BILL ANALYSIS                                                                                                                                                                                                    






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          |SENATE RULES COMMITTEE            |                       SB 1196|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   THIRD READING 


          Bill No:  SB 1196
          Author:   Hill (D) 
          Amended:  4/12/16  
          Vote:     21 

           SENATE BUS, PROF. & ECON. DEV. COMMITTEE:  9-0, 4/18/16
           AYES:  Hill, Bates, Berryhill, Block, Galgiani, Hernandez,  
            Jackson, Mendoza, Wieckowski

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           SUBJECT:   Bureau of Real Estate:  Bureau of Real Estate  
                     Appraisers


          SOURCE:    Author


          
          DIGEST:   This bill (1) adds a four-year sunset date to the  
          Bureau of Real Estate and Bureau of Real Estate Appraisers; (2)  
          provides the Real Estate Commissioner the authority to suspend  
          the license of a real estate licensee who has entered into a  
          guilty plea for a felony or a crime substantially related to the  
          qualifications, functions, or duties of a real estate license;  
          and (3) requires an applicant for a Real Estate Appraiser's  
          license to complete a course and examination that tests the  
          applicant's knowledge of state and federal laws relating to the  
          practice of appraising.   

          ANALYSIS:  










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          Existing law:


          1) Establishes the Real Estate Law, administered by the Bureau  
             of Real Estate (CalBRE or Bureau), within the Department of  
             Consumer Affairs (DCA), which licenses and regulates real  
             estate salespersons, brokers, and mortgage loan originators.   
             (BPC  1000 et seq.)  





          2) Provides that the Real Estate Commissioner (Commissioner) may  
             revoke or suspend a real estate license who entered a plea of  
             guilty or nolo contendere to, or was found guilty of, or  
             convicted of, a felony, or a crime substantially related to  
             the qualifications, functions, or duties of a real estate  
             licensee, after the time for appeal has elapsed or the  
             judgment of conviction has been affirmed on appeal.  (BPC   
             10177(b))


          3) Establishes the Real Estate Appraiser's Law, administered by  
             the Bureau of Real Estate Appraisers (BREA), within the DCA,  
             which licenses and regulates real estate appraisers.  (BPC   
             11300 et seq.)  


          4) Requires the Bureau Chief to adopt regulations governing the  
             process and procedures for renewal of a license to include,  
             but not be limited to, continuing education (CE)  
             requirements, which will be reported on the basis of  
             four-year CE cycles.  (BPC  11360)


          This bill:


          1) Requires CalBRE and BREA to be reviewed by the appropriate  
             policy committees in four years.


          2) Provides the Commissioner the authority to suspend the  







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             license of a real estate licensee who has entered into a  
             guilty plea for a felony or a crime substantially related to  
             the qualifications, functions, or duties of a real estate  
             license.


          3) Requires the Bureau to notify person whose license is subject  
             to suspension of his or her right to elect to have the issue  
             of the suspension heard.


          4) Requires that the suspension be rescinded and the license  
             reinstated to its status prior to the suspension if the plea  
             of guilty is withdrawn by the licensee. 


          5) Requires an applicant for a Real Estate Appraiser's license  
             to complete a Bureau approved course and examination that  
             tests the applicant's knowledge of state and federal laws  
             relating to the practice of appraising.   


          6) Makes other technical changes.


          Background


          1)Review of CalBRE - issues identified and recommended changes.   
            The following are some of the major issues pertaining to  
            CalBRE along with background information concerning the  
            particular issue.  Recommendations were made by the Senate  
            Business, Professions and Economic Development Committee staff  
            regarding the particular issue areas which needed to be  
            addressed. 


             a)   Issue: Licensee Suspension


               Background.  Currently, BPC Section 10177 (b) is written in  
               such a way that it requires "the time for appeal" to elapse  
               on a guilty plea before CalBRE can use it for disciplinary  
               action.  The full language for BPC Section 10177(b) reads:







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                 BPC  10177.  "The commissioner may suspend or revoke the  
                 license of a real estate licensee, delay the renewal of a  
                 license of a real estate licensee, or deny the issuance  
                 of a license to an applicant, who has done any of the  
                 following, or may suspend or revoke the license of a  
                 corporation, delay the renewal of a license of a  
                 corporation, or deny the issuance of a license to a  
                 corporation, if an officer, director, or person owning or  
                 controlling 10 percent or more of the corporation's stock  
                 has done any of the following:


                 (b) Entered a plea of guilty or nolo contendere to, or  
                 been found guilty of, or been convicted of, a felony, or  
                 a crime substantially related to the qualifications,  
                 functions, or duties of a real estate licensee, and the  
                 time for appeal has elapsed or the judgment of conviction  
                 has been affirmed on appeal, irrespective of an order  
                 granting probation following that conviction, suspending  
                 the imposition of sentence, or of a subsequent order  
                 under Section 1203.4 of the Penal Code allowing that  
                 licensee to withdraw his or her plea of guilty and to  
                 enter a plea of not guilty, or dismissing the accusation  
                 or information."


