BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 875|
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UNFINISHED BUSINESS
Bill No: SB 875
Author: Price (D)
Amended: 8/20/12
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
SENATE FLOOR : 37-0, 1/19/12
AYES: Alquist, Anderson, Blakeslee, Cannella, Corbett,
Correa, De Le�n, DeSaulnier, Dutton, Emmerson, Evans,
Fuller, Gaines, Hancock, Harman, Hernandez, Huff, Kehoe,
La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod,
Padilla, Pavley, Price, Rubio, Simitian, Steinberg,
Strickland, Vargas, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Berryhill, Calderon, Runner
ASSEMBLY FLOOR : 77-1, 8/22/12 - See last page for vote
SUBJECT : Real estate licensees
SOURCE : Author
DIGEST : This bill allows the Department of Real Estate
Commissioner (Commissioner ) to bar individuals from
licensure and licensure examinations for specified
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violations, and makes other changes to Real Estate Law.
Assembly Amendments (1) allow the Commissioner to bar from
participation in an examination for licensure a real estate
salesperson or real estate broker, or specified unlicensed
persons, if the Commissioner makes certain findings; (2)
provide that persons suspended or barred from a position of
employment, management, or control under existing law are
also barred from participating in examinations for
licensure; (3) require the Commissioner to require a person
who submits a petition for reinstatement of a license or
reduction of a penalty to submit his or her fingerprints
with the petition; (4) provide that no person shall cheat
on, subvert, or attempt to subvert, a licensing examination
given by the Department of Real Estate (DRE); (5) define
cheating on, subverting, or attempting to subvert; (6)
allow the Commissioner to bar any candidate who willfully
cheats on, subverts, or attempts to subvert an examination
from taking any license examination and from holding an
active real estate license under any provision of the
Business and Professions Code (BPC) for a period of up to
three years; (7) clarify grounds for disciplinary action
against a licensee for acting as a dual agent without the
knowledge and written consent of all parties; (8) clarify
that an applicant for a Mortgage Loan Originator (MLO)
endorsement may fail the examination only three consecutive
times before having to wait six months before re-taking the
exam; and (9) allow licensees with an MLO endorsement who
are called to active military duty to extend the timeframe
in which they must complete continuing education
requirements.
ANALYSIS :
Existing law, the BPC :
1. Provides for the licensure and regulation of more than
483,000 real estate brokers, real estate salespersons,
and more than 22,000 MLOs license endorsements by the
DRE in the Business, Transportation and Housing Agency.
The 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.
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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 BPC 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 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:
1. Allows the Commissioner to bar from participation in an
examination for licensure a real estate salesperson or
real estate broker, or specified unlicensed persons, if
the Commissioner finds either of the following:
A. That the suspension or bar is in the public
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interest and that the person has committed or
caused a violation of California Real Estate Law or
rule or order of the Commissioner, which violation
was either known or should have been known by the
person committing or causing it or has caused
material damage to the public.
B. That the person has been convicted of or pleaded
nolo contendere to any crime, or has been held
liable in any civil action by final judgment, or
any administrative judgment by any public agency,
if that crime or civil or administrative judgment
involved any offense involving dishonesty, fraud,
or deceit, or any other offense reasonably related
to the qualifications, functions, or duties of a
person engaged in the real estate business in
accordance with the provisions of this division.
2. Provides that persons suspended or barred from a
position of employment, management, or control under
existing law are also barred from participating in
examinations for licensure.
3. Requires DRE, upon denial of an application for a
license or a license endorsement, to proceed under
statutes governing the denial, suspension and revocation
of licenses issued by the boards and bureaus within the
DCA, which require a statement of issues or a
notification of denial, as specified.
4. Requires the Commissioner to require a person who
submits a petition for reinstatement of a license or
reduction of a penalty to submit his or her fingerprints
with the petition.
5. Provides that no person shall cheat on, subvert, or
attempt to subvert a licensing examination given by the
DRE. Cheating on, subverting, or attempting to subvert
a licensing examination includes, but is not limited to,
engaging in, soliciting, or procuring any of the
following:
A. Any communication between one or more examinees
and any person, other than a proctor or examination
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official, while the examination is in progress.
B. Copying answers from another examinee or
permitting one's answers to be copied by another
examinee.
C. The taking of all or a part of the examination
by a person other than the applicant.
D. Removing from the examination room any
examination materials without authorization.
E. The unauthorized reproduction by any means of
any portion of the actual licensing examination.
F. Aiding by any means the unauthorized
reproduction of any portion of the actual licensing
examination.
G. Possession or use at any time during the
examination or while the examinee is on the
examination premises of any device, material, or
document that is not expressly authorized for use
by examinees during the examination, including, but
not limited to, notes, crib sheets, textbooks, and
electronic devices.
H. Failure to follow any examination instruction or
rule related to examination security.
I. Providing false, fraudulent, or materially
misleading information concerning education,
experience, or other qualifications as part of, or
in support of, any application for admission to an
examination.
6. Allows the Commissioner to bar any candidate who
willfully cheats on, subverts, or attempts to subvert an
examination from taking any license examination and from
holding an active real estate license under any
provision of the BPC for a period of up to three years.
7. Repeals provisions relating to conditional licenses
(which the DRE no longer issues).
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8. Clarifies that an applicant for an MLO endorsement may
fail the examination only three consecutive times before
having to wait six months before re-taking the exam.
9. Allows licensees with an MLO endorsement who are called
to active military duty to extend the timeframe in which
they must complete CE requirements.
10. Makes conforming and technical changes.
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, requires that beginning, January 1, 2011, real
estate licensees who wish to act as a MLO must apply to DRE
and obtain a 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
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, DRE's
regulations, and other applicable laws. If a complaint is
supported by evidence, the Commissioner may, after
providing an opportunity for an administrative hearing,
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR : 77-1, 8/22/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Block, Blumenfield, Bonilla, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell,
Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Hill,
Huber, Hueso, Huffman, Jeffries, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Valadao, Wagner,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Jones
NO VOTE RECORDED: Bill Berryhill, Roger Hern�ndez
JJA:d 8/22/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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