10015.1

“Responsible broker” means the real estate broker responsible for the exercise of control and supervision of real estate salespersons under Section 10159.2, or a licensee subject to discipline under subdivision (h) of Section 10177 for failure to supervise activity requiring a real estate license. The supervision of a salesperson required under this part or any other law is limited to regulatory compliance and consumer protection. (Added by Stats. 2018, Ch. 285, Sec. 3. (AB 2884) Effective January 1, 2019.)

10015.2

“Manager” means a real estate licensee authorized to perform supervisorial services for a responsible broker. (Added by Stats. 2018, Ch. 285, Sec. 4. (AB 2884) Effective January 1, 2019.)

10015.3

“Broker associate” means a broker retained by a responsible broker who has authority to provide services requiring a real estate license on behalf of the responsible broker. (Added by Stats. 2018, Ch. 285, Sec. 5. (AB 2884) Effective January 1, 2019.)

10015.4

“Responsible broker’s identity” means the name under which the responsible broker is currently licensed by the department and conducts business in general or is a substantial division of the real estate firm, or both the name and the associated license identification number. “Responsible broker’s identity” does not include a fictitious business name obtained pursuant to paragraph (2) of subdivision (a) of Section 10159.5 or the use of a team name pursuant to Section 10159.6. (Added by Stats. 2018, Ch. 285, Sec. 6. (AB 2884) Effective January 1, 2019.)

10015.5

“Professional identity” includes “responsible broker’s identity” and the identity under which the licensee is authorized to do business. (Added by Stats. 2018, Ch. 285, Sec. 7. (AB 2884) Effective January 1, 2019.)

10016

“Real estate salesperson” means a natural person licensed as a salesperson under Chapter 3 of this part and who, for a compensation or in expectation of a compensation, is retained by a real estate broker to do one or more of the acts set forth in Sections 10131, 10131.1, 10131.2, 10131.3, 10131.4, and 10131.6. (Amended by Stats. 2018, Ch. 285, Sec. 8. (AB 2884) Effective January 1, 2019.)

10018.01

“Retained” means the relationship between a broker and a licensee who is either an independent contractor affiliated with, or an employee of, a broker to perform activities that require a license and are performed under a broker’s supervision. (Added by Stats. 2018, Ch. 285, Sec. 9. (AB 2884) Effective January 1, 2019.)

10018.02

“Seller” means a transferor in a real property transaction, and includes an owner who lists real property with a licensee, whether or not a transfer results, or who receives an offer to purchase real property of which he or she is the owner from a licensee on behalf of another. “Seller” includes both a vendor and lessor of real property. (Added by Stats. 2018, Ch. 285, Sec. 10. (AB 2884) Effective January 1, 2019.)

10018.03

“Listing agent” means a licensee who provides services requiring a real estate license for or on behalf of a seller pursuant to a listing agreement. Listing agent includes a seller’s agent. (Added by Stats. 2018, Ch. 285, Sec. 11. (AB 2884) Effective January 1, 2019.)

10018.04

“Seller’s agent” means a licensee who provides services requiring a real estate license for or on behalf of a seller. A seller’s agent may or may not be a listing agent. (Added by Stats. 2018, Ch. 285, Sec. 12. (AB 2884) Effective January 1, 2019.)

10018.05

“Buyer” means a transferee in a real property transaction, and includes a person who executes an offer to purchase real property from a seller through a licensee, whether or not a transfer results, or who seeks the services of a licensee in more than a casual, transitory, or preliminary manner, with the object of entering into a real property transaction. “Buyer” includes a purchaser, vendee, or lessee of real property. (Added by Stats. 2018, Ch. 285, Sec. 13. (AB 2884) Effective January 1, 2019.)

10018.06

“Buyer’s agent” means a licensee who provides services requiring a real estate license for or on behalf of a buyer. (Added by Stats. 2018, Ch. 285, Sec. 14. (AB 2884) Effective January 1, 2019.)

10018.07

“Real property” means any estate specified in (1) or (2) of Section 761 of the Civil Code in property, and includes:

• (a) Single-family residential property.
• (b) Multiunit residential property with more than four dwelling units.
• (c) Commercial real property.
• (d) Vacant land.
• (e) A ground lease coupled with improvements.
• (f) A manufactured home as defined in Section 18007 of the Health and Safety Code or a mobilehome as defined in Section 18008 of the Health and Safety Code.

10018.08

“Single-family residential property” or “Single-family residential real property” means:

• (a) Real property improved with one to four dwelling units, including any leasehold exceeding one year’s duration of such.
• (b) A unit in a residential stock cooperative, condominium, or planned unit development.
• (c) A mobilehome or manufactured home when offered for sale or sold through a real estate broker pursuant to Section 10131.6.

10018.09

“Commercial real property” means all real property except:

• (a) Single-family residential real property.
• (b) Dwelling units made subject to Chapter 2 (commencing with Section 1940) of Title 5 of Part 4 of Division 3 of the Civil Code.
• (c) A mobilehome as defined in Section 798.3 of the Civil Code.
• (d) Vacant land.
• (e) A recreational vehicle as defined in Section 799.29 of the Civil Code.

10018.10

Except as provided in Section 10239.2, “sell,” “sale,” or “sold” means a transaction for the transfer of real property from a seller to a buyer, and includes:

• (a) An exchange of real property between a seller and a buyer.
• (b) A real property sales contract within the meaning of Section 2985 of the Civil Code.
• (c) A leasehold exceeding one year’s duration.

10018.11

“Dual agent” means an agent acting, either directly or through a salesperson or broker associate, as agent for both the seller and the buyer in a real property transaction. (Added by Stats. 2018, Ch. 285, Sec. 19. (AB 2884) Effective January 1, 2019.)

10018.13

“Appraiser” means a person licensed or certified under Part 3 (commencing with Section 11300). (Added by Stats. 2018, Ch. 285, Sec. 20. (AB 2884) Effective January 1, 2019.)

10018.14

“Listing agreement” means a written contract between a seller of real property or a business opportunity and a real estate broker by which the broker has been authorized to sell the real property or find or obtain a buyer, including rendering other services for which a real estate license is required to the seller pursuant to the terms of the agreement. A “listing agreement” includes an “exclusive right to sell listing agreement,” “seller reserved listing agreement,” and “open listing agreement.” (Added by Stats. 2018, Ch. 285, Sec. 21. (AB 2884) Effective January 1, 2019.)

10018.15

“Exclusive right to sell listing agreement” means a listing agreement whereby the owner grants to a seller’s agent, for a specified period of time, the exclusive right to sell, find, or obtain a buyer for the real property, and the seller’s agent is entitled to the agreed compensation if, during that period of time, the real property is sold, no matter who effected the sale, or when the seller’s agent receives and presents to the owner any enforceable offer from a ready, able, and willing buyer on terms that are authorized by the listing agreement or accepted by the owner. An “exclusive right to sell listing agreement” may provide for compensation to the seller’s agent if the property is sold within a specified period after termination of the listing agreement. (Added by Stats. 2018, Ch. 285, Sec. 22. (AB 2884) Effective January 1, 2019.)

10018.16

“Seller reserved listing agreement” means a listing agreement whereby the owner grants to a seller’s agent, for a specified period of time, the exclusive right to sell, find, or obtain a buyer for the real property, and the seller’s agent is entitled to the agreed compensation if, during that period of time, the real property is sold, no matter who effected the sale, or when the seller’s agent receives and presents to the owner any enforceable offer from a ready, able, and willing buyer on terms that are authorized by the listing agreement or accepted by the owner. Compensation is not owed to the seller’s agent if the owner sells the property directly and not through any other broker. A “seller reserved listing agreement” may provide for compensation to the seller’s agent if the property is sold, other than directly by the seller, within a specified period after termination of the listing agreement. (Added by Stats. 2018, Ch. 285, Sec. 23. (AB 2884) Effective January 1, 2019.)

10018.17

“Open listing agreement” means a listing agreement which grants no exclusive rights or priorities to the seller’s agent, and the agreed commission is payable to the seller’s agent only if that agent obtains and presents to the owner an enforceable offer from a ready, able, and willing buyer on the terms authorized by the listing agreement, which is accepted by the owner, before the property is otherwise sold either through another licensee or by the owner directly and before the listing agreement expires by its terms or is revoked by the seller’s agent or the owner. (Added by Stats. 2018, Ch. 285, Sec. 24. (AB 2884) Effective January 1, 2019.)

10023

“Mineral, oil, and gas licensee” means a person licensed under Chapter 7 (commencing with Section 10500) of this part. (Amended by Stats. 2016, Ch. 177, Sec. 14. (AB 685) Effective January 1, 2017.)

10024

“Mineral, oil, and gas broker” means a person licensed as a broker under Chapter 7 of this part. (Amended by Stats. 2016, Ch. 177, Sec. 15. (AB 685) Effective January 1, 2017.)

10026

(a) The term “advance fee,” as used in this part, is a fee, regardless of the form, that is claimed, demanded, charged, received, or collected by a licensee for services requiring a license, or for a listing, as that term is defined in Section 10027, before fully completing the service the licensee contracted to perform or represented would be performed. Neither an advance fee nor the services to be performed shall be separated or divided into components for the purpose of avoiding the application of this division.
(b) For the purposes of this section, the term “advance fee” does not include:

• (1) “Security” as that term is used in Section 1950.5 of the Civil Code.
• (2) A “screening fee” as that term is used in Section 1950.6 of the Civil Code.
• (3) A fee that is claimed, demanded, charged, received, or collected for the purpose of advertising the sale, lease, or exchange of real estate, or of a business opportunity, in a newspaper of general circulation, any other written publication, or through electronic media comparable to any type of written publication, provided that the electronic media or the publication is not under the control or ownership of the broker.
• (4) A fee earned for a specific service under a “limited service” contract. For purposes of this section, a “limited service” contract is a written agreement for real estate services described in subdivision (a), (b), or (c) of Section 10131, and pursuant to which such services are promoted, advertised, or presented as stand-alone services, to be performed on a task-by-task basis, and for which compensation is received as each separate, contracted-for task is completed. To qualify for this exclusion, all services performed pursuant to the contract must be described in subdivision (a), (b), or (c) of Section 10131.

10027

The term “listing” as used in this part includes, but is not limited to:

• (a) The name or a list of the names, of the owners, landlords, exchangers, or lessors, or the location or locations, of property, or of an interest in property, offered for rent, sale, lease, or exchange, which may include a listing agreement.
• (b) The name, or a list of the names, or the location or locations at which prospective or potential purchasers, buyers, lessees, tenants, or exchangers of property may be found or contacted, which may include a listing agreement.
• (c) An agreement by which a person who is engaged in the business of promoting the sale or lease of business opportunities or real estate agrees to render to an owner or lessee of the property any services, to promote the sale or lease of that property.
• (d) An agreement by which a person who is engaged in the business of finding, locating, or promoting the sale or lease of business opportunities or real estate, agrees to circularize, notify, or refer real estate brokers or salespersons to the property that is offered for sale or lease.

10028

“Trust deed” or “deed of trust” as used in this part includes “mortgage.” (Added by Stats. 1961, Ch. 886.)

10029

“Real property sales contract” as used in this part is an agreement wherein one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract and which does not require conveyance of title within one year from the date of formation of the contract. (Added by Stats. 1961, Ch. 886.)

10030

As used in this part, the words “business opportunity” shall include the sale or lease of the business and goodwill of an existing business enterprise or opportunity. (Amended by Stats. 1969, Ch. 216.)

10032

(a) All obligations created under Section 10000, and following, all regulations issued by the commissioner relating to real estate salespersons, and all other obligations of brokers and real estate salespersons to members of the public shall apply regardless of whether the real estate salesperson and the broker to whom he or she is licensed have characterized their relationship as one of “independent contractor” or of “employer and employee.”

(b) A real estate broker and a real estate salesperson licensed under that broker may contract between themselves as independent contractors or as employer and employee, for purposes of their legal relationship with and obligations to each other. Characterization of a relationship as either “employer and employee” or “independent contractor” for statutory purposes, including, but not limited to, withholding taxes on wages and for purposes of unemployment compensation, shall be governed by Section 650 and Sections 13000 to 13054, inclusive, of the Unemployment Insurance Code. For purposes of workers compensation the characterization of the relationship shall be governed by Section 3200, and following, of the Labor Code.

10035

Neither Section 10185 nor any other provision of this part which makes violation of this part a crime shall be construed to preclude application of any other criminal provision of the law of this state to an act or omission which constitutes a violation of this part. (Added by Stats. 1985, Ch. 57, Sec. 1.)

10036

A licensed real estate broker who engages in the sale of any business opportunity must obtain a written agreement from the principal that identifies the broker’s duties, rights, and responsibilities in the transaction, including the payment of any fees or commissions earned by the broker as part of the business opportunity sale. (Added by hypothetical statute for demonstration purposes.)

10137

It is unlawful for any licensed real estate broker to retain, compensate, directly or indirectly, any person for performing any of the acts within the scope of this chapter who is not a licensed real estate broker, or a real estate salesperson licensed under the responsible broker retaining or compensating him or her, or to retain or compensate, directly or indirectly, any licensee for engaging in any activity for which a mortgage loan originator license endorsement is required, if that licensee does not hold a mortgage loan originator license endorsement; provided, however, that a licensed real estate broker may pay a commission to a broker of another state. No real estate salesperson shall accept compensation for activity requiring a real estate license from any person other than the broker under whom he or she is at the time licensed.

It is unlawful for any licensed real estate salesperson to pay any compensation for performing any of the acts within the scope of this chapter to any real estate licensee except through the broker under whom he or she is at the time licensed. A licensee may enter into an agreement with another licensee to share that compensation provided that any compensation is paid through the responsible broker.

For a violation of any of the provisions of this section, the commissioner may temporarily suspend or permanently revoke the license of the real estate licensee, in accordance with the provisions of this part relating to hearings.

10137.1

Nothing contained in this division shall preclude a partnership from performing acts for which a real estate broker license is required, provided every partner through whom the partnership so acts is a licensed real estate broker.

10138

It is a misdemeanor, punishable by a fine of not exceeding one hundred dollars ($100) for each offense, for any person, whether obligor, escrowholder or otherwise, to pay or deliver to anyone a compensation for performing any of the acts within the scope of this chapter, who is not known to be or who does not present evidence to such payor that he is a regularly licensed real estate broker at the time such compensation is earned.

For a violation of any of the provisions of this section, the commissioner may temporarily suspend or permanently revoke the license of the real estate licensee in accordance with the provisions of this part relating to hearings.

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 he or she is 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, 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 or corporation is convicted, any fine collected from the person in excess of ten thousand dollars ($10,000) or any fine collected from the corporation in excess of fifty thousand dollars ($50,000) shall be deposited in that Real Estate Fraud Prosecution Trust Fund.

10140

Every officer, agent or employee of any company, and every other person who knowingly authorizes, directs or aids in the publication, advertisement, distribution or circularization of any false statement or representation concerning any land or subdivision thereof, as defined in Chapter 1 (commencing at Section 11000) of Part 2 of this division, offered for sale or lease, or, if the land is owned by the State or Federal Government, which such person offers to assist another or others to file an application for the purchase or lease of, or to locate or enter upon, and every person who, with knowledge that any advertisement, pamphlet, prospectus or letter concerning any said land or subdivision, as defined in Chapter 1 (commencing at Section 11000) of Part 2 of this division, contains any written statement that is false or fraudulent, issues, circulates, publishes or distributes the same, or causes the same to be issued, circulated, published or distributed, or who, in any other respect, willfully violates or fails to comply with any of the provisions of this section, or who in any other respect willfully violates or fails, omits or neglects to obey, observe or comply with any order, permit, decision, demand or requirement of the commissioner under this section, is guilty of a public offense, and shall be punished by a fine not exceeding one thousand dollars ($1,000), or by imprisonment in a county jail not exceeding one year, or by both such fine and imprisonment, and, if a real estate licensee, he shall be held to trial by the commissioner for a suspension or revocation of his license, as provided in the provisions of this part relating to hearings. The district attorney of each county in this State shall prosecute all violations of the provisions of this section in respective counties in which the violations occur.

10140.5

Each advertisement or other statement which is published by a real estate broker or salesperson offering to assist persons to file applications for the purchase or lease of, or to locate or enter upon, lands owned by the state or federal government shall, when published, indicate the name of the broker for whom it is published and state that the broker is licensed as a real estate broker by the State of California.

10140.6

(a) A real estate licensee shall not publish, circulate, distribute, or cause to be published, circulated, or distributed in any newspaper or periodical, or by mail, any matter pertaining to any activity for which a real estate license is required that does not contain a designation disclosing that the licensee is performing acts for which a real estate license is required.

(b)(1) A real estate licensee shall disclose their name, license identification number and unique identifier assigned to that licensee by the Nationwide Multistate Licensing System and Registry, if that licensee is a mortgage loan originator, and responsible broker’s identity, as defined in Section 10015.4, on all solicitation materials intended to be the first point of contact with consumers and on real property purchase agreements when acting in a manner that requires a real estate license or mortgage loan originator license endorsement in those transactions. The commissioner may adopt regulations identifying the materials in which a licensee must disclose a license identification number and unique identifier assigned to that licensee by the Nationwide Multistate Licensing System and Registry, and responsible broker’s identity.

(2) A real estate licensee who is a natural person and who legally changes the surname in which their license was originally issued may continue to utilize their former surname for the purpose of conducting business associated with their license so long as both names are filed with the department. Use of a former surname shall not constitute a fictitious name for the purposes of Section 10159.5.

(3) For purposes of this section, “solicitation materials” include business cards, stationery, advertising flyers, advertisements on television, in print, or electronic media, “for sale,” rent, lease, “open house,” and directional signs, and other materials designed to solicit the creation of a professional relationship between the licensee and a consumer.

(4) This section does not limit or change the requirement described in Section 10236.4 as applicable to real estate brokers.

(c) This section shall not apply to “for sale,” rent, lease, “open house,” and directional signs that do either of the following:

• (1) Display the responsible broker’s identity, as defined in Section 10015.4, without reference to an associate broker or licensee.
• (2) Display no licensee identification information.

(d) “Mortgage loan originator,” “unique identifier,” and “Nationwide Multistate Licensing System and Registry” have the meanings set forth in Section 10166.01.

10141

Within one month after the closing of a transaction in which title to real property or in the sale of a business when real or personal property is conveyed from a seller to a purchaser through a licensed real estate broker, such broker shall inform or cause the information to be given to the seller and purchaser in writing of the selling price thereof and in event an exchange of real property or a business opportunity is involved, such information shall include a description of said property and amount of added money consideration, if any. If the transaction is closed through escrow and the escrow holder renders a closing statement which reveals such information, that shall be deemed compliance with this section on the part of the broker.

10141.5

Within one week after the closing of a transaction negotiated by a real estate broker in which title to real property is conveyed from a seller to a purchaser and a deed of trust secured by real property is executed, such broker shall cause such deed of trust to be recorded with the county recorder of the county in which the real property is located, or cause it to be delivered to the beneficiary with a written recommendation that it be recorded forthwith, unless written instructions not to record are received from the beneficiary. If the transaction is closed through escrow and the deed of trust is delivered to the escrow holder within the time prescribed by this section, that shall be deemed compliance with this section on the part of the broker. Nothing in this section shall affect the validity of a transfer of title to real property.

10141.6

(a) A real estate broker who engages in escrow activities for five or more transactions in a calendar year pursuant to the exemption from the Escrow Law contained in Section 17006 of the Financial Code, or whose escrow activities pursuant to that exemption equal or exceed one million dollars ($1,000,000) in a calendar year, shall file with the department a report, within 60 days following the completion of the calendar year, documenting the number of escrows conducted and the dollar volume escrowed during the calendar year in which the threshold was met. This report shall be made on a form acceptable to the commissioner.

(b) A real estate broker subject to this section and Section 10232.2 may file consolidated reports that include all of the information required under this section and Section 10232.2. Those consolidated reports shall clearly indicate that they are intended to satisfy the requirements of both sections.

