BILL NUMBER: SB 875 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 20, 2012
AMENDED IN ASSEMBLY AUGUST 6, 2012
AMENDED IN ASSEMBLY JUNE 6, 2012
AMENDED IN ASSEMBLY MAY 25, 2012
AMENDED IN SENATE JANUARY 4, 2012
AMENDED IN SENATE MARCH 25, 2011
INTRODUCED BY Senator Price
FEBRUARY 18, 2011
An act to amend Sections 10087, 10100, 10152, 10166.06,
10176, 10460, 10461, and 10463 of, to add Section 10153.01
to, and to repeal Section 10154 of, the Business and Professions
Code, relating to real estate.
LEGISLATIVE COUNSEL'S DIGEST
SB 875, as amended, Price. Real estate licensees.
Existing law, the Real Estate Law, provides for the licensure and
regulation of real estate brokers, real estate salespersons, and
mortgage loan originators by the Department of Real Estate and makes
a willful violation of that law a misdemeanor. Existing law
authorizes the department to deny, suspend, or revoke a license or
license endorsement on various grounds using specified procedures
generally applicable to state agencies. Under existing law, a hearing
to determine whether to issue a license must be initiated by filing
a statement of issues. Existing law provides additional procedures
with respect to certain licensing boards, including, among other
things, the authority to notify an applicant that the application is
denied in lieu of filing a statement of issues, as specified.
This bill would require the Department of Real Estate to use those
additional procedures when denying a license or a license
endorsement.
Existing law authorizes the commissioner to require any proof he
or she may deem advisable concerning the honesty and truthfulness of
an applicant for a real estate license or license examination, or of
the officers, directors, or persons owning more than 10% of the stock
of a corporate applicant, before authorizing the issuance of a real
estate license. Existing law authorizes a person whose license has
been revoked or suspended to petition the agency for reinstatement of
the license or reduction of a penalty, as specified.
This bill would authorize the commissioner to require any proof
concerning the honesty and truthfulness of the officers, directors,
or persons owning 10% or more of the stock of a corporate applicant.
The bill would also require the commissioner to require a person
submitting a petition for reinstatement of a license or reduction of
a penalty to submit his or her fingerprints with the petition.
Existing law authorizes the commissioner to suspend or bar a
person from a position of employment, management, or control (1)
where that action is in the public interest and the person has
committed or caused a violation of the Real Estate Law or a rule or
order adopted thereunder or (2) where the person has been convicted
of a crime or held liable in a civil action where the judgment
involves an offense involving dishonesty, fraud, or deceit or any
other offense reasonably related to the qualifications, functions, or
duties of a person engaged in the real estate business.
This bill would also authorize the commissioner to bar that person
from participation in examinations for licensure and would specify
that a person who is suspended or barred from a position of
employment, management, or control is also barred from participation
in examinations for licensure.
The bill would prohibit a person from cheating on, subverting, or
attempting to subvert a licensing examination and would authorize the
commissioner to bar a person who willfully engages in that conduct
from taking a licensing examination and from holding an active real
estate license for a period of up to 3 years. Because a willful
violation of the prohibition on cheating or subverting a licensing
examination would be a crime, the bill would impose a state-mandated
local program.
Existing law requires a person to obtain a real estate license
endorsement from the commissioner in order to engage in the business
of a mortgage loan originator, as defined. Existing law requires an
applicant for that license endorsement to pass a specified written
test and authorizes a person who fails the test to retake the test up
to 3 consecutive times, but requires an applicant to wait at least 6
months before retesting if the applicant fails 3 consecutive
retests.
This bill would eliminate the 3-test limit and would require an
applicant to wait at least 6 months before retesting if the applicant
fails 3 consecutive tests. The bill would exempt certain military
licensees from being required to renew their license endorsement
until the license period that commences after they engage in business
or after one year following the termination of their military
service, whichever occurs first.
Existing law authorizes the commissioner to suspend or revoke a
real estate license if the licensee has been found guilty of
specified acts, including acting for more than one party in a
transaction without the knowledge or consent of all parties.
This bill would allow those sanctions to be imposed if a licensee
described above acted without the knowledge or written consent of all
parties.
This bill would also delete certain obsolete language and would
make other related changes.
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 10087 of the Business and Professions Code is
amended to read:
10087. (a) In addition to acting pursuant to the authority
provided under Sections 10086, 10176, and 10177, the commissioner
may, after appropriate notice and opportunity for a hearing, by
order, suspend, bar from any position of employment, management, or
control, or bar from participation in an examination for licensure,
for a period not exceeding 36 months, a real estate salesperson or
real estate broker, or an unlicensed person issued an order under
Section 10086, if the commissioner finds either of the following:
(1) That the suspension or bar is in the public interest and that
the person has committed or caused a violation of this division or
rule or order of the commissioner, which violation was either known
or should have been known by the person committing or causing it or
has caused material damage to the public.
