Existing law, the California Fair Employment and Housing Act, prohibits the owner of any housing accommodation, or any person subject to the Unruh Civil Rights Act as the act applies to housing accommodations, from discriminating against any person because of the race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information of that person or engaging in harassment of tenants, among others, in connection with those housing accommodations. Existing law authorizes a person claiming to be aggrieved by an alleged unlawful practice to file a complaint with the Department of Fair Employment and Housing.

Existing law makes it unlawful for a landlord to engage in specified activities for the purpose of influencing a tenant to vacate a dwelling, including using, or threatening to use, force, willful threats, or menacing conduct that interferes with the tenants quiet enjoyment of the premises and that would create an apprehension of harm in a reasonable person.

This bill bill, commencing on January 1, 2020, would require the Department of Real Estate Consumer Affairs to administer a certification program for landlords and property managers, as defined, to provide education to landlords and property managers on fair practices housing practices, obligations of landlords, and tenant rights. The bill would make this certification effective for a period of 2 years. years and would provide for renewal if certain requirements are met. The bill would would, except as specified, authorize the department to identify and approve appropriate providers of the educational coursework, as specified. The bill would make a person who acts as a landlord or property manager without first having obtained certification from the department subject to a specified civil penalty.

Existing law, as of July 1, 2018, establishes the Department of Real Estate in the Business, Consumer Services, and Housing Agency to license and regulate real estate brokers and real estate salespersons. Existing law specifies that the chief officer of the department is the Real Estate Commissioner and it is his or her principal responsibility to enforce all laws relating to real estate brokers and real estate salespersons in a manner that achieves the maximum protection for the purchasers of real property and those persons dealing with real estate licensees.

Existing law, the California Fair Employment and Housing Act, prohibits the owner of any housing accommodation, or any person subject to the Unruh Civil Rights Act as the act applies to housing accommodations, from discriminating against any person because of the race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information of that person or engaging in harassment of tenants, among others, in connection with those housing accommodations. Existing law authorizes a person claiming to be aggrieved by an alleged unlawful practice to file a complaint with the Department of Fair Employment and Housing.

Existing law makes it unlawful for a landlord to engage in specified activities for the purpose of influencing a tenant to vacate a dwelling, including using, or threatening to use, force, willful threats, or menacing conduct that interferes with the tenants quiet enjoyment of the premises and that would create an apprehension of harm in a reasonable person.

This bill would require the Department of Real Estate to administer a certification program for landlords and property managers, as defined, to provide education to landlords and property managers on fair practices and tenant rights. The bill would make this certification effective for a period of 2 years. The bill would authorize the department to identify and approve appropriate providers of the educational coursework, as specified. The bill would make a person who acts as a landlord or property manager without first having obtained certification from the department subject to a specified civil penalty.

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2618

Author:(Bonta) – As Amended Ver:April 19, 2018

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

SUMMARY:

This bill requires a person who acts as a landlord or property manager to first obtain certification from the Department of Consumer Affairs (DCA), subject to a $500 civil fine for failure. Specifically, this bill:

1. Requires, effective January 1, 2020, a person who acts as a landlord or property manager to receive certification every two years pursuant to a course of education on fair housing practices, obligations of landlords, and tenant rights, to be developed by DCA.
2. Provides a six-month grace period, following the effective date, to a person who acted as a landlord or property manager prior to January 1, 2020.
3. Sets a civil fine of $500 for a person who acts as a landlord or property manager without certification.
4. Directs DCA to identify educational providers who will make the certification coursework available in a classroom setting and online.
5. Requires DCA to enforce the provisions of this bill and directs penalty revenue to the General Fund.

FISCAL EFFECT:

Ongoing annual costs (General Fund or special fund), in range of a few to several hundred thousand dollars, to DCA to establish the certification program and administer it, which would entail developing and enforcing regulations, developing program-specific information technology and internet applications, and processing applications and renewals.

COMMENTS:

1. Purpose. The author intends this bill to ensure landlords and others involved in management of rental properties are aware of all fair housing and tenant rights laws.
2. Background. Existing law does not require a license of those who engage in management of rental properties. The law does, however, require a person who acts as a real estate broker to have a real estate license issued by the Department of Real Estate. Statute defines as aspects of being a real estate broker the leasing, renting, and collecting of rents for the property of another. So, in effect, many property managers are licensed real estate brokers, or those employed under the supervision of a real estate broker.

