Bill Text: CA AB33 | 2009-2010 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Child abduction: sex offender identification.
Spectrum: Bipartisan Bill
Status: (Passed) 2010-09-24 - Chaptered by Secretary of State - Chapter 224, Statutes of 2010. [AB33 Detail]
Download: California-2009-AB33-Amended.html
BILL NUMBER: AB 33 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 25, 2009
AMENDED IN SENATE JULY 23, 2009
AMENDED IN SENATE JULY 14, 2009
AMENDED IN SENATE JUNE 23, 2009
AMENDED IN SENATE JUNE 11, 2009
AMENDED IN ASSEMBLY MARCH 24, 2009
AMENDED IN ASSEMBLY FEBRUARY 10, 2009
INTRODUCED BY Assembly Member Nava
DECEMBER 1, 2008
An act to amend Sections 11302 and 11310 of, and to amend, repeal,
and add Sections 10000, 10050, 11301, and 11313 of, the Business and
Professions Code, to amend, repeal, and add Sections 25005 and 31004
of the Corporations Code, to amend Sections 4970 and 23001 of, to
amend and repeal Section 252 of, to amend, repeal, and add Sections
112, 210, 4805.055, 5104, 5106, 12003, 14003, 17002, 18002, 18002.5,
22005, 30002, 31055, and 33045.5 of, to add Sections 23002 and
50003.5 to, and to add Division 0.5 (commencing with Section 25)
and Division 20.5 (commencing with Section 55000) to, the
Financial Code, and to amend Section 11552 of, and to
amend, repeal, and add Sections 13975 and 13978.6 of , the
Government Code, relating to financial services, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 33, as amended, Nava. Financial services.
Existing law establishes the Department of Financial Institutions,
the Department of Corporations, the Department of Real Estate, and
the Office of Real Estate Appraisers in the Business, Transportation
and Housing Agency.
Existing law provides for the licensing and regulation of, among
others, banks, credit unions, and other financial institutions by the
Commissioner of Financial Institutions. Existing law provides for
the licensing and regulation of, among others, residential mortgage
lenders and finance lenders by the Commissioner of Corporations.
Existing law provides for the licensing and regulation of, among
others, real estate brokers and salespersons by the Real Estate
Commissioner. Existing law provides for the licensure and regulation
of real estate appraisers by the Director of the Office of Real
Estate Appraisers. Existing law provides for the Real Estate Fund, a
continuously appropriated fund, for purposes of providing funding for
the regulation and enforcement of the Real Estate Law.
This bill would do the following, effective July 1, 2011: (1)
establish a new Department of Financial Services (DFS) in the
Business, Transportation and Housing Agency (BTHA), (2) designate the
chief officer of DFS as the Commissioner of Financial Services, (3)
transfer the powers, duties, purposes, jurisdiction,
responsibilities, and functions of the Department of Corporations
(DOC) and Department of Financial Institutions (DFI) to 2 new
divisions under the DFS, the Division of Corporations and the
Division of Financial Institutions, (4) designate the Commissioner of
Corporations and the Commissioner of Financial Institutions as the
directors of the Division of Corporations and the Division of
Financial Institutions, respectively, (5) establish a new Office of
Financial and Real Estate Consumer Advocacy within the DFS, and (6)
transfer authority over real estate appraisers to the Department of
Real Estate (DRE) under the Real Estate Law.
This bill would, effective July 1, 2012, transfer from the DRE to
the Division of Corporations the authority to license and
, regulate , enforce, and discipline
real estate licensees that provide lending, mortgage
brokerage services, and business opportunity activities, as
specified. engaged in residential real estate
financial services, as specified. The bill would, by July 1, 2011,
require the Commissioner of Financial Services to, among other
things, adopt or amend regulations and rules to implement this
transfer. The bill would establish the Real Estate Financial Services
Fund and the Real Estate Financial Services Recovery Account within
the fund, both with continuously appropriated funds, and would direct
that a specified percentage of licensure fees paid by those
licensees engaging in residential real estate financial services be
deposited in the recovery account. The bill would authorize an
aggrieved person with a final judgment against a licensee to file an
application, that includes a statement under penalty of perjury, with
the Division of Corporations for payment from the recovery account.
The bill would make these provisions relating to the fund and the
account operative on July 1, 2012. By creating a continuously
appropriated fund and account, the bill would make an appropriation.
By expanding the crime of perjury, the bill would impose a
state-mandated local program.
In order to implement the above provisions, this bill would
require the Secretary of the BTHA, in consultation with DFI, DOC,
DRE, and the Office of Real Estate Appraisers, to, on or before
January 1, 2011, report to the Legislature and make specified
recommendations regarding the consolidation of these entities and
their respective operations. This bill would appropriate $150,000
from the General Fund portions of the Real Estate Fund to the
Secretary of the BTHA to fund the reports, thereby making an
appropriation. The bill would make findings and declarations in this
regard, and would make technical and conforming changes to related
provisions and definitions.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The regulation and oversight of financial services in
California is principally divided between two regulators, the
Department of Financial Institutions and the Department of
Corporations.
(b) California is one of only a few states that separate the
regulation of financial services among different licensing agencies.
California is also anomalous in that three state departments regulate
and oversee mortgage brokerage as well as the sale of specified
business opportunity activities.
(c) This division of oversight is most apparent in the regulation
of home mortgage lending that is split among multiple licensing
schemes, including the California Finance Lenders Law, the California
Residential Mortgage Lending Act, the Real Estate Law, and laws
governing the operation of state and federally chartered banks or
credit unions. This division of oversight has made it cumbersome and
expensive for California to consistently implement, across three
departments, major advancements in consumer protection such as the
federal guidance on nontraditional mortgage product risks and
statement on subprime mortgage lending, the SAFE
S.A.F.E. Mortgage Licensing Act of 2008 (Public Law
110-289) and, most recently, the California Foreclosure
Prevention Act.
(d) The Department of Real Estate and the Office of Real Estate
Appraisers protect consumers in real estate transactions by licensing
real estate agents and appraisers, respectively.
(e) This partition of regulation dilutes consumer protection and
creates confusion and unnecessary administrative difficulties for
financial services entities.
(f) The current regulatory system creates licensing arbitrage,
with entities seeking out licenses from various regulators in order
to obtain an advantage.
(g) It is in the public's best interest effective July 1, 2011, to
have a single regulator, the Commissioner of a new Department of
Financial Services, ultimately responsible for the regulation of
financial services in California previously spread among the
Department of Corporations to be transferred intact to the new
Department of Financial Services as the Division of Corporations, the
Department of Financial Institutions to be transferred intact to the
new Department of Financial Services as the Division of
Financial Institutions, and the Department Real Estate, which shall
remain as a separate department, but which, effective July 1, 2012,
shall transfer its regulation of financial services with the same
level of consumer protections to the new Division of Corporations
within the Department of Financial Services as set forth in
subdivision (d) of Section 25 of Division 0.5 of the Financial Code.
It is in the public's best interest to combine the other operations
Financial Institutions.
(h) It is in the public's best interest that the Department of
Real Estate remain as a separate department regulating real estate
transactions, subdivided lands, and business opportunity activities.
However, effective July 1, 2012, the Department of Real Estate shall
transfer its licensure, regulation, enforcement, and discipline of
those persons engaged in real estate financial services to the new
Division of Corporations within the Department of Financial Services
as set forth in subdivision (b) of Section 25 of Division 0.5 of the
Financial Code. This transfer shall maintain existing consumer
protections, including the availability of a recovery fund similar to
the Recovery Account of the Real Estate Fund.
(i) It is in the public's best interest to combine the remaining
operations.
of the Department of Real Estate and the Office of Real Estate
Appraisers while remaining compliant with federal provisions related
to the regulation of real estate appraisers.
(h)
(j) It is in the public's best interest at this time to
not expand or contract diminish
existing authorities of the existing departments, commissioners, or
directors upon transfer and renaming except as set forth in
subdivision (d) (b) of Section 25 of
Division 0.5 of the Financial Code. It is in the public's best
interest at this time to not expand or contract
diminish any existing duties, including fiduciary duties,
of their licensees. It is, however, in the public's best
interest to have the outgoing administration of their
licensees or to diminish consumer protection.
(k) It is in the public's best interest
to collect public comment and make recommendations on a series
of potential future changes for later consideration by the
Legislature , and regulators as set forth in
Sections 48 to 50, inclusive, of Division 0.5 of the Financial Code.
(i)
(l) It is in the public's best interest to create a
formal Office of Financial and Real Estate Consumer Advocacy to
advise the Commissioner of Financial Services and the Real Estate
Commissioner on how their departments can provide a high degree of
service and protection to the public , and to be responsible
for outreach to financial real estate consumers. and
other duties described in Division 0.5 (commencing with Section 25)
of the Financial Code.
SEC. 2. Section 10000 of the Business and Professions Code is
amended to read:
10000. This part may be cited as the Real Estate Law.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 3. Section 10000 is added to the Business and Professions
Code, to read:
10000. (a) This part and Part 3 (commencing with Section 11300)
may be cited as the Real Estate Law.
(b) This section shall become operative on July 1, 2011.
SEC. 4. Section 10050 of the Business and Professions Code is
amended to read:
10050. There is in the Business and Transportation Agency a
Department of Real Estate, the chief officer of which department is
named the Real Estate Commissioner.
It shall be the principal responsibility of the commissioner to
enforce all laws in this part (commencing with Section 10000) and
Chapter 1 (commencing with Section 11000) of Part 2 of this division
in a manner which achieves the maximum protection for the purchasers
of real property and those persons dealing with real estate
licensees.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 5. Section 10050 is added to the Business and Professions
Code, to read:
10050. (a) There is in the Business and Transportation Agency a
Department of Real Estate, the chief officer of which department is
named the Real Estate Commissioner.
(b) It shall be the principal responsibility of the commissioner
to enforce all laws in this part (commencing with Section 10000),
Chapter 1 (commencing with Section 11000) of Part 2, and Part 3
(commencing with Section 11300) of this division, subject to
subdivision (c) of Section 49 of the Financial Code, in a manner that
achieves the maximum protection for the purchasers of real property
and those persons dealing with real estate licensees and real estate
appraisers.
(c) This section shall become operative on July 1, 2011.
