BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 345

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          Date of Hearing:  April 29, 2015


                                 Jimmy Gomez, Chair

          345 (Frazier) - As Amended March 16, 2015

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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill requires a real estate broker, as part of his or her  
          45 hours of continuing education (CE), to complete a 3-hour  
          course in the management of real estate offices and supervision  
          of licensed activities, and provides that elective CE courses  


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          may also include relevant information to assist salespersons and  
          brokers in understanding how to be effectively supervised.  

          FISCAL EFFECT:

          Costs to the California Bureau of Real Estate (CalBRE) will be  
          minor and absorbable within existing resources.


          1)Purpose. According to the author, "Current real estate law  
            requires a real estate broker to exercise reasonable  
            supervision over the activities of his or her salespersons.   
            Reasonable supervision includes the establishment of policies,  
            rules, procedures and systems to review, oversee, inspect and  
            manage real estate transactions.  Brokers are further required  
            to establish a system for monitoring compliance.  Supervision  
            is a critical part of a real estate broker's responsibility.   
            [This bill] allocates three hours of a licensed broker's  
            existing 45 hours of [CE] to be reserved for a course to  
            provide guidance of how to manage real estate offices,  
            salespersons, and broker associates, while also permitting  
            salespersons to elect to take a course containing relevant  
            information to assist them in understanding how to be  
            effectively supervised by a responsible broker or branch  

          2)Licensing and CEs.  To obtain a real estate salesperson  
            license, an individual must pass a real estate examination and  
            fulfill certain real estate education requirements.  To obtain  
            a real estate broker license, an individual, in most cases,  
            must have held a real estate salesperson's license for at  
            least two years during which time he or she must have been  
            actively engaged in real estate, meet certain real estate  


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            education requirements in addition to passing an examination.   

            Broker and salesperson licenses are issued for a four-year  
            period.  In general, both types of licenses may be renewed by  
            submitting the appropriate fee and application, and evidence  
            of completion of 45 hours of CalBRE-approved CE courses. These  
            courses include 15 hours of required courses in ethics, agency  
            relationships, trust fund handling, fair housing, and risk  
            management, and at least 18 hours in courses dedicated to  
            consumer protection.  The remaining courses, up to 12 hours of  
            electives, may be related either to consumer protection or  
            consumer services.  

          3)Failure to Supervise. According to the CalBRE's website, one  
            of the six most common types of violations of the Real Estate  
            Law resulting in disciplinary action include failure to  
            supervise, in violation of BPC Section 10177(h), which  
            requires a real estate broker to exercise reasonable  
            supervision over the activities of salespersons, or as the  
            designated officer of a corporation, to exercise the  
            activities conducted by the corporation for which a real  
            estate license is required.  CalBRE's website also indicates  
            that lack of supervision on the part of a broker is a  
            recurring problem.

            This bill seeks to address this problem by requiring, as a  
            part of existing CE requirements for brokers, a three hour  
            course on management and supervision, and by allowing  
            salespersons to take a course on how to be effectively  
            supervised by including that issue under elective CE  

          4)Prior Legislation. 


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             a)   SB 510 (Correa), Chapter 709, Statutes of 2012,  
               established various minimum requirements for an individual  
               to become a branch manager and authorized the Commissioner  
               to discipline a branch manager for failure to supervise  
               branch operations.

             b)   AB 2105 (DeSaulnier) of 2008, among other things, would  
               have required the consumer protection CE courses to include  
               instruction in financial elder and dependent adult abuse  
               signs and reporting requirements.  This bill was vetoed by  
               Governor Schwarzenegger for reasons primarily related to  
               other portions of the bill. 

          Analysis Prepared by:Jennifer Swenson / APPR. / (916)