BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 345|
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THIRD READING
Bill No: AB 345
Author: Frazier (D)
Amended: 3/16/15 in Assembly
Vote: 21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 6/8/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 77-0, 5/7/15 (Consent) - See last page for
vote
SUBJECT: Real estate licensees: continuing education
requirements
SOURCE: California Association of REALTORS
DIGEST: This bill requires a broker to complete a three-hour
course in management of real estate offices and supervision of
licensed activities as part of the 45 hours of required
continuing education (CE) for license renewal.
ANALYSIS:
Existing law:
1)Provides for the licensure and regulation of real estate
brokers and salesperson by the Real Estate Commissioner.
(Business and Professions Code (BPC) § 10050)
2)Requires a responsible broker, as defined, to exercise control
and supervision of salespersons. (BPC § 10159.7)
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3)Requires a corporate broker licensee to designate an officer
who is a broker to be responsible for the supervision and
control of the activities of the officers, employees and
salespersons. (BPC §§ 10211, 10159.2)
4)Defines the duties of a real estate broker as a person who,
for compensation or in expectation of compensation, performs
any of the following for another individual: sells, buys, or
solicits prospective sellers or purchasers of real property or
a business opportunity, leases, rents, or solicits listings of
places for rent or negotiates leases on real property, assists
or offers to assist in filing an application for the purchase
or lease of lands owned by the state or federal government, or
solicits or negotiates loans, liens on property, or other
collateral for borrowers or lenders on real property or
business opportunities. (BPC § 10131)
5)Authorizes an employing broker or corporate designated broker
officer to appoint a licensee as a manager of a branch office
or division of a real estate business if specified
requirements are met. (BPC § 10164)
6)Requires a licensee to complete 45 hours of CE in order to
renew his or her license. This CE includes:
a) A three-hour course in ethics, professional conduct, and
legal aspects of real estate (relevant legislation,
regulations, articles, reports, studies, court decision).
b) Four three-hour courses in: agency relationships and
duties in a real estate brokerage practice, trust fund
accounting and handling, fair housing, and risk management.
c) At least 18 hours of courses or programs related to
consumer protection.
d) Other courses and programs that will enable a licensee
to achieve a high level of competence in serving the
objectives of consumers who may engage the services of
licensees to secure, transfer, financing, or similar
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objects with respect to real property. (BPC § 10170.5)
7)Authorizes the Commissioner to suspend or revoke a real estate
license of a licensee or of a corporation if the licensee, or
an officer, director, or person owning or controlling 10% or
more of the corporation's stock, has, as a broker licensee,
failed to exercise reasonable supervision over the activities
of his or her salespersons, or, as the officer designated by a
corporate broker licensee, failed to exercise reasonable
supervision and control of the activities of the corporation
for which a real estate license is required. (BPC § 10177(h))
8)Exempts licensees from completing the 45 hours of CE if the
licensee can submit proof to the Commissioner that he or she
has been a real estate licensee in good standing for 30
continuous years in this state and is 70 years of age or
older. (BPC § 10170.8)
9)Makes willful violation of the Real Estate Law a misdemeanor.
(BPC § 10185)
This bill:
1)Requires a broker, as part of his or her 45-hour CE
requirement, to complete a three-hour course in the management
of offices and the supervision of licensed activities.
2)Permits salespersons, as part of their CE requirements, to
elect to take other courses and programs in organizational
management techniques, including information to assist them in
understanding how to be effectively supervised by a
responsible broker or branch manager.
3)Makes other technical and conforming changes.
Background
California adopted the Real Estate Act in 1919 to protect the
public in real estate and mortgage transactions involving the
services of an agent. The requirement of real estate
qualifications enables the Commissioner to ascertain whether or
not a licensee meets certain standards of knowledge and honesty
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for the salesperson and broker license. Short-term vacation
rental agents, employees of certain lending institutions, and
resident managers of apartment buildings and complexes or their
employees are exempt from these licensure requirements.
To obtain a real estate salesperson license, an applicant must
first qualify for and pass a written examination. The applicant
must then submit a license application to be approved by the
California Bureau of Real Estate (CalBRE). Prospective real
estate broker licensees, in addition to passing a written
examination and gaining approval of a broker license application
from CalBRE, must also have a minimum of two years of full-time
licensed real estate salesperson experience. The broker
licensee must submit evidence of this minimum of two years of
full-time experience through verification by the licensee's
employing broker using an Employment Verification (RE 226). The
course requirements for licensure as a real estate broker
include eight college level courses on real estate practice, the
legal aspects of real estate, real estate finance, real estate
appraisal, real estate economics/accounting, and three
electives.