SEC. 6. Section 11301 of the Business and Professions Code is
amended to read:
11301. There is hereby created within the Business,
Transportation and Housing Agency an Office of Real Estate Appraisers
to administer and enforce this part.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 7. Section 11301 is added to the Business and Professions
Code, to read:
11301. (a) There is hereby created within the Department of Real
Estate an Office of Real Estate Appraisers to administer and enforce
this part.
(b) This section shall become operative on July 1, 2011.
SEC. 8. Section 11302 of the Business and Professions Code is
amended to read:
11302. For the purpose of applying this part, the following
terms, unless otherwise expressly indicated, shall mean and have the
following definitions:
(a) "Agency" means the Business, Transportation and Housing
Agency.
(b) "Appraisal" means a written statement independently and
impartially prepared by a qualified appraiser setting forth an
opinion in a federally related transaction as to the market value of
an adequately described property as of a specific date, supported by
the presentation and analysis of relevant market information.
The term "appraisal" does not include an opinion given by a real
estate licensee or engineer or land surveyor in the ordinary course
of his or her business in connection with a function for which a
license is required under Chapter 7 (commencing with Section 6700) or
Chapter 15 (commencing with Section 8700) of Division 3, or Chapter
3 (commencing with Section 10130) or Chapter 7 (commencing with
Section 10500) and the opinion shall not be referred to as an
appraisal. This part does not apply to a probate referee acting
pursuant to Sections 400 to 408, inclusive, of the Probate Code
unless the appraised transaction is federally related.
(c) "Appraisal Foundation" means the Appraisal Foundation that was
incorporated as an Illinois not-for-profit corporation on November
30, 1987.
(d) "Appraisal Subcommittee" means the Appraisal Subcommittee of
the Federal Financial Institutions Examination Council.
(e) "Director" means the Director of the Office of Real Estate
Appraisers.
(f) "Federal financial institutions regulatory agency" means the
Federal Reserve Board, Federal Deposit Insurance Corporation, Office
of the Comptroller of the Currency, Office of Thrift Supervision,
Federal Home Loan Bank System, National Credit Union Administration,
the Resolution Trust Corporation, and any other
agency determined by the director to have jurisdiction over
transactions subject to this part.
(g) "Federally related real estate appraisal activity" means the
act or process of making or performing an appraisal on real estate or
real property in a federally related transaction and preparing an
appraisal as a result of that activity.
(h) "Federally related transaction" means any real estate-related
financial transaction which a federal financial institutions
regulatory agency engages in, contracts for or regulates and which
requires the services of a state licensed real estate appraiser
regulated by this part. This term also includes any transaction
identified as such by a federal financial institutions regulatory
agency.
(i) "License" means any license, certificate, permit,
registration, or other means issued by the office authorizing the
person to whom it is issued to act pursuant to this part within this
state.
(j) "Licensure" means the procedures and requirements a person
shall comply with in order to qualify for issuance of a license and
includes the issuance of the license.
(k) "Office" means the Office of Real Estate Appraisers.
(l) "Secretary" means the Secretary of the Business,
Transportation and Housing Agency.
(m) "State licensed real estate appraiser" is a person who is
issued and holds a current valid license under this part.
(n) "Uniform Standards of Professional Appraisal Practice" are the
standards of professional appraisal practice established by the
Appraisal Foundation.
(o) "Course provider" means a person or entity that provides
educational courses related to professional appraisal practice.
(p) "Commissioner" means the Real Estate Commissioner.
SEC. 9. Section 11310 of the Business and Professions Code is
amended to read:
11310. The Governor shall appoint, subject to confirmation by the
Senate, the Director of the Office of Real Estate Appraisers who
shall administer the licensing and certification program for real
estate appraisers. In making the appointment, consideration shall be
given to the qualifications of an individual that demonstrate
knowledge of the real estate appraisal profession.
(a) (1) Prior to July 1, 2011, the director shall serve at the
pleasure of the Governor and shall administer the licensing and
certification program in consultation with the Governor and
secretary. The salary for the director shall be fixed and determined
by the secretary with approval of the Department of Personnel
Administration.
(2) On and after July 1, 2011, the director shall serve at the
pleasure of the Governor and shall administer the licensing and
certification program in consultation with the Governor and the
commissioner. The salary for the director shall be fixed and
determined by the commissioner with approval of the Department of
Personnel Administration.
(3) Firewalls shall be maintained between the Department of Real
Estate and the Office of Real Estate Appraisers and its employees as
required in order to ensure compliance with federal law, to protect
the independence of the appraiser regulatory function from
realty-related activities, and to ensure that decisions relating to
appraisal license issuance, revocation, and disciplinary actions
shall be made by the Director of the Office of Real Estate Appraisers
and not by the Real Estate Commissioner.
(3) Institutional safeguards shall be established and maintained
between the Department of Real Estate and the Office of Real Estate
Appraisers and its employees to protect the independence of the
appraiser regulatory function from realty-related activities
consistent with Title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended, by the Real Estate
Appraisal Reform Amendments (12 U.S.C. Secs. 3331-3351). Decisions
relating to appraisal license issuance, revocation, and disciplinary
actions shall be made by the Director of the Office of Real Estate
Appraisers and shall not be made or influenced by the Department of
Real Estate or the Real Estate Commissioner.
(b) The director shall not be actively engaged in the appraisal
business or any other affected industry for the term of appointment,
and thereafter the director shall be subject to Section 87406 of the
Government Code.
(c) The director, in consultation with the secretary or, on and
after July 1, 2011, in consultation with the commissioner, and in
accordance with the State Civil Service Act, may appoint and fix the
compensation of legal, clerical, technical, investigation, and
auditing personnel as may be necessary to carry out this part. All
personnel shall perform their respective duties under the supervision
and direction of the director.
(d) The director may appoint not more than four deputy directors
as he or she deems appropriate. The deputy directors shall perform
their respective duties under the supervision and direction of the
director.
(e) Every power granted to or duty imposed upon the director under
this part may be exercised or performed in the name of the director
by the deputy directors, subject to conditions and limitations as the
director may prescribe.
SEC. 10. Section 11313 of the Business and Professions Code is
amended to read:
11313. The office is under the supervision and control of the
secretary. The duty of enforcing and administering this part is
vested in the director and he or she is responsible to the secretary
therefor. The director shall adopt and enforce rules and regulations
as are determined reasonably necessary to carry out the purposes of
this part. Those rules and regulations shall be adopted pursuant to
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 11. Section 11313 is added to the Business and Professions
Code, to read:
11313. (a) The office is under the supervision and control of the
commissioner. The duty of enforcing and administering this part is
vested in the director and he or she is responsible to the
commissioner therefor. The director shall adopt and enforce rules and
regulations as are determined reasonably necessary to carry out the
purposes of this part. Those rules and regulations shall be adopted
pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code.
(b) This section shall become operative on July 1, 2011.
SEC. 12. Section 25005 of the Corporations Code is amended to
read:
25005. "Commissioner" means the Commissioner of Corporations.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 13. Section 25005 is added to the Corporations Code, to read:
25005. (a) As used in this part, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 14. Section 31004 of the Corporations Code is amended to
read:
31004. "Commissioner" means the Commissioner of Corporations.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 15. Section 31004 is added to the Corporations Code, to read:
31004. (a) As used in this part, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 16. Division 0.5 (commencing with Section 25) is added to the
Financial Code, to read:
DIVISION 0.5. Consolidation of Financial Services
25. (a) Effective July 1, 2011, there shall
be in the state government, in the Business, Transportation and
Housing Agency, a Department of Financial Services, which shall
consist of the following:
(a)
(1) The Division of Financial Institutions, comprised of
the former Department of Financial Institutions, which shall be
primarily responsible for the execution of all laws previously under
that department's jurisdiction subject to oversight by the
Commissioner of Financial Services.
(b)
(2) The Division of Corporations, comprised of the
former Department of Corporations, which shall be primarily
responsible for the execution of all laws previously under that
department's jurisdiction subject to oversight by the Commissioner of
Financial Services.
(c) The Office of Financial and Real Estate Consumer Advocacy,
which shall advise the Commissioner of Financial Services and the
Real Estate Commissioner on how the Department of Financial Services
can provide a high degree of service and protection to the public,
shall be responsible for public outreach to financial and real estate
consumers, with the cooperation of the Departments of Financial
Services and Real Estate and shall perform such other duties as
determined by the Commissioner of Financial Services.
(d) (1) Effective July 1, 2012, the Department of Financial
Services, through the Division of Corporations, shall license and
regulate mortgage brokers, including those real estate licensees who
arrange loans secured by real property in the state, and shall
license and regulate those real estate licensees who provide
commercial and residential lending, including, but not limited to,
those activities described in Section 10008.5, Section 10030,
subdivisions (d) and (e) of Section 10131, and Section 10131.1 of the
Business and Professions Code, while maintaining the same level of
consumer protection now afforded. Nothing in this act or the
regulations it authorizes shall expand or diminish existing consumer
protections.
(2) (A) On or before January 1, 2012, the Commissioner of
Financial Services, in consultation with the Director of the Division
of Corporations and the Real Estate Commissioner, shall adopt
regulations creating a new license or licenses and setting related
fees such as the Commissioner of Financial Services believes
appropriate for the Department of Financial Services, through the
Division of Corporations, to assume responsibility for the provisions
of the Real Estate Law that allow real estate licensees to provide
commercial and residential lending, mortgage brokerage services, and
business opportunity activities, including, but not limited to, those
activities described in Section 10008.5, Section 10030, subdivisions
(d) and (e) of Section 10131, and Section 10131.1 of the Business
and Professions Code, while maintaining the same level of consumer
protection now afforded. Nothing in this bill or the regulations it
authorizes shall contract existing consumer protections.
(B) As of the effective date of those regulations, which shall be
on or after July 1, 2012, persons holding a license or licenses and
license endorsements issued by the Department of Real Estate shall no
longer be authorized to provide lending, commercial and residential
mortgage brokerage services, and business opportunity activities,
including, but not limited to, those activities described in Section
10008.5, Section 10030, subdivisions (d) and (e) of Section 10131,
and Section 10131.1 of the Business and Professions Code, without
first obtaining a license to do so from the Division of Corporations.
(3) (A) The Office of Financial and Real Estate Consumer Advocacy,
which shall act in an advisory capacity to the Department of
Financial Services and the Department of Real Estate and shall not
have rulemaking authority. The office's goal shall be to assist these
departments with providing a high degree of service and protection
to the public.
