California Legislature—2015–16 Regular Session

Assembly Bill No. 685

Introduced by Assembly Member Irwin

February 25, 2015

An act to amend Sections 10080.9, 10177, and 10186.2 of the Business and Professions Code, relating to real estate licensees.

LEGISLATIVE COUNSEL’S DIGEST

AB 685, as introduced, Irwin. Real estate: licensees.

Under existing law, if the Real Estate Commissioner has cause to believe that a person who does not have a real estate license is engaged in activities for which a license is required, he or she may issue a citation to that person which may include an administrative fine. Existing law prohibits the commissioner from renewing the license of a person who has failed to comply with the terms of a citation or to pay an outstanding fine.

This bill would also prohibit the commissioner from issuing a license to a person who has failed to comply with the terms of a citation or to pay an outstanding fine.

Existing law authorizes the commissioner to suspend or revoke the license of a real estate licensee if he or she has engaged in specified activities or has had a license issued by another agency, another state, or the federal government revoked or suspended for engaging in those activities, if specified conditions are met.

This bill would also authorize the commissioner to suspend or revoke the license of a real estate licensee who surrendered a licensed issued by another agency, another state, or the federal government. The bill would also authorize the commissioner to suspend or revoke the license of a licensee for failure to surrender a license that was issued in error or by mistake.

Existing law requires real estate licensees to report the bringing of an indictment or information charging a felony against the licensee. A willful or knowing violation of this requirement is punishable by a fine and imprisonment.

This bill would also require a licensee to report the filing of an criminal complaint charging a felony against the licensee to the Bureau of Real Estate. Because the bill would change the definition of a crime, it would impose a state-mandated local program.

The bill would also make other nonsubstantive changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 10080.9 of the Business and Professions
Code is amended to read:

10080.9.  

(a) If, upon inspection, examination, or investigation,
the commissioner has cause to believe that a person who does not
possess a real estate license is engaged or has engaged in activities
for which a real estate license is required, or that a person who
does not possess a prepaid rental listing service license or a real
estate broker license is engaged or has engaged in activities for
which a license is required pursuant to Section 10167.2, or that a
licensee is violating or has violated any provision of this division
or any rule or order thereunder, the commissioner or his or her
designated representative may issue a citation to that person in
writing, describing with particularity the basis of the citation. Each
citation may contain an order to correct the violation or violations
identified and a reasonable time period or periods by which the
violation or violations must be corrected. In addition, each citation
may assess an administrative fine not to exceed two thousand five
hundred dollars ($2,500), begin delete which end delete begin insert that end insert shall be deposited into the
Recovery Account of the Real Estate Fund and shall, upon
appropriation by the Legislature, be available for expenditure for
the purposes specified in Chapter 6.5 (commencing with Section
10470). In assessing a fine, the commissioner shall give due
consideration to the appropriateness of the amount of the fine with
respect to factors such as the gravity of the violation, the good
faith of the person cited, and the history of previous violations. A
citation issued and a fine assessed pursuant to this section, while
constituting discipline for a violation of the law, shall be in lieu
of other administrative discipline by the commissioner for the
offense or offenses cited, and the citation against and payment of
any fine by a licensee shall not be reported as disciplinary action
taken by the commissioner.

(b) Notwithstanding subdivision (a), nothing in this section shall
prevent the commissioner from issuing an order to desist and
refrain from engaging in a specific business activity or activities
or an order to suspend all business operations to a person who is
engaged in or has engaged in continued or repeated violations of
this part. In any of these circumstances, the sanctions authorized
under this section shall be separate from, and in addition to, all
other administrative, civil, or criminal penalties.

(c) If, within 30 days from the receipt of the citation or the
citation and fine, the person cited fails to notify the commissioner
that he or she intends to request a hearing as described in
subdivision (d), the citation or the citation and fine shall be deemed
final.

(d) Any hearing under this section shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of
Part 1 of Division 3 of Title 2 of the Government Code.

(e) After the exhaustion of the review procedures provided for
in this section, the commissioner may apply to the appropriate
superior court for a judgment in the amount of any administrative
penalty imposed pursuant to subdivision (a) and an order
compelling the begin delete cited person end delete begin insert person cited end insert to comply with the order
of the commissioner. The application, which shall include a
certified copy of the final order of the commissioner, shall
constitute a sufficient showing to warrant begin delete the issuance of end delete begin insert issuing end insert
the judgment and order.

(f) Failure of any person to comply with the terms of a citation
or pay a fine assessed pursuant to this section, within a reasonable
period specified by the commissioner, shall subject that person to
disciplinary action by the commissioner. In no event may a license
be begin insert issued or end insert renewed if an unpaid fine remains outstanding or the
terms of a citation have not been complied with.

SEC. 2.  

Section 10177 of the Business and Professions Code
is amended to read:

10177.  

The commissioner may 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,
who has done any of the following, or may suspend or revoke the
license of a corporation, delay the renewal of a license of a
corporation, or deny the issuance of a license to a corporation, if
an officer, director, or person owning or controlling 10 percent or
more of the corporation’s stock has done any of the following:

(a) Procured, or attempted to procure, a real estate license or
license renewal, for himself or herself or a salesperson, by fraud,
misrepresentation, or deceit, or by making a material misstatement
of fact in an application for a real estate license, license renewal,
or reinstatement.

(b) Entered a plea of guilty or begin delete nolo contendere end delete begin insert no contest end insert to, or
been found guilty of, or been convicted of, a felony, or a crime
substantially related to the qualifications, functions, or duties of a
real estate licensee, and the time for appeal has elapsed or the
judgment of conviction has been affirmed on appeal, irrespective
of an order granting probation following that conviction,
suspending the imposition of sentence, or of a subsequent order
under Section 1203.4 of the Penal Code allowing that licensee to
withdraw his or her plea of guilty and to enter a plea of not guilty,
or dismissing the accusation or information.