          CalBRE has seen instances where major criminal cases involving  
          real estate fraud have taken years to work their way through  
          federal and state criminal courts.  In these cases, CalBRE has  
          seen licensees who were defendants plead guilty relatively early  
          in the process as part of a plea bargain that furthers the  
          prosecution of other defendants.  Those guilty pleas may not  
          result in a conviction for months, if not years, as the case  
          against the other defendants proceeds.  As presently written in  
          statute, that guilty licensee (who has entered his or her own  
          voluntary and knowing plea) may continue to practice real  
          estate.


          The ability for the Bureau to take swift action against a  
          licensee and promote public health and safety appears to be  
          limited by this section of statute.  Without the authority to  







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          suspend a license from a real estate licensee who voluntarily  
          enters a guilty plea to a felony or substantially related crime,  
          real estate licensees are able to continue to practice real  
          estate.


               Recommendation and proposed statutory change. The  
               Legislature may wish to grant the Commissioner authority to  
               suspend the license of a real estate licensee who has  
               entered into a guilty plea for a felony or a crime  
               substantially related to the qualifications, functions, or  
               duties of a real estate license.


          This bill makes the following changes to the Real Estate Law  
          related to licensee suspension:


                 Provides the Commissioner authority to suspend the  
                 license of a real estate licensee who has entered into a  
                 guilty plea for a felony or a crime substantially related  
                 to the qualifications, functions, or duties of a real  
                 estate license.  The language would be added onto BPC   
                 10177(b).  The language reads:


                 "Notwithstanding the above, and with the recognition that  
                 sentencing may not occur for months or years following  
                 the entry of a guilty plea, the commissioner may suspend  
                 the license of a real estate licensee upon the entry by  
                 the licensee of a guilty plea to the crimes mentioned  
                 above. If the plea of guilty is withdrawn, the suspension  
                 shall be rescinded and the license reinstated to its  
                 status prior to the suspension. The Bureau shall the  
                 notify person whose license is subject to suspension of  
                 his or her right to elect to have the issue of the  
                 suspension heard in accordance with Section 10100 of the  
                 Business and Professions Code."


          2)Review of the BREA - issues identified and recommended  
            changes.  The following are some of the major issues  
            pertaining to BREA along with background information  
            concerning the particular issue.  Recommendations were made by  







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            the Senate Business, Professions and Economic Development  
            Committee staff regarding the particular issue areas which  
            needed to be addressed.


             a)   Issue: Licensee Education


               Background. Prior to licensure, applicants are not required  
               take a course or pass an exam to show fluency in federal  
               and state laws and regulations.  Only upon renewal of the  
               licensure must real estate appraisers demonstrate their  
               knowledge of federal and state laws and regulations.


          Real estate appraiser licenses must be renewed every two years.   
          However, there are two separate CE requirements in order to  
          renew a license.  All licensed appraisers must meet minimum CE  
          requirements before renewing their license.  A total of 56 hours  
          of CE is required during the four-year continuing education  
          cycle, including the following mandatory courses for all license  
          categories:


                     Seven-hour National Uniform Standards of  
                 Professional Appraisal Practice (USPAP) course-required  
                 every two years.


                     Four-hour Bureau approved course entitled "Federal  
                 and State Laws and Regulations"- required every four  
                 years.  (BPC  11360(a)). 


          In practical terms, this requires a renewal of the seven-hour  
          USPAP course every two years on its own, and a full CE (56  
          hours) renewal every four years.  Generally the requirement is a  
          full CE 56 hour renewal every other two year cycle, with a  
          reduced seven-hour CE renewal cycle in between.


          CE courses or seminars must cover appraisal related topics  
          including subjects such as land use planning, appraisal computer  
          applications, cost estimating, and green building appraisals.







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          Recommendation and proposed statutory change.  To ensure  
          adequate public protection and curtail unnecessary complaint  
          investigations, the Legislature may wish to require applicants  
          for a real estate appraiser license to initially demonstrate  
          their knowledge of the federal and state laws regulating the  
          appraisal profession.  The most effective way to accomplish this  
          would be to require applicants, prior to licensure, to complete  
          a course and pass an examination that would include questions  
          regarding federal and state laws and regulations. 


          This bill makes the following changes to the Appraisers Law  
          related to licensee education:


            Requires an applicant for a real estate appraiser's license to  
            complete a Bureau-approved course and examination testing the  
            applicant on federal and state laws regulating the appraisal  
            profession.




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified5/10/16)


          None received


          OPPOSITION:   (Verified5/10/16)


          None received


          Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104
          5/11/16 15:58:19








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