(B) The Office of Financial and Real Estate Consumer Advocacy may
advise the departments regarding the effectiveness of and possible
improvement of the following with respect to each department:
(i) Internet Web sites, brochures, and other public
communications.
(ii) Complaint processes.
(iii) Public outreach.
(iv) Regulations.
(v) Any other functions as determined by the Commissioner of
Financial Services or the Real Estate Commissioner.
(C) The Office of Financial and Real Estate Consumer Advocacy may
also advise the departments regarding developments in the following:
(i) Innovative financial products and services.
(ii) Efforts to assist low-income earners enter the financial
mainstream and build good credit.
(iii) Financial literacy.
(iv) Federal oversight of consumer issues.
(v) Any other topics as determined by the Commissioner of
Financial Services or the Real Estate Commissioner.
(b) (1) Effective July 1, 2012, the Department of Real Estate
shall transfer to the Division of Corporations within the Department
of Financial Services, the regulatory oversight, including, without
limitation, licensing and enforcement, for all residential real
property loan servicers and brokers, and those salespersons
performing residential loan servicing and lending activities under
the supervision of brokers, including, but not limited to, those
persons engaged in any of the activities described in subdivision (d)
of Section 10131 of the Business and Professions Code, the
residential lending and servicing activities described in subdivision
(e) of Section 10131 of the Business and Professions Code, and any
other residential lending and servicing activities covered by the
Real Estate Law (Division 4 (commencing with Section 10000) of the
Business and Professions Code), and those persons required to be
licensed by the state as "loan originators," pursuant to the Secure
and Fair Enforcement for Mortgage Licensing Act (12 U.S.C. Secs.
5101-5116) and all applicable state laws.
(2) Notwithstanding paragraph (1), all persons described in
paragraph (1) and formerly licensed by the Department of Real Estate
shall continue to have the authority to engage in all activities
relating to, among other things, lending, brokering, and servicing
previously authorized pursuant to the Real Estate Law (Division 4
(commencing with Section 10000) of the Business and Professions
Code).
(3) By July 1, 2011, the Commissioner of Financial Services shall
adopt, amend, or repeal regulations and rules that are reasonably
necessary and appropriate to implement the transfer from the
Department of Real Estate described in paragraph (1) and to license,
regulate, enforce, and
discipline those persons engaged in residential real estate financial
services as described in paragraph (1).
(e)
(c) Nothing in this bill
division shall expand or diminish existing authorities of the
existing departments or commissioners except as set forth in
subdivision (d) of Section 25 paragraph (3) of
subdivision (a) and subdivision (b) . Nothing in this
bill division shall expand or contract
diminish any existing duties, including
fiduciary duties, of their licensees. Nothing in this bill
division or the regulations it authorizes shall
contract diminish existing consumer
protections.
26. The chief officer of the Department of Financial Services
shall be the Commissioner of Financial Services. The Commissioner of
Financial Services shall be the head of the department and, except as
otherwise provided in this code, shall be subject to the provisions
of the Government Code relating to department heads, but need not
reside in Sacramento.
27. The Commissioner of Financial Services shall be appointed by
the Governor and shall hold office at the pleasure of the Governor.
The appointment of the commissioner shall be subject to confirmation
by the Senate. The commissioner shall receive an annual salary fixed
by the Secretary of the Business, Transportation and Housing Agency
and the Department of Personnel Administration.
28. The Commissioner of Financial Services shall be a citizen of
the United States. The commissioner shall be chosen solely for his or
her qualifications and fitness to perform the duties of his or her
office.
29. Before entering upon the duties of his or her office, the
Commissioner of Financial Services shall take and subscribe to the
constitutional oath of office and file the same with the Secretary of
State.
30. The Commissioner of Financial Services shall be responsible
for the performance of all duties, the exercise of all powers and
jurisdiction, and the assumption and discharge of all
responsibilities formerly vested by law in the Department of
Financial Institutions and the Department of Corporations. As
described in Section 32, the Director of the Division of Financial
Institutions and the Director of the Division of Corporations shall
be vested with the primary responsibility for all of the duties,
powers, and jurisdiction of the former Commissioner of Financial
Institutions and the Commissioner of Corporations, respectively,
subject to oversight by the Commissioner of Financial Services. The
commissioner has, and may exercise, all the powers necessary or
convenient for the administration and enforcement of these laws. The
commissioner may issue such rules and regulations consistent with law
as he or she may deem necessary or advisable in executing the
powers, duties, and responsibilities of the Department of Financial
Services. The Commissioner of Financial Services shall be
responsible for the performance of those duties, the exercise of
those powers and jurisdiction, and the assumption and discharge of
those responsibilities formerly vested by law in the Real Estate
Commissioner and transferred to the Commissioner of Financial
Services pursuant to subdivision (b) of Section 25.
32. Effective July 1, 2011, the Division of Financial
Institutions shall be headed by the former Commissioner of Financial
Institutions who shall have the title Director of the Division of
Financial Institutions. Effective July 1, 2011, the Division of
Corporations shall be headed by the former Commissioner of
Corporations who shall have the title Director of the Division of
Corporations. After July 1, 2011, the Commissioner of
Financial Services shall have the authority to appoint the directors
of these divisions who shall hold office at the commissioner's
pleasure. Corporations. After July 1, 2011, the Go
vernor shall appoint a Director of the Division of
Financial Services and a Director of the Division of
Corporations. These directors shall hold office at the pleasure of
the Governor and these appointments shall be subject to confirmation
by the Senate.
33. The Office of Financial and Real Estate Consumer Advocacy
shall be headed by the Director of the Office of Financial and Real
Estate Consumer Advocacy who shall be appointed by the Governor and
shall serve at the commissioner's pleasure
Governor's pleasure. This appointment shall be subject to
confirmation by the Senate . The Director of the Office of
Financial and Real Estate Consumer Advocacy shall be chosen solely
for his or her qualifications and fitness to perform the duties of
his or her office. The annual salary of the Director of the Office of
Financial and Real Estate Consumer Advocacy shall be fixed by the
Secretary of the Business, Transportation and Housing Agency and the
Department of Personnel Administration.
34. (a) Effective July 1, 2011, the Commissioner of Financial
Services and the Department of Financial Services shall succeed to
all the rights and property of the Commissioner of Corporations and
the Commissioner of Financial Institutions, and the Department of
Corporations and the Department of Financial Institutions,
respectively. The Commissioner of Financial Services and the
Department of Financial Services shall be subject to all the debts
and liabilities of the predecessor Commissioner of Corporations and
the Commissioner of Financial Institutions, and the Department of
Corporations and the Department of Financial Institutions, as if the
Commissioner of Financial Services and the Department of Financial
Services had incurred them.
(b) Any action or proceeding by or against the Commissioner of
Corporations, the Commissioner of Financial Institutions, the
Department of Corporations, or the Department of Financial
Institutions may be prosecuted to judgment, which shall bind the
Commissioner of Financial Services or the Department of Financial
Services, respectively. Alternatively, the Commissioner of Financial
Services or the Department of Financial Services may be proceeded
against or substituted in place of the Commissioner of Corporations
or the Commissioner of Financial Institutions and the Department of
Corporations or the Department of Financial Institutions,
respectively.
(c) The following funds and accounts shall continue in
existence and shall be under the jurisdiction of the
Commissioner of Financial Services without being commingled. These
funds shall only be used for purposes set forth in existing statutes
or regulations pertaining to them, unless a subsequent statute is
enacted changing them.
(1) The Financial Institutions Fund created by Section 265.
(2) The Credit Union Fund created by Section 14354.
(3) The Guaranty Corporation Fund created by Section 18535.
(4) The State Corporations Fund created by subdivision (b) of
Section 13978.6 of the Government Code.
(5) Any other fund or account subject to the jurisdiction of the
former Department of Corporations or the former Department of
Financial Institutions.
(d) All agreements entered into with, and orders and regulations
issued by, the Commissioner of Corporations or the Commissioner of
Financial Institutions, or the Department of Financial Institutions
or the Department of Corporations, shall continue in effect as if the
agreements were entered into with, and the orders and regulations
were issued by, the Commissioner of Financial Services or the
Department of Financial Services.
35. (a) The Commissioner of Financial Services may make the
agreements that he or she deems necessary or appropriate in
exercising his or her powers.
(b) (1) The agreements authorized under subdivision (a) may
include, but are not limited to, agreements with agencies of this
state, of other states of the United States, of the United States, or
of foreign nations that regulate financial institutions, relating to
oversight of financial services.
(2) Any agreement with a governmental agency that regulates
financial services is exempt from the advertising and competitive
bidding requirements of the Public Contract Code.
36. Notwithstanding any other law, the Commissioner of Financial
Services may adopt and implement any method of accepting electronic
filings of applications, reports, or other matters, which, in the
opinion of the commissioner, is secure. Any method of electronic
filing chosen by the commissioner shall include a method to verify
the identity of the person making the filing. The verification shall
be deemed to satisfy all other verifications required by this
division, and shall have the same force and effect as the use of
manual signatures.
37. The Commissioner of Financial Services shall appoint a chief
deputy who shall hold office at the pleasure of the Commissioner of
Financial Services. The annual salary of the chief deputy shall be
fixed by the Commissioner of Financial Services with the approval of
the Director of Finance. The chief deputy shall be chosen solely for
his or her qualifications and fitness to perform the duties of his or
her office and for the ability to succeed to the office of the
Commissioner of Financial Services, if needed. If the Commissioner of
Financial Services is unable to perform his or her duties for more
than 30 consecutive days or if the office of the Commissioner of
Financial Services becomes vacant, the chief deputy shall have all
the powers and duties of the Commissioner of Financial Services until
the return or recovery of the Commissioner of Financial Services,
or, in case of a vacancy, until a new Commissioner of Financial
Services is appointed by the Governor and qualifies to hold office.
38. The Commissioner of Financial Services may employ deputies in
addition to the chief deputy and other employees that he or she may
need to discharge in a proper manner the duties imposed upon him or
her by law. The commissioner shall prescribe their duties and fix
their compensation in accordance with classifications made by the
State Personnel Board. The commissioner may also, at those times and
on those terms as may be approved by the Governor, employ those
attorneys as he or she may need.