(c) A real estate broker who fails to submit the report required pursuant to subdivision (a) shall be assessed a penalty of fifty dollars ($50) per day for each day the report has not been received by the department, up to and including the 30th day after the first day of the assessment penalty. On and after the 31st day, the penalty shall be one hundred dollars ($100) per day, not to exceed a total penalty of ten thousand dollars ($10,000), regardless of the number of days, until the department receives the report.

(d) The commissioner may suspend or revoke the license of a real estate broker who fails to pay a penalty imposed pursuant to this section. In addition, the commissioner may bring an action in an appropriate court of this state to collect payment of that penalty.

(e) All penalties paid or collected under this section shall be deposited into the Recovery Account of the Real Estate Fund and shall, upon appropriation by the Legislature, be available for expenditure for the purposes specified in Chapter 6.5 (commencing with Section 10470).

(f) The reports described in this section are exempted from any requirement of public disclosure by subdivision (b) of Section 7929.000 of the Government Code.

(g) This section shall become operative on July 1, 2012.

10142

When a licensee prepares or has prepared an agreement authorizing or retaining that licensee to perform any of the acts for which he or she is required to hold a license, or when that licensee secures the signature of any person to any contract pertaining to those services or transactions, he or she shall deliver a copy of the agreement to the person signing it as soon as reasonably practicable after the time the signature is obtained. The copy may be provided electronically in transactions pursuant to provisions of the Uniform Electronic Transactions Act (Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code), where the parties have agreed to conduct the transaction by electronic means.

10143.5

Any real estate broker who assists another or others, or whose real estate salespersons assist another or others, for a compensation, in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government shall report to the commissioner the names and addresses of all persons the broker or his or her salespersons have assisted in filing applications for land owned by the state or federal government and the amount of compensation received from those persons. The report shall be filed quarterly within 10 days after the end of each calendar quarter.

10144

The commissioner may prescribe by regulation the information which shall be contained in contracts or other agreements by a real estate licensee to assist another or others in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government, including, but not limited to, information with regard to the services agreed to be performed and information with regard to the hazards which may prevent the person to be assisted in filing an application with the state or federal government ever receiving any state or federal land under the application.

10145

(a)(1) A real estate broker who accepts funds belonging to others in connection with a transaction subject to this part shall deposit all those funds that are not immediately placed into a neutral escrow depository or into the hands of the broker’s principal, into a trust fund account maintained by the broker in a bank or recognized depository in this state. All funds deposited by the broker in a trust fund account shall be maintained there until disbursed by the broker in accordance with instructions from the person entitled to the funds.

(2) Withdrawals may be made from a trust fund account of an individual broker only upon the signature of that broker, or in the case of a corporate broker, only upon the signature of an officer through whom the corporation is licensed pursuant to Section 10158 or 10211, or one, or more, of the following persons if specifically authorized in writing by the individual broker or officer:

• (A) A real estate salesperson licensed to the broker.
• (B) Another broker acting pursuant to a written agreement with the individual broker that conforms to the requirements of this part and any regulations promulgated pursuant to this part.
• (C) An unlicensed employee of the individual broker, if the broker has fidelity bond or insurance coverage equal to at least the maximum amount of the trust funds to which the unlicensed employee has access at any time. For purposes of this section, bonds or insurance providing coverage shall protect the broker from intentional wrongful acts committed by an employee of that business, including theft, dishonest acts, or forgery. Bonds and insurance providing coverage may be written with a deductible of up to 5 percent of the coverage amount. For bonds and insurance with a deductible, the employing broker shall have evidence of financial responsibility that is sufficient to protect members of the public against a loss subject to the deductible amount.

Evidence of financial responsibility shall include one or more of the following:

• (i) Separate bond or insurance coverage adequate to cover the amount of the deductible.
• (ii) A cash deposit held in a separate account, apart from other funds of the broker, the broker’s employees, or the broker’s principals, in a bank or recognized depository in this state adequate to cover the amount of the fidelity bond deductible and held exclusively and solely for the purpose of paying the fidelity bond deductible amount.
• (iii) Any other evidence of financial responsibility approved by the commissioner.

(3) An arrangement under which a person enumerated in subparagraph (A), (B), or (C) of paragraph (2) is authorized to make withdrawals from a trust fund account of a broker shall not relieve an individual broker, nor the broker-officer of a corporate broker licensee, from responsibility or liability as provided by law in handling trust funds in the broker’s custody.

(4) Notwithstanding the provisions of paragraphs (1), (2), and (3), a real estate broker collecting payments or performing services for investors or note owners in connection with loans secured by a first lien on real property may deposit funds received in trust in an out-of-state depository institution insured by the Federal Deposit Insurance Corporation, if the investor or note owner is any one of the following:

• (A) The Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Housing Administration, or the United States Department of Veterans Affairs.
• (B) A bank or subsidiary thereof, bank holding company or subsidiary thereof, trust company, savings bank or savings and loan association or subsidiary thereof, savings bank or savings association holding company or subsidiary thereof, credit union, industrial bank or industrial loan company, or insurance company doing business under the authority of, and in accordance with, the laws of this state, another state, or the United States relating to banks, trust companies, savings banks or savings associations, credit unions, industrial banks or industrial loan companies, or insurance companies, as evidenced by a license, certificate, or charter issued by the United States or a state, district, territory, or commonwealth of the United States.
• (C) Trustees of a pension, profit-sharing, or welfare fund, if the pension, profit-sharing, or welfare fund has a net worth of not less than fifteen million dollars ($15,000,000).
• (D) A corporation with outstanding securities registered under Section 12 of the Securities Exchange Act of 1934 or a wholly owned subsidiary of that corporation.
• (E) A syndication or other combination of any of the entities specified in subparagraph (A), (B), (C), or (D) that is organized to purchase the promissory note.
• (F) The California Housing Finance Agency or a local housing finance agency organized under the Health and Safety Code.
• (G) A licensed residential mortgage lender or servicer acting under the authority of that license.
• (H) A licensed real estate broker selling all or part of the loan, note, or contract to a lender or purchaser specified in subparagraphs (A) to (G), inclusive.

(5) A real estate broker who deposits funds held in trust in an out-of-state depository institution in accordance with paragraph (3) shall make available, in this state, the books, records, and files pertaining to the trust accounts to the commissioner or the commissioner’s representatives or pay the reasonable expenses for travel and lodging incurred by the commissioner or the commissioner’s representatives in order to conduct an examination at an out-of-state location.

(b) A real estate broker acting as a principal pursuant to Section 10131.1 shall place all funds received from others for the purchase of real property sales contracts or promissory notes secured directly or collaterally by liens on real property in a neutral escrow depository unless delivery of the contract or note is made simultaneously with the receipt of the purchase funds.

(c) A real estate salesperson who accepts trust funds from others on behalf of the broker under whom he or she is licensed shall immediately deliver the funds to the broker or, if so directed by the broker, shall deliver the funds into the custody of the broker’s principal or a neutral escrow depository or shall deposit the funds into the broker’s trust fund account.

(d) If not otherwise expressly prohibited by this part, a real estate broker may, at the request of the owner of trust funds or of the principals to a transaction or series of transactions from whom the broker has received trust funds, deposit the funds into an interest-bearing account in a bank, savings and loan association, credit union, or industrial loan company, the accounts of which are insured by the Federal Deposit Insurance Corporation, if all of the following requirements are met:

• (1) The account is in the name of the broker as trustee for the designated beneficiary or principal of a transaction or series of transactions.
• (2) All of the funds in the account are covered by insurance provided by an agency of the United States.
• (3) The funds in the account are kept separate, distinct, and apart from funds belonging to the broker or to any other person for whom the broker holds funds in trust.
• (4) The broker discloses to the person from whom the trust funds are received, and to a beneficiary whose identity is known to the broker at the time of establishing the account, the nature of the account, how interest will be calculated and paid under various circumstances, whether service charges will be paid to the depository and by whom, and possible notice requirements or penalties for withdrawal of funds from the account.
• (5) Interest earned on funds in the account shall not inure directly or indirectly to the benefit of the broker or a person licensed to the broker.
• (6) In an executory sale, lease, or loan transaction in which the broker accepts funds in trust to be applied to the purchase, lease, or loan, the parties to the contract shall have specified in the contract or by collateral written agreement the person to whom interest earned on the funds is to be paid or credited.

(e) The broker shall have no obligation to place trust funds into an interest-bearing account unless requested to do so and unless all of the conditions in subdivision (d) are met, nor, in any event, if he or she advises the party making the request that the funds will not be placed in an interest-bearing account.

(f) Subdivision (d) does not preclude the commissioner from prescribing, by regulation, circumstances in which, and conditions under which, a real estate broker is authorized to deposit funds received in trust into an interest-bearing trust fund account.

(g) The broker shall maintain a separate record of the receipt and disposition of all funds described in subdivisions (a) and (b), including any interest earned on the funds.

(h) Upon request of the commissioner, a broker shall furnish to the commissioner an authorization for examination of financial records of those trust fund accounts maintained in a financial institution, in accordance with the procedures set forth in Section 7473 of the Government Code.

(i) As used in this section, “neutral escrow” means an escrow business conducted by a person licensed under Division 6 (commencing with Section 17000) of the Financial Code or by a person described in paragraph (1) or (3) of subdivision (a) of Section 17006 of that code.

10146

Any real estate broker who contracts for or collects an advance fee from any other person, hereinafter referred to as the “principal,” shall deposit any such amount or amounts, when collected in a trust account with a bank or other recognized depository. Such funds are trust funds and not the funds of the agent. Amounts may be withdrawn therefrom for the benefit of the agent only when actually expended for the benefit of the principal or five days after the verified accounts mentioned hereinafter have been mailed to the principal. Upon request of the commissioner, a broker shall furnish to the commissioner an authorization for examination of financial records of the trust account in accordance with the procedures set forth in Section 7473 of the Government Code.

The commissioner may issue such rules and regulations as he or she deems necessary to regulate the method of accounting, and to accomplish the purpose of the provisions of this code relating to advance fees including, but not limited to, establishing forms for and determining information to be included in such accountings. Each principal shall be furnished a verified copy of such accountings at the end of each calendar quarter and when the contract has been completely performed by the licensee. The commissioner shall be furnished a verified copy of any account or all accounts on his or her demand therefor.

Where advance fees actually paid by or on behalf of any principal are not handled in accordance with the preceding paragraph, it shall be presumed that the agent has violated Sections 506 and 506a of the Penal Code. The principal may recover treble damages for amounts so misapplied and shall be entitled to reasonable attorney’s fees in any action brought to recover the same.

10147

(a) On or before January 1, 1993, the Alfred E. Alquist Seismic Safety Commission shall develop, adopt, and publish a Commercial Property Owner’s Guide to Earthquake Safety for distribution to licensees for purposes of Section 2079.9 of the Civil Code and, upon request, to any member of the general public.

(b) In developing the guide, the Alfred E. Alquist Seismic Safety Commission shall consult with the Office of Emergency Services, the California Geological Survey in the Department of Conservation, the Department of Real Estate, and other interested agencies and persons.

(c) The commission shall, to the extent possible, rely on currently available data to develop the guide. To the extent necessary, the commission may contract for the development and production of the guide. The commission shall update the contents of the guide whenever it determines that information within the guide is sufficiently inaccurate or incomplete so as to reduce the effectiveness of the guide. The commission shall charge a fee to cover the costs of production, distribution, development, and updating the guide.

(d) The guide shall include, but need not be limited to, all of the following:

• (1) Maps and information on geologic and seismic hazard conditions in the state.
• (2) Explanations of typical structural and nonstructural earthquake hazards.
• (3) Recommendations for mitigating the hazards of an earthquake, including references and explanations of what constitutes “adequate wall anchorage” as defined in Section 8893.1 of the Government Code.
• (4) A statement that there are no guarantees of safety or damage prevention that can be made with respect to a major earthquake and that only precautions, such as retrofitting, can be taken to reduce the risk of various types of earthquake damage. For purposes of preparing the statement, the commission shall confer with insurers and design professional associations.
• (5) Notice of the obligation to post a sign as required by Section 8875.8 of the Government Code.

10147.5

(a) Any printed or form agreement that initially establishes, or is intended to establish, or alters the terms of any agreement that previously established a right to compensation to be paid to a real estate licensee for the sale of residential real property containing not more than four residential units, or for the sale of a mobilehome, shall contain the following statement in not less than 10-point boldface type immediately preceding any provision of such agreement relating to compensation of the licensee:

Notice: The amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker.

(b) Any printed or form agreement that initially establishes or is intended to establish, or alters the terms of any agreement that previously established a right to compensation to be paid to a real estate licensee for the purchase of residential real property containing not more than four residential units, or for the purchase of a mobilehome, shall contain the following statement in not less than 10-point boldface type immediately preceding any provision of such agreement relating to compensation of the licensee:

Notice: The amount or rate of real estate compensation is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker.

(c) The amount or rate of compensation shall not be printed in any such agreement described in subdivisions (a) and (b).

(d) Nothing in this section shall affect the validity of a transfer of title to real property.

(e) As used in this section, “alters the terms of any agreement which previously established a right to compensation” means an increase in the rate of compensation, or the amount of compensation if initially established as a flat fee, from the agreement which previously established a right to compensation.

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:

It is not necessary to pay a third party to arrange for a loan modification or other form of forbearance from your mortgage lender or servicer. You may call your lender directly to ask for a change in your loan terms. Nonprofit housing counseling agencies also offer these and other forms of borrower assistance free of charge. A list of nonprofit housing counseling agencies approved by the United States Department of Housing and Urban Development (HUD) is available from your local HUD office or by visiting www.hud.gov.

(b) If loan modification or other mortgage loan forbearance services are offered or negotiated in one of the languages set forth in Section 1632 of the Civil Code, a translated copy of the statement in subdivision (a) shall be provided to the borrower in that foreign language.

(c) A violation of this section by a natural person who is a licensee is a public offense punishable by a fine not exceeding ten thousand dollars ($10,000), by imprisonment in the county jail for a term not to exceed one year, or by both that fine and imprisonment, or if by a corporation, the violation is punishable by a fine not exceeding fifty thousand dollars ($50,000). These penalties are cumulative to any other remedies or penalties provided by law.

(d) This section shall apply only to mortgages and deeds of trust secured by residential real property containing four or fewer dwelling units.

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 the broker or obtained by the broker 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 the commissioner’s 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.

(b) The commissioner shall charge a real estate broker for the cost of any audit, if the commissioner has found, in a final desist and refrain order issued under Section 10086 or in a final decision following a disciplinary hearing held in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code that the broker has violated Section 10145 or a regulation or rule of the commissioner interpreting Section 10145.

(c) If a broker fails to pay for the cost of an audit as described in subdivision (b) within 60 days of mailing a notice of billing, the commissioner may suspend or revoke the broker’s license or deny renewal of the broker’s license. The suspension or denial shall remain in effect until the cost is paid or until the broker’s right to renew a license has expired.

(d) The commissioner may maintain an action for the recovery of the cost of an audit in any court of competent jurisdiction. In determining the cost incurred by the commissioner for an audit, the commissioner may use the estimated average hourly cost for all persons performing audits of real estate brokers.

(e) The department may suspend or revoke the license of any real estate broker, real estate salesperson, or corporation licensed as a real estate broker, if the real estate broker, real estate salesperson, or any director, officer, employee, or agent of the corporation licensed as a real estate broker knowingly destroys, alters, conceals, mutilates, or falsifies any of the books, papers, writings, documents, or tangible objects that are required to be maintained by this section or that have been sought in connection with an investigation, audit, or examination of a real estate licensee by the commissioner.

10149

(a) The Alfred E. Alquist Seismic Safety Commission shall develop, adopt, and publish a Homeowner’s Guide to Earthquake Safety for distribution to licensees for purposes of Section 2079.8 of the Civil Code and, upon request, to any member of the general public.

(b) In revising the guide, the commission shall consult with the Office of Emergency Services, the California Geological Survey of the Department of Conservation, and the Department of Real Estate.

(c) The commission shall, to the extent possible, rely on currently available data to update the guide. To the extent necessary, the commission may contract for the development and production of the guide. The commission shall update the contents of the guide whenever it determines that information within the guide is sufficiently inaccurate or incomplete so as to reduce the effectiveness of the guide. The commission may charge a fee to cover the costs of production, distribution, development, and updating the guide.

(d) The guide shall include, but need not be limited to, all of the following:

• (1) Maps and information on geologic and seismic hazard conditions for all areas of the state.
• (2) Explanations of the related structural and nonstructural hazards.
• (3) Recommendations for mitigating the hazards of an earthquake.
• (4) Explanation that the recommendations in the guide do not guarantee the safety of an individual or prevention of damage to a structure in an earthquake.

ARTICLE 2. Licenses [10150 – 10165.1]

(Article 2 added by Stats. 1943, Ch. 127.)

10150

(a) Application for the real estate broker license examination shall be made in writing to the commissioner. The commissioner may prescribe the format and content of the broker examination application. The application for the broker examination shall include valid contact information at which the department may contact the applicant and shall be accompanied by the real estate broker license examination fee.

(b) Persons who have been notified by the commissioner that they passed the real estate broker license examination may apply for a real estate broker license. A person applying for the broker examination may also apply for a real estate broker license. However, a license shall not be issued until the applicant passes the real estate broker license examination. If there is any change to the information contained in a real estate broker license application after the application has been submitted and before the license has been issued, the commissioner may require the applicant to submit a supplement to the application listing the changed information.

(c) Application for the real estate broker license shall be made in writing to the commissioner. The commissioner may prescribe the format and content of the broker license application. The application for the real estate broker license shall include valid contact information at which the department may contact the applicant and shall be accompanied by the appropriate fee.

(d) Application for an endorsement to act as a mortgage loan originator, as defined in Section 10166.01, shall be made either electronically or in writing as directed by the commissioner. The commissioner may prescribe the format and content of the mortgage loan originator endorsement application, which shall meet the minimum requirements for licensing of a mortgage loan originator, pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

10150.6

(a) In addition to satisfying the other requirements of this article, and except as provided in subdivisions (b) and (c), an applicant for an original real estate broker’s license shall demonstrate to the Real Estate Commissioner that they have held a real estate salesperson’s license for at least two years and qualified for the renewal of their real estate salesperson status, within the five-year period immediately prior to the date of their application for the broker’s license, and during that time were actively engaged in the business of real estate salesperson.

(b) An applicant for a real estate broker’s license having at least the equivalent of two years’ general real estate experience within the five-year period immediately prior to the date of their application for the broker’s license may file a written petition with the Department of Real Estate setting forth their qualifications and experience, and, if the commissioner approves, they may be issued a real estate broker’s license immediately upon passing the examination and satisfying the other requirements of this article.

(c) In considering a petition described in subdivision (b), the commissioner may treat a degree from a four-year college or university, which course of study included a major or minor in real estate, as the equivalent of two years’ general real estate experience. In considering a petition described in subdivision (b), the commissioner may consider degrees that were completed before the five-year period immediately prior to the date of the application for a broker’s license.

10151

(a) Application for the real estate salesperson license examination shall be made in writing to the commissioner. The commissioner may prescribe the format and content of the salesperson examination application. The application for the salesperson examination shall include valid contact information at which the department may contact the applicant and shall be accompanied by the real estate salesperson license examination fee.

(b) Persons who have been notified by the commissioner that they passed the real estate salesperson license examination may apply for a real estate salesperson license. A person applying for the salesperson examination may also apply for a real estate salesperson license. However, a license shall not be issued until the applicant passes the real estate salesperson license examination. If there is any change to the information contained in a real estate salesperson license application after the application has been submitted and before the license has been issued, the commissioner may require the applicant to submit a supplement to the application listing the changed information.

(c)(1) The commissioner may prescribe the format and content of the real estate salesperson license application. The application for the real estate salesperson license shall include valid contact information at which the department may contact the applicant.