Both broker and salesperson licenses must be renewed every four
years. To renew either a broker or salesperson license, the
licensee must submit the appropriate fee and application, as
well as submit evidence that he or she has completed the
required 45 hours of CalBRE-approved CE courses. These CE
courses include 15 specifically earmarked courses in ethics,
agency relationships, trust fund handling, fair housing, and
risk management and 18 hours of the CE coursework is dedicated
to consumer protection. The remaining 12 hours are reserved as
CE electives, and licensees may take courses related either to
consumer protection or consumer services. These elective
courses are meant to enable the licensee to achieve a high level
of competence in serving the objectives of consumers who may
engage the services of licensees to secure the transfer,
financing, or similar objectives with respect to real property,
including organizational and management techniques. A licensee
who has been in good standing (meaning not having any
disciplinary action on record) for 30 continuous years in the
state of California and who is 70 years of age or older is
exempt from the CE requirements.
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A licensee may be appointed to manage a branch office or
division of the employing broker's or employing corporate
designated broker officer's real estate business by an employing
real estate broker or corporate designated broker officer. This
appointed licensee may also be responsible for overseeing the
day-to-day operations of the business, supervising the licensed
activities of licensees, and supervising clerical staff employed
in the branch office or division. Any appointment of a licensee
must be made through a written contract, in which the appointee
accepts the delegated responsibility, and requires the employing
broker or corporate designated officer to retain a copy of the
contract and send a notice to the CalBRE identifying the
appointee and the branch office or division the manager is
appointed to supervise. According to the author, while
principal brokers remain accountable for overall supervisorial
responsibilities, CalBRE can also hold managers accountable for
failure to supervise.
Although risk management is one of the earmarked CE courses, it
has been suggested by CalBRE that the subject of supervision in
risk management should be its own earmarked CE course required
for broker licensure renewal. According to CalBRE's Web site,
one of the six most common and recurring types of violations of
the Real Estate Law that have resulted in disciplinary action
include a lack of supervision on the part of the broker, in
violation of BPC §10177(h). This section 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.
According to the author, several states require brokers to
complete a course on supervision when renewing their license.
Montana requires supervising brokers to complete a three-hour
course on supervision to assure competent practice in the real
estate industry, while Virginia requires brokers to complete an
eight-hour course on management and supervision. Minnesota
requires brokers and salespersons to complete a one-hour course
on broker supervisory obligations; Maryland requires brokers,
office managers, and team leaders to complete a three- hour
course on supervision within 90 days of assuming a supervisory
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position if they did not complete the course during their
renewal; and Texas requires designated brokers and licensees
delegated supervision of one or more real estate licensees, for
a period of longer than six months, to complete a six hour
course on broker responsibility.
This bill reserves three hours of a licensed broker's CE
requirements specifically on a course to provide guidance on how
to manage real estate offices, salespersons and broker
associates. This bill also allows salespersons to take a course
on how to be effectively supervised by a responsible broker or
branch manager as part of the licensee's 12 hours of reserved CE
elective credits. This bill seeks to resolve the issue of
recurrent lack of supervision violations on the part of brokers
by requiring broker licensees to take specific CE courses on the
topic.
Prior/Related Legislation
AB 2105 (DeSaulnier, 2014) would have required the consumer
protection CE courses to include instruction in financial elder
and dependent adult abuse signs and reporting requirements. (The
bill was vetoed by Governor Schwarzenegger for reasons primarily
related to other portions of the bill.)
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.
AB 223 (Negrete McLeod, Chapter 183, Statutes of 2005) required
CE requirements to include completion of a three-hour course in
risk management that includes principles, practices, and
procedures calculated to avoid errors and omissions in the
practice of real estate licensed activities.
AB 555 (Dutra, Chapter 116, Statutes of 2002) included in the
consumer protection CE the subject of California law relating to
common interest developments.
FISCAL EFFECT: Appropriations: No Fiscal Com.: Yes
Local: No
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SUPPORT: (Verified6/22/15)
California Association of REALTORS (source)
OPPOSITION: (Verified6/22/15)
None Received
ARGUMENTS IN SUPPORT: Writing in support of the bill, the
California Association of REALTORS (CAR) states that "AB 345
seeks to earmark three hours of a real estate broker's mandated
45 hours of CE for a course on the management and supervision of
real estate licensed activity". CAR states that, "Current 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. Existing law also requires real
estate licensees renewing a real estate license to complete 45
hours of [CalBRE] approved CE. Currently, 15 hours of that CE
requirement are earmarked for specified courses (ethics, agency,
trust fund handling, fair housing, and risk management), while
18 hours are dedicated to consumer protection courses, with the
remaining 12 hours of CE being elective. C.A.R. supports [this
bill] as it will provide guidance to brokers on how to properly
manage real estate offices, salespersons, and broker associates,
while permitting salespersons to elect to take a course to
assist them in understanding how to be effectively supervised."
ASSEMBLY FLOOR: 77-0, 5/7/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones,
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Page 8
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NO VOTE RECORDED: Campos, Roger Hernández, Steinorth
Prepared by:Janelle Miyashiro / B., P. & E.D. / (916) 651-4104
6/23/15 16:41:39
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