Bill Text: CA AB687 | 2019-2020 | Regular Session | Amended
Bill Title: Real estate brokers: limited liability companies.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2020-06-23 - Referred to Com. on B., P. & E.D. [AB687 Detail]
Download: California-2019-AB687-Amended.html
Amended
IN
Assembly
January 07, 2020 |
Introduced by Assembly Member Daly |
February 15, 2019 |
LEGISLATIVE COUNSEL'S DIGEST
Digest Key
Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 10006 of the Business and Professions Code is amended to read:10006.
“Person” includes corporation, company, limited liability company, and firm.SEC. 2.
Section 10085.5 of the Business and Professions Code is amended to read:10085.5.
(a) It shall be unlawful for any person to claim, demand, charge, receive, collect, or contract for an advance fee (1) for soliciting lenders on behalf of borrowers or performing services for borrowers in connection with loans to be secured directly or collaterally by a lien on real property, before the borrower becomes obligated to complete the loan or, (2) for performing any other activities for which a license is required, unless the person is a licensed real estate broker and has complied with the provisions of this part.SEC. 3.
Section 10085.6 of the Business and Professions Code is amended to read:10085.6.
(a) Notwithstanding any other provision of law, it shall be unlawful for any licensee who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower, to do any of the following:SEC. 4.
Section 10106 of the Business and Professions Code is amended to read:10106.
(a) Except as otherwise provided by law, in any order issued in resolution of a disciplinary proceeding before the department, the commissioner may request the administrative law judge to direct a licensee found to have committed a violation of this part to pay a sum not to exceed the reasonable costs of the investigation and enforcement of the case.SEC. 5.
Section 10133.1 of the Business and Professions Code is amended to read:10133.1.
(a) Subdivisions (d) and (e) of Section 10131, Section 10131.1, Article 5 (commencing with Section 10230), and Article 7 (commencing with Section 10240) of this code and Section 1695.13 of the Civil Code do not apply to any of the following:SEC. 6.
Section 10139 of the Business and Professions Code is amended to read:10139.
Any person acting as a real estate broker, real estate salesperson, or mortgage loan originator without a license or license endorsement, or who advertises using words indicating that they are a real estate broker, real estate salesperson, or mortgage loan originator without being so licensed or without having obtained a license endorsement, shall be guilty of a public offense punishable by a fine not exceeding twenty thousand dollars ($20,000), or by imprisonment in the county jail for a term not to exceed six months, or by both fine and imprisonment; or if a corporation or limited liability company, be punished by a fine not exceeding sixty thousand dollars ($60,000). If a Real Estate Fraud Prosecution Trust Fund, as described in Section 27388 of the Government Code, exists in the county where a person, corporation, or limited liability company is convicted, any fine collected from the person in excess of ten thousand dollars ($10,000) or any fine collected from the corporation or limited liability company in excess of fifty thousand dollars ($50,000) shall be deposited in that Real Estate Fraud Prosecution Trust Fund.SEC. 7.
Section 10147.6 of the Business and Professions Code is amended to read:10147.6.
(a) Any licensee who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other form of compensation paid by the borrower, shall provide the following to the borrower, as a separate statement, in not less than 14-point bold type, prior to entering into any fee agreement with the borrower:SEC. 8.
Section 10148 of the Business and Professions Code is amended to read:10148.
(a) A licensed real estate broker shall retain for three years copies of all listings, deposit receipts, canceled checks, trust records, and other documents executed by them or obtained by them in connection with any transactions for which a real estate broker license is required. The retention period shall run from the date of the closing of the transaction or from the date of the listing if the transaction is not consummated. After notice, the books, accounts, and records shall be made available for examination, inspection, and copying by the commissioner or their designated representative during regular business hours; and shall, upon the appearance of sufficient cause, be subject to audit without further notice, except that the audit shall not be harassing in nature. This subdivision shall not be construed to require a licensed real estate broker to retain electronic messages of an ephemeral nature, as described in subdivision (d) of Section 1624 of the Civil Code.SEC. 9.