(2) An application for the real estate salesperson license examination or for both the examination and license that is received by the commissioner on or after October 1, 2007, shall include evidence or certification, satisfactory to the commissioner, of successful completion at an accredited institution of a three-semester unit course, or the quarter equivalent thereof, or successful completion of an equivalent course of study as defined in Section 10153.5 in real estate principles as well as the successful completion at an accredited institution of a course in real estate practice as set forth in Section 10153.2, and one additional course as set forth in Section 10153.2, other than real estate principles, real estate practice, advanced legal aspects of real estate, advanced real estate finance, or advanced real estate appraisal. The applicant shall provide this evidence or certification to the commissioner prior to taking the real estate salesperson license examination.

(d) The commissioner shall waive the requirements of this section for the following applicants:

• (1) An applicant who is a member of the State Bar of California.
• (2) An applicant who has qualified to take the examination for an original real estate broker license by satisfying the requirements of Section 10153.2.

(e) Application for endorsement to act as a mortgage loan originator, as defined in Section 10166.01, shall be made either electronically or in writing as directed by the commissioner. The commissioner may prescribe the format and the content of the mortgage loan originator endorsement application, which shall meet the minimum requirements for licensing of a mortgage loan originator, pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

10151.2

(a) For purposes of this section, “member of the Armed Forces of the United States” includes the following persons and no others: all members of the United States Army, the United States Navy, the United States Air Force, the United States Space Force, the Marine Corps, the Merchant Marine in time of war, the Coast Guard, the National Guard, and all officers of the Public Health Service detailed by proper authority for duty either with the Army or the Navy.

(b) The commissioner shall inquire in every application for licensure under this part if the individual applying for licensure is, or previously was, a member of the Armed Forces of the United States.

(c) The commissioner shall expedite, and may assist, the initial licensure process for an applicant who supplies satisfactory evidence to the department that the applicant has served as an active duty member of the Armed Forces of the United States and was honorably discharged.

(d) The commissioner shall expedite the licensure process for an applicant who meets both of the following requirements:

• (1) Supplies evidence satisfactory to the commissioner that the applicant is married to, or in a domestic partnership or other legal union with, an active duty member of the Armed Forces of the United States who is assigned to a duty station in this state under official active duty military orders.
• (2) Holds a current license in another state, district, or territory of the United States in the profession or vocation for which the applicant seeks a license from the commissioner.

10151.3

(a) The Department of Real Estate shall compile information on military, veteran, and spouse licensure into an annual report for the Legislature, which shall be submitted in conformance with Section 9795 of the Government Code. The report shall include all of the following:

• (1) The number of applications for expedited licenses submitted by veterans and active duty spouses pursuant to paragraphs (c) and (d) of Section 10151.2.
• (2) The number of licenses issued and denied per calendar year pursuant to paragraphs (c) and (d) of Section 10151.2.
• (3) The average length of time between application and issuance of licenses pursuant to paragraphs (c) and (d) of Section 10151.2 per license type.

(b) This section shall become operative only if Section 10151.2, as proposed to be added by Senate Bill 800 of the 2021–22 Regular Session, is enacted and takes effect.

10151.5

(a) An applicant who is not a resident of this state shall be eligible for a real estate license provided (1) the applicant qualifies for licensure under this chapter, including Section 10162, and (2) the state or other jurisdiction that is the place of residence of the applicant permits a resident of California to qualify for and obtain a real estate license in that jurisdiction.

(b) A foreign corporation shall be exempt from the eligibility requirement set forth in clause (2) of subdivision (a) if, and for so long as, at least one of the officers of the corporation who is designated and licensed as a real estate broker pursuant to Section 10158 or 10211 is a resident of this state.

(c) Every nonresident applicant for a real estate license shall, along with their application, file with the Real Estate Commissioner an irrevocable consent that if in any action commenced against the person in this state, personal service of process upon the person cannot be made in this state after the exercise of due diligence, a valid service may thereupon be made upon the applicant by delivering the process to the Department of Real Estate.

10152

(a) The commissioner may require any other proof he or she may deem advisable concerning the honesty and truthfulness of an applicant for a real estate license or license examination, or of the officers, directors, or persons owning 10 percent or more of the stock, of a corporation 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 his or her 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.

(b) The commissioner shall require a person who submits a petition for reinstatement of his or her license or reduction of a penalty pursuant to Section 11522 of the Government Code, in addition to meeting any other requirements imposed for purposes of the reinstatement or penalty reduction, to submit his or her fingerprints with the petition.

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 applicant for a real estate broker’s license that each officer, or agent thereof through whom it proposes to act as a real estate licensee, has all of the following:

(a) An appropriate knowledge of the English language, including reading, writing, and spelling and of arithmetical computations common to real estate and business opportunity practices.

(b) An understanding of the principles of real estate and business opportunity conveyancing, the general purposes and general legal effect of agency contracts, deposit receipts, deeds, mortgages, deeds of trust, chattel mortgages, bills of sale, land contracts of sale and leases, and of the principles of business and land economics and appraisals.

(c) A general and fair understanding of the obligations between principal and agent, of the principles of real estate and business opportunity practice and the canons of business ethics pertaining thereto, of the provisions of this part, of Chapter 1 (commencing with Section 11000) of Part 2, and of the regulations of the Real Estate Commissioner as contained in Title 10 of the California Administrative Code.

10153.01

(a) No person shall cheat on, subvert, or attempt to subvert a licensing examination given by the department. Cheating on, subverting, or attempting to subvert a licensing examination includes, but is not limited to, engaging in, soliciting, or procuring any of the following:

• (1) Any communication between one or more examinees and any person, other than a proctor or examination official, while the examination is in progress.
• (2) Copying answers from another examinee or permitting one’s answers to be copied by another examinee.
• (3) The taking of all or a part of the examination by a person other than the applicant.
• (4) Removing from the examination room any examination materials without authorization.
• (5) The unauthorized reproduction by any means of any portion of the actual licensing examination.
• (6) Aiding by any means the unauthorized reproduction of any portion of the actual licensing examination.
• (7) Possession or use at any time during the examination or while the examinee is on the examination premises of any device, material, or document that is not expressly authorized for use by examinees during the examination, including, but not limited to, notes, crib sheets, textbooks, and electronic devices.
• (8) Failure to follow any examination instruction or rule related to examination security.
• (9) Providing false, fraudulent, or materially misleading information concerning education, experience, or other qualifications as part of, or in support of, any application for admission to an examination.

(b) The commissioner may bar any candidate who willfully cheats on, subverts, or attempts to subvert an examination from taking any license examination and from holding an active real estate license under any provision of this code for a period of up to three years.

10153.1

It is unlawful for any person with respect to any examination under this part to practice any deception or fraud with regard to his or her identity in connection with any examination, application, or request to be examined.

Any person who willfully violates or knowingly participates in the violation of this section is guilty of a misdemeanor.

10153.2

(a) An applicant to take the examination for an original real estate broker license shall also submit evidence, satisfactory to the commissioner, of successful completion, at an accredited institution, of:

(1) A three-unit semester course, or the quarter equivalent thereof, in each of the following:

• (A) Real estate practice, which shall include both of the following:
  
  (i) A component on implicit bias, including education regarding the impact of implicit bias, explicit bias, and systemic bias on consumers, the historical and social impacts of those biases, and actionable steps students can take to recognize and address their own implicit biases.
  
  (ii) A component on federal and state fair housing laws as those laws apply to the practice of real estate. The fair housing component shall include an interactive participatory component, during which the applicant shall roleplay as both a consumer and real estate professional.
• (B) Legal aspects of real estate.
• (C) Real estate appraisal.
• (D) Real estate financing.
• (E) Real estate economics or accounting.

(2) A three-unit semester course, or the quarter equivalent thereof, in three of the following:

• (A) Advanced legal aspects of real estate.
• (B) Advanced real estate finance.
• (C) Advanced real estate appraisal.
• (D) Business law.
• (E) Escrows.
• (F) Real estate principles.
• (G) Property management.
• (H) Real estate office administration.
• (I) Mortgage loan brokering and lending.
• (J) Computer applications in real estate.
• (K) On and after July 1, 2004, California law that relates to common interest developments, including, but not limited to, topics addressed in the Davis-Stirling Common Interest Development Act (Part 5 (commencing with Section 4000) of Division 4 of the Civil Code) and in the Commercial and Industrial Common Interest Development Act (Part 5.3 (commencing with Section 6500) of Division 4 of the Civil Code).

(b) The commissioner shall waive the requirements of this section for an applicant who is a member of the State Bar of California and shall waive the requirements for which an applicant has successfully completed an equivalent course of study as determined under Section 10153.5.

(c) The commissioner shall extend credit under this section for any course completed to satisfy requirements of Section 10153.3 or 10153.4.

(d) This section shall become operative on January 1, 2024.

10153.3

(a) This section shall apply to an application for the real estate salesperson license examination, the real estate salesperson license, and for both the examination and license received by the commissioner prior to October 1, 2007.

(b) Application for the real estate salesperson license examination pursuant to this section shall be made in writing to the commissioner. The commissioner may prescribe the format and content of the salesperson examination application. The application for the salesperson examination shall be accompanied by the real estate salesperson license examination fee.

(c) In order to take the examination for a real estate salesperson license, an applicant under this section shall submit evidence or certification satisfactory to the commissioner of enrollment in, or successful completion at, an accredited institution of a three-unit semester course or the quarter equivalent thereof, or successful completion of an equivalent course of study as defined in Section 10153.5, in real estate principles. Evidence of enrollment satisfactory to the commissioner may include a statement from the applicant made under penalty of perjury.

(d) An applicant under this section may take the real estate salesperson license examination within two years of the date their application was received by the commissioner. Notwithstanding subdivision (c), if the applicant fails to schedule an examination or to obtain a passing score on it within that time period, they shall be required to submit evidence or certification satisfactory to the commissioner of satisfactory completion at an accredited institution of the courses described in subdivision (c) of Section 10151 or satisfactory completion of an equivalent course of study as defined in Section 10153.5, before taking the examination.

(e) An applicant under this section shall, prior to issuance of the real estate salesperson license, submit evidence or certification satisfactory to the commissioner of successful completion of the real estate principles course as described in subdivision (c) and of successful completion at an accredited institution or successful completion of an equivalent course of study as defined in Section 10153.5, of a course in real estate practice and one additional course set forth in Section 10153.2 other than real estate principles, real estate practice, advanced legal aspects of real estate, advanced real estate finance, or advanced real estate appraisal.

(f) The commissioner shall waive the requirements of this section for an applicant who is a member of the State Bar of California, or who has completed an equivalent course of study, as determined under Section 10153.5, or who has qualified to take the examination for an original real estate broker license by satisfying the requirements of Section 10153.2.

10153.4

(a) This section shall apply to an application for the real estate salesperson license examination, the real estate salesperson license, and for both the examination and license received by the commissioner prior to October 1, 2007, if the applicant obtains a passing score on the real estate salesperson license examination and submits a license application prior to October 1, 2007.

(b) Application for the real estate salesperson license examination pursuant to this section shall be made in writing to the commissioner. The commissioner may prescribe the format and content of the salesperson examination application. The application for the salesperson examination shall be accompanied by the real estate salesperson license examination fee.

(c) An applicant under this section shall comply with the requirements of subdivision (c) of Section 10153.3 in order to take the real estate salesperson license examination.

(d) An applicant under this section who obtains a passing score on the real estate salesperson license examination prior to October 1, 2007, shall, prior to the issuance of the real estate salesperson license, submit evidence or certification satisfactory to the commissioner of successful completion at an accredited institution of a three-unit semester course, or the quarter unit equivalent thereof, or successful completion of an equivalent course of study as defined in Section 10153.5, in real estate principles as described in subdivision (c) of Section 10153.3. An applicant for an original real estate salesperson license under this section shall also, prior to the issuance of the license, or within 18 months after issuance, submit evidence or certification satisfactory to the commissioner of successful completion at an accredited institution or a private vocational school, as specified in Section 10153.5, of a course in real estate practice and one additional course set forth in Section 10153.2, other than real estate principles, real estate practice, advanced legal aspects of real estate, advanced real estate finance, or advanced real estate appraisal.

(e) A salesperson who qualifies for a license pursuant to this section shall not be required for the first license renewal thereafter to complete the continuing education pursuant to Article 2.5 (commencing with Section 10170), except for the courses specified in paragraphs (1) to (4), inclusive, of subdivision (a) of Section 10170.5 or, on and after July 1, 2007, except for the courses specified in paragraphs (1) to (5), inclusive, of subdivision (a) of Section 10170.5.

(f) The salesperson license issued to an applicant who has satisfied only the requirements of subdivision (c) at the time of issuance shall be automatically suspended effective 18 months after issuance if the licensee has failed to satisfy the requirements of subdivision (d). The suspension shall not be lifted until the suspended licensee has submitted the required evidence of course completion and the commissioner has given written notice to the licensee of the lifting of the suspension.

(g) The original license issued to a salesperson shall clearly set forth the conditions of the license and shall be accompanied by a notice of the provisions of this section and of any regulations adopted by the commissioner to implement this section.

(h) The commissioner shall waive the requirements of this section for any person who presents evidence of admission to the State Bar of California, and the commissioner shall waive the requirement for any course for which an applicant has completed an equivalent course of study as determined under Section 10153.5.

10153.5

As used in Sections 10151, 10153.2, 10153.3, and 10153.4, “an equivalent course of study” consists of courses at a private vocational school that have been found by the commissioner, upon consideration of an application for approval, to be equivalent in quality to the real estate courses offered by the colleges and universities accredited by the Western Association of Schools and Colleges.

As used in Sections 10151, 10153.2, 10153.3, and 10153.4, “accredited institution” shall mean a college or university that either:

(a) Is accredited by the Western Association of Schools and Colleges, or by any other regional accrediting agency recognized by the United States Department of Education.

(b) In the judgment of the commissioner, has a real estate curriculum equivalent in quality to that of the institutions accredited pursuant to subdivision (a).

10153.6

All real estate broker licenses issued by the commissioner shall be for a period of four years. Applicants shall qualify in the appropriate examination and satisfy all other requirements prior to issuance of the license.

The four-year license may be renewed upon filing the required application and fee, and complying with the provisions of Article 2.5 (commencing with Section 10170).

10153.7

All real estate salesperson licenses issued by the commissioner shall be for a period of four years. Applicants must qualify in the appropriate examination and satisfy all other requirements prior to issuance of the license.

The four-year license may be renewed upon filing the required application and fee, and complying with the provisions of Article 2.5 (commencing with Section 10170).

10153.8

When an applicant for a real estate license fails the qualifying examination, the applicant may apply for reexamination by filing the appropriate application and fee. The application and fee for reexamination shall be filed and the reexamination taken within the two-year period following the date the application for examination was filed.

10156.2

An application on the form prescribed by the commissioner for the renewal of a license, filed before midnight of the last day of the period for which a previous license was issued, accompanied by the applicable renewal fee and good faith evidence of compliance with the provisions of Article 2.5 (commencing with Section 10170), entitles the applicant to continue operating under his or her existing license after its specified expiration date, if not previously suspended or revoked.

If the commissioner determines that the applicant has not complied with the continuing education requirements, he or she shall either (1) advise the applicant of the applicability of Section 10171.2 on an extended period for compliance; or (2) advise the applicant that his or her rights to operate under the prior license will expire five days from the date the notice is mailed, or on the date the license would normally expire, whichever is later; and the commissioner’s reason for that determination, and the right of the applicant to request a hearing on the decision. Nothing in this section shall prevent the commissioner from delaying the renewal of the license of a licensee pursuant to Section 10177.

This section shall become operative on July 1, 2012.

10156.5

The commissioner may issue a restricted license to a person:

• (a) Who is or has been licensed under this chapter and who has been found by the commissioner after a hearing to have violated provisions of Division 4 of this code where such violation would justify the suspension or revocation of the license.
• (b) Who is applying for a license under this chapter, who has met the examination and experience requirements, but who has been found by the commissioner after a hearing to have failed to have made a satisfactory showing that he meets all of the other requirements for the license applied for, where such failure would justify the denial of the license applied for.

10156.6

A restricted license issued pursuant to Section 10156.5 as the commissioner in his or her discretion finds advisable in the public interest may be restricted:

• (a) By term.
• (b) To employment by a particular real estate broker, if a salesperson.
• (c) By conditions to be observed in the exercise of the privileges granted.
• (d) If a salesperson licensee or applicant has not complied with Section 10153.4 within 18 months after issuance of the license.

10156.7

(a) A restricted license issued pursuant to Section 10156.5 does not confer any property right in the privileges to be exercised thereunder, and the holder of a restricted license does not have the right to the renewal of the license.

(b) Except as provided in subdivision (c), the commissioner may without hearing issue an order suspending the licensee’s right to further exercise any privileges granted under a restricted license pending final determination made after formal hearing.

(c) A restricted salesperson license containing a condition requiring compliance with Section 10153.4 shall be automatically suspended upon the licensee’s failure to comply with the condition. The suspension shall not be lifted until the suspended licensee has submitted the required evidence of course completion and the commissioner has given written notice to the licensee of the lifting of the suspension.

10156.8

As one of the conditions to the issuance of a restricted license authorized by Section 10156.5 the commissioner may require the filing of surety bonds in such form and condition as he may require in respect to the restricted licensee for the protection of persons or classes of persons with whom said licensee may deal.

10157

No real estate license gives authority to do any act specified in this chapter to any person, other than the person to whom the license is issued.

10158

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.

10159

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 he or she acts is clearly disclosed and apparent to any member of the public using his or her services outside the corporation.

When a corporation wishes to act as a real estate broker, the corporation shall be licensed by the department through qualified broker-officers, who have either passed the broker license examination and are now qualified to obtain a broker license, or who are currently licensed as real estate brokers. An officer of a corporation through whom it is licensed to act need not maintain an individual broker’s license, but is otherwise subject to all duties and responsibilities of a licensed broker.

10159.2

(a) 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.

(b) A corporate broker licensee that has procured additional licenses in accordance with Section 10158 through officers other than the officer designated pursuant to Section 10211 may, by appropriate resolution of its board of directors, assign supervisory responsibility over salespersons licensed to the corporation to its broker-officers.

(c) A certified copy of any resolution of the board of directors assigning supervisory responsibility over real estate salespersons licensed to the corporation shall be filed with the Real Estate Commissioner within five days after the adoption or modification thereof.

10159.5

(a)(1) Every person applying for a license under this chapter who desires to have the license issued under a fictitious business name shall file with the application a certified copy of their fictitious business name statement filed with the county clerk pursuant to Chapter 5 (commencing with Section 17900) of Part 3 of Division 7.

(2) A responsible broker may, by contract, permit a salesperson to do all of the following:

• (A) File an application on behalf of a responsible broker with a county clerk to obtain a fictitious business name.
• (B) Deliver to the department an application, signed by the responsible broker, requesting the department’s approval to use a county approved fictitious business name that shall be identified with the responsible broker’s license number.
• (C) Pay for any fees associated with filing an application with a county or the department to obtain or use a fictitious business name.
• (D) Maintain ownership of a fictitious business name, as defined in paragraph (1) of subdivision (a) of Section 10159.7, that may be used subject to the control of the responsible broker.

(b)(1) A salesperson using a fictitious business name authorized by subdivision (a), shall use that name only as permitted by the responsible broker.

(2) This section does not change a real estate broker’s duties under this division to supervise a salesperson.

(c) A person applying to a county for a fictitious business name pursuant to subdivision (a) may file the application in the county or counties where the fictitious business name will be used.

(d) Advertising and solicitation materials, including business cards, print or electronic media and “for sale” signage, using a fictitious business name obtained in accordance with paragraph (2) of subdivision (a) shall include the responsible broker’s identity, as defined in Section 10015.4, in a manner equally as prominent as the fictitious business name.