(2) That the person has been convicted of or pleaded nolo
contendere to any crime, or has been held liable in any civil action
by final judgment, or any administrative judgment by any public
agency, if that crime or civil or administrative judgment involved
any offense involving dishonesty, fraud, or deceit, or any other
offense reasonably related to the qualifications, functions, or
duties of a person engaged in the real estate business in accordance
with the provisions of this division.
(b) Within 15 days from the date of a notice of intention to issue
an order pursuant to subdivision (a), the person may request a
hearing under the Administrative Procedure Act (Chapter 4.5
(commencing with Section 11400) of Division 3 of Title 2 of the
Government Code). If no hearing is requested within 15 days after the
mailing or service of that notice and none is ordered by the
commissioner, the failure to request a hearing shall constitute a
waiver of the right to a hearing.
(c) Upon receipt of a notice of intention to issue an order
pursuant to this section, the person who is the subject of the
proposed order is immediately prohibited from engaging in any
business activity involving real estate that is subject to regulation
under this division.
(d) Persons suspended or barred under this section are prohibited
from participating in any business activity of a real estate
salesperson or a real estate broker and from engaging in any real
estate-related business activity on the premises where a real estate
salesperson or real estate broker is conducting business. Persons
suspended or barred under this section are also prohibited from
participating in any real estate-related business activity of a
finance lender, residential mortgage lender, bank, credit union,
escrow company, title company, or underwritten title company. Persons
suspended or barred from a position of employment, management, or
control under this section are also barred from participating in
examinations for licensure.
SEC. 2. Section 10100 of the Business and Professions Code is
amended to read:
10100. (a) Before suspending or revoking a license or license
endorsement issued under the provisions of this part, the department
shall proceed as prescribed by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code, and
the department shall have all the powers granted therein.
(b) Upon denial of an application for a license or license
endorsement issuable under the provisions of this part, the
department shall proceed under Sections 485 to 488, inclusive.
SEC. 3. Section 10152 of the Business and Professions Code is
amended to read:
10152. (a) The commissioner may require any other proof he or she
may deem advisable concerning the honesty and truthfulness of an
applicant for a real estate license or license examination, or of the
officers, directors, or persons owning 10 percent or more of the
stock, of a corporation making application therefor, before
authorizing the issuance of a real estate license. For this purpose
the commissioner may call a hearing in accordance with this part
relating to hearings. To assist in his or her determination the
commissioner shall require every original applicant to be
fingerprinted prior to issuing a license. The commissioner may
require the fingerprints to be submitted either with the application
to take the license examination or with the application for a real
estate license.
(b) The commissioner shall require a person who submits a petition
for reinstatement of his or her license or reduction of a penalty
pursuant to Section 11522 of the Government Code, in addition to
meeting any other requirements imposed for purposes of the
reinstatement or penalty reduction, to submit his or her fingerprints
with the petition.
SEC. 4. Section 10153.01 is added to the Business and Professions
Code, to read:
10153.01. (a) No person shall cheat on, subvert, or attempt to
subvert a licensing examination given by the department. Cheating on,
subverting, or attempting to subvert a licensing examination
includes, but is not limited to, engaging in, soliciting, or
procuring any of the following:
(1) Any communication between one or more examinees and any
person, other than a proctor or examination official, while the
examination is in progress.
(2) Copying answers from another examinee or permitting one's
answers to be copied by another examinee.
(3) The taking of all or a part of the examination by a person
other than the applicant.
(4) Removing from the examination room any examination materials
without authorization.
(5) The unauthorized reproduction by any means of any portion of
the actual licensing examination.
(6) Aiding by any means the unauthorized reproduction of any
portion of the actual licensing examination.
(7) Possession or use at any time during the examination or while
the examinee is on the examination premises of any device, material,
or document that is not expressly authorized for use by examinees
during the examination, including, but not limited to, notes, crib
sheets, textbooks, and electronic devices.
(8) Failure to follow any examination instruction or rule related
to examination security.
(9) Providing false, fraudulent, or materially misleading
information concerning education, experience, or other qualifications
as part of, or in support of, any application for admission to an
examination.
(b) The commissioner may bar any candidate who willfully cheats
on, subverts, or attempts to subvert an examination from taking any
license examination and from holding an active real estate license
under any provision of this code for a period of up to three years.
SEC. 5. Section 10154 of the Business and Professions Code is
repealed.
