BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 1381 Hearing Date: August 25,
2016
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|Author: |Weber |
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|Version: |August 19, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Professions and vocations: real estate appraisers:
real estate brokers
SUMMARY: Provides that an "outdoor advertising representative"
is not required to register as a broker with the Bureau of Real
Estate; defines an "outdoor advertising representative" as
specified; requires the owner or operator of the advertising
display to maintain liability insurance; requires the Bureau of
Real Estate Appraisers to provide information on its website
regarding the continuing education courses taken by a licensee.
NOTE : The Senate floor amendments as of 8/19/16 constitute a
rewrite and this measure has been referred to this Committee
pursuant to Senate Rule 29.10 (b) for consideration. The
Committee may, by a vote of the majority, either: (1) hold
the bill, or (2) return the bill to the Senate floor for
consideration, or (3) re-refer the bill to fiscal committee
pursuant to Joint Rule 10.5.
The Senate floor amendments define an "outdoor advertising
representative", clarify that an "outdoor advertising
representative" is not required to obtain a real estate broker's
license, require that the owner or operator of the advertising
display maintain liability insurance coverage, as specified, and
clarify that the renewal of an appraiser's license is not
contingent on the Bureau of Real Estate Appraisers' posting a
licensee's continuing education courses on its Web site.
Existing law:
AB 1381 (Weber) Page 2
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1) Establishes the Outdoor Advertising Act that regulates
outdoor advertising structures and signs. (Business and
Professions Code (BPC) § 5200)
2) Declares that it is the intent of the Legislature to regulate
advertising displays adjacent to highways included in the
national system of interstate and defense highways or the
federal-aid primary highway system. (BPC § 5228)
3) Authorizes the governing body of any city or city and county
to enact ordinances requiring licenses or permits for the
placing of advertising displays in view of any highway. (BPC
§ 5231)
4) States that a person engages in the business of outdoor
advertising whenever, personally or through employees, that
person places an advertising display, changes the advertising
message of an advertising display that does not pertain
exclusively to that person's business and is visible to a
state highway or freeway. (BPC § 5300)
5) Prohibits a person to engage in or carry on the business or
occupation of outdoor advertising without first having paid
the license fee. The fee is payable annually in advance on
the first day of July of each year to the Director of
Transportation or his authorized agent. Requires each license
remain in force for the term of one year from and after the
first day of July, and may be renewed annually. (BPC § 5301)
6) Provides that persons acting in the capacity of a film
location representative in connection with a transaction are
not required to be licensed as a real estate broker. (BPC §
10133.4(a))
7) Defines "film location representative" as an employee of a
principal arranging for the use of real property for
photographic purposes. (BPC § 10133.4(b)(1))
8) Defines "principal" as the person who will use the real
property for photographic purposes. (BPC § 10133.4(b)(2))
9) Requires, in every transaction by a film location
representative, the principal maintain liability insurance
AB 1381 (Weber) Page 3
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coverage for death, bodily injury, and property damage
arising out of, or in connection with the use, ownership, or
maintenance of real property which is the subject of the
transaction. (BPC § 10133.4(c))
10)Requires that the liability insurance not be less than five
hundred thousand dollars ($500,000) per person or one million
dollars ($1,000,000) per occurrence for personal injury and
five hundred thousand dollars ($500,000) for property damage.
(BPC § 10133.4(c))
11)Requires that the liability insurance be issued by an
insurance carrier authorized to sell such insurance in
California. (BPC § 10133.4(c))
12)Establishes the Real Estate Appraisers' Licensing and
Certification Law (Act), administered by the Bureau of Real
Estate Appraisers (BREA) within the Department of Consumer
Affairs (DCA), which regulates the licensing of real estate
appraisers. (BPC § 11300 et seq.)
13)Requires the BREA to provide information on the Internet in
regarding, among other things, the status of every license
and registration issued by the BREA.