(e) Notwithstanding subdivision (b) of Section 10140.6, advertising and solicitation materials, including print or electronic media and “for sale” signage, containing a fictitious business name obtained in accordance with paragraph (2) of subdivision (a) shall include the name and license number of the salesperson who is using the fictitious business name.

(f) Notwithstanding Section 10185, a violation of this section is not a misdemeanor.

10159.6

All of the following apply to use of a team name, as defined in paragraph (3) of subdivision (a) of Section 10159.7:

(a) Notwithstanding subdivision (b) of Section 10140.6, advertising and solicitation materials that contain a team name, including print or electronic media and “for sale” signage, shall include, and display in a conspicuous and prominent manner, the team name and the name and license number of at least one of the licensed members of the team.

(b) The responsible broker’s identity shall be displayed as prominently and conspicuously as the team name in all advertising and solicitation materials.

(c) The advertising and solicitation materials shall not contain terms that imply the existence of a real estate entity independent of the responsible broker.

(d) Notwithstanding Section 10185, a violation of this section is not a misdemeanor.

10159.7

(a) For the purposes of this article, the following definitions shall apply:

• (1) “Fictitious business name” means a professional identity or brand name under which activity requiring a real estate license is conducted and the use of which is subject to approval by the department pursuant to Section 10159.5.
• (2) “Ownership of a fictitious business name” means the right to use, renew, and control the use of a fictitious business name obtained in accordance with Section 10159.5.
• (3) “Team name” means a professional identity or brand name used by a salesperson, and one or more other real estate licensees, for the provision of real estate licensed services. Notwithstanding any other law, the use of a team name does not require that a separate license be issued for that name pursuant to Section 10159.5. A team name does not constitute a fictitious business name for purposes of this part or any other law or for purposes of filing a fictitious business name statement with an application as required by subdivision (a) of Section 10159.5 if all of the following apply:
  • (A) The name is used by two or more real estate licensees who work together to provide licensed real estate services, or who represent themselves to the public as being a part of a team, group, or association to provide those services.
  • (B) The name includes the surname of at least one of the licensee members of the team, group, or association in conjunction with the term “associates,” “group,” or “team.”
  • (C) The name does not include any term or terms, such as “real estate broker,” “real estate brokerage,” “broker,” or “brokerage” or any other term that would lead a member of the public to believe that the team is offering real estate brokerage services, that imply or suggest the existence of a real estate entity independent of a responsible broker.

(b) Nothing in this section changes a real estate broker’s duties under this division to supervise a salesperson.

10161.5

When the holder of a real estate broker’s or salesperson’s license is required to relinquish his or her license to assume an office in local, state, or federal government, he or she may have it reinstated at any time within six months of termination of his or her service in office upon payment of the appropriate renewal fee, and compliance with the provisions of Article 2.5 (commencing with Section 10170) of this chapter, if the relinquished license was issued four or more years prior to his or her application for reinstatement.

10161.8

(a) The commissioner shall specify the manner in which a responsible broker shall provide notice to the commissioner of an affiliation with a real estate licensee or by which a real estate licensee shall provide notice of a change of address or affiliation.

(b) Whenever a responsible broker retains a real estate salesperson to conduct activities requiring a license, the responsible broker shall notify the commissioner in a manner specified by the commissioner.

(c) Whenever a responsible broker retains a real estate broker to conduct activities requiring a license, the responsible broker shall provide notice to the commissioner in a manner specified by the commissioner.

(d) Whenever an affiliation with a real estate licensee is terminated, the responsible broker shall provide notice to the commissioner in a manner specified by the commissioner.

(e) Whenever a real estate licensee acquires a business address different from the address shown in the records maintained by the commissioner, the licensee shall notify the commissioner in a manner specified by the commissioner.

10162

(a) Every licensed real estate broker shall have and maintain a definite place of business in the State of California that serves as the broker’s office for the transaction of business. This office shall be the place where the broker’s license is displayed and where personal consultations with clients are held.

(b) A real estate license does not authorize the licensee to do business except from the location stipulated in the real estate license as issued or as altered pursuant to Section 10161.8.

(c)(1) Every real estate broker and salesperson licensee shall provide to the commissioner their current office or mailing address, a current telephone number, and a current electronic mail address that they maintain or use to perform any activity that requires a real estate license, at which the department may contact the licensee.

(2) Every real estate broker and salesperson licensee shall inform the commissioner of any change to their office or mailing address, telephone number, or electronic mail address no later than 30 days after making the change.

(d) Notwithstanding Section 10185, a violation of this section is not a misdemeanor.

10163

If the applicant for a real estate broker’s license maintains more than one place of business within the State he shall apply for and procure an additional license for each branch office so maintained by him. Every such application shall state the name of the person and the location of the place or places of business for which such license is desired. The commissioner may determine whether or not a real estate broker is doing a real estate brokerage business at or from any particular location which requires him to have a branch office license.

10164

(a) A responsible broker or corporate designated broker officer may appoint a licensee as a manager of a branch office or division of the responsible broker’s or corporate designated broker officer’s real estate business 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.

(b) Notwithstanding subdivision (a), nothing in this section shall be construed to limit the responsibilities of a responsible broker or a corporate designated broker officer pursuant to subdivision (h) of Section 10177. A licensee accepting appointment as a manager shall be subject to disciplinary action pursuant to Section 10165 for failure to properly supervise licensed activity pursuant to subdivision (a).

(c) Appointment of a manager shall only be made by means of a written contract in which the manager accepts the delegated responsibility. The appointing responsible broker or corporate designated broker officer shall retain a copy of the contract and send a notice to the department, in a form approved by the commissioner, identifying the appointed manager and the branch office or division the manager is appointed to supervise.

(d) A licensee shall not be appointed as a manager if any of the following apply:

• (1) The licensee holds a restricted license.
• (2) The licensee is or has been subject to an order of debarment.
• (3) The licensee is a salesperson with less than two years of full-time real estate experience within five years preceding the appointment.

(e) Whenever an appointment of a branch manager is terminated or changed, the responsible broker or corporate designated broker officer shall immediately notify the commissioner thereof in writing.

10165

For a violation of Section 10161.8, 10162, 10163, or subdivision (b) of Section 10164, the commissioner may temporarily suspend or permanently revoke the license of the real estate licensee in accordance with this part relating to hearings.

10165.1

This article does not require the department to post or publish electronic mail addresses or telephone numbers collected pursuant to Section 10150, 10151, or 10162, and if released by the department, the information shall be released in a way that discourages its use in unauthorized or unsolicited commercial electronic mail advertisement programs.

10166.01

For purposes of this article, the following definitions shall apply:

• “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).
• “Mortgage loan originator” means:
  • An individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain.
  • Does not include individuals performing administrative or clerical tasks on behalf of a mortgage loan originator, real estate brokerage services, or specific exemptions outlined in clauses (A) through (E).
• “Nationwide Multistate Licensing System and Registry” means a licensing system developed for the registration of mortgage loan originators.
• “Residential mortgage loan” includes loans primarily for personal or household use secured by mortgages or other similar securities.
• “Unique identifier” refers to the identification number assigned by the licensing system.

10166.02

(a) A real estate broker making, arranging, or servicing loans secured by real property containing one to four residential units shall notify the department within 30 days of commencing the activity using a prescribed form.

(b) Requirements for engaging in business as a mortgage loan originator include:

• Obtaining a real estate license.
• Obtaining and maintaining a license endorsement as a mortgage loan originator.

(f) Failure to notify the department or obtain a license endorsement results in penalties ranging from $50 to $100 per day, capped at $10,000.

10166.03

Loan processors or underwriters who do not represent themselves as mortgage loan originators are exempt from obtaining a license endorsement. Independent contractors performing these duties must obtain an endorsement.

10166.04

Applicants for a mortgage loan originator license endorsement must provide personal and professional details, including:

• Fingerprint images for background checks.
• Personal history and experience, including credit reports and information about any legal findings.

10166.05

The commissioner shall not issue a mortgage loan originator license endorsement unless:

• The applicant has never had a license revoked in any jurisdiction.
• The applicant has no felony convictions related to fraud, dishonesty, or money laundering in the last seven years.
• The applicant demonstrates financial responsibility and general fitness.
• The applicant meets the education and testing requirements specified in Section 10166.06.

10166.06

Mortgage loan originator applicants must complete at least 20 hours of pre-licensing education, including:

• Three hours of federal law and regulations.
• Three hours of ethics, including fraud prevention and fair lending issues.
• Two hours of training on nontraditional mortgage lending standards.

10166.06

(a) In addition to the requirements of Section 10153, an applicant for a license endorsement as a mortgage loan originator shall complete at least 20 hours of education courses, which shall include:

• Three hours of federal law and regulations.
• Three hours of ethics, including instruction on fraud, consumer protection, and fair lending issues.
• Two hours of training related to lending standards for the nontraditional mortgage product marketplace.

(b) For purposes of this section, education courses are acceptable only if they have been reviewed and approved, or otherwise deemed acceptable, by the Nationwide Multistate Licensing System and Registry in accordance with the SAFE Act. Education may be delivered:

• In a classroom setting.
• Online.
• By any other means approved by the licensing system and registry.

(c) A person who successfully completes education requirements approved by the licensing system in any state other than California shall be granted credit toward the completion of education requirements under this section.

(d) Before being issued a license endorsement to act as a mortgage loan originator, an individual must pass a qualified written test developed or deemed acceptable by the Nationwide Multistate Licensing System and Registry.

(e) A qualified written test shall evaluate knowledge and comprehension in:

• Ethics.
• Federal law and regulations pertaining to mortgage origination.
• State law and regulations pertaining to mortgage origination.
• Fraud prevention, consumer protection, and fair lending issues.

(f) A test provider approved by the Nationwide Multistate Licensing System and Registry may administer the test at the employer’s location or a subsidiary/affiliate location of the employer, subject to approval.

(g) An individual shall be considered to have passed the test only if they achieve a score of at least 75% correct answers.

(h) An individual who fails the test may retake it, with at least 30 days required between retests, except as specified in subdivision (i).

(i) An applicant who fails three consecutive tests must wait at least six months before retesting.

(j) A mortgage loan originator whose license endorsement lapses for five years or more must retake the qualified written test to regain eligibility.

10166.07

(a) A real estate broker who acts pursuant to Section 10131.1 or subdivision (d) or (e) of Section 10131 and makes, arranges, or services one or more loans in a calendar year secured by real property containing one to four residential units shall file an annual business activities report within 90 days after the end of the broker’s fiscal year or within additional time as the commissioner may allow for good cause.

(b) The report shall include information about:

• The names and license numbers of the supervising broker, brokers, and salespersons under supervision during the reporting year.
• A list of activities undertaken, including:
  • Mortgage-related activities (arranging, making, or servicing).
  • Other activities under the broker’s or salesperson’s license.
  • Activities under related licenses, such as finance lender or mortgage loan servicer licenses.
• Advertising media used, such as print, radio, TV, or internet.
• Details on fixed-rate and adjustable-rate loans, including aggregate principal amounts, interest rates, and lender categories.
• Compensation received for brokered loans, excluding fees for third-party services.

(c) If a broker fails to file the required report on time, the commissioner may conduct an audit and charge the broker one and a half times the cost of the audit. Licenses may be suspended or denied renewal if the broker does not pay the assessed fees.

(d) Reports required under this section are exempt from public disclosure under subdivision (b) of Section 7929.000 of the Government Code.

10166.08

Each mortgage loan originator shall submit reports of condition to the Nationwide Multistate Licensing System and Registry. These reports shall be:

• Form: The reports must be in the form prescribed by the Nationwide Multistate Licensing System and Registry.
• Content: The reports shall include all information as required by the Nationwide Multistate Licensing System and Registry.

This ensures that all necessary data regarding mortgage loan origination is consistently collected and monitored by the appropriate oversight bodies.

10166.09

The minimum standards for the renewal of an endorsement as a mortgage loan originator shall include the following:

• Ongoing Compliance: The mortgage loan originator continues to meet the minimum standards for obtaining an endorsement as a mortgage loan originator.
• Continuing Education: The mortgage loan originator satisfies the annual continuing education requirements described in Section 10166.10.

10166.10

(a) A mortgage loan originator shall complete at least eight hours of continuing education annually, which shall include:

• Federal Law: Three hours relating to federal law and regulations.
• Ethics: Two hours of ethics, including instruction on fraud, consumer protection, and fair lending issues.
• Nontraditional Lending: Two hours related to lending standards for the nontraditional mortgage product marketplace.

(b) Education courses and providers shall be reviewed and approved by the commissioner and the Nationwide Multistate Licensing System and Registry.

(c) The commissioner may substitute course requirements with equivalent standards found in Section 10170.5.

(d) Continuing education may be offered in a classroom, online, or other approved means. The following rules apply:

• Education must be taken within the year it is credited.
• A course may not be repeated in consecutive years.
• Credit is granted for instructors teaching approved courses at a rate of two hours for every one hour taught.

(e) Education requirements completed in another state shall be credited in California.

(f) An endorsement lapsing for over five years requires retaking of the qualifying test.

10166.11

(a) A real estate broker who engages in making, arranging, or servicing loans secured by real property containing one to four residential units shall keep detailed records to ensure compliance with this part.

(b) These records are subject to inspection and audit by the commissioner at any time. Failure to comply may result in license suspension or revocation.

(c) Inspection and examination reports are confidential and not public records but may be disclosed for enforcement purposes.

10166.12

(a) The commissioner shall examine the affairs of each real estate broker subject to Section 10166.02 as necessary for compliance.

(b) Penalties may be imposed for non-compliance, including suspension or revocation of licenses.

(c) Examination findings belong to the commissioner and may only be disclosed for enforcement purposes.

10166.13

A real estate broker subject to Section 10166.02 shall submit any special reports required by the commissioner.

10166.14

A real estate broker shall notify the department when they are no longer subject to this part. Required reports for the year must still be submitted.

10166.15

(a) The commissioner shall report violations of this article to the Nationwide Multistate Licensing System and Registry.

(b) A process shall be established to allow mortgage loan originators to challenge information entered into the registry.

10166.16

(a) Confidentiality of materials provided to the Nationwide Multistate Licensing System and Registry is maintained, and they may be shared only with regulatory officials.

(b) Information related to employment history and disciplinary actions may be accessed by the public.

10166.01

(a) “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

(b) “Mortgage loan originator” means an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain. It does not include:

• Individuals performing purely administrative or clerical tasks.
• Individuals only performing real estate brokerage services unless compensated by a lender or mortgage loan originator.
• Employees renegotiating terms for existing loans held by their employer unless otherwise determined under the SAFE Act.
• Individuals solely involved in timeshare plans as defined in Title 11 of the United States Code.
• Individuals licensed or registered as mortgage loan originators under the Financial Code and the SAFE Act.

(c) “Nationwide Multistate Licensing System and Registry” means a mortgage licensing system developed and maintained for licensing and registration of mortgage loan originators.

(d) “Residential mortgage loan” refers to loans secured by a dwelling or residential real estate.

(e) “Unique identifier” means a number or identifier assigned by the Nationwide Multistate Licensing System and Registry.

10166.02

(a) A real estate broker who acts pursuant to Section 10131.1 or subdivision (d) or (e) of Section 10131 and makes, arranges, or services loans secured by real property containing one to four residential units must notify the department within 30 days of commencing such activities.

(b) No individual may engage in business as a mortgage loan originator without:

• Obtaining and maintaining a real estate license.
• Obtaining and maintaining a real estate license endorsement as a mortgage loan originator.

(c) License endorsements are valid for one year and expire on December 31 each year.

(f) Failure to comply with notification or licensing requirements results in penalties ranging from $50 to $100 per day, capped at $10,000.

10166.03

(a) Loan processors or underwriters who do not represent themselves as mortgage loan originators are exempt from obtaining a license endorsement.

(b) Independent contractors performing these duties must obtain an endorsement as a mortgage loan originator.

10166.04

(a) Applicants for a mortgage loan originator license endorsement must provide the Nationwide Multistate Licensing System and Registry with:

• Fingerprint images for criminal history background checks.
• Personal history, including credit reports and legal findings.

(b) Background checks may include state criminal history information and subsequent arrest notifications.

10166.05

(a) The commissioner shall not issue a license endorsement unless the applicant meets the following criteria:

• No prior revocation of a mortgage loan originator license.
• No felony convictions involving fraud, dishonesty, or money laundering in the past seven years.
• Demonstrates financial responsibility and general fitness.
• Completes the education and testing requirements of Section 10166.06.

10166.06

(a) Applicants must complete 20 hours of education courses, including:

• Three hours of federal law and regulations.
• Three hours of ethics, including fraud prevention and fair lending.
• Two hours of training on nontraditional mortgage product standards.

(b) Education must be reviewed and approved by the Nationwide Multistate Licensing System and Registry.

(d) Applicants must pass a qualified written test with a score of at least 75%.

10166.01

For purposes of this article, the following definitions shall apply:

(a) “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

(b) (1) “Mortgage loan originator” means an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain.

• An individual performing purely administrative or clerical tasks under direction (Section 10166.03).
• An individual performing real estate brokerage services unless compensated by a lender or mortgage loan originator.
• An individual solely renegotiating terms for existing loans with their employer’s portfolio, unless determined otherwise by HUD.
• Persons solely involved in timeshare credit extensions.
• Individuals licensed under the Financial Code and SAFE Act.

(c) “Nationwide Multistate Licensing System and Registry” means a system for licensing and registration developed by the CSBS and AARMR.

10166.02

(a) A real estate broker who acts pursuant to Section 10131.1 or subdivisions (d) or (e) of Section 10131 shall notify the department within 30 days of commencing activities involving loans secured by property containing 1-4 residential units.

(b) Requirements to engage in business as a mortgage loan originator include:

• Obtaining and maintaining a valid real estate license.
• Obtaining and maintaining a license endorsement as a mortgage loan originator.

(f) Failure to notify the department or obtain the required license endorsement will result in penalties of $50 to $100 per day, up to a maximum of $10,000.

10166.03

(a) A loan processor or underwriter who does not represent to the public that they can or will perform any mortgage loan originator activities is not required to obtain a license endorsement as a mortgage loan originator.

(b) Independent contractors performing loan processor or underwriter duties must obtain and maintain an endorsement as a mortgage loan originator. Each such individual must:

• Hold a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.

10166.04

(a) Applicants for a license endorsement as a mortgage loan originator must provide the following to the Nationwide Multistate Licensing System and Registry:

• Fingerprint images for a state and federal criminal history background check.
• Personal history and experience, including authorization for obtaining:
  • An independent credit report from a consumer reporting agency.
  • Information related to any administrative, civil, or criminal findings.

(b) The commissioner may request state criminal background checks using procedures specified in the Penal Code.

(d) The Department of Justice may charge fees to cover the cost of processing requests under this section.

10166.05

The commissioner shall not issue a mortgage loan originator license endorsement unless the following requirements are met:

• The applicant has never had a license revoked in any jurisdiction, unless the revocation has been formally vacated.
• The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony related to fraud, dishonesty, or money laundering within the last seven years.
• The applicant demonstrates financial responsibility, character, and general fitness to operate fairly and efficiently.
• The applicant meets education and testing requirements outlined in Section 10166.06.

10166.06

(a) Applicants for a mortgage loan originator license endorsement must complete at least 20 hours of education courses, including:

• Three hours on federal law and regulations.
• Three hours on ethics, including fraud prevention, consumer protection, and fair lending practices.
• Two hours on nontraditional mortgage product lending standards.

(b) Education courses must be approved by the Nationwide Multistate Licensing System and Registry in accordance with the SAFE Act.

(d) Applicants must pass a qualified written test assessing knowledge in ethics, federal law, state law, fraud prevention, and fair lending practices with a minimum score of 75%.

(i) Applicants who fail the test three consecutive times must wait six months before retesting.

10166.07

(a) A real estate broker acting under Section 10131.1 or subdivisions (d) or (e) of Section 10131, and who makes, arranges, or services one or more loans in a calendar year secured by real property containing one to four residential units, shall file an annual business activities report. This report must be submitted:

• Within 90 days after the end of the broker’s fiscal year.
• Within an extended timeframe if allowed by the commissioner for good cause.

