BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 1807 Hearing Date: June 27,
2016
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|Author: |Bonta |
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|Version: |June 22, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Real estate licensees
SUMMARY: Allows a licensee of the Bureau of Real Estate to petition the
Real Estate Commissioner to remove his or her notice of
disciplinary action from the Bureau's Internet Web site because
the information is no longer necessary to prevent a credible
risk to the public, as specified.
Existing law:
1) Establishes within the Department of Consumer Affairs (DCA) a
Bureau of Real Estate (BRE or Bureau), the chief officer of
which is named the Real Estate Commissioner (Commissioner);
the BRE is mandated to protect the public by exercising its
licensing, regulatory, and disciplinary functions; whenever
the protection of the public is inconsistent with other
interests sought to be promoted, the protection of the public
shall be paramount. (Business and Professions Code (BPC) §
10000, et seq.)
2) Provides that the Commissioner enforce the provisions of the
Real Estate Law; has full power to regulate and control the
issuance and temporary or permanent revocation of all
licenses to be issued; and, perform all other acts and duties
necessary for their enforcement. (BPC § 10071)
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3) Provides that the Commissioner may adopt, amend, or repeal
rules and regulations that are reasonably necessary for the
enforcement. (BPC § 10080)
4) Requires the Commissioner to provide on the Internet
information regarding the status of every license issued,
including information on suspensions and revocations of
licenses, accusations filed pursuant to the Administrative
Procedure Act relative to persons or businesses subject to
licensure or regulation; provides that the information not
include personal information, except for the licensee's
address of record. (BPC § 10083.2)
5) Specifies actions by a licensee for which the Commissioner or
a designee may issue a citation and fine, including when a
person who does not possess a real estate license, prepaid
rental listing service license, or a real estate broker
license is engaged or has engaged in activities for which the
respective license is required; or when a licensee is
violating or has violated provisions, as specified.
(BPC § 10080.9)
6) Authorizes the Commissioner to promulgate regulations for
citations and fines associated with a violation or violations
of the Real Estate Law; requires the citation to be provided
in writing with particularities and nature of the violation;
provides that the citation may be made by certified mail at
the address of record of a licensee cited, or to the last
known mailing, business, or residence address of an
unlicensed person or entity cited; requires time be allowed
to comply with an order of correction that is specified in
the citation; provides that the person receiving the citation
may request an extension of the time to comply with the order
if the cited person or entity is unable to complete the
correction or pay the fine within the time specified.
(Title 10 California Code of Regulations §§ 2907.1-2907.4)
This bill:
1) Declares that it is appropriate for the BRE to continue
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reporting on its license verification Internet Web page,
which is hosted on the BRE Web site when discipline has been
imposed upon a licensee for conduct that indicates a credible
risk of harm to the public; and that the BRE may consider and
grant on a case-by-case basis a licensee's petition to
discontinue the reporting of past disciplinary actions when
the petitioning licensee has demonstrated to the satisfaction
of the Real Estate Commissioner that the continued reporting
is no longer required in order to avoid or reduce such a risk
to the public.
2) Declares that the BRE may require a petitioner to pay in
advance of consideration a fee to defray costs associated
with consideration of the petition.
3) Declares that the BRE is not authorized or required to
destroy public records maintained pursuant to the California
Public Records Act.
4) Declares that the Legislature intends to establish a process
by which a licensee may petition the BRE to remove a notice
of past discipline from the license verification Internet Web
site of the BRE.
5) Provides that a licensee may petition the Commissioner to
remove from the posting of discipline, as specified, an item
that through passage of time and evidence of rehabilitation
is no longer required in order to prevent a credible risk to
members of the public utilizing licensed activity of the
licensee.
6) Authorizes the Commissioner, upon petition by a licensee
accompanied by a fee, to remove from the posting of a
discipline that has been posted on the BRE's Internet Web
site for no less than 10 years and for which the licensee
provides evidence of rehabilitation indicating that the
notice is no longer required in order to prevent a credible
risk to members of the public utilizing licensed activity of
the licensee.
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7) Requires the Commissioner, when evaluating a petition, to
take into consideration other violations that present a
credible risk to the members of the public since the posting
of discipline requested for removal.
8) Defines "posted" as the date of disciplinary action taken on
the BRE website.
9) Authorizes BRE to develop, through regulations, the minimum
information to be included in a licensee's petition,
including, but not limited to, a written justification and
evidence of rehabilitation.
