california real estate law 2010

8/9/2019 California Real Estate Law 2010

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REAL ESTATE LAW AND SUBDIVIDED LANDS LAW

As amended and in effect January 1, 2010

From the Business a nd Professions Co d e

DIVISION 4. REAL ESTATE

PART 1. LICENSING OF PERSONSCHAPTER 1. GENERAL PROVISIONS

Definitions

10000. This part may be cited as the Real EstateLaw.

10001. The definitions in this chapter apply tothe provisions of this part only and do not affectany other provisions of this code.

10003.Commissioner refers to the Real Estate

Commissioner.

10004. Department means the Department ofReal Estate in the Business and TransportationAgency.

10005. Whenever the terms division, StateReal Estate Division, or Real Estate Divisionare used in this division, they mean theDepartment of Real Estate.

Whenever the terms State Real Estate

Division or Real Estate Division are used inany other law, they mean the Department ofReal Estate.

10006.Person includes corporation, companyand firm.

10007. Provisions of this part relating to realestate refers to the provisions of Chapters 1, 2,3 and 6 of Part 1.

10008. Provisions of this part relating to

business opportunity regulation refers to theprovisions of Chapters 1, 2, and 6 of Part 1.

10008.5. Solely with regard to any transactioninvolving the sale, lease, or exchange of abusiness opportunity occurring before, on, orafter the effective date of this section, thisdivision shall not apply to any person licensed atthe time of the transaction as a securities brokeror securities dealer under any law of this state orof the United States, or by any employee,officer, or agent of that person while acting

under the direction of, and within the scope of,

his or her employment with that person inconnection with the transaction.

As used in this section, any transactioninvolving the sale, lease, or exchange of abusiness opportunity does not include any ofthe acts described in Section 10131 or Section10131.2 if the substance of the transaction is totransfer, sell, lease, or exchange an interest inreal property for the purpose of evading thispart.

10009.5. Provisions of this part relating tomineral, oil and gas brokerage refers to theprovisions of Chapters 1, 2, 6 and 7, of Part 1.

10010. Provisions of this part relating tohearings refers to the provisions of Article 3 ofChapter 2 of Part 1.

10011. Licensee, when used withoutmodification, refers to a person, whether brokeror salesman, licensed under any of theprovisions of this part.

10012. Broker, when used withoutmodification, refers to a person licensed as abroker under any of the provisions of this part.

10013. Salesman, when used withoutmodification, refers to a person licensed as asalesman under any of the provisions of thispart.

10014.Real estate licensee refers to a person,whether broker or salesman, licensed under

Chapter 3 of this part.

10015. Real estate broker refers to a personlicensed as a broker under Chapter 3 of this part.

10016.Real estate salesman refers to a personlicensed as a salesman under Chapter 3 of thispart.

10017.Whenever the word salesman is used inthis division, or in the rules and regulations ofthe commissioner, it means salesperson. A

licensee, however, may elect to refer to the


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BUSINESS ANDPROFESSIONSCODE14

licensed status as real estate salesman, real estatesaleswoman, or real estate salesperson.

10023.Mineral, oil and gas licensee refers to aperson licensed under Chapter 7 (commencingwith Section 10500) of this part.

10024.Mineral, oil and gas broker refers to aperson licensed as a broker under Chapter 7 ofthis part.

Advance Fee

10026. The term "advance fee" as used inthis part is a fee, regardless of the form,claimed, demanded, charged, received, orcollected by a licensee from a principalbefore fully completing each and everyservice the licensee contracted to perform,

or represented would be performed. Neitheran advance fee nor the services to beperformed shall be separated or divided intocomponents for the purpose of avoiding theapplication of this section. The term appliesto a fee for a listing, advertisement or offerto sell or lease property, other than in anewspaper of general circulation, issuedprimarily for the purpose of promoting thesale or lease of business opportunities or realestate or for referral to real estate brokers orsalesmen, or soliciting borrowers or lendersfor, or to negotiate loans on, businessopportunities or real estate. As used in thissection, "advance fee" does not include"security" as that term is used in Section1950.5 of the Civil Code, or a "screeningfee" as that term is used in Section 1950.6 ofthe Civil Code. This section does not exempt

from regulation the charging or collecting ofa fee under Section 1950.5 or 1950.6 of theCivil Code, but instead regulates fees thatare not subject to those sections.

Listing

10027. The term listing as used in this partincludes, but is not limited to:

(a) The name or a list of the names, of theowners, landlords, exchangers, or lessors, or thelocation or locations, of property, or of an

interest in property, offered for rent, sale, lease,or exchange.

(b) The name, or a list of the names, or thelocation or locations at which prospective orpotential purchasers, buyers, lessees, tenants orexchangers of property may be found or

contacted.

(c) An agreement by which a person who isengaged in the business of promoting the sale orlease of business opportunities or real estateagrees to render to an owner or lessee of suchproperty any services, to promote the sale orlease of said property.

(d) An agreement by which a person who isengaged in the business of finding, locating or

promoting the sale or lease of businessopportunities or real estate, agrees to circularize,notify or refer real estate brokers or salesmen tosaid property which is offered for sale or lease.

Trust Deed

10028.Trust deed or deed of trust as used inthis part includes mortgage.

Real Property Sales Contract

10029.Real property sales contract as used inthis part is an agreement wherein one party

agrees to convey title to real property to anotherparty upon the satisfaction of specifiedconditions set forth in the contract and whichdoes not require conveyance of title within oneyear from the date of formation of the contract.

Business Opportunity

10030.As used in this part, the words businessopportunity shall include the sale or lease of thebusiness and goodwill of an existing businessenterprise or opportunity.

Broker-Salesperson Relationship Independent Contractor or Employee No

Effect on Obligations to Public

10032.(a) All obligations created under Section10000, and following, all regulations issued bythe commissioner relating to real estatesalespersons, and all other obligations of brokersand real estate salespersons to members of thepublic shall apply regardless of whether the realestate salesperson and the broker to whom he orshe is licensed have characterized their


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BUSINESS ANDPROFESSIONSCODE 15

relationship as one of independent contractoror of employer and employee.

