
               sensitive; often the DOJ lacks sufficient resources to expedite 
               these cases, which allows rogue real estate brokers who hold 
               out against producing their books, accounts, and records to 
               continue to operate.

              What the Bill Does:   This measure authorizes DRE to go to court 
               directly, to enforce an administrative subpoena.  Precedent for 
               granting this authority to other regulators tasked with 
               protecting the public already exists; the Department of 
               Corporations has this authority, to help it enforce the 
               Corporate Securities Law of 1968.
             
             b.     Provides for Citation and Fine Authority.
              Problem:   Current Real Estate Law gives DRE the authority to 
               examine the books, accounts, and records of real estate 
               licensees.  The Law also grants the Commissioner with authority 
               to enforce the Real Estate Law, by granting him or her full 
               power to regulate and control the issuance and revocation, both 
               temporary and permanent, of all real estate licenses, and to 
               perform all other acts and duties necessary to enforce the Real 
               Estate Law.  However, the Real Estate Law lacks any provision 
               that authorizes DRE to issue an on-the-spot citation or a 
               fix-it ticket to a licensee who has been found to have violated 
               a provision of the Real Estate Law.  For that reason, if a DRE 
               auditor or investigator identifies a violation during a routine 
               audit or investigation, the auditor or investigator must return 
               to the office and write up his/her findings, then send those 
               findings up the chain of command for review and approval.  In 
               all but the most serious cases, DRE sends a letter to the 





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               licensee once the auditor or investigator's findings have been 
               approved, informing the licensee of the violation(s), and 
               ordering that corrective action be taken.

             While a lengthy review of audit or investigation findings may be 
               appropriate in complex cases, simpler cases could be more 
               efficiently handled by granting DRE on-the-spot citation 
               authority.  Licensees would not lose the ability to appeal, but 
               straightforward findings, about which both DRE and licensee 
               agreed, could be handled far more expeditiously than under 
               existing law.  Granting DRE citation authority will help both 
               consumers and licensees, by allowing DRE enforcement staff to 
               more quickly share the results of their inquiries with 
               licensees, and by directing licensees to more quickly correct 
               those items found to be in violation.   The precedent for this 
               proposal already exists within the Financial Code (Section 
               23058) and elsewhere in the Business and Professions Code 
               (Sections 125.9 and 148).

              What the Bill Does:   This measure would give DRE citation and 
               fine authority patterned on Financial Code Section 23058 and 
               Business and Professions Code Sections 125.9 and 148.  Fines 
               would be capped at $2,500 per violation, and would be imposed 
               in lieu of, rather than in addition to, other discipline.  
               Fines collected would be deposited into the Real Estate Fund's 
               Recovery Account.  Failure to pay a fine would result in 
               disciplinary action.  

             c.     Disclosure of those under investigation for serious 
               violations.
             Problem:   Existing law provides no mechanism for use by the DRE 
               to warn the public, if the department knows of one or more 
               licensees who are engaging in activities that pose an immediate 
               risk of grievous harm to the public.  The public must wait for 
               the DRE to file a formal action, such as a Desist and Refrain 
               Order or an Accusation, in order to learn which persons or 
               companies may pose a risk.  Because the California State Bar 
               has the authority to release the identities of lawyers who are 
               under investigation, it was able to warn the public about 
               several members of the Bar, who were engaging in unscrupulous 
               loan modification activities.  The DRE, in contrast, lacked 
               this authority, so was unable to warn the public about specific 
               individuals and businesses who were engaging in unscrupulous 
               loan modification behavior.  Such reporting not only acts as a 
               warning to the public, but also as a deterrent to unscrupulous 
               behavior.





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             The ability to release the names of those under investigation is 
               not limited to the State Bar.  The Fair Political Practices 
               Commission recently announced that it would publicize the 
               identities of those under investigation for campaign 
               violations.

              What the Bill Does:   This measure would give the DRE authority to 
               release the identities of those under investigation.  To 
               protect the rights of those who are innocent until proven 
               guilty, DRE's authority would be limited to situations in which 
               failure to disclose the information is likely to lead to 
               grievous harm to the public.  The DRE would also have to 
               include language in each of its releases, explaining that the 
               persons under investigation are innocent until proven guilty, 
               and that they are entitled to a public hearing on the merits of 
               the DRE's accusation. 
             
             d.     Notification about escrow-related activities conducted by 
               real estate licensees.
              Problem:   Existing law authorizes licensed real estate brokers to 
               act as escrow agents, without obtaining an Escrow Law license, 
               if the brokers are performing acts in the course of, or 
               incidental to a real estate transaction in which the broker is 
               an agent or a party to the transaction, and in which the broker 
               is performing an act for which a real estate license is 
               required.  (Financial Code Section 17006)

             The DRE currently lacks the authority to determine which of its 
               licensed brokers engage in escrow activities pursuant to the 
               exemption provided in Financial Code Section 17006, nor does it 
               require these licensees to notify the DRE about their volume of 
               escrow business.  Without access to information about the 
               activities of its licensees, the DRE is limited to using 
               consumer complaints to help prioritize which of its licensees 
               to examine.  During the last year alone, real estate licensees 
               were found to have mishandled over $2.5 million in trust fund 
               deposits; it is unknown what volume of mishandled money went 
               undetected.  Providing the DRE with specific information about 
                                                           its licensees will help give the department a better sense for 
               the activities in which its licensees are engaging, which, in 
               turn, will help the department identify potential problems 
               before they result in harm to consumers. 