(b) The report must include the following:

• Name and license number of the supervising broker and any brokers or salespersons under their supervision.
• Activities conducted under the broker’s supervision, including:
  • Arranging, making, or servicing loans.
  • Real estate-related activities under applicable licenses.
  • Activities under finance lender or mortgage loan servicer licenses.
• Advertising methods used, such as print, radio, television, or internet.
• Details on fixed-rate and adjustable-rate loans, including aggregate amounts, interest rates, and funding sources.
• Compensation received by the broker, excluding third-party fees.

(c) If the broker fails to file the required report on time, the commissioner may:

• Conduct an audit and charge the broker one and a half times the cost of the audit.
• Suspend or deny license renewal if the broker does not pay the assessed fees.

(d) Reports filed under this section are exempt from public disclosure under the Government Code.

10166.07

(a) A real estate broker acting under Section 10131.1 or subdivisions (d) or (e) of Section 10131, and who makes, arranges, or services one or more loans in a calendar year secured by real property containing one to four residential units, shall file an annual business activities report. This report must be submitted:

• Within 90 days after the end of the broker’s fiscal year.
• Within an extended timeframe if allowed by the commissioner for good cause.

(b) The report must include the following:

• Name and license number of the supervising broker and any brokers or salespersons under their supervision.
• Activities conducted under the broker’s supervision, including:
  • Arranging, making, or servicing loans.
  • Real estate-related activities under applicable licenses.
  • Activities under finance lender or mortgage loan servicer licenses.
• Advertising methods used, such as print, radio, television, or internet.
• Details on fixed-rate and adjustable-rate loans, including aggregate amounts, interest rates, and funding sources.
• Compensation received by the broker, excluding third-party fees.

(c) If the broker fails to file the required report on time, the commissioner may:

• Conduct an audit and charge the broker one and a half times the cost of the audit.
• Suspend or deny license renewal if the broker does not pay the assessed fees.

(d) Reports filed under this section are exempt from public disclosure under the Government Code.

10166.08

Each mortgage loan originator shall submit reports of condition to the Nationwide Multistate Licensing System and Registry. These reports must adhere to the following:

• Be in the form prescribed by the Nationwide Multistate Licensing System and Registry.
• Contain all required information as mandated by the Nationwide Multistate Licensing System and Registry.

10166.09

The minimum standards for renewal of an endorsement as a mortgage loan originator include:

• The mortgage loan originator continues to meet the minimum standards for obtaining an endorsement.
• The mortgage loan originator satisfies the annual continuing education requirements outlined in Section 10166.10.

10166.10

(a) A mortgage loan originator must complete at least eight hours of continuing education annually, which includes:

• Three hours on federal law and regulations.
• Two hours on ethics, including fraud prevention, consumer protection, and fair lending issues.
• Two hours on lending standards for nontraditional mortgage products.

(b) Continuing education courses and providers must be reviewed and approved by the commissioner and the Nationwide Multistate Licensing System and Registry.

(c) The commissioner may substitute the course requirements with equivalent standards, provided they align with the intent of Section 10170.5.

(d) Continuing education may be provided in various formats, including classroom or online settings, as approved by the commissioner.

(e) Continuing education credits are only valid for the year in which they are completed and cannot be repeated in successive years.

(f) Instructors of approved continuing education courses may earn two hours of credit for every hour taught.

(g) Continuing education completed in other states may be credited towards California requirements if approved by the Nationwide Multistate Licensing System and Registry.

(h) A mortgage loan originator whose license lapses or expires must complete continuing education requirements for the last year the license was held before it can be renewed.

10166.11

(a) A real estate broker acting under Section 10131.1 or subdivisions (d) or (e) of Section 10131, and who makes, arranges, or services loans secured by real property containing one to four residential units, must maintain documents and records sufficient for the commissioner to determine compliance with this division and applicable rules. These records must include, at minimum, the documents described in Section 10148. Upon request, the broker shall authorize the commissioner to access financial records under Section 7473 of the Government Code.

(b) The business documents and records of real estate brokers, and salespersons under their supervision, are subject to inspection, examination, or audit by the commissioner with reasonable notice. Brokers and salespersons must provide access to these records within the timeframe specified in the commissioner’s request. Failure to comply may result in suspension or revocation of licenses.

(c) Inspection and audit reports prepared by the commissioner are confidential and exempt from public records. Disclosure is permitted only to the licensee for corrective action or to law enforcement and regulatory agencies for enforcement purposes.

10166.12

(a) The commissioner shall periodically examine the activities of real estate brokers and salespersons required to notify the commissioner or obtain license endorsements under Section 10166.02. Examinations may include a review of operations, books, records, and documents, and interviews under oath with the licensee’s personnel. The commissioner may accept examinations conducted by other regulatory bodies if deemed sufficient.

(b) Penalties may be imposed on brokers or salespersons for violations discovered during these examinations. Nonpayment of penalties may result in suspension or revocation of licenses. The commissioner may also initiate court proceedings to collect penalties.

(c) Penalties collected under this section are deposited into the Consumer Recovery Account of the Real Estate Fund and used for legislatively specified purposes.

(d) Examination findings are confidential and may only be disclosed for enforcement or investigative purposes. Reports and required filings are the property of the commissioner.

10166.13

A real estate broker acting under Section 10131.1 or subdivisions (d) or (e) of Section 10131 and who makes, arranges, or services loans secured by real property containing one to four residential units must submit any special reports requested by the commissioner.

10166.14

A real estate broker must notify the department when they are no longer subject to this part. If reports required under Sections 10166.07 and 10166.08 have been filed for the year, the broker must notify the department before year-end that they will not be subject to this part in the subsequent year.

10166.15

(a) The commissioner shall report violations of this article and enforcement actions involving mortgage loan originators to the Nationwide Multistate Licensing System and Registry.

(b) A process must be established for mortgage loan originators to challenge information entered into the registry by the commissioner.

(c) The commissioner may establish regulations for recordkeeping and penalties applicable to mortgage loan originators for violations of this article.

10166.16

(a) Information or material provided to the Nationwide Multistate Licensing System and Registry retains its confidentiality and legal privilege under state or federal law, even after disclosure. This information can be shared with regulatory officials without loss of privilege or confidentiality.

(b) The commissioner may enter agreements with other governmental agencies or associations to facilitate information sharing while maintaining confidentiality.

(c) Confidential information is exempt from disclosure under public records laws and is protected from subpoenas or discovery, except with explicit waiver by the individual to whom the information pertains.

(d) Information about employment history and publicly adjudicated actions against mortgage loan originators remains accessible to the public through the registry.

10166.17

The commissioner shall require mortgage loan originators to be licensed and registered through the Nationwide Multistate Licensing System and Registry. The commissioner may establish requirements by rule, regulation, or order, including:

• Background checks, including criminal, civil, and credit history reviews.
• Payment of application and renewal fees.
• Renewal or reporting deadlines.
• Amendments or surrendering of licenses and other administrative requirements.

10167

(a) “Prepaid rental listing service” refers to the business of supplying prospective tenants with listings of residential real properties for tenancy in exchange for an advance or contemporaneous fee. It excludes roommate referral services that provide information to assist in locating roommates based on specific criteria.

(b) “Licensee” is a person licensed to conduct a prepaid rental listing service or engaged in such business under a real estate broker license.

(c) “Location” designates any place, aside from a real estate broker’s main or branch office, where a prepaid rental listing service operates.

(d) “Designated agent” is the individual in charge of the prepaid rental listing service at a specific location.

(e) “Fee” denotes the charge required by a licensee for accessing rental listings or purchasing other services or products necessary to access listings.

(f) “Service charge” represents the amount of the fee retained by the licensee if the prospective tenant secures housing independently of the listings provided.

10167.1

This article does not apply to newspapers of general circulation.

10167.2

(a) Engaging in a prepaid rental listing service business without the proper license or as a licensed real estate broker is unlawful.

(b)(1) This article applies solely to the provision of rental property listings for tenancy. It does not apply to other goods or services unless the purchase of those goods or services is mandatory to obtain listings or included in the same contract. The contract must clearly specify that purchasing additional goods or services is optional, and their pricing must be fair and reasonable.

(b)(2) If a dispute arises regarding the fairness of goods or services pricing, the burden lies on the commissioner to prove that the pricing unreasonably exceeds customary fees for similar goods or services within the community.

10167.3

(a) Separate applications must be submitted for each prepaid rental listing service location, accompanied by an application fee. Adjustments to locations during a license term also require applications and corresponding fees. Part of these fees contributes to the Consumer Recovery Account.

(b) Licensed real estate brokers may provide prepaid rental listing services under direct supervision at a licensed brokerage office.

10167.4

The commissioner may require proof of honesty and truthfulness from applicants, their agents, and individuals with significant ownership interests in the entity. Fingerprinting is mandatory for original applicants. The commissioner may hold hearings and refuse to issue licenses if satisfactory proof is not provided.

10167.5

Prepaid rental listing services at a licensed location must be supervised by a designated agent. If the agent ceases their role, the licensee must notify the department within five days, and operations must cease after 60 days unless a new agent is appointed and reported.

10167.6

Non-resident applicants for a prepaid rental listing service license must file an irrevocable consent allowing valid service of process through the Secretary of State in California.

10167.7

Each location must maintain a $10,000 bond or cash deposit, which may be utilized for unsatisfied judgments related to the licensee’s operations. Interest earned on cash deposits is payable to the licensee.

10167.8

The bond requirement of Section 10167.7 does not apply to prepaid rental listing services operated by tax-exempt entities, government agencies, or real estate brokers conducting services under a real estate license.

10167.9

(a) Before accepting a fee, a licensee must offer the prospective tenant a written contract, either on paper or electronically, that includes:

• The licensee’s name, license number, and the addresses and phone numbers of the main office and the branch office or location providing the listing.
• Acknowledgment of the fee amount received.
• A description of the services provided, including conditions, restrictions, and limitations.
• The prospective tenant’s specifications for the rental property, such as type of structure, location, furnishings, number of bedrooms, and maximum monthly rent.
• The contract expiration date, no later than 90 days from execution.
• Terms for a full or partial refund as outlined in Section 10167.10.
• The printed name and signature of the licensee or authorized representative. Electronic signatures are acceptable if they provide a reasonable method of indicating authorization.
• A clause explaining small claims court remedies in bold type.
• A bold type clause clarifying that the purchase of additional goods or services is optional.

(b)(1) Original contracts, receipts, refund claims, and relevant documents must be retained for three years and made available for department examination. Documents stored digitally must be provided on portable storage media if requested.

(b)(2) Documents must be disposed of securely, such as by shredding, to protect tenant identities.

(c) Contract forms and modifications must be submitted to the department for approval before use. Unaddressed submissions are deemed approved after 15 working days.

(d) Contracts in electronic form are valid and enforceable. Upon request, a paper copy must be provided within five working days.

10167.95

Before accepting a fee, licensees must provide prospective tenants with a written notice in 12-point type stating their rights to a refund under the contract and summarizing the process for obtaining it. The notice must also include information about small claims court remedies and how to file complaints with the Department of Real Estate.

10167.10

(a)(1) Licensees must refund the full fee if they fail to provide at least three rental properties meeting the tenant’s specifications within five days unless the tenant secures housing through the service.

(b)(1) Tenants are entitled to a refund, minus a service charge, if they secure housing elsewhere or fail to find housing, provided a refund request is made within 10 days of contract expiration.

(b)(2) Refunds must be issued within 10 days of receiving supporting documentation or a written statement from the tenant confirming they did not secure housing through the service.

(c) Contracts must include a clause titled “RIGHT TO REFUND” in bold type, detailing the refund process and timelines.

(e) Bad faith denial or delay of a refund may result in damages up to $1,000, in addition to actual damages.

10167.11

Licensees or their representatives may not:

• Make false, misleading, or deceptive advertisements or representations.
• Refer properties they know are unavailable, do not exist, or were misrepresented.
• List properties without confirming availability within four days prior to dissemination, unless certain conditions are met.
• List properties without permission from the property owner or authorized agent.

10167.12

(a) The commissioner may suspend, deny, or revoke licenses for violations of this article or criminal convictions related to prepaid rental listing services.

(b) Hearings for license suspension, denial, or revocation must follow the procedures in Chapter 5 of the Government Code.

10167.13

Prepaid rental listing service licenses are issued for two years. Timely applications and fee payments allow continued operation at all specified locations during the renewal process.

10167.14

The superior court may issue injunctions to prevent or stop violations of this article, following procedures outlined in the Code of Civil Procedure.

10167.15

Willful violations of this article by any person, including officers or employees, are classified as misdemeanors.

10167.16

Licensees operating prepaid rental listing services are subject to additional provisions under Chapters 1 and 2 of Division 4, along with specific sections including 10450, 10452, 10453, and 10454.

10167.17

The commissioner shall regulate prepaid rental listing service licensees and applicants under the same licensing provisions applicable to real estate licensees as specified in designated sections.

10170

The Legislature has determined that it is in the public interest of consumer protection and consumer service that all real estate licensees licensed under this part comply with continuing education requirements adopted by the commissioner pursuant to this article as a prerequisite to the renewal of real estate licenses on and after January 1, 1981.

10170.2

The commissioner may appoint a committee comprised of licensees under this part and persons with expertise in real estate education to advise him with respect to his responsibilities under this article.

10170.4

The commissioner shall adopt regulations pursuant to Section 10080 to prescribe the following:

• A definition of basic requirements for 45 clock hours of continuing education achieved during the four-year period preceding license renewal.
• A basis and method of qualifying educational programs to satisfy the requirements of this article.
• A procedure for evaluating equivalency petitions, including activities such as real estate instruction, publication, or educational program development.
• A system for controlling and reporting qualifying attendance.
• Testing, examination, or evaluation for correspondence or home-study programs.
• Conditions for exemption from continuing education for reasons such as health, military service, or other compelling causes.

These standards shall ensure the currency of knowledge for consumer protection and competence in real estate services, permitting subject and program flexibility to address specialized practice areas and availability concerns.

10170.5

(a) A real estate license shall not be renewed unless the commissioner finds that the applicant has completed 45 clock hours of education in the four years preceding renewal, including:

• A three-hour course in ethics, professional conduct, and legal aspects of real estate.
• A three-hour course on agency relationships and duties.
• A three-hour course on trust fund accounting and handling.
• A three-hour fair housing course with an interactive component.
• A three-hour risk management course.
• A two-hour implicit bias training course addressing bias impacts and actionable steps for recognition and mitigation.
• For brokers, a three-hour course on managing real estate offices and supervising licensed activities.
• At least 18 hours of consumer protection-related courses designated by the commissioner.

(b) Subsequent renewals require a nine-hour update survey course covering the above topics. “Successful completion” involves passing a final examination.

10170.6

The commissioner may amend or repeal regulations adopted under this article, provided licensees are not deprived of the right to submit qualifying education completed under the previous regulation during their current license term for renewal purposes.

10170.8

(a) This article does not apply to a real estate licensee who has been in good standing for 30 continuous years in California and is 70 years or older.

(b) A “real estate licensee in good standing” is defined as one with an active license that has not been suspended, revoked, or restricted, and who has not surrendered a license or received an order of debarment.

10171.2

If an applicant for a license submits continuing education evidence that does not qualify, the commissioner may extend the license for 90 days to allow submission of additional evidence of compliance. If granted, the license shall expire four years from the otherwise applicable date.

10171.3

On or after January 1, 1981, a license revoked due to disciplinary action shall not be reinstated unless the applicant presents evidence of completing the continuing education required by this article. This requirement does not apply to applicants required to pass a qualifying examination under Section 10182 for reinstatement.

10171.4

A licensee applying for renewal or reinstatement after four or more years must present evidence of compliance with this article. If not provided, the commissioner may issue a temporary 90-day license. If compliance is demonstrated within 90 days, a regular license will be issued with an expiration date four years from the otherwise applicable date.

10171.5

A person licensed as a real estate broker solely as a corporate officer under Section 10158 or 10211 must complete the continuing education requirements of this article to renew their license or obtain a new license in any capacity.

ARTICLE 3. Disciplinary Action [10175 – 10186.9]

(Article 3 added by Stats. 1943, Ch. 127.)

10175

Upon grounds provided in this article and the other articles of this chapter, the license of any real estate licensee may be revoked or suspended in accordance with the provisions of this part relating to hearings.

10175.2

(a) If the Real Estate Commissioner determines that the public interest and public welfare will be adequately served by permitting a real estate licensee to pay a monetary penalty to the department in lieu of an actual license suspension, the commissioner may, on the petition of the licensee, stay the execution of all or some part of the suspension on the condition that the licensee pay a monetary penalty and the further condition that the licensee incur no other cause for disciplinary action within a period of time specified by the commissioner.

(b) The commissioner may exercise the discretion granted under subdivision (a) either with respect to a suspension ordered by a decision after a contested hearing on an accusation against the licensee or by stipulation with the licensee after the filing of an accusation, but prior to the rendering of a decision based upon the accusation. In either case, the terms and conditions of the disciplinary action against the licensee shall be made part of a formal decision of the commissioner.

(c) If a licensee fails to pay the monetary penalty in accordance with the terms and conditions of the decision of the commissioner, the commissioner may, without a hearing, order the immediate execution of all or any part of the stayed suspension in which event the licensee shall not be entitled to any repayment nor credit, prorated or otherwise, for money paid to the department under the terms of the decision.

(d) The amount of the monetary penalty payable under this section shall not exceed two hundred fifty dollars ($250) for each day of suspension stayed nor a total of ten thousand dollars ($10,000) per decision regardless of the number of days of suspension stayed under the decision.

(e) Any monetary penalty received by the department pursuant to this section shall be credited to the Consumer Recovery Account of the Real Estate Fund.

10176

The commissioner may, upon his or her own motion, and shall, upon the verified complaint in writing of any person, investigate the actions of any person engaged in the business or acting in the capacity of a real estate licensee within this state, and he or she may temporarily suspend or permanently revoke a real estate license at any time where the licensee, while a real estate licensee, in performing or attempting to perform any of the acts within the scope of this chapter has been guilty of any of the following:

• (a) Making any substantial misrepresentation.
• (b) Making any false promises of a character likely to influence, persuade, or induce.
• (c) A continued and flagrant course of misrepresentation or making of false promises through licensees.
• (d) Acting for more than one party in a transaction without the knowledge or consent of all parties thereto.
• (e) Commingling with his or her own money or property the money or other property of others which is received and held by him or her.
• (f) Claiming, demanding, or receiving a fee, compensation, or commission under any exclusive agreement authorizing a licensee to perform any acts set forth in Section 10131 for compensation or commission where the agreement does not contain a definite, specified date of final and complete termination.
• (g) The claiming or taking by a licensee of any secret or undisclosed amount of compensation, commission, or profit or the failure of a licensee to reveal to the buyer or seller contracting with the licensee the full amount of the licensee’s compensation, commission, or profit under any agreement authorizing the licensee to do any acts for which a license is required under this chapter for compensation or commission prior to or coincident with the signing of an agreement evidencing the meeting of the minds of the contracting parties, regardless of the form of the agreement, whether evidenced by documents in an escrow or by any other or different procedure.
• (h) The use by a licensee of any provision, which allows the licensee an option to purchase, in an agreement with a buyer or seller that authorizes the licensee to sell, buy, or exchange real estate or a business opportunity for compensation or commission, except when the licensee, prior to or coincident with election to exercise the option to purchase, reveals in writing to the buyer or seller the full amount of the licensee’s profit and obtains the written consent of the buyer or seller approving the amount of the profit.
• (i) Any other conduct, whether of the same or of a different character than specified in this section, which constitutes fraud or dishonest dealing.
• (j) Obtaining the signature of a prospective buyer to an agreement which provides that the prospective buyer shall either transact the purchasing, leasing, renting, or exchanging of a business opportunity property through the broker obtaining the signature, or pay a compensation to the broker if the property is purchased, leased, rented, or exchanged without the broker first having obtained the written authorization of the owner of the property concerned to offer the property for sale, lease, exchange, or rent.
• (k) Failing to disburse funds in accordance with a commitment to make a mortgage loan that is accepted by the applicant when the real estate broker represents to the applicant that the broker is either of the following:
  • (1) The lender.
  • (2) Authorized to issue the commitment on behalf of the lender or lenders in the mortgage loan transaction.
• (l) Intentionally delaying the closing of a mortgage loan for the sole purpose of increasing interest, costs, fees, or charges payable by the borrower.
• (m) Violating any section, division, or article of law which provides that a violation of that section, division, or article of law by a licensed person is a violation of that person’s licensing law, if it occurs within the scope of that person’s duties as a licensee.

