Amended in Senate April 26, 2016

Amended in Assembly April 8, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 685

Introduced by Assembly Member Irwin

February 25, 2015

begin delete An act to amend Sections 10080.9, 10177, and 10186.2 of the Business and Professions Code, relating to real estate licensees.end deletebegin insert An act to amend and repeal Section 10160 of, to amend, repeal, and add Sections 6742, 10001, 10003, 10007, 10008, 10009.5, 10010, 10011, 10012, 10013, 10014, 10015, 10016, 10023, 10024, 10026, 10027, 10050, 10074, 10080.9, 10082, 10131.01, 10132, 10133.1, 10136, 10137, 10140.5, 10142, 10143.5, 10144, 10158, 10159, 10159.6, 10159.7, 10161.5, 10161.8, 10164, 10166.03, 10176, 10177, 10178, 10179, 10186.2, 10232.3, 10238, 10243, 10509, 10561, 11212, and 11267 of, to add Sections 10015.1, 10015.2, 10015.3, 10015.4, 10018.01, 10018.02, 10018.03, 10018.04, 10018.05, 10018.06, 10018.07, 10018.08, 10018.09, 10018.10, 10018.11, 10018.12, 10018.13, 10018.14, 10018.15, 10018.16, 10018.17, and 10018.18 to, and to repeal Section 10017 of, the Business and Professions Code, to amend and repeal Sections 1102.14, 1103.14, 2079.18, and 2079.20 of, to amend, repeal, and add Sections 1102, 1102.1, 1102.2, 1102.3, 1102.4, 1102.5, 1102.6a, 1102.6b, 1102.6c, 1102.9, 1102.12, 1102.155, 1103, 1103.1, 1103.2, 1103.3, 1103.4, 1103.5, 1103.8, 1103.9, 1103.12, 2079, 2079.6, 2079.7, 2079.8, 2079.9, 2079.10, 2079.10.5, 2079.10a, 2079.13, 2079.14, 2079.15, 2079.16, 2079.17, 2079.19, 2079.21, 2079.22, 2079.23, and 2079.24 of, to add Section 1103.1.5 to, and to repeal and add Article 6 (commencing with Section 1086) of Chapter 1 of Title 4 of Part 4 of Division 2 of, the Civil Code, and to amend, repeal, and add Section 31210 of the Corporations Code, relating to real estate.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 685, as amended, Irwin. ~~begin deleteReal estate: licensees.end delete~~begin insert Real Estate Law: sales of real property: real property disclosure requirements.end insert

begin insert

(1) Existing law, the Real Estate Law, provides for the licensure and regulation of real estate brokers and salesmen by the Real Estate Commissioner, the chief officer of the Bureau of Real Estate. A willful violation of the law and other related real estate provisions is a crime.

end insertbegin insert

Under existing law, a real estate salesman is a natural person who is employed by a licensed real estate broker to do specified acts.

end insertbegin insert

This bill would redefine the term “salesman” as a “salesperson” who is retained by a licensed real estate broker. The bill would also define various terms to describe the relationships between real estate brokers and salespersons. The bill would require a real estate broker to immediately notify the commissioner whenever a licensee affiliates or is retained by a real estate broker, if that affiliation is terminated or if the licensee acquires a new business address. Because a willful violation of these reporting requirements would be a crime, the bill would impose a state-mandated local program.

end insertbegin insert

This bill would define various terms to describe the parties involved in the sale of real estate transactions, including, but not limited to, seller, buyer, seller’s licensee, buyer’s licensee, dual broker, and dual licensee. The bill would also define various other terms for purposes of carrying out the law.

end insertbegin insert

Existing law makes it unlawful for any licensed real estate salesperson to pay any compensation for performing specified acts to any real estate licensee except through the broker under whom he or she is at the time licensed.

end insertbegin insert

This bill would authorize a licensee to enter into an agreement with another licensee to share compensation provided that the compensation is paid through the responsible broker.

end insertbegin insert

Existing law requires a notice containing certain information to be filed with the commissioner within a specified period of time after the first transaction and within that same time period if there is any material change in the required information. Existing law requires the broker or the designated officer or corporate broker to sign the notice.

end insertbegin insert

This bill would require the responsible broker, as defined for purposes of the law, to sign that notice. Because a willful violation of that signature requirement would be a crime, the bill would impose a state-mandated local program.

end insertbegin insert

Under existing law, when a real estate license is issued to a corporation, if it desires any of its officers other than the specified designated officer to act under its license as a real estate broker, it is required to procure an additional license to so employ each additional officer.

end insertbegin insert

This bill would authorize a corporation, in the event of death or incapacity of a sole designated broker-officer, to operate continuously under its existing license if notice is provided to the bureau within a specified period of time of the death or incapacity. Because the willful failure to provide that notice would be a crime, the bill would impose a state-mandated local program.

end insertbegin insert

Under existing law, each officer of a corporation through whom it is licensed to act as a real estate broker is, while so employed under that license, a licensed real estate broker, but is only licensed to act as such for and on behalf of the corporation as an officer.

end insertbegin insert

This bill would not preclude a designated corporate officer who has a separate individual license from conducting licensed activity for another entity if the entity for which he or she acts is clearly disclosed and apparent to any member of the public using his or her services outside the corporation. When a corporation wishes to act as a real estate broker, the bill would require the corporation to be licensed by the Bureau of Real Estate through qualified broker officers, as provided. The bill would provide that an officer of a corporation through whom it is licensed to act need not maintain an individual broker’s license, but would provide that the officer is subject to all duties and responsibilities of a licensed real estate broker. Because a willful violation of these requirements would be a crime, the bill would impose a state-mandated local program.

end insertbegin insert

(2) (A) Existing civil law governing agency listings for the transfer of certain property, which includes real property and mobilehomes, prohibits a listing from being placed in a multiple listing service (MLS), as defined, unless authorized or directed by the owner in the listing.

end insertbegin insert

If an open listing is placed in the multiple listing service, existing law requires the total compensation that the owner is to pay to go to the selling agent who procures an enforceable offer from a ready, able, and willing buyer on the terms accepted by the owner. Existing law does not require an open listing to specify compensation to the selling agent, but authorizes the open listing to state that the compensation is to be negotiated between the selling agent and the owner. Existing law authorizes an open listing to contain an agreement by the owner to pay the listing agent compensation in any amount, at any time, and for any services, other than for selling the property or procuring or finding a buyer, as the agreement may specify.

end insertbegin insert

This bill would delete those provisions relating to an open listing and would revise and recast those provisions to make the definitions in the Real Estate Law, as described in paragraph (1), applicable to these provisions.

end insertbegin insert

(B) Existing civil law governing disclosures upon the transfer of residential property requires the transferor of any real property to deliver to the prospective transferee a specified written statement disclosure subject to specified requirements. If any disclosure, or any material amendment of any disclosure, is delivered after the execution of an offer to purchase, existing law requires the transferee to have a specified period of time to terminate his or her offer by delivery of a written notice of termination to the transferor or the transferor’s agent. Existing law requires these disclosures to be made on a specified form.

end insertbegin insert

This bill would make the definitions in the Real Estate Law, as described in paragraph (1), applicable to these provisions. The bill would provide that disclosure is complete when the 3 sections of the disclosure form are completed and delivered. The bill would also authorize a real estate licensee to complete his or her portion of the form using a comparable form that includes all of the same information, as provided.

end insertbegin insert

Under existing law, neither the transferor nor any listing or selling agent is required to be liable for any error, inaccuracy, or omission of any information delivered pursuant to these disclosure requirements if the error, inaccuracy, or omission was not within the personal knowledge of the transferor or that listing or selling agent, was based on information timely provided by public agencies or by certain licensed persons that is required to be disclosed, and ordinary care was exercised in obtaining and transmitting it.

end insertbegin insert

When a licensed person responds to such a request, existing law authorizes an expert to indicate, in writing, an understanding that the information provided will be used in fulfilling the disclosure requirements, which relieves the expert from responsibility for any items of information other than those expressly set forth in the statement.

end insertbegin insert

This bill would delete those provisions relating to expert responsibility.

end insertbegin insert

Existing law authorizes a city or county to elect to require a local option real estate disclosure document in addition to the real estate transfer disclosure document.

end insertbegin insert

This bill would update the content of that optional disclosure document based on making the Real Estate Law definitions, as described in paragraph (1), applicable to these provisions.

end insertbegin insert

Under existing law, if more than one licensed real estate broker is acting as an agent in a transaction, the broker who has obtained the offer made by the transferee is required to deliver the disclosure to the transferee, unless the transferor has given other written instructions for delivery.

end insertbegin insert

If there is only one real estate licensee in a transaction, the bill would require that real estate licensee to deliver the disclosure to the buyer. If there is no real estate licensee in a transaction, the bill would require the seller to deliver the disclosure to the buyer.

end insertbegin insert

(C) Existing law generally requires the disclosure of natural and environmental hazards, right-to-farm, and other disclosures upon the transfer of residential property.

end insertbegin insert

This bill would make the definitions in the Real Estate Law, as described in paragraph (1), applicable to these provisions. The bill would update the content of the Natural Hazard Disclosure Statement based on those newly defined terms.

end insertbegin insert

(D) Under existing law, real estate brokers and salespersons owe certain duties to prospective purchasers of real property.

end insertbegin insert

This bill would make the definitions in the Real Estate Law, as described in paragraph (1), applicable to these provisions.

end insertbegin insert

Existing law requires listing agents and selling agents to provide the seller and buyer in a real property transaction with a copy of a disclosure form, which includes specified statutory provisions printed on the back, regarding real estate agency relationships. Existing law further requires these agency relationships to be confirmed to the buyer and seller in a specified form.

end insertbegin insert

This bill would eliminate the requirement to include those statutory provisions, revise the content of that form to include at a minimum certain information, including consumer responsibilities, and update the terms used in that form based on the application of the Real Estate Law terminology to these provisions. The bill would also update the content of the form required to confirm real estate licensee relationships.

end insertbegin delete
Under
end delete

begin insert(3)end insertbegin insert end insertbegin insertUnderend insert 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 bringing of a 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.

begin delete
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.
end deletebegin delete
This bill would provide that no reimbursement is required by this act for a specified reason.
end deletebegin insert

(4) This bill would make numerous conforming and nonsubstantive changes.

end insertbegin insert

(5) This bill would delay the operation of these provisions to July 1, 2018.

end insertbegin insert

(6) 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.

end insertbegin insert

P8 1

begin insert10001.end insert

(a) Except as otherwise specified, the definitions in
2this chapter apply to the provisions of this part only and do not
3affect any other provisions of this code.

4
(b) This section shall become operative on July 1, 2018.

end insert

5begin insert

begin insertSEC. 5.end insert

end insert

begin insertSection 10003 of the end insertbegin insertBusiness and Professions Codeend insert
6
begin insert is amended to read:end insert

10003.

begin insert(a)end insertbegin insert end insert “Commissioner” refers to the Real Estate
8Commissioner.

begin insert

9
(b) This section shall repeal on July 1, 2018.

end insert

10begin insert

begin insertSEC. 6.end insert

end insert

begin insertSection 10003 is added to the end insertbegin insertBusiness and Professions
11Codeend insertbegin insert, to read:end insert

begin insert

begin insert10003.end insert

(a) “Commissioner” means the Real Estate
13Commissioner.

14
(b) This section shall become operative on July 1, 2018.

end insert

15begin insert

begin insertSEC. 7.end insert

end insert

begin insertSection 10007 of the end insertbegin insertBusiness and Professions Codeend insert
16
begin insert is amended to read:end insert

10007.

begin insert(a)end insertbegin insert end insert “Provisions of this part relating to real estate”
18refers to the provisions of Chapters 1, 2,~~begin delete 3end delete~~begin insert 3,end insert and 6 of Part 1.

begin insert

19
(b) This section shall repeal on July 1, 2018.

end insert

20begin insert

begin insertSEC. 8.end insert

end insert

begin insertSection 10007 is added to the end insertbegin insertBusiness and Professions
21Codeend insertbegin insert, to read:end insert

begin insert

begin insert10007.end insert

(a) “Provisions of this part relating to real estate”
23means the provisions of Chapters 1, 2, 3, and 6 of Part 1.

24
(b) This section shall become operative on July 1, 2018.

end insert

25begin insert

begin insertSEC. 9.end insert

end insert

begin insertSection 10008 of the end insertbegin insertBusiness and Professions Codeend insert
26
begin insert is amended to read:end insert

10008.

begin insert(a)end insertbegin insert end insert “Provisions of this part relating to business
28opportunity regulation” refers to the provisions of Chapters 1, 2,
29and 6 of Part 1.

begin insert

30
(b) This section shall repeal on July 1, 2018.

end insert

31begin insert

begin insertSEC. 10.end insert

end insert

begin insertSection 10008 is added to the end insertbegin insertBusiness and
32Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10008.end insert

(a) “Provisions of this part relating to business
34opportunity regulation” means the provisions of Chapters 1, 2,
35and 6 of Part 1.

36
(b) This section shall become operative on July 1, 2018.

end insert

37begin insert

begin insertSEC. 11.end insert

end insert

begin insertSection 10009.5 of the end insertbegin insertBusiness and Professions Codeend insert
38
begin insert is amended to read:end insert

P9 1

10009.5.

begin insert(a)end insertbegin insert end insert “Provisions of this part relating to mineral,~~begin delete oilend delete~~
2begin insert oil,end insert and gas brokerage” refers to the provisions of Chapters 1, 2,
3~~begin delete 6end delete~~begin insert 6,end insert and 7, of Part 1.

begin insert

4
(b) This section shall repeal on July 1, 2018.

end insert

5begin insert

begin insertSEC. 12.end insert

end insert

begin insertSection 10009.5 is added to the end insertbegin insertBusiness and
6Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10009.5.end insert

(a) “Provisions of this part relating to mineral, oil,
8and gas brokerage” means the provisions of Chapters 1, 2, 6, and
97, of Part 1.

10
(b) This section shall become operative on July 1, 2018.

end insert

11begin insert

begin insertSEC. 13.end insert

end insert

begin insertSection 10010 of the end insertbegin insertBusiness and Professions Codeend insert
12
begin insert is amended to read:end insert

10010.

begin insert(a)end insertbegin insert end insert “Provisions of this part relating to hearings” refers
14to the provisions of Article 3 of Chapter 2 of Part 1.

begin insert

15
(b) This section shall repeal on July 1, 2018.

end insert

16begin insert

begin insertSEC. 14.end insert

end insert

begin insertSection 10010 is added to the end insertbegin insertBusiness and
17Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10010.end insert

(a) “Provisions of this part relating to hearings” means
19the provisions of Article 3 of Chapter 2 of Part 1.

20
(b) This section shall become operative on July 1, 2018.

end insert

21begin insert

begin insertSEC. 15.end insert

end insert

begin insertSection 10011 of the end insertbegin insertBusiness and Professions Codeend insert
22
begin insert is amended to read:end insert

10011.

begin insert(a)end insertbegin insert end insert “Licensee,” when used without modification, refers
24to a person, whether broker or salesman, licensed under any of the
25provisions of this part.

begin insert

26
(b) This section shall repeal on July 1, 2018.

end insert

27begin insert

begin insertSEC. 16.end insert

end insert

begin insertSection 10011 is added to the end insertbegin insertBusiness and
28Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10011.end insert

(a) “Licensee,” when used without modification, means
30to a person, whether broker or salesperson, licensed under any of
31the provisions of this part.

32
(b) This section shall become operative on July 1, 2018.

end insert

33begin insert

begin insertSEC. 17.end insert

end insert

begin insertSection 10012 of the end insertbegin insertBusiness and Professions Codeend insert
34
begin insert is amended to read:end insert

10012.

begin insert(a)end insertbegin insert end insert “Broker,” when used without modification, refers
36to a person licensed as a broker under any of the provisions of this
37part.

begin insert

38
(b) This section shall repeal on July 1, 2018.

end insert

39begin insert

begin insertSEC. 18.end insert

end insert

begin insertSection 10012 is added to the end insertbegin insertBusiness and
40Professions Codeend insertbegin insert, to read:end insert

begin insert

P10 1

begin insert10012.end insert

(a) “Broker,” when used without modification, means
2a person licensed as a broker under any of the provisions of this
3part.

4
(b) This section shall become operative on July 1, 2018.

end insert

5begin insert

begin insertSEC. 19.end insert

end insert

begin insertSection 10013 of the end insertbegin insertBusiness and Professions Codeend insert
6
begin insert is amended to read:end insert

10013.

begin insert(a)end insertbegin insert end insert “Salesman,” when used without modification,
8refers to a person licensed as a~~begin delete salemanend delete~~begin insert salesmanend insert under any of the
9provisions of this part.

begin insert

10
(b) This section shall repeal on July 1, 2018.

end insert

11begin insert

begin insertSEC. 20.end insert

end insert

begin insertSection 10013 is added to the end insertbegin insertBusiness and
12Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10013.end insert

(a) “Salesperson,” when used without modification,
14means a person licensed as a salesperson under any of the
15provisions of this part. Whenever the word salesman is used in
16this division, or in the rules and regulations of the commissioner,
17it means salesperson. A licensee may elect to refer to his or her
18licensed status as real estate salesman, real estate saleswoman,
19or real estate salesperson.

20
(b) This section shall become operative on July 1, 2018.

end insert

21begin insert

begin insertSEC. 21.end insert

end insert

begin insertSection 10014 of the end insertbegin insertBusiness and Professions Codeend insert
22
begin insert is amended to read:end insert

10014.

begin insert(a)end insertbegin insert end insert “Real estate licensee” refers to a person, whether
24broker or salesman, licensed under Chapter 3 of this part.

begin insert

25
(b) This section shall repeal on July 1, 2018.

end insert

26begin insert

begin insertSEC. 22.end insert

end insert

begin insertSection 10014 is added to the end insertbegin insertBusiness and
27Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10014.end insert

(a) “Real estate licensee” means a person, whether
29broker or salesperson, licensed under Chapter 3 of this part.

30
(b) This section shall become operative on July 1, 2018.

end insert

31begin insert

begin insertSEC. 23.end insert

end insert

begin insertSection 10015 of the end insertbegin insertBusiness and Professions Codeend insert
32
begin insert is amended to read:end insert

10015.

begin insert(a)end insertbegin insert end insert “Real estate broker” refers to a person licensed as
34a broker under Chapter 3 of this part.

(a) “Broker identity” means the name under which
27the broker operates or conducts business and may include a sole
28proprietorship or business entity name.

29
(b) This section shall become operative on July 1, 2018.

end insert

30begin insert

begin insertSEC. 29.end insert

end insert

begin insertSection 10016 of the end insertbegin insertBusiness and Professions Codeend insert
31
begin insert is amended to read:end insert

10016.

begin insert(a)end insertbegin insert end insert “Real estate salesman” refers to a person licensed
33as a salesman under Chapter 3 of this part.

begin insert

34
(b) This section shall repeal on July 1, 2018.

end insert

35begin insert

begin insertSEC. 30.end insert

end insert

begin insertSection 10016 is added to the end insertbegin insertBusiness and
36Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10016.end insert

(a) “Real estate salesperson” means a person licensed
38as a salesperson under Chapter 3 of this part or a broker associate.

39
(b) This section shall become operative on July 1, 2018.

end insert

P12 1begin insert

begin insertSEC. 31.end insert

end insert

begin insertSection 10017 of the end insertbegin insertBusiness and Professions Codeend insert
2
begin insert is amended to read:end insert

10017.

begin insert(a)end insertbegin insert end insert Whenever the word salesman is used in this
4division, or in the rules and regulations of the commissioner, it
5means salesperson. A licensee, however, may elect to refer to the
6licensed status as real estate salesman, real estate saleswoman, or
7real estate salesperson.

(a) The term “advance fee,” as used in this part, is a
26fee, regardless of the form, that is claimed, demanded, charged,
27received, or collected by a licensee for services requiring a license,
28or for a listing, as that term is defined in Section 10027, before
29fully completing the service the licensee contracted to perform or
30represented would be performed. Neither an advance fee nor the
31services to be performed shall be separated or divided into
32components for the purpose of avoiding the application of this
33division.

34(b) For the purposes of this section, the term “advance fee” does
35not include:

36(1) “Security” as that term is used in Section 1950.5 of the Civil
37Code.

38(2) A “screening fee” as that term is used in Section 1950.6 of
39the Civil Code.

P17 1(3) A fee that is claimed, demanded, charged, received, or
2collected for the purpose of advertising the sale, lease, or exchange
3of real estate, or of a business opportunity, in a newspaper of
4general circulation, any other written publication, or through
5electronic media comparable to any type of written publication,
6provided that the electronic media or the publication is not under
7the control or ownership of the broker.

8(4) A fee earned for a specific service under a “limited service”
9contract. For purposes of this section, a “limited service” contract
10is a written agreement for real estate services described in
11subdivision (a), (b), or (c) of Section 10131, and pursuant to which
12such services are promoted, advertised, or presented as stand-alone
13services, to be performed on a task-by-task basis, and for which
14compensation is received as each separate, contracted-for task is
15completed. To qualify for this exclusion, all services performed
16pursuant to the contract must be described in subdivision (a), (b),
17or (c) of Section 10131.

18(c) A contract between a real estate broker and a principal that
19requires payment of a commission to the broker after the contract
20is fully performed does not represent an agreement for an advance
21fee.

22(d) This section does not exempt from regulation the charging
23or collecting of a fee under Section 1950.5 or 1950.6 of the Civil
24Code, but instead regulates fees that are not subject to those
25sections.

begin insert

26
(e) This section shall repeal on July 1, 2018.

end insert

27begin insert

begin insertSEC. 55.end insert

end insert

begin insertSection 10026 is added to the end insertbegin insertBusiness and
28Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10026.end insert

(a) The term “advance fee,” as used in this part, is a
30fee, regardless of the form, that is claimed, demanded, charged,
31received, or collected by a licensee for services requiring a license,
32or for a listing agreement, as that term is defined in Section 10027,
33before fully completing the service the licensee contracted to
34perform or represented would be performed. Neither an advance
35fee nor the services to be performed shall be separated or divided
36into components for the purpose of avoiding the application of
37this division.

38
(b) For the purposes of this section, the term “advance fee”
39does not include:

P18 1
(1) “Security” as that term is used in Section 1950.5 of the Civil
2Code.

3
(2) A “screening fee” as that term is used in Section 1950.6 of
4the Civil Code.

5
(3) A fee that is claimed, demanded, charged, received, or
6collected for the purpose of advertising the sale, lease, or exchange
7of real estate, or of a business opportunity, in a newspaper of
8general circulation, any other written publication, or through
9electronic media comparable to any type of written publication,
10provided that the electronic media or the publication is not under
11the control or ownership of the broker.

12
(4) A fee earned for a specific service under a “limited service”
13contract. For purposes of this section, a “limited service” contract
14is a written agreement for real estate services described in
15subdivision (a), (b), or (c) of Section 10131, and pursuant to which
16such services are promoted, advertised, or presented as stand-alone
17services, to be performed on a task-by-task basis, and for which
18compensation is received as each separate, contracted-for task is
19completed. To qualify for this exclusion, all services performed
20pursuant to the contract shall be described in subdivision (a), (b),
21or (c) of Section 10131.

22
(5) A fee approved by the bureau pursuant to Section 10085.

23
(c) A contract between a real estate broker and a principal that
24requires payment of a commission to the broker after the contract
25is fully performed does not represent an agreement for an advance
26fee.

27
(d) This section does not exempt from regulation the charging
28or collecting of a fee under Section 1950.5 or 1950.6 of the Civil
29Code, but instead regulates fees that are not subject to those
30sections.

31
(e) This section shall become operative on July 1, 2018.

end insert

32begin insert

begin insertSEC. 56.end insert

end insert

begin insertSection 10027 of the end insertbegin insertBusiness and Professions Codeend insert
33
begin insert is amended to read:end insert

10027.

begin insert(a)end insertbegin insert end insertThe term “listing” as used in this part includes, but
35is not limited to:

begin delete
36(a)
end delete

37begin insert(1)end insert The name or a list of the names, of the owners, landlords,
38exchangers, or lessors, or the location or locations, of property, or
39of an interest in property, offered for rent, sale, lease, or exchange.

begin delete
40(b)
end delete

P19 1begin insert(2)end insert The name, or a list of the names, or the location or locations
2at which prospective or potential purchasers, buyers, lessees,
3tenants or exchangers of property may be found or contacted.

begin delete
4(c)
end delete

5begin insert(3)end insert An agreement by which a person who is engaged in the
6business of promoting the sale or lease of business opportunities
7or real estate agrees to render to an owner or lessee of such property
8any services, to promote the sale or lease of said property.

begin delete
9(d)
end delete

10begin insert(4)end insert An agreement by which a person who is engaged in the
11business of finding, locating or promoting the sale or lease of
12business opportunities or real estate, agrees to circularize, notify
13or refer real estate brokers or salesmen to said property which is
14offered for sale or lease.

begin insert

15
(b) This section shall repeal on July 1, 2018.

end insert

16begin insert

begin insertSEC. 57.end insert

end insert

begin insertSection 10027 is added to the end insertbegin insertBusiness and
17Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10027.end insert

(a) The term “listing agreement” as used in this part
19includes, but is not limited to:

20
(1) The name or a list of the names, of the owners, landlords,
21exchangers, or lessors, or the location or locations, of property,
22or of an interest in property, offered for rent, sale, lease, or
23exchange.

24
(2) The name, or a list of the names, or the location or locations
25at which prospective or potential buyers, lessees, tenants, or
26exchangers of property may be found or contacted.

27
(3) An agreement by which a person who is engaged in the
28business of promoting the sale or lease of business opportunities
29or real estate agrees to render to an owner or lessee of such
30property any services, to promote the sale or lease of said property.

31
(4) An agreement by which a person who is engaged in the
32business of finding, locating, or promoting the sale or lease of
33business opportunities or real estate, agrees to circularize, notify,
34or refer real estate brokers or salespersons to said property which
35is offered for sale or lease.

36
(b) This section shall become operative on July 1, 2018.

end insert

37begin insert

begin insertSEC. 58.end insert

end insert

begin insertSection 10050 of the end insertbegin insertBusiness and Professions Codeend insert
38
begin insert is amended to read:end insert

P20 1

10050.

(a) There is in the Department of Consumer Affairs a
2Bureau of Real Estate, the chief officer of which bureau is named
3the Real Estate Commissioner.

4(b) It shall be the principal responsibility of the commissioner
5to enforce all laws in this part (commencing with Section 10000)
6and Chapter 1 (commencing with Section 11000) of Part 2 of this
7division in a manner that achieves the maximum protection for the
8purchasers of real property and those persons dealing with real
9estate licensees.

10(c) Wherever the term “commissioner” is used in this division,
11it means the Real Estate Commissioner.

begin insert

12
(d) This section shall repeal on July 1, 2018.

37begin insert

begin insertSEC. 61.end insert

end insert

begin insertSection 10074 is added to the end insertbegin insertBusiness and
38Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10074.end insert

(a) After qualifying as such neither the commissioner
40nor any of the deputies, clerks or employees of the department
P21 1shall be interested in any mineral, oil, or gas business, mineral,
2oil, or gas brokerage firm, real estate company or any real estate
3brokerage firm, as director, stockholder, officer, member, agent,
4or employee, or act as a broker or salesperson, or act as a
5copartner or agent for any broker or brokers, salesperson or
6salespersons.

7
(b) This section shall become operative on July 1, 2018.

end insert

8begin insert

begin insertSEC. 62.end insert

end insert

begin insertSection 10080.9 of the end insertbegin insertBusiness and Professions Codeend insert
9
begin insert is amended to read:end insert

10080.9.

(a) If, upon inspection, examination, or investigation,
11the commissioner has cause to believe that a person who does not
12possess a real estate license is engaged or has engaged in activities
13for which a real estate license is required, or that a person who
14does not possess a prepaid rental listing service license or a real
15estate broker license is engaged or has engaged in activities for
16which a license is required pursuant to Section 10167.2, or that a
17licensee is violating or has violated any provision of this division
18or any rule or order thereunder, the commissioner or his or her
19designated representative may issue a citation to that person in
20writing, describing with particularity the basis of the citation. Each
21citation may contain an order to correct the violation or violations
22identified and a reasonable time period or periods by which the
23violation or violations must be corrected. In addition, each citation
24may assess an administrative fine not to exceed two thousand five
25hundred dollars ($2,500), which shall be deposited into the
26Recovery Account of the Real Estate Fund and shall, upon
27appropriation by the Legislature, be available for expenditure for
28the purposes specified in Chapter 6.5 (commencing with Section
2910470). In assessing a fine, the commissioner shall give due
30consideration to the appropriateness of the amount of the fine with
31respect to factors such as the gravity of the violation, the good
32faith of the person cited, and the history of previous violations. A
33citation issued and a fine assessed pursuant to this section, while
34constituting discipline for a violation of the law, shall be in lieu
35of other administrative discipline by the commissioner for the
36offense or offenses cited, and the citation against and payment of
37any fine by a licensee shall not be reported as disciplinary action
38taken by the commissioner.

39(b) Notwithstanding subdivision (a), nothing in this section shall
40prevent the commissioner from issuing an order to desist and
P22 1refrain from engaging in a specific business activity or activities
2or an order to suspend all business operations to a person who is
3engaged in or has engaged in continued or repeated violations of
4this part. In any of these circumstances, the sanctions authorized
5under this section shall be separate from, and in addition to, all
6other administrative, civil, or criminal penalties.

7(c) If, within 30 days from the receipt of the citation or the
8citation and fine, the person cited fails to notify the commissioner
9that he or she intends to request a hearing as described in
10subdivision (d), the citation or the citation and fine shall be deemed
11final.

12(d) Any hearing under this section shall be conducted in
13accordance with Chapter 5 (commencing with Section 11500) of
14Part 1 of Division 3 of Title 2 of the Government Code.

15(e) After the exhaustion of the review procedures provided for
16in this section, the commissioner may apply to the appropriate
17superior court for a judgment in the amount of any administrative
18penalty imposed pursuant to subdivision (a) and an order
19compelling the cited person to comply with the order of the
20commissioner. The application, which shall include a certified
21copy of the final order of the commissioner, shall constitute a
22sufficient showing to warrant the issuance of the judgment and
23order.

24(f) Failure of any person to comply with the terms of a citation
25or pay a fine assessed pursuant to this section, within a reasonable
26period specified by the commissioner, shall subject that person to
27disciplinary action by the commissioner. In no event may a license
28be renewed if an unpaid fine remains outstanding or the terms of
29a citation have not been complied with.

begin insert

30
(g) This section shall repeal on July 1, 2018.

end insert

31begin insert

begin insertSEC. 63.end insert

end insert

begin insertSection 10080.9 is added to the end insertbegin insertBusiness and
32Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10080.9.end insert

(a) If, upon inspection, examination, or investigation,
34the commissioner has cause to believe that a person who does not
35possess a real estate license is engaged or has engaged in activities
36for which a real estate license is required, or that a person who
37does not possess a prepaid rental listing service license or a real
38estate broker license is engaged or has engaged in activities for
39which a license is required pursuant to Section 10167.2, or that
40a licensee is violating or has violated any provision of this division
P23 1or any rule or order thereunder, the commissioner or his or her
2designated representative may issue a citation to that person in
3writing, describing with particularity the basis of the citation.
4Each citation may contain an order to correct the violation or
5violations identified and a reasonable time period or periods by
6which the violation or violations must be corrected. In addition,
7each citation may assess an administrative fine not to exceed two
8thousand five hundred dollars ($2,500), that shall be deposited
9into the Recovery Account of the Real Estate Fund and shall, upon
10appropriation by the Legislature, be available for expenditure for
11the purposes specified in Chapter 6.5 (commencing with Section
1210470). In assessing a fine, the commissioner shall give due
13consideration to the appropriateness of the amount of the fine with
14respect to factors such as the gravity of the violation, the good
15faith of the person cited, and the history of previous violations. A
16citation issued and a fine assessed pursuant to this section, while
17constituting discipline for a violation of the law, shall be in lieu
18of other administrative discipline by the commissioner for the
19offense or offenses cited, and the citation against and payment of
20any fine by a licensee shall not be reported as disciplinary action
21taken by the commissioner.

22
(b) Notwithstanding subdivision (a), nothing in this section shall
23prevent the commissioner from issuing an order to desist and
24refrain from engaging in a specific business activity or activities
25or an order to suspend all business operations to a person who is
26engaged in or has engaged in continued or repeated violations of
27this part. In any of these circumstances, the sanctions authorized
28under this section shall be separate from, and in addition to, all
29other administrative, civil, or criminal penalties.

30
(c) If, within 30 days from the receipt of the citation or the
31citation and fine, the person cited fails to notify the commissioner
32that he or she intends to request a hearing as described in
33subdivision (d), the citation or the citation and fine shall be deemed
34final.

35
(d) Any hearing under this section shall be conducted in
36accordance with Chapter 5 (commencing with Section 11500) of
37Part 1 of Division 3 of Title 2 of the Government Code.

38
(e) After the exhaustion of the review procedures provided for
39in this section, the commissioner may apply to the appropriate
40superior court for a judgment in the amount of any administrative
P24 1penalty imposed pursuant to subdivision (a) and an order
2compelling the person cited to comply with the order of the
3commissioner. The application, which shall include a certified
4copy of the final order of the commissioner, shall constitute a
5sufficient showing to warrant issuing the judgment and order.

6
(f) Failure of any person to comply with the terms of a citation
7or pay a fine assessed pursuant to this section, within a reasonable
8period specified by the commissioner, shall subject that person to
9disciplinary action by the commissioner. In no event may a license
10be issued or renewed if an unpaid fine remains outstanding or the
11terms of a citation have not been complied with.

12
(g) This section shall become operative on July 1, 2018.

end insert

13begin insert

begin insertSEC. 64.end insert

end insert

begin insertSection 10082 of the end insertbegin insertBusiness and Professions Codeend insert
14
begin insert is amended to read:end insert

10082.

begin insert(a)end insertbegin insert end insert The commissioner may publish or cause to be
16published at appropriate intervals a directory or list of licensed
17brokers and salesmen and may publish therewith such matter as
18he may deem pertinent to this part and Chapter 1
19~~begin delete(commencinend delete~~begin insert(commencingend insert with Section 11000) of Part 2. He shall
20furnish one copy of such directory to each licensed broker upon
21his request and the payment of an appropriate charge based upon
22cost of publication. Such directory may contain copies of the Real
23Estate Law, Chapter 1 (commencing with Section 11000) of Part
242 of Division 4 of the Business and Professions Code, and the
25Rules and Regulations of the Real Estate Commissioner.

begin insert

26
(b) This section shall repeal on July 1, 2018.

end insert

27begin insert

begin insertSEC. 65.end insert

end insert

end insert

begin insertSection 10131.01 is added to the end insertbegin insertBusiness and
5Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10131.01.end insert

(a) Subdivision (b) of Section 10131 does not apply
7to (1) the manager of a hotel, motel, auto and trailer park, to the
8resident manager of an apartment building, apartment complex,
9or court, or to the employees of that manager, or (2) any person
10or entity, including a person retained by a real estate broker, who,
11on behalf of another or others, solicits or arranges, or accepts
12reservations or money, or both, for transient occupancies described
13in paragraphs (1) and (2) of subdivision (b) of Section 1940 of the
14Civil Code, in a dwelling unit in a common interest development,
15as defined in Section 4100 of the Civil Code, in a dwelling unit in
16an apartment building or complex, or in a single-family home, or
17(3) any person other than the resident manager or employees of
18that manager, performing the following functions, who is the
19employee of the property management firm retained to manage a
20residential apartment building or complex or court and who is
21performing under the supervision and control of a broker of record
22who is an employee of that property management firm or a
23salesperson licensed to the broker who meets certain minimum
24requirements as specified in a regulation issued by the
25commissioner:

26
(A) Showing rental units and common areas to prospective
27tenants.

28
(B) Providing or accepting preprinted rental applications, or
29responding to inquiries from a prospective tenant concerning the
30completion of the application.

31
(C) Accepting deposits or fees for credit checks or administrative
32costs and accepting security deposits and rents.

33
(D) Providing information about rental rates and other terms
34and provisions of a lease or rental agreement, as set out in a
35schedule provided by an employer.

36
(E) Accepting signed leases and rental agreements from
37prospective tenants.

(a) Subdivisions (d) and (e) of Section 10131, Section
2510131.1, Article 5 (commencing with Section 10230), and Article
267 (commencing with Section 10240) of this code and Section
271695.13 of the Civil Code do not apply to any of the following:

28(1) Any person or employee thereof doing business under any
29law of this state, any other state, or the United States relating to
30banks, trust companies, savings and loan associations, industrial
31loan companies, pension trusts, credit unions, or insurance
32companies.

33(2) Any nonprofit cooperative association organized under
34Chapter 1 (commencing with Section 54001) of Division 20 of the
35Food and Agricultural Code, in loaning or advancing money in
36connection with any activity mentioned therein.

