The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would authorize the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been posted on the bureaus Internet Web site for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. The bill would require the commissioner, in 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, as specified. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also authorize the bureau to develop, through regulations, the amount of the fee and the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation. The bill would require the petition process to commence January 1, 2018. The bill would require the bureau to maintain a list of all licensees whose disciplinary records are altered as a result of the petition process and to update the list and make it available to other licensing bodies, as specified.

This bill would incorporate additional changes in Section 10083.2 of the Business and Professions Code proposed by AB 2330, that would become operative only if AB 2330 and this bill are both chaptered and become effective on or before January 1, 2017, and this bill is chaptered last.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would authorize the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been posted on the bureaus Internet Web site for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. The bill would require the commissioner, in 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, as specified. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also authorize the bureau to develop, through regulations, the amount of the fee and the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation. The bill would require the petition process to commence January 1, 2018. The bill would require the bureau to maintain a list of all licensees whose disciplinary records are altered as a result of the petition process and to update the list and make it available to other licensing bodies, as specified.

This bill would incorporate additional changes in Section 10083.2 of the Business and Professions Code proposed by AB 2330, that would become operative only if AB 2330 and this bill are both chaptered and become effective on or before January 1, 2017, and this bill is chaptered last.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would authorize the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been posted on the bureaus Internet Web site for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. The bill would require the commissioner, in 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, as specified. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also authorize the bureau to develop, through regulations, the amount of the fee and the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation. The bill would require the petition process to commence January 1, 2018, or upon completion of regulations to implement the process, whichever comes first. 2018. The bill would require the bureau to maintain a list of all licensees whose disciplinary records are altered as a result of the petition process and to update the list and make it available to other licensing bodies, as specified.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would authorize the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been posted on the bureaus Internet Web site for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. The bill would require the commissioner, in 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, as specified. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also authorize the bureau to develop, through regulations, the amount of the fee and the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation. The bill would require the petition process to commence January 1, 2018, or upon completion of regulations to implement the process, whichever comes first.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would require authorize the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been posted on the bureaus Internet Web site for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. The bill would require the commissioner, in 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, as specified. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also authorize the bureau to develop, through regulations, the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would require the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been posted on the bureaus Internet Website Web site for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also authorize the bureau to develop, through regulations, the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would require the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that has been noticed posted on the bureaus Internet Website for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also require authorize the bureau to develop, through regulations, the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation.

The Real Estate Law provides for the licensure and regulation of real estate brokers and real estate salespersons by the Bureau of Real Estate Estate, headed by the Real Estate Commissioner. Fees charged and collected under the Real Estate Law, except as otherwise provided, are deposited into the Real Estate Fund and continuously appropriated for use by the commissioner, as specified. Existing law requires the commissioner to provide on the Internet specific information regarding the status of every license issued by the department.

This bill would require the commissioner, upon petition by a licensee accompanied by a specified fee, to remove from the posting of discipline an item that through passage of time has been noticed on the bureaus Internet Website for at least 10 years and for which the licensee provides evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. Because the fees collected pursuant to these provisions would be deposited in the Real Estate Fund, which is continuously appropriated, the bill would make an appropriation. The bill would also require the bureau to develop, through regulations, the minimum information to be included in a licensees petition, including, but not limited to, a written justification and evidence of rehabilitation.

Existing law subjects the escrow industry to various laws and regulations under the oversight of the Real Estate Commissioner, the Commissioner of Business Oversight, or the Insurance Commissioner. Existing law requires the commissioners to notify each other when taking enforcement or disciplinary action related to certain escrow services. Existing law requires the Bureau of Real Estate to maintain an Internet Web site that displays a database of individuals who have been subject to disciplinary action related to the escrow industry.

This bill would limit the time period for which the Bureau of Real Estates Internet Web site is required to display disciplinary actions taken against a licensee to 10 years or a lesser as the Real Estate Commissioner deems to be in the best interest of the public.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1807

Author:(Bonta)

As Amended Ver:August 19, 2016

Majority vote

Original Committee Reference: B. & P.

