BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1807 (Bonta) - Real estate licensees ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 22, 2016 |Policy Vote: B., P. & E.D. 9 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1807 would allow a licensee of the Bureau of Real Estate to petition the Bureau to remove information about disciplinary actions taken against the licensee, after ten years have elapsed and certain conditions are met. Fiscal Impact: Minor costs to adopt regulations specifying what information must be provided by a petitioner to the Bureau of Real Estate (Real Estate Fund). One-time costs of $340,000 and ongoing costs of $290,000 per year for the Bureau of Real Estate to evaluate petitions from licensees and the licensee's past disciplinary history, and to document the Bureau's decision on the petition (Real Estate Fund). Because the requirement for the Bureau to retain information on its website for ten years went into effect in 2011, the Bureau would not likely receive a substantial number of petitions until 2019-20. The Bureau anticipates that about AB 1807 (Bonta) Page 1 of ? 400 licensees per year would request disciplinary information to be removed from the website. The bill requires a petitioner to pay the Bureau a fee to cover the Bureau's workload. The fee would be set at the level of a license fee (currently set in statute at $300.) The Bureau anticipates this will generate about $120,000 per year, partially offsetting the cost to process the petitions. Background: Under current law, the Bureau of Real Estate licenses real estate brokers and salespersons in the state. Real estate salespersons are licensed and work under a licensed broker, who has retains fiduciary responsibly to the client. Under current law, an associate licensee is a licensed salesperson or licensed broker who is working under the supervision of a licensed broker. Under current law and practice, the Bureau of Real Estate publishes information about licensed salespersons and brokers on its website. Under current law and practice, the Bureau has the authority to take disciplinary action against a licensee for violations of law or regulation governing real estate sales. The scope of disciplinary action taken by the Bureau depends on the particular facts of an allegation. For minor or first time violations, the Bureau may impose a citation or fine. In those cases, information about the disciplinary action is not required to be posted on the Bureau's website. For more serious violations (for example violations that caused harm to the public), the Bureau is likely to revoke a license or place restrictions on a license. In those cases, the disciplinary action taken by the Bureau is required to be posted on its website (so that consumers can look up a licensee's disciplinary history). Current law requires information on disciplinary actions to be retained on the Bureau's website for ten years. Proposed Law: AB 1807 would allow a licensee of the Bureau of Real Estate to petition the Bureau to remove information about disciplinary actions taken against the licensee, after ten years have elapsed and certain conditions are met. Specific provisions of the bill would: Authorize the Real Estate Commissioner (the chief officer of AB 1807 (Bonta) Page 2 of ? the Bureau of Real Estate) to remove a posting of a disciplinary action against a licensee, upon a petition of the licensee; Require the petitioner to pay a fee to the Bureau; Require ten years to have elapsed before any disciplinary information is removed from the Bureau's website; Require the petitioner to demonstrate evidence of rehabilitation, such that notice is no longer needed to protect the public; Authorize the bureau to develop information to be included in a petition, through the adoption of regulations; Set the fee to be paid by a petitioner at the fee set in statute for a real estate salesperson or real estate broker (currently set at $300). Staff Comments: The Bureau indicates that since the housing bubble preceding the Great Recession, there have been a significant number of disciplinary actions that have been taken against licensees or are in process. The Bureau anticipates that once ten years have elapsed, there is likely to be a significant number of petitions to remove disciplinary information relating to those disciplinary actions. The Bureau indicates that the ongoing workload and costs indicated above are likely to persist for several years and then to moderate as the large number of disciplinary actions relating to the housing bubble are addressed. -- END --