However, statute exempts several categories of people from the requirement to have a real estate broker license. These categories include the resident manager of a rental property—that is, a person who lives onsite of the rental property and manages the property on behalf of the landlord, if the person is not the landlord themselves—and the employees of the resident manager. Statute also requires landlords of buildings of 16 or more units to have a resident manager living on site. Therefore, many renters live in properties managed by individuals who are not subject to real estate broker licensing requirements nor any property-management specific education requirements.

1. Choosing the right target. This bill requires certification of those engaged in property management. The preceding paragraphs explain the policy rationale for this requirement. However, it is not clear the bill penalizes the right individuals for failure to fulfill the certification requirement. This is because the $500 civil penalty prescribed by the bill could fall on resident managers of rental properties. In many cases, a landlord engages an individual as a resident manager simply because the individual lives in the rental building and has proven to be responsible. But the individual has no financial interest in the rental property, beyond the compensation provided to the individual by the landlord for acting as a resident manager. Oftentimes, this compensation is nothing more than a reduction in the rent collected from the individual by the landlord. It might, therefore, make more sense to subject a landlord to civil penalty for engaging an uncertified resident manager instead of penalizing the resident manager directly.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing:

ASSEMBLY COMMITTEE ON

, Chair

ABPCA Bill Id:

Author:(Bonta) – As Ver:

As Proposed to be Amended

SUBJECT:

KEY ISSUE: should landlords and property managers, with certain exceptions, be required to certify completion of specified educational coursework on landlord-tenant and property management issues every two years, subject to civil penalties for non-compliance, before they may engage in residential property management, as defined?

SYNOPSIS

According to the author, it is important that the individuals responsible for managing residential rental property, who act as the agents of property owners and interact with tenants on a regular basis, have some basic education and training on important responsibilities and relevant laws related to property management. Although current law reserves property management activities to real estate brokers licensed by the Department of Real Estate (DRE), and imposes various education and training requirements upon these licensees, the law also exempts several categories of non-licensees and allows them to engage in property management with no training or education requirements whatsoever. Most notable among this group are so-called "resident managers"—typically an existing tenant—who is employed by the landlord and delegated property management responsibilities in order for the landlord to comply with existing law that requires an on-site resident manager in all apartment buildings of 16 or more units. The bill is supported by tenant advocates, who believe that the education and training certification program required by this bill will ultimately encourage better property management practices and protect the wellbeing of tenants.

As proposed to be amended, this bill would establish a certification program for landlords and property managers to be administered by the Department of Consumer Affairs (DCA). The ability to engage in residential property management, as defined, would be conditioned on certifying completion of 4 to 8 hours of educational coursework every two years. Unless an exemption applies, a person acting as a property manager without first obtaining certification would be subject to a civil penalty of up to $500, to be enforced by DCA. The proposed amendments expand the scope of individuals who are exempted from certification requirements to largely correspond with existing exemptions from DRE licensure requirements, but does not categorically exempt licensed real estate brokers, as sought by the bill's chief opponent, the California Association of Realtors (CAR). Instead, the bill as proposed to be amended would exempt a licensed real estate broker from civil penalties for not complying with certification requirements if that broker has taken property management coursework offered through the DRE licensing program. The proposed amendments clarify that the bill does not subject real estate licensees to educational and training requirements under both DRE and DCA. Instead, a real estate licensee can obtain certification under this bill simply by taking the existing property management courses offered under the DRE licensing scheme. It is not known whether a categorical exemption for real estate licensees would be sufficient to remove CAR's opposition, because they have expressed other concerns about the bill as it relates to landlords, some of whom are members of CAR. The bill is also opposed by the California Apartment Association, unless amended to address specified concerns many but not all of which the author has attempted to address with proposed amendments to provide more specifics to the training program and the proposed coursework curriculum, codify exemptions to certification, and delay the operative date until January 1, 2020.