(b) A real estate broker and a real estatesalesperson licensed under that broker maycontract between themselves as independentcontractors or as employer and employee, for

purposes of their legal relationship with andobligations to each other. Characterization of arelationship as either employer and employeeor independent contractor for statutorypurposes, including, but not limited to,withholding taxes on wages and for purposes ofunemployment compensation, shall be governedby Section 650 and Sections 13000 to 13054,inclusive, of the Unemployment Insurance Code.For purposes of workers compensation the

characterization of the relationship shall begoverned by Section 3200, and following, of theLabor Code.

Criminal Provisions

10035. Neither Section 10185 nor any otherprovision of this part which makes violation ofthis part a crime shall be construed to precludeapplication of any other criminal provision ofthe law of this state to an act or omission whichconstitutes a violation of this part.

CHAPTER 2. ADMINISTRATION

Article 1. The Real Estate Commissioner

Chief Officer of Department of Real Estate

10050. There is in the Business andTransportation Agency a Department of RealEstate, the chief officer of which department isnamed the Real Estate Commissioner.

It shall be the principal responsibility of thecommissioner to enforce all laws in this part

(commencing with Section 10000) and Chapter1 (commencing with Section 11000) of Part 2 ofthis division in a manner which achieves themaximum protection for the purchasers of realproperty and those persons dealing with realestate licensees.

Appointment of Real Estate Commissioner

10051.The commissioner shall be appointed bythe Governor.

Commissioners Qualifications

10052. The commissioner shall have been for

five years a real estate broker actively engagedin business as such in California, or shallpossess related experience associated with realestate activity in California for five years withinthe last 10 years.

Commissioners Salary

10053. The commissioner shall receive anannual salary as provided in Chapter 6(commencing with Section 11550) of Part 1 ofDivision 3 of Title 2 of the Government Code, tobe paid monthly out of the State Treasury upon awarrant of the Controller, and shall be allowedhis actual and necessary expenses in thedischarge of his duties.

Article 2.The Rea l Estate Co mm issione r

(con t inued)

Enforcement

10071. The commissioner shall enforce theprovisions of this part and of Chapter 1 of Part 2.He has full power to regulate and control theissuance and revocation, both temporary andpermanent, of all licenses to be issued under theprovisions of this part, and to perform all otheracts and duties provided in this part and Chapter1 of Part 2 and necessary for their enforcement.

Personnel

10073. The commissioner shall employ suchdeputies, clerks and employees as he may needto discharge in proper manner the dutiesimposed upon him by law.

Vocations Restricted

10074. After qualifying as such neither thecommissioner nor any of the deputies, clerks oremployees of the department shall be interestedin any mineral, oil or gas business, mineral, oilor gas brokerage firm, real estate company or

any real estate brokerage firm, as director,stockholder, officer, member, agent oremployee, or act as a broker or salesman, or actas a copartner or agent for any broker or brokers,salesman or salesmen.

Duties and Compensation

10075. Deputies, clerks and employees shallperform such duties as the commissioner shallassign to them.

Subject to the powers of the State Personnel


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Board and the Director of Finance, thecommissioner shall fix the compensation of suchdeputies, clerks and employees, whichcompensation shall be paid monthly on acertificate of the commissioner, and on thewarrant of the Controller out of the State

Treasury.Oaths

10076.Each deputy shall, after his appointment,take and subscribe to the constitutional oath ofoffice and file the same in the office of theSecretary of State.

Main and Branch Offices

10077. The commissioner shall have hisprincipal office in the City of Sacramento, andmay establish branch offices in the City and

County of San Francisco, the City of LosAngeles and in such other cities as thecommissioner may deem necessary, subject tothe approval of the Department of Finance.

Seal

10078.The commissioner shall adopt a seal withthe words Real Estate Commissioner State ofCalifornia and such other device as thecommissioner may desire engraved thereon, bywhich he shall authenticate the proceedings of

his office.Copies of all records and papers in the office ofthe commissioner certified under the hand andseal of the commissioner shall be received inevidence in all cases equally and with like effectas the originals.

Legal Advisor

10079.The Attorney General shall render to thecommissioner opinions upon all questions of lawrelating to the construction or interpretation of

this part or Chapter 1 of Part 2 or arising in theadministration thereof that may be submitted tohim by the commissioner. The Attorney Generalshall act as the attorney for the commissioner inall actions and proceedings brought by or againsthim under or pursuant to any of the provisions ofthis part or of Chapter 1 of Part 2.

Rules and Regulations

10080.The commissioner may adopt, amend, orrepeal rules and regulations that are reasonably

necessary for the enforcement of the provisions

of this part and of Chapter 1 (commencing withSection 11000) of Part 2 of this division. Therules and regulations shall be adopted, amended,or repealed in accordance with the provisions ofthe Administrative Procedure Act.

Credit Reports

10080.5.In the event the commissioner employsthe services of an agency engaged in thebusiness of furnishing credit reports, suchagency shall have been engaged in such businesscontinuously in this State for a period of not lessthan five years prior to the time of suchemployment.

Commissioners Power to Enjoin

10081.(a) Whenever the commissioner believesfrom evidence satisfactory to him that any

person has violated or is about to violate any ofthe provisions of this part or of Chapter 1(commencing with Section 11000) of Part 2 orany order, license, permit, decision, demand orrequirement, or any part or provision thereof, heor she may bring an action in the name of thepeople of the State of California in the superiorcourt of the State of California against thatperson to enjoin him or her from continuing theviolation or engaging therein or doing any act oracts in furtherance thereof.

In this action an order or judgment may beentered awarding such preliminary or finalinjunction as may be proper, but no preliminaryinjunction or temporary restraining order shallbe granted without at least five days notice tothe defendant.

If the commissioner makes a showingsatisfactory to the court that the violations orthreatened violations jeopardize funds and

properties of others in the custody or under thecontrol of the defendant, the court may appoint areceiver for management of the business of thedefendant, including, but not limited to, thefunds and properties of others in his or herpossession or may make any other order as itdeems appropriate to protect and preserve thosefunds and properties.

The order appointing the receiver shall specifythe source of the funds for payment of the feesof the receiver and the costs attributable to


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administering the receivership. Unless providedfor in the order, the commissioner shall not beliable for payment of the fees or costs.