(BPC § 11317.2(a))
14)Requires the Director of the DCA to adopt regulations for
licensure which shall meet, at a minimum, the requirements
and standards established by the Appraisal Foundation and the
federal financial institutions regulatory agencies acting
pursuant to Section 1112 of the Financial Institutions Reform
Recovery and Enforcement Act of 1989, Public Law 101-73
(FIRREA). (BPC § 11340(c))
15)Requires the director to adopt regulations governing the
process and procedures for renewal of a license, which shall
include, but not be limited to, continuing education
requirements, which shall be reported on the basis of
four-year continuing education cycles. (BPC § 11360)
This bill:
1) Provides that an "outdoor advertising representative" is not
required to register as a broker with the Bureau of Real
AB 1381 (Weber) Page 4
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Estate (BRE).
2) Defines an "outdoor advertising representative" as an
employee of a corporation or a limited liability company or a
general partner of a partnership arranging for the lease or
transfer of real property or an interest in real property
solely for the placement of, access to, or operation of, an
advertising display and appurtenances.
3) Requires, in every transaction involving the transfer, lease,
or use of real property for the operation of an advertising
display negotiated by an outdoor advertising representative,
the owner or operator of the advertising display to maintain
liability insurance coverage for death, bodily injury, and
property damage arising out of, or in connection with, its
acts, omissions, or operations on the real property.
4) Requires that the liability insurance not be less than five
hundred thousand dollars ($500,000) per person or one million
dollars ($1,000,000) per occurrence for personal injury and
five hundred thousand dollars ($500,000) for property damage.
5) Requires that the liability insurance be issued by an
insurance carrier authorized to sell such insurance in
California.
6) Requires BREA to provide, on the Internet, the continuing
education course information provided by a licensee when an
individual applies for licensure renewal.
7) Removes obsolete references to the Office of Real Estate
Appraisers and inserts the word "Bureau".
FISCAL EFFECT: According to the Senate Committee on
Appropriations that analyzed the June 1, 2016 version, this
measure will result in minor and absorbable costs. Given the
new outdoor advertising provisions, additional costs are
unknown.
COMMENTS:
1. Purpose. The Author is the sponsor of the bill. According
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to the Author, "AB 1381 would provide the public with
additional information on the continuing education courses
taken when an appraiser seeks to renew his or her license.
By listing an appraiser's continuing education courses, the
public will have a better understanding of who appraises
their property. In addition, businesses would be better able
to evaluate candidates and select appraisers with certain
specializations.
Additionally, AB 1381 clarifies that employees of outdoor
advertising companies can continue to conduct business
negotiations related to the placement and operation of
outdoor advertising displays without seeking licensure as a
real estate broker for specific transactions related to the
placement, access, and operation of an outdoor advertising
display. Since 1901, this has been industry practice, and
with decades of experience, we have little evidence that the
status quo needs to be changed.
This issue was raised recently as the result of a signal
inquiry raised at the BRE. This bill takes a measured
approach explicitly detailing the types of transactions that
outdoor advertising representatives may negotiate and further
requires that the outdoor advertising company maintain
appropriate liability insurance - a model that has served the
film industry well. As the Little Hoover Commission and
others continue their efforts to study appropriate levels of
licensure, and how appropriate licensure levels can
facilitate economic prosperity as well as maintain consumer
protection, it is appropriate to codify this century-long
practice."
Broadway Heights Community Council and the Author ultimately
underscore,
"AB 1381 would provide the public with additional information
on the continuing education courses taken when an appraiser
seeks to renew his or her license. By listing an appraiser's
continuing education courses, the public will have a better
understanding of who appraises their property. In addition,
businesses would be better able to evaluate candidates and
select appraisers with certain specializations."
2. Outdoor Advertising Displays. Tracing back to 1867, outdoor
advertising displays have served as a messaging medium to the
AB 1381 (Weber) Page 6
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United States. Outdoor advertising companies negotiate with
private property owners, business partners and municipalities
to reach contractual agreements between the parties for the
ownership, operation, or placement of outdoor advertising
displays. Outdoor advertising displays are required to comply
with applicable federal, state and municipal ordinances.
Recently, a member of the public made a complaint about a
negotiation that had taken place between two outdoor
advertising companies and a private property owner at a BRE
forum. The complaint raised the question of whether
employees of outdoor advertising companies were required to
be licensed real estate brokers under existing state law.
Since 1960s, the California State Outdoor Advertising
Association (CSOAA) has represented member outdoor
advertising companies and affiliate members in California.