SUMMARY: Requires landlords and property managers, with certain exceptions, to certify completion of educational coursework on fair housing, landlord/tenant law, and other topics, in order to legally engage in residential property management, as defined. Specifically, this bill:

1. Defines "residential property management" to mean engaging in any of the following activities:
   1. Leasing or renting or offering to lease or rent, or placing for rent, or soliciting listings of residential property for rent, including accepting signed leases and rental agreements;
   2. Soliciting for prospective tenants;
   3. Showing rental units and common areas to prospective tenants;
   4. Responding to inquiries from a prospective tenant concerning the completion of the application;
   5. Providing information about rental rates and other terms and provisions of a lease or rental agreement;
   6. Collecting deposits or fees for credit checks, administrative costs, security deposits and/or rents;
   7. Determining whether the application of a prospective tenant will be approved or denied;
   8. Serving tenancy related notices, including, but not limited to, notices in changes of terms of tenancy, advisory notices regarding property issues, notices to enter a dwelling unit, notices to pay rent or quit, and notices to terminate the tenancy.
   9. Collecting rental payments, receiving requests for repairs, accommodations or services from current tenants, and receiving tenant complaints regarding tenantability, management issues, or similar communications, including formal or informal grievance resolution.
2. Defines "property manager" to mean any person, regardless of title or job description, who for compensation or in expectation of compensation, regardless of the form or time of payment, engages in residential property management of one or more dwelling units, excluding units used for transient occupancy limited to 30 days or less in duration.
3. Defines "landlord" to mean an owner of two or more dwelling units available for hire located within this state, excluding units used for transient occupancy limited to 30 days or less in duration.
4. Requires the Department of Consumer Affairs (DCA) to administer a program to provide education to landlords and property managers, as defined above, on fair housing practices, obligations of landlords, and tenant rights, and to certify their completion of the program.
5. Authorizes DCA to establish the total number of hours for the certification to be at least 4 hours, but no more than 8 hours. Requires DCA to determine the content and duration of the educational coursework required in order to obtain certification, subject to certain requirements, including, among other things:
   1. Required training on compliance with the Unruh Civil Rights Act and the California Fair Employment and Housing Act (FEHA).
   2. Training on the rights and responsibilities of landlords and tenants.
6. Requires DCA to identify and approve appropriate providers of the educational coursework required in order to obtain certification, and requires the providers to make the required educational coursework available to landlords and property managers in person in a classroom setting or online via live or pre-recorded webinars.
7. Requires landlords and property managers to renew certification under this act every two years, and permits renewal of certification to be obtained with different coursework necessary to obtain initial certification, as specified.
8. Establishes a civil penalty of up to five hundred dollars ($500) for a person who acts as a landlord or property manager without first having obtained certification from the Department, as provided. Delegates responsibility to DCA for enforcing this section and requires civil penalties to be deposited into the general fund.
9. Exempts the following persons from any civil penalty for failure to obtain certification before acting as a landlord or property manager pursuant to this act:
   1. A landlord who has delegated all Residential Property Management to a licensed real estate broker that has taken the property management course in the real estate licensing program, or a property manager who has obtained certification pursuant to this section. The property manager may be a co-owner of the residential rental property or an employee of the landlord.
   2. A licensed real estate broker who has taken the property management course in the real estate licensing program.
   3. Any person, including but not limited to a registered process server or employee of a licensed real estate broker, who serves specified tenancy-related notices, but who does not prepare such notices or engage in any other Residential Property Management.
   4. The manager of a hotel, motel, or auto and trailer park.
   5. Any person or entity, including a person employed by a real estate broker, who, on behalf of another or others, solicits or arranges, or accepts reservations or money, or both, for transient occupancies, as defined.
10. Provides that successful completion of the certification program shall not affect a landlord or property manager’s liability for violation of the underlying laws or rights covered under the program curriculum.
11. Establishes a delayed operative date for these provisions, effective January 1, 2020. Provides a six-month grace period (until June 30, 2020) for persons engaging in residential property management prior to January 1, 2020 to obtain their certification before becoming liable for civil penalties.

EXISTING LAW:

1. Makes it unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license from the Department of Real Estate (DRE). (Business & Professions Code (BPC) Section 10130.)
2. Defines a "real estate broker" as someone who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:
   1. Sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicits or obtains listings of, or negotiates the purchase, sale or exchange of real property or a business opportunity.
   2. Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.
   3. Assists or offers to assist in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government.
   4. Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.
   5. Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof. (BPC Section 10131.)
3. Notwithstanding the DRE licensure requirements imposed by 1), exempts the following persons from needing to have a real estate license issued by the DRE in order to do the acts described in 2b), above, on behalf of another:
   1. The manager of a hotel, motel, auto and trailer park.
   2. The resident manager of an apartment building, apartment complex, or court, or the employees of that manager.
   3. Any person or entity, including a person employed by a real estate broker, who, on behalf of another or others, solicits or arranges, or accepts reservations or money, or both, for: (i) transient occupancies, as defined; (ii) in a dwelling unit in a common interest development, as defined; (iii) in a dwelling unit in an apartment building or complex; or (iv) in a single-family home.
   4. Any person other than the resident manager or employees of that manager who is the employee of the property management firm retained to manage a residential apartment building or complex or court and who is performing under the supervision and control of a broker of record who is an employee of that property management firm or a salesperson licensed to the broker who meets certain minimum requirements as specified in a regulation issued by the commissioner, and who is performing the following functions:
      1. Showing rental units and common areas to prospective tenants.
      2. Providing or accepting preprinted rental applications, or responding to inquiries from a prospective tenant concerning the completion of the application.
      3. Accepting deposits or fees for credit checks or administrative costs and accepting security deposits and rents.
      4. Providing information about rental rates and other terms and provisions of a lease or rental agreement, as set out in a schedule provided by an employer.
      5. Accepting signed leases and rental agreements from prospective tenants. (BPC Section 10131.01.)
4. Requires a manager, janitor, housekeeper, or other responsible person to reside upon the premises and have charge of every apartment house in which there are 16 or more apartments, and of every hotel in which there are 12 or more guest rooms, in the event that the owner of an apartment house or hotel does not reside upon said premises. Only one caretaker is required for all structures under a single owner and on one contiguous parcel of land. (25 Cal. Code Reg. 42.)
5. Makes any violation of 4), above, a misdemeanor, punishable by a fine not exceeding one thousand dollars ($1,000) or by imprisonment not exceeding six months, or by both such fine and imprisonment. (Health & Safety Code Section 17995.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: As proposed to be amended, this bill would establish a certification program for landlords and property managers to be administered by the Department of Consumer Affairs DCA). The ability to engage in residential property management, as defined, would be conditioned on certifying completion of 4 to 8 hours of educational coursework every two years. Unless an exemption applies, a person acting as a property manager without first obtaining certification would be subject to a civil penalty of up to $500, to be enforced by the DCA. According to the author:

Millions of Californians rent the place they call home. With increasing housing costs, the number of renters in the state is estimated to continue growing. While current law prohibits landlords from engaging in discriminatory behavior, there is no formal education on fair housing or tenant rights that landlords are required to have in order to rent a unit. AB 2618 would take a proactive approach to ensuring landlords are aware of all fair housing and tenant rights laws by creating a certification program to be administered by the Department of Consumer Affairs. Certification will be granted upon completion of educational classes on compliance with relevant parts of the Fair Employment and Housing Act, evictions and notices, resident issues and tenant rights. This certification will be effective for a period of two years and must be renewed.

By mandating certification of all landlords and property managers, we are ensuring that the individuals who control the homes of millions of Californians are aware of the laws they should abide by when renting their residential properties. AB 2618 is a necessary ingredient to protect tenants and keep a safe roof over their heads. The history, culture, and character of our communities suffer when residents live with no security.

Background on current authority to engage in property management. Existing law does not directly define what it means to engage in residential property management. Instead it defines a real estate broker as a person who, for compensation or in expectation of compensation, regardless of the form or time of payment, does or negotiates to do specified acts for another. (BPC Section 10131.) Among the acts that a real estate broker does on behalf of another are leasing or renting or offering to lease or rent a property; soliciting prospective tenants; and collecting rents from real property. (BPC Section 10131.1 (b).) Because existing law requires a person to have a real estate license issued by the DRE before he or she can engage in any acts falling under the definition of a real estate broker, only licensed real estate brokers can engage in these acts that commonly are perceived as comprising "property management," with certain exceptions. Among those specifically exempted from the licensure requirement are: (1) the resident manager of an apartment building, complex, or court, and the employees of that manager; (2) the manager of a hotel, motel, auto park, or trailer park; (3) employees of a licensed real estate broker who perform specified functions; and (4) employees of a property management firm retained to manage a residential apartment building (other than a resident manager), working under the supervision of a real estate broker, who perform specified functions. (BPC Section 10131.01 (a).)