(b) The commissioner may include in any actionauthorized by subdivision (a), a claim forrestitution on behalf of the persons injured by

the act or practice constituting the subject matterof the action, and the court shall havejurisdiction to award appropriate relief to suchpersons.

Injunction Appointment of Receiver

10081.5. Whenever the commissioner believesfrom evidence satisfactory to him or her that anyreal estate licensee has violated or is about toviolate, the provisions of Section 10145, thecommissioner may bring an action in the name

of the people of the State of California, in thesuperior court of the State of California, toenjoin the licensee from continuing the violationor engaging therein or doing any act or acts infurtherance thereof.

In the event the commissioner has conducted anaudit which reflects commingling or conversionof trust funds in excess of ten thousand dollars($10,000), the court may enter an orderrestraining the licensee from doing any act or

acts in furtherance thereof, and from furtherexercising the privileges of his or her licensepending further order of the court, provided thata hearing shall be held on the order within fivedays after the date thereof.

After such hearing in the manner provided bylaw, an order may be entered appointing areceiver, or such other order as the court maydeem proper. The order appointing the receivershall specify the source of the funds from which

the fees of the receiver and the costs ofadministering the receivership are to be paid.Unless provided for in the order, thecommissioner shall not be liable for payment ofthe fees or costs.

A receiver appointed by the court pursuant tothis section may, with the approval of the court,exercise all of the powers of the licensee or itsofficers, directors, partners, trustees, or personswho exercise similar powers and perform similarduties, including the filing of a petition for

bankruptcy of the licensee.

Directory

10082.The commissioner may publish or causeto be published at appropriate intervals adirectory or list of licensed brokers and salesmenand may publish therewith such matter as he

may deem pertinent to this part and Chapter 1(commencing with Section 11000) of Part 2. Heshall furnish one copy of such directory to eachlicensed broker upon his request and thepayment of an appropriate charge based uponcost of publication. Such directory may containcopies of the Real Estate Law, Chapter 1(commencing with Section 11000) of Part 2 ofDivision 4 of the Business and ProfessionsCode, and the Rules and Regulations of the Real

Estate Commissioner.Bulletin

10083. The commissioner may periodicallyissue a bulletin containing matter relating to thedepartment, and to the provisions of this part andof Chapter 1 (commencing with Section 11000)of Part 2, and the administration thereof, andmay publish the same character of matter in anyestablished periodical published in the statewhich in his opinion would be most likely todisseminate such matter and information tolicensees under this part.

Information Brochures

10084. The commissioner may prepare apamphlet or brochure dealing with disclosures ofinformation in residential real estatetransactions. The costs of preparation anddistribution may be paid from such moneys asmay from time to time be appropriated from theReal Estate Fund for education and research.The commissioner shall make copies of the

pamphlet or brochure available upon request tosellers, buyers, and real estate licensees for a feecommensurate with the cost of preparation anddistribution. Such fees as are collected shall bepaid into the education and research account ofthe Real Estate Fund.

Environmental Hazards Booklet

10084.1. (a) Notwithstanding Section 10450.6,on or before January 1, 1991, the department,using funds appropriated from the Education and

Research Account in the Real Estate Fund, shall


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develop a booklet to educate and informconsumers on all of the following:

(1) Common environmental hazards that arelocated on, and affect, real property. Thetypes of common environmental hazardsshall include, but not be limited to, asbestos,

radon gas, lead-based paint, formaldehyde,fuel and chemical storage tanks, and waterand soil contamination.

(2) The significance of commonenvironmental hazards and what can be doneto mitigate these hazards.

(3) What sources can provide moreinformation on common environmentalhazards for the consumer.

(b) The department shall seek the advice of theOffice of Environmental Health HazardAssessment to assist it in determining thecontents of the booklet prepared pursuant to thissection, and shall seek the assistance of theOffice of Environmental Health HazardAssessment in the writing of the booklet.

Advance Fee Agreements and Materials

10085.The commissioner may require that anyor all materials used in obtaining advance fee

agreements, including but not limited to thecontract forms, letters or cards used to solicitprospective sellers, and radio and televisionadvertising be submitted to him or her at least 10calendar days before they are used. Should thecommissioner determine that any such matter,when used alone or with any other matter, wouldtend to mislead he or she may, within 10calendar days of the date he or she receivessame, order that it not be used, disseminated, norpublished. Any person or entity using,

disseminating, or publishing any matter whichthe commissioner has ordered, pursuant to thissection, not to be used, published, ordisseminated shall be guilty of a misdemeanorpunishable by a fine not exceeding two thousandfive hundred dollars ($2,500) or byimprisonment in the county jail not exceedingsix months, or both, for each such use,dissemination, or publication.

The commissioner may determine the form of

the advance fee agreements, and all material

used in soliciting prospective owners and sellersshall be used in the form and manner which heor she determines is necessary to carry out thepurposes and intent of this part.

Any violation of any of the provisions of thispart or of the rules, regulations, orders or

requirements of the commissioner thereundershall constitute grounds for disciplinary actionagainst a licensee, or for proceedings underSection 10081 of this code, or both. Thesesanctions are in addition to the criminalproceedings hereinbefore provided.

Payment of Advance Fee Loan Secured by

Lien on Real Property

10085.5.(a) It shall be unlawful for any personto claim, demand, charge, receive, collect, or

contract for an advance fee (1) for solicitinglenders on behalf of borrowers or performingservices for borrowers in connection with loansto be secured directly or collaterally by a lien onreal property, before the borrower becomesobligated to complete the loan or, (2) forperforming any other activities for which alicense is required, unless the person is alicensed real estate broker and has compliedwith the provisions of this part.

(b) This section does not prohibit the acceptanceor receipt of an advance fee by any bank,savings association, credit union, industrial loancompany, or person acting within the scope of alicense issued to that person pursuant to Division9 (commencing with Section 22000) of theFinancial Code, in connection with loans to besecured directly or collaterally by a lien on realproperty. This section does not apply to chargesmade by title insurers and controlled escrowcompanies pursuant to Chapter 1 (commencing

with Section 12340) of Part 6 of Division 2 ofthe Insurance Code.

