BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 510|
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THIRD READING
Bill No: SB 510
Author: Correa (D)
Amended: 5/4/11
Vote: 21
SENATE BUSINESS, PROF & ECON DEVELOP COMM : 9-0, 04/11/11
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Walters, Wyland
SENATE BANKING & FINANCIAL INST. COMM : 6-0, 04/27/11
AYES: Vargas, Blakeslee, Evans, Kehoe, Liu, Walters
NO VOTE RECORDED: Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Real estate brokers: corporate officers:
designating branch
SOURCE : California Association of Realtors
DIGEST : This bill establishes various minimum
requirements for an individual to become a branch manager
and authorizes the Commissioner of the Department of Real
Estate (DRE) to discipline a branch manager for failure to
supervise branch operations.
ANALYSIS : Existing law:
1.Defines real estate broker as a person who, for
compensation or in expectation of compensation, does or
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negotiates to do the following:
A. Sells or offers to sell, buys or offers to buy,
solicits prospective sellers or purchasers of,
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 exchange of leases on
real property, or on a business opportunity, or
collects rents from real property, or improvements
thereon, or 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 for or negotiates
loans or collects payments or performs services for
borrowers or lenders or note owners in connection with
loans secured directly or collaterally by liens on
real property or on a business opportunity.
E. Sells or offers to sell, buys or offers to buy, or
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.
1.Authorizes the commissioner of the real estate board to
suspend or revoke the license of a real estate licensee
for a violation of the Real Estate Law.
2.Authorizes the Commissioner of the DRE to suspend or
revoke a license or deny the issuance of a license where
licensee (either a person or a corporation) commits a
number of violations. Included in these violations is a
broker licensee's failure to exercise reasonable
supervision over his or her salespersons or an officer
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designated by the corporate broker licensee's failure to
exercise reasonable supervision over the corporation.
3.Requires a corporation that is issued a license to also
procure additional licenses for each branch office.
4.Allows corporate broker licensee to assign to a branch
manager supervisory responsibility over salespersons in
branch offices.
This bill:
1.Authorizes an employing real estate broker or corporate
designated broker officer appointed by an employing real
estate broker to appoint a licensee to manage a branch
office or division of the employing broker's or employing
corporate designated broker officer's real estate
business, and to delegate to the appointed manager the
responsibility to oversee day-to-day operations,
supervise the licensed activities of licensees, and
supervise clerical staff employed in the branch office or
division.
2.Provides that nothing in this bill shall be construed to
limit the responsibilities of an employing broker or a
corporate designated broker who fails to exercise
reasonable supervision and control over the activities of
the corporation.
3.Subjects a licensee accepting appointment as a branch
office or division manager to disciplinary action for
failure to properly supervise licensed activity over
which the appointee is given authority.
4.Requires any appointment made pursuant to the provisions
of the bill to be made through means of a written
contract in which the appointee accepts the delegated
responsibility, and requires the employing broker or
corporate designated officer retain a copy of the
contract and send a notice to the DRE, in a form approved
by the Commissioner of Real Estate, identifying the
appointee and the branch office or division the manager
is appointed to supervise.
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5.Provide that a licensee may not be appointed as a
manager, if he or she holds a restricted license, is or
has been subject to an order of debarment, or is a
salesperson with less than two years of full-time real
estate experience within five years preceding the
appointment.
6.Requires the employing broker or corporate designated
broker notify the Commissioner in writing whenever an
appointment of a branch manager is terminated or changed.
7.Sunsets the bill on July 1, 2012.
Background
California Code of Regulations governing the DRE requires
reasonable supervision of salespersons including
establishment of policies, rules, procedures and systems to
review, oversee, inspect and manage. The form of such
policies, procedures, and systems takes into consideration
the numbers of employees and branches. A broker is
required to monitor compliance and may not relinquish
overall responsibility. However, this regulation does not
include any kind of disciplinary action when a broker fails
to carry out his or her supervisorial duties.
In August 2010, the Commissioner of the DRE proposed to
adopt regulations that would implement some portions of
this bill. Specifically, the regulations prohibited a
broker from delegating supervision to a licensee whose
license was subject to restriction, who was not licensed to
the employing broker, who had less than two years of
experience during the five years immediately preceding the
delegation and who had been subject to debarment in the
past seven years. Additionally, it required that when a
broker designated a branch manager, that designation must
be in writing. However, no provisions concerning the
discipline of branch office managers were considered in
these regulations because that action requires a statutory
change, which this bill hopes to accomplish.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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SUPPORT : (Verified 5/17/11)
California Association of Realtors (source)
ARGUMENTS IN SUPPORT : The California Association of
Realtors states that "SB 510 will add two much needed
changes to the law." Also, they add that "SB 510 does not
remove any existing accountability for the employer broker
that is at the head of the company; he or she is still just
as accountable for wrongful acts as under current law."
JJA:nl 5/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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