Section 10152 of the Business and Professions Code is amended to read:10152.
(a) The commissioner may require any other proof they may deem advisable concerning the honesty and truthfulness of an applicant for a real estate license or license examination, or of the members, managers, officers, directors, or persons owning 10 percent or more of the stock, of a corporation or limited liability company making application therefor, before authorizing the issuance of a real estate license. For this purpose the commissioner may call a hearing in accordance with this part relating to hearings. To assist in their determination the commissioner shall require every original applicant to be fingerprinted prior to issuing a license. The commissioner may require the fingerprints to be submitted either with the application to take the license examination or with the application for a real estate license.SEC. 10.
Section 10153 of the Business and Professions Code is amended to read:10153.
In addition to the proof of honesty and truthfulness required of any applicant for a real estate license, the commissioner shall ascertain by written examination that the applicant, and in case of a corporation or limited liability company applicant for a real estate broker’s license that each officer, member, manager, or agent thereof through whom it proposes to act as a real estate licensee, has all of the following:SEC. 11.
Section 10156.9 is added to the Business and Professions Code, to read:10156.9.
(a) As a condition of the issuance, reinstatement, reactivation, or continued valid use of a real estate broker license under this part, a limited liability company shall, in accordance with this section, maintain a policy or policies of insurance against liability imposed on or against it by law for damages arising out of claims based upon acts, errors, or omissions arising out of conduct subject to licensure under this chapter. This insurance requirement is in addition to, and does not in any way supersede or mitigate the requirements of, Chapter 6.5 (commencing with Section 10470).SEC. 11.SEC. 12.
Section 10157.5 is added to the Business and Professions Code, to read:10157.5.
Notwithstanding any other law, a limited liability company may be licensed as a real estate broker.SEC. 12.SEC. 13.
Section 10158 of the Business and Professions Code is amended to read:10158.
(a) When a real estate license is issued to a corporation, if it desires any of its officers other than the officer designated by it pursuant to Section 10211, to act under its license as a real estate broker, it shall procure an additional license to retain each of those additional officers. In the event of death or incapacity of a sole designated broker-officer, a corporation may operate as a licensee without interruption under its existing license if notice of the death or incapacity and an application for a new designated officer is filed with the department before midnight of the 10th business day after the event.SEC. 13.SEC. 14.
Section 10159 of the Business and Professions Code is amended to read:10159.
(a) Each officer of a corporation through whom it is licensed to act as a real estate broker need not be a licensed real estate broker, but if not, is authorized only to act as such for and on behalf of the corporation as an officer. This does not preclude a designated corporate officer who has a separate individual license from conducting licensed activity for another entity if the entity for which they act is clearly disclosed and apparent to any member of the public using their services outside the corporation.SEC. 14.SEC. 15.
Section 10159.2 of the Business and Professions Code is amended to read:10159.2.
(a) (1) The officer designated by a corporate broker licensee pursuant to Section 10211 shall be responsible for the supervision and control of the activities conducted on behalf of the corporation by its officers and employees as necessary to secure full compliance with the provisions of this division, including the supervision of salespersons licensed to the corporation in the performance of acts for which a real estate license is required.SEC. 15.SEC. 16.
Section 10164 of the Business and Professions Code is amended to read:10164.
(a) A responsible broker, limited liability company designated broker member, manager, or officer, or corporate designated broker officer may appoint a licensee as a manager of a branch office or division of the real estate business of the responsible broker, limited liability company designated broker member, limited liability company designated broker manager, limited liability company designated broker officer’s, or corporate designated broker officer and delegate to the appointed manager the responsibility to oversee day-to-day operations, supervise the licensed activities of licensees, and supervise clerical staff employed in the branch office or division.SEC. 16.SEC. 17.
Section 10167.12 of the Business and Professions Code is amended to read:10167.12.
(a) The commissioner may suspend, deny, or revoke the license of a licensee or the license of the licensee to operate at one or more locations for either of the following:SEC. 17.SEC. 18.
Section 10171.5 of the Business and Professions Code is amended to read:10171.5.