(c) A violation of this section is a public offensepunishable by a fine not exceeding ten thousanddollars ($10,000), by imprisonment in thecounty jail for a term not to exceed six months,or by both that fine and imprisonment, or if by acorporation, the violation is punishable by a finenot exceeding fifty thousand dollars ($50,000).


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10085.6. (a) Notwithstanding any otherprovision of law, it shall be unlawful for anylicensee who negotiates, attempts to negotiate,arranges, attempts to arrange, or otherwise offersto perform a mortgage loan modification orother form of mortgage loan forbearance for a

fee or other compensation paid by the borrower,to do any of the following:

(1) Claim, demand, charge, collect, orreceive any compensation until after thelicensee has fully performed each and everyservice the licensee contracted to perform orrepresented that he, she, or it would perform.

(2) Take any wage assignment, any lien ofany type on real or personal property, orother security to secure the payment of

compensation.

(3) Take any power of attorney from theborrower for any purpose.

(b) A violation of this section by a naturalperson who is a licensee is a public offensepunishable by a fine not exceeding ten thousanddollars ($10,000), by imprisonment in thecounty jail for a term not to exceed one year, orby both that fine and imprisonment, or if by acorporation, the violation is punishable by a fine

not exceeding fifty thousand dollars ($50,000).These penalties are cumulative to any otherremedies or penalties provided by law.

(c) This section shall apply only to mortgagesand deeds of trust secured by residential realproperty containing four or fewer dwelling units.

(d) This section shall remain in effect only untilJanuary 1, 2013, and as of that date is repealed,unless a later enacted statute, that is enacted

before January 1, 2013, deletes or extends thatdate.

Engaging in Prohibited Activity Order to

Desist and Refrain

10086. (a) If the commissioner determinesthrough an investigation that (1) a person hasengaged or is engaging in an activity which is aviolation of a provision of this part, other than aprovision of Article 8 (commencing withSection 10249) of Chapter 3, or which is aviolation of a regulation of the commissioner

adopted for the purpose of implementing anyprovision of this part, other than a regulationadopted pursuant to a provision of Article 8(commencing with Section 10249) of Chapter 3,or (2) a real estate broker has engaged in or isengaging in an activity which is a violation of a

provision of Division 6 (commencing withSection 17000) of the Financial Code, and whichis not exempt pursuant to paragraph (4) ofsubdivision (a) of Section 17006, thecommissioner may direct the person to desistand refrain from such activity by issuance of anorder specifying the nature of the activity andthe factual and legal basis for his or herdetermination. The respondent to whom theorder is directed shall immediately, upon receiptof the order, cease the activity described in the

order.

(b) The respondent may, within 30 days afterservice of the order to desist and refrain, file arequest for a hearing. If, with the request forhearing, the respondent also files a writtenverification that the order of the commissionerprecludes him or her from further engaging in asubstantial proportion of his or her business, thecommissioner shall, within 10 days thereafter,file an action in superior court to restrain the

respondent from continuing the activity or doingany act in furtherance thereof pending thecompletion of a hearing pursuant to Chapter 5(commencing with Section 11500) of Part 1 ofDivision 3 of Title 2 of the Government Code.

If the commissioner fails to bring the action insuperior court within the time prescribed by thissection, or if the court refuses to restrain therespondent pending the decision of thecommissioner following the administrative

hearing, the respondent may resume theactivities in question pending the rendering ofthe decision of the commissioner following theadministrative hearing.

(c) The administrative hearing shall becommenced by the commissioner within 30 daysafter receipt of respondents request unless therespondent agrees to a postponement. If thehearing is not commenced within 30 days afterreceipt of respondents request or on the date to

which continued with respondents consent, or if


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the commissioner does not render a decisionwithin 15 days after receipt of the proposeddecision following the hearing, the order shall bedeemed rescinded.

(d) The provisions of Section 11019, and not theprovisions of this section, shall apply in the case

of an activity which the commissionerdetermines to be in violation of Article 8(commencing with Section 10249) of Chapter 3or of a regulation of the commissioner forimplementation of any provision of that article.

Debarment

10087. (a) In addition to acting pursuant to theauthority provided under Sections 10086, 10176,and 10177, the commissioner may, afterappropriate notice and opportunity for a hearing,

by order, suspend, or bar from any position ofemployment, management, or control, for aperiod not exceeding 36 months, a real estatesalesperson or real estate broker, or anunlicensed person issued an order under Section10086, if the commissioner finds either of thefollowing:

(1) That the suspension or bar is in thepublic interest and that the person hascommitted or caused a violation of this

division or rule or order of thecommissioner, which violation was eitherknown or should have been known by theperson committing or causing it or hascaused material damage to the public.

(2) That the person has been convicted of orpleaded nolo contendere to any crime, or hasbeen held liable in any civil action by finaljudgment, or any administrative judgmentby any public agency, if that crime or civil

or administrative judgment involved anyoffense involving dishonesty, fraud, ordeceit, or any other offense reasonablyrelated to the qualifications, functions, orduties of a person engaged in the real estatebusiness in accordance with the provisionsof this division.

(b) Within 15 days from the date of a notice ofintention to issue an order pursuant tosubdivision (a), the person may request ahearing under the Administrative Procedure Act

(Chapter 4.5 (commencing with Section 11400)of Division 3 of Title 2 of the GovernmentCode). If no hearing is requested within 15 daysafter the mailing or service of that notice andnone is ordered by the commissioner, the failureto request a hearing shall constitute a waiver of

the right to a hearing.(c) Upon receipt of a notice of intention to issuean order pursuant to this section, the person whois the subject of the proposed order isimmediately prohibited from engaging in anybusiness activity involving real estate that issubject to regulation under this division.

(d) Persons suspended or barred under thissection are prohibited from participating in anybusiness activity of a real estate salesperson or a

real estate broker and from engaging in any realestate-related business activity on the premiseswhere a real estate salesperson or real estatebroker is conducting business. Personssuspended or barred under this section are alsoprohibited from participating in any real estate-related business activity of a finance lender,residential mortgage lender, bank, credit union,escrow company, title company, or underwrittentitle company.