37(3) Any corporation, association, syndicate, joint stock company,
38or partnership engaged exclusively in the business of marketing
39agricultural, horticultural, viticultural, dairy, livestock, poultry, or
40bee products on a cooperative nonprofit basis, in loaning or
P28 1advancing money to the members thereof or in connection with
2any business of that type.

3(4) Any corporation securing money or credit from any federal
4intermediate credit bank organized and existing pursuant to the
5provisions of an act of Congress entitled the “Agricultural Credits
6Act of 1923,” in loaning or advancing money or credit so secured.

7(5) Any person licensed to practice law in this state, not actively
8and principally engaged in the business of negotiating loans secured
9by real property, when that person renders services in the course
10of his or her practice as an attorney at law, and the disbursements
11of that person, whether paid by the borrower or other person, are
12not charges or costs and expenses regulated by or subject to the
13limitations of Article 7 (commencing with Section 10240), and
14the fees and disbursements are not shared, directly or indirectly,
15with the person negotiating the loan or the lender.

16(6) Any person licensed as a finance lender when acting under
17the authority of that license.

18(7) Any cemetery authority as defined by Section 7018 of the
19Health and Safety Code, that is authorized to do business in this
20state or its authorized agent.

21(8) Any person authorized in writing by a savings institution to
22act as an agent of that institution, as authorized by Section 6520
23of the Financial Code or comparable authority of the Office of
24Thrift Supervision of the United States Department of the Treasury
25by its regulations, when acting under the authority of that written
26authorization.

27(9) Any person who is licensed as a securities broker or
28securities dealer under any law of this state, or of the United States,
29or any employee, officer, or agent of that person, if that person,
30employee, officer, or agent is acting within the scope of authority
31granted by that license in connection with a transaction involving
32the offer, sale, purchase, or exchange of a security representing an
33ownership interest in a pool of promissory notes secured directly
34or indirectly by liens on real property, which transaction is subject
35to any law of this state or the United States regulating the offer or
36sale of securities.

37(10) Any person licensed as a residential mortgage lender or
38servicer when acting under the authority of that license.

39(11) Any organization that has been approved by the United
40States Department of Housing and Urban Development pursuant
P29 1to Section 106(a)(1)(iii) of the federal Housing and Urban
2Development Act of 1968 (12 U.S.C. Sec. 1701x), to provide
3counseling services, or an employee of such an organization, when
4those services are provided at no cost to the borrower and are in
5connection with the modification of the terms of a loan secured
6directly or collaterally by a lien on residential real property
7containing four or fewer dwelling units.

8(b) Persons described in paragraph (1), (2), or (3), as follows,
9are exempt from the provisions of subdivisions (d) and (e) of
10Section 10131 or Section 10131.1 with respect to the collection
11of payments or performance of services for lenders or on notes of
12owners in connection with loans secured directly or collaterally
13by liens on real property:

14(1) The person makes collections on 10 or less of those loans,
15or in amounts of forty thousand dollars ($40,000) or less, in any
16calendar year.

17(2) The person is a corporation licensed as an escrow agent
18under Division 6 (commencing with Section 17000) of the
19Financial Code and the payments are deposited and maintained in
20the escrow agent’s trust account.

21(3) An employee of a real estate broker who is acting as the
22agent of a person described in paragraph (4) of subdivision (b) of
23Section 10232.4.

24For purposes of this subdivision, performance of services does
25not include soliciting borrowers, lenders, or purchasers for, or
26negotiating, loans secured directly or collaterally by a lien on real
27property.

28(c) (1) Subdivision (d) of Section 10131 does not apply to an
29employee of a real estate broker who, on behalf of the broker,
30assists the broker in meeting the broker’s obligations to its
31customers in residential mortgage loan transactions, as defined in
32Section 50003 of the Financial Code, where the lender is an
33institutional lender, as defined in Section 50003 of the Financial
34Code, provided the employee does not participate in any
35negotiations occurring between the principals.

36(2) A broker shall exercise reasonable supervision and control
37over the activities of nonlicensed employees acting under this
38subdivision, and shall comply with Section 10163 for each location
39where the nonlicensed persons are employed.

P30 1This section does not restrict the ability of the commissioner to
2discipline a broker or corporate broker licensee or its designated
3officer, or both the corporate broker licensee and its designated
4officer, for misconduct of a nonlicensed employee acting under
5this subdivision, or, pursuant to Section 10080, to adopt, amend,
6or repeal rules or regulations governing the employment or
7supervision of an employee who is a nonlicensed person as
8described in this subdivision.

begin insert

9
(d) This section shall repeal on July 1, 2018.

end insert

10begin insert

begin insertSEC. 71.end insert

end insert

begin insertSection 10133.1 is added to the end insertbegin insertBusiness and
11Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10133.1.end insert

(a) Subdivisions (d) and (e) of Section 10131, Section
1310131.1, Article 5 (commencing with Section 10230), and Article
147 (commencing with Section 10240) of this code and Section
151695.13 of the Civil Code do not apply to any of the following:

16
(1) Any person or employee thereof doing business under any
17law of this state, any other state, or the United States relating to
18banks, trust companies, savings and loan associations, industrial
19loan companies, pension trusts, credit unions, or insurance
20companies.

21
(2) Any nonprofit cooperative association organized under
22Chapter 1 (commencing with Section 54001) of Division 20 of the
23Food and Agricultural Code, in loaning or advancing money in
24connection with any activity mentioned therein.

25
(3) Any corporation, association, syndicate, joint stock company,
26or partnership engaged exclusively in the business of marketing
27agricultural, horticultural, viticultural, dairy, livestock, poultry,
28or bee products on a cooperative nonprofit basis, in loaning or
29advancing money to the members thereof or in connection with
30any business of that type.

31
(4) Any corporation securing money or credit from any federal
32intermediate credit bank organized and existing pursuant to the
33provisions of an act of Congress entitled the “Agricultural Credits
34Act of 1923,” in loaning or advancing money or credit so secured.

35
(5) Any person licensed to practice law in this state, not actively
36and principally engaged in the business of negotiating loans
37secured by real property, when that person renders services in the
38course of his or her practice as an attorney at law, and the
39disbursements of that person, whether paid by the borrower or
40other person, are not charges or costs and expenses regulated by
P31 1or subject to the limitations of Article 7 (commencing with Section
210240), and the fees and disbursements are not shared, directly
3or indirectly, with the person negotiating the loan or the lender.

4
(6) Any person licensed as a finance lender when acting under
5the authority of that license.

6
(7) Any cemetery authority as defined by Section 7018 of the
7Health and Safety Code, that is authorized to do business in this
8state or its authorized agent.

9
(8) Any person authorized in writing by a savings institution to
10act as an agent of that institution, as authorized by Section 6520
11of the Financial Code or comparable authority of the Office of the
12Comptroller of the Currency of the United States Department of
13the Treasury by its regulations, when acting under the authority
14of that written authorization.

15
(9) Any person who is licensed as a securities broker or
16securities dealer under any law of this state, or of the United States,
17or any employee, officer, or agent of that person, if that person,
18employee, officer, or agent is acting within the scope of authority
19granted by that license in connection with a transaction involving
20the offer, sale, purchase, or exchange of a security representing
21an ownership interest in a pool of promissory notes secured directly
22or indirectly by liens on real property, which transaction is subject
23to any law of this state or the United States regulating the offer or
24sale of securities.

25
(10) Any person licensed as a mortgage loan lender or servicer
26 when acting under the authority of that license.

27
(11) Any organization that has been approved by the United
28States Department of Housing and Urban Development pursuant
29to Section 106(a)(1)(iii) of the federal Housing and Urban
30Development Act of 1968 (12 U.S.C. Sec. 1701x), to provide
31counseling services, or an employee of such an organization, when
32those services are provided at no cost to the borrower and are in
33connection with the modification of the terms of a loan secured
34directly or collaterally by a lien on residential real property
35containing four or fewer dwelling units.

36
(b) Persons described in paragraph (1), (2), or (3), as follows,
37are exempt from the provisions of subdivisions (d) and (e) of
38Section 10131 or Section 10131.1 with respect to the collection of
39payments or performance of services for lenders or on notes of
P32 1owners in connection with loans secured directly or collaterally
2by liens on real property:

3
(1) The person makes collections on 10 or less of those loans,
4or in amounts of forty thousand dollars ($40,000) or less, in any
5calendar year.

6
(2) The person is a corporation licensed as an escrow agent
7under Division 6 (commencing with Section 17000) of the Financial
8Code and the payments are deposited and maintained in the escrow
9agent’s trust account.

10
(3) An employee of a real estate broker who is acting as the
11agent of a person described in paragraph (4) of subdivision (b) of
12Section 10232.4.

13
For purposes of this subdivision, performance of services does
14not include soliciting borrowers, lenders, or purchasers for, or
15negotiating, loans secured directly or collaterally by a lien on real
16property.

17
(c) (1) Subdivision (d) of Section 10131 does not apply to an
18employee of a real estate broker who, on behalf of the broker,
19assists the broker in meeting the broker’s obligations to its
20customers in residential mortgage loan transactions, as defined
21in Section 50003 of the Financial Code, where the lender is an
22institutional lender, as defined in Section 50003 of the Financial
23Code, provided the employee does not participate in any
24negotiations occurring between the principals.

25
(2) A broker shall exercise reasonable supervision and control
26over the activities of nonlicensed employees acting under this
27subdivision, and shall comply with Section 10163 for each location
28where the nonlicensed persons are employed.

29
This section does not restrict the ability of the commissioner to
30discipline a broker or corporate broker licensee or its designated
31officer, or both the corporate broker licensee and its designated
32officer, for misconduct of a nonlicensed employee acting under
33this subdivision, or, pursuant to Section 10080, to adopt, amend,
34or repeal rules or regulations governing the employment or
35supervision of an employee who is a nonlicensed person as
36described in this subdivision.

37
(d) This section shall become operative on July 1, 2018.

end insert

38begin insert

begin insertSEC. 72.end insert

end insert

begin insertSection 10136 of the end insertbegin insertBusiness and Professions Codeend insert
39
begin insert is amended to read:end insert

P33 1

10136.

begin insert(a)end insertbegin insert end insert No person engaged in the business or acting in the
2capacity of a real estate broker or a real estate salesman within this
3State shall bring or maintain any action in the courts of this State
4for the collection of compensation for the performance of any of
5the acts mentioned in this article without alleging and proving that
6he was a duly licensed real estate broker or real estate salesman
7at the time the alleged cause of action arose.

begin insert

8
(b) This section shall repeal on July 1, 2018.

end insert

9begin insert

begin insertSEC. 73.end insert

end insert

begin insertSection 10136 is added to the end insertbegin insertBusiness and
10Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10136.end insert

(a) No person engaged in the business or acting in the
12capacity of a real estate broker or a real estate salesperson within
13this state shall bring or maintain any action in the courts of this
14state for the collection of compensation for the performance of
15any of the acts mentioned in this article without alleging and
16proving that he was a duly licensed real estate broker or real estate
17salesperson at the time the alleged cause of action arose.

18
(b) This section shall become operative on July 1, 2018.

end insert

19begin insert

begin insertSEC. 74.end insert

end insert

begin insertSection 10137 of the end insertbegin insertBusiness and Professions Codeend insert
20
begin insert is amended to read:end insert

10137.

begin insert(a)end insertbegin insert end insert It is unlawful for any licensed real estate broker
22to employ or compensate, directly or indirectly, any person for
23performing any of the acts within the scope of this chapter who is
24not a licensed real estate broker, or a real estate salesperson
25licensed under the broker employing or compensating him or her,
26or to employ or compensate, directly or indirectly, any licensee
27for engaging in any activity for which a mortgage loan originator
28license endorsement is required, if that licensee does not hold a
29mortgage loan originator license endorsement; provided, however,
30that a licensed real estate broker may pay a commission to a broker
31of another state.

begin delete
32No
end delete

33begin insert (b)end insertbegin insert end insertbegin insertNoend insert real estate salesperson shall be employed by or accept
34compensation from any person other than the broker under whom
35he or she is at the time licensed.

begin delete
36It
end delete

37begin insert(c)end insertbegin insert end insertbegin insertItend insert is unlawful for any licensed real estate salesperson to pay
38any compensation for performing any of the acts within the scope
39of this chapter to any real estate licensee except through the broker
40under whom he or she is at the time licensed.

begin delete
P34 1For
end delete

2begin insert (d)end insertbegin insert end insertbegin insertForend insert a violation of any of the provisions of this section, the
3commissioner may temporarily suspend or permanently revoke
4the license of the real estate licensee, in accordance with the
5provisions of this part relating to hearings.

begin insert

6
(e) This section shall repeal on July 1, 2018.

end insert

7begin insert

begin insertSEC. 75.end insert

end insert

begin insertSection 10137 is added to the end insertbegin insertBusiness and
8Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10137.end insert

(a) It is unlawful for any licensed real estate broker
10to compensate, directly or indirectly, any person for performing
11any of the acts within the scope of this chapter who is not a licensed
12real estate broker, or a real estate salesperson licensed under the
13broker affiliated with that broker or to compensate, directly or
14indirectly that person’s broker, any licensee for engaging in any
15activity for which a mortgage loan originator license endorsement
16is required, if that licensee does not hold a mortgage loan
17originator license endorsement; provided, however, that a licensed
18real estate broker may pay a commission to a broker of another
19state.

20
(b) No real estate salesperson shall accept compensation for
21activity requiring a real estate license from any person other than
22the broker under whom he or she is at the time licensed.

begin insert10159.end insert

Each officer of a corporation through whom it is
40licensed to act as a real estate broker need not be a licensed real
P38 1estate broker, but if not, is licensed only to act as such for and on
2behalf of the corporation as an officer. This does not preclude a
3designated corporate officer who has a separate individual license
4from conducting licensed activity for another entity if the entity
5for which he or she acts is clearly disclosed and apparent to any
6member of the public using his or her services outside the
7corporation.

8
When a corporation wishes to act as a real estate broker, the
9corporation shall be licensed by the bureau through qualified
10broker officers, who have either passed the broker license
11examination and are now qualified to obtain a broker license, or
12who are currently licensed as real estate brokers. An officer of a
13corporation through whom it is licensed to act need not maintain
14an individual broker’s license, but is otherwise subject to all duties
15and responsibilities of a licensed broker.

16
This section shall become operative on July 1, 2018.

end insert

17begin insert

begin insertSEC. 88.end insert

end insert

begin insertSection 10159.6 of the end insertbegin insertBusiness and Professions Codeend insert
18
begin insert is amended to read:end insert

10159.6.

All of the following apply to use of a team name, as
20defined in paragraph (5) of subdivision (a) of Section 10159.7:

21(a) Notwithstanding subdivision (b) of Section 10140.6,
22advertising and solicitation materials that contain a team name,
23including print or electronic media and “for sale” signage, shall
24include, and display in a conspicuous and prominent manner, the
25team name and the name and license number of at least one of the
26licensed members of the team.

27(b) The responsible broker’s identity, as defined in paragraph
28(1) of subdivision (a) of Section 10159.7, shall be displayed as
29prominently and conspicuously as the team name in all advertising
30and solicitation materials.

31(c) The advertising and solicitation materials shall not contain
32terms that imply the existence of a real estate entity independent
33of the responsible broker.

34(d) Notwithstanding Section 10185, a violation of this section
35is not a misdemeanor.

begin insert

36
(e) This section shall repeal on July 1, 2018.

end insert

37begin insert

begin insertSEC. 89.end insert

end insert

begin insertSection 10159.6 is added to the end insertbegin insertBusiness and
38Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10159.6.end insert

All of the following apply to use of a team name, as
40defined in paragraph (3) of subdivision (a) of Section 10159.7:

P39 1
(a) Notwithstanding subdivision (b) of Section 10140.6,
2advertising and solicitation materials that contain a team name,
3including print or electronic media and “for sale” signage, shall
4include, and display in a conspicuous and prominent manner, the
5team name and the name and license number of at least one of the
6licensed members of the team.

7
(b) The responsible broker’s identity shall be displayed as
8prominently and conspicuously as the team name in all advertising
9and solicitation materials.

10
(c) The advertising and solicitation materials shall not contain
11terms that imply the existence of a real estate entity independent
12of the responsible broker.

13
(d) Notwithstanding Section 10185, a violation of this section
14is not a misdemeanor.

15
(e) This section shall become operative on July 1, 2018.

end insert

16begin insert

begin insertSEC. 90.end insert

end insert

begin insertSection 10159.7 of the end insertbegin insertBusiness and Professions Codeend insert
17
begin insert is amended to read:end insert

10159.7.

(a) For the purposes of this article, the following
19definitions shall apply:

20(1) “Responsible broker’s identity” means a name and the
21associated license identification number under which the
22responsible broker is currently licensed by the bureau and conducts
23business in general or is a substantial division of the real estate
24firm. Responsible broker’s identity does not include a fictitious
25business name obtained pursuant to paragraph (2) of subdivision
26(a) of Section 10159.5 or the use of a team name pursuant to
27Section 10159.6.

28(2) “Fictitious business name” means a professional identity or
29brand name under which activity requiring a real estate license is
30conducted and the use of which is subject to approval by the bureau
31pursuant to Section 10159.5.

32(3) “Ownership of a fictitious business name” means the right
33to use, renew, and control the use of a fictitious business name
34obtained in accordance with Section 10159.5.

35(4) “Responsible broker” means the broker responsible for the
36exercise of control and supervision of salespersons under Section
3710159.2, or a licensee subject to discipline under subdivision (h)
38of Section 10177 for failure to supervise activity requiring a real
39estate license. The supervision of a salesperson required under this
P40 1part or any other law is limited to regulatory compliance and
2consumer protection.

3(5) “Team name” means a professional identity or brand name
4used by a salesperson, and one or more other real estate licensees,
5for the provision of real estate licensed services. Notwithstanding
6any other law, the use of a team name does not require that a
7separate license be issued for that name pursuant to Section
810159.5. A team name does not constitute a fictitious business
9name for purposes of this part or any other law or for purposes of
10filing a fictitious business name statement with an application as
11required by subdivision (a) of Section 10159.5 if all of the
12following apply:

13(A) The name is used by two or more real estate licensees who
14work together to provide licensed real estate services, or who
15represent themselves to the public as being a part of a team, group,
16or association to provide those services.

17(B) The name includes the surname of at least one of the licensee
18members of the team, group, or association in conjunction with
19the term “associates,” “group,” or “team.”

20(C) The name does not include any term or terms, such as “real
21estate broker,” “real estate brokerage,” “broker,” or “brokerage”
22or any other term that would lead a member of the public to believe
23that the team is offering real estate brokerage services, that imply
24or suggest the existence of a real estate entity independent of a
25responsible broker.

26(b) Nothing in this section changes a real estate broker’s duties
27under this division to supervise a salesperson.

begin insert

28
(c) This section shall repeal on July 1, 2018.

end insert

29begin insert

begin insertSEC. 91.end insert

end insert

begin insertSection 10159.7 is added to the end insertbegin insertBusiness and
30Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10159.7.end insert

(a) For the purposes of this article, the following
32definitions shall apply:

33
(1) “Fictitious business name” means a professional identity
34or brand name under which activity requiring a real estate license
35is conducted and the use of which is subject to approval by the
36bureau pursuant to Section 10159.5.

37
(2) “Ownership of a fictitious business name” means the right
38to use, renew, and control the use of a fictitious business name
39obtained in accordance with Section 10159.5.

P41 1
(3) “Team name” means a professional identity or brand name
2used by a salesperson, and one or more other real estate licensees,
3for the provision of real estate licensed services. Notwithstanding
4any other law, the use of a team name does not require that a
5separate license be issued for that name pursuant to Section
610159.5. A team name does not constitute a fictitious business
7name for purposes of this part or any other law or for purposes
8of filing a fictitious business name statement with an application
9as required by subdivision (a) of Section 10159.5 if all of the
10following apply:

11
(A) The name is used by two or more real estate licensees who
12work together to provide licensed real estate services, or who
13represent themselves to the public as being a part of a team, group,
14or association to provide those services.

15
(B) The name includes the surname of at least one of the licensee
16members of the team, group, or association in conjunction with
17the term “associates,” “group,” or “team.”

end insert

begin insertSection 10161.8 is added to the end insertbegin insertBusiness and
37Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10161.8.end insert

(a) A broker and a real estate licensee shall
39immediately notify the commissioner in a manner designated by
40the commissioner whenever any of the following occur:

P43 1
(1) A real estate licensee affiliates as an independent contractor
2with or is otherwise retained by a real estate broker to conduct
3licensed activities.

4
(2) A real estate licensee’s affiliation with a broker is
5terminated.

6
(3) A real estate licensee affiliated with or retained by a broker
7acquires a business address different from the address shown on
8the records maintained by the commissioner.

9
(4) A real estate licensee affiliates as an independent contractor,
10or is otherwise retained by, a new real estate broker to conduct
11licensed activities.

12
(b) This section shall become operative on July 1, 2018.

end insert

13begin insert

begin insertSEC. 97.end insert

end insert

begin insertSection 10164 of the end insertbegin insertBusiness and Professions Codeend insert
14
begin insert is amended to read:end insert

10164.

(a) An employing broker or corporate designated broker
16officer may appoint a licensee as a manager of a branch office or
17division of the employing broker’s or employing corporate
18designated broker officer’s real estate business and delegate to the
19appointed manager the responsibility to oversee day-to-day
20operations, supervise the licensed activities of licensees, and
21supervise clerical staff employed in the branch office or division.

22(b) Notwithstanding subdivision (a), nothing in this section shall
23be construed to limit the responsibilities of an employing broker
24or a corporate designated broker officer pursuant to subdivision
25(h) of Section 10177. A licensee accepting appointment as a
26manager shall be subject to disciplinary action pursuant to Section
2710165 for failure to properly supervise licensed activity pursuant
28to subdivision (a).

29(c) Appointment of a manager shall only be made by means of
30a written contract in which the manager accepts the delegated
31responsibility. The appointing employing broker or corporate
32designated broker officer shall retain a copy of the contract and
33send a notice to the department, in a form approved by the
34commissioner, identifying the appointed manager and the branch
35office or division the manager is appointed to supervise.

36(d) A licensee shall not be appointed as a manager if any of the
37following apply:

38(1) The licensee holds a restricted license.

39(2) The licensee is or has been subject to an order of debarment.

P44 1(3) The licensee is a salesperson with less than two years of
2full-time real estate experience within five years preceding the
3appointment.

4(e) Whenever an appointment of a branch manager is terminated
5or changed, the employing broker or corporate designated broker
6officer shall immediately notify the commissioner thereof in
7writing.

8(f) This section shall~~begin delete become operative on July 1, 2012.end delete~~begin insert repeal
9on July, 1, 2018.end insert

10begin insert

begin insertSEC. 98.end insert

end insert

begin insertSection 10164 is added to the end insertbegin insertBusiness and
11Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10164.end insert

(a) A responsible broker or corporate designated
13broker officer may appoint a licensee as a manager of a branch
14office or division of the broker’s real estate business and delegate
15to the appointed manager the responsibility to oversee day-to-day
16operations, supervise the licensed activities of licensees, and
17supervise clerical staff employed in the branch office or division.

18
(b) Notwithstanding subdivision (a), nothing in this section shall
19be construed to limit the responsibilities of a responsible broker
20or a designated broker corporate officer pursuant to subdivision
21(h) of Section 10177. A licensee accepting appointment as a
22manager shall be subject to disciplinary action pursuant to Section
2310165 for failure to properly supervise licensed activity pursuant
24to subdivision (a).

25
(c) Appointment of a manager shall only be made by means of
26a written contract in which the manager accepts the delegated
27responsibility. The appointing broker shall retain a copy of the
28contract and send a notice to the department, in a form approved
29by the commissioner, identifying the appointed manager and the
30branch office or division the manager is appointed to supervise.

31
(d) A licensee shall not be appointed as a manager if any of the
32following apply:

33
(1) The licensee holds a restricted license.

34
(2) The licensee is or has been subject to an order of debarment.

35
(3) The licensee is a salesperson with less than two years of
36full-time real estate experience within five years preceding the
37appointment.

38
(e) Whenever an appointment of a branch manager is terminated
39or changed, the appointing broker shall immediately notify the
40commissioner thereof in writing.

P45 1
(f) This section shall become operative on July 1, 2018.

end insert

2begin insert

begin insertSEC. 99.end insert

end insert

begin insertSection 10166.03 of the end insertbegin insertBusiness and Professions
3Codeend insertbegin insert is amended to read:end insert

10166.03.

(a) A loan processor or underwriter who does not
5represent to the public, through advertising or other means of
6communicating or providing information, including the use of
7business cards, stationery, brochures, signs, rate lists, or other
8promotional items, that the individual can or will perform any of
9the activities of a mortgage loan originator shall not be required
10to obtain a license endorsement as a mortgage loan originator.

11(b) An individual engaging solely in loan processor or
12underwriter activities shall not represent to the public, through
13advertising or other means of communicating or providing
14information including the use of business cards, stationery,
15brochures, signs, rate lists, or other promotional items, that the
16individual can or will perform any of the activities of a mortgage
17loan originator.

18(c) An independent contractor who is employed by a mortgage
19loan originator may not engage in the activities of a loan processor
20or underwriter for a residential mortgage loan unless the
21independent contractor loan processor or underwriter obtains and
22maintains an endorsement as a mortgage loan originator under this
23article. Each independent contractor loan processor or underwriter
24who obtains and maintains an endorsement as a mortgage loan
25originator under this article shall have and maintain a valid unique
26identifier issued by the Nationwide Mortgage Licensing System
27and Registry.

begin insert

28
(d) This section shall repeal on July 1, 2018.

30begin insert(2)end insert Making any false promises of a character likely to influence,
31persuade, or induce.

begin delete
32(c)
end delete

33begin insert(3)end insert A continued and flagrant course of misrepresentation or
34making of false promises through real estate agents or salespersons.

begin delete
35(d)
end delete

36begin insert(4)end insert Acting for more than one party in a transaction without the
37knowledge or consent of all parties thereto.

begin delete
38(e)
end delete

P47 1begin insert(5)end insert Commingling with his or her own money or property the
2money or other property of others which is received and held by
3him or her.

begin delete
4(f)
end delete

5begin insert(6)end insert Claiming, demanding, or receiving a fee, compensation, or
6commission under any exclusive agreement authorizing or
7employing a licensee to perform any acts set forth in Section 10131
8for compensation or commission where the agreement does not
9contain a definite, specified date of final and complete termination.

begin delete
10(g)
end delete

11begin insert(7)end insert The claiming or taking by a licensee of any secret or
12undisclosed amount of compensation, commission, or profit or the
13failure of a licensee to reveal to the employer of the licensee the
14full amount of the licensee’s compensation, commission, or profit
15under any agreement authorizing or employing the licensee to do
16any acts for which a license is required under this chapter for
17compensation or commission prior to or coincident with the signing
18of an agreement evidencing the meeting of the minds of the
19contracting parties, regardless of the form of the agreement,
20whether evidenced by documents in an escrow or by any other or
21different procedure.

begin delete
22(h)
end delete

23begin insert(8)end insert The use by a licensee of any provision allowing the licensee
24an option to purchase in an agreement authorizing or employing
25the licensee to sell, buy, or exchange real estate or a business
26opportunity for compensation or commission, except when the
27licensee prior to or coincident with election to exercise the option
28to purchase reveals in writing to the employer the full amount of
29the licensee’s profit and obtains the written consent of the employer
30approving the amount of the profit.

begin delete
31(i)
end delete

32begin insert(9)end insert Any other conduct, whether of the same or a different
33character than specified in this section, which constitutes fraud or
34dishonest dealing.

begin delete
35(j)
end delete

36begin insert(10)end insert Obtaining the signature of a prospective purchaser to an
37agreement which provides that the prospective purchaser shall
38either transact the purchasing, leasing, renting, or exchanging of
39a business opportunity property through the broker obtaining the
40signature, or pay a compensation to the broker if the property is
P48 1purchased, leased, rented, or exchanged without the broker first
2having obtained the written authorization of the owner of the
3property concerned to offer the property for sale, lease, exchange,
4or rent.

begin delete
5(k)
end delete

6begin insert(11)end insert Failing to disburse funds in accordance with a commitment
7to make a mortgage loan that is accepted by the applicant when
8the real estate broker represents to the applicant that the broker is
9either of the following:

begin delete
10(1)
end delete

11begin insert(A)end insert The lender.

begin delete
12(2)
end delete

13begin insert(B)end insert Authorized to issue the commitment on behalf of the lender
14or lenders in the mortgage loan transaction.

begin delete
15(l)
end delete

16begin insert(12)end insert Intentionally delaying the closing of a mortgage loan for
17the sole purpose of increasing interest, costs, fees, or charges
18payable by the borrower.

begin delete
19(m)
end delete

20begin insert(13)end insert Violating any section, division, or article of law which
21provides that a violation of that section, division, or article of law
22by a licensed person is a violation of that person’s licensing law,
23if it occurs within the scope of that person’s duties as a licensee.

begin insert

24
(b) This section shall repeal on July 1, 2018.

end insert

25begin insert

begin insertSEC. 102.end insert

end insert

begin insertSection 10176 is added to the end insertbegin insertBusiness and
26Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10176.end insert

(a) The commissioner may, upon his or her own motion,
28and shall, upon the verified complaint in writing of any person,
29investigate the actions of any person engaged in the business or
30acting in the capacity of a real estate licensee within this state,
31and he or she may temporarily suspend or permanently revoke a
32real estate license at any time where the licensee, while a real
33estate licensee, in performing or attempting to perform any of the
34acts within the scope of this chapter has been guilty of any of the
35following:

36
(1) Making any substantial misrepresentation.

37
(2) Making any false promises of a character likely to influence,
38persuade, or induce.

39
(3) A continued and flagrant course of misrepresentation or
40making of false promises through licensees.

P49 1
(4) Acting for more than one party in a transaction without the
2knowledge or consent of all parties thereto.

3
(5) Commingling with his or her own money or property the
4money or other property of others which is received and held by
5him or her.

6
(6) Claiming, demanding, or receiving a fee, compensation, or
7commission under any exclusive agreement authorizing or
8retaining a licensee to perform any acts set forth in Section 10131
9for compensation or commission where the agreement does not
10contain a definite, specified date of final and complete termination.

11
(7) The claiming or taking by a licensee of any secret or
12undisclosed amount of compensation, commission, or profit or the
13failure of a licensee to reveal to the principal retaining the licensee
14the full amount of the licensee’s compensation, commission, or
15profit under any agreement authorizing or retaining the licensee
16to do any acts for which a license is required under this chapter
17for compensation or commission prior to or coincident with the
18signing of an agreement evidencing the meeting of the minds of
19the contracting parties, regardless of the form of the agreement,
20whether evidenced by documents in an escrow or by any other or
21different procedure.

22
(8) The use by a licensee of any provision allowing the licensee
23an option to purchase in an agreement authorizing or retaining
24the licensee to sell, buy, or exchange real estate or a business
25opportunity for compensation or commission, except when the
26licensee prior to or coincident with election to exercise the option
27to purchase reveals in writing to the responsible broker the full
28amount of the licensee’s profit and obtains the written consent of
29the responsible broker approving the amount of the profit.

30
(9) Any other conduct, whether of the same or of a different
31character than specified in this section, which constitutes fraud
32or dishonest dealing.

33
(10) Obtaining the signature of a prospective purchaser to an
34agreement which provides that the prospective purchaser shall
35either transact the purchasing, leasing, renting, or exchanging of
36a business opportunity property through the broker obtaining the
37signature or pay a compensation to the broker if the property is
38purchased, leased, rented, or exchanged without the broker first
39having obtained the written authorization of the owner of the
P50 1property concerned to offer the property for sale, lease, exchange,
2or rent.

3
(11) Failing to disburse funds in accordance with a commitment
4to make a mortgage loan that is accepted by the applicant when
5the real estate broker represents to the applicant that the broker
6is either of the following:

7
(A) The lender.

8
(B) Authorized to issue the commitment on behalf of the lender
9or lenders in the mortgage loan transaction.

10
(12) Intentionally delaying the closing of a mortgage loan for
11the sole purpose of increasing interest, costs, fees, or charges
12payable by the borrower.

13
(13) Violating any section, division, or article of law which
14provides that a violation of that section, division, or article of law
15by a licensed person is a violation of that person’s licensing law
16if it occurs within the scope of that person’s duties as a licensee.

17
(b) This section shall become operative on July 1, 2018.

end insert

18begin insert

begin insertSEC. 103.end insert

end insert

begin insertSection 10177 of the end insertbegin insertBusiness and Professions Codeend insert
19
begin insert is amended to read:end insert

10177.

The commissioner may suspend or revoke the license
21of a real estate licensee, delay the renewal of a license of a real
22estate licensee, or deny the issuance of a license to an applicant,
23who has done any of the following, or may suspend or revoke the
24license of a corporation, delay the renewal of a license of a
25corporation, or deny the issuance of a license to a corporation, if
26an officer, director, or person owning or controlling 10 percent or
27more of the corporation’s stock has done any of the following:

28(a) Procured, or attempted to procure, a real estate license or
29license renewal, for himself or herself or a salesperson, by fraud,
30misrepresentation, or deceit, or by making a material misstatement
31of fact in an application for a real estate license, license renewal,
32or reinstatement.

33(b) Entered a plea of guilty or nolo contendere to, or been found
34guilty of, or been convicted of, a felony, or a crime substantially
35related to the qualifications, functions, or duties of a real estate
36licensee, and the time for appeal has elapsed or the judgment of
37conviction has been affirmed on appeal, irrespective of an order
38granting probation following that conviction, suspending the
39imposition of sentence, or of a subsequent order under Section
401203.4 of the Penal Code allowing that licensee to withdraw his
P51 1or her plea of guilty and to enter a plea of not guilty, or dismissing
2the accusation or information.

3(c) Knowingly authorized, directed, connived at, or aided in the
4publication, advertisement, distribution, or circulation of a material
5false statement or representation concerning his or her designation
6or certification of special education, credential, trade organization
7membership, or business, or concerning a business opportunity or
8a land or subdivision, as defined in Chapter 1 (commencing with
9Section 11000) of Part 2, offered for sale.

10(d) Willfully disregarded or violated the Real Estate Law (Part
111 (commencing with Section 10000)) or Chapter 1 (commencing
12with Section 11000) of Part 2 or the rules and regulations of the
13commissioner for the administration and enforcement of the Real
14Estate Law and Chapter 1 (commencing with Section 11000) of
15Part 2.

16(e) Willfully used the term “realtor” or a trade name or insignia
17of membership in a real estate organization of which the licensee
18is not a member.

19(f) Acted or conducted himself or herself in a manner that would
20have warranted the denial of his or her application for a real estate
21license, or either had a license denied or had a license issued by
22another agency of this state, another state, or the federal
23government revoked or suspended for acts that, if done by a real
24estate licensee, would be grounds for the suspension or revocation
25of a California real estate license, if the action of denial, revocation,
26or suspension by the other agency or entity was taken only after
27giving the licensee or applicant fair notice of the charges, an
28opportunity for a hearing, and other due process protections
29comparable to the Administrative Procedure Act (Chapter 3.5
30(commencing with Section 11340), Chapter 4 (commencing with
31Section 11370), and Chapter 5 (commencing with Section 11500)
32of Part 1 of Division 3 of Title 2 of the Government Code), and
33only upon an express finding of a violation of law by the agency
34or entity.

35(g) Demonstrated negligence or incompetence in performing
36an act for which he or she is required to hold a license.

37(h) As a broker licensee, failed to exercise reasonable
38supervision over the activities of his or her salespersons, or, as the
39officer designated by a corporate broker licensee, failed to exercise
P52 1reasonable supervision and control of the activities of the
2corporation for which a real estate license is required.

3(i) Used his or her employment by a governmental agency in a
4capacity giving access to records, other than public records, in a
5manner that violates the confidential nature of the records.

6(j) Engaged in any other conduct, whether of the same or a
7different character than specified in this section, that constitutes
8fraud or dishonest dealing.

9(k) Violated any of the terms, conditions, restrictions, and
10limitations contained in an order granting a restricted license.

11(l) (1) Solicited or induced the sale, lease, or listing for sale or
12lease of residential property on the ground, wholly or in part, of
13loss of value, increase in crime, or decline of the quality of the
14schools due to the present or prospective entry into the
15neighborhood of a person or persons having a characteristic listed
16in subdivision (a) or (d) of Section 12955 of the Government Code,
17as those characteristics are defined in Sections 12926 and 12926.1,
18subdivision (m) and paragraph (1) of subdivision (p) of Section
1912955, and Section 12955.2 of the Government Code.

20(2) Notwithstanding paragraph (1), with respect to familial
21status, paragraph (1) shall not be construed to apply to housing for
22older persons, as defined in Section 12955.9 of the Government
23Code. With respect to familial status, nothing in paragraph (1)
24shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11,
25and 799.5 of the Civil Code, relating to housing for senior citizens.
26Subdivision (d) of Section 51 and Section 4760 of the Civil Code
27and subdivisions (n), (o), and (p) of Section 12955 of the
28Government Code shall apply to paragraph (1).