Existing law requires landlords of apartment buildings having 16 or more units to have a resident manager, or other responsible person living on the premises, to manage the property if the landlord does not him/herself live there. (25 CCR Sec. 42.) Failure to comply with this requirement is a misdemeanor, punishable by a fine not exceeding one thousand dollars ($1,000) or by imprisonment not exceeding six months. (Health & Safety Code Section 17995.) The resident manager fulfilling this requirement is often hired by virtue of the fact that he or she already is a responsible, reliable tenant living in the apartment building, and is typically compensated by the landlord through a partial reduction in rent. Existing law specifically exempts resident managers of apartment buildings from the need to hold a real estate license issued by the DRE. (BPC Section 10131.01 (a)(1).)

As a practical matter, most persons currently acting as property managers in residential housing operate under one of the following categories: (1) real estate brokers licensed by DRE, acting pursuant to BPC Section 10131; (2) employees of professional property management firms working under the supervision of a real estate broker, pursuant to BPC Section 10131.01(a); (3) resident managers, employed by the landlord, who live on the premises of residential apartment buildings of 16 or more units; and (4) landlords of properties less than 16 units who self-manage the property rather than employing the services of persons in categories (1) through (3).

Unlike rules regarding real estate brokers or other residential property management professionals, there is no educational or training prerequisite for resident managers under existing law. Landlords who self-manage properties that are less than 16 units which do not require a resident manager are able to do so under the so-called "principal exemption" to Section 10131 and similarly are not subject to any education or training requirements in order to manage their own properties.

Proposed amendments modify parameters of the certification program for landlords and property managers. According to the author, this bill is intended to "ensure that the individuals who control the homes of millions of Californians are aware of the laws they should abide by when renting their residential properties." This bill establishes a program to provide educational classes and training to landlords and property managers, as defined, on issues related to property management responsibilities, fair housing, and landlord-tenant law, as specified. The bill also requires a landlord or property manager to obtain certification every two years, after completing between 4 to 8 hours of educational coursework, as provided.

The bill is opposed by the California Apartment Association (CAA), who represent landlords and apartment owners, and the California Association of Realtors (CAR), whose members are real estate licensees under DRE and often are employed as property managers on behalf of landlords. CAA writes that the bill, as currently in print, "fails to provide specifics for the required education as well as the required number of hours to complete the training . . . [and] requires education on topics that are not relevant or necessary for a property owner or manager to know." They contend, for example, that a property owner does not need to understand all of the court proceedings involved in the unlawful detainer (eviction) process because the owner typically hires a lawyer to handle evictions.

Proposed author's amendments to the bill seek to give greater structure and clarity to the proposed certification program and shift responsibility for administrating and enforcing the program to the Department of Consumer Affairs, rather than the Department of Real Estate. As proposed to be amended, the bill authorizes DCA to establish the total number of hours for the certification to be at least 4 hours, but no more than 8 hours. The amendments require the educational coursework to include training on compliance with the Unruh Civil Rights Act, the Fair Employment and Housing Act (FEHA), and regulations which may be promulgated thereunder, as they relate to housing issues, including, but not limited to (1) discrimination policies, practices, terms, or conditions that result in unequal access to housing or housing-related services; (2) representation that a housing accommodation is not available for rent when that accommodation is in fact available; (3) refusal to permit, at a disabled tenant’s expense, reasonable modifications when necessary to accommodate a disability; and (4) refusal to make reasonable accommodations in housing rules, policies, practices, or services where necessary to afford equal opportunity to disabled persons.

In addition, the proposed amendments require the coursework to include training on the rights and responsibilities of landlords and tenants, including, among other things: (1) habitability duties of landlords and tenants, as specified in sections 1941, 1941.1, 1941.2, and 1942 of the Civil Code; (2) preparation and service of notices to change the terms of the tenancy, as specified in section 827 of the Civil Code; (3) preparation and service of notices to terminate the tenancy, as specified in sections 1946 and 1946.1 of the Civil Code and section 1161 of the Code of Civil Procedure; and (4) rights and responsibilities related to entering the rental unit, as specified in section 1954 of the Civil Code. According to the author, these proposed amendments to the areas of the educational coursework were developed in conjunction with CAA to focus on areas relevant to property management practices.

The bill requires coursework to be taken every two years to maintain uninterrupted certification as a property manager. Proposed amendments to the bill provide that the coursework required to renew certification may differ from that needed to obtain initial certification, as long as it meets certain other requirements. All qualifying coursework shall be made available in person in a classroom setting, or more conveniently, online via live or pre-recorded webinars.