(c) Knowingly authorized, directed, connived at, or aided in the
publication, advertisement, distribution, or circulation of a material
false statement or representation concerning his or her designation
or certification of special education, credential, trade organization
membership, or business, or concerning a business opportunity or
a land or subdivision, as defined in Chapter 1 (commencing with
Section 11000) of Part 2, offered for sale.

(d) Willfully disregarded or violated the Real Estate Law (Part
1 (commencing with Section 10000)) or Chapter 1 (commencing
with Section 11000) of Part 2 or the rules and regulations of the
commissioner for the administration and enforcement of the Real
Estate Law and Chapter 1 (commencing with Section 11000) of
Part 2.

(e) Willfully used the term “realtor” or a trade name or insignia
of membership in a real estate organization of which the licensee
is not a member.

(f) Acted or conducted himself or herself in a manner that would
have warranted the denial of his or her application for a real estate
license, or either had a license denied or had a license issued by
another agency of this state, another state, or the federal
government begin delete revoked end delete begin insert revoked, surrendered, end insert or suspended for acts
that, if done by a real estate licensee, would be grounds for the
suspension or revocation of a California real estate license, if the
action of denial, revocation, begin insert surrender, end insert or suspension by the other
agency or entity was taken only after giving the licensee or
applicant fair notice of the charges, an opportunity for a hearing,
and other due process protections comparable to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340),
Chapter 4 (commencing with Section 11370), and Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title
2 of the Government Code), and only upon an express finding of
a violation of law by the agency or entity.

(g) Demonstrated negligence or incompetence in performing
an act for which he or she is required to hold a license.

(h) 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.

(i) Used his or her employment by a governmental agency in a
capacity giving access to records, other than public records, in a
manner that violates the confidential nature of the records.

(j) Engaged in any other conduct, whether of the same or a
different character than specified in this section, that constitutes
fraud or dishonest dealing.

(k) Violated any of the terms, conditions, restrictions, and
limitations contained in an order granting a restricted license.

(l) (1) Solicited or induced the sale, lease, or listing for sale or
lease of residential property on the ground, wholly or in part, of
loss of value, increase in crime, or decline of the quality of the
schools due to the present or prospective entry into the
neighborhood of a person or persons having a characteristic listed
in subdivision (a) or (d) of Section 12955 of the Government Code,
as those characteristics are defined in Sections 12926 and 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section
12955, and Section 12955.2 of the Government Code.

(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for
older persons, as defined in Section 12955.9 of the Government
Code. With respect to familial status, nothing in paragraph (1)
shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11,
and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51 and Section 4760 of the Civil Code
and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to paragraph (1).

(m) Violated the Franchise Investment Law (Division 5
(commencing with Section 31000) of Title 4 of the Corporations
Code) or regulations of the Commissioner of Corporations
pertaining thereto.

(n) Violated the Corporate Securities Law of 1968 (Division 1
(commencing with Section 25000) of Title 4 of the Corporations
Code) or the regulations of the Commissioner of Corporations
pertaining thereto.

(o) Failed to disclose to the buyer of real property, in a
transaction in which the licensee is an agent for the buyer, the
nature and extent of a licensee’s direct or indirect ownership
interest in that real property. The direct or indirect ownership
interest in the property by a person related to the licensee by blood
or marriage, by an entity in which the licensee has an ownership
interest, or by any other person with whom the licensee has a
special relationship shall be disclosed to the buyer.

(p) Violated Article 6 (commencing with Section 10237).

(q) Violated or failed to comply with Chapter 2 (commencing
with Section 2920) of Title 14 of Part 4 of Division 3 of the Civil
Code, related to mortgages.

begin insert

(r) Failure to surrender a license that was issued in error or by
mistake.

end insert

If a real estate broker that is a corporation has not done any of
the foregoing acts, either directly or through its employees, agents,
officers, directors, or persons owning or controlling 10 percent or
more of the corporation’s stock, the commissioner may not deny
the issuance or delay the renewal of a real estate license to, or
suspend or revoke the real estate license of, the corporation,
provided that any offending officer, director, or stockholder, who
has done any of the foregoing acts individually and not on behalf
of the corporation, has been completely disassociated from any
affiliation or ownership in the corporation. A decision by the
commissioner to delay the renewal of a real estate license shall
toll the expiration of that license until the results of any pending
disciplinary actions against that licensee are final, or until the
licensee voluntarily surrenders his, her, or its license, whichever
is earlier.

begin delete

This section shall become operative on July 1, 2012.

end delete

SEC. 3.  

Section 10186.2 of the Business and Professions Code
is amended to read:

10186.2.  

(a) (1) A licensee shall report any of the following
to the begin delete department: end delete begin insert bureau: end insert

(A) The bringing of an indictment or begin delete information end delete begin insert information,
or the filing of a criminal complaint, end insert charging a felony against the
licensee.

(B) The conviction of the licensee, including any verdict of
guilty, or plea of guilty or no contest, of any felony or
misdemeanor.

(C) Any disciplinary action taken by another licensing entity
or authority of this state or of another state or an agency of the
federal government.

(2) The report required by this subdivision shall be made in
writing within 30 days of the date of the bringing of the indictment
or the charging of a felony, the conviction, or the disciplinary
action.

(b) Failure to make a report required by this section shall
constitute a cause for discipline.

SEC. 4.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.