Article 3. HearingsDisciplinary Procedure

10100.Before denying, suspending or revokingany license or license endorsement issuable orissued under the provisions of this part, thedepartment shall proceed as prescribed byChapter 5 (commencing with Section 11500) ofPart 1 of Division 3 of Title 2 of theGovernment Code, and the department shallhave all the powers granted therein.

Voluntary Surrender of License10100.2. A licensee against whom aninvestigation is pending or an accusation hasbeen filed pursuant to Section 11503 of theGovernment Code may petition thecommissioner to voluntarily surrender his or herlicense. The surrender of a license shall becomeeffective upon acceptance by the commissionerand thereafter, a surrendered licensee may berelicensed only by petitioning for reinstatement

pursuant to Section 11522 of the Government


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Code. When deciding a petition forreinstatement, the commissioner may considerall relevant evidence, including affidavits.

Statute of Limitations Real Estate Licensees

10101. The accusation provided for by Section11503 of the Government Code shall be filed not

later than three years from the occurrence of thealleged grounds for disciplinary action unlessthe acts or omissions with which the licensee ischarged involves fraud, misrepresentation or afalse promise in which case the accusation shallbe filed within one year after the date ofdiscovery by the aggrieved party of the fraud,misrepresentation or false promise or withinthree years after the occurrence thereof,whichever is later, except that in no case shall an

accusation be filed later than 10 years from theoccurrence of the alleged grounds fordisciplinary action.

Jurisdiction Over a Lapsed or Suspended

License

10103.The lapsing or suspension of a license byoperation of law or by order or decision of thedepartment or a court of law, or the voluntarysurrender of a license by a licensee shall notdeprive the department of jurisdiction to proceedwith any investigation of or action ordisciplinary proceeding against such licensee, orto render a decision suspending or revoking suchlicense.

CHAPTER 3. REAL ESTATE REGULATIONS

Article 1. Scope of Regulation

License Required

10130.It is unlawful for any person to engage inthe business, act in the capacity of, advertise orassume to act as a real estate broker or a realestate salesman within this state without firstobtaining a real estate license from thedepartment.

The commissioner may prefer a complaint forviolation of this section before any court ofcompetent jurisdiction, and the commissionerand his counsel, deputies or assistants may assistin presenting the law or facts at the trial.

Prosecution of Violations

It is the duty of the district attorney of each

county in this state to prosecute all violations ofthis section in their respective counties in whichthe violations occur.

Broker Defined

10131.A real estate broker within the meaningof this part is a person who, for a compensation

or in expectation of a compensation, regardlessof the form or time of payment, does ornegotiates to do one or more of the followingacts for another or others:

(a) Sells or offers to sell, buys or offers to buy,solicits prospective sellers or purchasers of,solicits or obtains listings of, or negotiates thepurchase, sale or exchange of real property or abusiness opportunity.

(b) Leases or rents or offers to lease or rent, orplaces for rent, or solicits listings of places forrent, or solicits for prospective tenants, ornegotiates the sale, purchase or exchanges ofleases on real property, or on a businessopportunity, or collects rents from real property,or improvements thereon, or from businessopportunities.

(c) Assists or offers to assist in filing anapplication for the purchase or lease of, or inlocating or entering upon, lands owned by thestate or federal government.

(d) Solicits borrowers or lenders for ornegotiates loans or collects payments orperforms services for borrowers or lenders ornote owners in connection with loans secureddirectly or collaterally by liens on real propertyor on a business opportunity.

(e) Sells or offers to sell, buys or offers to buy,or exchanges or offers to exchange a real

property sales contract, or a promissory notesecured directly or collaterally by a lien on realproperty or on a business opportunity, andperforms services for the holders thereof.

Some Managers and Employees Exempt

10131.01. (a) Subdivision (b) of Section 10131does not apply to (1) the manager of a hotel,motel, auto and trailer park, to the residentmanager of an apartment building, apartmentcomplex, or court, or to the employees of thatmanager, or (2) any person or entity, including a


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person employed by a real estate broker, who,on behalf of another or others, solicits orarranges, or accepts reservations or money, orboth, for transient occupancies described inparagraphs (1) and (2) of subdivision (b) ofSection 1940 of the Civil Code, in a dwelling

unit in a common interest development, asdefined in Section 1351 of the Civil Code, in adwelling unit in an apartment building orcomplex, or in a single-family home, or (3) anyperson other than the resident manager oremployees of that manager, performing thefollowing functions who is the employee of theproperty management firm retained to manage aresidential apartment building or complex orcourt and who is performing under thesupervision and control of a broker of record

who is an employee of that propertymanagement firm or a salesperson licensed tothe broker who meets certain minimumrequirements as specified in a regulation issuedby the commissioner:

(A) Showing rental units and commonareas to prospective tenants.

(B) Providing or accepting preprintedrental applications, or responding toinquiries from a prospective tenantconcerning the completion of theapplication.

(C) Accepting deposits or fees for creditchecks or administrative costs andaccepting security deposits and rents.

(D) Providing information about rentalrates and other terms and provisions of alease or rental agreement, as set out in aschedule provided by an employer.

(E) Accepting signed leases and rentalagreements from prospective tenants.

(b) A broker or salesperson shall exercisereasonable supervision and control over theactivities of nonlicensed persons acting underparagraph (3) of subdivision (a).

(c) A broker employing nonlicensed persons toact under paragraph (3) of subdivision (a) shallcomply with Section 10163 for each apartmentbuilding or complex or court where the

nonlicensed persons are employed.

Broker Definition Continued Buying/Selling

Notes, etc.

10131.1. (a) A real estate broker within themeaning of this part is also a person whoengages as a principal in the business of making

loans or buying from, selling to, or exchangingwith the public, real property sales contracts orpromissory notes secured directly or collaterallyby liens on real property, or who makesagreements with the public for the collection ofpayments or for the performance of services inconnection with real property sales contracts orpromissory notes secured directly or collaterallyby liens on real property.

(b) As used in this section:

(1) "In the business" means any of thefollowing:

(A) The acquisition for resale to thepublic, and not as an investment, ofeight or more real property salescontracts or promissory notes secureddirectly or collaterally by liens on realproperty during a calendar year.