29(m) Violated the Franchise Investment Law (Division 5
30(commencing with Section 31000) of Title 4 of the Corporations
31Code) or regulations of the Commissioner of Corporations
32pertaining thereto.

33(n) Violated the Corporate Securities Law of 1968 (Division 1
34(commencing with Section 25000) of Title 4 of the Corporations
35Code) or the regulations of the Commissioner of Corporations
36pertaining thereto.

37(o) Failed to disclose to the buyer of real property, in a
38transaction in which the licensee is an agent for the buyer, the
39nature and extent of a licensee’s direct or indirect ownership
40interest in that real property. The direct or indirect ownership
P53 1interest in the property by a person related to the licensee by blood
2or marriage, by an entity in which the licensee has an ownership
3interest, or by any other person with whom the licensee has a
4special relationship shall be disclosed to the buyer.

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

6(q) Violated or failed to comply with Chapter 2 (commencing
7with Section 2920) of Title 14 of Part 4 of Division 3 of the Civil
8Code, related to mortgages.

9If a real estate broker that is a corporation has not done any of
10the foregoing acts, either directly or through its employees, agents,
11officers, directors, or persons owning or controlling 10 percent or
12more of the corporation’s stock, the commissioner may not deny
13the issuance or delay the renewal of a real estate license to, or
14suspend or revoke the real estate license of, the corporation,
15provided that any offending officer, director, or stockholder, who
16has done any of the foregoing acts individually and not on behalf
17of the corporation, has been completely disassociated from any
18affiliation or ownership in the corporation. A decision by the
19commissioner to delay the renewal of a real estate license shall
20toll the expiration of that license until the results of any pending
21disciplinary actions against that licensee are final, or until the
22licensee voluntarily surrenders his, her, or its license, whichever
23is earlier.

begin delete
24This section shall become operative on July 1, 2012.
end deletebegin insert

25
This section shall repeal on July 1, 2018.

end insert

26begin insert

begin insertSEC. 104.end insert

end insert

begin insertSection 10177 is added to the end insertbegin insertBusiness and
27Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10177.end insert

The commissioner may suspend or revoke the license
29of a real estate licensee, delay the renewal of a license of a real
30estate licensee, or deny the issuance of a license to an applicant,
31who has done any of the following, or may suspend or revoke the
32license of a corporation, delay the renewal of a license of a
33corporation, or deny the issuance of a license to a corporation, if
34an officer, director, or person owning or controlling 10 percent
35or more of the corporation’s stock has done any of the following:

36
(a) Procured, or attempted to procure, a real estate license or
37license renewal, for himself or herself or a salesperson, by fraud,
38misrepresentation, or deceit or by making a material misstatement
39of fact in an application for a real estate license, license renewal,
40or reinstatement.

P54 1
(b) Entered a plea of guilty or no contest to, or been found guilty
2of, or been convicted of, a felony, or a crime substantially related
3to the qualifications, functions, or duties of a real estate licensee,
4and the time for appeal has elapsed or the judgment of conviction
5has been affirmed on appeal, irrespective of an order granting
6probation following that conviction, suspending the imposition of
7sentence, or of a subsequent order under Section 1203.4 of the
8Penal Code allowing that licensee to withdraw his or her plea of
9guilty and to enter a plea of not guilty, or dismissing the accusation
10or information.

11
(c) Knowingly authorized, directed, connived at, or aided in the
12publication, advertisement, distribution, or circulation of a material
13false statement or representation concerning his or her designation
14or certification of special education, credential, trade organization
15membership, or business or concerning a business opportunity or
16a land or subdivision, as defined in Chapter 1 (commencing with
17Section 11000) of Part 2, offered for sale.

18
(d) Willfully disregarded or violated the Real Estate Law (Part
191 (commencing with Section 10000)) or Chapter 1 (commencing
20with Section 11000) of Part 2 or the rules and regulations of the
21commissioner for the administration and enforcement of the Real
22Estate Law and Chapter 1 (commencing with Section 11000) of
23Part 2.

24
(e) Willfully used the term “realtor” or a trade name or insignia
25of membership in a real estate organization of which the licensee
26is not a member.

27
(f) Acted or conducted himself or herself in a manner that would
28have warranted the denial of his or her application for a real estate
29license or either had a license denied or had a license issued by
30another agency of this state, another state, or the federal
31government revoked, surrendered, or suspended for acts that, if
32done by a real estate licensee, would be grounds for the suspension
33or revocation of a California real estate license, if the action of
34denial, revocation, surrender, or suspension by the other agency
35or entity was taken only after giving the licensee or applicant fair
36notice of the charges, an opportunity for a hearing, and other due
37process protections comparable to the Administrative Procedure
38Act (Chapter 3.5 (commencing with Section 11340), Chapter 4
39(commencing with Section 11370), and Chapter 5 (commencing
40with Section 11500) of Part 1 of Division 3 of Title 2 of the
P55 1Government Code) and only upon an express finding of a violation
2of law by the agency or entity.

3
(g) Demonstrated negligence or incompetence in performing
4an act for which he or she is required to hold a license.

5
(h) As a broker licensee, failed to exercise reasonable
6supervision over the activities of his or her salespersons, or, as
7the officer designated by a corporate broker licensee, failed to
8exercise reasonable supervision and control of the activities of the
9corporation for which a real estate license is required.

10
(i) Used his or her employment by a governmental agency in a
11capacity giving access to records, other than public records, in a
12manner that violates the confidential nature of the records.

13
(j) Engaged in any other conduct, whether of the same or of a
14different character than specified in this section, that constitutes
15fraud or dishonest dealing.

16
(k) Violated any of the terms, conditions, restrictions, and
17limitations contained in an order granting a restricted license.

18
(l) (1) Solicited or induced the sale, lease, or listing for sale or
19lease of residential property on the grounds, wholly or in part, of
20loss of value, increase in crime, or decline of the quality of the
21schools due to the present or prospective entry into the
22neighborhood of a person or persons having a characteristic listed
23in subdivision (a) or (d) of Section 12955 of the Government Code,
24as those characteristics are defined in Sections 12926 and 12926.1
25of, subdivision (m) and paragraph (1) of subdivision (p) of Section
2612955 of, and Section 12955.2 of, the Government Code.

27
(2) Notwithstanding paragraph (1), with respect to familial
28status, paragraph (1) shall not be construed to apply to housing
29for older persons, as defined in Section 12955.9 of the Government
30Code. With respect to familial status, nothing in paragraph (1)
31shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11,
32and 799.5 of the Civil Code, relating to housing for senior citizens.
33Subdivision (d) of Section 51 and Section 4760 of the Civil Code
34and subdivisions (n), (o), and (p) of Section 12955 of the
35Government Code shall apply to paragraph (1).

36
(m) Violated the Franchise Investment Law (Division 5
37(commencing with Section 31000) of Title 4 of the Corporations
38Code) or regulations of the Commissioner of Corporations
39pertaining thereto.

P56 1
(n) Violated the Corporate Securities Law of 1968 (Division 1
2(commencing with Section 25000) of Title 4 of the Corporations
3Code) or the regulations of the Commissioner of Corporations
4pertaining thereto.

5
(o) Failed to disclose to the buyer of real property, in a
6transaction in which the licensee is an agent for the buyer, the
7nature and extent of a licensee’s direct or indirect ownership
8interest in that real property. The direct or indirect ownership
9interest in the property by a person related to the licensee by blood
10or marriage, by an entity in which the licensee has an ownership
11interest, or by any other person with whom the licensee has a
12special relationship shall be disclosed to the buyer.

13
(p) Violated Article 6 (commencing with Section 10237).

14
(q) Violated or failed to comply with Chapter 2 (commencing
15with Section 2920) of Title 14 of Part 4 of Division 3 of the Civil
16Code, relating to mortgages.

begin insert10179.end insert

(a) No violation of any of the provisions of this part
32relating to real estate or of Chapter 1 of Part 2 of this division by
33any real estate salesperson or employee of any licensed real estate
34broker shall cause the revocation or suspension of the license of
35the employer of the salesperson or employee unless it appears
36upon a hearing by the commissioner that the employer had guilty
37knowledge of the violation.

38
(b) This section shall become operative on July 1, 2018.

end insert

39begin insert

begin insertSEC. 109.end insert

end insert

begin insertSection 10186.2 of the end insertbegin insertBusiness and Professions
40Codeend insertbegin insert is amended to read:end insert

P58 1

10186.2.

(a) (1) A licensee shall report any of the following
2to the department:

3(A) The bringing of an indictment or information charging a
4felony against the licensee.

5(B) The conviction of the licensee, including any verdict of
6guilty, or plea of guilty or no contest, of any felony or
7misdemeanor.

8(C) Any disciplinary action taken by another licensing entity
9or authority of this state or of another state or an agency of the
10federal government.

11(2) The report required by this subdivision shall be made in
12writing within 30 days of the date of the bringing of the indictment
13or the charging of a felony, the conviction, or the disciplinary
14action.

15(b) Failure to make a report required by this section shall
16constitute a cause for discipline.

begin insert

17
(c) This section shall repeal on July 1, 2018.

end insert

18begin insert

begin insertSEC. 110.end insert

end insert

begin insertSection 10186.2 is added to the end insertbegin insertBusiness and
19Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10186.2.end insert

(a) (1) A licensee shall report any of the following
21to the bureau:

22
(A) The bringing of a criminal complaint, information, or
23indictment charging a felony against the licensee.

24
(B) The conviction of the licensee, including any verdict of
25guilty, or plea of guilty or no contest, of any felony or
26misdemeanor.

27
(C) Any disciplinary action taken by another licensing entity or
28authority of this state or of another state or an agency of the federal
29government.

30
(2) The report required by this subdivision shall be made in
31writing within 30 days of the date of the bringing of the indictment
32or the charging of a felony, the conviction, or the disciplinary
33action.

34
(b) Failure to make a report required by this section shall
35constitute a cause for discipline.

36
(c) This section shall become operative on July 1, 2018.

end insert

37begin insert

begin insertSEC. 111.end insert

end insert

begin insertSection 10232.3 of the end insertbegin insertBusiness and Professions
38Codeend insertbegin insert is amended to read:end insert

10232.3.

(a) Any transaction that involves the sale of or offer
40to sell a note secured directly by an interest in one or more parcels
P59 1of real property or the sale of an undivided interest in a note secured
2directly by one or more parcels of real property shall adhere to all
3of the following:

4(1) Except as provided in paragraph (2), the aggregate principal
5amount of the note or interest sold, together with the unpaid
6principal amount of any encumbrances upon the real property
7senior thereto, shall not exceed the following percentages of the
8current market value of each parcel of the real property, as
9determined in writing by the broker or appraiser pursuant to Section
1010232.6, plus the amount for which the payment of principal and
11interest in excess of the percentage of current market value is
12insured for the benefit of the holders of the note or interest by an
13insurer admitted to do business in this state by the Insurance
14Commissioner:

(A)	Single-family residence, owner occupied	80%
(B)	Single-family residence, not owner occupied	75%
(C)	Commercial properties and income-producing properties not
	described in (B) or (E)	65%
(D)	Single-family residentially zoned lot or parcel that has installed offsite improvements including drainage, curbs, gutters, sidewalks, paved roads, and utilities as mandated by the political subdivision having jurisdiction over the lot or parcel	65%
(E)	Land that produces income from crops, timber, or minerals	60%
(F)	Land that is not income producing but has been zoned for (and if required, approved for subdivision as) commercial or residential development	50%
(G)	Other real property	35%

P59 2939P59 10

30(2) The percentage amounts specified in paragraph (1) may be
31exceeded when and to the extent that the broker determines that
32the encumbrance of the property in excess of these percentages is
33reasonable and prudent considering all relevant factors pertaining
34to the real property. However, in no event shall the aggregate
35principal amount of the note or interest sold, together with the
36unpaid principal amount of any encumbrances upon the property
37senior thereto, exceed 80 percent of the current fair market value
38of improved real property or 50 percent of the current fair market
39value of unimproved real property, except in the case of a
40single-family zoned lot or parcel as defined in paragraph (1), which
P60 1shall not exceed 65 percent of the current fair market value of that
2lot or parcel, plus the amount insured as specified in paragraph
3(1). A written statement shall be prepared by the broker that sets
4forth the material considerations and facts that the broker relies
5upon for his or her determination, which shall be retained as a part
6of the broker’s record of the transaction. Either a copy of the
7statement or the information contained therein shall be included
8in the disclosures required pursuant to Section 10232.5.

9(3) A copy of the appraisal or the broker’s evaluation, for each
10parcel of real property securing the note or interest, shall be
11delivered to the purchaser. The broker shall advise the purchaser
12of his or her right to receive a copy. For purposes of this paragraph,
13“appraisal” means a written estimate of value based upon the
14assembling, analyzing, and reconciling of facts and value indicators
15for the real property in question. A broker shall not purport to make
16an appraisal unless the person so employed is qualified on the basis
17of special training, preparation, or experience.

18(4) For construction or rehabilitation loans, where the amount
19withheld for construction or rehabilitation at the start of the project
20exceeds one hundred thousand dollars ($100,000), the term “current
21market value” may be deemed to be the value of the completed
22project if all of the following safeguards are met:

23(A) An independent neutral third-party escrow holder is used
24for all deposits and disbursements relating to the construction or
25rehabilitation of the secured property.

26(B) The loan is fully funded, with the entire loan amount to be
27deposited in escrow prior to recording of the deed or deeds of trust.

28(C) A comprehensive, detailed draw schedule is used to ensure
29proper and timely disbursements to allow for completion of the
30project.

31(D) The disbursement draws from the escrow account are based
32on verification from an independent qualified person who certifies
33that the work completed to date meets the related codes and
34standards and that the draws were made in accordance with the
35construction contract and draw schedule. For purposes of this
36subparagraph, “independent qualified person” means a person who
37is not an employee, agent, or affiliate of the broker and who is a
38licensed architect, general contractor, structural engineer, or active
39local government building inspector acting in his or her official
40capacity.

P61 1(E) An appraisal is completed by a qualified and licensed
2appraiser in accordance with the Uniform Standards of Professional
3Appraisal Practice (USPAP).

4(F) The documentation includes a detailed description of the
5actions that may be taken in the event of a failure to complete the
6project, whether that failure is due to default, insufficiency of
7funds, or other causes.

8(G) The entire amount of the loan does not exceed two million
9five hundred thousand dollars ($2,500,000).

10(5) For construction or rehabilitation loans, where the amount
11withheld for construction or rehabilitation at the start of the project
12is one hundred thousand dollars ($100,000) or less, the term
13“current market value” may be deemed to be the value of the
14completed project if all of the following safeguards are met:

15(A) The loan is fully funded, with the entire loan amount to be
16deposited in escrow prior to recording of the deed or deeds of trust.

17(B) A comprehensive, detailed draw schedule is used to ensure
18proper and timely disbursements to allow for completion of the
19project.

20(C) An appraisal is completed by a qualified and licensed
21appraiser in accordance with the Uniform Standards of Professional
22Appraisal Practice (USPAP).

23(D) The documentation includes a detailed description of the
24actions that may be taken in the event of a failure to complete the
25project, whether that failure is due to default, insufficiency of
26funds, or other causes.

27(E) The entire amount of the loan does not exceed two million
28five hundred thousand dollars ($2,500,000).

29(6) If a note or an interest will be secured by more than one
30parcel of real property, for the purpose of determining the
31maximum amount of the note or interest, each security property
32shall be assigned a portion of the note or interest that shall not
33exceed the percentage of current market value determined by, and
34in accordance with, the provisions of paragraphs (1) and (2).

35(b) The note or interest shall not be sold, unless the purchaser
36meets one or both of the qualifications of income or net worth set
37forth below and signs a statement, which shall be retained by the
38broker for four years, conforming to the following:

“Transaction Identifier:
Name of Purchaser:		Date:
Check either one of the following, if true:
( ) My investment in the transaction does not exceed 10% of my net worth,
exclusive of home, furnishings, and automobiles.
( ) My investment in the transaction does not exceed 10% of my adjusted
gross income for federal income tax purposes for my last tax year or,
in the alternative, as estimated for the current year.

	Signature”

P59 10

begin insert

11
(c) This section shall repeal on July 1, 2018.

end insert

12begin insert

begin insertSEC. 112.end insert

end insert

begin insertSection 10232.3 is added to the end insertbegin insertBusiness and
13Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10232.3.end insert

(a) Any transaction that involves the sale of or offer
15to sell a note secured directly by an interest in one or more parcels
16of real property or the sale of an undivided interest in a note
17secured directly by one or more parcels of real property shall
18adhere to all of the following:

19
(1) Except as provided in paragraph (2), the aggregate principal
20amount of the note or interest sold, together with the unpaid
21principal amount of any encumbrances upon the real property
22senior thereto, shall not exceed the following percentages of the
23current market value of each parcel of the real property, as
24determined in writing by the broker or appraiser pursuant to
25Section 10232.6, plus the amount for which the payment of
26principal and interest in excess of the percentage of current market
27value is insured for the benefit of the holders of the note or interest
28by an insurer admitted to do business in this state by the Insurance
29Commissioner:

begin insert (A) end insert	begin insert Single-family residence, owner occupied end insert	begin insert 80% end insert
begin insert (B) end insert	begin insert Single-family residence, not owner occupied end insert	begin insert 75% end insert
begin insert (C) end insert	begin insert Commercial properties and income-producing properties not end insert	begin insert end insert
begin insert end insert	begin insert described in (B) or (E) end insert	begin insert 65% end insert
begin insert (D) end insert	begin insert Single-family residentially zoned lot or parcel that has installed offsite improvements, including drainage, curbs, gutters, sidewalks, paved roads, and utilities as mandated by the political subdivision having jurisdiction over the lot or parcel end insert	begin insert 65% end insert
begin insert (E) end insert	begin insert Land that produces income from crops, timber, or minerals end insert	begin insert 60% end insert
begin insert (F) end insert	begin insert Land that is not income producing but has been zoned for (and, if required, approved for subdivision as) commercial or residential development end insert	begin insert 50% end insert
begin insert (G) end insert	begin insert Other real property end insert	begin insert 35% end insert

P63 520P63 31

6
(2) The percentage amounts specified in paragraph (1) may be
7exceeded when and to the extent that the broker determines that
8the encumbrance of the property in excess of these percentages is
9reasonable and prudent considering all relevant factors pertaining
10to the real property. However, in no event shall the aggregate
11principal amount of the note or interest sold, together with the
12unpaid principal amount of any encumbrances upon the property
13senior thereto, exceed 80 percent of the current fair market value
14of improved real property or 50 percent of the current fair market
15value of unimproved real property, except in the case of a
16single-family zoned lot or parcel as defined in paragraph (1),
17which shall not exceed 65 percent of the current fair market value
18of that lot or parcel, plus the amount insured as specified in
19paragraph (1). A written statement shall be prepared by the broker
20that sets forth the material considerations and facts that the broker
21relies upon for his or her determination, which shall be retained
22as part of the broker’s record of the transaction. Either a copy of
23the statement or the information contained therein shall be included
24in the disclosures required pursuant to Section 10232.5.

25
(3) A copy of the appraisal or the broker’s evaluation, for each
26parcel of real property securing the note or interest, shall be
27delivered to the purchaser. The broker shall advise the purchaser
28of his or her right to receive a copy. For purposes of this
29paragraph, “appraisal” means a written estimate of value based
30upon the assembling, analyzing, and reconciling of facts and value
31indicators for the real property in question. A broker shall not
32purport to make an appraisal unless he or she is qualified on the
33basis of special training, preparation, or experience.

34
(4) For construction or rehabilitation loans, where the amount
35withheld for construction or rehabilitation at the start of the project
36exceeds one hundred thousand dollars ($100,000), the term
37“current market value” may be deemed to be the value of the
38completed project if all of the following safeguards are met:

P64 1
(A) An independent neutral third-party escrow holder is used
2for all deposits and disbursements relating to the construction or
3rehabilitation of the secured property.

4
(B) The loan is fully funded, with the entire loan amount to be
5deposited in escrow prior to the recording of the deed or deeds of
6trust.

7
(C) A comprehensive, detailed draw schedule is used to ensure
8proper and timely disbursements to allow for completion of the
9project.

10
(D) The disbursement draws from the escrow account are based
11 on verification from an independent qualified person who certifies
12that the work completed to date meets the related codes and
13standards and that the draws were made in accordance with the
14construction contract and draw schedule. For purposes of this
15subparagraph, “independent qualified person” means a person
16who is not an employee, agent, or affiliate of the broker and who
17is a licensed architect, general contractor, structural engineer, or
18active local government building inspector acting in his or her
19official capacity.

20
(E) An appraisal is completed by a qualified and licensed
21appraiser in accordance with the Uniform Standards of
22Professional Appraisal Practice (USPAP).

23
(F) The documentation includes a detailed description of the
24actions that may be taken in the event of a failure to complete the
25project, whether that failure is due to default, insufficiency of funds,
26or other causes.

27
(G) The entire amount of the loan does not exceed two million
28five hundred thousand dollars ($2,500,000).

29
(5) For construction or rehabilitation loans, where the amount
30withheld for construction or rehabilitation at the start of the project
31is one hundred thousand dollars ($100,000) or less, the term
32“current market value” may be deemed to be the value of the
33completed project if all of the following safeguards are met:

34
(A) The loan is fully funded, with the entire loan amount to be
35deposited in escrow prior to the recording of the deed or deeds of
36trust.

37
(B) A comprehensive, detailed draw schedule is used to ensure
38proper and timely disbursements to allow for completion of the
39project.

P65 1
(C) An appraisal is completed by a qualified and licensed
2appraiser in accordance with the Uniform Standards of
3Professional Appraisal Practice (USPAP).

4
(D) The documentation includes a detailed description of the
5actions that may be taken in the event of a failure to complete the
6project, whether that failure is due to default, insufficiency of funds,
7or other causes.

8
(E) The entire amount of the loan does not exceed two million
9five hundred thousand dollars ($2,500,000).

10
(6) If a note or an interest will be secured by more than one
11parcel of real property, for the purpose of determining the
12maximum amount of the note or interest, each security property
13shall be assigned a portion of the note or interest that shall not
14exceed the percentage of current market value determined by, and
15in accordance with, the provisions of paragraphs (1) and (2).

16
(b) The note or interest shall not be sold, unless the purchaser
17meets one or both of the qualifications of income or net worth set
18forth below and signs a statement, which shall be retained by the
19broker for four years, conforming to the following:

begin insert “Transaction Identifier: end insert
begin insert Name of Purchaser: end insert			begin insert Date: end insert
begin insert Check either one of the following, if true: end insert
begin insert ( ) My investment in the transaction does not exceed 10% of my net worth, end insert
begin insert exclusive of home, furnishings, and automobiles. end insert
begin insert ( ) My investment in the transaction does not exceed 10% of my adjusted end insert
begin insert gross income for federal income tax purposes for my last tax year or, end insert
begin insert in the alternative, as estimated for the current year. end insert
begin insert end insert	begin insert end insert	begin insert end insert
begin insert end insert	begin insert end insert	begin insert Signature” end insert

P63 31

32
(c) This section shall become operative on July 1, 2018.

end insert

33begin insert

begin insertSEC. 113.end insert

end insert

begin insertSection 10238 of the end insertbegin insertBusiness and Professions Codeend insert
34
begin insert is amended to read:end insert

10238.

(a) A notice in the following form and containing the
36following information shall be filed with the commissioner within
3730 days after the first transaction and within 30 days of any material
38change in the information required in the notice:

P67 21

TO:

Real Estate Commissioner
Mortgage Loan Section
1651 Exposition Boulevard
Sacramento, CA 95815

This notice is filed pursuant to Sections 10237 and 10238 of the Business and Professions Code.

( ) Original Notice ( ) Amended Notice

Name of Broker conducting transaction under Section 10237:

Broker license identification number:

List the month the fiscal year ends:

Broker’s telephone number:

Firm name (if different from “1”):

Street address (main location):

# and Street City State ZIP Code

Mailing address (if different from “6”):

Servicing agent: Identify by name, address, and telephone number the person or entity who will act as the servicing agent in transactions pursuant to Section 10237 (including the undersigned Broker if that is the case):

Total number of multilender notes arranged:

10.

Total number of interests sold to investors on the

multilender’s notes: ______

11.

Inspection of trust account (before answering this question, review the provisions of paragraph (3) of subdivision (k) of Section 10238).

CHECK ONLY ONE OF THE FOLLOWING:

( )

The undersigned Broker is (or expects to be) required to file reports of inspection of its trust account(s) with the Real Estate Commissioner pursuant to paragraph (3) of subdivision (k) of Section 10238.

Amount of Multilender Payments Collected Last Fiscal Quarter:

Total Number of Investors Due Payments Last Fiscal Quarter:

( )

The undersigned Broker is NOT (or does NOT expect to be) required to file reports of inspection of its trust account(s) with the Real Estate Commissioner pursuant to paragraph (3) of subdivision (k) of Section 10238.

12.

Signature. The contents of this notice are true and correct.

Date

Type Name of Broker

Signature of Broker or of Designated Officer of
Corporate Broker

Type Name of Person(s) Signing This Notice

17P67 2935P67 10

22NOTE: AN AMENDED NOTICE MUST BE FILED BY THE
23BROKER WITHIN 30 DAYS OF ANY MATERIAL CHANGE
24IN THE INFORMATION REQUIRED TO BE SET FORTH
25HEREIN.

27(b) A broker or person who becomes the servicing agent for
28notes or interests sold pursuant to this article, upon which payments
29due during any period of three consecutive months in the aggregate
30exceed one hundred twenty-five thousand dollars ($125,000) or
31the number of persons entitled to the payments exceeds 120, shall
32file the notice required by subdivision (a) with the commissioner
33within 30 days after becoming the servicing agent.

34(c) All advertising employed for transactions under this article
35shall show the name of the broker and comply with Section 10235
36of this code and Sections 260.302 and 2848 of Title 10 of the
37California Code of Regulations. Brokers and their agents are
38cautioned that a reference to a prospective investor that a
39transaction is conducted under this article may be deemed
P68 1misleading or deceptive if this representation may reasonably be
2construed by the investor as an implication of merit or approval
3of the transaction.

4(d) Each parcel of real property directly securing the notes or
5interests shall be located in this state, the note or notes shall not
6by their terms be subject to subordination to any subsequently
7created deed of trust upon the real property, and the note or notes
8shall not be promotional notes secured by liens on separate parcels
9of real property in one subdivision or in contiguous subdivisions.
10For purposes of this subdivision, a promotional note means a
11promissory note secured by a trust deed, executed on unimproved
12real property or executed after construction of an improvement of
13the property but before the first purchase of the property as so
14improved, or executed as a means of financing the first purchase
15of the property as so improved, that is subordinate, or by its terms
16may become subordinate, to any other trust deed on the property.
17However, the term “promotional note” does not include either of
18the following:

19(1) A note that was executed in excess of three years prior to
20being offered for sale.

21(2) A note secured by a first trust deed on real property in a
22subdivision that evidences a bona fide loan made in connection
23with the financing of the usual cost of the development in a
24residential, commercial, or industrial building or buildings on the
25property under a written agreement providing for the disbursement
26of the loan funds as costs are incurred or in relation to the progress
27of the work and providing for title insurance insuring the priority
28of the security as against mechanic’s and materialmen’s liens or
29for the final disbursement of at least 10 percent of the loan funds
30after the expiration of the period for the filing of mechanic’s and
31materialmen’s liens.

32(e) The notes or interests shall be sold by or through a real estate
33broker, as principal or agent. At the time the notes or interests are
34originally sold or assigned, neither the broker nor an affiliate of
35the broker shall have an interest as owner, lessor, or developer of
36the property securing the loan, or any contractual right to acquire,
37lease, or develop the property securing the loan. This provision
38does not prohibit a broker from conducting the following
39transactions if, in either case, the disclosure statement furnished
40by the broker pursuant to subdivision (l) discloses the interest of
P69 1the broker or affiliate in the transaction and the circumstances
2under which the broker or affiliate acquired the interest:

3(1) A transaction in which the broker or an affiliate of the broker
4is acquiring the property pursuant to a foreclosure under, or sale
5pursuant to, a deed of trust securing a note for which the broker is
6the servicing agent or that the broker sold to the holder or holders.

7(2) A transaction in which the broker or an affiliate of the broker
8is reselling from inventory property acquired by the broker pursuant
9to a foreclosure under, or sale pursuant to, a deed of trust securing
10a note for which the broker is the servicing agent or that the broker
11sold to the holder or holders.

12(f) (1) The notes or interests shall not be sold to more than 10
13persons, each of whom meets one or both of the qualifications of
14income or net worth set forth below and signs a statement, which
15shall be retained by the broker for four years, conforming to the
16following:

Transaction Identifier:
Name of Purchaser: Date: ______
Check either one of the following, if true:
( )	My investment in the transaction does not exceed 10% of my net worth, exclusive of home, furnishings, and automobiles.

( )	My investment in the transaction does not exceed 10% of my adjusted gross income for federal income tax purposes for my last tax year or, in the alternative, as estimated for the current year.
Signature

P67 2935P67 10

30(2) The number of offerees shall not be considered for the
31purposes of this section.

32(3) Spouses and their dependents, and an individual and his or
33her dependents, shall be counted as one person.

34(4) A retirement plan, trust, business trust, corporation, or other
35entity that is wholly owned by an individual and the individual’s
36spouse or the individual’s dependents, or any combination thereof,
37shall not be counted separately from the individual, but the
38investments of these entities shall be aggregated with those of the
39individual for the purposes of the statement required by paragraph
40(1). If the investments of any entities are required to be aggregated
P70 1under this subdivision, the adjusted gross income or net worth of
2these entities may also be aggregated with the net worth, income,
3or both, of the individual.

4(5) The “institutional investors” enumerated in subdivision (i)
5of Section 25102 or subdivision (c) of Section 25104 of the
6Corporations Code, or in a rule adopted pursuant thereto, shall not
7be counted.

8(6) A partnership, limited liability company, corporation, or
9other organization that was not specifically formed for the purpose
10of purchasing the security offered in reliance upon this exemption
11from securities qualification is counted as one person.

12(g) The notes or interests of the purchasers shall be identical in
13their underlying terms, including the right to direct or require
14foreclosure, rights to and rate of interest, and other incidents of
15being a lender, and the sale to each purchaser pursuant to this
16section shall be upon the same terms, subject to adjustment for the
17face or principal amount or percentage interest purchased and for
18interest earned or accrued. This subdivision does not preclude
19different selling prices for interests to the extent that these
20differences are reasonably related to changes in the market value
21of the loan occurring between the sales of these interests. The
22interest of each purchaser shall be recorded pursuant to
23subdivisions (a) to (c), inclusive, of Section 10234.

24(h) (1) Except as provided in paragraph (2), the aggregate
25principal amount of the notes or interests sold, together with the
26unpaid principal amount of any encumbrances upon the real
27property senior thereto, shall not exceed the following percentages
28of the current market value of each parcel of the real property, as
29determined in writing by the broker or appraiser pursuant to Section
3010232.6, plus the amount for which the payment of principal and
31interest in excess of the percentage of current market value is
32insured for the benefit of the holders of the notes or interests by
33an insurer admitted to do business in this state by the Insurance
34Commissioner:

(A)	Single-family residence, owner occupied	80%
(B)	Single-family residence, not owner occupied	75%
(C)	Commercial properties and income-producing properties not described in (B) or (E)	65%
(D)	Single-family residentially zoned lot or parcel that has installed offsite improvements including drainage, curbs, gutters, sidewalks, paved roads, and utilities as mandated by the political subdivision having jurisdiction over the lot or parcel	65%
(E)	Land that produces income from crops, timber, or minerals	60%
(F)	Land that is not income producing but has been zoned for (and if required, approved for subdivision as) commercial or residential development	50%
(G)	Other real property	35%

P67 10

11(2) The percentage amounts specified in paragraph (1) may be
12exceeded when and to the extent that the broker determines that
13the encumbrance of the property in excess of these percentages is
14reasonable and prudent considering all relevant factors pertaining
15to the real property. However, in no event shall the aggregate
16principal amount of the notes or interests sold, together with the
17unpaid principal amount of any encumbrances upon the property
18senior thereto, exceed 80 percent of the current fair market value
19of improved real property or 50 percent of the current fair market
20value of unimproved real property, except in the case of a
21single-family zoned lot or parcel as defined in paragraph (1), which
22shall not exceed 65 percent of the current fair market value of that
23lot or parcel, plus the amount insured as specified in paragraph
24(1). A written statement shall be prepared by the broker that sets
25forth the material considerations and facts that the broker relies
26upon for his or her determination, which shall be retained as a part
27of the broker’s record of the transaction. Either a copy of the
28statement or the information contained therein shall be included
29in the disclosures required pursuant to subdivision (l).

30(3) A copy of the appraisal or the broker’s evaluation, for each
31parcel of real property securing the notes or interests, shall be
32delivered to each purchaser. The broker shall advise purchasers
33of their right to receive a copy. For purposes of this paragraph,
34“appraisal” means a written estimate of value based upon the
35assembling, analyzing, and reconciling of facts and value indicators
36for the real property in question. A broker shall not purport to make
37an appraisal unless the person so employed is qualified on the basis
38of special training, preparation, or experience.

P72 1(4) For construction or rehabilitation loans, the term “current
2market value” may be deemed to be the value of the completed
3project if the following safeguards are met:

4(A) An independent neutral third-party escrow holder is used
5for all deposits and disbursements.

6(B) The loan is fully funded, with the entire loan amount to be
7deposited in escrow prior to recording of the deed or deeds of trust.

8(C) A comprehensive, detailed draw schedule is used to ensure
9proper and timely disbursements to allow for completion of the
10project.

11(D) The disbursement draws from the escrow account are based
12on verification from an independent qualified person who certifies
13that the work completed to date meets the related codes and
14standards and that the draws were made in accordance with the
15construction contract and draw schedule. For purposes of this
16subparagraph, “independent qualified person” means a person who
17is not an employee, agent, or affiliate of the broker and who is a
18licensed architect, general contractor, structural engineer, or active
19local government building inspector acting in his or her official
20capacity.

21(E) An appraisal is completed by a qualified and licensed
22appraiser in accordance with the Uniform Standards of Professional
23Appraisal Practice (USPAP).

24(F) In addition to the transaction documentation required by
25subdivision (i), the documentation shall include a detailed
26description of actions that may be taken in the event of a failure
27to complete the project, whether that failure is due to default,
28insufficiency of funds, or other causes.

29(G) The entire amount of the loan does not exceed two million
30five hundred thousand dollars ($2,500,000).

31(5) If a note or an interest will be secured by more than one
32parcel of real property, for the purpose of determining the
33maximum amount of the note or interest, each security property
34shall be assigned a portion of the note or interest that shall not
35exceed the percentage of current market value determined by, and
36in accordance with, the provisions of paragraphs (1) and (2).

37(i) The documentation of the transaction shall require that (1)
38a default upon any note or interest is a default upon all notes or
39interests and (2) the holders of more than 50 percent of the recorded
40beneficial interests of the notes or interests may govern the actions
P73 1to be taken on behalf of all holders in accordance with Section
22941.9 of the Civil Code in the event of default or foreclosure for
3matters that require direction or approval of the holders, including
4designation of the broker, servicing agent, or other person acting
5on their behalf, and the sale, encumbrance, or lease of real property
6owned by the holders resulting from foreclosure or receipt of a
7deed in lieu of foreclosure. The terms called for by this subdivision
8may be included in the deed of trust, in the assignment of interests,
9or in any other documentation as is necessary or appropriate to
10make them binding on the parties.

11(j) (1) The broker shall not accept any purchase or loan funds
12or other consideration from a prospective lender or purchaser, or
13directly or indirectly cause the funds or other consideration to be
14deposited in an escrow or trust account, except as to a specific loan
15or note secured by a deed of trust that the broker owns, is
16authorized to negotiate, or is unconditionally obligated to buy.

17(2) All funds received by the broker from the purchasers or
18lenders shall be handled in accordance with Section 10145 for
19disbursement to the persons thereto entitled upon recordation of
20the interests of the purchasers or lenders in the note and deed of
21trust. No provision of this article shall be construed as modifying
22or superseding applicable law regulating the escrow holder in any
23transaction or the handling of the escrow account.

24(3) The books and records of the broker or servicing agent, or
25both, shall be maintained in a manner that readily identifies
26transactions under this article and the receipt and disbursement of
27funds in connection with these transactions.

28(4) If required by paragraph (3) of subdivision (k), the review
29by the independent certified public accountant shall include a
30sample of transactions, as reflected in the records of the trust
31account required pursuant to paragraph (1) of subdivision (k), and
32the bank statements and supporting documents. These documents
33shall be reviewed for compliance with this article with respect to
34the handling and distribution of funds. The sample shall be selected
35at random by the accountant from all these transactions and shall
36consist of the following: (A) three sales made or 5 percent of the
37sales made pursuant to this article during the period for which the
38examination is conducted, whichever is greater, and (B) 10
39payments processed or 2 percent of payments processed under this
P74 1article during the period for which the examination is conducted,
2whichever is greater.

3(5) For the purposes of this subdivision, the transaction that
4constitutes a “sale” is the series of transactions by which a series
5of notes of a maker, or the interests in the note of a maker, are sold
6or issued to their various purchasers under this article, including
7all receipts and disbursements in that process of funds received
8from the purchasers or lenders. The transaction that constitutes a
9“payment,” for the purposes of this subdivision, is the receipt of
10a payment from the person obligated on the note or from some
11other person on behalf of the person so obligated, including the
12broker or servicing agent, and the distribution of that payment to
13the persons entitled thereto. If a payment involves an advance paid
14by the broker or servicing agent as the result of a dishonored check,
15the inspection shall identify the source of funds from which the
16payment was made or, in the alternative, the steps that are
17reasonably necessary to determine that there was not a
18disbursement of trust funds. The accountant shall inspect for
19compliance with the following specific provisions of this section:
20paragraphs (1), (2), and (3) of subdivision (j) and paragraphs (1)
21and (2) of subdivision (k).

22(6) Within 30 days of the close of the period for which the report
23is made, or within any additional time as the commissioner may
24in writing allow in a particular case, the accountant shall forward
25to the broker or servicing agent, as the case may be, and to the
26commissioner, the report of the accountant, stating that the
27inspection was performed in accordance with this section, listing
28the sales and the payments examined, specifying the nature of the
29deficiencies, if any, noted by the accountant with respect to each
30sale or payment, together with any further information as the
31accountant may wish to include, such as corrective steps taken
32with respect to any deficiency so noted, or stating that no
33deficiencies were observed. If the broker meets the threshold
34criteria of Section 10232, the report of the accountant shall be
35submitted as part of the quarterly reports required under Section
3610232.25.

37(k) The notes or interests shall be sold subject to a written
38agreement that obligates a licensed real estate broker, or a person
39exempted from the licensing requirement for real estate brokers
40under this chapter, to act as agent for the purchasers or lenders to
P75 1service the note or notes and deed of trust, including the receipt
2and transmission of payments and the institution of foreclosure
3proceedings in the event of a default. A copy of this servicing
4agreement shall be delivered to each purchaser. The broker shall
5offer to the lenders or purchasers the services of the broker or one
6or more affiliates of the broker, or both, as servicing agent for each
7transaction conducted pursuant to this article. The agreement shall
8require all of the following:

9(1) (A) That payments received on the note or notes be
10deposited immediately to a trust account maintained in accordance
11with this section and with the provisions for trust accounts of
12licensed real estate brokers contained in Section 10145 and Article
1315 (commencing with Section 2830.1) of Chapter 6 of Title 10 of
14the California Code of Regulations.

15(B) That payments deposited pursuant to subparagraph (A) shall
16not be commingled with the assets of the servicing agent or used
17for any transaction other than the transaction for which the funds
18are received.

19(2) That payments received on the note or notes shall be
20transmitted to the purchasers or lenders pro rata according to their
21respective interests within 25 days after receipt thereof by the
22agent. If the source for the payment is not the maker of the note,
23the agent shall inform the purchasers or lenders in writing of the
24source for payment. A broker or servicing agent who transmits to
25the purchaser or lenders the broker’s or servicing agent’s own
26funds to cover payments due from the borrower but unpaid as a
27result of a dishonored check may recover the amount of the
28advances from the trust fund when the past due payment is
29received. However, this article does not authorize the broker,
30servicing agent, or any other person to issue, or to engage in any
31practice constituting, any guarantee or to engage in the practice of
32advancing payments on behalf of the borrower.

33(3) If the broker or person who is or becomes the servicing agent
34for notes or interests sold pursuant to this article upon which the
35payments due during any period of three consecutive months in
36the aggregate exceed one hundred twenty-five thousand dollars
37($125,000) or the number of persons entitled to the payments
38exceeds 120, the trust account or accounts of that broker or affiliate
39shall be inspected by an independent certified public accountant
40at no less than three-month intervals during the time the volume
P76 1is maintained. Within 30 days after the close of the period for
2which the review is made, the report of the accountant shall be
3forwarded as provided in paragraph (6) of subdivision (j). If the
4broker is required to file an annual report pursuant to subdivision
5(o) or pursuant to Section 10232.2, the quarterly report pursuant
6to this subdivision need not be filed for the last quarter of the year
7for which the annual report is made. For the purposes of this
8subdivision, an affiliate of a broker is any person controlled by,
9controlling, or under common control with the broker.

10(4) Unless the servicing agent will receive notice pursuant to
11Section 2924b of the Civil Code, the servicing agent shall file a
12written request for notice of default upon any prior encumbrances
13and promptly notify the purchasers or lenders of any default on
14the prior encumbrances or on the note or notes subject to the
15servicing agreement.

16(5) The servicing agent shall promptly forward copies of the
17following to each purchaser or lender:

18(A) Any notice of trustee sale filed on behalf of the purchasers
19or lenders.

20(B) Any request for reconveyance of the deed of trust received
21on behalf of the purchasers or lenders.

22(l) The broker shall disclose in writing to each purchaser or
23lender the material facts concerning the transaction on a disclosure
24form adopted or approved by the commissioner pursuant to Section
2510232.5, subject to the following:

26(1) The disclosure form shall include a description of the terms
27upon which the note and deed of trust are being sold, including
28the terms of the undivided interests being offered therein, including
29the following:

30(A) In the case of the sale of an existing note:

31(i) The aggregate sale price of the note.

32(ii) The percent of the premium over or discount from the
33principal balance plus accrued but unpaid interest.

34(iii) The effective rate of return to the purchasers if the note is
35paid according to its terms.

36(iv) The name and address of the escrow holder for the
37transaction.

38(v) A description of, and the estimated amount of, each cost
39payable by the seller in connection with the sale and a description
P77 1of, and the estimated amount of, each cost payable by the
2purchasers in connection with the sale.

3(B) In the case of the origination of a note:

4(i) The name and address of the escrow holder for the
5transaction.

6(ii) The anticipated closing date.

7(iii) A description of, and the estimated amount of, each cost
8payable by the borrower in connection with the loan and a
9description of, and the estimated amount of, each cost payable by
10the lenders in connection with the loan.

11(C) In the case of a transaction involving a note or interest
12secured by more than one parcel of real property, in addition to
13the requirements of subparagraphs (A) and (B):

14(i) The address, description, and estimated fair market value of
15each property securing the loan.

16(ii) The amount of the available equity in each property securing
17the loan after the loan amount to be apportioned to each property
18is assigned.

19(iii) The loan to value percentage for each property after the
20loan amount to be apportioned to each property is assigned pursuant
21to subdivision (h).

22(2) A copy of the written statement or information contained
23therein, as required by paragraph (2) of subdivision (h), shall be
24included in the disclosure form.

25(3) Any interest of the broker or affiliate in the transaction, as
26described in subdivision (e), shall be included with the disclosure
27form.

28(4) When the particular circumstances of a transaction make
29information not specified in the disclosure form material or
30essential to keep the information provided in the form from being
31misleading, and the other information is known to the broker, the
32other information shall also be provided by the broker.

33(5) If more than one parcel of real property secures the notes or
34interests, the disclosure form shall also fully disclose any risks to
35investors associated with securing the notes or interests with
36multiple parcels of real property.

37(m) The broker or servicing agent shall furnish any purchaser
38of a note or interest, upon request, with the names and addresses
39of the purchasers of the other notes or interests in the loan.

P78 1(n) No agreement in connection with a transaction covered by
2this article shall grant to the real estate broker, the servicing agent,
3or any affiliate of the broker or agent the option or election to
4acquire the interests of the purchasers or lenders or to acquire the
5real property securing the interests. This subdivision shall not
6prohibit the broker or affiliate from acquiring the interests, with
7the consent of the purchasers or lenders whose interests are being
8purchased, or the property, with the written consent of the
9purchasers or lenders, if the consent is given at the time of the
10acquisition.

11(o) Each broker who conducts transactions under this article,
12or broker or person who becomes the servicing agent for notes or
13interests sold pursuant to this article, who meets the criteria of
14paragraph (3) of subdivision (k) shall file with the commissioner
15an annual report of a review of its trust account. The report shall
16be prepared and filed in accordance with subdivision (a) of Section
1710232.2 and the rules and procedures thereunder of the
18commissioner. That report shall cover the broker’s transactions
19 under this article and, if the broker also meets the threshold criteria
20set forth in Section 10232, the broker’s transactions subject to that
21section shall be included as well.

22(p) Each broker conducting transactions pursuant to this article,
23or broker or person who becomes the servicing agent for notes or
24interests sold pursuant to this article, who meets the criteria of
25paragraph (3) of subdivision (k) shall file with the commissioner
26a report of the transactions that is prepared in accordance with
27subdivision (c) of Section 10232.2. If the broker also meets the
28threshold criteria of Section 10232, the report shall also include
29the transactions subject to that section. This report shall be
30confidential pursuant to subdivision (f) of Section 10232.2.

begin insert

31
(q) This section shall repeal on July 1, 2018.

end insert

32begin insert

begin insertSEC. 114.end insert

end insert

begin insertSection 10238 is added to the end insertbegin insertBusiness and
33Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10238.end insert

(a) A notice in the following form and containing the
35following information shall be filed with the commissioner within
3630 days after the first transaction and within 30 days of any
37material change in the information required in the notice:

P80 21

begin insert

TO:

end insert

begin insert

Real Estate Commissioner
Mortgage Loan Section
1651 Exposition Boulevard
Sacramento, CA 95815

end insert

begin insert

This notice is filed pursuant to Sections 10237 and 10238 of the Business and Professions Code.

end insert

begin insert

( ) Original Notice ( ) Amended Notice

end insert

begin insert

end insert

begin insert

Name of Responsible Broker conducting transaction under Section 10237:

end insert

begin insert end insert

begin insert

end insert

begin insert

end insert

begin insert

Broker license identification number:

end insert

begin insert end insert

begin insert

end insert

begin insert

List the month the fiscal year ends:

end insert

begin insert end insert

begin insert

end insert

begin insert

Broker’s telephone number:

end insert

begin insert end insert

begin insert

end insert

begin insert

Firm name (if different from “1”):

end insert

begin insert end insert

begin insert

end insert

begin insert end insert

begin insert

end insert

begin insert

Street address (main location):

end insert

begin insert end insert

begin insert

# and Street City State ZIP Code

end insert

begin insert end insert

begin insert

end insert

begin insert

Mailing address (if different from “6”):

end insert

begin insert end insert

begin insert

end insert

begin insert

end insert

begin insert

end insert

begin insert end insert

begin insert

end insert

begin insert end insert

begin insert

end insert

begin insert end insert

begin insert

end insert

begin insert

Total number of multilender notes arranged:

end insert

begin insert end insert

begin insert

end insert

begin insert

10.

end insert

begin insert

Total number of interests sold to investors on the

multilender’s notes: ______

end insert

begin insert end insert

begin insert

11.

end insert

begin insert

Inspection of trust account (before answering this question, review the provisions of paragraph (3) of subdivision (k) of Section 10238).

end insert

begin insert

CHECK ONLY ONE OF THE FOLLOWING:

end insert

begin insert

( )

end insert

begin insert

end insert

begin insert

Amount of Multilender Payments Collected Last Fiscal Quarter:

end insert

begin insert end insert

begin insert

Total Number of Investors Due Payments Last Fiscal Quarter:

end insert

begin insert end insert

begin insert

( )

end insert

begin insert

end insert

begin insert end insert

begin insert

12.

end insert

begin insert

Signature. The contents of this notice are true and correct.

end insert

begin insert end insert

begin insert

end insert

begin insert

end insert

begin insert end insert

begin insert

Date

end insert

begin insert

Type Name of Broker

end insert

begin insert end insert

begin insert

end insert

begin insert end insert

begin insert

Signature of Responsible Broker

end insert

begin insert end insert

begin insert

end insert

begin insert end insert

begin insert

Type Name of Person(s) Signing This Notice

end insert

19P80 3137P80 12

22
NOTE: AN AMENDED NOTICE MUST BE FILED BY THE
23BROKER WITHIN 30 DAYS OF ANY MATERIAL CHANGE IN
24THE INFORMATION REQUIRED TO BE SET FORTH HEREIN.

26
(b) A broker or person who becomes the servicing agent for
27notes or interests sold pursuant to this article, upon which
28payments due during any period of three consecutive months in
29the aggregate exceed one hundred twenty-five thousand dollars
30($125,000) or the number of persons entitled to the payments
31exceeds 120, shall file the notice required by subdivision (a) with
32the commissioner within 30 days after becoming the servicing
33agent.

34
(c) All advertising used for transactions under this article shall
35show the name of the broker and comply with Section 10235 of
36this code and Sections 260.302 and 2848 of Title 10 of the
37California Code of Regulations. Brokers and their agents are
38cautioned that a reference to a prospective investor that a
39transaction is conducted under this article may be deemed
P81 1misleading or deceptive if this representation may reasonably be
2construed by the investor as an implication of merit or approval
3of the transaction.

4
(d) Each parcel of real property directly securing the notes or
5interests shall be located in this state, the note or notes shall not
6by their terms be subject to subordination to any subsequently
7created deed of trust upon the real property, and the note or notes
8shall not be promotional notes secured by liens on separate parcels
9of real property in one subdivision or in contiguous subdivisions.
10For purposes of this subdivision, a promotional note means a
11promissory note secured by a trust deed, executed on unimproved
12real property or executed after construction of an improvement of
13the property but before the first purchase of the property as so
14improved, or executed as a means of financing the first purchase
15of the property as so improved, that is subordinate, or by its terms
16may become subordinate, to any other trust deed on the property.
17However, the term “promotional note” does not include either of
18the following:

19
(1) A note that was executed in excess of three years prior to
20being offered for sale.

21
(2) A note secured by a first trust deed on real property in a
22subdivision that evidences a bona fide loan made in connection
23with the financing of the usual cost of the development in a
24residential, commercial, or industrial building or buildings on the
25property under a written agreement providing for the disbursement
26of the loan funds as costs are incurred or in relation to the progress
27of the work and providing for title insurance insuring the priority
28of the security as against mechanic’s and materialmen’s liens or
29for the final disbursement of at least 10 percent of the loan funds
30after the expiration of the period for the filing of mechanic’s and
31materialmen’s liens.

32
(e) The notes or interests shall be sold by or through a real
33estate broker, as principal or agent. At the time the notes or
34interests are originally sold or assigned, neither the broker nor
35an affiliate of the broker shall have an interest as owner, lessor,
36or developer of the property securing the loan or any contractual
37right to acquire, lease, or develop the property securing the loan.
38This provision does not prohibit a broker from conducting the
39following transactions if, in either case, the disclosure statement
40furnished by the broker pursuant to subdivision (l) discloses the
P82 1interest of the broker or affiliate in the transaction and the
2circumstances under which the broker or affiliate acquired the
3interest:

4
(1) A transaction in which the broker or an affiliate of the broker
5is acquiring the property pursuant to a foreclosure under, or sale
6pursuant to, a deed of trust securing a note for which the broker
7is the servicing agent or that the broker sold to the holder or
8holders.

9
(2) A transaction in which the broker or an affiliate of the broker
10is reselling from inventory property acquired by the broker
11pursuant to a foreclosure under, or sale pursuant to, a deed of
12trust securing a note for which the broker is the servicing agent
13or that the broker sold to the holder or holders.

14
(f) (1) The notes or interests shall not be sold to more than 10
15persons, each of whom meets one or both of the qualifications of
16income or net worth set forth below and signs a statement, which
17shall be retained by the broker for four years, conforming to the
18following:

begin insert Transaction Identifier: end insert
begin insert Name of Purchaser: Date: ______ end insert
begin insert Check either one of the following, if true: end insert
begin insert ( ) end insert	begin insert My investment in the transaction does not exceed 10% of my net worth, exclusive of home, furnishings, and automobiles. end insert
begin insert end insert	begin insert end insert
begin insert ( ) end insert	begin insert My investment in the transaction does not exceed 10% of my adjusted gross income for federal income tax purposes for my last tax year or, in the alternative, as estimated for the current year. end insert
begin insert Signature end insert

P80 3137P80 12

32
(2) The number of offerees shall not be considered for the
33purposes of this section.

34
(3) Spouses and their dependents, and an individual and his or
35her dependents, shall be counted as one person.

36
(4) A retirement plan, trust, business trust, corporation, or other
37entity that is wholly owned by an individual and the individual’s
38spouse or the individual’s dependents, or any combination thereof,
39shall not be counted separately from the individual, but the
40investments of these entities shall be aggregated with those of the
P83 1individual for the purposes of the statement required by paragraph
2(1). If the investments of any entities are required to be aggregated
3under this subdivision, the adjusted gross income or net worth of
4these entities may also be aggregated with the net worth, income,
5or both, of the individual.

6
(5) The “institutional investors” enumerated in subdivision (i)
7of Section 25102 or subdivision (c) of Section 25104 of the
8Corporations Code, or in a rule adopted pursuant thereto, shall
9not be counted.

10
(6) A partnership, limited liability company, corporation, or
11other organization that was not specifically formed for the purpose
12of purchasing the security offered in reliance upon this exemption
13from securities qualification is counted as one person.

14
(g) The notes or interests of the purchasers shall be identical
15in their underlying terms, including the right to direct or require
16foreclosure, rights to and rate of interest, and other incidents of
17being a lender, and the sale to each purchaser pursuant to this
18section shall be upon the same terms, subject to adjustment for the
19face or principal amount or percentage interest purchased and
20for interest earned or accrued. This subdivision does not preclude
21different selling prices for interests to the extent that these
22differences are reasonably related to changes in the market value
23of the loan occurring between the sales of these interests. The
24interest of each purchaser shall be recorded pursuant to
25subdivisions (a) to (c), inclusive, of Section 10234.

26
(h) (1) Except as provided in paragraph (2), the aggregate
27principal amount of the notes or interests sold, together with the
28unpaid principal amount of any encumbrances upon the real
29property senior thereto, shall not exceed the following percentages
30of the current market value of each parcel of the real property, as
31determined in writing by the broker or appraiser pursuant to
32Section 10232.6, plus the amount for which the payment of
33principal and interest in excess of the percentage of current market
34value is insured for the benefit of the holders of the notes or
35interests by an insurer admitted to do business in this state by the
36Insurance Commissioner:

begin insert (A) end insert	begin insert Single-family residence, owner occupied end insert	begin insert 80% end insert
begin insert (B) end insert	begin insert Single-family residence, not owner occupied end insert	begin insert 75% end insert
begin insert (C) end insert	begin insert Commercial properties and income-producing properties not described in (B) or (E) end insert	begin insert 65% end insert
begin insert (D) end insert	begin insert Single-family residentially zoned lot or parcel that has installed offsite improvements, including drainage, curbs, gutters, sidewalks, paved roads, and utilities as mandated by the political subdivision having jurisdiction over the lot or parcel end insert	begin insert 65% end insert
begin insert (E) end insert	begin insert Land that produces income from crops, timber, or minerals end insert	begin insert 60% end insert
begin insert (F) end insert	begin insert Land that is not income producing but has been zoned for (and, if required, approved for subdivision as) commercial or residential development end insert	begin insert 50% end insert
begin insert (G) end insert	begin insert Other real property end insert	begin insert 35% end insert

P80 12

13
(2) The percentage amounts specified in paragraph (1) may be
14exceeded when and to the extent that the broker determines that
15the encumbrance of the property in excess of these percentages is
16reasonable and prudent considering all relevant factors pertaining
17to the real property. However, in no event shall the aggregate
18principal amount of the notes or interests sold, together with the
19unpaid principal amount of any encumbrances upon the property
20senior thereto, exceed 80 percent of the current fair market value
21of improved real property or 50 percent of the current fair market
22value of unimproved real property, except in the case of a
23single-family zoned lot or parcel as defined in paragraph (1),
24which shall not exceed 65 percent of the current fair market value
25of that lot or parcel, plus the amount insured as specified in
26paragraph (1). A written statement shall be prepared by the broker
27that sets forth the material considerations and facts that the broker
28relies upon for his or her determination, which shall be retained
29as part of the broker’s record of the transaction. Either a copy of
30the statement or the information contained therein shall be included
31in the disclosures required pursuant to subdivision (l).

32
(3) A copy of the appraisal or the broker’s evaluation, for each
33parcel of real property securing the notes or interests, shall be
34delivered to each purchaser. For purposes of this paragraph,
35“appraisal” means a written estimate of value based upon the
36assembling, analyzing, and reconciling of facts and value
37indicators for the real property in question. A broker shall not
38purport to make an appraisal unless he or she is qualified on the
39basis of special training, preparation, or experience.

P85 1
(4) For construction or rehabilitation loans, the term “current
2market value” may be deemed to be the value of the completed
3 project if the following safeguards are met:

4
(A) An independent neutral third-party escrow holder is used
5for all deposits and disbursements.

6
(B) The loan is fully funded, with the entire loan amount to be
7deposited in escrow prior to the recording of the deed or deeds of
8trust.

9
(C) A comprehensive, detailed draw schedule is used to ensure
10proper and timely disbursements to allow for completion of the
11project.

12
(D) The disbursement draws from the escrow account are based
13on verification from an independent qualified person who certifies
14that the work completed to date meets the related codes and
15standards and that the draws were made in accordance with the
16construction contract and draw schedule. For purposes of this
17subparagraph, “independent qualified person” means a person
18who is not an employee, agent, or affiliate of the broker and who
19is a licensed architect, general contractor, structural engineer, or
20active local government building inspector acting in his or her
21official capacity.

22
(E) An appraisal is completed by a qualified and licensed
23appraiser in accordance with the Uniform Standards of
24Professional Appraisal Practice (USPAP).

25
(F) In addition to the transaction documentation required by
26subdivision (i), the documentation shall include a detailed
27description of actions that may be taken in the event of a failure
28to complete the project, whether that failure is due to default,
29insufficiency of funds, or other causes.

30
(G) The entire amount of the loan does not exceed two million
31five hundred thousand dollars ($2,500,000).

32
(5) If a note or an interest will be secured by more than one
33parcel of real property, for the purpose of determining the
34maximum amount of the note or interest, each security property
35shall be assigned a portion of the note or interest that shall not
36exceed the percentage of current market value determined by, and
37in accordance with, the provisions of paragraphs (1) and (2).

38
(i) The documentation of the transaction shall require both of
39the following:

P86 1
(1) A default upon any note or interest is a default upon all notes
2or interests.

3
(2) The holders of more than 50 percent of the recorded
4beneficial interests of the notes or interests may govern the actions
5to be taken on behalf of all holders in accordance with Section
62941.9 of the Civil Code in the event of default or foreclosure for
7matters that require direction or approval of the holders, including
8designation of the broker, servicing agent, or other person acting
9on their behalf, and the sale, encumbrance, or lease of real
10property owned by the holders resulting from foreclosure or receipt
11of a deed in lieu of foreclosure. The terms called for by this
12subdivision may be included in the deed of trust, in the assignment
13of interests, or in any other documentation as is necessary or
14appropriate to make them binding on the parties.

15
(j) (1) The broker shall not accept any purchase or loan funds
16or other consideration from a prospective lender or purchaser, or
17directly or indirectly cause the funds or other consideration to be
18deposited in an escrow or trust account, except as to a specific
19loan or note secured by a deed of trust that the broker owns, is
20authorized to negotiate, or is unconditionally obligated to buy.

21
(2) All funds received by the broker from the purchasers or
22lenders shall be handled in accordance with Section 10145 for
23disbursement to the persons thereto entitled upon recordation of
24the interests of the purchasers or lenders in the note and deed of
25trust. No provision of this article shall be construed as modifying
26or superseding applicable law regulating the escrow holder in any
27transaction or the handling of the escrow account.

28
(3) The books and records of the broker or servicing agent, or
29both, shall be maintained in a manner that readily identifies
30transactions under this article and the receipt and disbursement
31of funds in connection with these transactions.

32
(4) If required by paragraph (3) of subdivision (k), the review
33by the independent certified public accountant shall include a
34sample of transactions, as reflected in the records of the trust
35account required pursuant to paragraph (1) of subdivision (k),
36and the bank statements and supporting documents. These
37documents shall be reviewed for compliance with this article with
38respect to the handling and distribution of funds. The sample shall
39be selected at random by the accountant from all these transactions
40and shall consist of both of the following:

P87 1
(A) Three sales made or 5 percent of the sales made pursuant
2to this article during the period for which the examination is
3conducted, whichever is greater.

4
(B) Ten payments processed or 2 percent of payments processed
5under this article during the period for which the examination is
6conducted, whichever is greater.

7
(5) For the purposes of this subdivision, the transaction that
8constitutes a “sale” is the series of transactions by which a series
9of notes of a maker, or the interests in the note of a maker, are
10sold or issued to their various purchasers under this article,
11including all receipts and disbursements in that process of funds
12received from the purchasers or lenders. The transaction that
13constitutes a “payment,” for the purposes of this subdivision, is
14the receipt of a payment from the person obligated on the note or
15from some other person on behalf of the person so obligated,
16including the broker or servicing agent, and the distribution of
17that payment to the persons entitled thereto. If a payment involves
18an advance paid by the broker or servicing agent as the result of
19a dishonored check, the inspection shall identify the source of
20funds from which the payment was made or, in the alternative, the
21steps that are reasonably necessary to determine that there was
22not a disbursement of trust funds. The accountant shall inspect for
23compliance with the following specific provisions of this section:
24paragraphs (1), (2), and (3) of this subdivision and paragraphs
25(1) and (2) of subdivision (k).

26
(6) Within 30 days of the close of the period for which the report
27is made, or within any additional time as the commissioner may
28in writing allow in a particular case, the accountant shall forward
29to the broker or servicing agent, as the case may be, and to the
30commissioner, the report of the accountant, stating that the
31inspection was performed in accordance with this section, listing
32the sales and the payments examined, specifying the nature of the
33deficiencies, if any, noted by the accountant with respect to each
34sale or payment, together with any further information as the
35accountant may wish to include, such as corrective steps taken
36with respect to any deficiency so noted, or stating that no
37deficiencies were observed. If the broker meets the threshold
38criteria of Section 10232, the report of the accountant shall be
39submitted as part of the quarterly reports required under Section
4010232.25.

P88 1
(k) The notes or interests shall be sold subject to a written
2agreement that obligates a licensed real estate broker, or a person
3exempted from the licensing requirement for real estate brokers
4under this chapter, to act as agent for the purchasers or lenders
5to service the note or notes and deed of trust, including the receipt
6and transmission of payments and the institution of foreclosure
7proceedings in the event of a default. A copy of this servicing
8 agreement shall be delivered to each purchaser. The broker shall
9offer to the lenders or purchasers the services of the broker or one
10or more affiliates of the broker, or both, as servicing agent for
11each transaction conducted pursuant to this article. The agreement
12shall require all of the following:

13
(1) (A) That payments received on the note or notes be deposited
14 immediately to a trust account maintained in accordance with this
15section and with the provisions for trust accounts of licensed real
16estate brokers contained in Section 10145 and Article 15
17(commencing with Section 2830.1) of Chapter 6 of Title 10 of the
18California Code of Regulations.

19
(B) That payments deposited pursuant to subparagraph (A)
20shall not be commingled with the assets of the servicing agent or
21used for any transaction other than the transaction for which the
22funds are received.

23
(2) That payments received on the note or notes shall be
24transmitted to the purchasers or lenders pro rata according to
25their respective interests within 25 days after receipt thereof by
26the agent. If the source for the payment is not the maker of the
27note, the agent shall inform the purchasers or lenders in writing
28of the source for payment. A broker or servicing agent who
29transmits to the purchaser or lenders the broker’s or servicing
30agent’s own funds to cover payments due from the borrower but
31unpaid as a result of a dishonored check may recover the amount
32of the advances from the trust fund when the past due payment is
33received. However, this article does not authorize the broker,
34servicing agent, or any other person to issue, or to engage in any
35practice constituting, any guarantee or to engage in the practice
36of advancing payments on behalf of the borrower.

37
(3) If the broker or person who is or becomes the servicing
38agent for notes or interests sold pursuant to this article upon which
39the payments due during any period of three consecutive months
40in the aggregate exceed one hundred twenty-five thousand dollars
P89 1($125,000) or the number of persons entitled to the payments
2exceeds 120, the trust account or accounts of that broker or affiliate
3shall be inspected by an independent certified public accountant
4at no less than three-month intervals during the time the volume
5is maintained. Within 30 days after the close of the period for
6which the review is made, the report of the accountant shall be
7forwarded as provided in paragraph (6) of subdivision (j). If the
8broker is required to file an annual report pursuant to subdivision
9(o) or pursuant to Section 10232.2, the quarterly report pursuant
10to this subdivision need not be filed for the last quarter of the year
11for which the annual report is made. For the purposes of this
12subdivision, an affiliate of a broker is any person controlled by,
13controlling, or under common control with the broker.

14
(4) Unless the servicing agent will receive notice pursuant to
15Section 2924b of the Civil Code, the servicing agent shall file a
16written request for notice of default upon any prior encumbrances
17and promptly notify the purchasers or lenders of any default on
18the prior encumbrances or on the note or notes subject to the
19 servicing agreement.

20
(5) The servicing agent shall promptly forward copies of both
21of the following to each purchaser or lender:

22
(A) Any notice of trustee sale filed on behalf of the purchasers
23or lenders.

24
(B) Any request for reconveyance of the deed of trust received
25on behalf of the purchasers or lenders.

26
(l) The broker shall disclose in writing to each purchaser or
27lender the material facts concerning the transaction on a disclosure
28form adopted or approved by the commissioner pursuant to Section
2910232.5, subject to the following:

30
(1) The disclosure form shall include a description of the terms
31upon which the note and deed of trust are being sold, including
32the terms of the undivided interests being offered therein, including
33the following:

34
(A) In the case of the sale of an existing note:

35
(i) The aggregate sale price of the note.

36
(ii) The percent of the premium over or discount from the
37principal balance plus accrued but unpaid interest.

38
(iii) The effective rate of return to the purchasers if the note is
39paid according to its terms.

P90 1
(iv) The name and address of the escrow holder for the
2transaction.

3
(v) A description of, and the estimated amount of, each cost
4payable by the seller in connection with the sale and a description
5of, and the estimated amount of, each cost payable by the
6purchasers in connection with the sale.

7
(B) In the case of the origination of a note:

8
(i) The name and address of the escrow holder for the
9transaction.

10
(ii) The anticipated closing date.

11
(iii) A description of, and the estimated amount of, each cost
12payable by the borrower in connection with the loan and a
13description of, and the estimated amount of, each cost payable by
14the lenders in connection with the loan.

15
(C) In the case of a transaction involving a note or interest
16secured by more than one parcel of real property, in addition to
17the requirements of subparagraphs (A) and (B):

18
(i) The address, description, and estimated fair market value of
19each property securing the loan.

20
(ii) The amount of the available equity in each property securing
21the loan after the loan amount to be apportioned to each property
22is assigned.

23
(iii) The loan to value percentage for each property after the
24loan amount to be apportioned to each property is assigned
25pursuant to subdivision (h).

26
(2) A copy of the written statement or information contained
27therein, as required by paragraph (2) of subdivision (h), shall be
28included in the disclosure form.

29
(3) Any interest of the broker or affiliate in the transaction, as
30described in subdivision (e), shall be included with the disclosure
31form.

32
(4) When the particular circumstances of a transaction make
33information not specified in the disclosure form material or
34essential to keep the information provided in the form from being
35misleading, and the other information is known to the broker, the
36other information shall also be provided by the broker.

37
(5) If more than one parcel of real property secures the notes
38or interests, the disclosure form shall also fully disclose any risks
39to investors associated with securing the notes or interests with
40multiple parcels of real property.

P91 1
(m) The broker or servicing agent shall furnish any purchaser
2of a note or interest, upon request, with the names and addresses
3of the purchasers of the other notes or interests in the loan.

begin insert(a)end insertbegin insert end insert The commissioner may, upon his own motion, and
4shall, upon the verified complaint in writing of any person,
5investigate the actions of any person engaged in the business or
6acting in the capacity of a mineral, oil and gas licensee, within this
7state, and he may temporarily suspend or permanently revoke a
8mineral, oil and gas license at any time if the licensee, while a
9mineral, oil and gas licensee, in performing or attempting to
10perform any of the acts within the scope of this chapter, has been
11guilty of any of the following:

begin delete
12(a)
end delete

13begin insert(1)end insert Making any substantial misrepresentation.

begin delete
14(b)
end delete

15begin insert(2)end insert Making any false promises of a character likely to influence,
16persuade or induce.

begin delete
17(c)
end delete

18begin insert(3)end insert Acting for more than one party in a transaction without the
19knowledge or consent of all parties thereto.

begin delete
20(d)
end delete

21begin insert(4)end insert Commingling with his own money or property the money
22or property of others which is received and held by him.

begin delete
23(e)
end delete

24begin insert(5)end insert Claiming or demanding a fee, compensation or commission
25under any exclusive agreement authorizing or employing a licensee
26to sell, buy or exchange mineral, oil or gas property for
27compensation, or commission where such agreement does not
28contain a definite, specified date of final and complete termination.

begin delete
29(f)
end delete

30begin insert(6)end insert The claiming or taking by a licensee of any secret or
31undisclosed amount of compensation, commission or profit or the
32failure of a licensee to reveal to the employer of such licensee the
33full amount of such licensee’s compensation, commission, or profit
34under any agreement authorizing or employing such licensee to
35do any acts for which a license is required under this chapter for
36compensation or commission prior to or coincident with the signing
37of an agreement evidencing the meeting of the minds of the
38contracting parties, regardless of the form of such agreement,
39whether evidenced by documents in an escrow or by any other or
40different procedure.

begin delete
P95 1(g)
end delete

2begin insert(7)end insert The use by a licensee of any provision allowing the licensee
3an option to purchase in an agreement authorizing or employing
4such licensee to sell, buy or exchange mineral, oil or gas property
5for compensation or commission, except when such licensee prior
6to or coincident with election to exercise such option to purchase
7reveals in writing to the employer the full amount of licensee’s
8profit and obtains the written consent of the employer approving
9the amount of such profit.

begin delete
10(h)
end delete

11begin insert(8)end insert Any other conduct, whether of the same or a different
12character than specified in this section, which constitutes fraud or
13dishonest dealing.

begin insert

14
(b) This section shall repeal on July 1, 2018.

end insert

15begin insert

begin insertSEC. 120.end insert

end insert

begin insertSection 10561 is added to the end insertbegin insertBusiness and
16Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert10561.end insert

(a) The commissioner may, upon his own motion, and
18shall, upon the verified complaint in writing of any person,
19investigate the actions of any person engaged in the business or
20acting in the capacity of a mineral, oil, and gas licensee within
21this state, and he may temporarily suspend or permanently revoke
22a mineral, oil, and gas license at any time if the licensee, while a
23mineral, oil, and gas licensee, in performing or attempting to
24perform any of the acts within the scope of this chapter has been
25guilty of any of the following:

26
(1) Making any substantial misrepresentation.

27
(2) Making any false promises of a character likely to influence,
28persuade, or induce.

29
(3) Acting for more than one party in a transaction without the
30knowledge or consent of all parties thereto.

31
(4) Commingling with his or her own money or property or the
32money or property of others that is received and held by him or
33her.

34
(5) Claiming or demanding a fee, compensation, or commission
35under any exclusive agreement authorizing or retaining a licensee
36to sell, buy, or exchange mineral, oil, or gas property for
37compensation, or commission where that agreement does not
38contain a definite, specified date of final and complete termination.

39
(6) Claiming or taking by a licensee of any secret or undisclosed
40amount of compensation, commission, or profit or the failure of a
P96 1licensee to reveal to the principal retaining the licensee the full
2amount of the licensee’s compensation, commission, or profit under
3any agreement retaining the licensee to do any acts for which a
4license is required under this chapter for compensation or
5commission prior to or coincident with the signing of an agreement
6evidencing the meeting of the minds of the contracting parties,
7regardless of the form of such agreement, whether evidenced by
8documents in an escrow or by any other or different procedure.

9
(7) The use by a licensee of any provision allowing the licensee
10an option to purchase in an agreement authorizing or retaining
11the licensee to sell, buy, or exchange mineral, oil, or gas property
12for compensation or commission, except when the licensee prior
13to or coincident with election to exercise the option to purchase
14reveals in writing to the responsible broker the full amount of the
15licensee’s profit and obtains the written consent of the responsible
16broker approving the amount of that profit.

17
(8) Any other conduct, whether of the same or a different
18character than specified in this section, that constitutes fraud or
19dishonest dealing.

20
(b) This section shall become operative on July 1, 2018.

end insert

21begin insert

begin insertSEC. 121.end insert

end insert

begin insertSection 11212 of the end insertbegin insertBusiness and Professions Codeend insert
22
begin insert is amended to read:end insert

11212.

As used in this chapter, the following definitions apply:

24(a) “Accommodation” means any apartment, condominium or
25cooperative unit, cabin, lodge, hotel or motel room, or other private
26or commercial structure containing toilet facilities therein that is
27designed and available, pursuant to applicable law, for use and
28occupancy as a residence by one or more individuals, or any unit
29or berth on a commercial passenger ship, which is included in the
30offering of a time-share plan.