CSOAA states the following:
"Although individuals may negotiate to sell their own
real property assets without holding a broker's license,
and officers of corporations may negotiate on behalf of
their corporation, existing law may be interpreted that
an employee is not viewed to have the same ability. Oil
and mineral property owners, and film industry
representatives have explicit exemptions from licensure
as real estate brokers under existing law."
The Administration also notes that outdoor advertising is a
heavily regulated business. Under current law, any person or
company wishing to display advertising, other than a display
on a building, within 660 feet of a highway right of way must
comply with federal and State law relating to display size,
distance between displays, and certain content limitations.
The person or company must be licensed by the State Office of
Outdoor Advertising, within Department of Transportation,
obtain a permit from the State Office of Outdoor Advertising,
and comply with all local permitting requirements. The State
license and permit must be renewed each year.
The Department of Transportation is responsible for enforcing
compliance with federal and state laws governing outdoor
advertising. If the state fails to properly administer the
federal program, the state shall lose 10% of its federal
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highway funding.
Given the level of regulation already placed on the outdoor
advertising industry, the Department of Consumer Affairs does
not believe an additional real estate license for outdoor
advertising representatives is needed.
The proposed language is modeled after an existing exemption
for film industry employees who negotiate lease agreements
for filming and are not required to obtain licensure as real
estate brokers.
3. Background on the BREA. In 1989, Title XI of the federal
Financial Institutions Reform, Recovery and Enforcement Act
was adopted by Congress mandating states to license and
certify real estate appraisers who appraise property for
federally related transactions. The federal law was enacted
as a result of the savings and loan crisis.
In response to the federal mandate, the California
Legislature enacted the Real Estate Appraisers Licensing and
Certification Law in 1990 (AB 527, Chapter 491, Statutes of
1990). The Office of Real Estate Appraisers was established
within the Business, Transportation and Housing Agency, and
charged with developing and implementing a real estate
appraiser licensing and certification program compliant with
the federal mandate. In 2012, Governor Brown submitted a
reorganization plan to the Legislature. As a result, on July
1, 2013, OREA became the BREA within DCA.
BREA, which is entirely funded by licensing fees, is a single
program comprised of two core components, licensing and
enforcement.
The Licensing Division implements the minimum requirements
for licensure, according to criteria established by the
federal government and California law, to ensure that only
qualified persons are licensed to conduct appraisals in
federally related real estate transactions. Applicants must
meet minimum education and experience requirements and
successfully complete a nationally approved examination. The
Licensing Division also registers Appraisal Management
Companies (AMC) in compliance with California law.
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The Enforcement Division investigates the background of
applicants, licensees, and AMC registrants to ensure they
meet the standards for licensure. The Enforcement Division
also investigates complaints of violations of California law
and national appraisal standards filed against licensed
appraisers and registered AMCs.
BREA is responsible for the accreditation of educational
courses and providers for real estate appraisers. BREA has
reviewed and approved over 1,800 pre-licensing and continuing
education courses. In addition to the real estate appraisal
related
3 courses offered by California's community colleges and
universities, over 70 proprietary schools provide appraisal
education.
4. Continuing Education for Licensees. The term of a California
real estate appraiser's license is two years. All licensed
appraisers must meet minimum continuing education
requirements before renewing their license. A total of 56
hours of continuing education is required during the
four-year continuing education cycle including the following
mandatory courses for all license categories.
7-hour National Uniform Standards of Professional
Appraisal Practice (USPAP) course-required every two
years.
4-hour Bureau approved course entitled "Federal
and State Laws and Regulations"- required every four
years. This 4-hour course is an addition since the last
sunset review. (California Code of Regulations, Title
10, § 3543)
In practical terms, this requires a renewal of the 7-hour
USPAP course every two years on its own, and a full
continuing education (56 hours) renewal every four years.
Generally the requirement is a full CE 56 hour renewal every
other two year cycle, with a reduced 7 hour CE renewal cycle
in between.
Continuing education courses or seminars must cover appraisal
related topics including subjects such as land use planning,
appraisal computer applications, cost estimating, and green
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building appraisals.