(B) The sale to or exchange with the

public of eight or more real propertysales contracts or promissory notessecured directly or collaterally by lienson real property during a calendar year.However, no transaction negotiatedthrough a real estate licensee shall beconsidered in determining whether aperson is a real estate broker within themeaning of this section.

(C) The making of eight or more loans

in a calendar year from the person's ownfunds to the public when those loans areheld or resold and are secured directly orcollaterally by a lien on residential realproperty consisting of a single dwellingunit in a condominium or cooperative oron any parcel containing only residentialbuildings if the total number of units onthe parcel is four or less. However, notransaction negotiated through a realestate broker who meets the criteria of

subdivision (a) or (b) of Section 10232


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shall be considered in determiningwhether a person is a real estate brokerwithin the meaning of this section.

(2) "Sale," "resale," and "exchange" includeevery disposition of any interest in a realproperty sales contract or promissory note

secured directly or collaterally by a lien onreal property, except the original issuance ofa promissory note by a borrower or a realproperty sales contract by a vendor, either ofwhich is to be secured directly by a lien onreal property owned by the borrower orvendor.

(3) "Own funds" means either of thefollowing:

(A) Cash, corporate capital, orwarehouse credit lines at commercialbanks, savings banks, savings and loanassociations, industrial loan companies,or other sources that are liability itemson the person's financial statements,whether secured or unsecured.

(B) Cash, corporate capital, orwarehouse credit lines at commercialbanks, savings banks, savings and loanassociations, industrial loan companies,or other sources that are liability itemson the financial statement of an affiliateof the person, whether secured orunsecured.

(4) "Own funds" does not include fundsprovided by a third party to fund a loan oncondition that the third party willsubsequently purchase or accept anassignment of the loan.

Broker Definition Continued Advance Fees10131.2.A real estate broker within the meaningof this part is also a person who engages in thebusiness of claiming, demanding, charging,receiving, collecting or contracting for thecollection of an advance fee in connection withany employment undertaken to promote the saleor lease of real property or of a businessopportunity by advance fee listing,advertisement or other offering to sell, lease,exchange or rent property or a business

opportunity, or to obtain a loan or loans thereon.

Broker Definition Continued Securities

10131.3.A real estate broker within the meaningof this part is also a person who, for another orothers, for compensation or in expectation ofcompensation, issues or sells, solicitsprospective sellers or purchasers of, solicits or

obtains listings of, or negotiates the purchase,sale, or exchange of securities as specified inSection 25206 of the Corporations Code.

The provisions of this section do not apply to abroker-dealer or agent of a broker-dealerlicensed by the Commissioner of Corporationsunder the provisions of the Corporate SecuritiesLaw of 1968.

Broker Definition Continued Mineral, Oil, or

Gas Property

10131.4. A real estate broker within the meaningof this part is also a person who acts for anotheror others for compensation or in expectation ofcompensation, to do one or more of thefollowing acts:

(a) To sell or offer for sale, buy or offer to buy,solicit prospective sellers or purchasers, solicitor obtain listings, or negotiate the purchase, sale,or exchange of mineral, oil, or gas property.

(b) To solicit borrowers or lenders for ornegotiate loans on mineral, oil, or gas property,or collect payments for lenders in connectionwith these loans.

(c) To lease or offer to lease or negotiate thesale, purchase, or exchange of leases on mineral,oil, or gas property.

(d) To rent or place for rent, mineral, oil, or gasproperty or to collect rent or royalties frommineral, oil, or gas property or improvements

thereon.(e) Other than as an officer or employee of thestate or federal government, to assist or offer toassist another or others in filing an applicationfor the purchase or lease of, or to locate or enterupon mineral, oil, or gas property owned by thestate or federal government.

MOG Property License Required as Principal

10131.45. A real estate broker within themeaning of this part is also a person who


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engages in the following businesses as aprincipal:

(a) Except as provided in subdivision (d) ofSection 10133.35, buying or leasing, or takingan option on mineral, oil, or gas property for thepurpose of sale, exchange, lease, sublease, or

assignment of a lease of the property or any partof the property.

(b) Offering mining claims or any interesttherein for sale or assignment.

Nonresident Licensees

10131.5. A nonresident of California maybecome a real estate broker by conforming to allof the provisions of this part.

Broker Definition Continued Mobilehomes

10131.6. (a) Notwithstanding any otherprovision of law, a person licensed as a realestate broker may sell or offer to sell, buy oroffer to buy, solicit prospective purchasers of,solicit or obtain listings of, or negotiate thepurchase, sale, or exchange of any mobilehomeonly if the mobilehome has been registeredunder Part 2 (commencing with Section 18000)of Division 13 of the Health and Safety Code.

(b) No real estate broker who engages in the

activities authorized by this section shallmaintain any place of business where two ormore mobilehomes are displayed and offered forsale by the person, unless the broker is alsolicensed as a mobilehome dealer as provided forby Part 2 (commencing with Section 18000) ofDivision 13 of the Health and Safety Code.

(c) As used in this chapter, mobilehomemeans a structure transportable in one or moresections, designed and equipped to contain not

more than two dwelling units to be used with orwithout a foundation system. Mobilehomedoes not include a recreational vehicle, asdefined in Section 18010 of the Health andSafety Code, a commercial coach, as defined inSection 18001.8 of the Health and Safety Code,or factory-built housing, as defined in Section19971 of the Health and Safety Code.

(d) In order to carry out this section, thecommissioner shall prescribe by regulation, afterconsultation with the Department of Housing

and Community Development, methods andprocedures to assure compliance withrequirements of the Health and Safety Codepertaining to mobilehome registration, collectionof sales and use taxes, and transactiondocumentation.

(e) Nothing in this section increases ordecreases, or in any way preempts, consumernotice requirements of the NationalManufactured Housing Construction and SafetyStandards Act of 1974 and related regulationswhich are set forth in Section 5414 of Title 42 ofthe United States Code and Section 3282.255 ofTitle 24 of the Code of Federal Regulations.