10176.1

(a) (1) Whenever the commissioner takes any enforcement or disciplinary action against a licensee, and the enforcement or disciplinary action is related to escrow services provided pursuant to paragraph (4) of subdivision (a) of Section 17006 of the Financial Code, upon the action becoming final the commissioner shall notify the Insurance Commissioner and the Commissioner of Financial Protection and Innovation of the action or actions taken. The purpose of this notification is to alert the departments that enforcement or disciplinary action has been taken, if the licensee seeks or obtains employment with entities regulated by the departments.

(2) The commissioner shall provide the Insurance Commissioner and the Commissioner of Financial Protection and Innovation, in addition to the notification of the action taken, with a copy of the written accusation, statement of issues, or order issued or filed in the matter and, at the request of the Insurance Commissioner or the Commissioner of Financial Protection and Innovation, with any underlying factual material relevant to the enforcement or disciplinary action. Any confidential information provided by the commissioner to the Insurance Commissioner or the Commissioner of Financial Protection and Innovation shall not be made public pursuant to this section. Notwithstanding any other law, the disclosure of any underlying factual material to the Insurance Commissioner or the Commissioner of Financial Protection and Innovation shall not operate as a waiver of confidentiality or any privilege that the commissioner may assert.

(b) The commissioner shall establish and maintain, on the internet website maintained by the Department of Real Estate, a database of its licensees, including those who have been subject to any enforcement or disciplinary action that triggers the notification requirements of this section. The database shall also contain a direct link to the databases, described in Section 17423.1 of the Financial Code and Section 12414.31 of the Insurance Code and required to be maintained on the internet websites of the Department of Financial Protection and Innovation and the Department of Insurance, respectively, of persons who have been subject to enforcement or disciplinary action for malfeasance or misconduct related to the escrow industry by the Insurance Commissioner and the Commissioner of Financial Protection and Innovation.

(c) There shall be no liability on the part of, and no cause of action of any nature shall arise against, the State of California, the Department of Real Estate, the Real Estate Commissioner, any other state agency, or any officer, agent, employee, consultant, or contractor of the state, for the release of any false or unauthorized information pursuant to this section, unless the release of that information was done with knowledge and malice, or for the failure to release any information pursuant to this section.

10176.5

(a) The commissioner may, upon his or her own motion, and shall upon receiving a verified complaint in writing from any person, investigate an alleged violation of Article 1.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part 4 of Division 2 of the Civil Code by any real estate licensee within this state. The commissioner may suspend or revoke a licensee’s license if the licensee acting under the license has willfully or repeatedly violated any of the provisions of Article 1.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part 4 of Division 2 of the Civil Code.

(b) Notwithstanding any other provision of Article 1.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part 4 of Division 2 of the Civil Code, and in lieu of any other civil remedy, subdivision (a) of this section is the only remedy available for violations of Section 1102.6b of the Civil Code by any real estate licensee within this state.

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 a corporation, delay the renewal of a license of a corporation, or deny the issuance of a license to a corporation, if an 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 that licensee’s 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 that person’s 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 this part or Chapter 1 (commencing with Section 11000) of Part 2 or the rules and regulations of the commissioner for the administration and enforcement of this part 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, 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, or received an order of debarment, 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, suspension, or debarment 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 the officer, director, or person is required to hold a license.
• (h) As a broker licensee, failed to exercise reasonable supervision over the activities of that licensee’s salespersons, or, as the officer designated by a corporate broker licensee, failed to exercise reasonable supervision and control of the activities of the corporation 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 Financial Protection and Innovation 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 Financial Protection and Innovation 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 has not done any of the foregoing acts, either directly or through its 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, provided that any offending officer, director, or stockholder, who has done any of the foregoing acts individually and not on behalf of the corporation, has been completely disassociated from any affiliation or ownership in the corporation. 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 the licensee’s license, whichever is earlier.

10177.1

The commissioner may, without a hearing, suspend the license of any person who procured the issuance of the license to himself by fraud, misrepresentation, deceit, or by the making of any material misstatement of fact in his application for such license.

The power of the commissioner under this section to order a suspension of a license shall expire 90 days after the date of issuance of said license and the suspension itself shall remain in effect only until the effective date of a decision of the commissioner after a hearing conducted pursuant to Section 10100 and the provisions of this section.

A statement of issues as defined in Section 11504 of the Government Code shall be filed and served upon the respondent with the order of suspension. Service by certified or registered mail directed to the respondent’s current address of record on file with the commissioner shall be effective service.

The respondent shall have 30 days after service of the order of suspension and statement of issues in which to file with the commissioner a written request for hearing on the statement of issues filed against him. The commissioner shall hold a hearing within 30 days after receipt of the request therefor unless the respondent shall request or agree to a continuance thereof. If a hearing is not commenced within 30 days after receipt of the request for hearing or on the date to which continued with the agreement of respondent, or if the decision of the commissioner is not rendered within 30 days after completion of the hearing, the order of suspension shall be vacated and set aside.

A hearing conducted under this section shall in all respects, except as otherwise expressly provided herein, conform to the substantive and procedural provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code applicable to a hearing on a statement of issues.

10177.2

The commissioner may, upon his or her own motion, and shall, upon the verified complaint in writing of any person, investigate the actions of any licensee, and he or she may suspend or revoke a real estate license at any time where the licensee in performing or attempting to perform any of the acts within the scope of Section 10131.6 has been guilty of any of the following acts:

• (a) Has used a false or fictitious name, knowingly made any false statement, or knowingly concealed any material fact, in any application for the registration of a mobilehome, or otherwise committed a fraud in that application.
• (b) Failed to provide for the delivery of a properly endorsed certificate of ownership or certificate of title of a mobilehome from the seller to the buyer thereof.
• (c) Has knowingly participated in the purchase, sale, or other acquisition or disposal of a stolen mobilehome.
• (d) Has submitted a check, draft, or money order to the Department of Housing and Community Development for any obligation or fee due the state and it is thereafter dishonored or refused payment upon presentation.

10177.3

(a) No licensee shall knowingly or intentionally misrepresent the value of real property.

(b) No licensee that offers or provides an opinion of value of residential real property that is used as the basis for the origination of a mortgage loan shall have a prohibited interest in that property, within the meaning of Section 226.42(d) of Title 12 of the Code of Federal Regulations and the accompanying commentary contained in Volume 75 of the Federal Register, page 66554, dated October 28, 2010.

10177.4

(a) Notwithstanding any other provision of law, the commissioner may, after hearing in accordance with this part relating to hearings, suspend or revoke the license of a real estate licensee who claims, demands, or receives a commission, fee, or other consideration, as compensation or inducement, for referral of customers to any escrow agent, structural pest control firm, home protection company, title insurer, controlled escrow company, or underwritten title company. A licensee may not be disciplined under any provision of this part for reporting to the commissioner violations of this section by another licensee, unless the licensee making the report had guilty knowledge of, or committed or participated in, the violation of this section.

(b) The term “other consideration” as used in this section does not include any of the following:

• (1) Bona fide payments for goods or facilities actually furnished by a licensee or for services actually performed by a licensee, provided these payments are reasonably related to the value of the goods, facilities, or services furnished.
• (2) Furnishing of documents, services, information, advertising, educational materials, or items of a like nature that are customary in the real estate business and that relate to the product or services of the furnisher and that are available on a similar and essentially equal basis to all customers or the agents of the customers of the furnisher.
• (3) Moderate expenses for food, meals, beverages, and similar items furnished to individual licensees or groups or associations of licensees within a context of customary business, educational, or promotional practices pertaining to the business of the furnisher.
• (4) Items of a character and magnitude similar to those in paragraphs (2) and (3) that are promotional of the furnisher’s business customary in the real estate business, and available on a similar and essentially equal basis to all customers, or the agents of the customers, of the furnisher.

(c) Nothing in this section shall relieve any licensee of the obligation of disclosure otherwise required by this part.

10177.5

When a final judgment is obtained in a civil action against any real estate licensee upon grounds of fraud, misrepresentation, or deceit with reference to any transaction for which a license is required under this division, the commissioner may, after hearing in accordance with the provisions of this part relating to hearings, suspend or revoke the license of such real estate licensee.

10177.6

When an agent undertakes to arrange financing in connection with a sale, lease, or exchange of real property, or when a person or entity arranging financing in connection with the sale, lease, or exchange of real property undertakes to act as an agent with respect to that property, that agent, person, or entity shall, within 24 hours, make a written disclosure of those roles to all parties to the sale, lease, or exchange, and any related loan transaction. For purposes of this section, “agent” has the same meaning as defined in subdivision (a) of Section 2079.13 of the Civil Code.

10178

When any real estate salesperson is discharged by his or her responsible broker for a violation of any of the provisions of this article prescribing a ground for disciplinary action, a certified written statement of the facts with reference thereto shall be filed forthwith with the commissioner by the responsible broker, and if the responsible broker fails to notify the commissioner as required by this section, the commissioner may temporarily suspend or permanently revoke the real estate license of the responsible broker, in accordance with the provisions of this part relating to hearings.

10179

No violation of any of the provisions of this part relating to real estate or of Chapter 1 (commencing with Section 11000) of Part 2 of this division by any real estate salesperson or employee of any licensed real estate broker shall cause the revocation or suspension of the license of the responsible broker retaining the salesperson or the broker employing the employee unless it appears upon a hearing by the commissioner that the responsible broker or broker had guilty knowledge of the violation.

10180

The commissioner may deny, suspend or revoke the real estate license of a corporation as to any officer or agent acting under its license without revoking the license of the corporation.

10182

As a condition to the reinstatement of a revoked or suspended license, the commissioner may require the applicant to take and pass a qualifying examination.

10185

Any person, including officers, directors, agents or employees of corporations, 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.

10186

(a) Following an administrative proceeding, or in connection with a stipulation, when the commissioner grants the right to a license applicant or a licensee to apply for or to obtain a restricted license or restricted mortgage loan originator license endorsement, the commissioner may, in addition to any other terms and conditions placed upon the restricted licensee, require the restricted licensee to pay the monetary costs associated with monitoring the licensed activities conducted by and pursuant to the restricted license or restricted mortgage loan originator license endorsement.

(b) The commissioner may also require, as a condition precedent to the issuance of a restricted license or restricted mortgage loan originator license endorsement, that the licensee pay monetary restitution to any person who sustained damages by reason of the act or acts that led to the discipline imposed by the commissioner.

(c) The commissioner shall not renew a license or a mortgage loan originator license endorsement, and may deny an application for the removal of license restrictions or for the reinstatement of an unrestricted license, if the licensee fails to pay all of the costs he or she is ordered to pay pursuant to this section.

(d) The commissioner shall not reinstate an unrestricted license or unrestricted mortgage loan originator license endorsement, or remove restrictions from a license or license endorsement, if the petitioner has failed to pay any costs he or she was ordered to pay pursuant to this section.

(e) The commissioner may require a holder of a restricted or revoked license, who petitions the commissioner for reinstatement of his or her license pursuant to Section 11522 of the Government Code, to pay the reasonable costs of processing the petition request.

(f) All costs recovered under this section shall be considered a reimbursement for costs incurred and shall be deposited in the Real Estate Fund to be available, notwithstanding Section 10451, upon appropriation by the Legislature.

10186.1

(a) A license or an endorsement of the department shall be suspended automatically during any time that the licensee is incarcerated after conviction of a felony, regardless of whether the conviction has been appealed. The department shall, immediately upon receipt of the certified copy of the record of conviction, determine whether the license or endorsement has been automatically suspended by virtue of the licensee’s incarceration, and if so, the duration of that suspension. The department shall notify the licensee of the suspension and of the right to elect to have the issue of penalty heard as provided in subdivision (d).

(b) If after a hearing before an administrative law judge from the Office of Administrative Hearings it is determined that the felony for which the licensee was convicted was substantially related to the qualifications, functions, or duties of a licensee, the commissioner upon receipt of the certified copy of the record of conviction, shall suspend the license or endorsement until the time for appeal has elapsed, if an appeal has not been taken, or until the judgment of conviction has been affirmed on appeal or has otherwise become final, and until further order of the department.

(c) Notwithstanding subdivision (b), a conviction of a charge of violating any federal statute or regulation or any statute or regulation of this state regulating dangerous drugs or controlled substances, or a conviction of Section 187, 261, 288, or former Section 262, of the Penal Code, shall be conclusively presumed to be substantially related to the qualifications, functions, or duties of a licensee and a hearing shall not be held on this issue. However, upon its own motion or for good cause shown, the commissioner may decline to impose or may set aside the suspension when it appears to be in the interest of justice to do so, with due regard to maintaining the integrity of, and confidence in, the practice regulated by the department.

(d)(1) Discipline may be ordered against a licensee in accordance with the laws and regulations of the department when the time for appeal has elapsed, the judgment of conviction has been affirmed on appeal, or an order granting probation is made suspending the imposition of sentence, irrespective of a subsequent order under Section 1203.4 of the Penal Code allowing the person to withdraw a plea of guilty and to enter a plea of not guilty, setting aside the verdict of guilty, or dismissing the accusation, complaint, information, or indictment.

(2) The issue of penalty shall be heard by an administrative law judge from the Office of Administrative Hearings. The hearing shall not be held until the judgment of conviction has become final or, irrespective of a subsequent order under Section 1203.4 of the Penal Code, an order granting probation has been made suspending the imposition of sentence, except that a licensee may, at the licensee’s option, elect to have the issue of penalty decided before those time periods have elapsed. Where the licensee so elects, the issue of penalty shall be heard in the manner described in subdivision (b) at the hearing to determine whether the conviction was substantially related to the qualifications, functions, or duties of a licensee. If the conviction of a licensee who has made this election is overturned on appeal, any discipline ordered pursuant to this section shall automatically cease. This subdivision does not prohibit the department from pursuing disciplinary action based on any cause other than the overturned conviction.

(e) The record of the proceedings resulting in a conviction, including a transcript of the testimony in those proceedings, may be received in evidence.

(f) Any other law setting forth a procedure for the suspension or revocation of a license or endorsement issued by the department shall not apply to proceedings conducted pursuant to this section.

10186.2

(a)(1) A licensee shall report any of the following to the department:

• (A) The bringing of a criminal complaint, information, or indictment charging a felony against the licensee.
• (B) The conviction of the licensee, including any verdict of guilty, or plea of guilty or no contest, of any felony or misdemeanor.
• (C) Any disciplinary action taken by another licensing entity or authority of this state or of another state or an agency of the federal government.

(2) The report required by this subdivision shall be made in writing within 30 days of the date of the bringing of the indictment or the charging of a felony, the conviction, or the disciplinary action.

(b) Failure to make a report required by this section shall constitute a cause for discipline.

10186.9

Notwithstanding any other provision of law, on and after January 1, 2015, the department shall be subject to review by the appropriate policy committees of the Legislature.

ARTICLE 4. Fees [10200 – 10227]

(Article 4 added by Stats. 1943, Ch. 127.)

10200

All real estate license fees shall be payable in advance of issuing the licenses and at the time of filing the application. Unless otherwise provided, all licenses expire at midnight of the last day of the period for which issued.

10201

The holder of a license who fails to renew it prior to the expiration of the period for which it was issued and who has otherwise qualified for such license may renew it within two years from such expiration upon proper application and the payment of a late renewal fee in an amount equal to one and one-half times the regular renewal fee in effect at the time the license is reinstated.

10201.6

Any person who has qualified in an examination for a real estate license shall file the required application and fee for the license within one year thereafter.

10207

The amount of the real estate fees prescribed for an examination or for a license under this chapter is that fixed by the following provisions of this article. No part of any fee paid in accordance with the provisions of this chapter is refundable. It is deemed earned by the department upon its receipt.

10208.5

The real estate broker license examination fee is one hundred fifty dollars ($150), not to exceed one hundred ninety-five dollars ($195). The reexamination fee is the same. If an applicant fails to appear for the examination within two years from the application date, the application lapses.

10209

(a) The commissioner shall establish fees for applications for approval of equivalent courses of study. The fee for a course given by a private vocational school is five hundred dollars ($500), not to exceed six hundred fifty dollars ($650).

(b) Applicants will be notified of decisions within 60 days of application receipt.

10210

(a) The fee for a real estate broker license is four hundred fifty dollars ($450), not to exceed five hundred eighty-five dollars ($585). For original applicants, the fee is payable upon application.

(b) If an applicant fails to pass the examination within two years of application filing, the application lapses.

10213.5

The real estate salesperson license examination fee is one hundred dollars ($100), not to exceed one hundred thirty dollars ($130). If an applicant fails to appear for the exam within two years of filing, the application lapses.

10226

(a) The commissioner may reduce fees by regulation when sufficient to cover administrative costs. A regulation hearing will be held annually to review the financial status of the department and determine if fee reductions are warranted.

(b) If funds in the Real Estate Fund exceed 150% of the department’s authorized budget, fees will be reduced to maintain compliance with this threshold.

10227

(a) Beginning January 1, 2025, before submitting a regulatory fee increase proposal, the department will conduct a meeting with statewide membership organizations to discuss the proposal. Information about the proposal will be provided 30 days prior to the meeting.

(b) The department may implement regulations to enforce this section.

Rewrite Tracker

Current Article: 5

Completed Sections:

• Article 4: Fees [10200 – 10227]

Pending Sections:

• Article 5: Transactions in Trust Deeds and Real Property Sales Contracts [10230 – 10236.7]

ARTICLE 5

Transactions in Trust Deeds and Real Property Sales Contracts [10230 – 10236.7]

(Article 5 added by Stats. 1961, Ch. 886.)

10230

(a) The provisions of this article do not apply to the negotiation of a loan by or on behalf of a real estate broker in connection with a qualifying sale or exchange of real property in which the broker acted as the agent of one or more of the parties to the sale or exchange. The same applies to the sale or exchange of a promissory note created for financing such transactions, regardless of timing. A “qualifying” sale is subject to Article 3, Chapter 2, Title 14, Part 4, Division 3 of the Civil Code.

(b) Subdivision (a) does not apply to the negotiation of loans or sales of promissory notes if the broker has a monetary interest in the transaction as a party.

10231

No person shall accept purchase or loan funds or cause their deposit in escrow for acts described in Section 10131(d), 10131(e), or 10131.1, except for specific loans or contracts with authorization. The person must have paid for or have an unconditional contract to purchase the specific contract or promissory note secured by a trust deed.

10231.1

Persons performing acts described in Section 10131(d), 10131(e), or 10131.1 shall not retain funds payable according to promissory notes or real property contracts for over 25 days, except with a written agreement from the purchaser or lender.

10231.2

(a) A broker who proposes to solicit and accept funds for transactions in which they directly or indirectly benefit, other than lawful commissions and fees, must submit the following to the Department of Real Estate before making any representation:

• A copy of the applicable completed statement as described in Section 10232.5.
• A statement that the submission complies with Section 10231.2.

(b) A broker making a solicitation must deliver the completed statement at least 24 hours before accepting funds or binding the prospective lender. The statement shall be signed and retained by the broker for four years.

(c) This section does not apply to securities offerings under the Corporate Securities Law of 1968.