39. Before entering upon the duties of his or her office, each
deputy of the Commissioner of Financial Services, the Director of the
Division of Financial Institutions, the Director of the Division of
Corporations, and the Director of the Office of Financial and Real
Estate Consumer Advocacy shall take and subscribe to the
constitutional oath of office and file the same with the Secretary of
State.
40. The Commissioner of Financial Services may require, at any
time, of any deputy, the Director of the Division of Financial
Institutions, the Director of the Division of Corporations, the
Director of the Office of Financial and Real Estate Consumer
Advocacy, or any other employee of the department, an official bond
in such amount as he or she may deem necessary. The premium for bonds
required by the commissioner shall be an expense of the department.
41. On or before July 1, 2011, the Commissioner of Financial
Services shall adopt and promulgate a Conflict of Interest Code
pursuant to the provisions of Article 3 of Chapter 3 of Title 9 of
the Government Code (commencing with Section 87300). The Conflict of
Interest Code shall have the force of law and any violation of the
Conflict of Interest Code by a designated employee shall be deemed a
violation of Chapter 3 of Title 9 of the Government Code.
42. In addition to the offices previously maintained by the
Department of Financial Institutions and the Department of
Corporations, the Commissioner of Financial Services may establish
offices in any other location in the state that he or she considers
appropriate. The commissioner shall provide at the expense of the
department such office space, furniture, and equipment as may be
necessary or convenient for the transaction of the business of the
Department of Financial Services.
43. The Department of Financial Services may expend moneys in
accordance with law for the necessary travel expenses of officers and
employees of the department while traveling in the line of their
duties either within or without the state.
44. The Commissioner of Financial Services shall adopt and keep
an official seal. Papers executed by the Commissioner of Financial
Services in his or her official capacity pursuant to law and bearing
the seal, or copies thereof certified by him or her, shall be
received in evidence in like manner as the original and may be
recorded in the same manner and with the same effect as a deed
regularly acknowledged.
45. Notwithstanding any other law, as of July 1, 2011, all
references to the Department of Financial Institutions shall be
deemed to refer to the Division of Financial Institutions within the
Department of Financial Services and all references to the Department
of Corporations shall be deemed to refer to the Division of
Corporations within the Department of Financial Services.
46. (a) The Department of Real Estate shall continue to exist in
state government, subject to the limitations , effective
July 1, 2012, set forth in subdivision (d) set forth
in subdivision (b) of Section 25 with regard to authority that
is transferred to the Department of Financial Services, Division of
Corporations, and shall continue to be located within the Business,
Transportation and Housing Agency.
(b) Effective July 1, 2011, the Office of Real Estate Appraisers
shall be transferred to the Department of Real Estate. The Office of
Real Estate Appraisers shall be primarily responsible for the
execution of all laws previously under its jurisdiction subject to
oversight by the Director of the Office of Real Estate Appraisers.
The Real Estate Appraisers' Licensing and Certification Law (Part 3
(commencing with Section 11300) of Division 4 of the Business and
Professions Code), shall be deemed to be part of the Real Estate Law
(Part 1 (commencing with Section 10000) of Division 4 of the Business
and Professions Code).
47. After transfer to the Department of Real Estate on July 1,
2011, the Office of Real Estate Appraisers shall continue to be
headed by the Director of the Office of Real Estate Appraisers. The
Director of the Office of Real Estate Appraisers shall be appointed
by the Governor and shall serve at his or her pleasure. The
qualifications for the position of Director of the Office of Real
Estate Appraisers shall remain unchanged.
48. On or before January 1, 2011, and for purposes of
implementation of Section 25, the Secretary of the Business,
Transportation and Housing Agency, in consultation with the
Commissioner of Financial Institutions, the Commissioner of
Corporations, and the Real Estate Commissioner, shall submit a report
to the Legislature that addresses the following:
(a) Recommendations regarding all appropriate areas for
consolidation of the operations, licensing frameworks, regulations,
and other aspects of, on and after July 1, 2011, the Department of
Financial Institutions and Department of Corporations, and of
pertinent commercial and residential lending, mortgage brokerage, and
business opportunity activities by Department of Real Estate
licensees.
(a) Recommendations regarding any further reorganization of the
Department of Financial Services that may be advisable beyond that
set forth herein.
(b) Recommendations regarding any new or different authorities
needed to address any gaps in, or shortcomings of, the regulation of
financial services in California.
(c) Recommendations regarding the possible consolidation of
the regulation of business opportunities that remains in the
Department of Real Estate or the regulation of any other
financial services that currently takes place outside of the
jurisdiction of the Business, Transportation and Housing Agency.
(d) Recommendations regarding the consolidation of the regulation
of home mortgage lending in California, including, but not limited
to, recommendations on licensing schemes, including the California
Finance Lenders Law (Division 9 (commencing with Section 22000), the
California Residential Mortgage Lending Act (Division 20 (commencing
with Section 50000), the Real Estate Law (Part 1 (commencing with
Section 10000) of Division 4 of the Business and Professions Code),
and laws governing the operation of state and federally chartered
banks or credit unions.
(e) Recommendations regarding any firewalls between the future
Department of Financial Services and its divisions and the Office of
Financial and Real Estate Consumer Advocacy, or employees, that may
be advisable.
(f) Recommendations regarding an efficient and effective
implementation of the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (Public Law 110-289) within the
Department of Financial Services.
(g)
(f) Recommendations regarding additional changes that
should be made in light of any developments at the federal level
regarding the regulation of financial services.
(h)
(g) Recommendations to better serve and protect
financial and real estate consumers in California, including, but not
limited to, public outreach and public protections.
(i)
(h) Recommendations regarding the advisability of
establishing new recovery accounts , in addition to the Real
Estate Financial Services Recovery Account described in Division 20.5
(commencing with Section 55000), to protect financial services
and real estate consumers in California.
(j)
(i) Recommendations regarding any staffing changes that
are advisable.
(k)
(j) Recommendations regarding any information
technology changes that are advisable.
(l)
(k) Recommendations regarding the optimal number, size,
and locations of offices for the Department of Financial Services
and its divisions and the Office of Financial and Real Estate
Consumer Advocacy.
(m)
(l) Recommendations regarding the structure of fees and
other revenue sources, as well as reserve accounts.
(n)
(m) The estimated cost impacts of all recommendations
made and details regarding how those estimated impacts are expected
to manifest.
(o)
(n) Any other recommendations the Secretary of the
Business, Transportation and Housing Agency believes would be
helpful.
(p)
(o) Recommendations regarding any necessary statutory
changes required to achieve the recommendations made in the report.
(q)
(p) Recommendations regarding any necessary regulation
changes required to achieve the recommendations made in the report.
49. On or before January 1, 2011, and for purposes of
implementing Sections 46 and 47, the Secretary of the Business,
Transportation and Housing Agency in consultation with the Real
Estate Commissioner and the Director of the Office of Real Estate
Appraisers shall submit a joint report to the Legislature that
addresses the following:
(a) Recommendations regarding the consolidation of the operations,
licensing frameworks, and other aspects of the Department of Real
Estate and the Office of Real Estate Appraisers.
(b) Recommendations regarding any new or different authorities
needed to effect the consolidation.
(c) Recommendations regarding any necessary statutory changes
required to achieve the recommendations made in the report.
(d) Recommendations regarding any necessary regulation changes
required to achieve the recommendations in the report.
(e) Recommendations regarding the structure of fees and other
revenue sources, as well as reserve accounts.
(f) Recommendations regarding the future of the Recovery Account
of the Real Estate Fund and the advisability of establishing
additional or different recovery accounts to protect consumers in
real estate transactions in California.
(g) Recommendations regarding staffing changes that are advisable.
(h) Recommendations regarding technology changes that are
advisable.
(i) Recommendations regarding state representation at
administrative hearings.
(j) The estimated cost impacts of all recommendations made and
details regarding how those estimated impacts are expected to
manifest.
(k) Any other recommendations that the Real Estate Commissioner
and the Director of the Office of Real Estate Appraisers believes
would be helpful.
(l) Recommendations addressing any federal level restrictions or
impositions on such consolidation of entities.
50. Fourteen days after the effective date of this act, the
Secretary of the Business, Transportation and Housing Agency shall
post the items listed in Sections 48 and 49 on the Internet Web site
of the agency in a manner that provides for public comment for a
period of 120 days. The posting shall also set forth a mailing
address for members of the public to use should they choose to submit
comments by mail instead of via the Internet Web site during this
period. All comments shall specifically reference the sections to
which they are directed. Public comments received shall be considered
in making the secretary's final recommendations pursuant to Sections
48 and 49.
SEC. 17. Section 112 of the Financial Code is amended to read:
112. "Commissioner" means the Commissioner of Financial
Institutions and "department" means the Department of Financial
Institutions.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 18. Section 112 is added to the Financial Code, to read:
112. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Financial Institutions" or "department" means
the Department of Financial Services, Division of Financial
Institutions.
(2) "Commissioner of Financial Institutions" or "commissioner"
means the Director of the Division of Financial Institutions.
(b) This section shall become operative on July 1, 2011.
SEC. 19. Section 210 of the Financial Code is amended to read:
210. The chief officer of the Department of Financial
Institutions is the Commissioner of Financial Institutions. The
Commissioner of Financial Institutions is the head of the department
and, except as otherwise provided in this code, is subject to the
provisions of the Government Code relating to department heads, but
need not reside in Sacramento.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 20. Section 210 is added to the Financial Code, to read:
210. The Director of the Division of Financial Institutions is
the head of the Division of Financial Institutions, as specified in
Division 0.5 (commencing with Section 25).
This section shall become operative on July 1, 2011.
SEC. 21. Section 252 of the Financial Code is amended to read:
252. The commissioner shall adopt and keep an official seal.
Papers executed by the commissioner in his or her official capacity
pursuant to law and bearing the seal, or copies thereof certified by
him or her, shall be received in evidence in like manner as the
original and may be recorded in the same manner and with the same
effect as a deed regularly acknowledged.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 22. Section 4805.055 of the Financial Code is amended to
read:
4805.055. "Commissioner" means the Commissioner of Financial
Institutions.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 23. Section 4805.055 is added to the Financial Code, to read:
4805.055. (a) As used in this division, the following terms have
the following meanings:
(1) "Department of Financial Institutions" or "department" means
the Department of Financial Services, Division of Financial
Institutions.