              What the Bill Does:   This measure requires any real estate broker 
               who engages in escrow activities for five or more transactions 





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               in a calendar year pursuant to the exemption from the Escrow 
               Law contained in Section 17006 of the Financial Code, or whose 
               escrow activities pursuant to that exemption equal or exceed $1 
               million in a calendar year, to file a report with the DRE, 
               documenting the number of escrows conducted and the dollar 
               volume escrowed during the calendar year in which the threshold 
               was met.

             e.     Authorizes the DRE to deny the license renewal application 
               of a licensee under investigation for a serious violation of 
               the Real Estate Law.
              Problem:   Current Real Estate Law authorizes the Commissioner to 
               suspend or revoke the license of a real estate licensee, or 
               deny the issuance of a license to a real estate applicant, who 
               has engaged in one or more of several enumerated bad acts.  
               However, the Commissioner lacks the authority to deny the 
               renewal of a license application submitted by a real estate 
               licensee who is under investigation by the DRE for having 
               engaged in behavior that would warrant a license suspension or 
               revocation.  This creates a situation under which the DRE must 
               renew the license of a licensee that has paid his or her 
               renewal fee and completed his or her continuing education 
               requirements, even when the DRE plans to issue an accusation to 
               that individual, suspending or revoking his or her license.  

             Recent press accounts have criticized the DRE for continuing to 
               license individuals known to be engaging in acts that would 
               disqualify them from licensure.  One way to stop this practice 
               is to allow the DRE to deny the renewal of a license to these 
               types of individuals.

              What the Bill Does:   This measure grants DRE the ability to deny 
               a license renewal to an individual known or suspected to have 
               engaged in or to be engaging in acts that would disqualify them 
               from licensure.  Individuals denied a renewal pursuant to this 
               provision would have appeal rights, just as they would if the 
               DRE were required to re-issue their license, and then pursue a 
               license suspension or revocation.  The DRE already has the 
               authority to deny the renewal of a mortgage loan originator 
               licensee endorsement, if the endorsement holder fails at any 
               time to meet specified requirements or withholds information or 
               makes a material misstatement in their application for 
               endorsement renewal.  This measure also makes a conforming 
               change to ensure that a licensee's license does not 
               automatically renew upon payment of the renewal fee and 
               certification by a licensee that he or she has complied with 





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               his or her continuing education requirements.

             f.     Updates the Real Estate Law relating to Multi-Lender 
               Loans.
              Problem:   Article 6 of Chapter 3 of Part 1 of the Real Estate 
               Law, titled, "Claim of Exemption from Securities 
               Qualification," (Business and Professions Code Section 10237- 
               10239.4) was added to the codes in 2003, as part of a bill that 
               was intended to replace the formerly existing Articles 6 and 
               6.5.  A recent review of Article 6 identified a handful of 
               changes, which would correct, update, and clarify the operation 
               of the Article, while at the same time better informing 
               investors who purchase interests in multi-lender loans about 
               the rules under which the real estate brokers selling those 
               loans are operating. 

              What the Bill Does:   This measure makes the needed cleanup 
               changes, and adds a provision to require real estate licensees 
               that engage in multi-lender loans to provide information to 
               their investors regarding the provisions of law under which 
               they are operating.  Licensees are already required to document 
               this information in their files; this bill would require that 
               it be provided to investors.

             g.     Grants the DRE access to DMV Photographs and certain DMV 
               Records to aid the DRE in enforcing the Real Estate and 
               Subdivided Lands Laws.
              Problem:   For many years, the DRE had access to driver's license 
               and vehicle registration information from the DMV.  The DRE 
               used this information to help it identify and locate 
               individuals upon whom it sought to issue subpoenas, desist and 
               refrain orders, and accusations, and when interviewing victims 
               of real estate fraud or other real estate violations, in order 
               to properly identify the individuals with whom these victims 
               interacted.

             In 2001, the DMV changed its policies regarding access to its 
               records, by limiting such access to sworn peace officers.  This 
               technically cut the DRE off from the records, because none of 
               the DRE's personnel are sworn peace officers.  Despite the 2001 
               change to the DMV's policy, some DRE offices continued 
               receiving access to the DMV records until very recently.  That 
               changed in late 2010, when the DMV began more formally 
               enforcing its policies, and terminated all access to its 
               records by the DRE employees.  Without access to the DMV 
               information, the DRE lacks access to photographs of those 





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               persons it needs to investigate, and those on whom the 
               department seeks to serve process.  The DMV's records can also 
               help the DRE identify the most recent address of a licensee or 
               individual improperly acting without a license.

             In a letter to the DRE's Chief Counsel regarding its latest move, 
               the DMV pointed to its longstanding policy, and encouraged the 
               DRE to seek legislation, granting the DMV authority to share 
               with the DRE the records needed.  Precedent for such 
               legislation already exists; the Board of Equalization sought 
               and obtained access to the DMV's records in 2003, when faced 
               with a problem similar to the one now faced by the DRE.

              What the Bill Does:   This measure provides the statutory 
               authority for the DRE to request the DMV information, and for 
               the DMV to provide the requested information to the DRE.
             
             h.     Gives the DRE express enforcement authority for violations 
               of certain laws by its licensees.
              Problem:   A number of statutes whose language is codified outside 
               of the Real Estate Law (including the Covered Loan Law and the 
               law prohibiting inappropriate influence of appraisers) contain 
               statements to the effect that, "A violation of this law by a 
               licensed person is a violation of the licensed person's 
               licensing law."  This boilerplate language is intended to allow 
               departments, such as the DRE, the Department of Corporations, 
               and the Department of Financial Institutions, to take 
               enforcement actions against any of their licensees that are 
               found to be violating the specified statute.  The DRE legal 
               staff has expressed concern that the boilerplate language in 
               these other statutes is insufficient, on its own, to permit the 
               DRE to bring an enforcement action against one of its licensees 
               for violating one of these statutes.

              What the Bill Does:   This measure adds language to the Real 
               Estate Law, to ensure that DRE has the authority to pursue 
               enforcement actions against licensees who, while acting within 
               the scope of their license, violate certain statutes not 
               explicitly contained within the Real Estate Law. 

        3.Related Legislation.   SB 706  (Price) makes numerous enforcement 
          enhancements to the Department of Real Estate (DRE) and the Office 
          of Real Estate Appraisers (OREA); transfers OREA into DRE; requires 
          DRE to appoint a Real Estate Advisory Commission; requires licensing 
          boards to post information about licensees on the Internet, as 
          specified; makes updating and conforming changes. 





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         AB 278  (Hill) would authorize the DRE Commissioner to promulgate 
          regulations authorizing the issuance of citations and fines to DRE 
          licensees and unlicensed persons engaging in activities for which a 
          real estate license is required.  It would cap the maximum amount of 
          the fine at $1,000.  It is sponsored by the California Association 
          of Realtors.  It is pending a hearing in the Assembly Business, 
          Professions, and Consumer Protection Committee.
        
        4.Arguments in Support.  The  California Mortgage Association  (CMA) 
          supports the efforts of this bill's Authors to give the DRE the 
          tools the department needs to effectively and efficiently enforce 
          the law.  "Fundamentally, SB 53 is a consumer protection measure.  
          The bill is well thought-out and crafted."  CMA specifically cites 
          its support for the "cite and fine" provision of this measure, which 
          it views as a way for the DRE to deal with minor violations of the 
          law quickly and conclusively, without having to resort to formal 
          accusations against licensees in each instance.  This, in turn, will 
          free up department resources to focus on egregious violations of the 
          law.  

        The  California Association of Realtors  (CAR) supports the bill as 
          currently amended.  The CAR had concerns about disclosure of 
          enforcement action without prior proof but believes the language in 
          the bill now strikes a balance between concern for immediate 
          protection of the public and basic due process for licensees by 
          requiring stringent findings by the DRE and requiring the imposition 
          of preliminary sanctions before releasing information regarding the 
          investigation of a licensee to the public.  The CAR also had 
          concerns about the authority granted to DRE to refuse renewal of a 
          license while a licensee was under investigation by the DRE.  Recent 
          language allows more flexibility to DRE to toll the expiration of 
          the license under review and reinstate the license if the licensee 
          is absolved.  The CAR is also in support of a limited citation and 
          fine authority and is actually sponsoring a similar bill but the cap 
          is $1,000.
        They indicate that they will continue to work with the Authors to 
          reconcile the two provisions. 

        The  Escrow Institute of California  (EIC) is in support of this 
          measure, especially as to the provision which would require DRE 
          licensees who conduct escrows to annually report their number of 
          transactions to the DRE.  According to the EIC, under the California 
          Escrow Law real estate and mortgage brokers, title companies, banks 
          and attorneys who engage in escrow activities are exempt from the 
          stringent requirements contained in the Escrow Law.  The EIC has 





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          advocated for years the elimination of the exemption for unlicensed 
          escrow practitioners and the regulation of all escrow agents under a 
          uniform Escrow Law and Regulations.  The EIC believes that this bill 
          is an important first step for the DRE to identify who among their 
          real estate licensees are conduction escrows so as to evaluate and 
          determine if any appropriate regulatory measures and follow up may 
          be required.  

        
        SUPPORT AND OPPOSITION:
        
         Support:  

        California Association of Realtors
        California Mortgage Association
        Escrow Institute of California

         Opposition:  

        None Received as of April 27, 2011.



        Consultant:Bill Gage