(d) If funds solicited by a corporate broker benefit an officer, director, or 10%-or-greater owner, subdivisions (a) and (b) apply.

10232

(a) Sections 10232.2, 10232.25, 10233, and 10236.6 apply to any broker who, within a 12-month period, expects to:

1. Negotiate 10 or more transactions aggregating over $1,000,000 involving:
   • Loans secured by real property or business opportunities.
   • Sales or exchanges of real property sales contracts or promissory notes secured by real property or business opportunities.
2. Collect $250,000 or more in payments on behalf of note or contract owners or obligors.

(b) A rebuttable presumption arises if a broker negotiates multiple transactions exceeding thresholds within a specific period, suggesting the broker meets the criteria of subdivision (a).

(c) Loans or sales are excluded from the criteria if the lender or purchaser is a qualified institutional investor, as specified in subdivision (c).

(d) If brokers under different management cooperate in negotiating a transaction, the transaction amount is proportionally allocated based on compensation received.

(e) A broker meeting the criteria of subdivision (a) or (b) must notify the department within 30 days.

10232.1

(a) Brokers may submit proposed advertisements for approval, accompanied by a fee of $100 to $130. If the department does not disapprove within 15 days, the advertisement is deemed approved.

(b) “Advertisement” excludes brochures or letters distributed exclusively to other brokers or previous clients and restricted to specific terms of loans, mortgages, or contracts.

(c) Subdivision (a) does not apply to securities offerings regulated by the Corporate Securities Law of 1968.

(d) Advertising approvals remain valid for five years.

10232.2

Brokers meeting the criteria of Section 10232 must annually file reports within 90 days of their fiscal year-end:

• A review of trust fund financial statements by a licensed CPA.
• A business activity report including transaction details, commissions, and default experience.

Failure to file reports may result in audits, additional fees, and potential license suspension.

10232.25

(a) Brokers meeting the criteria of Section 10232 must file quarterly trust fund status reports including:

• Compliance with trust account regulations.
• Details of trust account balances and accountability.

(b) Reports must include the preparer’s details and a declaration under penalty of perjury by the broker.

(c) Failure to file reports may result in audits, fees, and license suspension.

10232.3

Transactions involving the sale of notes secured by real property must meet strict loan-to-value (LTV) ratios, based on the property type:

• 80% for owner-occupied single-family residences.
• 75% for non-owner-occupied single-family residences.
• Lower limits apply for other property types, as detailed in the statute.

10232.4

(a) A real estate broker soliciting a loan or sale of a real property sales contract or note secured by a deed of trust shall provide the prospective lender or purchaser with a completed disclosure statement before they are obligated. The statement must be signed by the broker and the client, and copies retained for three years.

(b) Exemptions from this disclosure requirement apply to:

• Persons purchasing securities under specific permits or exemptions issued under the Corporate Securities Law of 1968.
• Sellers taking back promissory notes as part of a real property sale.
• Institutional investors, government entities, or others specified in the statute.

(c) When brokers hold funds in trust with written permission, they must provide the disclosure statement and obtain consent for disbursement before releasing the funds. Funds held without instructions must be returned to the owner within 25 days.

10232.45

(a) Brokers subject to Section 10232.3 or Article 6 must ensure that investments are suitable for their clients by evaluating:

• The client’s ability to understand the investment.
• The client’s financial capacity to bear the economic risk.
• The alignment of the investment with the client’s financial goals.

(b) Brokers must collect and document relevant information about the client, including financial situation, income, net worth, and investment experience.

(c) Records of this suitability assessment must be retained for at least four years. Brokers may use investor questionnaires approved by the commissioner to streamline compliance.

10232.5

(a) When negotiating loans secured by real property, brokers must provide prospective lenders with a disclosure statement that includes:

• The address or identification of the property securing the loan.
• The estimated market value of the property, supported by an appraisal or broker’s estimate.
• Details about the borrower’s financial condition and the loan’s terms.
• Information on any other encumbrances on the property.

(b) When selling promissory notes or contracts secured by real property, brokers must disclose similar information about the property, the obligor’s financial condition, and the terms of the contract or note.

10232.6

(a) Brokers using licensed appraisers to determine property value and delivering those appraisals to clients fulfill their disclosure obligations for fair market value.

(b) This does not apply if the appraiser is an employee of the broker, or if the broker knew or should have known the appraisal was negligently conducted or inaccurate.

(c) Brokers must still disclose their knowledge about the property’s value, regardless of appraisal use.

10233

A real estate broker servicing a promissory note or real property sales contract must:

• Obtain written authorization from the borrower or lender through a servicing agreement.
• Provide annual accountings of principal balances and payment collections.
• Notify the lender or owner within 15 days of key events, such as default notices, trustee sale notices, or significant payments.

10233.1

Brokers servicing notes or contracts must notify lenders or owners within 10 days if they use non-obligor funds to make payments protecting the security, specifying the payment date, amount, recipient, and reason.

10233.2

When brokers retain possession of notes or collateral documents while servicing loans, delivery and perfection are deemed complete if the deed of trust or assignment is recorded and the note is payable or endorsed to the lender or purchaser.

10234

(a) Brokers negotiating loans secured by trust deeds must record the trust deed in the lender’s name before disbursing funds unless the lender authorizes prior release.

(b) If funds are released early, the trust deed must be recorded or delivered to the lender within 10 days with a recommendation for prompt recording.

(c) Brokers must also record assignments for sales or exchanges of real property sales contracts or promissory notes within 10 working days.

(d) Exceptions are provided for transactions involving institutional lenders or non-residential properties under specified conditions.

10234.5

In addition to the requirements of Section 10234, when placing any loan, a broker shall deliver or cause to be delivered conformed copies of any deed of trust to both the investor or lender and the borrower within a reasonable amount of time after recording.

10235

No real estate licensee shall knowingly make or disseminate false, misleading, or deceptive advertisements about the rates, terms, or conditions of loans or real property sales contracts.

Indicating a specific yield or return on a note other than the stated interest rate is considered misleading unless the advertisement specifies the actual interest rate and discount from the principal balance.

10235.5

(a) A real estate licensee or mortgage loan originator shall display their Department of Real Estate number and unique identifier from the Nationwide Multistate Licensing System and Registry (NMLS) in all advertisements for loans disseminated in California.

(b) Definitions:

• “Mortgage loan originator” and “unique identifier” have the meanings provided in Section 10166.01.
• “Nationwide Multistate Licensing System and Registry” refers to the system governing mortgage loan licensing.

10236

The commissioner may honor requests for interpretive opinions regarding the provisions or regulations of this article.

No liability shall be imposed for actions taken in good faith based on written interpretive opinions of the commissioner or Attorney General, even if the opinions are later amended, rescinded, or invalidated.

10236.1

No real estate licensee shall advertise or offer premiums, gifts, or objects of value as an inducement for making a loan or purchasing promissory notes secured by real property or sales contracts.

10236.2

(a) A real estate broker meeting the criteria of Section 10232 must notify the Department of Real Estate within 30 days of meeting the criteria. Failure to notify results in penalties as follows:

• $50 per day for the first 30 days.
• $100 per day starting on the 31st day, up to a maximum of $10,000.

(b) Failure to pay penalties may result in license suspension or revocation. The commissioner may pursue legal action for collection.

(c) Penalties collected are deposited into the Consumer Recovery Account of the Real Estate Fund.

10236.4

(a) Licensed real estate brokers must display their license number in advertisements soliciting borrowers or investors. Mortgage loan originators must display their NMLS unique identifier in such advertisements.

(b) Disclosures required by Sections 10232.4 and 10240 must include the licensee’s license number, the mortgage loan originator’s unique identifier (if applicable), and the department’s license information telephone number.

(c) Definitions:

• “Mortgage loan originator,” “unique identifier,” and “Nationwide Multistate Licensing System and Registry” have the meanings defined in Section 10166.01.

10234.5

In addition to the requirements of Section 10234, when placing any loan, a broker shall deliver or cause to be delivered conformed copies of any deed of trust to both the investor or lender and the borrower within a reasonable amount of time after recording.

10235

No real estate licensee shall knowingly make or disseminate false, misleading, or deceptive advertisements about the rates, terms, or conditions of loans or real property sales contracts.

Indicating a specific yield or return on a note other than the stated interest rate is considered misleading unless the advertisement specifies the actual interest rate and discount from the principal balance.

10235.5

(a) A real estate licensee or mortgage loan originator shall display their Department of Real Estate number and unique identifier from the Nationwide Multistate Licensing System and Registry (NMLS) in all advertisements for loans disseminated in California.

(b) Definitions:

• “Mortgage loan originator” and “unique identifier” have the meanings provided in Section 10166.01.
• “Nationwide Multistate Licensing System and Registry” refers to the system governing mortgage loan licensing.

10236

The commissioner may honor requests for interpretive opinions regarding the provisions or regulations of this article.

No liability shall be imposed for actions taken in good faith based on written interpretive opinions of the commissioner or Attorney General, even if the opinions are later amended, rescinded, or invalidated.

10236.1

No real estate licensee shall advertise or offer premiums, gifts, or objects of value as an inducement for making a loan or purchasing promissory notes secured by real property or sales contracts.

10236.2

(a) A real estate broker meeting the criteria of Section 10232 must notify the Department of Real Estate within 30 days of meeting the criteria. Failure to notify results in penalties as follows:

• $50 per day for the first 30 days.
• $100 per day starting on the 31st day, up to a maximum of $10,000.

(b) Failure to pay penalties may result in license suspension or revocation. The commissioner may pursue legal action for collection.

(c) Penalties collected are deposited into the Consumer Recovery Account of the Real Estate Fund.

10236.4

(a) Licensed real estate brokers must display their license number in advertisements soliciting borrowers or investors. Mortgage loan originators must display their NMLS unique identifier in such advertisements.

(b) Disclosures required by Sections 10232.4 and 10240 must include the licensee’s license number, the mortgage loan originator’s unique identifier (if applicable), and the department’s license information telephone number.

(c) Definitions:

• “Mortgage loan originator,” “unique identifier,” and “Nationwide Multistate Licensing System and Registry” have the meanings defined in Section 10166.01.

10236.5

A real estate broker shall notify the Department of Real Estate when they are no longer servicing or arranging loans that are subject to the reporting requirements of Section 10232. If a broker has already submitted the required reports for the year, they shall continue filing reports for that year but must notify the department prior to the year’s end that they will cease servicing or arranging loans requiring such reports. The department’s records, including those disclosed through its license information telephone number, must then be updated accordingly.

10236.6

(a) The commissioner, in his or her discretion, may audit any broker who conducts transactions subject to the provisions of this article. The audit shall be conducted after reasonable notice to the broker and shall include an examination of both of the following:

(1) Trust accounts under the control of the broker or in any manner affiliated with the broker.

(2) Nontrust accounts under the control of the broker or in any manner affiliated with the broker to which funds from trust accounts have been deposited other than for the payment of commissions, fees, costs, or expenses due to or incurred by the broker.

(b) The authority to audit these nontrust accounts shall be limited to instances where either an annual review or audit conducted by an independent certified public accountant or a departmental audit reveals unauthorized transfers of money to those accounts.

10236.7

(a) A real estate broker, when engaging in acts for which a license is required, who arranges a transaction pursuant to Article 6 (commencing with Section 10237) or one or more provisions of the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code), shall clearly indicate in the real estate broker’s transaction file the provision or provisions of this code or the Corporate Securities Law of 1968 pertaining to qualification or exemption from qualification under which the transaction is being conducted. The real estate broker shall retain this information for the period specified in subdivision (a) of Section 10148.

(b) The real estate broker shall submit a copy of the information described in subdivision (a) to any investor from whom the real estate broker obtains funds in connection with the transaction, either directly or through an agent or affiliate, within 10 days of receipt of those funds.

ARTICLE 6. Claim of Exemption From Securities Qualification [10237 – 10239.3]

(Article 6 added by Stats. 2003, Ch. 901, Sec. 2.)

10237

This article applies only to the exemption from securities qualification claimed under Section 25102.5 of the Corporations Code. This article does not apply to any other exemption from securities qualification, including subdivision (e) of Section 25102 of the Corporations Code, that may be claimed without complying with this article, or to any permit to qualify the offer and sale of securities under the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code). Any transaction that involves the sale of or offer to sell a series of notes secured directly by interests in one or more parcels of real property, or the sale of undivided interests in a note secured directly by one or more parcels of real property equivalent to a series transaction, shall comply with all of the provisions of this article.

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 Street ____________________ City ____________ State ______ ZIP 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 or of Designated Officer of Corporate Broker: ____________________________
Type Name of Person(s) Signing This Notice: ______________________________________

NOTE: AN AMENDED NOTICE MUST BE FILED BY THE BROKER WITHIN 30 DAYS OF ANY MATERIAL CHANGE
IN THE INFORMATION REQUIRED TO BE SET FORTH HEREIN.
    

(b) A broker or person who becomes the servicing agent for notes or interests sold pursuant to this article, upon which payments due during any period of three consecutive months in the aggregate exceed one hundred twenty-five thousand dollars ($125,000) or the number of persons entitled to the payments exceeds 120, shall file the notice required by subdivision (a) with the commissioner within 30 days after becoming the servicing agent.

(c) All advertising used for transactions under this article shall show the name of the broker and comply with Section 10235 of this code and Sections 260.302 and 2848 of Title 10 of the California Code of Regulations. Brokers and their agents are cautioned that a reference to a prospective investor that a transaction is conducted under this article may be deemed misleading or deceptive if this representation may reasonably be construed by the investor as an implication of merit or approval of the transaction.

(d) Each parcel of real property directly securing the notes or interests shall be located in this state, the note or notes shall not by their terms be subject to subordination to any subsequently created deed of trust upon the real property, and the note or notes shall not be promotional notes secured by liens on separate parcels of real property in one subdivision or in contiguous subdivisions. For purposes of this subdivision, a promotional note means a promissory note secured by a trust deed, executed on unimproved real property or executed after construction of an improvement of the property but before the first purchase of the property as so improved, or executed as a means of financing the first purchase of the property as so improved, that is subordinate, or by its terms may become subordinate, to any other trust deed on the property. However, the term “promotional note” does not include either of the following:

• (1) A note that was executed in excess of three years prior to being offered for sale.
• (2) A note secured by a first trust deed on real property in a subdivision that evidences a bona fide loan made in connection with the financing of the usual cost of the development in a residential, commercial, or industrial building or buildings on the property under a written agreement providing for the disbursement of the loan funds as costs are incurred or in relation to the progress of the work and providing for title insurance insuring the priority of the security as against mechanic’s and materialmen’s liens or for the final disbursement of at least 10 percent of the loan funds after the expiration of the period for the filing of mechanic’s and materialmen’s liens.

(e) The notes or interests shall be sold by or through a real estate broker, as principal or agent. At the time the notes or interests are originally sold or assigned, neither the broker nor an affiliate of the broker shall have an interest as owner, lessor, or developer of the property securing the loan, or any contractual right to acquire, lease, or develop the property securing the loan. This provision does not prohibit a broker from conducting the following transactions if, in either case, the disclosure statement furnished by the broker pursuant to subdivision (l) discloses the interest of the broker or affiliate in the transaction and the circumstances under which the broker or affiliate acquired the interest:

• (1) A transaction in which the broker or an affiliate of the broker is acquiring the property pursuant to a foreclosure under, or sale pursuant to, a deed of trust securing a note for which the broker is the servicing agent or that the broker sold to the holder or holders.
• (2) A transaction in which the broker or an affiliate of the broker is reselling from inventory property acquired by the broker pursuant to a foreclosure under, or sale pursuant to, a deed of trust securing a note for which the broker is the servicing agent or that the broker sold to the holder or holders.

(f) (1) The notes or interests shall not be sold to more than 10 persons, each of whom meets one or both of the qualifications of income or net worth set forth below and signs a statement, which shall be retained by the broker for four years, conforming to the following:

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: _______________________________
    

(2) The number of offerees shall not be considered for the purposes of this section.

(3) Spouses and their dependents, and an individual and his or her dependents, shall be counted as one person.

(4) A retirement plan, trust, business trust, corporation, or other entity that is wholly owned by an individual and the individual’s spouse or the individual’s dependents, or any combination thereof, shall not be counted separately from the individual, but the investments of these entities shall be aggregated with those of the individual for the purposes of the statement required by paragraph (1). If the investments of any entities are required to be aggregated under this subdivision, the adjusted gross income or net worth of these entities may also be aggregated with the net worth, income, or both, of the individual.

(5) The “institutional investors” enumerated in subdivision (i) of Section 25102 or subdivision (c) of Section 25104 of the Corporations Code, or in a rule adopted pursuant thereto, shall not be counted.

(6) A partnership, limited liability company, corporation, or other organization that was not specifically formed for the purpose of purchasing the security offered in reliance upon this exemption from securities qualification is counted as one person.

(g) The notes or interests of the purchasers shall be identical in their underlying terms, including the right to direct or require foreclosure, rights to and rate of interest, and other incidents of being a lender, and the sale to each purchaser pursuant to this section shall be upon the same terms, subject to adjustment for the face or principal amount or percentage interest purchased and for interest earned or accrued. This subdivision does not preclude different selling prices for interests to the extent that these differences are reasonably related to changes in the market value of the loan occurring between the sales of these interests. The interest of each purchaser shall be recorded pursuant to subdivisions (a) to (c), inclusive, of Section 10234.

(h) (1) Except as provided in paragraph (2), the aggregate principal amount of the notes or interests sold, together with the unpaid principal amount of any encumbrances upon the real property senior thereto, shall not exceed the following percentages of the current market value of each parcel of the real property, as determined in writing by the broker or appraiser pursuant to Section 10232.6, plus the amount for which the payment of principal and interest in excess of the percentage of current market value is insured for the benefit of the holders of the notes or interests by an insurer admitted to do business in this state by the Insurance Commissioner:

(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%
    

(2) The percentage amounts specified in paragraph (1) may be exceeded when and to the extent that the broker determines that the encumbrance of the property in excess of these percentages is reasonable and prudent considering all relevant factors pertaining to the real property. However, in no event shall the aggregate principal amount of the notes or interests sold, together with the unpaid principal amount of any encumbrances upon the property senior thereto, exceed 80 percent of the current fair market value of improved real property or 50 percent of the current fair market value of unimproved real property, except in the case of a single-family zoned lot or parcel as defined in paragraph (1), which shall not exceed 65 percent of the current fair market value of that lot or parcel, plus the amount insured as specified in paragraph (1). A written statement shall be prepared by the broker that sets forth the material considerations and facts that the broker relies upon for his or her determination, which shall be retained as a part of the broker’s record of the transaction. Either a copy of the statement or the information contained therein shall be included in the disclosures required pursuant to subdivision (l).

(3) A copy of the appraisal or the broker’s evaluation, for each parcel of real property securing the notes or interests, shall be delivered to each purchaser. For purposes of this paragraph, “appraisal” means a written estimate of value based upon the assembling, analyzing, and reconciling of facts and value indicators for the real property in question. A broker shall not purport to make an appraisal unless he or she is qualified on the basis of special training, preparation, or experience.

(4) For construction or rehabilitation loans, the term “current market value” may be deemed to be the value of the completed project if the following safeguards are met:

• (A) An independent neutral third-party escrow holder is used for all deposits and disbursements.
• (B) The loan is fully funded, with the entire loan amount to be deposited in escrow prior to the recording of the deed or deeds of trust.
• (C) A comprehensive, detailed draw schedule is used to ensure proper and timely disbursements to allow for completion of the project.
• (D) The disbursement draws from the escrow account are based on verification from an independent qualified person who certifies that the work completed to date meets the related codes and standards and that the draws were made in accordance with the construction contract and draw schedule. For purposes of this subparagraph, “independent qualified person” means a person who is not an employee, agent, or affiliate of the broker and who is a licensed architect, general contractor, structural engineer, or active local government building inspector acting in his or her official capacity.
• (E) An appraisal is completed by a qualified and licensed appraiser in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP).
• (F) In addition to the transaction documentation required by subdivision (i), the documentation shall include a detailed description of actions that may be taken in the event of a failure to complete the project, whether that failure is due to default, insufficiency of funds, or other causes.
• (G) The entire amount of the loan does not exceed two million five hundred thousand dollars ($2,500,000).