A person who is licensed as a real estate broker only as a member, manager, or officer of a limited liability company or corporate broker pursuant to Section 10158 or 10211 shall not be eligible for the renewal of such license nor for the issuance of a license in an individual capacity or as a member, manager, or officer of a limited liability company or corporate broker licensed pursuant to Section 10158 or 10211, unless and until such person has completed the continuing education requirements of this article.The commissioner may suspend or revoke the license of a real estate licensee, delay the renewal of a license of a real estate licensee, or deny the issuance of a license to an applicant, who has done any of the following, or may suspend or revoke the license of a corporation or limited liability company, delay the renewal of a license of a corporation or limited liability company, or deny the issuance of a license to a
corporation or limited liability company, if a member, manager, officer, director, or person owning or controlling 10 percent or more of the corporation’s stock has done any of the following:
(a)Procured, or attempted to procure, a real estate license or license renewal, for themself or a salesperson, by fraud, misrepresentation, or deceit, or by making a material misstatement of fact in an application for a real estate license, license renewal, or reinstatement.
(b)(1)Entered a plea of guilty or no contest to, or been found guilty of, or been convicted of, a felony, or a crime substantially related to the qualifications, functions, or duties of a real estate licensee, and the time for appeal has elapsed or the judgment of conviction
has been affirmed on appeal, irrespective of an order granting probation following that conviction, suspending the imposition of sentence, or of a subsequent order under Section 1203.4 of the Penal Code allowing that licensee to withdraw their plea of guilty and to enter a plea of not guilty, or dismissing the accusation or information.
(2)Notwithstanding paragraph (1), and with the recognition that sentencing may not occur for months or years following the entry of a guilty plea, the commissioner may suspend the license of a real estate licensee upon the entry by the licensee of a guilty plea to any of the crimes described in paragraph (1). If the guilty plea is withdrawn, the suspension shall be rescinded and the license reinstated to its status prior to the suspension. The department shall notify a person whose license is subject to
suspension pursuant to this paragraph of their right to have the issue of the suspension heard in accordance with Section 10100.
(c)Knowingly authorized, directed, connived at, or aided in the publication, advertisement, distribution, or circulation of a material false statement or representation concerning their
designation or certification of special education, credential, trade organization membership, or business, or concerning a business opportunity or a land or subdivision, as defined in Chapter 1 (commencing with Section 11000) of Part 2, offered for sale.
(d)Willfully disregarded or violated the Real Estate Law (Part 1 (commencing with Section 10000)) or Chapter 1 (commencing with Section 11000) of Part 2 or the rules and regulations of the commissioner for the administration and enforcement of the Real Estate Law and Chapter 1 (commencing with Section 11000) of Part 2.
(e)Willfully used the term “realtor” or a trade name or insignia of membership in a real estate organization of which the licensee is not a member.
(f)Acted or conducted themself in a manner that would have warranted the denial of their application for a real estate license, or either had a license denied or had a license issued by another agency of this state, another state, or the federal government revoked, surrendered, or suspended for acts that, if done by a real estate licensee, would be grounds for the suspension or revocation of a California real estate license, if the action of denial, revocation, surrender, or suspension by the other agency or entity was taken only after giving the licensee or applicant fair notice of the charges, an opportunity for a hearing, and other due process protections comparable to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the
Government Code), and only upon an express finding of a violation of law by the agency or entity.
(g)Demonstrated negligence or incompetence in performing an act for which they are required to hold a license.
(h)As a broker licensee, failed to exercise reasonable supervision over the activities of their salespersons, or, as the officer designated by a corporate broker licensee, or, as the member, manager, or officer designated by a limited liability company broker licensee, failed to exercise reasonable supervision and control of the activities of the corporation or limited liability company for which a real estate license is required.
(i)Used their employment by a governmental agency in a capacity giving access to records,
other than public records, in a manner that violates the confidential nature of the records.
(j)Engaged in any other conduct, whether of the same or of a different character than specified in this section, that constitutes fraud or dishonest dealing.