10)Requires the fee for a real estate salesperson or broker to
petition the BRE for removal of a notice of disciplinary
action from its Internet Web site after the passage of no
less than 10 years of the action first being noticed online
be the same as that for an unrestricted real estate
salesperson or broker license.
FISCAL EFFECT: This bill has been keyed "fiscal" by Legislative
Counsel. According to the May 4, 2016 Assembly Appropriations
Committee analysis, this bill will impose:
"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.
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."
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COMMENTS:
1. Purpose. The California Association of Realtors is the
sponsor of this bill. According to the Author, "The current
disciplinary system under the BRE 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 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 simply provides
the BRE Commissioner the ability to determine how long
certain disciplinary actions should be posted online,
ensuring that rehabilitated licensees are operating on a
level playing field."
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
BRE, even if the violation for which the licensee was
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.
The Commissioner already has the authority to review
disciplinary actions against a licensee and evaluate whether
the disciplinary action should be modified. This bill would
provide an avenue for licensees to request a disciplinary
action on the BRE's website be removed if the Commissioner
agrees that there is evidence of rehabilitation and the
licensee is not a potential risk to consumers.
2. Background on the BRE. Real estate licensing in California
commenced in 1917. BRE is the state entity currently charged
with responsibility to enforce the Real Estate Law, the
Subdivided Lands Act, and the Vacation Ownership and
Time-share Act of 2004. BRE's programs are in place to
satisfy the Bureau's statutorily mandated obligations of
licensing and regulating salespersons, brokers, mortgage loan
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originators, real estate and prepaid listing service
licensees, reviewing and approving subdivision and time share
offerings, and approving continuing education (CE) and
pre-license courses. Within the framework of requirements of
Division 4 of the BPC and the Regulations of the Real Estate
Commissioner as contained in the California Code of
Regulations, each of BRE's programs contribute toward
satisfying its mission of protecting and serving the
interests of the public in real estate transactions and
providing related services to the real estate industry.
Specifically, BPC § 10050 requires the Real Estate
Commissioner to enforce all laws commencing with BPC § 10000
and BPC § 11000 of Part 2 in a manner which achieves the
maximum protection for the purchasers of real property and
those persons dealing with real estate licensees.
A real estate license must first be obtained from the BRE if
a person wishes 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. Currently, there are approximately 535,000 real
estate licensees in California.
3. Disciplinary Action Postings. The facts and circumstances of
a violation, rather than the specific code section of the
violation determines the level of discipline sought by BRE.
Under current law, low-level violations of the real estate
law by licensees are addressed by BRE through citations and
fines. Typically, these are violations where the facts and
circumstances showed little harm to the public, but where
possible repetition of the violation calls for some
corrective action by BRE. The citation and fine authorization
statute (BPC § 10080.9) mandates that these low-level
discipline actions against licensees "shall not be reported
as disciplinary action taken by the commissioner." Thus,
citations to licensees do not appear on BRE's website.
More serious violations of the real estate law may involve
exactly the same code sections - usually BPC § 10176-10177 -
but where the facts and circumstances resulted in genuine
harm to the public or unacceptable risk taking on the part of
the licensee. Higher levels of risk, or of actual harm to
the public, cause BRE to seek revocation or restriction of a
license. Such discipline remains on BRE's website
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indefinitely.
For example, BPC § 10177(g) provides for license discipline
where a licensee demonstrates negligence or incompetence in
performing an act that requires licensure. In one instance,
a small act of negligence may present little risk and result
in no harm to a client, but require correction, and a
citation is issued. Where an act of negligence is one that
presents great risk, or costs a client his or her life
savings, outright revocation of the license may be sought by
BRE. Presently, such discipline is visible on CalBRE's
website, including documentation of the administrative
filings.
The sponsor reports that, even if the Commissioner were to
remove a citation from its website, other states and
enforcement agencies would be able to contact BRE and gain
access to disciplinary documents against a licensee.
4. Arguments in Support. The California Association of Realtors
(Sponsor) writes in support, "This bill creates a process by
which a licensee can have an old record of discipline removed
from [the BRE] website profile if the [Commissioner]
determines that protection of the public interest and public
welfare will be adequately maintained. Additionally, the
process would be paid for by the petitioner thereby avoiding
any new costs to the [BRE]."
SUPPORT AND OPPOSITION:
Support:
California Association of Realtors (Sponsor)
Opposition:
None on file as of June 21, 2016.
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