31(b) “Advertisement” means any written, oral, or electronic
32communication that is directed to or targeted to persons within the
33state or such a communication made from this state or relating to
34a time-share plan located in this state and contains a promotion,
35inducement, or offer to sell a time-share plan, including, but not
36limited to, brochures, pamphlets, radio and television scripts,
37electronic media, telephone and direct mail solicitations, and other
38means of promotion.

39(c) “Association” means the organized body consisting of the
40purchasers of time-share interests in a time-share plan.

P97 1(d) “Assessment” means the share of funds required for the
2payment of common expenses which is assessed from time to time
3against each purchaser by the managing entity.

4(e) “Commissioner” means the Real Estate Commissioner.

5(f) “Component site” means a specific geographic location
6where accommodations that are part of a multisite time-share plan
7are located. Separate phases of a time-share property in a specific
8geographic location and under common management shall not be
9deemed a component site.

10(g) “Conspicuous type” means either of the following:

11(1) Type in upper and lower case letters two point sizes larger
12than the nearest nonconspicuous type, exclusive of headings, on
13the page on which it appears but in at least 10-point type.

14(2) Conspicuous type may be utilized in contracts for purchase
15or public permits only where required by law or as authorized by
16the commissioner.

17(h) “Department” means the Department of Real Estate.

18(i) “Developer” means and includes any person who creates a
19time-share plan or is in the business of selling time-share interests,
20other than those employees or agents of the developer who sell
21time-share interests on the developer’s behalf, or employs agents
22to do the same, or any person who succeeds to the interest of a
23developer by sale, lease, assignment, mortgage, or other transfer,
24but the term includes only those persons who offer time-share
25interests for disposition in the ordinary course of business.

26(j) “Dispose” or “disposition” means a voluntary transfer or
27assignment of any legal or equitable interest in a time-share plan,
28other than the transfer, assignment, or release of a security interest.

29(k) “Exchange company” means any person owning or
30operating, or both owning and operating, an exchange program.

31(l) “Exchange program” means any method, arrangement, or
32procedure for the voluntary exchange of time-share interests or
33other property interests. The term does not include the assignment
34of the right to use and occupy accommodations to owners of
35time-share interests within a single site time-share plan. Any
36method, arrangement, or procedure that otherwise meets this
37definition in which the purchaser’s total contractual financial
38obligation exceeds three thousand dollars ($3,000) per any
39individual, recurring time-share period, shall be regulated as a
40time-share plan in accordance with this chapter. For purposes of
P98 1determining the purchaser’s total contractual financial obligation,
2amounts to be paid as a result of renewals and options to renew
3shall be included in the term except for the following: (1) amounts
4to be paid as a result of any optional renewal that a purchaser, in
5his or her sole discretion may elect to exercise, (2) amounts to be
6paid as a result of any automatic renewal in which the purchaser
7has a right to terminate during the renewal period at any time and
8receive a pro rata refund for the remaining unexpired renewal term,
9or (3) amounts to be paid as a result of an automatic renewal in
10which the purchaser receives a written notice no less than 30 nor
11more than 90 days prior to the date of renewal informing the
12purchaser of the right to terminate prior to the date of renewal.
13Notwithstanding these exceptions, if the contractual financial
14obligation exceeds three thousand dollars ($3,000) for any
15three-year period of any renewal term, amounts to be paid as a
16result of that renewal shall be included in determining the
17purchaser’s total contractual financial obligation.

18(m) “Incidental benefit” is an accommodation, product, service,
19discount, or other benefit, other than an exchange program, that
20is offered to a prospective purchaser of a time-share interest prior
21to the end of the rescission period set forth in Section 11238, the
22continuing availability of which for the use and enjoyment of
23owners of time-share interests in the time-share plan is limited to
24a term of not more than three years, subject to renewal or extension.
25The term shall not include an offer of the use of the
26accommodation, product, service, discount, or other benefit on a
27free or discounted one-time basis.

28(n) “Managing entity” means the person who undertakes the
29duties, responsibilities, and obligations of the management of a
30time-share plan.

31(o) “Offer” means any inducement, solicitation, or other attempt,
32whether by marketing, advertisement, oral or written presentation,
33or any other means, to encourage a person to acquire a time-share
34interest in a time-share plan, other than as security for an
35obligation.

36(p) “Person” means a natural person, corporation, limited
37liability company, partnership, joint venture, association, estate,
38trust, government, governmental subdivision or agency, or other
39legal entity, or any combination thereof.

P99 1(q) “Promotion” means a plan or device, including one involving
2the possibility of a prospective purchaser receiving a vacation,
3discount vacation, gift, or prize, used by a developer, or an agent,
4independent contractor, or employee of any of the same on behalf
5of the developer, in connection with the offering and sale of
6time-share interests in a time-share plan.

7(r) “Public report” means a preliminary public report, conditional
8public report, final public report, or other such disclosure document
9authorized for use in connection with the offering of time-share
10interests pursuant to this chapter.

11(s) “Purchaser” means any person, other than a developer, who
12by means of a voluntary transfer for consideration acquires a legal
13or equitable interest in a time-share plan other than as security for
14an obligation.

15(t) “Purchase contract” means a document pursuant to which a
16developer becomes legally obligated to sell, and a purchaser
17becomes legally obligated to buy, a time-share interest.

18(u) “Reservation system” means the method, arrangement, or
19procedure by which a purchaser, in order to reserve the use or
20occupancy of any accommodation of a multisite time-share plan
21for one or more time-share periods, is required to compete with
22other purchasers in the same multisite time-share plan, regardless
23of whether the reservation system is operated and maintained by
24the multisite time-share plan managing entity, an exchange
25company, or any other person. If a purchaser is required to use an
26exchange program as the purchaser’s principal means of obtaining
27the right to use and occupy accommodations in a multisite
28time-share plan, that arrangement shall be deemed a reservation
29system. When an exchange company utilizes a mechanism for the
30exchange of use of time-share periods among members of an
31exchange program, that utilization is not a reservation system of
32a multisite time-share plan.

33(v) “Short-term product” means the right to use accommodations
34on a one-time or recurring basis for a period or periods not to
35exceed 30 days per stay and for a term of three years or less, and
36that includes an agreement that all or a portion of the consideration
37paid by a person for the short-term product will be applied to or
38credited against the price of a future purchase of a time-share
39interest or that the cost of a future purchase of a time-share interest
40will be fixed or locked-in at a specified price.

P100 1(w) “Time-share instrument” means one or more documents,
2by whatever name denominated, creating or governing the
3operation of a time-share plan and includes the declaration
4dedicating accommodations to the time-share plan.

5(x) “Time-share interest” means and includes either of the
6following:

7(1) A “time-share estate,” which is the right to occupy a
8time-share property, coupled with a freehold estate or an estate for
9years with a future interest in a time-share property or a specified
10portion thereof.

11(2) A “time-share use,” which is the right to occupy a time-share
12property, which right is neither coupled with a freehold interest,
13nor coupled with an estate for years with a future interest, in a
14time-share property.

15(y) “Time-share period” means the period or periods of time
16when the purchaser of a time-share plan is afforded the opportunity
17to use the accommodations of a time-share plan.

18(z) “Time-share plan” means any arrangement, plan, scheme,
19or similar device, other than an exchange program, whether by
20membership agreement, sale, lease, deed, license, right to use
21agreement, or by any other means, whereby a purchaser, in
22exchange for consideration, receives ownership rights in or the
23right to use accommodations for a period of time less than a full
24year during any given year, on a recurring basis for more than one
25year, but not necessarily for consecutive years. A time-share plan
26may be either of the following:

27(1) A “single site time-share plan,” which is the right to use
28accommodations at a single time-share property.

29(2) A “multisite time-share plan,” which includes either of the
30following:

31(A) A “specific time-share interest,” which is the right to use
32accommodations at a specific time-share property, together with
33use rights in accommodations at one or more other component
34sites created by or acquired through the time-share plan’s
35reservation system.

36(B) A “nonspecific time-share interest,” which is the right to
37use accommodations at more than one component site created by
38or acquired through the time-share plan’s reservation system, but
39including no specific right to use any particular accommodations.

P101 1(aa) “Time-share property” means one or more accommodations
2subject to the same time-share instrument, together with any other
3property or rights to property appurtenant to those
4accommodations.

begin insert

5
This section shall repeal on July 1, 2018.

end insert

6begin insert

begin insertSEC. 122.end insert

end insert

begin insertSection 11212 is added to the end insertbegin insertBusiness and
7Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert11212.end insert

As used in this chapter, the following definitions apply:

9
(a) “Accommodation” means any apartment, condominium, or
10cooperative unit, cabin, lodge, hotel or motel room, or other private
11or commercial structure containing toilet facilities therein that is
12designed and available, pursuant to applicable law, for use and
13occupancy as a residence by one or more individuals, or any unit
14or berth on a commercial passenger ship that is included in the
15offering of a time-share plan.

16
(b) “Advertisement” means any written, oral, or electronic
17communication that is directed to or targeted to persons within
18the state or such a communication made from this state or relating
19to a time-share plan located in this state and contains a promotion,
20inducement, or offer to sell a time-share plan, including, but not
21limited to, brochures, pamphlets, radio and television scripts,
22electronic media, telephone and direct mail solicitations, and other
23means of promotion.

24
(c) “Association” means the organized body consisting of the
25purchasers of time-share interests in a time-share plan.

26
(d) “Assessment” means the share of funds required for the
27payment of common expenses that is assessed from time to time
28against each purchaser by the managing entity.

29
(e) “Bureau” means the Bureau of Real Estate.

30
(f) “Commissioner” means the Real Estate Commissioner.

31
(g) “Component site” means a specific geographic location
32where accommodations that are part of a multisite time-share plan
33are located. Separate phases of a time-share property in a specific
34geographic location and under common management shall not be
35deemed a component site.

36
(h) “Conspicuous type” means either of the following:

37
(1) Type in uppercase and lowercase letters two point sizes
38larger than the nearest nonconspicuous type, exclusive of headings,
39on the page on which it appears but in at least 10-point type.

P102 1
(2) Conspicuous type may be utilized in contracts for purchase
2or public permits only where required by law or as authorized by
3the commissioner.

4
(i) “Developer” means and includes any person who creates a
5time-share plan or is in the business of selling time-share interests,
6 other than those employees or agents of the developer who sell
7time-share interests on the developer’s behalf, or retains agents
8to do the same, or any person who succeeds to the interest of a
9developer by sale, lease, assignment, mortgage, or other transfer,
10but the term includes only those persons who offer time-share
11interests for disposition in the ordinary course of business.

12
(j) “Dispose” or “disposition” means a voluntary transfer or
13assignment of any legal or equitable interest in a time-share plan,
14other than the transfer, assignment, or release of a security interest.

15
(k) “Exchange company” means any person owning or
16operating, or both owning and operating, an exchange program.

17
(l) “Exchange program” means any method, arrangement, or
18procedure for the voluntary exchange of time-share interests or
19 other property interests. The term does not include the assignment
20of the right to use and occupy accommodations to owners of
21time-share interests within a single-site time-share plan. Any
22method, arrangement, or procedure that otherwise meets this
23definition in which the purchaser’s total contractual financial
24obligation exceeds three thousand dollars ($3,000) per any
25individual, recurring time-share period, shall be regulated as a
26time-share plan in accordance with this chapter. For purposes of
27determining the purchaser’s total contractual financial obligation,
28amounts to be paid as a result of renewals and options to renew
29shall be included in the term except for the following: (1) amounts
30to be paid as a result of any optional renewal that a purchaser, in
31his or her sole discretion may elect to exercise, (2) amounts to be
32paid as a result of any automatic renewal in which the purchaser
33has a right to terminate during the renewal period at any time and
34receive a pro rata refund for the remaining unexpired renewal
35term, or (3) amounts to be paid as a result of an automatic renewal
36in which the purchaser receives a written notice no less than 30
37nor more than 90 days prior to the date of renewal informing the
38purchaser of the right to terminate prior to the date of renewal.
39Notwithstanding these exceptions, if the contractual financial
40obligation exceeds three thousand dollars ($3,000) for any
P103 1three-year period of any renewal term, amounts to be paid as a
2result of that renewal shall be included in determining the
3purchaser’s total contractual financial obligation.

4
(m) “Incidental benefit” is an accommodation, product, service,
5discount, or other benefit, other than an exchange program, that
6is offered to a prospective purchaser of a time-share interest prior
7to the end of the rescission period set forth in Section 11238, the
8continuing availability of which for the use and enjoyment of
9owners of time-share interests in the time-share plan is limited to
10a term of not more than three years, subject to renewal or
11extension. The term shall not include an offer of the use of the
12accommodation, product, service, discount, or other benefit on a
13free or discounted one-time basis.

14
(n) “Managing entity” means the person who undertakes the
15duties, responsibilities, and obligations of the management of a
16time-share plan.

17
(o) “Offer” means any inducement, solicitation, or other
18attempt, whether by marketing, advertisement, oral or written
19presentation, or any other means, to encourage a person to acquire
20a time-share interest in a time-share plan, other than as security
21for an obligation.

22
(p) “Person” means a natural person, corporation, limited
23liability company, partnership, joint venture, association, estate,
24trust, government, governmental subdivision or agency, or other
25legal entity, or any combination thereof.

26
(q) “Promotion” means a plan or device, including one
27involving the possibility of a prospective purchaser receiving a
28vacation, discount vacation, gift, or prize, used by a developer, or
29an agent, independent contractor, or employee of any of the same
30on behalf of the developer, in connection with the offering and
31sale of time-share interests in a time-share plan.

32
(r) “Public report” means a preliminary public report,
33conditional public report, final public report, or other such
34disclosure document authorized for use in connection with the
35offering of time-share interests pursuant to this chapter.

36
(s) “Purchaser” means any person, other than a developer,
37who by means of a voluntary transfer for consideration acquires
38a legal or equitable interest in a time-share plan other than as
39security for an obligation.

P104 1
(t) “Purchase contract” means a document pursuant to which
2a developer becomes legally obligated to sell, and a purchaser
3becomes legally obligated to buy, a time-share interest.

4
(u) “Reservation system” means the method, arrangement, or
5procedure by which a purchaser, in order to reserve the use or
6occupancy of any accommodation of a multisite time-share plan
7for one or more time-share periods, is required to compete with
8other purchasers in the same multisite time-share plan regardless
9of whether the reservation system is operated and maintained by
10the multisite time-share plan managing entity, an exchange
11company, or any other person. If a purchaser is required to use
12an exchange program as the purchaser’s principal means of
13obtaining the right to use and occupy accommodations in a
14multisite time-share plan, that arrangement shall be deemed a
15reservation system. When an exchange company utilizes a
16mechanism for the exchange of use of time-share periods among
17members of an exchange program, that utilization is not a
18reservation system of a multisite time-share plan.

19
(v) “Short-term product” means the right to use
20accommodations on a one-time or recurring basis for a period or
21periods not to exceed 30 days per stay and for a term of three years
22or less, and that includes an agreement that all or a portion of the
23consideration paid by a person for the short-term product will be
24applied to or credited against the price of a future purchase of a
25time-share interest or that the cost of a future purchase of a
26time-share interest will be fixed or locked-in at a specified price.

27
(w) “Time-share instrument” means one or more documents,
28by whatever name denominated, creating or governing the
29operation of a time-share plan and includes the declaration
30dedicating accommodations to the time-share plan.

31
(x) “Time-share interest” means and includes either of the
32following:

33
(1) A “time-share estate,” which is the right to occupy a
34time-share property, coupled with a freehold estate or an estate
35for years with a future interest in a time-share property or a
36specified portion thereof.

37
(2) A “time-share use,” which is the right to occupy a time-share
38property, which right is neither coupled with a freehold interest,
39nor coupled with an estate for years with a future interest, in a
40time-share property.

P105 1
(y) “Time-share period” means the period or periods of time
2when the purchaser of a time-share plan is afforded the opportunity
3to use the accommodations of a time-share plan.

4
(z) “Time-share plan” means any arrangement, plan, scheme,
5or similar device, other than an exchange program, whether by
6membership agreement, sale, lease, deed, license, right to use
7agreement, or by any other means, whereby a purchaser, in
8exchange for consideration, receives ownership rights in or the
9right to use accommodations for a period of time less than a full
10year during any given year, on a recurring basis for more than
11one year, but not necessarily for consecutive years. A time-share
12plan may be either of the following:

13
(1) A “single-site time-share plan” that is the right to use
14accommodations at a single time-share property.

15
(2) A “multisite time-share plan” that includes either of the
16following:

17
(A) A “specific time-share interest” that is the right to use
18accommodations at a specific time-share property, together with
19use rights in accommodations at one or more other component
20sites created by or acquired through the time-share plan’s
21reservation system.

22
(B) A “nonspecific time-share interest” that is the right to use
23accommodations at more than one component site created by or
24acquired through the time-share plan’s reservation system, but
25including no specific right to use any particular accommodations.

26
(aa) “Time-share property” means one or more
27accommodations subject to the same time-share instrument,
28together with any other property or rights to property appurtenant
29to those accommodations.

30
This section shall become operative on July 1, 2018.

end insert

31begin insert

begin insertSEC. 123.end insert

end insert

begin insertSection 11267 of the end insertbegin insertBusiness and Professions Codeend insert
32
begin insert is amended to read:end insert

11267.

(a) The time-share instruments shall require the
34employment of a managing entity for the time-share plan or
35component site pursuant to a written management agreement that
36shall include all of the following provisions:

37(1) Delegation of authority to the managing entity to carry out
38the duties and obligations of the association or the developer to
39the time-share interest owners.

P106 1(2) Authority of the managing entity to employ subagents, if
2applicable.

3(3) A term of not more than five years with automatic renewals
4for successive three-year periods after expiration of the first term
5unless the association by the vote or written assent of a majority
6of the voting power residing in members other than the developer
7determines not to renew the contract and gives appropriate notice
8of that determination. However, in those time-share plans where
9the association is controlled by owners other than the developer,
10the management agreement shall not be subject to the term
11limitations set forth in this section, and any longer term shall not
12be grounds for denial of a public report, unless the longer term of
13the management contract is the result of the developer exercising
14control.

15(4) Termination for cause at any time by the governing body of
16the association. If the single site time-share plan or the component
17site of a multisite time-share plan is located within the state, then
18that termination provision shall include a provision for arbitration
19in accordance with the Commercial Arbitration Rules of the
20American Arbitration Association if requested by or on behalf of
21the managing entity.

22(5) Not less than 90 days’ written notice to the association of
23the intention of the managing entity to resign.

24(6) Enumeration of the powers and duties of the managing entity
25in the operation of time-share plan and the maintenance of the
26accommodations comprising the time-share plan.

27(7) Compensation to be paid to the managing entity.

28(8) Records to be maintained by the managing entity.

29(9) A requirement that the managing entity provide a policy for
30fidelity insurance or bond for the activities of the managing entity,
31payable to the association, which shall be in an amount no less
32than the sum of the largest amount of funds expected to be held
33or controlled by the managing entity at any time during the year,
34pursuant to the budget. The commissioner may provide a reduction
35in the insurance policy or bond amounts required by this paragraph.

36(10) Errors and omissions insurance coverage for the managing
37entity, if available.

38(11) Delineation of the authority of the managing entity and
39persons authorized by the managing entity to enter into
40accommodations of the time-share plan for the purpose of cleaning,
P107 1maid service, maintenance and repair including emergency repairs,
2and for the purpose of abating a nuisance or dangerous, unlawful,
3or prohibited activity being conducted in the accommodation.

4(12) Description of the duties of the managing entity, including,
5but not limited to, the following:

6(A) Collection of all assessments as provided in the time-share
7instruments.

8(B) Maintenance of all books and records concerning the
9time-share plan.

10(C) Scheduling occupancy of accommodations, when purchasers
11are not entitled to use specific time-share periods, so that all
12purchasers will be provided the opportunity for use and possession
13of the accommodations of the time-share plan, that they have
14purchased.

15(D) Providing for the annual meeting of the association of
16owners.

17(E) Performing any other functions and duties related to the
18maintenance of the accommodations or that are required by the
19time-share instrument.

20(b) Any written management agreement in existence as of the
21effective date of this chapter shall not be subject to the term
22limitations set forth above.

23(c) For single site time-share plans and component sites of a
24multisite time-share plan located outside of the state, the time-share
25instruments shall include the subject matter set forth in subdivision
26(a). The time-share instruments shall be in compliance with the
27applicable laws of the state or jurisdiction in which the time-share
28property or component site is located, and if a conflict exists
29between laws of the situs state and the requirements set forth in
30this section, the law of the situs state shall control. If the time-share
31instruments provide for the matters contained in subdivision (a),
32the time-share instruments shall be deemed to be in compliance
33with the requirements of subdivision (a) and the developer shall
34not be required to make revisions in order to comply with
35subdivision (a) and this subdivision.

begin insert

36
(d) This section shall repeal on July 1, 2018.

end insert

37begin insert

begin insertSEC. 124.end insert

end insert

begin insertSection 11267 is added to the end insertbegin insertBusiness and
38Professions Codeend insertbegin insert, to read:end insert

begin insert

begin insert11267.end insert

(a) The time-share instruments shall require the use
40of a managing entity for the time-share plan or component site
P108 1pursuant to a written management agreement that shall include
2all of the following provisions:

3
(1) Delegation of authority to the managing entity to carry out
4the duties and obligations of the association or the developer to
5the time-share interest owners.

6
(2) Authority of the managing entity to use subagents, if
7applicable.

8
(3) A term of not more than five years with automatic renewals
9for successive three-year periods after expiration of the first term
10unless the association by the vote or written assent of a majority
11of the voting power residing in members other than the developer
12determines not to renew the contract and gives appropriate notice
13of that determination. However, in those time-share plans where
14the association is controlled by owners other than the developer,
15the management agreement shall not be subject to the term
16limitations set forth in this section, and any longer term shall not
17be grounds for denial of a public report, unless the longer term of
18the management contract is the result of the developer exercising
19control.

20
(4) Termination for cause at any time by the governing body of
21the association. If the single-site time-share plan or the component
22site of a multisite time-share plan is located within the state, then
23that termination provision shall include a provision for arbitration
24in accordance with the Commercial Arbitration Rules of the
25American Arbitration Association if requested by or on behalf of
26the managing entity.

27
(5) Not less than 90 days’ written notice to the association of
28the intention of the managing entity to resign.

29
(6) Enumeration of the powers and duties of the managing entity
30in the operation of the time-share plan and the maintenance of the
31accommodations comprising the time-share plan.

32
(7) Compensation to be paid to the managing entity.

33
(8) Records to be maintained by the managing entity.

34
(9) A requirement that the managing entity provide a policy for
35fidelity insurance or bond for the activities of the managing entity,
36payable to the association, that shall be in an amount no less than
37the sum of the largest amount of funds expected to be held or
38controlled by the managing entity at any time during the year,
39pursuant to the budget. The commissioner may provide a reduction
P109 1in the insurance policy or bond amounts required by this
2paragraph.

3
(10) Errors and omissions of insurance coverage for the
4managing entity, if available.

5
(11) Delineation of the authority of the managing entity and
6persons authorized by the managing entity to enter into
7accommodations of the time-share plan for the purpose of cleaning,
8maid service, maintenance, and repair, including emergency
9repairs, and for the purpose of abating a nuisance or dangerous,
10unlawful, or prohibited activity being conducted in the
11accommodation.

12
(12) Description of the duties of the managing entity, including,
13but not limited to, the following:

14
(A) Collection of all assessments as provided in the time-share
15instruments.

16
(B) Maintenance of all books and records concerning the
17time-share plan.

18
(C) Scheduling occupancy of accommodations, when purchasers
19are not entitled to use specific time-share periods, so that all
20purchasers will be provided the opportunity for use and possession
21of the accommodations of the time-share plan, that they have
22purchased.

23
(D) Providing for the annual meeting of the association of
24owners.

25
(E) Performing any other functions and duties related to the
26maintenance of the accommodations or that are required by the
27time-share instrument.

28
(b) Any written management agreement in existence as of the
29effective date of this chapter shall not be subject to the term
30limitations set forth above.

31
(c) For single-site time-share plans and component sites of a
32multisite time-share plan located outside of the state, the time-share
33instruments shall include the subject matter set forth in subdivision
34(a). The time-share instruments shall be in compliance with the
35applicable laws of the state or jurisdiction in which the time-share
36property or component site is located, and if a conflict exists
37between laws of the situs state and the requirements set forth in
38this section, the law of the situs state shall control. If the time-share
39instruments provide for the matters contained in subdivision (a),
40the time-share instruments shall be deemed to be in compliance
P110 1with the requirements of subdivision (a), and the developer shall
2not be required to make revisions in order to comply with
3subdivision (a) and this subdivision.

4
(d) This section shall become operative on July 1, 2018.

end insert

5begin insert

begin insertSEC. 125.end insert

end insert

begin insertArticle 6 (commencing with Section 1086) is added
6to Chapter 1 of Title 4 of Part 4 of Division 2 of the end insertbegin insertCivil Codeend insertbegin insert,
7to read:end insert

begin insert

9Article begin insert6.end insert Real Estate License Listings for the Transfer of
10Certain Property

begin insert1086.end insert

(a) For the purposes of this article, the definitions in
13Chapter 1 (commencing with Section 10000) of Part 1 of Division
144 of the Business and Professions Code shall apply.

begin insert1087.end insert

(a) A multiple listing service (MLS) is a facility of
16cooperation of real estate brokers and appraisers, operating
17through an intermediary that does not itself act as a real estate
18licensee or appraiser, through which real estate brokers establish
19express or implied contracts for compensation between real estate
20brokers that are MLS participants in accordance with its MLS
21rules with respect to listed properties, or that may be used by real
22estate licensees and appraisers, pursuant to the rules of the service,
23to prepare market evaluations and appraisals of real property.

begin insert1088.end insert

A listing may not be placed in a multiple listing service
25unless authorized or directed by the owner in the listing.

26
If a real estate licensee or appraiser places a listing or other
27information in the multiple listing service, that real estate licensee
28or appraiser shall be responsible for the truth of all representations
29and statements made by the real estate licensee or appraiser of
30which that real estate licensee or appraiser had knowledge or
31reasonably should have had knowledge to anyone injured by their
32falseness or inaccuracy.

begin insert1089.5.end insert

Subject to the limitations, conditions, and requirements
34of Chapter 18 (commencing with Section 10000) of Part 5 of
35Division 7 of the Probate Code, this article applies to real property
36defined in Section 1086 that is covered by a contract described in
37Section 10150 of the Probate Code.

begin insert1090.end insert

Nothing in this article shall preclude a listing licensee
39from also being the buyer’s licensee.

begin insert1090.2.end insert

This article shall become operative on July 1, 2018.

end insert

P111 1begin insert

begin insertSEC. 126.end insert

end insert

begin insertSection 1090.2 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1090.2.end insert

This article shall repeal on July 1, 2018.

end insert

3begin insert

begin insertSEC. 127.end insert

end insert

begin insertSection 1102 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1102.

(a) Except as provided in Section 1102.2, this article
5applies to any transfer by sale, exchange, installment land sale
6contract, as defined in Section 2985, lease with an option to
7purchase, any other option to purchase, or ground lease coupled
8with improvements, of real property or residential stock
9cooperative, improved with or consisting of not less than one nor
10more than four dwelling units.

11(b) Except as provided in Section 1102.2, this article shall apply
12to a resale transaction entered into on or after January 1, 2000, for
13a manufactured home, as defined in Section 18007 of the Health
14and Safety Code, or a mobilehome, as defined in Section 18008
15of the Health and Safety Code, which manufactured home or
16mobilehome is classified as personal property and intended for
17use as a residence.

18(c) Any waiver of the requirements of this article is void as
19against public policy.

begin insert

20
(d) This section shall repeal on July 1, 2018.

P113 1(c) It is the intent of the Legislature that manufactured home
2and mobilehome dealers and salespersons and real estate brokers
3and salespersons use the form provided pursuant to Section
41102.6d. It is also the intent of the Legislature for sellers of
5manufactured homes or mobilehomes who are neither manufactured
6home dealers or salespersons nor real estate brokers or salespersons
7to use the Manufactured Home/Mobilehome Transfer Disclosure
8Statement contained in Section 1102.6d.

begin insert

9
(d) This section shall repeal on July 1, 2018.

end insert

10begin insert

begin insertSEC. 130.end insert

end insert

begin insertSection 1102.1 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.1.end insert

(a) In enacting Chapter 817 of the Statutes of 1994,
12it was the intent of the Legislature to clarify and facilitate the use
13of the real estate disclosure statement, as specified in Section
141102.6. The Legislature intended the statement to be used by sellers
15making disclosures required under this article and by real estate
16licensees making disclosures required by Section 2079 on the real
17estate licensee’s portion of the real estate disclosure statement, in
18transfers subject to this article. In transfers not subject to this
19article, real estate licensees may make required disclosures in a
20separate writing. The Legislature did not intend to affect the
21existing obligations of the parties to a real estate contract, or their
22retained real estate licensees, to disclose any known fact materially
23affecting the value and desirability of the property, including, but
24not limited to, the physical conditions of the property and
25previously received reports of physical inspections noted on the
26disclosure form set forth in Section 1102.6 or 1102.6a, and that
27nothing in this article shall be construed to change the duty of a
28real estate broker or salesperson pursuant to Section 2079.

29
It is also the intent of the Legislature that the delivery of a real
30estate transfer disclosure statement may not be waived in an “as
31is” sale, as held in Loughrin v. Superior Court (1993) 15
32Cal.App.4th 1188.

33
(b) In enacting Chapter 677 of the Statutes of 1996, it was the
34intent of the Legislature to clarify and facilitate the use of the
35manufactured home and mobilehome transfer disclosure statement
36applicable to the resale of a manufactured home or mobilehome
37pursuant to subdivision (b) of Section 1102. The Legislature
38intended the statements to be used by sellers making disclosures
39required under this article and by real estate licensees making
40disclosures required by Section 2079 on the real estate licensee’s
P114 1portion of the disclosure statement and as required by Section
218046 of the Health and Safety Code on the dealer’s portion of
3the manufactured home and mobilehome transfer disclosure
4statement, in transfers subject to this article. In transfers not
5subject to this article, real estate licensees may make required
6disclosures in a separate writing. The Legislature did not intend
7to affect the existing obligations of the parties to a real estate
8contract, or their real estate licensees, to disclose any fact
9materially affecting the value and desirability of the property,
10including, but not limited to, the physical conditions of the property
11and previously received reports of physical inspections noted on
12the disclosure form set forth in Section 1102.6 or 1102.6a or to
13affect the existing obligations of the parties to a manufactured
14 home or mobilehome purchase contract, and nothing in this article
15shall be construed to change the duty of a real estate broker or
16salesperson pursuant to Section 2079 or the duty of a manufactured
17home or mobilehome dealer or salesperson pursuant to Section
1818046 of the Health and Safety Code.

19
It is also the intent of the Legislature that the delivery of a
20mobilehome transfer disclosure statement may not be waived in
21an “as is” sale.

22
(c) It is the intent of the Legislature that manufactured home
23and mobilehome dealers and salespersons and real estate brokers
24and salespersons use the form provided pursuant to Section
251102.6d. It is also the intent of the Legislature for sellers of
26manufactured homes or mobilehomes who are neither
27manufactured home dealers or salespersons nor real estate brokers
28or salespersons to use the Manufactured Home/Mobilehome
29Transfer Disclosure Statement contained in Section 1102.6d.

30
(d) This section shall become operative on July 1, 2018.

end insert

31begin insert

begin insertSEC. 131.end insert

end insert

begin insertSection 1102.2 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1102.2.

This article does not apply to the following:

33(a) Transfers which are required to be preceded by the furnishing
34to a prospective transferee of a copy of a public report pursuant to
35Section 11018.1 of the Business and Professions Code and transfers
36which can be made without a public report pursuant to Section
3711010.4 of the Business and Professions Code.

38(b) Transfers pursuant to court order, including, but not limited
39to, transfers ordered by a probate court in the administration of an
40estate, transfers pursuant to a writ of execution, transfers by any
P115 1foreclosure sale, transfers by a trustee in bankruptcy, transfers by
2eminent domain, and transfers resulting from a decree for specific
3performance.

4(c) Transfers to a mortgagee by a mortgagor or successor in
5interest who is in default, transfers to a beneficiary of a deed of
6trust by a trustor or successor in interest who is in default, transfers
7by any foreclosure sale after default, transfers by any foreclosure
8sale after default in an obligation secured by a mortgage, transfers
9by a sale under a power of sale or any foreclosure sale under a
10decree of foreclosure after default in an obligation secured by a
11deed of trust or secured by any other instrument containing a power
12of sale, transfers by a mortgagee or a beneficiary under a deed of
13trust who has acquired the real property at a sale conducted
14pursuant to a power of sale under a mortgage or deed of trust or a
15sale pursuant to a decree of foreclosure or has acquired the real
16property by a deed in lieu of foreclosure, transfers to the legal
17owner or lienholder of a manufactured home or mobilehome by a
18registered owner or successor in interest who is in default, or
19transfers by reason of any foreclosure of a security interest in a
20manufactured home or mobilehome.

21(d) Transfers by a fiduciary in the course of the administration
22of a decedent’s estate, guardianship, conservatorship, or trust. This
23exemption shall not apply to a transfer if the trustee is a natural
24person who is sole trustee of a revocable trust and he or she is a
25former owner of the property or an occupant in possession of the
26property within the preceding year.

27(e) Transfers from one coowner to one or more other coowners.

28(f) Transfers made to a spouse, or to a person or persons in the
29lineal line of consanguinity of one or more of the transferors.

30(g) Transfers between spouses resulting from a judgment of
31dissolution of marriage or of legal separation or from a property
32settlement agreement incidental to that judgment.

33(h) Transfers by the Controller in the course of administering
34Chapter 7 (commencing with Section 1500) of Title 10 of Part 3
35of the Code of Civil Procedure.

36(i) Transfers under Chapter 7 (commencing with Section 3691)
37or Chapter 8 (commencing with Section 3771) of Part 6 of Division
381 of the Revenue and Taxation Code.

39(j) Transfers or exchanges to or from any governmental entity.

begin insert

40
This section shall repeal on July 1, 2018.

end insert

P116 1begin insert

begin insertSEC. 132.end insert

end insert

begin insertSection 1102.2 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.2.end insert

This article does not apply to the following:

3
(a) Sales which are required to be preceded by the furnishing
4to a prospective buyer of a copy of a public report pursuant to
5Section 11018.1 of the Business and Professions Code and transfers
6that can be made without a public report pursuant to Section
711010.4 of the Business and Professions Code.

8
(b) Sales pursuant to court order, including, but not limited to,
9sales ordered by a probate court in the administration of an estate,
10sales pursuant to a writ of execution, transfers by any foreclosure
11sale, sales by a trustee in bankruptcy, sales by eminent domain,
12and sales resulting from a decree for specific performance.

13
(c) Sales to a mortgagee by a mortgagor or successor in interest
14who is in default, sales to a beneficiary of a deed of trust by a
15trustor or successor in interest who is in default, sales by any
16foreclosure sale after default, sales by any foreclosure sale after
17default in an obligation secured by a mortgage, a sale under a
18power of sale or any foreclosure sale under a decree of foreclosure
19after default in an obligation secured by a deed of trust or secured
20by any other instrument containing a power of sale, sales by a
21mortgagee or a beneficiary under a deed of trust who has acquired
22the real property at a sale conducted pursuant to a power of sale
23under a mortgage or deed of trust or a sale pursuant to a decree
24of foreclosure or has acquired the real property by a deed in lieu
25of foreclosure, sales to the legal owner or lienholder of a
26manufactured home or mobilehome by a registered owner or
27successor in interest who is in default, or sales by reason of any
28foreclosure of a security interest in a manufactured home or
29mobilehome.

30
(d) Sales by a fiduciary in the course of the administration of a
31trust, guardianship, conservatorship, or decedent’s estate. This
32exemption shall not apply to a transfer if the trustee is a natural
33person who is sole trustee of a revocable trust and he or she is a
34former owner of the property or an occupant in possession of the
35property within the preceding year.

36
(e) Sales from one coowner to one or more other coowners.

37
(f) Sales made to a spouse, or to a person or persons in the
38lineal line of consanguinity of one or more of the sellers.

P117 1
(g) Sales between spouses resulting from a judgment of
2dissolution of marriage or of legal separation or from a property
3 settlement agreement incidental to that judgment.

4
(h) Sales by the Controller in the course of administering
5Chapter 7 (commencing with Section 1500) of Title 10 of Part 3
6of the Code of Civil Procedure.

7
(i) Sales under Chapter 7 (commencing with Section 3691) or
8Chapter 8 (commencing with Section 3771) of Part 6 of Division
91 of the Revenue and Taxation Code.

10
(j) Transfers or exchanges to or from any governmental entity.

11
(k) With regard to transfers of multiuse properties, the transfer
12of any portion of the property not constituting residential property
13with one-to-four dwelling units.

14
This section shall become operative on July 1, 2018.

end insert

15begin insert

begin insertSEC. 133.end insert

end insert

begin insertSection 1102.3 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1102.3.

The transferor of any real property subject to this article
17shall deliver to the prospective transferee the written statement
18required by this article, as follows:

19(a) In the case of a sale, as soon as practicable before transfer
20of title.

21(b) In the case of transfer by a real property sales contract, as
22defined in Section 2985, or by a lease together with an option to
23purchase, or a ground lease coupled with improvements, as soon
24as practicable before execution of the contract. For the purpose of
25this subdivision, “execution” means the making or acceptance of
26an offer.

27With respect to any transfer subject to subdivision (a) or (b), the
28 transferor shall indicate compliance with this article either on the
29receipt for deposit, the real property sales contract, the lease, or
30any addendum attached thereto or on a separate document.

31If any disclosure, or any material amendment of any disclosure,
32required to be made by this article, is delivered after the execution
33of an offer to purchase, the transferee shall have three days after
34delivery in person or five days after delivery by deposit in the mail,
35to terminate his or her offer by delivery of a written notice of
36termination to the transferor or the transferor’s agent.

begin insert

37
This section shall repeal on July 1, 2018.

end insert

38begin insert

begin insertSEC. 134.end insert

end insert

begin insertSection 1102.3 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

P118 1

begin insert1102.3.end insert

The seller of any real property subject to this article
2shall deliver to the prospective buyer the written statement required
3by this article, as follows:

4
(a) In the case of a sale, as soon as practicable before transfer
5of title.

6
(b) In the case of sale by a real property sales contract, as
7defined in Section 2985, or by a lease together with an option to
8purchase, or a ground lease coupled with improvements, as soon
9as practicable before execution of the contract. For the purpose
10of this subdivision, “execution” means the making or acceptance
11of an offer.

12
(c) With respect to any sale subject to subdivision (a) or (b),
13the seller shall indicate compliance with this article on the real
14property sales contract, the lease, or any addendum attached
15thereto or on a separate document.

16
If any disclosure, or any material amendment of any disclosure,
17required to be made by this article, is delivered after the execution
18of an offer to purchase, the prospective buyer shall have three
19days after delivery in person or five days after delivery by deposit
20in the mail, to terminate his or her offer by delivery of a written
21notice of termination to the seller or the seller’s licensee. The
22disclosure is complete when sections I, II, and III in the form
23described in Section 1102.6 are completed and delivered. A real
24estate licensee may complete his or her portion of the required
25disclosure by using a comparable form that includes all of the
26information on the licensee's inspection disclosure set forth in
27Section 1102.6.

28
This section shall become operative on July 1, 2018.

end insert

29begin insert

begin insertSEC. 135.end insert

end insert

begin insertSection 1102.4 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1102.4.

(a) Neither the transferor nor any listing or selling
31agent shall be liable for any error, inaccuracy, or omission of any
32information delivered pursuant to this article if the error,
33inaccuracy, or omission was not within the personal knowledge
34of the transferor or that listing or selling agent, was based on
35information timely provided by public agencies or by other persons
36providing information as specified in subdivision (c) that is
37required to be disclosed pursuant to this article, and ordinary care
38was exercised in obtaining and transmitting it.

39(b) The delivery of any information required to be disclosed by
40this article to a prospective transferee by a public agency or other
P119 1person providing information required to be disclosed pursuant to
2this article shall be deemed to comply with the requirements of
3this article and shall relieve the transferor or any listing or selling
4agent of any further duty under this article with respect to that item
5of information.

6(c) The delivery of a report or opinion prepared by a licensed
7engineer, land surveyor, geologist, structural pest control operator,
8contractor, or other expert, dealing with matters within the scope
9of the professional’s license or expertise, shall be sufficient
10compliance for application of the exemption provided by
11subdivision (a) if the information is provided to the prospective
12transferee pursuant to a request therefor, whether written or oral.
13In responding to such a request, an expert may indicate, in writing,
14an understanding that the information provided will be used in
15fulfilling the requirements of Section 1102.6 and, if so, shall
16indicate the required disclosures, or parts thereof, to which the
17information being furnished is applicable. Where such a statement
18is furnished, the expert shall not be responsible for any items of
19information, or parts thereof, other than those expressly set forth
20in the statement.

begin insert

21
(d) This section shall repeal on July 1, 2018.

22begin insert

begin insertSEC. 138.end insert

end insert

begin insertSection 1102.5 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.5.end insert

(a) If information disclosed in accordance with this
24article is subsequently rendered inaccurate as a result of any act,
25occurrence, or agreement subsequent to the delivery of the required
26disclosures, any inaccuracy resulting therefrom does not constitute
27a violation of this article. If at the time the disclosures are required
28to be made, an item of information required to be disclosed is
29unknown or not available to the seller, and the seller or his or her
30real estate licensee has made a reasonable effort to ascertain it,
31the seller may use an approximation of the information, provided
32 the approximation is clearly identified as such, is reasonable, is
33based on the best information reasonably available to the seller
34or his or her real estate licensee, and is not used for the purpose
35of circumventing or evading this article.

36
(b) This section shall become operative on July 1, 2018.

end insert

37begin insert

begin insertSEC. 139.end insert

end insert

begin insertSection 1102.6a of the end insertbegin insertCivil Codeend insertbegin insert is amended to
38read:end insert

1102.6a.

(a) On and after July 1, 1990, any city or county may
40elect to require disclosures on the form set forth in subdivision (b)
P121 1in addition to those disclosures required by Section 1102.6.
2However, this section does not affect or limit the authority of a
3city or county to require disclosures on a different disclosure form
4in connection with transactions subject to this article pursuant to
5an ordinance adopted prior to July 1, 1990. An ordinance like this
6adopted prior to July 1, 1990, may be amended thereafter to revise
7the disclosure requirements of the ordinance, in the discretion of
8the city council or county board of supervisors.

9(b) Disclosures required pursuant to this section pertaining to
10the property proposed to be transferred, shall be set forth in, and
11 shall be made on a copy of, the following disclosure form:

[2 pages]

P123 1(c) This section does not preclude the use of addenda to the
2form specified in subdivision (b) to facilitate the required
3disclosures. This section does not preclude a city or county from
4using the disclosure form specified in subdivision (b) for a purpose
5other than that specified in this section.

6(d) (1) On and after January 1, 2005, if a city or county adopts
7a different or additional disclosure form pursuant to this section
8regarding the proximity or effects of an airport, the statement in
9that form shall contain, at a minimum, the information in the
10statement “Notice of Airport in Vicinity” found in Section 11010
11of the Business and Professions Code, or Section 1103.4 or 4255.

12(2) On and after January 1, 2006, if a city or county does not
13adopt a different or additional disclosure form pursuant to this
14section, then the provision of an “airport influence area” disclosure
15pursuant to Section 11010 of the Business and Professions Code,
16or Section 1103.4 or 4255, or if there is not a current airport
17influence map, a written disclosure of an airport within two statute
18miles, shall be deemed to satisfy any city or county requirements
19for the disclosure of airports in connection with transfers of real
20property.

begin insert

21
(e) This section shall repeal on July 1, 2018.

end insert

22begin insert

begin insertSEC. 140.end insert

end insert

begin insertSection 1102.6a is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.6a.end insert

(a) Any city or county may elect to require disclosures
24on the form set forth in subdivision (b) in addition to those
25disclosures required by Section 1102.6. However, this section does
26not affect or limit the authority of a city or county to require
27disclosures on a different disclosure form in connection with
28transactions subject to this article pursuant to an ordinance
29adopted prior to July 1, 1990.

30
(b) Disclosures required pursuant to this section pertaining to
31the property proposed to be sold, shall be set forth in, and shall
32be made on a copy of, the following disclosure form:

[2 pages]

P125 1
(c) This section does not preclude the use of addenda to the
2form specified in subdivision (b) to facilitate the required
3disclosures. This section does not preclude a city or county from
4using the disclosure form specified in subdivision (b) for a purpose
5other than that specified in this section.

6
(d) (1) On and after January 1, 2005, if a city or county adopts
7a different or additional disclosure form pursuant to this section
8regarding the proximity or effects of an airport, the statement in
9that form shall contain, at a minimum, the information in the
10statement “Notice of Airport in Vicinity” found in Section 11010
11of the Business and Professions Code, or Section 1103.4 or 4255.

12
(2) On and after January 1, 2006, if a city or county does not
13adopt a different or additional disclosure form pursuant to this
14section, then the provision of an “airport influence area”
15disclosure pursuant to Section 11010 of the Business and
16 Professions Code, or Section 1103.4 or 4255, or if there is not a
17current airport influence map, a written disclosure of an airport
18within two statute miles, shall be deemed to satisfy any city or
19county requirements for the disclosure of airports in connection
20with sales of real property.

21
(e) This section shall become operative on July 1, 2018.

end insert

22begin insert

begin insertSEC. 141.end insert

end insert

begin insertSection 1102.6b of the end insertbegin insertCivil Codeend insertbegin insert is amended to
23read:end insert

1102.6b.

(a) This section applies to all transfers of real property
25for which all of the following apply:

26(1) The transfer is subject to this article.

27(2) The property being transferred is subject to a continuing lien
28securing the levy of special taxes pursuant to the Mello-Roos
29Community Facilities Act (Chapter 2.5 (commencing with Section
3053311) of Part 1 of Division 2 of Title 5 of the Government Code),
31to a fixed lien assessment collected in installments to secure bonds
32issued pursuant to the Improvement Bond Act of 1915 (Division
3310 (commencing with Section 8500) of the Streets and Highways
34Code), or to a contractual assessment program authorized pursuant
35to Chapter 29 (commencing with Section 5898.10) of Part 3 of
36Division 7 of the Streets and Highway Code.

37(3) A notice is not required pursuant to Section 53341.5 of the
38Government Code.

39(b) In addition to any other disclosure required pursuant to this
40article, the seller of any real property subject to this section shall
P126 1make a good faith effort to obtain a disclosure notice concerning
2the special tax as provided for in Section 53340.2 of the
3Government Code, or a disclosure notice concerning an assessment
4installment as provided in Section 53754 of the Government Code,
5from each local agency that levies a special tax pursuant to the
6Mello-Roos Community Facilities Act, or that collects assessment
7installments to secure bonds issued pursuant to the Improvement
8Bond Act of 1915 (Division 10 (commencing with Section 8500)
9of the Streets and Highways Code), or a disclosure notice
10concerning the contractual assessment as provided in Section
115898.24 of the Streets and Highways Code, on the property being
12transferred, and shall deliver that notice or those notices to the
13prospective purchaser, as long as the notices are made available
14by the local agency.

15(c) (1) The seller of real property subject to this section may
16satisfy the disclosure notice requirements in regard to the bonds
17issued pursuant to the Improvement Bond Act of 1915 (Division
1810 (commencing with Section 8500) of the Streets and Highways
19Code) by delivering a disclosure notice that is substantially
20equivalent and obtained from another source, until December 31,
212004.

22(2) The seller of real property subject to this section may satisfy
23the disclosure notice requirements in regard to the assessments
24collected under the contractual assessment program authorized
25pursuant to Chapter 29 (commencing with Section 5898.10) of
26Part 3 of Division 7 of the Streets and Highway Code by delivering
27a disclosure notice that is substantially equivalent and obtained
28from another source.

29(3) For the purposes of this section, a substantially equivalent
30disclosure notice includes, but is not limited to, a copy of the most
31recent year’s property tax bill or an itemization of current
32assessment amounts applicable to the property.

33(d) (1) Notwithstanding subdivision (c), at any time after the
34effective date of this section, the seller of real property subject to
35this section may satisfy the disclosure notice requirements of this
36section by delivering a disclosure notice obtained from a
37nongovernmental source that satisfies the requirements of
38paragraph (2).

39(2) A notice provided by a private entity other than a designated
40office, department, or bureau of the levying entity may be modified
P127 1as needed to clearly and accurately describe a special tax pursuant
2to the Mello-Roos Community Facilities Act levied against the
3property or to clearly and accurately consolidate information about
4two or more districts that levy or are authorized to levy a special
5tax pursuant to the Mello-Roos Community Facilities Act against
6the property, and shall include the name of the Mello-Roos entity
7levying taxes against the property, the annual tax due for the
8Mello-Roos entity for the current tax year, the maximum tax that
9may be levied against the property in any year, the percentage by
10which the maximum tax for the Mello-Roos entity may increase
11per year, and the date until the tax may be levied against the
12property for the Mello-Roos entity and a contact telephone number,
13if available, for further information about the Mello-Roos entity.
14A notice provided by a private entity other than a designated office,
15department, or bureau of the levying entity may be modified as
16needed to clearly and accurately describe special assessments and
17bonds pursuant to the Improvement Bond Act of 1915 levied
18against the property, or to clearly and accurately consolidate
19information about two or more districts that levy or are authorized
20to levy special assessments and bonds pursuant to the Improvement
21Bond Act of 1915 against the property, and shall include the name
22of the special assessments and bonds issued pursuant to the
23Improvement Bond Act of 1915, the current annual tax on the
24property for the special assessments and bonds issued pursuant to
25the Improvement Bond Act of 1915 and a contact telephone
26number, if available, for further information about the special
27assessments and bonds issued pursuant to the Improvement Bond
28Act of 1915.

29(3) This section does not change the ability to make disclosures
30pursuant to Section 1102.4 of the Civil Code.

31(e) If a disclosure received pursuant to subdivision (b), (c), or
32(d) has been delivered to the transferee, a seller or his or her agent
33is not required to provide additional information concerning, and
34information in the disclosure shall be deemed to satisfy the
35responsibility of the seller or his or her agent to inform the
36transferee regarding the special tax or assessment installments and
37the district. Notwithstanding subdivision (b), (c), or (d), nothing
38in this section imposes a duty to discover a special tax or
39assessment installments or the existence of any levying district not
40actually known to the agents.

begin insert

P128 1
(f) This section shall repeal on July 1, 2018.

end insert

2begin insert

begin insertSEC. 142.end insert

end insert

begin insertSection 1102.6b is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.6b.end insert

(a) This section applies to all sales of real property
4for which all of the following apply:

5
(1) The sale is subject to this article.

6
(2) The property being sold is subject to a continuing lien
7securing the levy of special taxes pursuant to the Mello-Roos
8Community Facilities Act (Chapter 2.5 (commencing with Section
953311) of Part 1 of Division 2 of Title 5 of the Government Code),
10to a fixed lien assessment collected in installments to secure bonds
11issued pursuant to the Improvement Bond Act of 1915 (Division
1210 (commencing with Section 8500) of the Streets and Highways
13Code), or to a contractual assessment program authorized pursuant
14to Chapter 29 (commencing with Section 5898.10) of Part 3 of
15Division 7 of the Streets and Highway Code.

16
(3) A notice is not required pursuant to Section 53341.5 of the
17Government Code.

18
(b) In addition to any other disclosure required pursuant to this
19article, the seller of any real property subject to this section shall
20make a good faith effort to obtain a disclosure notice concerning
21the special tax as provided for in Section 53340.2 of the
22Government Code, or a disclosure notice concerning an assessment
23installment as provided in Section 53754 of the Government Code
24from each local agency that levies a special tax pursuant to the
25Mello-Roos Community Facilities Act, or that collects assessment
26installments to secure bonds issued pursuant to the Improvement
27Bond Act of 1915 (Division 10 (commencing with Section 8500)
28of the Streets and Highways Code), or a disclosure notice
29concerning the contractual assessment as provided in Section
305898.24 of the Streets and Highways Code on the property being
31sold and shall deliver that notice or those notices to the prospective
32buyer, as long as the notices are made available by the local
33agency.

34
(c) (1) The seller of real property subject to this section may
35satisfy the disclosure notice requirements in regard to the bonds
36issued pursuant to the Improvement Bond Act of 1915 (Division
3710 (commencing with Section 8500) of the Streets and Highways
38Code) by delivering a disclosure notice that is substantially
39equivalent and obtained from another source.

P129 1
(2) The seller of real property subject to this section may satisfy
2the disclosure notice requirements in regard to the assessments
3collected under the contractual assessment program authorized
4pursuant to Chapter 29 (commencing with Section 5898.10) of
5Part 3 of Division 7 of the Streets and Highway Code by delivering
6a disclosure notice that is substantially equivalent and obtained
7from another source.

8
(3) For the purposes of this section, a substantially equivalent
9disclosure notice includes, but is not limited to, a copy of the most
10recent year’s property tax bill or an itemization of current
11assessment amounts applicable to the property.

12
(d) (1) Notwithstanding subdivision (c), the seller of real
13property subject to this section may satisfy the disclosure notice
14requirements of this section by delivering a disclosure notice
15obtained from a nongovernmental source that satisfies the
16requirements of paragraph (2).

17
(2) A notice provided by a private entity other than a designated
18office, department, or bureau of the levying entity may be modified
19as needed to clearly and accurately describe a special tax pursuant
20to the Mello-Roos Community Facilities Act levied against the
21property or to clearly and accurately consolidate information
22about two or more districts that levy or are authorized to levy a
23special tax pursuant to the Mello-Roos Community Facilities Act
24against the property, and shall include the name of the Mello-Roos
25entity levying taxes against the property, the annual tax due for
26the Mello-Roos entity for the current tax year, the maximum tax
27that may be levied against the property in any year, the percentage
28by which the maximum tax for the Mello-Roos entity may increase
29per year, and the date until the tax may be levied against the
30property for the Mello-Roos entity and a contact telephone number,
31if available, for further information about the Mello-Roos entity.
32A notice provided by a private entity other than a designated office,
33department, or bureau of the levying entity may be modified as
34needed to clearly and accurately describe special assessments and
35 bonds pursuant to the Improvement Bond Act of 1915 levied against
36the property, or to clearly and accurately consolidate information
37about two or more districts that levy or are authorized to levy
38special assessments and bonds pursuant to the Improvement Bond
39Act of 1915 against the property, and shall include the name of
40the special assessments and bonds issued pursuant to the
P130 1Improvement Bond Act of 1915, the current annual tax on the
2property for the special assessments and bonds issued pursuant
3to the Improvement Bond Act of 1915, and a contact telephone
4number, if available, for further information about the special
5assessments and bonds issued pursuant to the Improvement Bond
6Act of 1915.

7
(3) This section does not change the ability to make disclosures
8pursuant to Section 1102.4 of the Civil Code.

9
(e) If a disclosure received pursuant to subdivision (b), (c), or
10(d) has been delivered to the buyer, a seller or his or her real estate
11licensee is not required to provide additional information
12concerning, and information in the disclosure shall be deemed to
13satisfy the responsibility of the seller or his or her real estate
14licensee to inform the buyer regarding the special tax or assessment
15installments and the district. Notwithstanding subdivision (b), (c),
16or (d), nothing in this section imposes a duty to discover a special
17tax or assessment installments or the existence of any levying
18district not actually known to the real estate licensees.

19
(f) This section shall become operative on July 1, 2018.

end insert

20begin insert

begin insertSEC. 143.end insert

end insert

begin insertSection 1102.6c of the end insertbegin insertCivil Codeend insertbegin insert is amended to
21read:end insert

1102.6c.

(a) In addition to any other disclosure required
23pursuant to this article, it shall be the sole responsibility of the
24seller of any real property subject to this article, or his or her agent,
25to deliver to the prospective purchaser a disclosure notice that
26includes both of the following:

27(1) A notice, in at least 12-point type or a contrasting color, as
28follows:

29“California property tax law requires the Assessor to revalue
30real property at the time the ownership of the property changes.
31Because of this law, you may receive one or two supplemental tax
32bills, depending on when your loan closes.

33The supplemental tax bills are not mailed to your lender. If you
34 have arranged for your property tax payments to be paid through
35an impound account, the supplemental tax bills will not be paid
36by your lender. It is your responsibility to pay these supplemental
37bills directly to the Tax Collector.

38If you have any question concerning this matter, please call your
39local Tax Collector’s Office.”

P131 1(2) A title, in at least 14-point type or a contrasting color, that
2reads as follows: “Notice of Your~~begin delete ’Supplemental’end delete~~begin insert end insertbegin insert‘Supplemental’end insert
3 Property Tax Bill.”

4(b) The disclosure notice requirements of this section may be
5 satisfied by delivering a disclosure notice pursuant to Section
61102.6b that satisfies the requirements of subdivision (a).

begin insert

7
(c) This section shall repeal on July 1, 2018.

end insert

8begin insert

begin insertSEC. 144.end insert

end insert

begin insertSection 1102.6c is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.6c.end insert

(a) In addition to any other disclosure required
10pursuant to this article, it shall be the sole responsibility of the
11seller of any real property subject to this article, or his or her real
12estate licensee, to deliver to the prospective buyer a disclosure
13notice that includes both of the following:

14
(1) A notice, in at least 12-point type or a contrasting color, as
15follows:

16
“California property tax law requires the Assessor to revalue
17real property at the time the ownership of the property changes.
18Because of this law, you may receive one or two supplemental tax
19bills, depending on when your loan closes.

20
The supplemental tax bills are not mailed to your lender. If you
21have arranged for your property tax payments to be paid through
22an impound account, the supplemental tax bills will not be paid
23by your lender. It is your responsibility to pay these supplemental
24bills directly to the tax collector.

25
If you have any question concerning this matter, please call your
26local tax collector’s office.”

27
(2) A title, in at least 14-point type or a contrasting color, that
28reads as follows: “Notice of Your ‘Supplemental’ Property Tax
29Bill.”

30
(b) The disclosure notice requirements of this section may be
31satisfied by delivering a disclosure notice pursuant to Section
321102.6b that satisfies the requirements of subdivision (a).

33
(c) This section shall become operative on July 1, 2018.

end insert

34begin insert

begin insertSEC. 145.end insert

end insert

begin insertSection 1102.9 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1102.9.

begin insert(a)end insertbegin insert end insert Any disclosure made pursuant to this article may
36be amended in writing by the transferor or his or her agent, but the
37amendment shall be subject to Section 1102.3 or 1102.3a.

begin insert

38
(b) This section shall repeal on July 1, 2018.

end insert

39begin insert

begin insertSEC. 146.end insert

end insert

begin insertSection 1102.9 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

P132 1

begin insert1102.9.end insert

(a) Any disclosure made pursuant to this article may
2be amended in writing by the seller or his or her real estate
3licensee, but the amendment shall be subject to Section 1102.3 or
41102.3a.

end insert

5begin insert

begin insertSEC. 149.end insert

end insert

begin insertSection 1102.14 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
6read:end insert

1102.14.

(a) As used in this article, “listing agent” means
8listing agent as defined in subdivision (f) of Section 1086.

9(b) As used in this article, “selling agent” means selling agent
10as defined in subdivision (g) of Section 1086, exclusive of the
11requirement that the agent be a participant in a multiple listing
12service as defined in Section 1087.

begin insert

13
(c) This section shall repeal on July 1, 2018.

end insert

14begin insert

begin insertSEC. 150.end insert

end insert

begin insertSection 1102.155 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
15read:end insert

1102.155.

(a) (1) The seller of residential real property subject
17to this article shall disclose, in writing, that Section 1101.4 of the
18Civil Code requires that California single-family residences be
19equipped with water-conserving plumbing fixtures on or before
20January 1, 2017, and shall disclose whether the property includes
21any noncompliant plumbing fixtures.

22(2) The seller shall affirm that this representation is that of the
23seller and not a representation of any agent, and that this disclosure
24is not intended to be part of any contract between the buyer and
25the seller. The seller shall further affirm that this disclosure is not
26a warranty of any kind by the seller or any agent representing any
27principal in the transaction and is not a substitute for any
28inspections that or warranties any principal may wish to obtain.

29(b) This section shall become operative on January 1, 2017.

begin insert

30
(c) This section shall repeal on July 1, 2018.

end insert

31begin insert

begin insertSEC. 151.end insert

end insert

begin insertSection 1102.155 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1102.155.end insert

(a) (1) The seller of residential property subject to
33this article shall disclose, in writing, that Section 1101.4 requires
34that California single-family residences be equipped with
35water-conserving plumbing fixtures on or before January 1, 2017,
36and shall disclose whether the property includes any noncompliant
37plumbing fixtures as defined in subdivision (c) of Section 1101.3.

38
(2) The seller shall affirm that this representation is that of the
39seller and not a representation of any real estate licensee and that
40this disclosure is not intended to be part of any contract between
P134 1the buyer and the seller. The seller shall further affirm that this
2disclosure is not a warranty of any kind by the seller or any real
3estate licensee representing any principal in the transaction and
4is not a substitute for any inspections or warranties that any
5principal may wish to obtain.

6
(b) This section shall become operative on July 1, 2018.

end insert

7begin insert

begin insertSEC. 152.end insert

end insert

begin insertSection 1103 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1103.

(a) Except as provided in Section 1103.1, this article
9applies to the transfer by sale, exchange, installment land sale
10contract, as defined in Section 2985, lease with an option to
11purchase, any other option to purchase, or ground lease coupled
12with improvements, of any real property described in subdivision
13(c), or residential stock cooperative, improved with or consisting
14of not less than one nor more than four dwelling units.

15(b) Except as provided in Section 1103.1, this article shall apply
16to a resale transaction entered into on or after January 1, 2000, for
17a manufactured home, as defined in Section 18007 of the Health
18and Safety Code, that is classified as personal property intended
19for use as a residence, or a mobilehome, as defined in Section
2018008 of the Health and Safety Code, that is classified as personal
21property intended for use as a residence, if the real property on
22which the manufactured home or mobilehome is located is real
23property described in subdivision (c).

24(c) This article shall apply to the transactions described in
25subdivisions (a) and (b) only if the transferor or his or her agent
26is required by one or more of the following to disclose the
27property’s location within a hazard zone:

28(1) A person who is acting as an agent for a transferor of real
29property that is located within a special flood hazard area (any
30type Zone “A” or “V”) designated by the Federal Emergency
31Management Agency, or the transferor if he or she is acting without
32an agent, shall disclose to any prospective transferee the fact that
33the property is located within a special flood hazard area if either:

34(A) The transferor, or the transferor’s agent, has actual
35knowledge that the property is within a special flood hazard area.

36(B) The local jurisdiction has compiled a list, by parcel, of
37properties that are within the special flood hazard area and a notice
38has been posted at the offices of the county recorder, county
39assessor, and county planning agency that identifies the location
40of the parcel list.

P135 1(2) A person who is acting as an agent for a transferor of real
2property that is located within an area of potential flooding
3designated pursuant to Section 8589.5 of the Government Code,
4or the transferor if he or she is acting without an agent, shall
5disclose to any prospective transferee the fact that the property is
6located within an area of potential flooding if either:

7(A) The transferor, or the transferor’s agent, has actual
8knowledge that the property is within an inundation area.

9(B) The local jurisdiction has compiled a list, by parcel, of
10properties that are within the inundation area and a notice has been
11posted at the offices of the county recorder, county assessor, and
12county planning agency that identifies the location of the parcel
13list.

14(3) A transferor of real property that is located within a very
15high fire hazard severity zone, designated pursuant to Section
1651178 of the Government Code, shall disclose to any prospective
17transferee the fact that the property is located within a very high
18fire hazard severity zone and is subject to the requirements of
19Section 51182 of the Government Code if either:

20(A) The transferor, or the transferor’s agent, has actual
21knowledge that the property is within a very high fire hazard
22severity zone.

23(B) A map that includes the property has been provided to the
24local agency pursuant to Section 51178 of the Government Code
25and a notice has been posted at the offices of the county recorder,
26county assessor, and county planning agency that identifies the
27location of the map and any information regarding changes to the
28map received by the local agency.

29(4) A person who is acting as an agent for a transferor of real
30property that is located within an earthquake fault zone, designated
31pursuant to Section 2622 of the Public Resources Code, or the
32transferor if he or she is acting without an agent, shall disclose to
33any prospective transferee the fact that the property is located
34within a delineated earthquake fault zone if either:

35(A) The transferor, or the transferor’s agent, has actual
36knowledge that the property is within a delineated earthquake fault
37zone.

38(B) A map that includes the property has been provided to the
39city or county pursuant to Section 2622 of the Public Resources
40Code and a notice has been posted at the offices of the county
P136 1recorder, county assessor, and county planning agency that
2identifies the location of the map and any information regarding
3changes to the map received by the county.

4(5) A person who is acting as an agent for a transferor of real
5property that is located within a seismic hazard zone, designated
6pursuant to Section 2696 of the Public Resources Code, or the
7transferor if he or she is acting without an agent, shall disclose to
8any prospective transferee the fact that the property is located
9within a seismic hazard zone if either:

10(A) The transferor, or the transferor’s agent, has actual
11knowledge that the property is within a seismic hazard zone.

12(B) A map that includes the property has been provided to the
13city or county pursuant to Section 2696 of the Public Resources
14Code and a notice has been posted at the offices of the county
15recorder, county assessor, and county planning agency that
16identifies the location of the map and any information regarding
17changes to the map received by the county.

18(6) A transferor of real property that is located within a state
19responsibility area determined by the board, pursuant to Section
204125 of the Public Resources Code, shall disclose to any
21prospective transferee the fact that the property is located within
22a wildland area that may contain substantial forest fire risks and
23hazards and is subject to the requirements of Section 4291 if either:

24(A) The transferor, or the transferor’s agent, has actual
25knowledge that the property is within a wildland fire zone.

26(B) A map that includes the property has been provided to the
27city or county pursuant to Section 4125 of the Public Resources
28Code and a notice has been posted at the offices of the county
29recorder, county assessor, and county planning agency that
30identifies the location of the map and any information regarding
31changes to the map received by the county.

32(d) Any waiver of the requirements of this article is void as
33against public policy.

begin insert

34
(e) This section shall repeal on July 1, 2018.

end insert

35begin insert

begin insertSEC. 153.end insert

end insert

begin insertSection 1103 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.end insert

(a) Except as provided in Section 1103.1, this article
37applies to a sale, exchange, installment land sale contract, as
38defined in Section 2985, lease with an option to purchase, any
39other option to purchase, or ground lease coupled with
40improvements, of any real property described in subdivision (c),
P137 1or residential stock cooperative, improved with or consisting of
2not less than one nor more than four dwelling units.

3
(b) Except as provided in Section 1103.1, this article applies to
4a resale transaction entered into for a manufactured home, as
5defined in Section 18007 of the Health and Safety Code, that is
6classified as personal property intended for use as a residence, or
7a mobilehome, as defined in Section 18008 of the Health and Safety
8Code, that is classified as personal property intended for use as
9a residence, if the real property on which the manufactured home
10or mobilehome is located is real property described in subdivision
11(c).

12
(c) This article shall apply to the transactions described in
13subdivisions (a) and (b) only if the seller or his or her real estate
14licensee is required by one or more of the following to disclose
15the property’s location within a hazard zone:

16
(1) A person who is acting as a real estate licensee for a seller
17of real property that is located within a special flood hazard area
18(any type Zone “A” or “V”) designated by the Federal Emergency
19Management Agency, or the seller if he or she is acting without a
20real estate licensee, shall disclose to any prospective buyer the
21fact that the property is located within a special flood hazard area
22if either:

23
(A) The seller, or the seller’s real estate licensee, has actual
24knowledge that the property is within a special flood hazard area.

25
(B) The local jurisdiction has compiled a list, by parcel, of
26properties that are within the special flood hazard area and a
27notice has been posted at the offices of the county recorder, county
28assessor, and county planning agency that identifies the location
29of the parcel list.

30
(2) A person who is acting as a real estate licensee for a seller
31of real property that is located within an area of potential flooding
32designated pursuant to Section 8589.5 of the Government Code,
33or the seller if he or she is acting without a real estate licensee,
34shall disclose to any prospective buyer the fact that the property
35is located within an area of potential flooding if either:

36
(A) The seller, or the seller’s real estate licensee, has actual
37knowledge that the property is within an inundation area.

38
(B) The local jurisdiction has compiled a list, by parcel, of
39properties that are within the inundation area and a notice has
40been posted at the offices of the county recorder, county assessor,
P138 1and county planning agency that identifies the location of the
2parcel list.

3
(3) A seller of real property that is located within a very high
4fire hazard severity zone, designated pursuant to Section 51178
5of the Government Code, shall disclose to any prospective buyer
6the fact that the property is located within a very high fire hazard
7severity zone and is subject to the requirements of Section 51182
8of the Government Code if either:

9
(A) The seller, or the seller’s real estate licensee, has actual
10knowledge that the property is within a very high fire hazard
11severity zone.

12
(B) A map that includes the property has been provided to the
13local agency pursuant to Section 51178 of the Government Code
14and a notice has been posted at the offices of the county recorder,
15county assessor, and county planning agency that identifies the
16location of the map and any information regarding changes to the
17map received by the local agency.

18
(4) A person who is acting as a real estate licensee for a seller
19of real property that is located within an earthquake fault zone,
20designated pursuant to Section 2622 of the Public Resources Code,
21or the seller if he or she is acting without a real estate licensee,
22shall disclose to any prospective buyer the fact that the property
23is located within a delineated earthquake fault zone if either:

24
(A) The seller, or the seller’s real estate licensee, has actual
25knowledge that the property is within a delineated earthquake fault
26zone.

27
(B) A map that includes the property has been provided to the
28city or county pursuant to Section 2622 of the Public Resources
29Code and a notice has been posted at the offices of the county
30recorder, county assessor, and county planning agency that
31identifies the location of the map and any information regarding
32changes to the map received by the county.

33
(5) A person who is acting as a real estate licensee for a seller
34of real property that is located within a seismic hazard zone,
35designated pursuant to Section 2696 of the Public Resources Code,
36or the seller if he or she is acting without a real estate licensee,
37shall disclose to any prospective buyer the fact that the property
38is located within a seismic hazard zone if either:

39
(A) The seller, or the seller’s real estate licensee, has actual
40knowledge that the property is within a seismic hazard zone.

P139 1
(B) A map that includes the property has been provided to the
2city or county pursuant to Section 2696 of the Public Resources
3Code and a notice has been posted at the offices of the county
4recorder, county assessor, and county planning agency that
5identifies the location of the map and any information regarding
6changes to the map received by the county.

7
(6) A seller of real property that is located within a state
8responsibility area determined by the board, pursuant to Section
94125 of the Public Resources Code, shall disclose to any
10prospective buyer the fact that the property is located within a
11wildland area that may contain substantial forest fire risks and
12hazards and is subject to the requirements of Section 4291 of the
13Public Resources Code if either:

14
(A) The seller, or the seller’s real estate licensee, has actual
15knowledge that the property is within a wildland fire zone.

16
(B) A map that includes the property has been provided to the
17city or county pursuant to Section 4125 of the Public Resources
18Code and a notice has been posted at the offices of the county
19recorder, county assessor, and county planning agency that
20identifies the location of the map and any information regarding
21changes to the map received by the county.

22
(d) Any waiver of the requirements of this article is void as
23against public policy.

24
(e) This section shall become operative on July 1, 2018.

end insert

25begin insert

begin insertSEC. 154.end insert

end insert

begin insertSection 1103.1 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1103.1.

(a) This article does not apply to the following
27transfers:

28(1) Transfers pursuant to court order, including, but not limited
29to, transfers ordered by a probate court in administration of an
30estate, transfers pursuant to a writ of execution, transfers by any
31foreclosure sale, transfers by a trustee in bankruptcy, transfers by
32eminent domain, and transfers resulting from a decree for specific
33performance.

34(2) Transfers to a mortgagee by a mortgagor or successor in
35interest who is in default, transfers to a beneficiary of a deed of
36trust by a trustor or successor in interest who is in default, transfers
37by any foreclosure sale after default, transfers by any foreclosure
38sale after default in an obligation secured by a mortgage, transfers
39by a sale under a power of sale or any foreclosure sale under a
40decree of foreclosure after default in an obligation secured by a
P140 1deed of trust or secured by any other instrument containing a power
2of sale, or transfers by a mortgagee or a beneficiary under a deed
3of trust who has acquired the real property at a sale conducted
4pursuant to a power of sale under a mortgage or deed of trust or a
5sale pursuant to a decree of foreclosure or has acquired the real
6property by a deed in lieu of foreclosure.

7(3) Transfers by a fiduciary in the course of the administration
8of a decedent’s estate, guardianship, conservatorship, or trust.

9(4) Transfers from one coowner to one or more other coowners.

10(5) Transfers made to a spouse, or to a person or persons in the
11lineal line of consanguinity of one or more of the transferors.

12(6) Transfers between spouses resulting from a judgment of
13dissolution of marriage or of legal separation of the parties or from
14a property settlement agreement incidental to that judgment.

15(7) Transfers by the Controller in the course of administering
16Chapter 7 (commencing with Section 1500) of Title 10 of Part 3
17of the Code of Civil Procedure.

18(8) Transfers under Chapter 7 (commencing with Section 3691)
19or Chapter 8 (commencing with Section 3771) of Part 6 of Division
201 of the Revenue and Taxation Code.

21(9) Transfers or exchanges to or from any governmental entity.

22(b) Transfers not subject to this article may be subject to other
23disclosure requirements, including those under Sections 8589.3,
248589.4, and 51183.5 of the Government Code and Sections 2621.9,
252694, and 4136 of the Public Resources Code. In transfers not
26subject to this article, agents may make required disclosures in a
27separate writing.

begin insert

28
(c) This section shall repeal on July 1, 2018.

end insert

29begin insert

begin insertSEC. 155.end insert

end insert

begin insertSection 1103.1 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.1.end insert

(a) This article does not apply to the following sales:

31
(1) Sales pursuant to court order, including, but not limited to,
32sales ordered by a probate court in administration of an estate,
33sales pursuant to a writ of execution, sales by any foreclosure sale,
34sales by a trustee in bankruptcy, sales by eminent domain, and
35sales resulting from a decree for specific performance.

36
(2) Sales to a mortgagee by a mortgagor or successor in interest
37who is in default, sales to a beneficiary of a deed of trust by a
38trustor or successor in interest who is in default, sales by any
39foreclosure sale after default, sales by any foreclosure sale after
40default in an obligation secured by a mortgage, sale under a power
P141 1of sale or any foreclosure sale under a decree of foreclosure after
2default in an obligation secured by a deed of trust or secured by
3any other instrument containing a power of sale, or sales by a
4mortgagee or a beneficiary under a deed of trust who has acquired
5the real property at a sale conducted pursuant to a power of sale
6under a mortgage or deed of trust or a sale pursuant to a decree
7of foreclosure or has acquired the real property by a deed in lieu
8of foreclosure.

9
(3) Sales by a fiduciary in the course of the administration of a
10trust, guardianship, conservatorship, or the decedent’s estate. This
11exemption shall not apply to a sale if the trustee is a natural person
12who is a trustee of a revocable trust and he or she is a former
13owner of the property or an occupant in possession of the property
14within the preceding year.

15
(4) Sales from one coowner to one or more other coowners.

16
(5) Sales made to a spouse, or to a person or persons in the
17lineal line of consanguinity of one or more of the sellers.

18
(6) Sales between spouses resulting from a judgment of
19dissolution of marriage or of legal separation of the parties or
20from a property settlement agreement incidental to that judgment.

21
(7) Sales by the Controller in the course of administering
22Chapter 7 (commencing with Section 1500) of Title 10 of Part 3
23of the Code of Civil Procedure.

24
(8) Sales under Chapter 7 (commencing with Section 3691) or
25Chapter 8 (commencing with Section 3771) of Part 6 of Division
261 of the Revenue and Taxation Code.

27
(9) Sales or exchanges to or from any governmental entity.

28
(b) Sales not subject to this article may be subject to other
29disclosure requirements, including those under Sections 8589.3,
308589.4, and 51183.5 of the Government Code and Sections 2621.9,
312694, and 4136 of the Public Resources Code. In sales not subject
32to this article, real estate licensees may make required disclosures
33in a separate writing.

34
(c) This section shall become operative on July 1, 2018.

end insert

35begin insert

begin insertSEC. 156.end insert

end insert

begin insertSection 1103.1.5 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.1.5.end insert

(a) For the purposes of this article, the definitions
37in Chapter 1 (commencing with Section 10000) of Part 1 of
38Division 4 of the Business and Professions Code shall apply.

39
(b) This section shall become operative on July 1, 2018.

end insert

40begin insert

begin insertSEC. 157.end insert

end insert

begin insertSection 1103.2 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

P142 1

1103.2.

(a) The disclosures required by this article are set forth
2in, and shall be made on a copy of, the following Natural Hazard
3Disclosure Statement:

NATURAL HAZARD DISCLOSURE STATEMENT

This statement applies to the following property:

The transferor and his or her agent(s) or a third-party consultant disclose the following information with the knowledge that even though this is not a warranty, prospective transferees may rely on this information in deciding whether and on what terms to purchase the subject property. Transferor hereby authorizes any agent(s) representing any principal(s) in this action to provide a copy of this statement to any person or entity in connection with any actual or anticipated sale of the property.
The following are representations made by the transferor and his or her agent(s) based on their knowledge and maps drawn by the state and federal governments. This information is a disclosure and is not intended to be part of any contract between the transferee and transferor.

THIS REAL PROPERTY LIES WITHIN THE FOLLOWING HAZARDOUS AREA(S):

	A SPECIAL FLOOD HAZARD AREA (Any type Zone “A” or “V”) designated by the Federal Emergency Management Agency.

	Yes ____ No ____ Do not know and information not available from local jurisdiction ____

	AN AREA OF POTENTIAL FLOODING shown on a dam failure inundation map pursuant to Section 8589.5 of the Government Code.

	Yes ____ No ____ Do not know and information not available from local jurisdiction ____

	A VERY HIGH FIRE HAZARD SEVERITY ZONE pursuant to Section 51178 or 51179 of the Government Code. The owner of this property is subject to the maintenance requirements of Section 51182 of the Government Code.

	Yes ____ No ____

	A WILDLAND AREA THAT MAY CONTAIN SUBSTANTIAL FOREST FIRE RISKS AND HAZARDS pursuant to Section 4125 of the Public Resources Code. The owner of this property is subject to the maintenance requirements of Section 4291 of the Public Resources Code. Additionally, it is not the state’s responsibility to provide fire protection services to any building or structure located within the wildlands unless the Department of Forestry and Fire Protection has entered into a cooperative agreement with a local agency for those purposes pursuant to Section 4142 of the Public Resources Code.

	Yes ____ No ____

	AN EARTHQUAKE FAULT ZONE pursuant to Section 2622 of the Public Resources Code.

	Yes ____ No ____

	A SEISMIC HAZARD ZONE pursuant to Section 2696 of the Public Resources Code.

	Yes (Landslide Zone)____________ Yes (Liquefaction Zone) ______ No ____ Map not yet released by state ____

THESE HAZARDS MAY LIMIT YOUR ABILITY TO DEVELOP THE REAL PROPERTY, TO OBTAIN INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A DISASTER.

THE MAPS ON WHICH THESE DISCLOSURES ARE BASED ESTIMATE WHERE NATURAL HAZARDS EXIST. THEY ARE NOT DEFINITIVE INDICATORS OF WHETHER OR NOT A PROPERTY WILL BE AFFECTED BY A NATURAL DISASTER. TRANSFEREE(S) AND TRANSFEROR(S) MAY WISH TO OBTAIN PROFESSIONAL ADVICE REGARDING THOSE HAZARDS AND OTHER HAZARDS THAT MAY AFFECT THE PROPERTY.

P144 339

Signature of Transferor(s)	Date
Signature of Transferor(s)	Date

Agent(s)	Date
Agent(s)	Date

Check only one of the following:

◻ Transferor(s) and their agent(s) represent that the information herein is true and correct to the best of their knowledge as of the date signed by the transferor(s) and agent(s).

◻ Transferor(s) and their agent(s) acknowledge that they have exercised good faith in the selection of a third-party report provider as required in Civil Code Section 1103.7, and that the representations made in this Natural Hazard Disclosure Statement are based upon information provided by the independent third-party disclosure provider as a substituted disclosure pursuant to Civil Code Section 1103.4. Neither transferor(s) nor their agent(s) (1) has independently verified the information contained in this statement and report or (2) is personally aware of any errors or inaccuracies in the information contained on the statement. This statement was prepared by the provider below:

Third-Party Disclosure Provider(s)	Date

Transferee represents that he or she has read and understands this document. Pursuant to Civil Code Section 1103.8, the representations made in this Natural Hazard Disclosure Statement do not constitute all of the transferor’s or agent’s disclosure obligations in this transaction.

Signature of Transferee(s)	Date
Signature of Transferee(s)	Date

P145 1(b) If an earthquake fault zone, seismic hazard zone, very high
2fire hazard severity zone, or wildland fire area map or
3accompanying information is not of sufficient accuracy or scale
4that a reasonable person can determine if the subject real property
5is included in a natural hazard area, the transferor or transferor’s
6agent shall mark “Yes” on the Natural Hazard Disclosure
7Statement. The transferor or transferor’s agent may mark “No” on
8the Natural Hazard Disclosure Statement if he or she attaches a
9report prepared pursuant to subdivision (c) of Section 1103.4 that
10verifies the property is not in the hazard zone. Nothing in this
11subdivision is intended to limit or abridge any existing duty of the
12transferor or the transferor’s agents to exercise reasonable care in
13making a determination under this subdivision.

14(c) If the Federal Emergency Management Agency has issued
15a Letter of Map Revision confirming that a property is no longer
16within a special flood hazard area, then the transferor or transferor’s
17agent may mark “No” on the Natural Hazard Disclosure Statement,
18even if the map has not yet been updated. The transferor or
19transferor’s agent shall attach a copy of the Letter of Map Revision
20to the disclosure statement.

21(d) If the Federal Emergency Management Agency has issued
22a Letter of Map Revision confirming that a property is within a
23special flood hazard area and the location of the letter has been
24posted pursuant to subdivision (g) of Section 8589.3 of the
25Government Code, then the transferor or transferor’s agent shall
26mark “Yes” on the Natural Hazard Disclosure Statement, even if
27the map has not yet been updated. The transferor or transferor’s
28agent shall attach a copy of the Letter of Map Revision to the
29disclosure statement.

30(e) The disclosure required pursuant to this article may be
31provided by the transferor and the transferor’s agent in the Local
32Option Real Estate Disclosure Statement described in Section
331102.6a, provided that the Local Option Real Estate Disclosure
34Statement includes substantially the same information and
35substantially the same warnings that are required by this section.

36(f) (1) The legal effect of a consultant’s report delivered to
37satisfy the exemption provided by Section 1103.4 is not changed
38when it is accompanied by a Natural Hazard Disclosure Statement.

39(2) A consultant’s report shall always be accompanied by a
40completed and signed Natural Hazard Disclosure Statement.

P146 1(3) In a disclosure statement required by this section, an agent
2and third-party provider may cause his or her name to be preprinted
3in lieu of an original signature in the portions of the form reserved
4for signatures. The use of a preprinted name shall not change the
5legal effect of the acknowledgment.

6(g) The disclosure required by this article is only a disclosure
7between the transferor, the transferor’s agents, and the transferee,
8and shall not be used by any other party, including, but not limited
9to, insurance companies, lenders, or governmental agencies, for
10any purpose.

11(h) In any transaction in which a transferor has accepted, prior
12to June 1, 1998, an offer to purchase, the transferor, or his or her
13agent, shall be deemed to have complied with the requirement of
14subdivision (a) if the transferor or agent delivers to the prospective
15transferee a statement that includes substantially the same
16information and warning as the Natural Hazard Disclosure
17Statement.

begin insert

18
(i) This section shall repeal on July 1, 2018.

end insert

19begin insert

begin insertSEC. 158.end insert

end insert

begin insertSection 1103.2 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.2.end insert

(a) The disclosures required by this article are set
21forth in, and shall be made on a copy of, the following Natural
22Hazard Disclosure Statement:

begin insert NATURAL HAZARD DISCLOSURE STATEMENT end insert
begin insert end insert
begin insert This statement applies to the following property: end insert
begin insert end insert
begin insert The seller and his or her real estate licensee(s) or a third-party consultant disclose the following information with the knowledge that even though this is not a warranty, prospective buyers may rely on this information in deciding whether and on what terms to purchase the subject property. Seller hereby authorizes any real estate licensee(s) representing any principal(s) in this action to provide a copy of this statement to any person or entity in connection with any actual or anticipated sale of the property. end insert
begin insert The following are representations made by the seller and his or her real estate licensee(s) based on their knowledge and maps drawn by the state and federal governments. This information is a disclosure and is not intended to be part of any contract between the seller and buyer. end insert
begin insert end insert
begin insert THIS REAL PROPERTY LIES WITHIN THE FOLLOWING HAZARDOUS AREA(S): end insert
begin insert end insert
begin insert end insert	begin insert A SPECIAL FLOOD HAZARD AREA (Any type Zone “A” or “V”) designated by the Federal Emergency Management Agency. end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert Yes ____ No ____ Do not know and information not available from local jurisdiction ____ end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert AN AREA OF POTENTIAL FLOODING shown on a dam failure inundation map pursuant to Section 8589.5 of the Government Code. end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert Yes ____ No ____ Do not know and information not available from local jurisdiction ____ end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert A VERY HIGH FIRE HAZARD SEVERITY ZONE pursuant to Section 51178 or 51179 of the Government Code. The owner of this property is subject to the maintenance requirements of Section 51182 of the Government Code. end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert Yes ____ No ____ end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert A WILDLAND AREA THAT MAY CONTAIN SUBSTANTIAL FOREST FIRE RISKS AND HAZARDS pursuant to Section 4125 of the Public Resources Code. The owner of this property is subject to the maintenance requirements of Section 4291 of the Public Resources Code. Additionally, it is not the state’s responsibility to provide fire protection services to any building or structure located within the wildlands unless the Department of Forestry and Fire Protection has entered into a cooperative agreement with a local agency for those purposes pursuant to Section 4142 of the Public Resources Code. end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert Yes ____ No ____ end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert AN EARTHQUAKE FAULT ZONE pursuant to Section 2622 of the Public Resources Code. end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert Yes ____ No ____ end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert A SEISMIC HAZARD ZONE pursuant to Section 2696 of the Public Resources Code. end insert
begin insert end insert	begin insert end insert
begin insert end insert	begin insert Yes (Landslide Zone)____________ Yes (Liquefaction Zone) ______ No ____ Map not yet released by state ____ end insert
begin insert end insert	begin insert end insert
begin insert THESE HAZARDS MAY LIMIT YOUR ABILITY TO DEVELOP THE REAL PROPERTY, TO OBTAIN INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A DISASTER. end insert
begin insert end insert
begin insert THE MAPS ON WHICH THESE DISCLOSURES ARE BASED ESTIMATE WHERE NATURAL HAZARDS EXIST. THEY ARE NOT DEFINITIVE INDICATORS OF WHETHER OR NOT A PROPERTY WILL BE AFFECTED BY A NATURAL DISASTER. SELLER(S) AND BUYER(S) MAY WISH TO OBTAIN PROFESSIONAL ADVICE REGARDING THOSE HAZARDS AND OTHER HAZARDS THAT MAY AFFECT THE PROPERTY. end insert

P148 20P148 19

begin insert Signature of Seller(s) end insert	begin insert Date end insert
begin insert Signature of Seller(s) end insert	begin insert Date end insert
begin insert end insert	begin insert end insert
begin insert Seller’s Licensee(s) end insert	begin insert Date end insert
begin insert Seller’s Licensee(s) end insert	begin insert Date end insert
begin insert end insert	begin insert end insert
begin insert Check only one of the following: end insert
begin insert end insert
begin insert ◻ Seller(s) and their real estate licensee(s) represent that the information herein is true and correct to the best of their knowledge as of the date signed by the seller(s) and real estate licensee(s). end insert
begin insert end insert
begin insert ◻ Seller(s) and their real estate licensee(s) acknowledge that they have exercised good faith in the selection of a third-party report provider as required in Civil Code Section 1103.7, and that the representations made in this Natural Hazard Disclosure Statement are based upon information provided by the independent third-party disclosure provider as a substituted disclosure pursuant to Civil Code Section 1103.4. Neither seller(s) nor their real estate licensee(s) (1) has independently verified the information contained in this statement and report or (2) is personally aware of any errors or inaccuracies in the information contained on the statement. This statement was prepared by the provider below: end insert
begin insert end insert
begin insert Third-Party Disclosure Provider(s) end insert	begin insert Date end insert
begin insert end insert	begin insert end insert
begin insert Buyer represents that he or she has read and understands this document. Pursuant to Civil Code Section 1103.8, the representations made in this Natural Hazard Disclosure Statement do not constitute all of the seller’s or real estate licensee’s disclosure obligations in this transaction. end insert
begin insert end insert
begin insert Signature of Buyer(s) end insert	begin insert Date end insert
begin insert Signature of Buyer(s) end insert	begin insert Date end insert

20
(b) If an earthquake fault zone, seismic hazard zone, very high
21fire hazard severity zone, or wildland fire area map or
22accompanying information is not of sufficient accuracy or scale
23that a reasonable person can determine if the subject real property
24is included in a natural hazard area, the seller or seller’s real
25estate licensee shall mark “Yes” on the Natural Hazard Disclosure
26Statement. The seller or seller’s real estate licensee may mark
27“No” on the Natural Hazard Disclosure Statement if he or she
28attaches a report prepared pursuant to subdivision (c) of Section
291103.4 that verifies the property is not in the hazard zone. Nothing
30in this subdivision is intended to limit or abridge any existing duty
31of the seller or the seller’s real estate licensees to exercise
32reasonable care in making a determination under this subdivision.

33
(c) If the Federal Emergency Management Agency has issued
34a Letter of Map Revision confirming that a property is no longer
35within a special flood hazard area, then the seller or seller’s real
36estate licensee may mark “No” on the Natural Hazard Disclosure
37Statement, even if the map has not yet been updated. The seller or
38seller’s real estate licensee shall attach a copy of the Letter of
39Map Revision to the disclosure statement.

P150 1
(d) If the Federal Emergency Management Agency has issued
2a Letter of Map Revision confirming that a property is within a
3special flood hazard area and the location of the letter has been
4posted pursuant to subdivision (g) of Section 8589.3 of the
5Government Code, then the seller or seller’s’s real estate licensee
6shall mark “Yes” on the Natural Hazard Disclosure Statement,
7even if the map has not yet been updated. The seller or seller’s
8real estate licensee shall attach a copy of the Letter of Map
9Revision to the disclosure statement.

10
(e) The disclosure required pursuant to this article may be
11provided by the seller or seller’s real estate licensee in the Local
12Option Real Estate Disclosure Statement described in Section
131102.6a, provided that the Local Option Real Estate Disclosure
14Statement includes substantially the same information and
15substantially the same warnings that are required by this section.

16
(f) (1) The legal effect of a consultant’s report delivered to
17satisfy the exemption provided by Section 1103.4 is not changed
18when it is accompanied by a Natural Hazard Disclosure Statement.

19
(2) A consultant’s report shall always be accompanied by a
20completed and signed Natural Hazard Disclosure Statement.

21
(3) In a disclosure statement required by this section, a real
22estate licensee and third-party provider may cause his or her name
23to be preprinted in lieu of an original signature in the portions of
24the form reserved for signatures. The use of a preprinted name
25shall not change the legal effect of the acknowledgment.

26
(g) The disclosure required by this article is only a disclosure
27between the seller, the seller’s real estate licensees, and the
28prospective buyer, and shall not be used by any other party,
29including, but not limited to, insurance companies, lenders, or
30governmental agencies, for any purpose.

31
(h) In any transaction in which a seller has accepted, prior to
32June 1, 1998, an offer to purchase, the seller, or his or her real
33estate licensee, shall be deemed to have complied with the
34requirement of subdivision (a) if the seller or real estate licensee
35delivers to the prospective buyer a statement that includes
36substantially the same information and warning as the Natural
37Hazard Disclosure Statement.

38
(i) This section shall become operative on July 1, 2018.

end insert

39begin insert

begin insertSEC. 159.end insert

end insert

begin insertSection 1103.3 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

P151 1

1103.3.

(a) The transferor of any real property subject to this
2article shall deliver to the prospective transferee the written
3statement required by this article, as follows:

4(1) In the case of a sale, as soon as practicable before transfer
5of title.

6(2) In the case of transfer by a real property sales contract, as
7defined in Section 2985, or by a lease together with an option to
8purchase, or a ground lease coupled with improvements, as soon
9as practicable before execution of the contract. For the purpose of
10this subdivision, “execution” means the making or acceptance of
11an offer.

12(b) The transferor shall indicate compliance with this article
13either on the receipt for deposit, the real property sales contract,
14the lease, any addendum attached thereto, or on a separate
15document.

16(c) If any disclosure, or any material amendment of any
17disclosure, required to be made pursuant to this article is delivered
18after the execution of an offer to purchase, the transferee shall have
19three days after delivery in person or five days after delivery by
20deposit in the mail to terminate his or her offer by delivery of a
21written notice of termination to the transferor or the transferor’s
22agent.

begin insert

23
(d) This section shall repeal on July 1, 2018.

end insert

24begin insert

begin insertSEC. 160.end insert

end insert

begin insertSection 1103.3 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.3.end insert

(a) The seller of any real property subject to this
26article shall deliver to the prospective buyer the written statement
27required by this article, as follows:

28
(1) In the case of a sale, as soon as practicable before transfer
29of title.

30
(2) In the case of sale by a real property sales contract, as
31defined in Section 2985, or by a lease together with an option to
32purchase, or a ground lease coupled with improvements, as soon
33as practicable before the prospective buyer’s execution of the
34contract. For the purpose of this subdivision, “execution” means
35the making or acceptance of an offer.

36
(b) The seller shall indicate compliance with this article on the
37real property sales contract, the lease, any addendum attached
38thereto, or on a separate document.

39
(c) If any disclosure, or any material amendment of any
40disclosure, required to be made pursuant to this article is delivered
P152 1after the execution of an offer to purchase, the prospective buyer
2shall have three days after delivery in person or five days after
3delivery by deposit in the mail to terminate his or her offer by
4delivery of a written notice of termination to the seller or the
5seller’s real estate licensee.

6
(d) This section shall become operative on July 1, 2018.

end insert

7begin insert

begin insertSEC. 161.end insert

end insert

begin insertSection 1103.4 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

1103.4.

(a) Neither the transferor nor any listing or selling
9agent shall be liable for any error, inaccuracy, or omission of any
10information delivered pursuant to this article if the error,
11inaccuracy, or omission was not within the personal knowledge
12of the transferor or the listing or selling agent, and was based on
13information timely provided by public agencies or by other persons
14providing information as specified in subdivision (c) that is
15required to be disclosed pursuant to this article, and ordinary care
16was exercised in obtaining and transmitting the information.

17(b) The delivery of any information required to be disclosed by
18this article to a prospective transferee by a public agency or other
19person providing information required to be disclosed pursuant to
20 this article shall be deemed to comply with the requirements of
21this article and shall relieve the transferor or any listing or selling
22agent of any further duty under this article with respect to that item
23of information.

24(c) The delivery of a report or opinion prepared by a licensed
25engineer, land surveyor, geologist, or expert in natural hazard
26discovery dealing with matters within the scope of the
27professional’s license or expertise shall be sufficient compliance
28for application of the exemption provided by subdivision (a) if the
29information is provided to the prospective transferee pursuant to
30a request therefor, whether written or oral. In responding to that
31request, an expert may indicate, in writing, an understanding that
32the information provided will be used in fulfilling the requirements
33of Section 1103.2 and, if so, shall indicate the required disclosures,
34or parts thereof, to which the information being furnished is
35applicable. Where that statement is furnished, the expert shall not
36be responsible for any items of information, or parts thereof, other
37than those expressly set forth in the statement.

38(1) In responding to the request, the expert shall determine
39whether the property is within an airport influence area as defined
40in subdivision (b) of Section 11010 of the Business and Professions
P153 1Code. If the property is within an airport influence area, the report
2shall contain the following statement:

NOTICE OF AIRPORT IN VICINITY

This property is presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you.

P153 15

16(2) In responding to the request, the expert shall determine
17whether the property is within the jurisdiction of the San Francisco
18Bay Conservation and Development Commission, as defined in
19Section 66620 of the Government Code. If the property is within
20the commission’s jurisdiction, the report shall contain the following
21notice:
22 NOTICE OF SAN FRANCISCO BAY CONSERVATION AND
23DEVELOPMENT COMMISSION JURISDICTION

24This property is located within the jurisdiction of the San
25Francisco Bay Conservation and Development Commission. Use
26and development of property within the commission’s jurisdiction
27may be subject to special regulations, restrictions, and permit
28requirements. You may wish to investigate and determine whether
29they are acceptable to you and your intended use of the property
30before you complete your transaction.

31(3) In responding to the request, the expert shall determine
32whether the property is presently located within one mile of a
33parcel of real property designated as “Prime Farmland,” “Farmland
34of Statewide Importance,” “Unique Farmland,” “Farmland of Local
35Importance,” or “Grazing Land” on the most current “Important
36Farmland Map” issued by the California Department of
37Conservation, Division of Land Resource Protection, utilizing
38solely the county-level GIS map data, if any, available on the
39Farmland Mapping and Monitoring Program Web site. If the
P154 1residential property is within one mile of a designated farmland
2area, the report shall contain the following notice:
3

4NOTICE OF RIGHT TO FARM

5This property is located within one mile of a farm or ranch land
6designated on the current county-level GIS “Important Farmland
7Map,” issued by the California Department of Conservation,
8Division of Land Resource Protection. Accordingly, the property
9may be subject to inconveniences or discomforts resulting from
10agricultural operations that are a normal and necessary aspect of
11living in a community with a strong rural character and a healthy
12agricultural sector. Customary agricultural practices in farm
13operations may include, but are not limited to, noise, odors, dust,
14light, insects, the operation of pumps and machinery, the storage
15and disposal of manure, bee pollination, and the ground or aerial
16application of fertilizers, pesticides, and herbicides. These
17agricultural practices may occur at any time during the 24-hour
18day. Individual sensitivities to those practices can vary from person
19to person. You may wish to consider the impacts of such
20agricultural practices before you complete your purchase. Please
21be advised that you may be barred from obtaining legal remedies
22against agricultural practices conducted in a manner consistent
23with proper and accepted customs and standards pursuant to
24Section 3482.5 of the Civil Code or any pertinent local ordinance.

25(4) In responding to the request, the expert shall determine,
26utilizing map coordinate data made available by the Office of Mine
27Reclamation, whether the property is presently located within one
28mile of a mine operation for which map coordinate data has been
29reported to the director pursuant to Section 2207 of the Public
30Resources Code. If the expert determines, from the available map
31coordinate data, that the residential property is located within one
32mile of a mine operation, the report shall contain the following
33notice:

35NOTICE OF MINING OPERATIONS:

36This property is located within one mile of a mine operation for
37which the mine owner or operator has reported mine location data
38to the Department of Conservation pursuant to Section 2207 of
39the Public Resources Code. Accordingly, the property may be
40subject to inconveniences resulting from mining operations. You
P155 1may wish to consider the impacts of these practices before you
2complete your transaction.

begin insert

3
(d) This section shall repeal on July 1, 2018.

end insert

4begin insert

begin insertSEC. 162.end insert

end insert

begin insertSection 1103.4 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.4.end insert

(a) Neither the seller nor any listing licensee or
6buyer’s licensee shall be liable for any error, inaccuracy, or
7omission of any information delivered pursuant to this article if
8the error, inaccuracy, or omission was not within the personal
9knowledge of the seller or the listing licensee or buyer’s licensee,
10and was based on information timely provided by public agencies
11or by other persons providing information as specified in
12subdivision (c) that is required to be disclosed pursuant to this
13article, and ordinary care was exercised in obtaining and
14transmitting the information.

15
(b) The delivery of any information required to be disclosed by
16this article to a prospective buyer by a public agency or other
17person providing information required to be disclosed pursuant
18to this article shall be deemed to comply with the requirements of
19this article and shall relieve the seller and buyer’s licensee of any
20further duty under this article with respect to that item of
21information.

22
(c) The delivery of a report or opinion prepared by a licensed
23engineer, land surveyor, geologist, or expert in natural hazard
24discovery dealing with matters within the scope of the
25professional’s license or expertise shall be sufficient compliance
26for application of the exemption provided by subdivision (a) if the
27information is provided to the prospective buyer pursuant to a
28request therefor, whether written or oral.

29
(1) In responding to the request, the expert shall determine
30whether the property is within an airport influence area as defined
31in subdivision (b) of Section 11010 of the Business and Professions
32Code. If the property is within an airport influence area, the report
33shall contain the following statement:

begin insert NOTICE OF AIRPORT IN VICINITY end insert
begin insert end insert
begin insert This property is presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you. end insert

P156 6

7
(2) In responding to the request, the expert shall determine
8whether the property is within the jurisdiction of the San Francisco
9Bay Conservation and Development Commission, as defined in
10Section 66620 of the Government Code. If the property is within
11the commission’s jurisdiction, the report shall contain the following
12notice:
13
NOTICE OF SAN FRANCISCO BAY CONSERVATION AND
14DEVELOPMENT COMMISSION JURISDICTION

15
This property is located within the jurisdiction of the San
16Francisco Bay Conservation and Development Commission. Use
17and development of property within the commission’s jurisdiction
18may be subject to special regulations, restrictions, and permit
19 requirements. You may wish to investigate and determine whether
20they are acceptable to you and your intended use of the property
21before you complete your transaction.

22
(3) In responding to the request, the expert shall determine
23whether the property is presently located within one mile of a
24parcel of real property designated as “Prime Farmland,”
25“Farmland of Statewide Importance,” “Unique Farmland,”
26“Farmland of Local Importance,” or “Grazing Land” on the most
27current “Important Farmland Map” issued by the California
28Department of Conservation, Division of Land Resource
29Protection, utilizing solely the county-level GIS map data, if any,
30available on the Farmland Mapping and Monitoring Program
31Web site. If the residential property is within one mile of a
32designated farmland area, the report shall contain the following
33notice:
34

35
NOTICE OF RIGHT TO FARM

36
This property is located within one mile of a farm or ranch land
37designated on the current county-level GIS “Important Farmland
38Map,” issued by the California Department of Conservation,
39Division of Land Resource Protection. Accordingly, the property
40may be subject to inconveniences or discomforts resulting from
P157 1agricultural operations that are a normal and necessary aspect
2of living in a community with a strong rural character and a
3healthy agricultural sector. Customary agricultural practices in
4farm operations may include, but are not limited to, noise, odors,
5dust, light, insects, the operation of pumps and machinery, the
6storage and disposal of manure, bee pollination, and the ground
7or aerial application of fertilizers, pesticides, and herbicides. These
8agricultural practices may occur at any time during the 24-hour
9day. Individual sensitivities to those practices can vary from person
10to person. You may wish to consider the impacts of such
11agricultural practices before you complete your purchase. Please
12be advised that you may be barred from obtaining legal remedies
13against agricultural practices conducted in a manner consistent
14with proper and accepted customs and standards pursuant to
15Section 3482.5 of the Civil Code or any pertinent local ordinance.

begin insert(a)end insertbegin insert end insert Any disclosure made pursuant to this article may
21be amended in writing by the transferor or his or her agent, but the
22amendment shall be subject to Section 1103.3.

begin insert

23
(b) This section shall repeal on July 1, 2018.

end insert

24begin insert

begin insertSEC. 168.end insert

end insert

begin insertSection 1103.9 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert1103.9.end insert

(a) Any disclosure made pursuant to this article may
26be amended in writing by the seller or his or her real estate
27licensee, but the amendment shall be subject to Section 1103.3.

end insert

23begin insert

begin insertSEC. 171.end insert

end insert

begin insertSection 1103.14 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
24read:end insert

1103.14.

(a) As used in this article, “listing agent” means
26listing agent as defined in subdivision (f) of Section 1086.

27(b) As used in this article, “selling agent” means selling agent
28as defined in subdivision (g) of Section 1086, exclusive of the
29requirement that the agent be a participant in a multiple listing
30service as defined in Section 1087.

begin insert

end insert

33begin insert

begin insertSEC. 174.end insert

end insert

begin insertSection 2079.6 of the end insertbegin insertCivil Codeend insertbegin insert is amended to read:end insert

2079.6.

begin insert(a)end insertbegin insert end insert This article does not apply to transfers which are
35required to be preceded by the furnishing, to a prospective
36transferee, of a copy of a public report pursuant to Section 11018.1
37or Section 11234 of the Business and Professions Code and
38transfers that can be made without a public report pursuant to
39Section 11010.4 of the Business and Professions Code, unless the
40property has been previously occupied.

begin insert

P162 1
(b) This section shall repeal on July 1, 2018.

end insert

2begin insert

begin insertSEC. 175.end insert

end insert

begin insertSection 2079.6 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.6.end insert

(a) This article does not apply to sales which are
4required to be preceded by the furnishing, to a prospective buyer,
5of a copy of a public report pursuant to Section 11018.1 or Section
611234 of the Business and Professions Code and sales that can
7be made without a public report pursuant to Section 11010.4 of
8the Business and Professions Code, unless the property has been
9previously occupied.

begin insertSEC. 182.end insert

end insert

begin insertSection 2079.10 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
15read:end insert

2079.10.

(a) If the informational booklet published pursuant
17to Section 25402.9 of the Public Resources Code, concerning the
18statewide home energy rating program adopted pursuant to Section
1925942 of the Public Resources Code, is delivered to a transferee
20in connection with the transfer of real property, including, but not
21limited to, property specified in Section 1102, manufactured homes
22as defined in Section 18007 of the Health and Safety Code, and
23property subject to Chapter 7.5 (commencing with Section 2621)
24of Division 2 of the Public Resources Code, the seller or broker
25is not required to provide information additional to that contained
26in the booklet concerning home energy ratings, and the information
27in the booklet shall be deemed to be adequate to inform the
28transferee about the existence of a statewide home energy rating
29program.

30(b) Notwithstanding subdivision (a), nothing in this section
31alters any existing duty of the seller or broker under any other law
32including, but not limited to, the duties of a seller or broker under
33this article, Article 1.5 (commencing with Section 1102) of Chapter
342 of Title 4 of Part 4 of Division 2 of the Civil Code, or Chapter
357.5 (commencing with Section 2621) of Division 2 of the Public
36Resources Code, to disclose information concerning the existence
37of a home energy rating program affecting the real property.

38(c) If the informational booklet or materials described in Section
39375.5 of the Water Code concerning water conservation and water
40conservation programs are delivered to a transferee in connection
P166 1with the transfer of real property, including property described in
2subdivision (a), the seller or broker is not required to provide
3information concerning water conservation and water conservation
4programs that is additional to that contained in the booklet or
5materials, and the information in the booklet or materials shall be
6deemed to be adequate to inform the transferee about water
7conservation and water conservation programs.

begin insert

8
(d) This section shall repeal on July 1, 2018.

29(c) Nothing in this section shall alter any existing duty under
30any other statute or decisional law imposed upon the seller or
31broker, including, but not limited to, the duties of a seller or broker
32under this article, or the duties of a seller or broker under Article
331.5 (commencing with Section 1102) of Chapter 2 of Title 4 of
34Part 4 of Division 2.

begin insert

35
(d) This section shall repeal on July 1, 2018.

end insert

36begin insert

begin insertSEC. 185.end insert

end insert

begin insertSection 2079.10.5 is added to the end insertbegin insertCivil Codeend insertbegin insert, to
37read:end insert

begin insert

begin insert2079.10.5.end insert

(a) Every contract for the sale of residential real
39property entered into on or after July 1, 2013, shall contain, in
40not less than 8-point type, a notice as specified below:

P168 2
NOTICE REGARDING GAS AND HAZARDOUS LIQUID
3TRANSMISSION PIPELINES

4
This notice is being provided simply to inform you that
5information about the general location of gas and hazardous liquid
6transmission pipelines is available to the public via the National
7Pipeline Mapping System (NPMS) Internet Web site maintained
8by the United States Department of Transportation at
9http://www.npms.phmsa.dot.gov/. To seek further information
10about possible transmission pipelines near the property, you may
11 contact your local gas utility or other pipeline operators in the
12area. Contact information for pipeline operators is searchable by
13ZIP Code and county on the NPMS Internet Web site.

15
(b) Upon delivery of the notice to the buyer of the real property,
16the seller or broker is not required to provide information in
17addition to that contained in the notice regarding gas and
18hazardous liquid transmission pipelines in subdivision (a). The
19information in the notice shall be deemed to be adequate to inform
20the buyer about the existence of a statewide database of the
21locations of gas and hazardous liquid transmission pipelines and
22information from the database regarding those locations.

23
(c) Nothing in this section shall alter any existing duty under
24any other statute or decisional law imposed upon the seller or
25broker, including, but not limited to, the duties of a seller or broker
26under this article, or the duties of a seller or broker under Article
271.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part
284 of Division 2.

29
(d) This section shall become operative on July 1, 2018.

end insert

30begin insert

begin insertSEC. 186.end insert

end insert

begin insertSection 2079.10a of the end insertbegin insertCivil Codeend insertbegin insert is amended to
31read:end insert

2079.10a.

(a) Every lease or rental agreement for residential
33real property entered into on or after July 1, 1999, and every
34contract for the sale of residential real property comprised of one
35to four dwelling units entered into on or after that date, shall
36contain, in not less than 8-point type, a notice as specified in
37paragraph (1), (2), or (3).

38(1) A contract entered into by the parties on or after July 1,
391999, and before September 1, 2005, shall contain the following
40notice:

P169 1Notice: The California Department of Justice, sheriff’s
2departments, police departments serving jurisdictions of 200,000
3or more, and many other local law enforcement authorities maintain
4for public access a database of the locations of persons required
5to register pursuant to paragraph (1) of subdivision (a) of Section
6290.4 of the Penal Code. The database is updated on a quarterly
7basis and is a source of information about the presence of these
8individuals in any neighborhood. The Department of Justice also
9maintains a Sex Offender Identification Line through which
10inquiries about individuals may be made. This is a “900” telephone
11service. Callers must have specific information about individuals
12they are checking. Information regarding neighborhoods is not
13available through the “900” telephone service.

14(2) A contract entered into by the parties on or after September
151, 2005, and before April 1, 2006, shall contain either the notice
16specified in paragraph (1) or the notice specified in paragraph (3).

17(3) A contract entered into by the parties on or after April 1,
182006, shall contain the following notice:

19Notice: Pursuant to Section 290.46 of the Penal Code,
20information about specified registered sex offenders is made
21available to the public via an Internet Web site maintained by the
22Department of Justice at www.meganslaw.ca.gov. Depending on
23an offender’s criminal history, this information will include either
24the address at which the offender resides or the community of
25residence and ZIP Code in which he or she resides.

26(b) Subject to subdivision (c), upon delivery of the notice to the
27lessee or transferee of the real property, the lessor, seller, or broker
28is not required to provide information in addition to that contained
29in the notice regarding the proximity of registered sex offenders.
30The information in the notice shall be deemed to be adequate to
31inform the lessee or transferee about the existence of a statewide
32database of the locations of registered sex offenders and
33 information from the database regarding those locations. The
34information in the notice shall not give rise to any cause of action
35against the disclosing party by a registered sex offender.

36(c) Notwithstanding subdivisions (a) and (b), nothing in this
37section shall alter any existing duty of the lessor, seller, or broker
38under any other statute or decisional law including, but not limited
39to, the duties of a lessor, seller, or broker under this article, or the
P170 1duties of a seller or broker under Article 1.5 (commencing with
2Section 1102) of Chapter 2 of Title 4 of Part 4 of Division 2.

begin insert

3
(d) This section shall repeal on July 1, 2018.

end insert

4begin insert

begin insertSEC. 187.end insert

end insert

begin insertSection 2079.10a is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.10a.end insert

(a) Every lease or rental agreement for residential
6real property entered into on or after July 1, 1999, and every
7contract for the sale of residential real property comprised of one
8to four dwelling units entered into on or after that date, shall
9contain, in not less than 8-point type, a notice as specified in
10paragraph (1), (2), or (3).

11
(1) A contract entered into by the parties on or after July 1,
121999, and before September 1, 2005, shall contain the following
13notice:

14
Notice: The California Department of Justice, sheriff’s
15departments, police departments serving jurisdictions of 200,000
16or more, and many other local law enforcement authorities
17maintain for public access a database of the locations of persons
18required to register pursuant to paragraph (1) of subdivision (a)
19of Section 290.4 of the Penal Code. The database is updated on a
20quarterly basis and is a source of information about the presence
21of these individuals in any neighborhood. The Department of
22Justice also maintains a Sex Offender Identification Line through
23which inquiries about individuals may be made. This is a “900”
24telephone service. Callers shall have specific information about
25individuals they are checking. Information regarding
26neighborhoods is not available through the “900” telephone
27service.

28
(2) A contract entered into by the parties on or after September
291, 2005, and before April 1, 2006, shall contain either the notice
30specified in paragraph (1) or the notice specified in paragraph
31(3).

32
(3) A contract entered into by the parties on or after April 1,
332006, shall contain the following notice:

34
Notice: Pursuant to Section 290.46 of the Penal Code,
35information about specified registered sex offenders is made
36available to the public via an Internet Web site maintained by the
37Department of Justice at www.meganslaw.ca.gov. Depending on
38an offender’s criminal history, this information will include either
39the address at which the offender resides or the community of
40residence and ZIP Code in which he or she resides.

P171 1
(b) Subject to subdivision (c), upon delivery of the notice to the
2lessee or buyer of the real property, the lessor, seller, or broker
3is not required to provide information in addition to that contained
4in the notice regarding the proximity of registered sex offenders.
5The information in the notice shall be deemed to be adequate to
6inform the lessee or buyer about the existence of a statewide
7database of the locations of registered sex offenders and
8information from the database regarding those locations. The
9information in the notice shall not give rise to any cause of action
10against the disclosing party by a registered sex offender.

11
(c) Notwithstanding subdivisions (a) and (b), nothing in this
12section shall alter any existing duty of the lessor, seller, or broker
13under any other statute or decisional law including, but not limited
14to, the duties of a lessor, seller, or broker under this article, or the
15duties of a seller or broker under Article 1.5 (commencing with
16Section 1102) of Chapter 2 of Title 4 of Part 4 of Division 2.

17
(d) This section shall become operative on July 1, 2018.

end insert

18begin insert

begin insertSEC. 188.end insert

end insert

begin insertSection 2079.13 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
19read:end insert

2079.13.

As used in Sections 2079.14 to 2079.24, inclusive,
21the following terms have the following meanings:

22(a) “Agent” means a person acting under provisions of Title 9
23(commencing with Section 2295) in a real property transaction,
24and includes a person who is licensed as a real estate broker under
25Chapter 3 (commencing with Section 10130) of Part 1 of Division
264 of the Business and Professions Code, and under whose license
27a listing is executed or an offer to purchase is obtained.

28(b) “Associate licensee” means a person who is licensed as a
29real estate broker or salesperson under Chapter 3 (commencing
30with Section 10130) of Part 1 of Division 4 of the Business and
31Professions Code and who is either licensed under a broker or has
32entered into a written contract with a broker to act as the broker’s
33agent in connection with acts requiring a real estate license and to
34function under the broker’s supervision in the capacity of an
35associate licensee.

36The agent in the real property transaction bears responsibility
37for his or her associate licensees who perform as agents of the
38agent. When an associate licensee owes a duty to any principal,
39or to any buyer or seller who is not a principal, in a real property
P172 1transaction, that duty is equivalent to the duty owed to that party
2by the broker for whom the associate licensee functions.

3(c) “Buyer” means a transferee in a real property transaction,
4and includes a person who executes an offer to purchase real
5property from a seller through an agent, or who seeks the services
6of an agent in more than a casual, transitory, or preliminary manner,
7with the object of entering into a real property transaction. “Buyer”
8includes vendee or lessee.

9(d) “Commercial real property” means all real property in the
10state, except single-family residential real property, dwelling units
11made subject to Chapter 2 (commencing with Section 1940) of
12Title 5, mobilehomes, as defined in Section 798.3, or recreational
13vehicles, as defined in Section 799.29.

14(e) “Dual agent” means an agent acting, either directly or
15through an associate licensee, as agent for both the seller and the
16buyer in a real property transaction.

17(f) “Listing agreement” means a contract between an owner of
18real property and an agent, by which the agent has been authorized
19to sell the real property or to find or obtain a buyer.

20(g) “Listing agent” means a person who has obtained a listing
21of real property to act as an agent for compensation.

22(h) “Listing price” is the amount expressed in dollars specified
23in the listing for which the seller is willing to sell the real property
24through the listing agent.

25(i) “Offering price” is the amount expressed in dollars specified
26in an offer to purchase for which the buyer is willing to buy the
27real property.

28(j) “Offer to purchase” means a written contract executed by a
29buyer acting through a selling agent that becomes the contract for
30the sale of the real property upon acceptance by the seller.

31(k) “Real property” means any estate specified by subdivision
32(1) or (2) of Section 761 in property that constitutes or is improved
33with one to four dwelling units, any commercial real property, any
34 leasehold in these types of property exceeding one year’s duration,
35and mobilehomes, when offered for sale or sold through an agent
36pursuant to the authority contained in Section 10131.6 of the
37Business and Professions Code.

38(l) “Real property transaction” means a transaction for the sale
39of real property in which an agent is employed by one or more of
P173 1the principals to act in that transaction, and includes a listing or
2an offer to purchase.

3(m) “Sell,” “sale,” or “sold” refers to a transaction for the
4transfer of real property from the seller to the buyer, and includes
5exchanges of real property between the seller and buyer,
6transactions for the creation of a real property sales contract within
7the meaning of Section 2985, and transactions for the creation of
8a leasehold exceeding one year’s duration.

9(n) “Seller” means the transferor in a real property transaction,
10and includes an owner who lists real property with an agent,
11whether or not a transfer results, or who receives an offer to
12purchase real property of which he or she is the owner from an
13agent on behalf of another. “Seller” includes both a vendor and a
14lessor.

15(o) “Selling agent” means a listing agent who acts alone, or an
16agent who acts in cooperation with a listing agent, and who sells
17or finds and obtains a buyer for the real property, or an agent who
18locates property for a buyer or who finds a buyer for a property
19for which no listing exists and presents an offer to purchase to the
20seller.

12begin insert

begin insertSEC. 193.end insert

end insert

begin insertSection 2079.15 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.15.end insert

(a) In any circumstance in which the seller or buyer
14refuses to sign an acknowledgment of receipt pursuant to Section
152079.14, the real estate broker, or an associate licensee acting for
16a real estate broker, shall set forth, sign, and date a written
17declaration of the facts of the refusal.

18
(b) This section shall become operative on July 1, 2018.

end insert

19begin insert

begin insertSEC. 194.end insert

end insert

begin insertSection 2079.16 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
20read:end insert

2079.16.

The disclosure form required by Section 2079.14
22shall have Sections 2079.13 to 2079.24, inclusive, excluding this
23section, printed on the back, and on the front of the disclosure form
24the following shall appear:

25
26DISCLOSURE REGARDING
27REAL ESTATE AGENCY RELATIONSHIP
28(As required by the Civil Code)
29

30When you enter into a discussion with a real estate agent
31regarding a real estate transaction, you should from the outset
32understand what type of agency relationship or representation you
33wish to have with the agent in the transaction.

34
35SELLER’S AGENT
36

37A Seller’s agent under a listing agreement with the Seller acts
38as the agent for the Seller only. A Seller’s agent or a subagent of
39that agent has the following affirmative obligations:
40To the Seller:

P176 1A fiduciary duty of utmost care, integrity, honesty, and loyalty
2in dealings with the Seller.
3To the Buyer and the Seller:

4(a) Diligent exercise of reasonable skill and care in performance
5of the agent’s duties.

6(b) A duty of honest and fair dealing and good faith.

7(c) A duty to disclose all facts known to the agent materially
8affecting the value or desirability of the property that are not known
9to, or within the diligent attention and observation of, the parties.

10An agent is not obligated to reveal to either party any confidential
11information obtained from the other party that does not involve
12the affirmative duties set forth above.

13
14BUYER’S AGENT
15

16A selling agent can, with a Buyer’s consent, agree to act as agent
17for the Buyer only. In these situations, the agent is not the Seller’s
18agent, even if by agreement the agent may receive compensation
19for services rendered, either in full or in part from the Seller. An
20agent acting only for a Buyer has the following affirmative
21obligations:
22To the Buyer:

23A fiduciary duty of utmost care, integrity, honesty, and loyalty
24in dealings with the Buyer.
25To the Buyer and the Seller:

26(a) Diligent exercise of reasonable skill and care in performance
27of the agent’s duties.

28(b) A duty of honest and fair dealing and good faith.

29(c) A duty to disclose all facts known to the agent materially
30affecting the value or desirability of the property that are not known
31to, or within the diligent attention and observation of, the parties.
32An agent is not obligated to reveal to either party any confidential
33information obtained from the other party that does not involve
34the affirmative duties set forth above.

35
36AGENT REPRESENTING BOTH SELLER AND BUYER
37

38A real estate agent, either acting directly or through one or more
39associate licensees, can legally be the agent of both the Seller and
P177 1the Buyer in a transaction, but only with the knowledge and consent
2of both the Seller and the Buyer.

3In a dual agency situation, the agent has the following affirmative
4obligations to both the Seller and the Buyer:

5(a) A fiduciary duty of utmost care, integrity,~~begin delete honestyend delete~~begin insert honesty,end insert
6 and loyalty in the dealings with either the Seller or the Buyer.

7(b) Other duties to the Seller and the Buyer as stated above in
8their respective sections.

9In representing both Seller and Buyer, the agent may not, without
10the express permission of the respective party, disclose to the other
11party that the Seller will accept a price less than the listing price
12or that the Buyer will pay a price greater than the price offered.

13The above duties of the agent in a real estate transaction do not
14relieve a Seller or Buyer from the responsibility to protect his or
15her own interests. You should carefully read all agreements to
16assure that they adequately express your understanding of the
17transaction. A real estate agent is a person qualified to advise about
18real estate. If legal or tax advice is desired, consult a competent
19professional.

20Throughout your real property transaction you may receive more
21than one disclosure form, depending upon the number of agents
22assisting in the transaction. The law requires each agent with whom
23you have more than a casual relationship to present you with this
24disclosure form. You should read its contents each time it is
25presented to you, considering the relationship between you and
26the real estate agent in your specific transaction.

27This disclosure form includes the provisions of Sections 2079.13
28to 2079.24, inclusive, of the Civil Code set forth on the reverse
29hereof. Read it carefully.


Agent (date)	Buyer/Seller (date)
begin insert (Signature) end insert	(Signature)

Associate Licensee (date)	Buyer/Seller (date)
(Signature)	(Signature)

P177 37

begin insert

38
This section shall repeal on July 1, 2018.

end insert

39begin insert

begin insertSEC. 195.end insert

end insert

begin insertSection 2079.16 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

P178 1

begin insert2079.16.end insert

The disclosure form required by Section 2079.14
2shall contain at a minimum the following:

3

4
DISCLOSURE REGARDING
5
REAL ESTATE RELATIONSHIPS WITH LICENSEES
6
(As required by Section 2079.14 of the Civil Code)
7

8
When you enter into a relationship with a real estate broker
9regarding a real estate transaction, you should from the outset
10understand what type of representation you wish to have with the
11broker in the transaction.

12

13
SELLER’S BROKER
14

15
A Seller’s broker under a listing agreement with the Seller acts
16as the broker for the Seller only. A Seller’s broker has the following
17affirmative obligations:
18
To the Seller:

19
A fiduciary duty of care, integrity, honesty, and loyalty in
20dealings with the Seller.
21
To the Buyer and the Seller:

22
(a) Diligent exercise of reasonable skill and care in performance
23of the broker’s duties.

24
(b) A duty of honest and fair dealing and good faith.

25
(c) A duty to disclose all facts known to the broker materially
26affecting the value or desirability of the property that are not
27known to, or within the diligent attention and observation of, the
28parties.

29
(d) A Seller’s broker may have other listing agreements with
30other Sellers.

31
A broker is not obligated to reveal to either party any
32confidential information obtained from the other party or from
33other clients that does not involve the affirmative duties set forth
34above. Confidential information includes, but is not limited to,
35facts relating to the party’s financial position, motivations,
36bargaining position, or other personal information that may impact
37price or price-related issues.

P179 1
BUYER’S BROKER
2

3
A broker can, with the Buyer’s agreement, agree to act as broker
4for the Buyer only. The Buyer’s broker may receive compensation
5for services rendered, either in full or in part from the Seller, but
6that does not make the Buyer’s broker the Seller’s broker. A broker
7acting for a Buyer has the following affirmative obligations:
8
To the Buyer:

9
A fiduciary duty of care, integrity, honesty, and loyalty in
10dealings with the Buyer.
11
To the Buyer and the Seller:

12
(a) Diligent exercise of reasonable skill and care in performance
13of the broker’s duties.

14
(b) A duty of honest and fair dealing and good faith.

15
(c) A duty to disclose all facts known to the real estate broker
16materially affecting the value or desirability of the property that
17are not known to, or within the diligent attention and observation
18of, the parties. A real estate broker is not obligated to reveal to
19either party any confidential information obtained from the other
20party or from other clients that does not involve the affirmative
21duties set forth above. Confidential information includes, but is
22not limited to, facts relating to the party’s financial position,
23motivations, bargaining position, or other personal information
24that may impact price or price-related issues.

25
(d) The Buyer’s broker may also be providing services to other
26buyers in regard to the same or different properties.

27

28
BROKER REPRESENTING BOTH SELLER AND BUYER
29

30
A real estate broker, either acting directly or through one or
31more associate licensees, can legally represent both the Seller and
32the Buyer in a transaction, but only with the knowledge and consent
33of both the Seller and the Buyer.

34
In a dual brokerage or dual licensee situation, the broker and
35dual licensees have the following affirmative obligations to both
36the Seller and the Buyer:

37
(a) A fiduciary duty of care, integrity, honesty, and loyalty in
38the dealings with either the Seller or the Buyer.

39
(b) Other duties to the Seller and the Buyer as stated above in
40their respective sections.

P180 1
In representing both Seller and Buyer, the broker or dual licensee
2may not, without the express permission of the respective party,
3disclose to the other party in that transaction any confidential
4information obtained from the other party that does not involve
5the affirmative duties set forth above. Confidential information
6includes, but is not limited to, facts relating to the party's financial
7position, motivations, bargaining position, or other personal
8information that may impact price or price-related issues. A broker
9is not obligated to reveal to either party any information obtained
10from clients or reports regarding the property in a previous
11transaction regarding the same property without the client’s
12consent.

13

14
CONSUMER RESPONSIBILITIES
15

16
The above duties of the broker in a real estate transaction do
17not relieve a Seller or Buyer from the responsibility to protect his
18or her own interests, including reading all documents, reports,
19and disclosures. The Buyer has a duty to exercise reasonable care
20to protect himself or herself, including obtaining and considering
21those facts which are known to or within the diligent attention and
22observation of the Buyer. You should carefully read all agreements
23to assure that they adequately express your understanding of the
24transaction. A real estate broker is a person qualified to advise
25about real estate. If legal or tax advice is desired, consult a
26competent professional.

27
Since you will likely not know who the Buyer is going to be, if
28you are the Seller, or which property you are going to buy, if you
29are the Buyer, consider the confirmation of relationships carefully
30in the context of each offer as it may change as the property in the
31 transaction is identified and the respective parties and their brokers
32become clear.

33
This disclosure form includes the provisions of Sections 2079.13
34to 2079.24, inclusive, of the Civil Code set forth on the reverse
35hereof. Read it carefully.

begin insert end insert	begin insert end insert
begin insert Real Estate Broker (date) end insert	begin insert Buyer/Seller (date) end insert
begin insert (Signature) end insert	begin insert (Signature) end insert
begin insert end insert	begin insert end insert
begin insert Associate Licensee (date) end insert	begin insert Buyer/Seller (date) end insert
begin insert (Signature) end insert	begin insert (Signature) end insert

P181 3

4
This section shall become operative on July 1, 2018.

end insert

5begin insert

begin insertSEC. 196.end insert

end insert

begin insertSection 2079.17 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
6read:end insert

2079.17.

(a) As soon as practicable, the selling agent shall
8disclose to the buyer and seller whether the selling agent is acting
9in the real property transaction exclusively as the buyer’s agent,
10exclusively as the seller’s agent, or as a dual agent representing
11both the buyer and the seller. This relationship shall be confirmed
12in the contract to purchase and sell real property or in a separate
13writing executed or acknowledged by the seller, the buyer, and the
14selling agent prior to or coincident with execution of that contract
15by the buyer and the seller, respectively.

16(b) As soon as practicable, the listing agent shall disclose to the
17seller whether the listing agent is acting in the real property
18transaction exclusively as the seller’s agent, or as a dual agent
19representing both the buyer and seller. This relationship shall be
20confirmed in the contract to purchase and sell real property or in
21a separate writing executed or acknowledged by the seller and the
22listing agent prior to or coincident with the execution of that
23contract by the seller.

24(c) The confirmation required by subdivisions (a) and (b) shall
25be in the following form:

is the agent of (check one):

(Name of Listing Agent)

[ ] the seller exclusively; or

[ ] both the buyer and seller.

(Name of Selling Agent if not the same as the Listing Agent)

is the agent of (check one):

[ ] the buyer exclusively; or

[ ] the seller exclusively; or

[ ] both the buyer and seller.

P181 37

38(d) The disclosures and confirmation required by this section
39shall be in addition to the disclosure required by Section 2079.14.

begin insert

40
(e) This section shall repeal on July 1, 2018.

end insert

P182 1begin insert

begin insertSEC. 197.end insert

end insert

begin insertSection 2079.17 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.17.end insert

(a) As soon as practicable, the buyer’s broker shall
3disclose to the buyer and seller whether the broker is acting in the
4real property transaction as the buyer’s broker or as a dual broker
5representing both the buyer and the seller. This relationship shall
6be confirmed in the contract to purchase and sell real property or
7in a separate writing executed or acknowledged by the seller, the
8buyer, and the buyer’s broker either directly or through an
9associate licensee prior to or coincident with execution of that
10contract by the buyer and the seller, respectively.

11
(b) As soon as practicable, the seller’s broker shall disclose to
12the seller whether the seller’s licensee is acting in the real property
13transaction as the seller’s broker or as a dual broker representing
14both the buyer and seller. This relationship shall be confirmed in
15the contract to purchase and sell real property or in a separate
16writing executed or acknowledged by the seller and the seller’s
17broker either directly or through an associate licensee prior to or
18coincident with the execution of that contract by the seller.

19
(c) The confirmation required by subdivisions (a) and (b) shall
20be in the following form:

begin insert

(Name of Seller’s Broker, Brokerage firm, and license number)

the broker of (check one):

end insert

begin insert

[ ] the seller; or

end insert

begin insert

[ ] both the buyer and seller. (dual broker)

end insert

begin insert

is (check one):

(Name of Seller’s Licensee and license number)

end insert

begin insert

[ ] is the Seller’s Licensee. (salesperson or associate broker)

end insert

begin insert

[ ] is both the Buyer’s and Seller’s Licensee. (dual licensee)

end insert

begin insert

(Name of Buyer’s Broker, Brokerage firm, and license number)

the broker of (check one):

end insert

begin insert

[ ] the buyer; or

end insert

begin insert

[ ] both the buyer and seller. (dual broker)

end insert

begin insert

(Name of Buyer’s Licensee and license number)

end insert

begin insert

[ ] the Buyer’s Licensee. (salesperson or associate broker)

end insert

begin insert

[ ] both the Buyer’s and Seller’s Licensee. (dual licensee)

end insert

A dual agent shall not disclose to the buyer that the
12seller is willing to sell the property at a price less than the listing
13price, without the express written consent of the seller. A dual
14agent shall not disclose to the seller that the buyer is willing to pay
15a price greater than the offering price, without the express written
16consent of the buyer.

17This section does not alter in any way the duty or responsibility
18of a dual agent to any principal with respect to confidential
19information other than price.

begin insert

20
This section shall repeal on July 1, 2018.

end insert

21begin insert

begin insertSEC. 203.end insert

end insert

begin insertSection 2079.21 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.21.end insert

(a) A dual licensee may not, without the express
23permission of a client, disclose to the other client any confidential
24information obtained from the other client that does not involve
25the affirmative duties described in Section 2079.16. Confidential
26information includes, but is not limited to, facts relating to the
27client’s financial position, motivations, bargaining position, or
28other personal information that may impact price or price-related
29issues.

30
(b) This section shall become operative on July 1, 2018.

end insert

31begin insert

begin insertSEC. 204.end insert

end insert

begin insertSection 2079.22 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
32read:end insert

2079.22.

begin insert(a)end insertbegin insert end insert Nothing in this article precludes a listing agent
34from also being a selling agent, and the combination of these
35functions in one agent does not, of itself, make that agent a dual
36agent.

begin insert

37
(b) This section shall repeal on July 1, 2018.

end insert

38begin insert

begin insertSEC. 205.end insert

end insert

begin insertSection 2079.22 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.22.end insert

(a) Nothing in this article precludes a seller’s broker,
40including through one or more associate licensees, from also being
P185 1a buyer’s broker. If one party to the transaction chooses to not be
2represented by a broker, that does not, of itself, make that broker
3a dual licensee without the written consent set forth in Section
42079.18. An agency relationship between a client and a broker or
5associate licensee shall have the express written consent of all
6parties.

end insert

4begin insert

begin insertSEC. 208.end insert

end insert

begin insertSection 2079.24 of the end insertbegin insertCivil Codeend insertbegin insert is amended to
5read:end insert

2079.24.

begin insert(a)end insertbegin insert end insert Nothing in this article shall be construed to either
7diminish the duty of disclosure owed buyers and sellers by agents
8and their associate licensees, subagents, and employees or to relieve
9agents and their associate licensees, subagents, and employees
10from liability for their conduct in connection with acts governed
11by this article or for any breach of a fiduciary duty or a duty of
12disclosure.

begin insert

13
(b) This section shall repeal on July 1, 2018.

end insert

14begin insert

begin insertSEC. 209.end insert

end insert

begin insertSection 2079.24 is added to the end insertbegin insertCivil Codeend insertbegin insert, to read:end insert

begin insert

begin insert2079.24.end insert

(a) Nothing in this article shall be construed to either
16diminish the duty of disclosure owed to buyers and sellers by
17brokers, including their broker associates, salespersons, and
18employees, or to relieve brokers, including their broker associates,
19salespersons, and employees from liability for their conduct in
20connection with acts governed by this article.

21
(b) This section shall become operative on July 1, 2018.

end insert

22begin insert

begin insertSEC. 210.end insert

end insert

begin insertSection 31210 of the end insertbegin insertCorporations Codeend insertbegin insert is amended
23to read:end insert

31210.

begin insert(a)end insertbegin insert end insert It is unlawful for any person to effect or attempt
25to effect a sale of a franchise in this state, except in transactions
26exempted under Chapter 1 (commencing with Section 31100) of
27Part 2 of this division, unless such person is: (1) identified in an
28application or amended application filed with the commissioner
29pursuant to Part 2 (commencing with Section 31100) of this
30division, (2) licensed by the Bureau of Real Estate as a real estate
31broker or real estate salesman, or (3) licensed by the commissioner
32as a broker-dealer or agent pursuant to the Corporate Securities
33Law of 1968.

begin insert

34
(b) This section shall repeal on July 1, 2018.

end insert

35begin insert

begin insertSEC. 211.end insert

end insert

begin insertSection 31210 is added to the end insertbegin insertCorporations Codeend insertbegin insert,
36to read:end insert

begin insert

begin insert31210.end insert

(a) It is unlawful for any person to effect or attempt to
38effect a sale of a franchise in this state, except in transactions
39exempted under Chapter 1 (commencing with Section 31100) of
40Part 2 of this division, unless such person is: (1) identified in an
P187 1application or amended application filed with the commissioner
2pursuant to Part 2 (commencing with Section 31100) of this
3division, (2) licensed by the Bureau of Real Estate as a real estate
4broker or real estate salesperson, or (3) licensed by the
5commissioner as a broker-dealer or agent pursuant to the
6Corporate Securities Law of 1968.

7
(b) This section shall become operative on July 1, 2018.

end insert

8begin insert

begin insertSEC. 212.end insert

end insertbegin insert

No reimbursement is required by this act pursuant
9to Section 6 of Article XIII B of the California Constitution because
10the only costs that may be incurred by a local agency or school
11district will be incurred because this act creates a new crime or
12infraction, eliminates a crime or infraction, or changes the penalty
13for a crime or infraction, within the meaning of Section 17556 of
14the Government Code, or changes the definition of a crime within
15the meaning of Section 6 of Article XIII B of the California
16Constitution.

end insert

begin delete
17
SECTION 1.

Section 10080.9 of the Business and Professions
18Code is amended to read:

19
10080.9.

(a) If, upon inspection, examination, or investigation,
20the commissioner has cause to believe that a person who does not
21possess a real estate license is engaged or has engaged in activities
22for which a real estate license is required, or that a person who
23does not possess a prepaid rental listing service license or a real
24estate broker license is engaged or has engaged in activities for
25which a license is required pursuant to Section 10167.2, or that a
26licensee is violating or has violated any provision of this division
27or any rule or order thereunder, the commissioner or his or her
28designated representative may issue a citation to that person in
29writing, describing with particularity the basis of the citation. Each
30citation may contain an order to correct the violation or violations
31identified and a reasonable time period or periods by which the
32violation or violations must be corrected. In addition, each citation
33may assess an administrative fine not to exceed two thousand five
34hundred dollars ($2,500), that shall be deposited into the Recovery
35Account of the Real Estate Fund and shall, upon appropriation by
36the Legislature, be available for expenditure for the purposes
37specified in Chapter 6.5 (commencing with Section 10470). In
38assessing a fine, the commissioner shall give due consideration to
39the appropriateness of the amount of the fine with respect to factors
40such as the gravity of the violation, the good faith of the person
P188 1cited, and the history of previous violations. A citation issued and
2a fine assessed pursuant to this section, while constituting discipline
3for a violation of the law, shall be in lieu of other administrative
4 discipline by the commissioner for the offense or offenses cited,
5and the citation against and payment of any fine by a licensee shall
6not be reported as disciplinary action taken by the commissioner.

7(b) Notwithstanding subdivision (a), nothing in this section shall
8prevent the commissioner from issuing an order to desist and
9refrain from engaging in a specific business activity or activities
10or an order to suspend all business operations to a person who is
11engaged in or has engaged in continued or repeated violations of
12this part. In any of these circumstances, the sanctions authorized
13under this section shall be separate from, and in addition to, all
14other administrative, civil, or criminal penalties.

15(c) If, within 30 days from the receipt of the citation or the
16citation and fine, the person cited fails to notify the commissioner
17that he or she intends to request a hearing as described in
18subdivision (d), the citation or the citation and fine shall be deemed
19final.

20(d) Any hearing under this section shall be conducted in
21accordance with Chapter 5 (commencing with Section 11500) of
22Part 1 of Division 3 of Title 2 of the Government Code.

23(e) After the exhaustion of the review procedures provided for
24in this section, the commissioner may apply to the appropriate
25superior court for a judgment in the amount of any administrative
26penalty imposed pursuant to subdivision (a) and an order
27compelling the person cited to comply with the order of the
28commissioner. The application, which shall include a certified
29copy of the final order of the commissioner, shall constitute a
30sufficient showing to warrant issuing the judgment and order.

31(f) Failure of any person to comply with the terms of a citation
32or pay a fine assessed pursuant to this section, within a reasonable
33period specified by the commissioner, shall subject that person to
34disciplinary action by the commissioner. In no event may a license
35be issued or renewed if an unpaid fine remains outstanding or the
36terms of a citation have not been complied with.

37
SEC. 2.

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

39
10177.

The commissioner may suspend or revoke the license
40of a real estate licensee, delay the renewal of a license of a real
P189 1estate licensee, or deny the issuance of a license to an applicant,
2who has done any of the following, or may suspend or revoke the
3license of a corporation, delay the renewal of a license of a
4corporation, or deny the issuance of a license to a corporation, if
5an officer, director, or person owning or controlling 10 percent or
6more of the corporation’s stock has done any of the following:

7(a) Procured, or attempted to procure, a real estate license or
8license renewal, for himself or herself or a salesperson, by fraud,
9misrepresentation, or deceit, or by making a material misstatement
10of fact in an application for a real estate license, license renewal,
11or reinstatement.

12(b) Entered a plea of guilty or no contest to, or been found guilty
13of, or been convicted of, a felony, or a crime substantially related
14to the qualifications, functions, or duties of a real estate licensee,
15and the time for appeal has elapsed or the judgment of conviction
16has been affirmed on appeal, irrespective of an order granting
17probation following that conviction, suspending the imposition of
18sentence, or of a subsequent order under Section 1203.4 of the
19Penal Code allowing that licensee to withdraw his or her plea of
20guilty and to enter a plea of not guilty, or dismissing the accusation
21or information.

22(c) Knowingly authorized, directed, connived at, or aided in the
23publication, advertisement, distribution, or circulation of a material
24false statement or representation concerning his or her designation
25or certification of special education, credential, trade organization
26membership, or business, or concerning a business opportunity or
27a land or subdivision, as defined in Chapter 1 (commencing with
28Section 11000) of Part 2, offered for sale.

29(d) Willfully disregarded or violated the Real Estate Law (Part
301 (commencing with Section 10000)) or Chapter 1 (commencing
31with Section 11000) of Part 2 or the rules and regulations of the
32commissioner for the administration and enforcement of the Real
33Estate Law and Chapter 1 (commencing with Section 11000) of
34Part 2.

35(e) Willfully used the term “realtor” or a trade name or insignia
36of membership in a real estate organization of which the licensee
37is not a member.

38(f) Acted or conducted himself or herself in a manner that would
39have warranted the denial of his or her application for a real estate
40license, or either had a license denied or had a license issued by
P190 1another agency of this state, another state, or the federal
2government revoked, surrendered, or suspended for acts that, if
3done by a real estate licensee, would be grounds for the suspension
4or revocation of a California real estate license, if the action of
5denial, revocation, surrender, or suspension by the other agency
6or entity was taken only after giving the licensee or applicant fair
7notice of the charges, an opportunity for a hearing, and other due
8process protections comparable to the Administrative Procedure
9Act (Chapter 3.5 (commencing with Section 11340), Chapter 4
10 (commencing with Section 11370), and Chapter 5 (commencing
11with Section 11500) of Part 1 of Division 3 of Title 2 of the
12Government Code), and only upon an express finding of a violation
13of law by the agency or entity.

14(g) Demonstrated negligence or incompetence in performing
15an act for which he or she is required to hold a license.

16(h) As a broker licensee, failed to exercise reasonable
17supervision over the activities of his or her salespersons, or, as the
18officer designated by a corporate broker licensee, failed to exercise
19reasonable supervision and control of the activities of the
20corporation for which a real estate license is required.

21(i) Used his or her employment by a governmental agency in a
22capacity giving access to records, other than public records, in a
23manner that violates the confidential nature of the records.

24(j) Engaged in any other conduct, whether of the same or a
25different character than specified in this section, that constitutes
26fraud or dishonest dealing.

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

29(l) (1) Solicited or induced the sale, lease, or listing for sale or
30lease of residential property on the ground, wholly or in part, of
31loss of value, increase in crime, or decline of the quality of the
32schools due to the present or prospective entry into the
33neighborhood of a person or persons having a characteristic listed
34in subdivision (a) or (d) of Section 12955 of the Government Code,
35as those characteristics are defined in Sections 12926 and 12926.1,
36subdivision (m) and paragraph (1) of subdivision (p) of Section
3712955, and Section 12955.2 of the Government Code.

38(2) Notwithstanding paragraph (1), with respect to familial
39status, paragraph (1) shall not be construed to apply to housing for
40older persons, as defined in Section 12955.9 of the Government
P191 1Code. With respect to familial status, nothing in paragraph (1)
2shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11,
3and 799.5 of the Civil Code, relating to housing for senior citizens.
4Subdivision (d) of Section 51 and Section 4760 of the Civil Code
5and subdivisions (n), (o), and (p) of Section 12955 of the
6Government Code shall apply to paragraph (1).

7(m) Violated the Franchise Investment Law (Division 5
8(commencing with Section 31000) of Title 4 of the Corporations
9Code) or regulations of the Commissioner of Corporations
10pertaining thereto.

11(n) Violated the Corporate Securities Law of 1968 (Division 1
12(commencing with Section 25000) of Title 4 of the Corporations
13Code) or the regulations of the Commissioner of Corporations
14pertaining thereto.

15(o) Failed to disclose to the buyer of real property, in a
16transaction in which the licensee is an agent for the buyer, the
17nature and extent of a licensee’s direct or indirect ownership
18interest in that real property. The direct or indirect ownership
19interest in the property by a person related to the licensee by blood
20or marriage, by an entity in which the licensee has an ownership
21interest, or by any other person with whom the licensee has a
22special relationship shall be disclosed to the buyer.

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

24(q) Violated or failed to comply with Chapter 2 (commencing
25with Section 2920) of Title 14 of Part 4 of Division 3 of the Civil
26Code, related to mortgages.

27(r) Failure to surrender a license that was issued in error or by
28mistake.

29If a real estate broker that is a corporation has not done any of
30the foregoing acts, either directly or through its employees, agents,
31officers, directors, or persons owning or controlling 10 percent or
32more of the corporation’s stock, the commissioner may not deny
33the issuance or delay the renewal of a real estate license to, or
34suspend or revoke the real estate license of, the corporation,
35provided that any offending officer, director, or stockholder, who
36has done any of the foregoing acts individually and not on behalf
37of the corporation, has been completely disassociated from any
38affiliation or ownership in the corporation. A decision by the
39commissioner to delay the renewal of a real estate license shall
40toll the expiration of that license until the results of any pending
P192 1disciplinary actions against that licensee are final, or until the
2licensee voluntarily surrenders his, her, or its license, whichever
3is earlier.

4
SEC. 3.

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

6
10186.2.

(a) (1) A licensee shall report any of the following
7to the bureau:

8(A) The bringing of a criminal complaint, information, or
9indictment charging a felony against the licensee.

10(B) The conviction of the licensee, including any verdict of
11guilty, or plea of guilty or no contest, of any felony or
12misdemeanor.

13(C) Any disciplinary action taken by another licensing entity
14or authority of this state or of another state or an agency of the
15federal government.

16(2) The report required by this subdivision shall be made in
17writing within 30 days of the date of the bringing of the indictment
18or the charging of a felony, the conviction, or the disciplinary
19action.

20(b) Failure to make a report required by this section shall
21constitute a cause for discipline.

22
SEC. 4.

No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.

end delete