Mobilehome Advertising

10131.7. It is unlawful for any real estate

licensee acting under authority of Section10131.6 to do any of the following:

(a) To advertise or offer for sale in any mannerany mobilehome, unless it is either in place on alot rented or leased for human habitation withinan established mobilehome park as defined inSection 18214 of the Health and Safety Codeand the advertising or offering for sale is notcontrary to any terms of a contract between theseller of the mobilehome and the owner of the

mobilehome park, or is otherwise located,pursuant to a local zoning ordinance or permit,on a lot where its presence has been authorizedor its continued presence and that use would beauthorized for a total and uninterrupted period ofat least one year.

(b) To fail to withdraw any advertisement of amobilehome for sale, lease, or exchange within48 hours after the real estate licensees receipt ofnotice that the mobilehome is no longer

available for sale, lease, or exchange.(c) To advertise or represent a mobilehome as anew mobilehome.

(d) To include as an added cost to the sellingprice of a mobilehome, an amount for licensing,as prescribed by Section 10751 of the Revenueand Taxation Code, except where the buyer andseller agree to the proration of the license feesfor the applicable license period, or transfer oftitle of the mobilehome as a vehicle, which

amount is not due to the state unless, prior to the


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sale, the amount has been paid by the licensee tothe state in order to avoid penalties that wouldhave accrued because of late payment of thefees.

(e) To make any representation that amobilehome is capable of being transported on

California highways if the mobilehome does notmeet all of the equipment requirementsapplicable to mobilehomes of Division 12(commencing with Section 24000) of theVehicle Code, or to fail to disclose any materialfact respecting those equipment requirements.

(f) To advertise or otherwise represent, orknowingly to allow to be advertised orrepresented on the real estate licensees behalf orat the real estate licensees place of business,

that no downpayment is required in connectionwith the sale of a mobilehome whendownpayment is in fact required and the buyer isadvised or induced to finance the downpaymentby a loan in addition to any other loan financingthe remainder of the purchase price of themobilehome.

(g) To fail or neglect properly to cause theendorsement, dating, and delivery (or fail toendorse, date, and deliver) of the certificate of

ownership or certificate of title of themobilehome, and, when having possession, tofail to deliver the registration card to a transfereewho is lawfully entitled to a transfer ofregistration. Except when the certificate ofownership or certificate of title is demanded inwriting by a purchaser, the licensee shall satisfythe delivery requirement of this subdivision bysubmitting appropriate documents and fees tothe Department of Housing and CommunityDevelopment for transfer of registration in

accordance with Chapter 8 (commencing withSection 18075) of Part 2 of Division 13 of theHealth and Safety Code and rules andregulations promulgated thereunder.

Salesman Defined

10132. A real estate salesman within themeaning of this part is a natural person who, fora compensation or in expectation of acompensation, is employed by a licensed realestate 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.

Exemptions from License Requirements

10133. (a) The acts described in Section 10131are not acts for which a real estate license isrequired if performed by:

(1) A regular officer of a corporation or ageneral partner of a partnership with respectto real property owned or leased by thecorporation or partnership, respectively, orin connection with the proposed purchase orleasing of real property by the corporation orpartnership, respectively, if the acts are notperformed by the officer or partner inexpectation of special compensation.

(2) A person holding a duly executed power

of attorney from the owner of the realproperty with respect to which the acts areperformed.

(3) An attorney at law in rendering legalservices to a client.

(4) A receiver, trustee in bankruptcy or otherperson acting under order of a court ofcompetent jurisdiction.

(5) A trustee for the beneficiary of a deed oftrust when selling under authority of that

deed of trust.

(b) The exemptions in subdivision (a) are notapplicable to a person who uses or attempts touse them for the purpose of evading theprovisions of this part.

Brokers Lenders Exemptions from License

10133.1.(a) Subdivisions (d) and (e) of Section10131, Section 10131.1, Article 5 (commencingwith Section 10230), and Article 7 (commencing

with Section 10240) of this code and Section1695.13 of the Civil Code do not apply to any ofthe following:

(1) Any person or employee thereof doingbusiness under any law of this state, anyother state, or the United States relating tobanks, trust companies, savings and loanassociations, industrial loan companies,pension trusts, credit unions, or insurancecompanies.


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(2) Any nonprofit cooperative associationorganized under Chapter 1 (commencingwith Section 54001) of Division 20 of theFood and Agricultural Code, in loaning oradvancing money in connection with anyactivity mentioned therein.

(3) Any corporation, association, syndicate,joint stock company, or partnership engagedexclusively in the business of marketingagricultural, horticultural, viticultural, dairy,livestock, poultry, or bee products on acooperative nonprofit basis, in loaning oradvancing money to the members thereof orin connection with any business of that type.

(4) Any corporation securing money orcredit from any federal intermediate credit

bank organized and existing pursuant to theprovisions of an act of Congress entitled the"Agricultural Credits Act of 1923," inloaning or advancing money or credit sosecured.

(5) Any person licensed to practice law inthis state, not actively and principallyengaged in the business of negotiating loanssecured by real property, when that personrenders services in the course of his or her

practice as an attorney at law, and thedisbursements of that person, whether paidby the borrower or other person, are notcharges or costs and expenses regulated byor subject to the limitations of Article 7(commencing with Section 10240), and thefees and disbursements are not shared,directly or indirectly, with the personnegotiating the loan or the lender.

(6) Any person licensed as a finance lender

when acting under the authority of thatlicense.

(7) Any cemetery authority as defined bySection 7018 of the Health and Safety Code,that is authorized to do business in this stateor its authorized agent.

(8) Any person authorized in writing by asavings institution to act as an agent of thatinstitution, as authorized by Section 6520 ofthe Financial Code or comparable authority

of the Office of Thrift Supervision of the

United States Department of the Treasury byits regulations, when acting under theauthority of that written authorization.

(9) Any person who is licensed as asecurities broker or securities dealer underany law of this state, or of the United States,

or any employee, officer, or agent of thatperson, if that person, employee, officer, oragent is acting within the scope of authoritygranted by that license in connection with atransaction involving the offer, sale,purchase, or exchange of a securityrepresenting an ownership interest in a poolof promissory notes secured directly orindirectly by liens on real property, whichtransaction is subject to any law of this state

or the United States regulating the offer orsale of securities.