SEC. 6. Section 10166.06 of the Business and Professions Code is
amended to read:
10166.06. (a) In addition to the requirements of Section 10153,
an applicant for a license endorsement as a mortgage loan originator
shall complete at least 20 hours of education courses, which shall
include at least the following:
(1) Three hours of federal law and regulations.
(2) Three hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues.
(3) Two hours of training related to lending standards for the
nontraditional mortgage product marketplace.
(b) For purposes of this section, education courses are only
acceptable if they have been reviewed and approved, or otherwise
deemed acceptable, by the Nationwide Mortgage Licensing System and
Registry, in accordance with the SAFE Act. Education may be offered
in a classroom, online, or by any other means approved by the
Nationwide Mortgage Licensing System and Registry, in accordance with
the SAFE Act.
(c) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner toward completion of the education requirements of this
section.
(d) Before being issued a license endorsement to act as a mortgage
loan originator, an individual shall pass a qualified written test
developed or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry and administered by a test provider
approved or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry.
(e) A written test shall not be treated as a qualified written
test for purposes of this section, unless the test adequately
measures the applicant's knowledge and comprehension in the following
subject areas: ethics, federal law and regulation pertaining to
mortgage origination, state law and regulation pertaining to mortgage
origination, and federal and state law and regulation relating to
fraud, consumer protection, the nontraditional mortgage marketplace,
and fair lending issues.
(f) Nothing in this section shall prohibit a test provider
approved by the Nationwide Mortgage Licensing System and Registry
from providing a test at the location of the employer of the
applicant or any subsidiary or affiliate of the employer of the
applicant, or any entity with which the applicant holds an exclusive
arrangement to conduct the business of a mortgage loan originator.
(g) An individual shall not be considered to have passed a
qualified written test administered pursuant to this section unless
the individual achieves a test score of not less than 75 percent
correct answers to questions.
(h) An individual who fails the qualified written test may retake
the test, although at least 30 days must pass between each retesting,
except as provided in subdivision (i).
(i) An applicant who fails three consecutive tests shall wait at
least six months before retesting.
(j) A mortgage loan originator who fails to maintain a valid
license endorsement for a period of five years or longer or who fails
to register as a mortgage loan originator shall retake the qualified
written test.
SEC. 7. 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 a substantial misrepresentation.
(b) Making a false promise 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 written 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 an 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 a 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 an 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 the
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) Violating any section, division, or article of law which
provides that a violation of that section, division, or article of
law by a licensed person is a violation of that person's licensing
law, if it occurs within the scope of that person's duties as a
licensee.
SEC. 8. SEC. 7. Section 10460 of the
Business and Professions Code is amended to read:
10460. As used in this article:
(a) "Military licensee" refers to a person who, while holding a
license or license endorsement under the Real Estate Law, or any of
the statutes codified therein, entered the military service of the
United States and notifies the commissioner of that fact within six
months of such entry.
(b) "Persons in the military service of the United States"
includes the following persons and no others: all members of the
United States Army, the United States Navy, the United States Air
Force, the Marine Corps, the Merchant Marine in time of war, the
Coast Guard, the National Guard, and all officers of the Public
Health Service detailed by proper authority for duty either with the
Army or the Navy.
(c) "Military service" signifies federal service after October 1,
1940, on active duty with any branch of service heretofore referred
to or mentioned as well as training or education under the
supervision of the United States preliminary to induction into the
military service. The terms "active service" or "active duty" include
the period during which a person in military service is absent from
duty on account of sickness, wounds, leave, or other lawful cause.
SEC. 9. SEC. 8. Section 10461 of the
Business and Professions Code is amended to read:
10461. A military licensee shall not be required to renew his or
her license or license endorsement under this part, or his or her
license under Chapter 19 of Division 3, until the beginning of the
license or license endorsement period which first commences (a) after
his or her again engaging in business, or (b) after one year
following termination of military service, whichever is the earlier.
SEC. 10. SEC. 9. Section 10463 of
the Business and Professions Code is amended to read:
10463. A person who would qualify as a military licensee except
for the failure to notify the commissioner of his or her entry into
the military service of the United States may apply to the
commissioner for reinstatement of his or her license or license
endorsement upon resuming business or within one year following
termination of military service, whichever is earlier. The
commissioner shall reinstate the applicant if he or she finds that
the applicant would be entitled to the privileges of this article
except for his or her failure to give the commissioner notice of his
or her entry into the military service of the United States and that
the applicant has complied with Article 2.5 (commencing with Section
10170). In the event the applicant failed to notify the commissioner
of his or her entry into the military service as provided, he or she
shall be required to submit proof of his or her previous licensure or
license endorsement within seven years of the date of entry into the
military service to permit reinstatement of his or her license or
license endorsement.
SEC. 11. SEC. 10. 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.