SUMMARY: Allows a licensee of the Bureau of Real Estate (Bureau) to petition the Real Estate Commissioner (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. Specifically, this bill:

1. Declares that it is appropriate for the Bureau to continue reporting on its license verification Internet Web page, which is hosted on the Bureau 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 Bureau may consider and grant on a case-by-case basis a licensee's petition to discontinue the posting of past disciplinary actions if he or she can provide evidence that continued posting is no longer required to reduce risk to the public.
2. Declares that the Bureau 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 Bureau 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 Bureau to remove a notice of past discipline from the license verification Internet Web site of the Bureau.
5. Provides that a licensee may petition the Commissioner to remove the notice of discipline, as specified, if the action has been posted for at least ten years and the licensee provides evidence of rehabilitation indicating the information is no longer necessary to prevent a credible risk to the public.
6. Permits the Bureau 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; permits the Bureau to additionally develop, through regulations, the fee amount required to petition.

The Senate amendments:

1. Requires the Commissioner, in 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.
2. Defines "posted" as the date of disciplinary action taken by the bureau.
3. Specifies that the petition process becomes operative on January 1, 2018.
4. Require the Bureau to maintain a list of all licensees whose disciplinary records are altered as a result of the petition process and to update the list and make it available to other licensing bodies, as specified.
5. Add language to avoid chaptering out issues with AB 2330 (Ridley-Thomas) of the current Legislative Session.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill will result in:

1. Minor costs to adopt regulations specifying what information must be provided by a petitioner to the Bureau of Real Estate (Real Estate Fund).
2. 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 Web site 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 400 licensees per year would request disciplinary information to be removed from the Web site. This bill requires a petitioner to pay the Bureau a fee to cover the Bureau's workload, to be set by the Bureau. Depending on the fee level established by the Bureau, fee revenues will offset some or all of the Bureau's costs.

COMMENTS:

Purpose. This bill provides that a licensee of the Bureau may petition the Commissioner to remove his or her notice of disciplinary action from the Bureau's Internet Web site because the licensee is no longer a credible risk to the public. This bill is sponsored by the California Association of Realtors.

According to the author, "The current disciplinary system under the [Bureau] 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 [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."

Background. The mission of the Bureau is to safeguard and promote the public interests in real estate matters through licensure, regulation, education and enforcement. The Bureau's jurisdiction is licensing and regulating mortgage loan originators, real estate and prepaid listing service licensees, reviewing and approving subdivision and time share offerings, and approving continuing education and pre-license courses.

A real estate license must first be obtained from the Bureau 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.

Under current law, low-level disciplinary actions that the Bureau addresses via citation and fine do not appear on its Web site. These infractions include, among others, when a person without a real estate license engages in activities for which a real estate license is required. The Bureau investigates these situations following standards set in regulations.

Violations of provisions in law that warrant disciplinary action can vary in greatly. For instance, a licensee may violate a seemingly minor provision of his or her licensure in a severe way. As such, a violation of one licensee's provisions could lead to the same disciplinary action as another licensee who violated a completely different provision. Likewise, a licensee who repeatedly violates his or her provisions may have a more severe disciplinary action taken against him or her than a licensee who is noticed for his or her first violation.

SB 706 (Price), Chapter 712, Statutes of 2011, requires the Commissioner to post a notice of discipline on the Bureau's Web site so that the information is available to a consumer who searches specifically for that licensee. These notices are posted to the Web site indefinitely. As such, the current version of this bill makes all past disciplinary actions ineligible to be removed from the Bureau's Web site until a minimum of 10 years after the enactment SB 706; therefore, the Bureau does not anticipate implementation costs until Fiscal Year 2020-21.

However, 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 Bureau, 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 Web site be removed if the Commissioner agrees that there is evidence of rehabilitation and the licensee is not a potential risk to consumers.

Analysis Prepared by: Gabby Nepomuceno / B. & P. / (916) 319-3301 FN: 0004883

 THIRD READING  

Bill No: AB 1807

Author:

:

Vote:

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/27/16

AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

ASSEMBLY FLOOR: 78-0, 6/1/16 - See last page for vote

SUBJECT:

SOURCE: California Association of Realtors

DIGEST: This bill 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. Additionally, this bill adds double jointing language with AB 2330 (Ridley-Thomas) and requires that the Bureau of Real Estate to maintain a list of all licensees whose disciplinary records are altered as a result of a petition.

Senate Floor Amendments as of 8/19/16 add double jointing language with AB 2330 (Ridley-Thomas) and require that the Bureau of Real Estate to maintain a list of all licensees whose disciplinary records are altered as a result of a petition.

