BILL ANALYSIS
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|Hearing Date:April 9, 2007 |Bill No:SB |
| |226 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC
DEVELOPMENT
Senator Mark Ridlely-Thomas, Chair
Bill No: SB 226Author:Negrete-Mcleod
As Amended: March 28, 2007 Fiscal:Yes
SUBJECT: Real estate brokers.
SUMMARY: Repeals and recasts existing law that provides
for conditions that must be met prior to the licensure of
real estate brokers, and provides that the Real Estate
Commissioner may grant an original real estate broker's
license to an applicant who (a) has passed the real estate
broker license examination,
(b) satisfied other specified requirements, and (c) either
held a real estate salesperson's license and satisfied
other requirements as specified, or holds an active
membership in the State Bar of California.
Existing law:
1) Establishes in the Business and Transportation
Agency (BT&H) the Department of Real Estate (DRE), the
chief officer of which is the Real Estate Commissioner
and specifies that the Commissioner, through the
Department, is responsible for the regulation of real
estate transactions and licensure of real estate
agents, brokers and appraisers.
2) Provides that the following conditions must be met
for issuance of a real estate broker's license: (a)
the applicant must hold a real estate salesman's
license for at least 2 years and be eligible for
renewal of that license within 5 years of the
application for a broker's license; and (b) must be
actively engaged in the business of real estate
salesperson during that time.
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3) Provides an exception to the above conditions, if
the applicant files a written petition to the DRE
setting forth his or her qualifications and experience
to include at least the equivalent of two years'
general real estate experience or graduation from a
four-year college or university course which included
specialization in real estate.
4) Allows for the immediate issuance of a broker's
license if either of the conditions above in item #
(3) have been met and the applicant passes the
broker's license examination.
This bill:
1) Repeals and recasts the existing law pertaining to
the conditions that must be met prior to issuance of
an original real estate brokers license.
2) Provides that the Commissioner may grant an
original broker's license to an applicant who has
satisfied any of the following four requirements:
a) Has been a licensed salesperson for at
least two years; and been actively engaged in the
business of real estate; and qualified for
renewal of a real estate salesperson license;
b) Is an otherwise qualified applicant who
has graduated from a four-year college or
university course of study that included a major
or minor concentration in real estate;
c) Has demonstrated the equivalent of
general real estate experience by written
petition satisfactory to the commissioner; or
d) Holds an active membership in the State
Bar of California.
FISCAL EFFECT: Fiscal effect unknown at this time.
COMMENTS:
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1.Purpose. According to the sponsor, the California
Association of Realtors , this bill clarifies Business and
Professions Code Sec. 10150.6 to ensure that the
exemption to the usual two years experience requirement
for real estate brokers who have a college degree with a
"specialization in real estate" is not applied so broadly
as to exempt every applicant with a four year degree from
the requirement.
2.Background. The sponsor notes that current law generally
requires applicants for a real estate broker's license to
have, among other things, two years full-time experience
in the real estate business. It also contains
alternative ways to demonstrate the experience
qualification:
a) A finding of equivalent experience and education by
the Commissioner; or,
b) active membership in the State Bar; or,
c) a degree or "course" of study from a four-year
college which "included a specialization in real
estate."
The DRE reports on its website that the number of real
estate brokers has increased more than 32% in the past
five years. The sponsor is concerned that this rapid
increase may be due in part to an increase in the number
of "degree brokers," i.e. those who qualify for a license
based on having a four-year degree. The sponsor also
states that the problem with existing law is that it has
been interpreted by the DRE to give the exemption from
the experience requirement to the holder of any degree,
even if it is not relevant to real estate. It has also
been applied to give one year of experience credit to
holders of a two-year degree, again without a relevancy
requirement.
1.Arguments in Support. The sponsor believes that the
experience requirement for an applicant for a real estate
broker's license is a critical consumer protection,
because it is the broker who employs sales agents and
supervises their conduct. The combination of a
relatively easy entry sales license, coupled with a
supervising broker who has both much more education and
substantial experience, allows the real estate industry
to be both flexible and responsive to market demand.
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Equally important, it makes sure that salespeople have a
supervisor who actually has experience in the business
and can help agents resolve the challenges that arise in
transactions. This bill will also clarify the ambiguous
language of Section 10150.6 in order to ensure that
"specialization in real estate" means a major or minor in
real estate, and that the degree exemption from the
experience requirement is not applied so broadly as to
include every applicant with a four year degree.
2.Related legislation.
AB 840 (Emmerson) , currently in the Assembly Committee on
Business and Professions, would limit the authorization
for the Commissioner of Real Estate to suspend, revoke,
or deny the issuance of a license of a person who is
convicted of a felony or a crime, only when that felony
or crime is substantially related to the qualifications,
functions, or duties of a real estate licensee.
AB 1963 (Leslie), vetoed by the Governor in 2006, would
have repealed in its entirety the provision of law that
allows a person to qualify for a real estate broker's
license by using a four year college degree and two years
of general real estate experience as a substitute for two
years of experience as a real estate salesperson. The
Governor's veto message noted, "Although the Department
of Real Estate has seen a significant increase in the
real estate licensee population, it does not appear that
newly licensed 'degree' brokers pose any more of a risk
to the public compared to those brokers who qualified for
licensure based on experience. Given this fact, it
appears placing further impediments on those seeking to
start a business and work independently is not
warranted".
SB 2429 (Negrete McLeod) Chapter 278, Statutes of 2006,
amended the section of law that pertains to real estate
salespersons by eliminating the provision for a
conditional license after October 1, 2007 and requiring
all applicants for the real estate salesperson's license
to complete three specified courses and pass the
examination before obtaining the license.
SUPPORT AND OPPOSITION:
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Support:
California Association of Realtors (Sponsor)
Orange County Association of Realtors
Opposition:
None received as of April 3, 2009.
Consultant: Doug Brown