(2) "Commissioner of Financial Institutions" or "commissioner"
means the Director of the Division of Financial Institutions.
(b) This section shall become operative on July 1, 2011.
SEC. 24. Section 4970 of the Financial Code is amended to read:
4970. For purposes of this division:
(a) "Annual percentage rate" means the annual percentage rate for
the loan calculated according to the provisions of the federal Truth
in Lending Act and the regulations adopted thereunder by the Federal
Reserve Board.
(b) "Covered loan" means a consumer loan in which the original
principal balance of the loan does not exceed the most current
conforming loan limit for a single-family first mortgage loan
established by the Federal National Mortgage Association in the case
of a mortgage or deed of trust, and where one of the following
conditions are met:
(1) For a mortgage or deed of trust, the annual percentage rate at
consummation of the transaction will exceed by more than eight
percentage points the yield on Treasury securities having comparable
periods of maturity on the 15th day of the month immediately
preceding the month in which the application for the extension of
credit is received by the creditor.
(2) The total points and fees payable by the consumer at or before
closing for a mortgage or deed of trust will exceed 6 percent of the
total loan amount.
(c) "Points and fees" shall include the following:
(1) All items required to be disclosed as finance charges under
Sections 226.4(a) and 226.4(b) of Title 12 of the Code of Federal
Regulations, including the Official Staff Commentary, as amended from
time to time, except interest.
(2) All compensation and fees paid to mortgage brokers in
connection with the loan transaction.
(3) All items listed in Section 226.4(c)(7) of Title 12 of the
Code of Federal Regulations, only if the person originating the
covered loan receives direct compensation in connection with the
charge.
(d) "Consumer loan"
means a consumer credit transaction that is secured by real property
located in this state used, or intended to be used or occupied, as
the principal dwelling of the consumer that is improved by a
one-to-four residential unit. "Consumer loan" does not include a
reverse mortgage, an open line of credit as defined in Part 226 of
Title 12 of the Code of Federal Regulations (Regulation Z), or a
consumer credit transaction that is secured by rental property or
second homes. "Consumer loan" does not include a bridge loan. For
purposes of this division, a bridge loan is any temporary loan,
having a maturity of one year or less, for the purpose of acquisition
or construction of a dwelling intended to become the consumer's
principal dwelling.
(e) "Original principal balance" means the total initial amount
the consumer is obligated to repay on the loan.
(f) "Licensing agency" shall mean the Department of Real Estate
for licensed real estate brokers, the Department of Corporations for
licensed residential mortgage lenders and licensed finance lenders
and brokers, and the Department of Financial Institutions for
commercial and industrial banks and savings associations and credit
unions organized in this state. On and after July 1, 2011, or as
otherwise specified, "licensing agency" shall instead be defined as
specified in Sections 25, 45, and 46.
(g) "Licensed person" means a real estate broker licensed under
the Real Estate Law (Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code), a finance lender or
broker licensed under the California Finance Lenders Law (Division 9
(commencing with Section 22000)), a residential mortgage lender
licensed under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000)), a commercial or
industrial bank organized under the Banking Law (Division 1
(commencing with Section 99)), a savings association organized under
the Savings Association Law (Division 2 (commencing with Section
5000)), and a credit union organized under the California Credit
Union Law (Division 5 (commencing with Section 14000)). Nothing in
this division shall be construed to prevent any enforcement by a
governmental entity against any person who originates a loan and who
is exempt or excluded from licensure by all of the licensing
agencies, based on a violation of any provision of this division.
Nothing in this division shall be construed to prevent the Department
of Real Estate from enforcing this division against a licensed
salesperson employed by a licensed real estate broker as if that
salesperson were a licensed person under this division. A licensed
person includes any person engaged in the practice of consumer
lending, as defined in this division, for which a license is required
under any other provision of law, but whose license is invalid,
suspended or revoked, or where no license has been obtained.
(h) "Originate" means to arrange, negotiate, or make a consumer
loan.
(i) "Servicer" has the same meaning provided in Section 6 (i)(2)
of the Real Estate Settlement Procedures Act of 1974.
SEC. 25. Section 5104 of the Financial Code is amended to read:
5104. "Commissioner" means the Commissioner of Financial
Institutions.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 26. Section 5104 is added to the Financial Code, to read:
5104. As used in this division, "Commissioner of Financial
Institutions" or "commissioner" means the Director of the Division of
Financial Institutions.
This section shall become operative on July 1, 2011.
SEC. 27. Section 5106 of the Financial Code is amended to read:
5106. "Department" means the Department of Financial
Institutions.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 28. Section 5106 is added to the Financial Code, to read:
5106. As used in this division, "Department of Financial
Institutions" or "department" means the Department of Financial
Services, Division of Financial Institutions.
This section shall become operative on July 1, 2011.
SEC. 29. Section 12003 of the Financial Code is amended to read:
12003. "Commissioner" means the Commissioner of Corporations of
the State of California, or any deputy, investigator, auditor, or any
other person employed by him or her.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 30. Section 12003 is added to the Financial Code, to read:
12003. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations, or any deputy,
investigator, auditor, or any other person employed by him or her.
(b) This section shall become operative on July 1, 2011.
SEC. 31. Section 14003 of the Financial Code is amended to read:
14003. "Commissioner" means the Commissioner of Financial
Institutions of the State of California.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 32. Section 14003 is added to the Financial Code, to read:
14003. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Financial Institutions" or "department" means
the Department of Financial Services, Division of Financial
Institutions.
(2) "Commissioner of Financial Institutions" or "commissioner"
means the Director of the Division of Financial Institutions.
(b) This section shall become operative on July 1, 2011.
SEC. 33. Section 17002 of the Financial Code is amended to read:
17002. "Commissioner" means the Commissioner of Corporations.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 34. Section 17002 is added to the Financial Code, to read:
17002. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 35. Section 18002 of the Financial Code is amended to read:
18002. "Commissioner" means the Commissioner of Financial
Institutions of the State of California.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 36. Section 18002 is added to the Financial Code, to read:
18002. As used in this division, "Commissioner of Financial
Institutions" or "commissioner" means the Director of the Division of
Financial Institutions.
This section shall become operative on July 1, 2011.
SEC. 37. Section 18002.5 of the Financial Code is amended to read:
18002.5. "Department" means the Department of Financial
Institutions.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 38. Section 18002.5 is added to the Financial Code, to read:
18002.5. As used in this division, "Department of Financial
Institutions" or "department" means the Department of Financial
Services, Division of Financial Institutions.
This section shall become operative on July 1, 2011.
SEC. 39. Section 22005 of the Financial Code is amended to read:
22005. "Commissioner" means the Commissioner of Corporations.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 40. Section 22005 is added to the Financial Code, to read:
22005. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 41. Section 23001 of the Financial Code is amended to read:
23001. As used in this division, the following terms have the
following meanings:
(a) "Deferred deposit transaction" means a transaction whereby a
person defers depositing a customer's personal check until a specific
date, pursuant to a written agreement for a fee or other charge, as
provided in Section 23035.
(b) "Commissioner" means the Commissioner of Corporations, except
as specified in Section 23002.
(c) "Department" means the Department of Corporations, except as
specified in Section 23002.
(d) "Licensee" means any person who offers, originates, or makes a
deferred deposit transaction, who arranges a deferred deposit
transaction for a deferred deposit originator, who acts as an agent
for a deferred deposit originator, or who assists a deferred deposit
originator in the origination of a deferred deposit transaction.
However, "licensee" does not include a state or federally chartered
bank, thrift, savings association, industrial loan company, or credit
union. "Licensee" also does not include a retail seller engaged
primarily in the business of selling consumer goods, including
consumables, to retail buyers that cashes checks or issues money
orders for a minimum fee not exceeding two dollars ($2) as a service
to its customers that is incidental to its main purpose or business.
"Licensee" also does not include an employee regularly employed by a
licensee at the licensee's place of business. An employee, when
acting under the scope of the employee's employment, shall be exempt
from any other law from which the employee's employer is exempt.
(e) "Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a joint
stock company, a trust, an unincorporated organization, a government
entity, or a political subdivision of a government entity.
(f) "Deferred deposit originator" means a person who offers,
originates, or makes a deferred deposit transaction.
SEC. 42. Section 23002 is added to the Financial Code, to read:
23002. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 43. Section 30002 of the Financial Code is amended to read:
30002. "Commissioner" means the Commissioner of Corporations.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 44. Section 30002 is added to the Financial Code, to read:
30002. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 45. Section 31055 of the Financial Code is amended to read:
31055. "Commissioner" means the Commissioner of Financial
Institutions, or any person to whom the Commissioner of Financial
Institutions delegates the authority to act for him or her in the
particular matter.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 46. Section 31055 is added to the Financial Code, to read:
31055. (a) As used in this division, the following terms have the
following meanings:
(1) "Department of Financial Institutions" or "department" means
the Department of Financial Services, Division of Financial
Institutions.
(2) "Commissioner of Financial Institutions" or "commissioner"
means the Director of the Division of Financial Institutions, or any
person to whom the director delegates the authority to act for him or
her in a particular matter.
(b) This section shall become operative on July 1, 2011.
SEC. 47. Section 33045.5 of the Financial Code is amended to read:
33045.5. "Commissioner" means the Commissioner of Financial
Institutions, or any person to whom the Commissioner of Financial
Institutions delegates the authority to act for the Commissioner of
Financial Institutions in this matter.
This section shall become inoperative on July 1, 2011, and, as of
January 1, 2012, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2012, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 48. Section 33045.5 is added to the Financial Code, to read:
33045.5. (a) As used in this division, the following terms have
the following meanings:
(1) "Department of Financial Institutions" or "department" means
the Department of Financial Services, Division of Financial
Institutions.
(2) "Commissioner of Financial Institutions" or "commissioner"
means the Director of the Division of Financial Institutions, or any
person to whom the director delegates the authority to act for him or
her in a particular matter.
(b) This section shall become operative on July 1, 2011.
SEC. 49. Section 50003.5 is added to the Financial Code, to read:
50003.5. (a) Notwithstanding Section 50003, as used in this
division, the following terms have the following meanings:
(1) "Department of Corporations" or "department" means the
Department of Financial Services, Division of Corporations.
(2) "Commissioner of Corporations" or "commissioner" means the
Director of the Division of Corporations.
(b) This section shall become operative on July 1, 2011.
