BILL ANALYSIS �
SB 676
Page 1
Date of Hearing: August 5, 2013
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Roger Dickinson, Chair
SB 676 (Block) - As Amended: May 14, 2013
SENATE VOTE : 39-0
SUBJECT : Real estate records: unlawful destruction
SUMMARY : Authorizes the Bureau of Real Estate (BRE) to suspend
or revoke the license of any real estate broker, real estate
salesperson, or corporation licensed as a real estate broker if
they knowingly destroy, alter, conceal mutilate, or falsify any
books, accounts, or records that are required to be maintained.
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. (Business & Professions
Code � 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.
(Business & Professions Code � 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. (Business & Professions Code � 10148)
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. (Business & Professions Code � 10185)
5)Gives the Real Estate Commissioner authority to investigate
licensees, bring administrative actions against licensees, and
SB 676
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in some circumstances suspend or revoke a real estate
licensee. (Business & Professions Code �� 10175, 10176)
FISCAL EFFECT : None
COMMENTS :
According to the author, In order to thwart investigations and
hide wrong doing, some real estate licensees have falsified or
destroyed records required to be kept under Business and
Professions Code Section 10148 (a). Rare examples include a
broker who submitted bank statements with the dollar figures
altered for the purposes of hiding trust fund shortages and
false entries in accounting records in order to hide money that
has been mishandled.
In these instances, Real Estate Law is silent on the
Commissioner's specific authority to take disciplinary action
against the licensee. 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. First, the legislation creates clear rules
for real estate professionals and secondly, it authorizes the
BRE to seek administrative disciplinary action against licensees
who willingly engage in these dishonest actions.
This bill provides direct authorization for BRE 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, BRE 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.
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 BRE 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
BRE to take administrative action directly.
SB 676
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Explicitly codifying the increased penalty for violating the
real estate record retention requirement strengthens the BRE'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.
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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Realtors
Opposition
None on file.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081