BILL ANALYSIS Ó
SB 676
Page 1
Date of Hearing: June 25, 2013
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Richard S. Gordon, Chair
SB 676 (Block) - As Amended: May 14, 2013
SENATE VOTE : 39-0
SUBJECT : Real estate records: unlawful destruction.
SUMMARY : Authorizes the Department of Real Estate (DRE) to
suspend or revoke a real estate license if the licensee
knowingly destroys, alters, conceals, mutilates, or falsifies
any of the books, accounts, or records that are required to be
maintained or are sought by the Commissioner of the DRE, as
specified. Specifically, this bill :
1)Authorizes DRE to suspend or revoke the license of any real
estate broker, real estate salesperson, or corporation
licensed as a real estate broker, if the real estate broker,
real estate salesperson, or any director, officer, employee,
or agent of the corporation licensed as a real estate broker
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.
2)Clarifies that the Commissioner may maintain an action for the
recovery of the cost of an audit in any court of competent
jurisdiction.
EXISTING LAW :
1)Requires a licensed real estate broker to retain copies of all
listings, deposit receipts, canceled checks, trust records,
and other documents executed by him or her or obtained by him
or her in connection with any transactions for which a real
estate broker license is required for three years. (Business
and Professions Code (BPC) 10148(a))
2)Requires a licensed real estate broker, after receiving
notice, to make the books, accounts, and records available for
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examination, inspection, and copying by the commissioner, or
his or her designated representative, during regular business
hours; specifies that upon the appearance of sufficient cause,
the broker shall be subject to audit without further notice,
except that the audit shall not be harassing in nature. (BPC
10148(a))
3)Authorizes the Commissioner to charge a real estate broker for
the cost of any audit, if the commissioner has found that the
broker has violated a regulation or rule of BPC 10145,
relating to transactions and payments. (BPC 10148(b))
4)Authorizes the Commissioner to suspend, revoke, or deny
renewal of a broker's license, if a broker fails to pay for
the cost of an audit within 60 days of mailing a notice of
billing, and specifies that the suspension or denial shall
remain in effect until the cost is paid or until the broker's
right to renew a license has expired. (BPC 10148(c))
5)Specifies that any person, including officers, directors,
agents or employees of corporations, who willfully violates or
knowingly participates in a violation of the Real Estate Law,
shall be guilty of a misdemeanor punishable by a fine not
exceeding $10,000, or by imprisonment in the county jail not
exceeding six months, or both. (BPC 1085)
6)Authorizes the Commissioner to suspend or revoke the license
of a real estate licensee, delay the renewal of a license of a
real estate licensee, or deny the issuance of a license to an
applicant, for specified violations to the Real Estate Law.
(BPC 10175 et seq.)
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . This bill provides direct authorization
for DRE to suspend or revoke a real estate license if the
licensee knowingly destroys or alters any records that are
required to be maintained or are sought by the Commissioner.
Currently, DRE must first prove that the destruction or
alteration constitutes fraud or dishonest dealing before
revoking a license, which is difficult when the records to
prove that fact have been altered or destroyed. This bill is
author sponsored.
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2)Author's statement. According to the author, "SB 676
expressly codifies that knowingly destroying, altering,
concealing, mutilating, or falsifying records is a violation
of real estate law resulting in two important outcomes. This
legislation creates clear rules for real estate professionals
and authorizes the DRE to seek administrative disciplinary
action against licensees who willingly engage in these
dishonest actions."
1)Problems with existing law . Existing law requires a real
estate broker to maintain copies of all records connected with
real estate transactions for three years. Failure to do so is
a misdemeanor punishable by a fine not exceeding $10,000, or
by imprisonment in the county jail not exceeding six months,
or both. Presently, to revoke the real estate license of a
licensee who destroys or alters these records requires that
DRE prove that the act constitutes fraud or dishonest dealing.
Unfortunately, this is difficult when the records have been
destroyed or altered. This bill will allow DRE to take
administrative action directly.
Explicitly codifying the increased penalty for violating the
real estate record retention requirement strengthens the DRE's
ability to investigate records and punish wrongdoing. The
clarification of the risk to the broker's license may also act
as an additional deterrent to the crime.
2)Audit clarification. Existing law authorizes the Commissioner
to charge a real estate broker for the cost of any audit, and
to suspend, revoke, or deny renewal of a broker's license, if
a broker fails to pay for the cost of an audit within 60 days
of mailing a notice of billing. The authorization for the
Commissioner to maintain an action for the recovery of the
cost in a court of competent jurisdiction, however, does not
clarify to which specific "cost" the authorization applies.
Clarifying that the "cost" refers specifically to the cost of
an audit provides greater certainty and prevents unnecessary
disputes over cost recovery.
3)Arguments in Support: The California Association of Realtors
states, "Existing law already prohibits any form of dishonest
conduct by a real estate licensee, and requires licensees to
make records available to the Department. We hope that by
clarifying the linkage between the professional obligation and
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the potential prosecution for violation, that SB 676 will
raise the quality of practice to the benefit of both consumers
and other licensees."
4)Double-referred . This bill is double-referred to the Assembly
Banking and Finance Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Realtors
Opposition
None on file.
Analysis Prepared by : Angela Pontes / B.,P. & C.P. / (916)
319-3301