(k)Violated any of the terms, conditions, restrictions, and limitations contained in an order granting a restricted license.
(l)(1)Solicited or induced the sale, lease, or listing for sale or lease of residential property on the grounds, wholly or in part, of loss of value, increase in crime, or decline of the quality of the schools due to the present or prospective entry into the neighborhood of a person or persons having a characteristic listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those characteristics are defined in Sections 12926 and 12926.1 of, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 of, and Section 12955.2 of, the Government Code.
(2)Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 4760 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1).
(m)Violated the Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code) or regulations of the Commissioner of Corporations pertaining thereto.
(n)Violated the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code) or the regulations of the Commissioner of Corporations pertaining thereto.
(o)Failed to disclose to the buyer of real property, in a transaction in which the licensee is an agent for the buyer, the nature and extent of a licensee’s direct or indirect ownership interest in that real property. The direct or indirect ownership interest in the property by a person related to the licensee by blood or
marriage, by an entity in which the licensee has an ownership interest, or by any other person with whom the licensee has a special relationship shall be disclosed to the buyer.
(p)Violated Article 6 (commencing with Section 10237).
(q)Violated or failed to comply with Chapter 2 (commencing with Section 2920) of Title 14 of Part 4 of Division 3 of the Civil Code, relating to mortgages.
If a real estate broker that is a corporation or limited liability company has not done any of the foregoing acts, either directly or through its members, managers, employees, agents, officers, directors, or persons owning or controlling 10 percent or more of the corporation’s stock, the commissioner may not deny the issuance or delay the renewal of a real
estate license to, or suspend or revoke the real estate license of, the corporation or limited liability company, provided that any offending member, manager, officer, director, or stockholder, who has done any of the foregoing acts individually and not on behalf of the corporation or limited liability company, has been completely disassociated from any affiliation or ownership in the corporation or limited liability company. A decision by the commissioner to delay the renewal of a real estate license shall toll the expiration of that license until the results of any pending disciplinary actions against that licensee are final, or until the licensee voluntarily surrenders their or its license, whichever is earlier.
SEC. 19.
Section 10176 of the Business and Professions Code is amended to read:10176.
The commissioner may, uponSEC. 20.
Section 10177 of the Business and Professions Code is amended to read:10177.
The commissioner may suspend or revoke the license of a real estate licensee, delay the renewal of a license of a real estate licensee, or deny the issuance of a license to an applicant, who has done any of the following, or may suspend or revoke the license of aSEC. 19.SEC. 21.
Section 10180 of the Business and Professions Code is amended to read:10180.
The commissioner may deny, suspend or revoke the real estate license of a corporation or limited liability company as to any member, manager, officer, or agent acting under its license without revoking the license of the corporation or limited liability company.SEC. 20.SEC. 22.
Section 10185 of the Business and Professions Code is amended to read:10185.
Any person, including members, managers, officers, directors, agents or employees of corporations or limited liability companies, who willfully violates or knowingly participates in the violation of this division shall be guilty of a misdemeanor punishable by a fine not exceeding ten thousand dollars ($10,000), or by imprisonment in the county jail not exceeding six months, or by a fine and imprisonment.SEC. 21.SEC. 23.
Section 10211 of the Business and Professions Code is amended to read:10211.
(a) If the licensee is a corporation, the license issued to it entitles one officer thereof, on behalf of the corporation, to engage in the business of real estate broker without the payment of any further fee, such officer to be designated in the application of the corporation for a license. For each officer other than the officer so designated, through whom it engages in the business of real estate broker, the appropriate original or renewal fee is to be paid in addition to the fee paid by the corporation.SEC. 22.SEC. 24.
Section 10231.2 of the Business and Professions Code is amended to read:10231.2.
(a) A real estate broker who, through express or implied representations that the broker or any salesperson acting on the broker’s behalf is engaging in acts for which a real estate license is required by subdivision (d) or (e) of Section 10131, proposes to solicit and accept funds, or to cause the solicitation and acceptance of funds, to be applied to a purchase or loan transaction in which the broker will directly or indirectly obtain the use or benefit of the funds other than for commissions, fees, and costs and expenses as provided by law for the broker’s services as an agent, shall, prior to the making of any representation, solicitation, or presentation of the statement described in subdivision (b), submit the following to the Department of Real Estate:SEC. 23.SEC. 25.
