BILL ANALYSIS Ó AB 1807 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1807 (Bonta) - As Amended April 18, 2016 ----------------------------------------------------------------- |Policy |Business and Professions |Vote:|16 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill allows a licensee of the Bureau of Real Estate (Bureau) to petition the Real Estate Commissioner (Commissioner) to remove his or her notice of disciplinary action from the Bureau's Internet Web site if that action has been noticed for AB 1807 Page 2 at least ten years and the licensee provides evidence of rehabilitation indicating the information is no longer necessary to prevent a credible risk to the public. The bill further allows the Bureau to charge a fee to cover the costs of considering a petition, and requires the Bureau to develop regulations establishing the minimum information to be included in a licensee's petition. FISCAL EFFECT: 1)The Bureau anticipates significant costs beginning in FY 2020-21 of approximately $340,000 (special funds) and $292,000 (special funds) ongoing for three positions for the associated workload to process, review and make recommendations on each request received. These costs, which are fee supported, assume the same type of staffing currently used by Bureau for similar workload for existing Bureau functions. (See Comment #3 below.) 2)The Bureau notes that certain licenses generated significant disciplinary actions between 2004 and 2009, during the real estate "bubble", and from 2008 to the present due to the bursting of the real estate bubble and subsequent market decline. For these reasons the Bureau anticipates the workload impact of this bill may not decline until approximately 2030. COMMENTS: 1)Purpose. According to the author, "The current disciplinary system under the Bureau serves an important role in ensuring consumers have access to a real estate licensee's disciplinary history. That information serves as a valuable tool in protecting consumers and promoting transparency. However, this tool has also negatively impacted a small class of real estate AB 1807 Page 3 licensees who have had minor disciplinary actions on their record for many years. Even after the licensee has been rehabilitated and the license penalty has been removed, there isn't an opportunity to have that action removed from the online database." This bill provides a self-funding process for licensees to petition to have a disciplinary action removed from the Bureau's website 2)Background. A person wishing to engage in the real estate business and to act in the capacity of, advertise, or assume to act as a real estate broker or real estate salesperson within the State of California must obtain a license from the Bureau. Currently, there are approximately 535,000 real estate licensees in California. Under current law, low-level disciplinary actions that the Bureau addresses via citation and fine do not appear on its website. The Bureau investigates these situations following standards set out in regulations. When a violation warrants disciplinary action against a licensee, the Commissioner is required to post a notice of discipline on the Bureau's Web site so that the information is available to a consumer who searches specifically for that licensee. These notices remain on the Web site indefinitely. According to the California Association of Realtors, some licensees have used this information to gain a competitive advantage over licensees with a record of discipline from the Bureau, even if the violation for which the licensee was AB 1807 Page 4 disciplined is several years old, the licensee has complied with corrective actions specified in the citation, and the violation is no longer relevant to the licensee's ability to operate. 3)Clarifying Amendments. Staff notes that the Bureau is interpreting this bill to mean that all past disciplinary actions would not be eligible to be removed from the Bureau's website until a minimum of ten years after the enactment SB 706 (Price), Chapter 712, Statutes of 2011; therefore they don't anticipate costs until FY 2020-21. If this is not the author's intent, clarifying amendments may be needed. 4)Prior Legislation. SB 706 (Price), Chapter 712, Statutes of 2011, established the requirement that disciplinary actions be posted to the Bureau of Real Estate's website. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081 AB 1807 Page 5