SEC. 50. Division 20.5 (commencing with Section
55000) is added to the Financial Code , to
read:
DIVISION 20.5. Real Estate Financial Services
CHAPTER 1. GENERAL PROVISIONS
55000. This division shall be known and may be cited as the Real
Estate Financial Services Law.
55001. For the purposes of this division, the following
definitions shall apply:
(a) "Division of Corporations" means the Division of Corporations
within the Department of Financial Services.
(b) "Commissioner" means the Commissioner of Financial Services.
(c) "Fund" means the Real Estate Financial Services Fund
established in Section 55005.
(d) "Real estate financial services" means the services performed
by those persons described in subdivision (b) of Section 25.
(e) "Recovery account" means the Real Estate Financial Services
Recovery Account established in Section 55010.
CHAPTER 2. REAL ESTATE FINANCIAL SERVICES FUND
55005. There is hereby created in the State Treasury the Real
Estate Financial Services Fund. Notwithstanding Section 13340 of the
Government Code, moneys in the fund are continuously appropriated to
the Division of Corporations and shall be used for carrying out the
purposes of this division.
CHAPTER 3. REAL ESTATE FINANCIAL SERVICES RECOVERY ACCOUNT
55010. There shall be a separate account that shall be known as
the Real Estate Financial Services Recovery Account in the Real
Estate Financial Services Fund for purposes of recovery related to
real estate financial services licensed by the Division of
Corporations. The commissioner may, by regulation, require that up to
12 percent of the amount of any license fee collected from a real
estate financial services licensee shall be credited to the recovery
account. If, as of June 30 of any fiscal year, the balance of funds
in the recovery account is at least three million five hundred
thousand dollars ($3,500,000), all funds in excess of this amount
that have been credited to the recovery account shall instead be
credited to the fund. As long as the balance of funds in the recovery
account exceeds three million five hundred thousand dollars
($3,500,000), all license fees collected from real estate financial
services licensees shall be credited to the fund. Moneys in the
recovery account are continuously appropriated to the Division of
Corporations and shall be used for carrying out the provisions of
this chapter.
55011. If, on June 30 of any year, the balance remaining in the
recovery account is less than two hundred thousand dollars
($200,000), every person engaging in real estate financial services,
at the time of initial licensure and license renewal, shall pay, in
addition to the license fee, a fee of seven dollars ($7). This fee
shall be paid into the State Treasury and credited to the recovery
account.
55012. (a) In addition to the amount paid into the recovery
account as set forth in Sections 55010 and 55011, the commissioner
may authorize the transfer from the fund to the recovery account any
amounts as are deemed necessary.
(b) If the balance remaining in the recovery account is more than
four hundred thousand dollars ($400,000), the commissioner may
authorize the transfer of all or part of the surplus amount into the
fund.
(c) The commissioner may authorize the return to the recovery
account of all or any amount previously transferred to the fund under
this section.
55013. (a) When an aggrieved person obtains (1) a final judgment
in a court of competent jurisdiction, including, but not limited to,
a criminal restitution order issued pursuant to subdivision (f) of
Section 1202.4 of the Penal Code or Section 3663 of Title 18 of the
United States Code, or (2) an arbitration award that includes
findings of fact and conclusions of law rendered in accordance with
the rules established by the American Arbitration Association or
another recognized arbitration body, and in accordance with Sections
1281 to 1294.2, inclusive, of the Code of Civil Procedure where
applicable, and where the arbitration award has been confirmed and
reduced to judgment pursuant to Section 1287.4 of the Code of Civil
Procedure, against a defendant based upon the defendant's fraud,
misrepresentation, or deceit, made with intent to defraud, or
conversion of trust funds, arising directly out of any transaction in
which the defendant, while licensed by the Division of Corporations,
performed real estate financial services for which a license was
required, the aggrieved person may, upon the judgment becoming final,
file an application with the Division of Corporations for payment
from the recovery account, within the limitations specified in
Section 55024, of the amount unpaid on the judgment that represents
an actual and direct loss to the claimant in the transaction. As used
in this chapter, "court of competent jurisdiction" includes the
federal courts, but does not include the courts of another state.
(b) The application shall be delivered in person or by certified
mail to an office of the Division of Corporations no later than one
year after the judgment has become final.
(c) The application shall be made on a form prescribed by the
Division of Corporations, verified by the claimant, and shall include
all of the following:
(1) The name and address of the claimant.
(2) If the claimant is represented by an attorney, the name,
business address, and telephone number of the attorney.
(3) The identification of the judgment, the amount of the claim,
and an explanation of its computation.
(4) A detailed narrative statement of the facts in explanation of
the allegations of the complaint upon which the underlying judgment
is based.
(5) (A) Except as provided in subparagraph (B), a statement by the
claimant, signed under penalty of perjury, that the complaint upon
which the underlying judgment is based was prosecuted conscientiously
and in good faith. As used in this section, "conscientiously and in
good faith" means that no party potentially liable to the claimant in
the underlying transaction was intentionally and without good cause
omitted from the complaint, that no party named in the complaint who
otherwise reasonably appeared capable of responding in damages was
dismissed from the complaint intentionally and without good cause,
and that the claimant employed no other procedural means contrary to
the diligent prosecution of the complaint in order to seek to qualify
for the recovery account.
(B) For the purpose of an application based on a criminal
restitution order, all of the following statements by the claimant:
(i) The claimant has not intentionally and without good cause
failed to pursue any person potentially liable to the claimant in the
underlying transaction other than a defendant who is the subject of
a criminal restitution order.
(ii) The claimant has not intentionally and without good cause
failed to pursue in a civil action for damages all persons
potentially liable to the claimant in the underlying transaction who
otherwise reasonably appeared capable of responding in damages other
than a defendant who is the subject of a criminal restitution order.
(iii) The claimant employed no other procedural means contrary to
the diligent prosecution of the complaint in order to seek to qualify
for recovery from the recovery account.
(6) The name and address of the judgment debtor or, if not known,
the names and addresses of persons who may know the judgment debtor's
present whereabouts.
(7) The following representations and information from the
claimant:
(A) That he or she is not a spouse of the judgment debtor nor a
personal representative of the spouse.
(B) That he or she has complied with all of the requirements of
this chapter.
(C) That the judgment underlying the claim meets the requirements
of subdivision (a).
(D) A description of searches and inquiries conducted by or on
behalf of the claimant with respect to the judgment debtor's assets
liable to be sold or applied to satisfaction of the judgment, an
itemized valuation of the assets discovered, and the results of
actions by the claimant to have the assets applied to satisfaction of
the judgment.
(E) That he or she has diligently pursued collection efforts
against all judgment debtors and all other persons liable to the
claimant in the transaction that is the basis for the underlying
judgment.
(F) That the underlying judgment and debt have not been discharged
in bankruptcy, or, in the case of a bankruptcy proceeding that is
open at or after the time of the filing of the application, that the
judgment and debt have been declared to be nondischargeable.
(G) That the application was mailed or delivered to the Division
of Corporations no later than one year after the underlying judgment
became final.
(d) The application form shall include detailed instructions with
respect to documentary evidence, pleadings, court rulings, the
products of discovery in the underlying litigation, and a notice to
the applicant of his or her obligation to protect the underlying
judgment from discharge in bankruptcy, to be appended to the
application.
(e) An application for payment from the recovery account that is
based on a criminal restitution order shall comply with all of the
requirements of this chapter. For the purpose of an application based
on a criminal restitution order, the following terms shall have all
of the following meanings:
(1) "Judgment" means the criminal restitution order.
(2) "Complaint" means the facts of the underlying transaction upon
which the criminal restitution order is based.
(3) "Judgment debtor" means any defendant who is the subject of
the criminal restitution order.
55014. (a) The claimant shall serve a copy of the notice
prescribed in subdivision (e) together with a copy of the application
upon the judgment debtor by personal service, by certified mail, or
by publication, as set forth in subdivision (b).
(b) If the judgment debtor holds an unexpired and unrevoked
license issued by the Division of Corporations, service of the notice
and a copy of the application may be made by certified mail
addressed to the judgment debtor at the latest business or residence
address on file with the Division of Corporations. If the judgment
debtor does not hold an unexpired and unrevoked license issued by the
Division of Corporations and personal service cannot be effected
through the exercise of reasonable diligence, the claimant shall
serve the judgment debtor by one publication of the notice in each of
two successive weeks in a newspaper of general circulation published
in the county in which the judgment debtor was last known to reside.
(c) If the application is served upon the judgment debtor by
certified mail, service is complete five days after mailing if the
place of address is within the State of California, 10 days after
mailing if the place of address is outside the State of California
but within the United States, and 20 days after mailing if the place
of address is outside the United States. Personal service is complete
on the date of service. Service by publication is complete upon
completion of the second week of publication.
(d) If a judgment debtor wishes to contest payment of an
application by the commissioner, he or she shall mail or deliver a
written response to the application addressed to the Division of
Corporations at its headquarters office within 30 days after service
of the notice and application, and shall mail or deliver a copy of
the response to the claimant. If a judgment debtor fails to mail or
deliver a timely response, he or she shall have waived his or her
right to present objections to payment.
(e) The notice served upon the judgment debtor shall include the
following statement:
"NOTICE: Based upon a judgment entered against you in favor of
__________________(name of claimant), application for payment from
the Real Estate Financial Services Recovery Account of the Real
Estate Financial Services Fund is being made to the Division of
Corporations.
"If payment is made from the Real Estate Financial Services
Recovery Account, all licenses and license rights that you have under
the applicable licensing laws and regulations will be automatically
suspended on the date of payment and cannot be reinstated until the
Real Estate Financial Services Recovery Account has been reimbursed
for the amount paid plus interest at the prevailing rate.
"If you wish to contest payment by the Commissioner of Financial
Services, you must file a written response to the application
addressed to the Division of Corporations, at ___________ within 30
days after mailing, delivery, or publication of this notice and mail
or deliver a copy of that response to the claimant. If you fail to do
so, you will have waived your right to present your objections to
payment."
(f) If a judgment debtor fails to mail or deliver a written
response to the application with the Division of Corporations within
30 days after personal service, mailing, or final publication of the
notice, the judgment debtor shall not then be entitled to notice of
any action taken or proposed to be taken by the commissioner with
respect to the application.
