BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 875|
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THIRD READING
Bill No: SB 875
Author: Price (D)
Amended: 1/4/12
Vote: 21
SENATE BUS., PROF. & ECON. DEVEL. COMMITTEE : 8-0, 1/9/12
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Walters
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Real estate licensees
SOURCE : Author
DIGEST : This bill authorizes the Department of Real
Estate to use additional procedures when denying a license
and also deletes an obsolete provision dealing with the
issuing of conditional licenses.
ANALYSIS :
Existing law, the Business and Professions Code :
1. Provides for the licensure and regulation of more than
483,000 real estate brokers, real estate salespersons,
and more than 22,000 mortgage loan originator license
endorsements by the Department of Real Estate (DRE) in
the Business, Transportation and Housing Agency (BT&H).
CONTINUED
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The Real Estate Commissioner (Commissioner), who serves
as the chief executive of the DRE, is appointed by the
Governor, subject to Senate confirmation. The
Commissioner is mandated to enforce the Real Estate Law.
2. Requires that before denying, suspending or revoking any
license or license endorsement, the DRE shall proceed as
described in the Administrative Procedures Act (APA).
3. Requires, through general provisions of the Business and
Professions Code that regulatory boards within the
Department of Consumer Affairs (DCA), may deny a license
to an applicant by either:
A. Filing and serving a statement of issues to the
applicant as provided under the APA.
B. Notifying the applicant, as specified, that the
application is denied stating the reasons for denial and
that the applicant has a right to a hearing as provided
in the APA if the applicant makes a written request
within 60 days for a hearing on the denial of the
application.
4. Refers to the renewal and issuance of a conditional
license in real estate. The DRE is no longer authorized
to issue a conditional license.
Existing law, the Government Code :
1. Establishes the Administrative Procedures Act (APA)
which provides the framework by which state agencies may
take administrative action to deny, suspend, or revoke a
regulatory license.
2. The APA provides for a statement of issues, which is a
written statement of the reasons for denial of an
application for a license or privilege, specifying the
statutes and rules allegedly violated and the acts or
omissions comprising the alleged violations.
This bill:
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1. Revises and recasts the provisions authorizing the DRE
to deny, a license or license endorsement to instead
authorize DRE to deny a license to an applicant by
either:
A. Filing and serving a statement of issues to the
applicant as provided under the APA.
B. Notifying the applicant, as specified, that that
the application is denied stating the reasons for
denial and that the applicant has a right to a
hearing as provided in the APA if the applicant
makes a written request within 60 days for a
hearing on the denial of the application.
2. Repeals the obsolete reference to a conditional real
estate license.
Background
The DRE is responsible for regulating the practice of real
estate brokers and real estate salespersons in California.
The DRE currently licenses more than 483,000 persons in
California, with over 20,800 new licenses issued each year,
and more than 95,000 licenses renewed annually. Licensed
salespersons (333,330) outnumber licensed brokers (149,920)
at a ratio of more than two to one. The DRE licenses and
regulates real estate salespeople, brokers, and
corporations. To implement mandates established by federal
legislation (The Secure and Fair Enforcement Mortgage
Licensing Act, called the SAFE Act), the California
Legislature enacted SB 36 (Calderon, Chapter 160, Statutes
of 2009), which requires that beginning, January 1, 2011,
real estate licensees who wish to act as mortgage loan
originators must apply to DRE and obtain a mortgage loan
originator (MLO) license endorsement. The DRE issued over
22,000 MLO license endorsements prior to the January 1,
2011 deadline.
The Commissioner serves as the chief executive of the DRE
and is appointed by the Governor and subject to
confirmation by the Senate Committee on Rules. The
Commissioner is mandated to enforce the Real Estate Law in
a manner which achieves the maximum protection for the
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purchasers of real property and those persons dealing with
real estate licensees.
DRE's Enforcement and Audit sections investigate complaints
regarding alleged violations of the Real Estate Law, the
Department's regulations, and other applicable laws. If a
complaint is supported by evidence, the Commissioner may,
after providing an opportunity for an administrative
hearing, revoke, suspend, or deny a real estate license.
The Commissioner may also issue desist and refrain orders
to stop activities that are in violation of these laws.
Comments
According to the author's office, this bill is a follow-up
bill to last year's SB 706 (Price), Chapter 712, Statutes
of 2011, to provide additional enforcement tools for the
DRE to more effectively carry out their regulatory duties.
According to the author's office, as currently provided
under the real estate law, in order to deny an application,
the DRE must draft a formal statement of issues describing
in detail the reasons for denying the license application
and requesting a hearing of the statement of issues before
by an administrative law judge (ALJ) under the Office of
Administrative Hearings (OAH). The author's office states
that each of the boards and bureaus under the DCA has the
ability to either issue a statement of issues as provided
in the APA, or to issue the applicant a written notice of
denial. This bill gives the DRE the ability to use the
same streamlined process to deny a license that is used by
all of the boards within DCA.
According to the author's office, the requirement to issue
a statement of issues each and every time the DRE denies a
license increases the department's enforcement costs and
delays the overall licensing processes. This bill
authorizes the DRE to issue a written notice of denial to
an applicant who does not meet the criteria for a real
estate license.
Issuing a notice of denial does not reject an applicant's
right to a hearing, since the applicant may request a
hearing within 60 days of being served with the notice of
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denial. DRE will then prepare a statement of issues and
proceed under the provisions of the APA in order for the
denial to be heard before an ALJ.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
JJA:do 1/18/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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