Section 10232.25 of the Business and Professions Code is amended to read:10232.25.
(a) A real estate broker who meets the criteria of subdivision (a) of Section 10232 shall, within 30 days after the end of each of the first three fiscal quarters of the broker’s fiscal year, or within any additional time as the Real Estate Commissioner may allow for good cause, file with the commissioner a trust funds status report as of the last day of the fiscal quarter which shall include the following:SEC. 24.SEC. 26.
Section 10238 of the Business and Professions Code is amended to read:10238.
(a) A notice in the following form and containing the following information shall be filed with the commissioner within 30 days after the first transaction and within 30 days of any material change in the information required in the notice:TO: | Real Estate Commissioner Mortgage Loan Section 1651 Exposition Boulevard Sacramento, CA 95815 | |
This notice is filed pursuant to Sections 10237 and 10238 of the Business and Professions
Code. | ||
( ) Original Notice( ) Amended Notice | ||
1. | Name of the Broker conducting transaction under Section 10237: | |
2. | Broker license identification number: | |
3. | List the month the fiscal year ends: | |
4. | Broker’s telephone number: | |
5. | Firm name (if different from “1”): | |
6. | Street address (main location): | |
# and StreetCityStateZIP Code
_____
| ||
7. | Mailing address (if different from “6”): | |
8. | Servicing agent: Identify by name, address, and telephone number the person or entity who will act as the servicing agent in transactions pursuant to Section 10237 (including the undersigned Broker if that is the case): | |
9. | Total number of multilender notes arranged: | |
10. | Total number of interests sold to investors on the multilender’s notes: ______ | |
11. | Inspection of trust account (before answering this question, review the provisions of paragraph (3) of subdivision (k) of Section 10238). | |
CHECK ONLY ONE OF THE FOLLOWING: | ||
( ) | The
undersigned Broker is (or expects to be) required to file reports of inspection of its trust account(s) with the Real Estate Commissioner pursuant to paragraph (3) of subdivision (k) of Section 10238. | |
Amount of Multilender Payments Collected Last Fiscal Quarter: | ||
Total Number of Investors Due Payments Last Fiscal Quarter: | ||
( ) | The undersigned Broker is NOT (or does NOT expect to be) required to file reports of inspection of its trust account(s) with the Real Estate Commissioner
pursuant to paragraph (3) of subdivision (k) of Section 10238. | |
12. | Signature. The contents of this notice are true and correct. | |
Date | Type Name of Broker | |
Signature
of Broker, Designated Member, Manager, or Officer of Limited Liability Broker, or of Designated Officer of Corporate Broker | ||
Type Name of Person(s) Signing This Notice |
Transaction Identifier: | |
Name of Purchaser: Date: | |
Check either one of the following, if true: | |
( ) | My investment in the
transaction does not exceed 10% of my net worth, exclusive of home, furnishings, and automobiles. |
( ) | My investment in the transaction does not exceed 10% of my adjusted gross income for federal income tax purposes for my last tax year or, in the alternative, as estimated for the current year. |
Signature |
(A) | Single-family residence, owner occupied
........................
| 80% |
(B) | Single-family residence, not owner occupied
........................
| 75% |
(C) | Commercial properties and income-producing properties not described in (B) or (E)
........................
| 65% |
(D) | Single-family residentially zoned lot or parcel that has installed offsite improvements including drainage, curbs, gutters, sidewalks, paved roads, and utilities as mandated by the political subdivision having jurisdiction over the lot or parcel
........................
| 65% |
(E) | Land that produces income from crops, timber, or minerals
........................
| 60% |
(F) | Land that is not income producing but has been zoned for (and if required, approved for subdivision as) commercial or residential development
........................
| 50% |
(G) | Other real property
........................
| 35% |