ANALYSIS:

Existing law:

1. Establishes within the Department of Consumer Affairs 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)
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; and 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 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 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.
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 Web site.
9. Authorizes BRE to develop, through regulations, the amount of the fee and 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 petition process to commence January 1, 2018, or upon completion of regulations to implement the process, whichever comes first.
11. Adds double jointing language with AB 2330 (Ridley-Thomas).
12. Requires that BRE to maintain a list of all licensees whose disciplinary records are altered as a result of a petition.

Background

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 provides an avenue for licensees to request a disciplinary action on the BRE’s Web site be removed if the Commissioner agrees that there is evidence of rehabilitation and the licensee is not a potential risk to consumers.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, this bill would incur minor costs to adopt regulations specifying what information must be provided by a petitioner to BRE and ongoing cots for BRE to evaluate the petitions from licensees and their past disciplinary history.

SUPPORT: (Verified 8/22/16)

California Association of Realtors (source)

OPPOSITION: (Verified 8/22/16)

Department of Finance

ARGUMENTS IN SUPPORT: The California Association of Realtors, the sponsor of this bill, 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].”

ARGUMENTS IN OPPOSITION: The Department of Finance argues that this bill “results in costs not included in the Administration’s current fiscal plan. The Bureau [also] did not start posting disciplinary actions to their website until 2011.”

ASSEMBLY FLOOR: 78-0, 6/1/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Gordon, Harper

Prepared by:

8/22/16 22:59:20

**** END ****

 THIRD READING  

Bill No: AB 1807

Author:

: 8/15/16

Vote:

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/27/16

AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

ASSEMBLY FLOOR: 78-0, 6/1/16 - See last page for vote

SUBJECT:

SOURCE: California Association of Realtors

DIGEST: This bill 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.

ANALYSIS:

Existing law:

1. Establishes within the Department of Consumer Affairs 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)
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; and 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 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 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.
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 Web site.
9. Authorizes BRE to develop, through regulations, the amount of the fee and 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 petition process to commence January 1, 2018, or upon completion of regulations to implement the process, whichever comes first.

Background

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 provides an avenue for licensees to request a disciplinary action on the BRE’s Web site be removed if the Commissioner agrees that there is evidence of rehabilitation and the licensee is not a potential risk to consumers.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, this bill would incur minor costs to adopt regulations specifying what information must be provided by a petitioner to BRE and ongoing cots for BRE to evaluate the petitions from licensees and their past disciplinary history.

SUPPORT: (Verified 8/11/16)

California Association of Realtors (source)

OPPOSITION: (Verified 8/11/16)

Department of Finance

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].”

ARGUMENTS IN OPPOSITION: The Department of Finance argues that this bill “results in costs not included in the Administration’s current fiscal plan. The Bureau [also] did not start posting disciplinary actions to their website until 2011.”

ASSEMBLY FLOOR: 78-0, 6/1/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Gordon, Harper

Prepared by:

8/15/16 20:10:09

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1807 (Bonta) - Real estate licensees

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 11, 2016

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 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, to be set by the Bureau. Depending on the fee level established by the Bureau, fee revenues will offset some or all of the Bureau’s costs.

Author Amendments:

Authorize the Bureau to determine the level of the fee and make technical changes.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1807 (Bonta) - Real estate licensees

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 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 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 --

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2015 - 2016 Regular

Bill No: Hearing Date: June 27, 2016

Subject:

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)
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 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.
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.”

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.

1. 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 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.

1. 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 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.

1. 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.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1807

Author:(Bonta)

As Amended Ver:

Majority vote

SUMMARY: Allows a licensee of the Bureau of Real Estate (Bureau) to petition the Real Estate Commissioner (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. Specifically, this bill:

1. Declares that it is appropriate for the Bureau to continue reporting on its license verification Internet Web page, which is hosted on the Bureau 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 Bureau may consider and grant on a case-by-case basis a licensee's petition to discontinue the posting of past disciplinary actions if he or she can provide evidence that continued posting is no longer required to reduce risk to the public.
2. Declares that the Bureau 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 Bureau 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 Bureau to remove a notice of past discipline from the license verification Internet Web site of the Bureau.
5. Provides that a licensee may petition the Commissioner to remove the notice of discipline, as specified, if the action has been posted for at least 10 years and the licensee provides evidence of rehabilitation indicating the information is no longer necessary to prevent a credible risk to the public.
6. Permits the Bureau 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.
7. Sets the fee to petition the Commissioner as the same as an unrestricted license, as specified.

