BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1807


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          Date of Hearing:  May 4, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1807 (Bonta) - As Amended April 18, 2016


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          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  








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          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  








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            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  








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            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


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