BILL ANALYSIS Ó
AB 345
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
345 (Frazier) - As Amended March 16, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
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
AB 345
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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.
COMMENTS:
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
manager."
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
requirements.
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)
319-2081