FISCAL EFFECT: According to the Assembly Appropriations Committee, the Bureau anticipates costs of approximately $300,000 (special funds) beginning in 2016-17 and on-going for the associated workload to process, review and make recommendations on each request received. These costs are supported by the fee authorized in the bill.

COMMENTS:

Purpose. This bill provides that a licensee of the Bureau may petition the Commissioner to remove his or her notice of disciplinary action from the Bureau's Internet Web site because the licensee is no longer a credible risk to the public. This bill is sponsored by the California Association of Realtors.

According to the author, "The current disciplinary system under the [Bureau] 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 [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."

Background. The mission of the Bureau is to safeguard and promote the public interests in real estate matters through licensure, regulation, education and enforcement. The Bureau's jurisdiction is licensing and regulating mortgage loan originators, real estate and prepaid listing service licensees, reviewing and approving subdivision and time share offerings, and approving continuing education and pre-license courses.

A real estate license must first be obtained from the Bureau 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.

Under current law, low-level disciplinary actions that the Bureau addresses via citation and fine do not appear on its Web site. These infractions include, among others, when a person without a real estate license engages in activities for which a real estate license is required. The Bureau investigates these situations following standards set in regulations.

Violations of provisions in law that warrant disciplinary action can vary in greatly. For instance, a licensee may violate a seemingly minor provision of his or her licensure in a severe way. As such, a violation of one licensee's provisions could lead to the same disciplinary action as another licensee who violated a completely different provision. Likewise, a licensee who repeatedly violates his or her provisions may have a more severe disciplinary action taken against him or her than a licensee who is noticed for his or her first violation.

SB 706 (Price), Chapter 712, Statutes of 2011, requires the Commissioner to post a notice of discipline on the Bureau's Web site so that the information is available to a consumer who searches specifically for that licensee. These notices are posted to the Web site indefinitely. As such, the current version of this bill makes all past disciplinary actions ineligible to be removed from the Bureau's website until a minimum of 10 years after the enactment SB 706; therefore, the Bureau does not anticipate implementation costs until Fiscal Year 2020-21.

However, 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 Bureau, 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 Web site be removed if the Commissioner agrees that there is evidence of rehabilitation and the licensee is not a potential risk to consumers.

Analysis Prepared by: Gabby Nepomuceno / B. & P. / (916) 319-3301 FN: 0003332

Date of Hearing: May 4, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1807

Author:(Bonta) – As Amended Ver:April 18, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows a licensee of the Bureau of Real Estate (Bureau) to petition the Real Estate Commissioner (Commissioner) to remove his or her notice of disciplinary action from the Bureau’s Internet Web site if that action has been noticed for at least ten years and the licensee provides evidence of rehabilitation indicating the information is no longer necessary to prevent a credible risk to the public. The bill further allows the Bureau to charge a fee to cover the costs of considering a petition, and requires the Bureau to develop regulations establishing the minimum information to be included in a licensee's petition.

FISCAL EFFECT:

1. The Bureau anticipates 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. (See Comment #3 below.)
2. 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.

COMMENTS:

1. Purpose. According to the author, “The current disciplinary system under the Bureau 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 provides a self-funding process for licensees to petition to have a disciplinary action removed from the Bureau's website

1. Background. A person wishing 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 must obtain a license from the Bureau. Currently, there are approximately 535,000 real estate licensees in California.

Under current law, low-level disciplinary actions that the Bureau addresses via citation and fine do not appear on its website. The Bureau investigates these situations following standards set out in regulations. When a violation warrants disciplinary action against a licensee, the Commissioner is required to post a notice of discipline on the Bureau's Web site so that the information is available to a consumer who searches specifically for that licensee. These notices remain on the Web site indefinitely.

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 Bureau, 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.