55015. (a) If the commissioner determines that the application as
submitted by the claimant fails to comply substantially with the
requirements of Section 55013 or with the requirements of a
regulation adopted by the commissioner, the commissioner shall,
within 15 days after receipt of the application, mail an itemized
list of deficiencies to the claimant.
(b) The time within which the commissioner is required to act
under Section 55016 shall be measured from the date of receipt by the
Division of Corporations of an application that is substantially
complete. In the event of an irreconcilable dispute between the
claimant and the commissioner on the question of whether the
application is substantially complete, the claimant may immediately
file the claim with the court pursuant to Section 55020.
55016. (a) The commissioner shall render a final written decision
on the application within 90 days after a completed application has
been received unless the claimant agrees in writing to extend the
time within which the commissioner may render a decision. If the
commissioner fails to render a written decision in response to the
claim within 90 days after its receipt or within the extended period
agreed to by the claimant, the claim shall be deemed to have been
denied by the commissioner on the final day for rendering the
decision.
(b) The commissioner may deny or grant the application or may
enter into a compromise with the claimant to pay less in settlement
than the full amount of the claim. If the claimant refuses to accept
a settlement of the claim offered by the commissioner, the written
decision of the commissioner shall be to deny the claim or it shall
be deemed denied if a written decision is not rendered within the
time specified in subdivision (a). Evidence of settlement offers and
discussions between the commissioner or the Division of Corporations
and the claimant shall not be competent evidence in judicial
proceedings undertaken by the claimant pursuant to Section 55020.
55017. In its consideration and investigation of an application,
the Division of Corporations shall have recourse to all appropriate
means of investigation and discovery available to it under Article 2
(commencing with Section 11180) of Chapter 2 of Part 1 of Division 3
of Title 2 of the Government Code.
55018. (a) The commissioner shall give notice of a decision
rendered with respect to the application to the claimant and to a
judgment debtor who has filed a timely response to the application in
accordance with Section 55014.
(b) If the application is denied, the notice to the claimant and
judgment debtor shall include all of the following:
"NOTICE: Claimant's application has been denied. If the claimant
wishes to pursue the application in court, the claimant must file the
application as follows in a superior court of this state not later
than six months after receipt of this notice, pursuant to Section
55020. If the underlying judgment is a California state court
judgment, the application shall be filed in the court in which the
underlying judgment was entered. If the underlying judgment is a
federal court judgment, the application shall be filed in the
superior court of any county within California that would have been a
proper venue if the underlying lawsuit had been filed in a
California state court, or in the Superior Court of the County of
Sacramento."
(c) If the decision of the commissioner is to make a payment to
the claimant out of the recovery account, the following notice shall
be given to the judgment debtor along with a copy of the decision of
the commissioner:
"NOTICE: The decision of the Commissioner of Financial Services on
the application of ____ is to pay $____ from the Real Estate
Financial Services Recovery Account. A copy of that decision is
enclosed.
"Pursuant to Section 55026, all of your licenses and license
rights under applicable laws and regulations will be suspended
effective on the date of the payment, and you will not be eligible
for reinstatement of any of those licenses or license rights until
you have reimbursed the Real Estate Financial Services Recovery
Account for this payment plus interest at the prevailing legal rate.
"If you desire a judicial review of the suspension of your
licenses and license rights, you may petition the superior court for
a writ of mandamus. If the underlying judgment is a California state
court judgment, the petition shall be filed in the court in which the
judgment was entered. If the underlying judgment is a federal court
judgment, the petition shall be filed in the superior court of any
county within California that would have been a proper venue if the
underlying lawsuit had been filed in a California state court, or in
the Superior Court of the County of Sacramento. To be timely, the
petition must be filed with the court within 30 days of receipt of
this notice."
55019. If, at any time prior to the rendering of a decision on an
application, the commissioner makes a preliminary determination that
the aggregate valid applications of all aggrieved persons against
that licensee are likely to exceed the limits of liability in Section
55024, the commissioner shall, in lieu of further administrative
proceedings, initiate a proration proceeding pursuant to Section
55025 in a superior court of any county in this state that would be a
proper court for the filing of a denied application or writ of
mandamus pursuant to Section 55018.
55020. (a) A claimant against whom the commissioner has rendered
a decision denying an application pursuant to Section 55013 may,
within six months after the mailing of the notice of the denial, file
a verified application in superior court for an Order Directing
Payment Out of the Real Estate Financial Services Recovery Account
based upon the grounds set forth in the application to the
commissioner. If the underlying judgment is a California state court
judgment, the application shall be filed in the court in which the
underlying judgment was entered. If the underlying judgment is a
federal court judgment, the application shall be filed in the
superior court of any county within California that would have been a
proper venue if the underlying lawsuit had been filed in a
California state court, or in the Superior Court of the County of
Sacramento.
(b) A copy of the verified application shall be served upon the
commissioner and upon the judgment debtor. A certificate or affidavit
of service shall be filed by the claimant with the court. Service on
the commissioner may be made by certified mail addressed to the
headquarters office of the Division of Corporations. Service upon a
judgment debtor may be made in accordance with Section 55014. The
notice served upon the judgment debtor shall read as follows:
"NOTICE: An application has been filed with the court for a
payment from the Real Estate Financial Services Recovery Account that
was previously denied by the Commissioner of Financial Services."
"If the Division of Corporations makes a payment from the Real
Estate Financial Services Recovery Account pursuant to court order,
all of your licenses and license rights under applicable laws and
regulations will be automatically suspended until the Real Estate
Financial Services Recovery Account has been reimbursed for the
amount paid plus interest at the prevailing rate."
"If you wish to defend in court against this application, you must
file a written response with the court within 30 days after having
been served with a copy of the application. If you do not file a
written response, you will have waived your right to defend against
the application."
55021. (a) The commissioner and the judgment debtor shall each
have 30 days after being served with the application to file a
written response. The court shall then set the matter for hearing
upon the petition of the claimant. The court shall grant a request of
the commissioner for a continuance of as much as 30 days and may,
upon a showing of good cause by any party, continue the hearing as
the court deems appropriate.
(b) The claimant shall have the burden of proving compliance with
the requirements of Section 55013 by competent evidence at an
evidentiary hearing. The claimant shall be entitled to a de novo
review of the merits of the application as contained in the
administrative record.
(c) If the judgment debtor fails to file a written response to the
application, the application may be compromised or settled by the
commissioner at any time during the court proceedings and the court
shall, upon joint petition of the claimant and the commissioner,
issue an order directing payment out of the recovery account.
55022. Whenever the court proceeds upon an application under
Section 55020, it shall order payment out of the recovery account
only upon a determination that the aggrieved party has a valid cause
of action within the purview of Section 55013, and has complied with
Section 55020.
The commissioner may defend any of these actions on behalf of the
recovery account and shall have recourse to all appropriate means of
defense and review, including examination of witnesses and the right
to relitigate any issues material and relevant in the proceeding
against the recovery account which were determined in the underlying
action on which the judgment in favor of the applicant was based. If
the judgment in favor of the applicant was by default, stipulation,
consent, or pursuant to Section 594 of the Code of Civil Procedure,
or whenever the action against the licensee was defended by a trustee
in bankruptcy, the applicant shall have the burden of proving that
the cause of action against the licensee was for fraud,
misrepresentation, deceit, or conversion of trust funds. Otherwise,
the judgment shall create a rebuttable presumption of the fraud,
misrepresentation, deceit, or conversion of trust funds by the
licensee, which presumption shall affect the burden of producing
evidence.
The commissioner may move the court at any time to dismiss the
application when it appears there are no triable issues and the
petition is without merit. The motion may be supported by affidavit
of any person or persons having knowledge of the facts, and may be
made on the basis that the petition, and the judgment referred to in
the petition, does not form the basis for a meritorious recovery
claim within the purview of Section 55013; provided, however, the
commissioner shall give written notice at least 10 days before the
motion.
The commissioner may, subject to court approval, compromise a
claim based upon the application of an aggrieved party. The
commissioner shall not be bound by any compromise or stipulation of
the judgment debtor.
55023. The judgment debtor may defend an action against the
recovery account on his or her own behalf and shall have recourse to
all appropriate means of defense and review, including examination of
witnesses. All matters, including, but not limited to, the issues of
fraud, misrepresentation, deceit, or conversion of trust funds,
finally adjudicated in the underlying action are conclusive as to the
judgment debtor and the applicant in the proceeding against the
recovery account.
55024. Notwithstanding any other provision of this chapter and
regardless of the number of persons aggrieved or parcels of real
estate involved in a transaction or the number of judgments against a
licensee, the liability of the recovery account shall not exceed the
following amounts:
(a) Fifty thousand dollars ($50,000) for any one transaction and
two hundred fifty thousand dollars ($250,000) for any one licensee.
(b) When multiple licensed persons performing real estate
financial services are involved in a transaction and the individual
conduct of two or more of the licensees results in a judgment meeting
the requirements of subdivision (a) of Section 55013, the claimant
may seek recovery from the recovery account based on the judgment
against any of the licensed persons, subject to the limitations of
this section and subparagraph (E) of paragraph (7) of subdivision (c)
of Section 55013.
55025. If the amount of liability of the recovery account as
provided for in Section 55024 is insufficient to pay in full the
valid claims of all aggrieved persons by whom claims have been filed
against any one licensee, the amount shall be distributed among them
in the ratio that their respective claims bear to the aggregate of
the valid claims, or in any other manner as the court deems
equitable. Distribution of any moneys shall be among the persons
entitled to a share, without regard to the order of priority in which
their respective judgments may have been obtained or their claims
have been filed. Upon petition of the commissioner, the court may
require all claimants and prospective claimants against one licensee
to be joined in one action, to the end that the respective rights of
all claimants to the recovery account may be equitably adjudicated
and settled.
55026. If the commissioner pays from the recovery account any
amount in settlement of a claim or toward satisfaction of a judgment
against a licensed person performing real estate financial services,
the license shall be automatically suspended upon the date of payment
from the recovery account. No person engaging in real estate
financial services shall be granted reinstatement until he or she has
repaid in full, plus interest at the prevailing legal rate
applicable to a judgment rendered in any court of this state, the
amount paid from the recovery account on his or her account. A
discharge in bankruptcy shall not relieve a person from the penalties
and disabilities provided in this chapter.
