BILL ANALYSIS Ó
SB 510
Page 1
Date of Hearing: June 27, 2011
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Mike Eng, Chair
SB 510 (Correa) - As Amended: May 4, 2011
SENATE VOTE : 39-0
SUBJECT : Real estate brokers: corporate officers: designating
branch managers.
SUMMARY : Establishes requirements for an individual to become
a real estate branch manager and authorizes the Commissioner of
the Department of Real Estate (DRE) to discipline a branch
manager for failure to supervise branch operations.
Specifically, this bill :
1)Authorizes an employing real estate broker or corporate
designated broker officer to appoint a real estate broker
licensee or real estate sales licensee as a manager of a
branch office or division of the employing broker's or
employing corporate designated broker officer's real estate
business and 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 officer who fails to exercise reasonable
supervision and control over the activities of the
corporation.
3)Subjects a licensee accepting appointment as a manager to
disciplinary action, including suspension or revocation of the
appointee's license, for failure to properly supervise
licensed activity over which the appointee is given authority.
4)Requires any appointment made pursuant to this bill to be made
by means of a written contract in which the appointed manager
accepts the delegated responsibility. The broker or corporate
designated broker officer must retain a copy of the contract
and send a notice to DRE, in a form approved by the
Commissioner, identifying the appointee and the branch office
the manager is appointed to supervise.
SB 510
Page 2
5)Provides that a licensee shall not be appointed as a manager
if any of the following apply:
a) The licensee holds a restricted license;
b) The licensee is or has been subject to an order of
debarment; or,
c) The licensee 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
officer to immediately notify the Commissioner in writing
whenever an appointment of a branch manager is terminated or
changed.
7)Becomes operative on July 1, 2012.
EXISTING LAW
1)Defines a real estate salesperson as a natural person who, for
compensation or in expectation of compensation, is employed by
a licensed real estate broker to engage in one or more of the
activities for which a real estate license is required.
(Business and Professions Code, Section 10131)
2)Provides that the Commissioner may suspend or revoke the
license of a real estate broker licensee who fails to exercise
reasonable supervision over the activities of his or her
salespersons or who, as the officer designated by a corporate
broker licensee, fails to exercise reasonable supervision and
control over the activities of the corporation. (Business and
Professions Code, Section 10160, 10161.8, 10162, 10163)
3)Requires a corporation that is issued a license to also
procure additional licenses for each branch office. (Business
and Profession Code, Section 10158, 10211)
4)Allows corporate broker licensee to assign to a branch manager
supervisory responsibility over salespersons in branch
offices. (Business and Profession Code, Section 10159.2)
5)Requires real estate brokers to exercise reasonable
SB 510
Page 3
supervision over the activities of their salespersons, as
specified, and provides that a broker may use the services of
brokers and salespersons to assist in this task, as long as
the broker does not relinquish overall responsibility for
supervising the acts of salespersons licensed to the broker
(DRE Regulation 2725).
FISCAL EFFECT : Unknown.
COMMENTS :
According to the author, SB 510 will add accountability to the
managers of real estate branch offices by ensuring that
managers' licenses can be sanctioned for failure to supervise.
The bill sets minimum standards for licensees that may be
appointed as a branch office manager, and empowers DRE to
require registration of appointed managers in a form approved by
the DRE.
This legislative proposal is one of the recommendations of the
DRE Broker Supervision Task Force. The Task Force was an
internal group with industry participation, set up by the DRE
Commissioner in 2009-2010 that looked at ways to improve the
supervision of sales licensees.
In its September 2010 report, the task force explained,
"Currently, there are no license disciplinary consequences to
any subordinate licensee when supervisorial authority is
delegated under the provisions of Regulation 2725 for failure to
properly supervise. It was decided that legislation should be
considered to provide a multi-tiered operational structure that
would hold a subordinate supervisor delegate liable for proper
supervision potentially along with the designated officer or
broker. Real estate licensee(s) accepting delegated supervisory
authority shall be subject to disciplinary action, potentially
along with the responsible broker or designated officer, for
failing to properly supervise the licensed activities performed
within his/her delegated areas of responsibility. Regardless of
any such agreements, the principal real estate broker or
designated officer of a corporation shall exercise reasonable
supervision and control over all activities that require a real
estate license."
The task force concluded that requirements for appointment as an
office manager should include those provided for in this bill (a
SB 510
Page 4
minimum of two years for any real estate salesperson appointed
to a branch manager position, inability of anyone with a
restricted license or subject to a bar order to act as a branch
manager, and a requirement that a written contract be in place
between the employing broker and the branch manager).
As noted above, the task force envisions that real estate
brokers who head up large real estate offices will be able to
delegate branch manager responsibilities to real estate
salespersons and real estate brokers in their employ. This is
nothing new. Employing brokers already delegate branch manager
and office manager responsibility to others. What is new in
this bill is the concept that the licensees to whom this
responsibility is delegated will be subject to disciplinary
action for failure to properly supervise.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Realtors
Opposition
None on file.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081