1. Clarifying Amendments. Staff notes that the Bureau is interpreting this bill to mean that all past disciplinary actions would not be eligible to be removed from the Bureau’s website until a minimum of ten years after the enactment SB 706 (Price), Chapter 712, Statutes of 2011; therefore they don't anticipate costs until FY 2020-21. If this is not the author's intent, clarifying amendments may be needed.
2. Prior Legislation. SB 706 (Price), Chapter 712, Statutes of 2011, established the requirement that disciplinary actions be posted to the Bureau of Real Estate's website.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing:

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Rudy Salas, Chair

ABPCA Bill Id:AB 1807

Author:(Bonta) – As Amended Ver:April 4, 2016

SUBJECT: Real estate licensees.

SUMMARY: Allows a licensee of the Bureau of Real Estate (BRE) to petition the Real Estate Commissioner (Commissioner) to remove his or her notice of disciplinary action from the BRE’s Internet Web site because the information is no longer necessary to prevent a credible risk to the public.

EXISTING LAW:

1. Establishes within the Department of Consumer Affairs (DCA) a Bureau of Real Estate (BRE), the chief officer of which is named the Real Estate Commissioner (Commissioner); the BRE is mandated 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) Section 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 Section 10071)
3. Provides that the commissioner may adopt, amend, or repeal rules and regulations that are reasonably necessary for the enforcement. (BPC Section 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 Section 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 Section 10080.9)
6. Promulgates 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 Sections 2907.1-2907.4)

THIS BILL:

1. Declares that it is appropriate for the BRE to continue 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 he or she can provide evidence that continued reporting is no longer required reduce 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 bureau.
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.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill provides that a licensee of the BRE may petition the Commissioner to remove his or her notice of disciplinary action from the BRE’s Internet Web site because the licensee is no longer a credible risk to the public. This bill is sponsored by the California Association of Realtors.

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.”

Background. The mission of the BRE is to safeguard and promote the public interests in real estate matters through licensure, regulation, education and enforcement. The BRE's jurisdiction is licensing and regulating mortgage loan originators, real estate and prepaid listing service licensees, reviewing and approving subdivision and time share offerings, and approving continuing education and pre-license courses.

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.

Under current law, low-level disciplinary actions that the BRE addresses via citation and fine do not appear on its website. These infractions include, among others, when a person without a real estate license engages in activities for which a real estate license is required. The BRE investigates these situations following standards set out in regulations.

Violations of provisions in law that warrant disciplinary action can vary in greatly. For instance, a licensee may violate a seemingly minor provision of his or her licensure in a severe way. As such, a violation of one licensee’s provisions could lead to the same disciplinary action as another licensee who violated a completely different provision. Likewise, a licensee who repeatedly violates his or her provisions may have a more severe disciplinary action taken against him or her than a licensee who is noticed for his or her first violation. When a disciplinary action is taken against a licensee, the Commissioner is required to post a notice of discipline on the BRE’s Web site so that the information is available to a consumer who searches specifically for that licensee. These notices are posted to the Web site indefinitely.

However, 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.

ARGUMENTS IN SUPPORT:

The California Association of Realtors 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].”

POLICY ISSUES FOR CONSIDERATION:

This bill requires the licensee who is petitioning to have his or her notice of disciplinary action removed from the website pay a fee to defray the cost of evaluation. It is unclear what would be the expense to the licensee. The author may wish to specify that the BRE develop, through regulations, a fee schedule for the petition process.

IMPLEMENTATION ISSUES:

1. This bill specifies that a licensee may petition the Commissioner to remove the notice of disciplinary action if he or she can show that he or she is no longer a credible risk to the public. It is unclear how much time would constitute “passage of time” before the licensee qualifies for the petition.
2. This bill leaves the outcome of the petition to the discretion of the Commissioner, but provides no guidelines for the petitions to be minimally consistent.

To address the implementation concerns raised above, the author should amend his bill as follows:

1. On page 3, subdivision (c) should be amended to read:

Upon petition by a licensee accompanied by a fee sufficient to defray costs associated with consideration of a petition, the commissioner shall remove from the posting of discipline described in subdivision (a), an item that through passage of time has been noticed on the bureau’s Internet Website for no less than ten 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.

1. On page 3, after subdivision (c) insert “The bureau shall 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 pursuant to Business and Professions Code Section 482.”

REGISTERED SUPPORT:

California Association of Realtors (Sponsor)

REGISTERED OPPOSITION:

None on file.

Analysis Prepared by: Gabby Nepomuceno / B. & P. / (916) 319-3301