1. BREA Continuing Education Course Approval. Continuing
education courses, both classroom and online, must meet the
requirements of the Appraisal Qualifications Board (AQB).
The AQB is within the Appraisal Foundation, a non-profit
organization that works to advance professionalism for
appraisers through the promulgation of standards, appraiser
qualifications, and guidance regarding appraisal methods and
techniques. The AQB establishes the minimum education and
experience requirements as well as the examination
requirements for appraisers.
The requirements for BREA approval of continuing education
courses are:
Courses must be a minimum of two classroom hours
long (classroom hour means 50 minutes within a one-hour
period actually spent in presenting the course content).
Participants must have been present for at least 90%
of the course hours to obtain credit for the course.
Continuing education courses that BREA has already approved
allow for faster processing of renewal applications. Courses
offered by providers that are private vocational schools or
professional organizations are assigned a BREA course
approval number. In addition, some college and university
courses may be acceptable if the courses cover one of the
topics listed below.
The AQB allows, and BREA may grant, continuing education
credit for courses that cover topics including, but not
limited to:
a) Ad Valorem Taxation
b) Arbitration-Dispute Resolution
c) Practice of Real Estate Appraisal
d) Development Cost Estimating
e) Ethics and Standards of Practice
f) Land Use Planning-Zoning
g) Property Management-Leasing-Timesharing
h) Property Development-Partial Interests
i) Real Estate Law-Easements-Legal Interests
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j) Real Estate Litigation-Damages-Condemnation
aa) Real Estate Financing and Investment
bb) Real Estate Appraisal Computer Applications
cc) Real Estate Securities and Syndication
dd) Real Property Appraisals-Personal Property-Business
Valuation
ee) Seller Concession Impact on Value
ff) Energy Efficient-Green Building Appraisal
1. Arguments in Support. The California State Outdoor Adverting
Association writes that this bill "takes a measured approach
explicitly detailing the types of transactions that outdoor
advertising representatives may negotiate and further
requires that the outdoor advertising company maintain
appropriate liability insurance - a model that has served the
film industry well."
2. Arguments in Opposition. The California Association of
Realtors writes, "We respectfully suggest that it is
inappropriate to carve out a new exemption to the real estate
license at the very last hour, and to do so in a way that
interferes with a pending enforcement action that has not yet
been resolved.
Under the new proposed language, any individual can create a
partnership or company and "end run" the license requirement
for agents that negotiate extremely valuable leases, and
sales, on behalf of third parties. The change allows
unlicensed agents to evade the recently enacted commercial
agency disclosures that were enacted only last session; it
also allows unlicensed agents to evade the fiduciary duty
responsibilities that would apply to any other legitimate
agent.
As we understand it, the bill is intended to protect salaried
in-house employees that negotiate only outdoor advertising
siting on behalf of their own employer. We respectfully
suggest that such a goal is already addressed in the
so-called 'principal's exemption' in existing Business and
Professions Code 10133 (a). That law already allows
individuals and corporate entities to negotiate their own
transactions without a license. If that provision is
unclear, we would welcome an opportunity to work with you and
your staff, or the sponsors, to clarify it."
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The California Association of Realtors believes the following
language would better capture the Author's intent:
"SECTION 1. Section 10133 of the Business and Professions
Code is amended to read:
(a) The acts described in Section 10131 are not acts for
which a real estate license is required if performed by:
(1 )(A) A regular officer of a corporation or a general
partner of a partnership with respect to real property owned
or leased by the corporation or partnership, respectively, or
in connection with the proposed purchase or leasing of real
property by the corporation or partnership, respectively, if
the acts are not performed by the officer or partner in
expectation of special compensation.
(B) For the purposes of this Section a regular officer may
include an officer of a corporation, a limited liability
company; or a general partner of a partnership, that is a
salaried employee whose duties entail the arranging or
negotiation on behalf of his or her employer of a lease or
purchase by the employer of an interest in real property for
the placement of, access to or operation of an advertising
display defined in Section 5202. "
SUPPORT AND OPPOSITION:
Support:
Broadway Heights Community Council
The California State Outdoor Adverting Association
Outfront Media
Opposition:
California Association of Realtors