BILL ANALYSIS Ó AB 685 Page 1 Date of Hearing: April 7, 2015 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair AB 685 (Irwin) - As Introduced February 25, 2015 SUBJECT: Real estate: licensees. SUMMARY: Requires the California Bureau of Real Estate (CalBRE) to deny a license to an applicant with an unpaid fine, and authorizes the CalBRE to sanction a licensee for the surrender of another license and revoke a license issued in error. The bill also requires a licensee to report the filing of a criminal complaint charging a felony against the licensee and makes other technical changes. EXISTING LAW 1)Provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate headed by the Real Estate Commissioner (Commissioner). (Business and Professions Code (BPC) § 10000 - 10580) 2)Authorizes the Commissioner to issue a citation to someone engaged in activities requiring a real estate license if the Commissioner has cause to believe the person does not have a license. (BPC § 10080.9) AB 685 Page 2 3)Prohibits the Commissioner from renewing the license of a person who has failed to comply with the terms of a citation or pay an outstanding fine. (BPC § 10080.9) 4)Authorizes the Commissioner to suspend or revoke the license of a real estate licensee, or deny the issuance of a license to an applicant, if he or she has engaged in specific activities or has had a license issued by another agency, another state, or the federal government revoked or suspended for engaging in those activities. (BPC § 10177) 5)Requires 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. (BPC § 10186.2, 10185) THIS BILL 1)Prohibits the Commissioner from issuing a license to an applicant that has not complied with the terms of a citation or paid an outstanding fine. 2)Authorizes the Commissioner to suspend or revoke the license of a licensee, or deny the issuance of a license to an applicant, who surrendered a license issued by another agency, another state, or the federal government. 3)Authorizes the Commissioner to suspend or revoke the license of a licensee, or deny the issuance of a license to an applicant, for failure to surrender a license that was issued in error or by mistake. AB 685 Page 3 4)Requires a licensee to report the filing of a criminal complaint charging a felony against the licensee to CalBRE. 5)Makes other nonsubstantive changes. FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel. COMMENTS 1)Purpose. This bill is sponsored by the California Realtor's Association. According to the Author, "AB 685 is a cleanup of the Real Estate Law intended to provide greater clarity as well as remove any redundancy. The measure will, for example, (1) allow CalBRE to deny the issuance of a license due to unpaid fine, (2) allow CalBRE to discipline a licensee for actions taken against another state license if the behavior that resulted in that action would have resulted in the discipline of a real estate licensee, and (3) make it clear that licensees must report any information regarding the charging of a felony to CalBRE. These are changes that will allow CalBRE to better oversee the licensure and discipline of real estate licensees." 2)Background. Currently, there are several loopholes in CalBRE's enforcement statute. First, CalBRE cannot deny an applicant a license if the licensee has an outstanding fine, for instance if fined for unlicensed activity. Second, while CalBRE can suspend, revoke, or delay the renewal of a license for a licensee, or deny the issuance of a license to an applicant that has had a license suspended or revoked by AB 685 Page 4 another agency, it cannot do so if the license was voluntarily surrendered. Third, CalBRE is not expressly authorized to revoke a license issued by mistake. This bill proposes to close the loopholes by adding language authorizing CalBRE to perform the above actions. Reporting of criminal complaints. Current law requires a licensee to report the "bringing of an indictment or information charging a felony against a licensee." The failure to report the filed pleadings is punishable by a fine and imprisonment (BPC §10185). This bill would amend the language to require a licensee to report the "bringing of an indictment or information, or the filing of a criminal complaint, charging a felony against a licensee." As worded, the bill likely makes the failure to report the filing of a criminal complaint charging a felony also punishable by fine or imprisonment. The sponsors state, "As it is unclear what was meant by "information," the proposed amendment would clarify this section by adding the filing of a criminal complaint charging a felony to the list of disciplinary activities licensees must report to the bureau." However, the new language is ambiguous-it is unclear what the clause "or the filing of a criminal complaint" is doing. A complaint is the pleading used to bring charges in a felony or misdemeanor criminal action (California Penal Code (CPC) § 949). Complaints are also the pleading used to prosecute a misdemeanor and infraction (CPC § 740). They cannot be used to prosecute felonies (CPC § 682). AB 685 Page 5 Information and indictments are the pleadings used to prosecute felonies (CPC § 737). An information is the pleading that is filed when felony charges are brought with a complaint (CPC § 738-739). An indictment is a pleading that is presented by a grand jury to the court, and charges a public offense-no complaint is needed (CPC § 889). Therefore, while criminal complaint, indictment, and information are often used interchangeably, they are actually three distinct accusatory pleadings under California criminal procedure (CPC § 959.1). 3)Related legislation. SB 146 (Galgiani) of 2015 revises the definition of "responsible broker's identity" to mean a name under which the responsible broker operates or conducts business in general for the real estate firm as a whole and that does not include a fictitious business name or a team name owned or used solely by a salesperson or group of salespersons, and would provide that a responsible broker's identity may include divisions of the real estate firm registered with the Bureau of Real Estate under the broker, as specified. (STATUS: This bill is currently pending in the Senate Business, Professions and Economic Development Committee) 4)Previous legislation. SB 875 (Price), Chapter 380, Statutes of 2012, among other things, authorized CalBRE to use additional procedures when denying a license and deleted an obsolete provision dealing with the issuing of conditional licenses. SB 706 (Price), Chapter 712, Statutes of 2011, made enforcement enhancements to the Department of Real Estate (DRE) and the Office of Real Estate Appraisers (OREA); transferred OREA into DRE; required DRE to appoint a Real Estate Advisory Commission; required licensing boards to post information about licensees on the Internet, as specified; and made updating and conforming changes. AB 685 Page 6 5)SUGGESTED AUTHOR'S AMENDMENT. The sponsors have noted that they wish to include the requirement that licensees report criminal complaints. Therefore, the author should amend the bill to ensure the language is clear as to the requirement. On page 7, lines 17 - 18, strike "an indictment or information, or the filing of a criminal complaint," and insert "a criminal complaint, information, or indictment." REGISTERED SUPPORT / OPPOSITION: Support California Association of Realtors (sponsor) Opposition None on file. Analysis Prepared by:Vincent Chee / B. & P. / (916) 319-3301 AB 685 Page 7