BILL ANALYSIS �
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|Hearing Date:April 8, 2013 |Bill No:SB |
| |676 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 676Author:Block
As Introduced February 22, 2013 Fiscal: Yes
SUBJECT: Real estate records: unlawful destruction.
SUMMARY: This bill clarifies that there is a misdemeanor penalty when
a real estate broker, salesperson, or a director, officer, employee,
agent, or shareholder of a corporation licensed as a real estate
broker, unlawfully destroys records required to be maintained by a
real estate broker, or records that have been sought in connection
with an investigation, audit, or examination by the Real Estate
Commissioner.
Existing law:
1) Requires a real estate broker to retain for three years copies
of all listings, deposit receipts, canceled checks, trust
records, and other documents executed or obtained by the broker
in connection with any transactions for which a real estate
broker license is required. (BPC � 10148)
2) Requires a broker, after receiving notice, to make available
for examination, inspection, and copying by the Real Estate
Commissioner or the Commissioner's designee, during regular
business hours, all requested records the broker is legally
required to retain.
(BPC � 10148)
3) States that after an initial inspection of retained records,
and upon the appearance of sufficient cause, a broker is subject
to audit without further notice, so long as the audit is not
harassing. (BPC � 10148)
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4) States that any person who willfully violates or knowingly
participates in the violation of a provision of the Real Estate
Division of the Business and Professions Code is guilty of a
misdemeanor. (BPC � 10185)
5) Gives the Real Estate Commissioner authority to investigate
licensees, bring administrative actions against licensees, and in
some circumstances suspend or revoke a real estate licensee.
(BPC �� 10175, 10176)
This bill: Clarifies that any real estate broker, real estate
salesperson, or any director, officer, employee, agent, or shareholder
of a corporation licensed as a real estate broker, who knowingly
destroys, alters, conceals, mutilates, or falsifies any of the books,
papers, writings, documents, or tangible objects that are required to
be maintained by this section or that have been sought in connection
with an investigation, audit, or examination of a real estate licensee
by the commissioner is guilty of a misdemeanor.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1. Purpose. In order to thwart investigations and hide wrong doing,
some real estate licensees have falsified or destroyed records
required to be kept under law. According to the Author, this bill
resolves a weakness in current Real Estate Law, by clarifying that
there is a misdemeanor penalty for real estate licensees, and other
persons, who knowingly destroy, alter, conceal, mutilate, or
falsify records required to be kept under law or sought in an
investigation. This bill makes the punishment for committing a
knowing violation of BPC � 10148 clear and obvious.
2. Background. Currently, a licensee's failure to retain records
required under BPC � 10148 may be punished through an
administrative action or criminal prosecution. Although BPC �
10148 itself is silent on the penalty for violating the statute,
other sections (BPC �� 10175, 10176, 10185) authorize strong
penalties for violating the records retention requirement.
Potential discipline includes professional penalties, such as
suspension or revocation of the violator's real estate license. To
take action against a license, the Real Estate Commissioner must
prove in an administrative action that the accused individual's
acts constituted fraud or dishonest dealing. Criminal penalties
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are available pursuant to BPC � 10185, which states that a willful
violation or knowing participation in a violation of real estate
law may be prosecuted as a misdemeanor.
According to the Author, this bill is necessary to create clear
rules for real estate professionals, and to authorize the
Department of Real Estate to seek administrative disciplinary
action against licensees who engage in actions prohibited by BPC �
10148.
3. Staff Comments: Real estate law already authorizes the Real Estate
Commissioner to take administrative action against licensees who
engage in fraud or dishonest dealings, and states that it is a
misdemeanor to willfully or knowingly violate real estate law.
However, adding language to BPC � 10148 to clarify the penalty for
violating the record retention requirement strengthens the record
retention requirement. By making a closer, clearer connection
between the prohibited actions and the criminal penalties, this
bill emphasizes the importance of retaining accurate records and
the seriousness of failing to comply with BPC � 10148.
4. Arguments in Support. The California Association of Realtors,
(CAR) supports this bill. CAR states that it hopes that clarifying
the linkage between the professional obligations related to record
keeping and the potential prosecution for violating those
requirements will raise the quality of practice, to the benefit of
consumers and other licensees.
NOTE : Double-referral to Rules Committee second.
SUPPORT AND OPPOSITION:
Support:
California Association of Realtors
Opposition: None received as of April 2, 2013
Consultant: Kristin Webb
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