55027. If, at any time, the money deposited in the recovery
account is insufficient to satisfy any duly authorized claim or
portion thereof, the commissioner shall, when sufficient money has
been deposited in the recovery account, satisfy the unpaid claims or
portions thereof, in the order that the claims or portions thereof
were originally filed, plus accumulated interest at the rate of 4
percent a year.
55028. Any sums received by the commissioner pursuant to any
provisions of this chapter shall be deposited in the State Treasury
and credited to the recovery account.
55029. It shall be unlawful for any person or the agent of any
person to file with the commissioner any notice, statement, or other
document required under the provisions of this chapter which is false
or untrue or contains any willful, material misstatement of fact.
This type of conduct shall constitute a public offense punishable by
imprisonment in the county jail for a period of not more than one
year or a fine of not more than one thousand dollars ($1,000), or
both.
55030. When the commissioner has paid from the recovery account
any sum to the judgment creditor, the commissioner shall be
subrogated to all of the rights of the judgment creditor and the
judgment creditor shall assign all of his or her right, title, and
interest in the judgment to the commissioner of and any amount and
interest so recovered by the commissioner on the judgment shall be
deposited to the recovery account.
55031. The failure of an aggrieved person to comply with all of
the provisions of this chapter shall constitute a waiver of any
rights under this chapter.
55032. Nothing in this chapter shall limit the authority of the
commissioner to take disciplinary action against any licensee for a
violation of applicable licensing laws, or of the rules and
regulations of the commissioner; nor shall the repayment in full of
all obligations to the recovery account by any licensee nullify or
modify the effect of any other disciplinary proceeding brought
pursuant to applicable law or regulation.
CHAPTER 4. MISCELLANEOUS
55040. This division shall become operative on July 1, 2012.
SEC. 51. Section 11552 of the
Government Code is amended to read:
11552. (a) Effective January 1, 1988, an annual salary of
eighty-five thousand four hundred two dollars ($85,402) shall be paid
to each of the following:
(1) Commissioner of Financial Institutions
Services .
(2) Commissioner of Corporations.
(3)
(2) Director of Transportation.
(4)
(3) Real Estate Commissioner.
(5)
(4) Director of Social Services.
(6)
(5) Director of Water Resources.
(7)
(6) Chief Deputy Secretary for Adult Operations of the
Department of Corrections and Rehabilitation.
(8)
(7) Director of General Services.
(9)
(8) Director of Motor Vehicles.
(10)
(9) Chief Deputy Secretary for Juvenile Justice in the
Department of Corrections and Rehabilitation.
(11)
(10) Executive Officer of the Franchise Tax Board.
(12)
(11) Director of Employment Development.
(13)
(12) Director of Alcoholic Beverage Control.
(14)
(13) Director of Housing and Community Development.
(15)
(14) Director of Alcohol and Drug Programs.
(16)
(15) Director of Statewide Health Planning and
Development.
(17)
(16) Director of the Department of Personnel
Administration.
(18)
(17) Director of Health Care Services.
(19)
(18) Director of Mental Health.
(20)
(19) Director of Developmental Services.
(21)
(20) State Public Defender.
(22)
(21) Director of the California State Lottery.
(23)
(22) Director of Fish and Game.
(24)
(23) Director of Parks and Recreation.
(25)
(24) Director of Rehabilitation.
(26)
(25) Director of the Office of Administrative Law.
(27)
(26) Director of Consumer Affairs.
(28)
(27) Director of Forestry and Fire Protection.
(29)
(28) The Inspector General pursuant to Section 6125 of
the Penal Code.
(30)
(29) Director of Child Support Services.
(31)
(30) Director of Industrial Relations.
(32)
(31) Chief Deputy Secretary for Adult Programs in the
Department of Corrections and Rehabilitation.
(33)
(32) Director of Toxic Substances Control.
(34)
(33) Director of Pesticide Regulation.
(35)
(34) Director of Managed Health Care.
(36)
(35) Director of Environmental Health Hazard
Assessment.
(37)
(36) Director of Technology.
(38)
(37) Director of California Bay-Delta Authority.
(39)
(38) Director of California Conservation Corps.
(b) The annual compensation provided by this section shall be
increased in any fiscal year in which a general salary increase is
provided for state employees. The amount of the increase provided by
this section shall be comparable to, but shall not exceed, the
percentage of the general salary increases provided for state
employees during that fiscal year.
SEC. 50. SEC. 52. Section 13975 of
the Government Code is amended to read:
13975. (a) The Business and Transportation Agency in state
government is hereby renamed the Business, Transportation and Housing
Agency. The agency consists of the State Department of Alcoholic
Beverage Control, the Department of the California Highway Patrol,
the Department of Corporations, the Department of Housing and
Community Development, the Department of Motor Vehicles, the
Department of Real Estate, the Department of Transportation, the
Department of Financial Institutions, the Department of Managed
Health Care, and the Board of Pilot Commissioners for the Bays of San
Francisco, San Pablo, and Suisun. The California Housing Finance
Agency is also located within the Business, Transportation and
Housing Agency, as specified
in Division 31 (commencing with Section 50000) of the
Health and Safety Code.
(b) This section shall become inoperative on July 1, 2011, and, as
of January 1, 2012, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2012, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 51. SEC. 53. Section 13975 is
added to the Government Code, to read:
13975. (a) The Business and Transportation Agency in state
government is hereby renamed the Business, Transportation and Housing
Agency. The agency consists of the State Department of Alcoholic
Beverage Control, the Department of the California Highway Patrol,
the Department of Financial Services, the Department of Housing and
Community Development, the Department of Motor Vehicles, the
Department of Real Estate, the Department of Transportation, the
Department of Managed Health Care, and the Board of Pilot
Commissioners for the Bays of San Francisco, San Pablo, and Suisun.
The California Housing Finance Agency is also located within the
Business, Transportation and Housing Agency, as specified in Division
31 (commencing with Section 50000) of the Health and Safety Code.
(b) This section shall become operative on July 1, 2011.
SEC. 52. SEC. 54. Section 13978.6 of
the Government Code is amended to read:
13978.6. (a) The Secretary of the Business, Transportation and
Housing Agency shall be generally responsible for the sound fiscal
management of each department, office, or other unit within the
agency. The secretary shall review and approve the proposed budget of
each department, office, or other unit. The secretary shall hold the
head of each department, office, or other unit responsible for
management control over the administrative, fiscal, and program
performance of his or her department, office, or other unit. The
secretary shall review the operations and evaluate the performance at
appropriate intervals of each department, office, or other unit, and
shall seek continually to improve the organization structure, the
operating policies, and the management information systems of each
department, office, or other unit.
(b) There is in the Business, Transportation, and Housing Agency a
Department of Corporations, which has the responsibility for
administering various laws. In order to effectively support the
Department of Corporations in the administration of these laws, there
is hereby established the State Corporations Fund. All expenses and
salaries of the Department of Corporations shall be paid out of the
State Corporations Fund. Therefore, notwithstanding any provision of
any law administered by the Department of Corporations declaring that
fees, reimbursements, assessments, or other money or amounts charged
and collected by the Department of Corporations under these laws are
to be delivered or transmitted to the Treasurer and deposited to the
credit of the General Fund, on and after July 1, 1992, all fees,
reimbursements, assessments, and other money or amounts charged and
collected under these laws and attributable to the 1992-93 fiscal
year and subsequent fiscal years shall be delivered or transmitted to
the Treasurer and deposited to the credit of the State Corporations
Fund.
(c) Funds appropriated from the State Corporations Fund and made
available for expenditure for any law or program of the Department of
Corporations may come from the following:
(1) Fees and any other amounts charged and collected pursuant to
Section 25608 of the Corporations Code, except for fees and other
amounts charged and collected pursuant to subdivisions (o) to (r),
inclusive, of Section 25608 of the Corporations Code.
(2) Fees collected pursuant to subdivisions (a), (b), (c), and (d)
of Section 25608.1 of the Corporations Code.
(d) This section shall become inoperative on July 1, 2011, and, as
of January 1, 2012, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2012, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 53. SEC. 55. Section 13978.6 is
added to the Government Code, to read:
13978.6. (a) The Secretary of the Business, Transportation and
Housing Agency shall be generally responsible for the sound fiscal
management of each department, office, or other unit within the
agency. The secretary shall review and approve the proposed budget of
each department, office, or other unit. The secretary shall hold the
head of each department, office, or other unit responsible for
management control over the administrative, fiscal, and program
performance of his or her department, office, or other unit. The
secretary shall review the operations and evaluate the performance at
appropriate intervals of each department, office, or other unit, and
shall seek continually to improve the organization structure, the
operating policies, and the management information systems of each
department, office, or other unit.
(b) There is in the Business, Transportation and Housing Agency a
Department of Financial Services, which has the responsibility for
administering various laws. In order to effectively support the
Department of Financial Services in the administration of these laws,
there is hereby continued in existence the State Corporations Fund.
All expenses and salaries of the Department of Financial Services
shall be paid out of the State Corporations Fund. Therefore,
notwithstanding any provision of any law administered by the
Department of Financial Services declaring that fees, reimbursements,
assessments, or other money or amounts charged and collected by the
Department of Financial Services under these laws are to be delivered
or transmitted to the Treasurer and deposited to the credit of the
General Fund, on and after July 1, 1992, all fees, reimbursements,
assessments, and other money or amounts charged and collected under
these laws and attributable to the 1992-93 fiscal year and subsequent
fiscal years shall be delivered or transmitted to the Treasurer and
deposited to the credit of the State Corporations Fund.
(c) Funds appropriated from the State Corporations Fund and made
available for expenditure for any law or program of the Department of
Financial Services may come from the following:
(1) Fees and any other amounts charged and collected pursuant to
Section 25608 of the Corporations Code, except for fees and other
amounts charged and collected pursuant to subdivisions (o) to (r),
inclusive, of Section 25608 of the Corporations Code.
(2) Fees collected pursuant to subdivisions (a), (b), (c), and (d)
of Section 25608.1 of the Corporations Code.
(d) This section shall become operative on July 1, 2011.
SEC. 54. SEC. 56. The sum of one
hundred fifty thousand dollars ($150,000) is hereby appropriated from
the General Fund portions of the Real Estate Fund to the Secretary
of the Business, Transportation and Housing Agency to fund the
reports described in Sections 48 and 49 of the Financial Code.
SEC. 57. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