Proposed amendments decrease the civil penalty and exempt specified groups of people from civil penalty for not obtaining certification. As currently in print, the bill establishes a civil penalty of up to $1,000 for a person acting as a landlord or property manager who do not first obtain certification from the department to engage in residential property management. The proposed amendments reduce the civil penalty to $500.

The California Association of Realtors is strongly opposed to this bill, contending that the certification program is unnecessary, duplicative, and burdensome for real estate licensees. CAR notes that existing law already requires a person to have a real estate broker's license if they perform and receive compensation for property management services, and subjects all licensees to oversight by DRE. Failure by real estate licensees to comply with these requirements already subjects them to discipline and potential license revocation by DRE, in addition to civil penalties and damages. CAR also states that in addition to the training and expertise required to obtain a license, all licensees must complete 45 hours of mandatory continuing education prior to each license renewal, including completion of a course on fair housing. In short, because real estate licensees are currently authorized to engage in property management by virtue of holding their license, even if they haven't specifically taken classes in property management, CAR believes that real estate licensees should be categorically exempt from the certification program established by this bill.

The author, however, does not believe there should be a categorical exemption for real estate licensees under this bill. Instead, the author contends that licensed real estate brokers who have not taken a property management class or classes under the DRE licensing program should have to do so under the provisions of the bill in order to engage in property management activities, notwithstanding existing law that contains no such requirement. Accordingly, as proposed to be amended, the bill would exempt a licensed real estate broker from civil penalties for not complying with certification requirements if that broker has taken a property management course offered through the DRE licensing program. The proposed amendments clarify that the bill does not subject real estate licensees to the prospect of required coursework under both the DRE and DCA schemes; instead, a real estate licensee can obtain certification under this bill simply by taking the existing property management courses currently offered under the DRE licensing scheme. A real estate licensee not intending to engage in property management would have no need to obtain certification, and thus would not have to take any property management course in conjunction with his or her real estate license. The author contends that maintaining this narrowly tailored requirement, rather than a categorical exemption from the training requirement, furthers the stated intent of the bill to ensure that those actually engaged in property management practice at an everyday level do, in fact, receive a certain amount of education and training about issues regarding such practice.

The proposed author's amendments also establish additional exemptions for the following: (1) landlords who have delegated all residential property management responsibilities to a licensed real estate broker, or other property manager who is certified; (2) managers of hotels, motels, and trailer parks; (3) persons, such as registered process servers or employees of a licensed real estate broker, who serve tenancy-related notices but engage in no other acts qualifying as residential property management; and (4) persons, such as operators of hotels and motels, who solicit or arrange, or accept reservations or money, for transient occupancies, as defined. These proposed amendments are intended to preserve exemptions for individuals who, under existing law, engage in certain activities within the definition of property management but are exempt from having to obtaining a real estate broker license.

As a practical matter, the bill as proposed to be amended with these exemptions, will primarily affect resident managers in apartment buildings of 16 or more units, and landlords who self-manage their own smaller properties under the principal exemption to Section 10131. These actors currently engage in property management but are not subject to any education or training requirements. The only way for a resident manager to comply with the bill is to take the coursework and obtain certification, while the landlord has the option of hiring a property manager who is a real estate licensee or otherwise certified, or taking the coursework to become certified.

To comply with the bill as proposed to be amended, real estate licensees wishing to engage in property management activities will have to complete coursework in property management, as determined by DRE within its existing licensing program. Licensees not wishing to engage in property management activities would not be required to get certified or take any additional coursework.

Proposed amendments establish a delayed operative date. In response to opposition concerns that the bill leaves insufficient time to develop the necessary educational coursework and complete appropriate outreach to landlords and property managers who would need to obtain certification, the author has proposed amendments to delay the operative date of these provisions until January 1, 2020. In addition, proposed amendments provide a six-month grace period (until June 30, 2020) for persons who are engaged in residential property management prior to the January 1, 2020 operative date of the bill, allowing them additional time to obtain their certification before becoming liable for civil penalties.

REGISTERED SUPPORT / OPPOSITION:

Support

California Renters Legal Advocacy and Education Fund

Oakland Tenants Union

Wellstone Democratic Renewal Club

Opposition

California Apartment Association

California Association of Realtors

Analysis Prepared by: