BILL ANALYSIS Ó
SB 53
Page 1
SENATE THIRD READING
SB 53 (Ron Calderon and Vargas)
As Amended June 15, 2011
Majority vote
SENATE VOTE :38-0
BUSINESS & PROFESSIONS 9-0 BANKING &
FINANCE 10-0
-----------------------------------------------------------------
|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Eng, Achadjian, Fletcher, |
| |Allen, Butler, Eng, | |Fuentes, Gatto, Harkey, |
| |Hagman, Hill, Ma, Smyth | |Roger Hernández, Lara, |
| | | |Perea, Torres |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Fuentes, Harkey, | | |
| |Blumenfield, Bradford, | | |
| |Charles Calderon, Campos, | | |
| |Davis, Donnelly, Gatto, | | |
| |Hall, Hill, Lara, | | |
| |Mitchell, Nielsen, Norby, | | |
| |Solorio, Wagner | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Makes several changes to California's Real Estate Law
to give the Department of Real Estate (DRE) more enforcement
tools to take action against mortgage fraud and other real
estate violations, add safeguards to protect consumers who seek
services from real estate licensees, and make technical changes
to portions of the Real Estate Law. Specifically, this bill :
1)Provides that, in a case where a licensee refuses to obey an
order of the court or obey a subpoena, the Department of Real
Estate (Commissioner) may, by a noticed motion, apply directly
to the Superior Court (without the need for the Attorney
General to act as the Commissioner's attorney) and the Court
may issue an order requiring the licensee to appear before the
SB 53
Page 2
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 authority to DRE to issue citations and/or citations
and fines, capped at $2,500 per violation, to licensees found
to have violated provisions of the Real Estate Law. Licensees
may appeal the findings of any such citation through an
administrative hearing process conducted according to current
law governing administrative hearings. The Commissioner may
apply to superior court for an order to comply, as specified.
Failure to comply shall be subject to disciplinary action, as
specified. A license may not be renewed if fines are unpaid
or citation terms have not been met. Fines must be deposited
into the Real Estate Fund's Recovery Account, to be made
available upon legislative appropriation to reimburse
consumers for losses resulting from violations of the Real
Estate Law.
3)Specifies that nothing prevents the Commissioner 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,
a 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. Any release that contains the identity of the
person or business under investigation shall include language
explaining that the person or business is entitled to a public
hearing on the merits of the order or accusation. The release
may also clarify the procedural aspects and current status of
the investigation or proceeding.
5)Requires, beginning July 1, 2012, a real estate broker who
engages in escrow activities for five or more transactions
SB 53
Page 3
within a year, as specified, or whose escrow activities equal
or exceed $1 million in a calendar year, to file with DRE a
report within 60 days providing certain information, as
specified. The real estate broker may file consolidated
reports if the broker is subject to this bill's provisions and
specified current-law requirements to report to DRE. Failure
to report incurs a penalty of $50 per day up to the 30th day,
after which daily fines increase to $100 up to a total of
$10,000. The Commissioner may suspend or revoke the license
of a broker who fails to pay, and may bring court action to
collect payment.
6)Exempts the reports specified above from specified public
disclosure. Pursuant to this exemption, this bill makes
findings to demonstrate the interest being protected, stating
that in order to allow DRE to fully accomplish its goals, it
is imperative to protect the interests of those persons
submitting information to DRE to ensure that any personal or
sensitive business information that this bill requires those
persons to submit is protected as confidential information.
7)Provides, beginning July 1, 2012, that the Commissioner may
delay renewal of a license pursuant to any acts as specified
under current law for which the Commissioner may suspend,
revoke or deny the issuance of a license, 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 under current law
for which the Commissioner may suspend, revoke or deny the
issuance of a license, even though the licensee has fulfilled
the requirements for licensure pursuant to current law,
including fulfilling continuing education requirements.
9)Requires a real estate broker to submit a copy of information
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, to any investor from whom the real
estate broker obtains funds in connection with the transaction
SB 53
Page 4
or other provision of law pertaining to these types of
transactions, within 10 days of receipt of those funds.
Recasts and updates certain provisions and clarifies the
repeal of specified provisions relative to these transactions.
10)Provides that DRE may obtain copies of full-face engraved
pictures or photos of individuals directly from the Department
of Motor Vehicles (DMV) for purposes of enforcing the Real
Estate Law and the Subdivided Lands Law.
11)Makes clarifying and technical changes to certain enforcement
provisions of the Real Estate Law, and contains
double-jointing language with SB 6 (Ron Calderon and Vargas).
EXISTING LAW
1)Regulates real estate transactions and licenses real estate
agents, brokers and salespersons through the DRE.
2)Provides that the DRE 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.
3)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.
4)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
SB 53
Page 5
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% or more of the corporation's
stock has violated any of those provisions as specified.
5)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.
FISCAL EFFECT : According to Assembly Appropriations Committee,
costs associated with this legislation are minor and absorbable
within existing DRE resources.
COMMENTS : According to the authors, this bill makes several
changes to California's Real Estate Law to give DRE more
enforcement tools and add safeguards to protect consumers who
seek services from real estate licensees. This bill also makes
technical changes intended to clean up certain portions of the
Real Estate Law.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301
FN: 0002129