(5) If a note or an interest will be secured by more than one parcel of real property, for the purpose of determining the maximum amount of the note or interest, each security property shall be assigned a portion of the note or interest that shall not exceed the percentage of current market value determined by, and in accordance with, the provisions of paragraphs (1) and (2).

(i) The documentation of the transaction shall require both of the following:

• (1) A default upon any note or interest is a default upon all notes or interests.
• (2) The holders of more than 50 percent of the recorded beneficial interests of the notes or interests may govern the actions to be taken on behalf of all holders in accordance with Section 2941.9 of the Civil Code in the event of default or foreclosure for matters that require direction or approval of the holders, including designation of the broker, servicing agent, or other person acting on their behalf, and the sale, encumbrance, or lease of real property owned by the holders resulting from foreclosure or receipt of a deed in lieu of foreclosure. The terms called for by this subdivision may be included in the deed of trust, in the assignment of interests, or in any other documentation as is necessary or appropriate to make them binding on the parties.

(j)(1) The broker shall not accept any purchase or loan funds or other consideration from a prospective lender or purchaser, or directly or indirectly cause the funds or other consideration to be deposited in an escrow or trust account, except as to a specific loan or note secured by a deed of trust that the broker owns, is authorized to negotiate, or is unconditionally obligated to buy.

(2) All funds received by the broker from the purchasers or lenders shall be handled in accordance with Section 10145 for disbursement to the persons thereto entitled upon recordation of the interests of the purchasers or lenders in the note and deed of trust. No provision of this article shall be construed as modifying or superseding applicable law regulating the escrow holder in any transaction or the handling of the escrow account.

(3) The books and records of the broker or servicing agent, or both, shall be maintained in a manner that readily identifies transactions under this article and the receipt and disbursement of funds in connection with these transactions.

(4) If required by paragraph (3) of subdivision (k), the review by the independent certified public accountant shall include a sample of transactions, as reflected in the records of the trust account required pursuant to paragraph (1) of subdivision (k), and the bank statements and supporting documents. These documents shall be reviewed for compliance with this article with respect to the handling and distribution of funds. The sample shall be selected at random by the accountant from all these transactions and shall consist of both of the following:

• (A) Three sales made or 5 percent of the sales made pursuant to this article during the period for which the examination is conducted, whichever is greater.
• (B) Ten payments processed or 2 percent of payments processed under this article during the period for which the examination is conducted, whichever is greater.

(5) For the purposes of this subdivision, the transaction that constitutes a “sale” is the series of transactions by which a series of notes of a maker, or the interests in the note of a maker, are sold or issued to their various purchasers under this article, including all receipts and disbursements in that process of funds received from the purchasers or lenders. The transaction that constitutes a “payment,” for the purposes of this subdivision, is the receipt of a payment from the person obligated on the note or from some other person on behalf of the person so obligated, including the broker or servicing agent, and the distribution of that payment to the persons entitled thereto. If a payment involves an advance paid by the broker or servicing agent as the result of a dishonored check, the inspection shall identify the source of funds from which the payment was made or, in the alternative, the steps that are reasonably necessary to determine that there was not a disbursement of trust funds. The accountant shall inspect for compliance with the following specific provisions of this section: paragraphs (1), (2), and (3) of this subdivision and paragraphs (1) and (2) of subdivision (k).

(6) Within 30 days of the close of the period for which the report is made, or within any additional time as the commissioner may in writing allow in a particular case, the accountant shall forward to the broker or servicing agent, as the case may be, and to the commissioner, the report of the accountant, stating that the inspection was performed in accordance with this section, listing the sales and the payments examined, specifying the nature of the deficiencies, if any, noted by the accountant with respect to each sale or payment, together with any further information as the accountant may wish to include, such as corrective steps taken with respect to any deficiency so noted, or stating that no deficiencies were observed. If the broker meets the threshold criteria of Section 10232, the report of the accountant shall be submitted as part of the quarterly reports required under Section 10232.25.

(k) The notes or interests shall be sold subject to a written agreement that obligates a licensed real estate broker, or a person exempted from the licensing requirement for real estate brokers under this chapter, to act as agent for the purchasers or lenders to service the note or notes and deed of trust, including the receipt and transmission of payments and the institution of foreclosure proceedings in the event of a default. A copy of this servicing agreement shall be delivered to each purchaser. The broker shall offer to the lenders or purchasers the services of the broker or one or more affiliates of the broker, or both, as servicing agent for each transaction conducted pursuant to this article. The agreement shall require all of the following:

• (1)(A) That payments received on the note or notes be deposited immediately to a trust account maintained in accordance with this section and with the provisions for trust accounts of licensed real estate brokers contained in Section 10145 and Article 15 (commencing with Section 2830.1) of Chapter 6 of Title 10 of the California Code of Regulations.
  (B) That payments deposited pursuant to subparagraph (A) shall not be commingled with the assets of the servicing agent or used for any transaction other than the transaction for which the funds are received.
• (2) That payments received on the note or notes shall be transmitted to the purchasers or lenders pro rata according to their respective interests within 25 days after receipt thereof by the agent. If the source for the payment is not the maker of the note, the agent shall inform the purchasers or lenders in writing of the source for payment. A broker or servicing agent who transmits to the purchaser or lenders the broker’s or servicing agent’s own funds to cover payments due from the borrower but unpaid as a result of a dishonored check may recover the amount of the advances from the trust fund when the past due payment is received. However, this article does not authorize the broker, servicing agent, or any other person to issue, or to engage in any practice constituting, any guarantee or to engage in the practice of advancing payments on behalf of the borrower.
• (3) If the broker or person who is or becomes the servicing agent for notes or interests sold pursuant to this article upon which the payments due during any period of three consecutive months in the aggregate exceed one hundred twenty-five thousand dollars ($125,000) or the number of persons entitled to the payments exceeds 120, the trust account or accounts of that broker or affiliate shall be inspected by an independent certified public accountant at no less than three-month intervals during the time the volume is maintained. Within 30 days after the close of the period for which the review is made, the report of the accountant shall be forwarded as provided in paragraph (6) of subdivision (j). If the broker is required to file an annual report pursuant to subdivision (o) or pursuant to Section 10232.2, the quarterly report pursuant to this subdivision need not be filed for the last quarter of the year for which the annual report is made. For the purposes of this subdivision, an affiliate of a broker is any person controlled by, controlling, or under common control with the broker.
• (4) Unless the servicing agent will receive notice pursuant to Section 2924b of the Civil Code, the servicing agent shall file a written request for notice of default upon any prior encumbrances and promptly notify the purchasers or lenders of any default on the prior encumbrances or on the note or notes subject to the servicing agreement.
• (5) The servicing agent shall promptly forward copies of both of the following to each purchaser or lender:
  • (A) Any notice of trustee sale filed on behalf of the purchasers or lenders.
  • (B) Any request for reconveyance of the deed of trust received on behalf of the purchasers or lenders.

(l) The broker shall disclose in writing to each purchaser or lender the material facts concerning the transaction on a disclosure form adopted or approved by the commissioner pursuant to Section 10232.5, subject to the following:

• (1) The disclosure form shall include a description of the terms upon which the note and deed of trust are being sold, including the terms of the undivided interests being offered therein, including the following:
  • (A) In the case of the sale of an existing note:
    
    (i) The aggregate sale price of the note.
    (ii) The percent of the premium over or discount from the principal balance plus accrued but unpaid interest.
    (iii) The effective rate of return to the purchasers if the note is paid according to its terms.
    (iv) The name and address of the escrow holder for the transaction.
    (v) A description of, and the estimated amount of, each cost payable by the seller in connection with the sale and a description of, and the estimated amount of, each cost payable by the purchasers in connection with the sale.
  • (B) In the case of the origination of a note:
    
    (i) The name and address of the escrow holder for the transaction.
    (ii) The anticipated closing date.
    (iii) A description of, and the estimated amount of, each cost payable by the borrower in connection with the loan and a description of, and the estimated amount of, each cost payable by the lenders in connection with the loan.
  • (C) In the case of a transaction involving a note or interest secured by more than one parcel of real property, in addition to the requirements of subparagraphs (A) and (B):
    • (i) The address, description, and estimated fair market value of each property securing the loan.
    • (ii) The amount of the available equity in each property securing the loan after the loan amount to be apportioned to each property is assigned.
    • (iii) The loan to value percentage for each property after the loan amount to be apportioned to each property is assigned pursuant to subdivision (h).
• (2) A copy of the written statement or information contained therein, as required by paragraph (2) of subdivision (h), shall be included in the disclosure form.
• (3) Any interest of the broker or affiliate in the transaction, as described in subdivision (e), shall be included with the disclosure form.
• (4) When the particular circumstances of a transaction make information not specified in the disclosure form material or essential to keep the information provided in the form from being misleading, and the other information is known to the broker, the other information shall also be provided by the broker.
• (5) If more than one parcel of real property secures the notes or interests, the disclosure form shall also fully disclose any risks to investors associated with securing the notes or interests with multiple parcels of real property.

(m) The broker or servicing agent shall furnish any purchaser of a note or interest, upon request, with the names and addresses of the purchasers of the other notes or interests in the loan.

(n) No agreement in connection with a transaction covered by this article shall grant to the real estate broker, the servicing agent, or any affiliate of the broker or agent the option or election to acquire the interests of the purchasers or lenders or to acquire the real property securing the interests. This subdivision shall not prohibit the broker or affiliate from acquiring the interests, with the consent of the purchasers or lenders whose interests are being purchased, or the property, with the written consent of the purchasers or lenders, if the consent is given at the time of the acquisition.

(o) Each broker who conducts transactions under this article, or broker or person who becomes the servicing agent for notes or interests sold pursuant to this article, who meets the criteria of paragraph (3) of subdivision (k) shall file with the commissioner an annual report of a review of its trust account. The report shall be prepared and filed in accordance with subdivision (a) of Section 10232.2 and the rules and procedures thereunder of the commissioner. That report shall cover the broker’s transactions under this article and, if the broker also meets the threshold criteria set forth in Section 10232, the broker’s transactions subject to that section shall be included as well.

(p) Each broker conducting transactions pursuant to this article, or broker or person who becomes the servicing agent for notes or interests sold pursuant to this article, who meets the criteria of paragraph (3) of subdivision (k) shall file with the commissioner a report of the transactions that is prepared in accordance with subdivision (c) of Section 10232.2. If the broker also meets the threshold criteria of Section 10232, the report shall also include the transactions subject to that section. This report shall be confidential pursuant to subdivision (f) of Section 10232.2.

10239

The jurisdiction of the Commissioner of Financial Protection and Innovation under the Corporate Securities Law of 1968 shall be neither limited nor expanded by this article. Nothing in this article shall be construed to supersede or restrict the application of the Corporate Securities Law of 1968. A transaction under this article shall not be construed to be a transaction involving the issuance of securities subject to authorization by the Real Estate Commissioner under subdivision (e) of Section 25100 of the Corporations Code.

10239.1

Nothing in this article shall be construed to change the agency relationships between the parties where they exist or limit in any manner the fiduciary duty of brokers to borrowers, lenders, and purchasers of notes or interests in transactions subject to this article.

10239.2

For the purposes of this article, the following definitions shall apply:

(a) “Broker” means a person licensed as a broker under this part.

(b) “Affiliate” means a person controlled by, controlling, or under common control with, the broker.

(c) “Servicing agent” means the real estate broker or person exempted from the licensing requirements for real estate brokers under this chapter, to act as agent for the purchasers or lenders to service the notes and deeds of trust, including the handling the receipt and transmission of payments and the institution of foreclosure proceedings in the event of a default.

(d) Except as provided in paragraph (5) of subdivision (j) of Section 10238, the terms “sale” and “offer to sell,” shall have the same meaning as set forth in Section 25017 of the Corporations Code and include the acts of negotiating and arranging the transaction.

10239.3

(a) If any person other than a real estate broker makes or keeps any of the books, accounts, or other records maintained in connection with a transaction described in this article, the provisions of this article and of any regulation or order issued under this section shall apply to the person with respect to the performance of those services and with respect to those books, accounts, and other records to the same extent as if the person were the broker.

(b) If any person other than an affiliate of a broker makes or keeps any of the books, accounts, or other records maintained in connection with a transaction described in this article, or in the case of an affiliate other than a parent or subsidiary of the broker, the provisions of this article and of any regulation or order issued under this article shall apply to the person with respect to those books, accounts, and other records to the same extent as if the person were the affiliate.

ARTICLE 8. Out-of-State Land Promotions [10249 – 10249.93]

(Article 8 added by Stats. 1963, Ch. 1819.)

10249

(a) A person acting as a principal or agent who intends, in this state, to sell or lease or offer for sale or lease lots, parcels, or interests in a subdivision, as defined in Section 10249.1, situated outside of this state but within the United States, shall, prior to a sale, lease, or offer, register the subdivision with the commissioner. An application for registration shall be made on a form acceptable to the commissioner and include, together with a fee, a description of the offering, certification by the applicant that the subdivision is in compliance with all applicable requirements of the state or states wherein the project is located, evidence of this compliance, if applicable, and a consent to service as described in Section 10249.92.

(b) The commissioner, within 10 days of receipt of an application of registration, shall provide the applicant with notice of the completion of the registration or a notice of deficiency. If the department does not provide a notice within 10 days, the registration shall be deemed complete.

10249.1

“Subdivision,” as used in Section 10249, includes all of the following:

• (a) Improved or unimproved land or lands divided or proposed to be divided for the purpose of sale or lease, whether immediate or future, into five or more lots or parcels.
• (b) Improved or unimproved land or lands in which, for the purpose of sale or lease, whether immediate or future, five or more undivided interests are created or proposed to be created.
• (c) “Subdivision,” as defined in Section 11004.5, excluding “subdivision” as defined in subdivision (e) of that section.

10249.3

(a) The commissioner may by regulation prescribe filing fees in connection with registrations with the department pursuant to the provisions of this article that are lower than the maximum fees specified in subdivision (b) if the commissioner determines that the lower fees are sufficient to offset the costs and expenses incurred in the administration of this article. The commissioner shall hold at least one hearing each calendar year to determine if lower fees than those specified in subdivision (b) should be prescribed. At this hearing, the department shall report on the financial status of the department, including the revenues, expenditures, and reserves as of the end of the previous fiscal year. The department shall post a hearing notice 15 days in advance of the hearing that includes the required information about the financial status of the department.

(b) The filing fee for an application for a registration with the department pursuant to the provisions of this article shall be set at the amount prescribed below and shall not exceed the maximum specified for each subdivision or phase of the subdivision in which interests are to be offered for sale or lease:

• (1) An application for an original registration: One hundred dollars ($100), not to exceed one hundred thirty dollars ($130).
• (2) An application for a renewal registration: One hundred dollars ($100), not to exceed one hundred thirty dollars ($130).
• (3) An application for an amended registration: One hundred dollars ($100), not to exceed one hundred thirty dollars ($130).

(c) All fees collected by the Department of Real Estate under authority of this article shall be deposited into the Real Estate Fund under Chapter 6 (commencing with Section 10450) of Part 1. All fees received by the department pursuant to the provisions of this article shall be deemed earned upon receipt. No part of any fee is refundable unless the commissioner determines that it was paid as a result of mistake or inadvertence.

10249.8

(a) Notwithstanding any provision to the contrary in Section 10249 or 11000, it is unlawful for a person, in this state, to sell or lease or offer for sale or lease lots, parcels, or interests in a subdivision, as defined in Section 10249.1, entirely located outside of this state but within the United States, unless any printed material, literature, advertising, or invitation in this state relating to that sale, lease, or offer clearly and conspicuously contains the following disclaimer in at least 10-point type:

WARNING: THE CALIFORNIA DEPARTMENT OF REAL ESTATE HAS NOT INSPECTED, EXAMINED, OR QUALIFIED THIS OFFERING.
    

(b) If an offer on property described in subdivision (a) is not initially made in writing, the disclaimer set forth in subdivision (c) shall be received by the offeree in writing prior to a visit to a location, sales presentation, or contact with a person representing the offeror, when the visit or contact was scheduled or arranged by the offeror or its representative. The deposit of the disclaimer in the United States mail, addressed to the offeree and with first-class postage prepaid, at least five days prior to the scheduled or arranged visit or contact, shall be deemed to constitute delivery for purposes of this section.

(c) If a California resident is presented with an agreement or contract to lease or purchase any property described in subdivision (a), when an offer to lease or purchase that property was made to that resident in California, a copy of the disclaimer set forth in this subdivision shall be inserted in at least 10-point type at the top of the first page of that agreement or contract and shall be initialed by that California resident.

WARNING: THE CALIFORNIA DEPARTMENT OF REAL ESTATE HAS NOT QUALIFIED, INSPECTED, OR EXAMINED THIS OFFERING,
INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT (IF ANY),
ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER PROJECT MANAGEMENT, RACIALLY
DISCRIMINATORY PRACTICES (IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS
(IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE ADVISABLE FOR YOU TO
CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW
IN THE STATE WHERE THIS SUBDIVISION IS SITUATED.
    

10249.9

(a) Notwithstanding any provision to the contrary in Section 10249 or 11000, it is unlawful for a person, in this state, to sell or lease or offer for sale or lease a lot, parcel, or interest in a subdivision, located outside the United States, unless the printed material, literature, advertising, or invitation in this state relating to that sale, lease, or offer clearly and conspicuously contains the following disclaimer in at least 10-point capital type:

WARNING: THE CALIFORNIA DEPARTMENT OF REAL ESTATE HAS NOT EXAMINED THIS OFFERING, INCLUDING, BUT NOT LIMITED
TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT (IF ANY), ARRANGEMENTS TO ASSURE PROJECT
COMPLETION, ESCROW PRACTICES, CONTROL OVER PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES (IF ANY),
TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS (IF ANY), OR THE AVAILABILITY
OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR
OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE COUNTRY
WHERE THIS SUBDIVISION IS SITUATED.
    

(b) If an offer on property described in subdivision (a) is not initially made in writing, the foregoing disclaimer shall be received by the offeree in writing prior to a visit to a location, sales presentation, or contact with a person representing the offeror, when the visit or contact was scheduled or arranged by the offeror or its representative. The deposit of the disclaimer in the United States mail, addressed to the offeree and with first-class postage prepaid, at least five days prior to the scheduled or arranged visit or contact, shall be deemed to constitute delivery for purposes of this section.

(c) If any California resident is presented with an agreement or contract to lease or purchase a property described in subdivision (a), when an offer to lease or purchase that property was made to that resident in California, a copy of the disclaimer set forth in subdivision (a) shall be inserted in at least 10-point type at the top of the first page of that agreement or contract and shall be initialed by that California resident.

10249.91

The term of a registration issued pursuant to this article shall be one year, unless the commissioner by regulation prescribes a longer term.

10249.92

A registration application pursuant to the provisions of this article shall be accompanied by an irrevocable consent stating that if in any action commenced against the applicant in this state personal service of process upon the applicant cannot be made after the exercise of due diligence, a valid service may thereupon be made upon the applicant by delivering the process to the Secretary of State.

Insofar as possible, the provisions of Section 1018 of the Code of Civil Procedure relating to service of process on the Secretary of State are applicable to this section.

10249.93

(a) If the commissioner finds, based on available evidence, that a person is violating any provision of this article or a regulation of the commissioner adopted to implement a provision of this article, the commissioner may order the person to cease and desist from committing the violation or to cease and desist from the further sale or lease of an interest in the subdivision until the violation is corrected.

(b) A person to whom an order is directed shall, upon receipt of the order, immediately cease the activity described in the order.

(c) The person to whom the order is directed may request a hearing in accordance with subdivision (c) of Section 11019.