(10) Any person licensed as a residentialmortgage lender or servicer when actingunder the authority of that license.

(11) Any organization that has beenapproved by the United States Departmentof Housing and Urban Developmentpursuant to Section 106 (a)(1)(iii) of thefederal Housing and Urban Development

Act of 1968 (12 U.S.C. Sec. 1701x), toprovide counseling services, or an employeeof such an organization, when those servicesare provided at no cost to the borrower andare in connection with the modification ofthe terms of a loan secured directly orcollaterally by a lien on residential realproperty containing four or fewer dwellingunits.

(b) Persons described in paragraph (1), (2), or

(3), as follows, are exempt from the provisionsof subdivisions (d) and (e) of Section 10131 orSection 10131.1 with respect to the collection ofpayments or performance of services for lendersor on notes of owners in connection with loanssecured directly or collaterally by liens on realproperty:

(1) The person makes collections on 10 orless of those loans, or in amounts of fortythousand dollars ($40,000) or less, in anycalendar year.


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(2) The person is a corporation licensed asan escrow agent under Division 6(commencing with Section 17000) of theFinancial Code and the payments aredeposited and maintained in the escrowagent's trust account.

(3) An employee of a real estate broker whois acting as the agent of a person describedin paragraph (4) of subdivision (b) ofSection 10232.4.

For purposes of this subdivision,performance of services does not includesoliciting borrowers, lenders, or purchasersfor, or negotiating, loans secured directly orcollaterally by a lien on real property.

(c) (1) Subdivision (d) of Section 10131 doesnot apply to an employee of a real estatebroker who, on behalf of the broker, assiststhe broker in meeting the broker'sobligations to its customers in residentialmortgage loan transactions, as defined inSection 50003 of the Financial Code, wherethe lender is an institutional lender, asdefined in Section 50003 of the FinancialCode, provided the employee does notparticipate in any negotiations occurring

between the principals.

(2) A broker shall exercise reasonablesupervision and control over the activities ofnonlicensed employees acting under thissubdivision, and shall comply with Section10163 for each location where thenonlicensed persons are employed.

This section does not restrict the ability ofthe commissioner to discipline a broker orcorporate broker licensee or its designatedofficer, or both the corporate broker licenseeand its designated officer, for misconduct ofa nonlicensed employee acting under thissubdivision, or, pursuant to Section 10080,to adopt, amend, or repeal rules orregulations governing the employment orsupervision of an employee who is anonlicensed person as described in thissubdivision.

Other Exemptions

10133.15. The provisions of Article 5(commencing with Section 10230) and Article 7(commencing with Section 10240) do not applyto any person whose business is that of acting asan authorized representative, agent, or loan

correspondent of any person or employeethereof doing business under any law of thisstate, any other state, or the United Statesrelating to banks, trust companies, savings andloan associations, industrial loan companies,pension trusts, credit unions, or insurancecompanies or when making loans qualified forsale to any of the foregoing insofar as thatbusiness is concerned.

Clerical Exemptions

10133.2. The provisions of Sections 10131,10131.1, 10131.2, and 10132 do not apply toany stenographer, bookkeeper, receptionist,telephone operator, or other clerical help incarrying out their functions as such.

Transactions Involving FCC-Regulated

Enterprises

10133.3.The provisions of Sections 10131 and10131.2 relating to business opportunities do notapply to any person, partnership, corporation, orother legal entity which for another or otherssells or offers to sell, solicits prospective sellersor purchasers of, solicits or obtains listings of,advertises for sale, buys or offers to buy, ornegotiates the purchase, sale, or exchange ofradio, television, or cable enterprises which arelicensed and regulated by the FederalCommunications Commission, or any successoragency, pursuant to the Communications Act of1934, as amended and which purchase, sale, orexchange is not in substance a transfer of real

property.MOG Property Activities Not Requiring a

License

10133.35. A real estate brokers license shall notbe required to engage in any of the followingactivities with respect to a mineral, oil, or gasproperty:

(a) To act as a depository under an oil lease, gaslease, or oil and gas lease other than for purposeof sale.


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(b) To engage in any transaction subject to anorder of a court of competent jurisdiction.

(c) To engage in the business of drilling for orproducing oil or gas or mining for or producingminerals.

(d) To negotiate leases or agreements betweenan owner of mineral, oil, or gas lands, leases, ormineral rights, and a person organized for orengaging in oil or gas or mineral or metalproduction, or to enter into leases or agreementswith an owner of mineral, oil, or gas lands,leases, or mineral rights on behalf of a disclosedor undisclosed person organized for or engagingin oil or gas or mineral or metal production.

(e) To deal with mineral rights or land, other

than oil or gas rights or land, as the owner of therights or land.

Exemption Film Location Representative

10133.4.(a) The provisions of subdivision (b) ofSection 10131 do not apply to persons acting inthe capacity of a film location representative inconnection with a transaction which complieswith the requirements of subdivision (c).

(b) As used in this section:

(1) Film location representative means an

employee of a principal arranging for theuse of real property for photographicpurposes.

(2) Principal means the person who willuse the real property for photographicpurposes.

(c) In every transaction arranged by a filmlocation representative, the principal shallmaintain liability insurance insuring both that

principal and the real property owner againstdeath, bodily injury, and property damagearising out of or in connection with the use,ownership, or maintenance of the real propertywhich is the subject of the transaction. Theamount of the insurance coverage shall not beless than five hundred thousand dollars($500,000) per person or one million dollars($1,000,000) per occurrence for personal injuryand five hundred thousand dollars ($500,000)for property damage. It must be issued by an

insurance carrier authorized to sell suchinsurance in California.

Exemption from Article 5 Certain

Institutional Loans

10133.5. The provisions of Article 5(commencing with Section 10230) do not apply

to any person who is an approved lender,mortgagee, seller, or servicer for the FederalHousing Administration, United StatesDepartment of Veterans Affairs, Farmers HomeAdministration, Government National MortgageAssociation, Federal National MortgageAssociation, or Federal Home Loan MortgageCorporation, when making loans to be sold to, orwhen servicing loans on behalf of and subject toaudit by, any of the foregoing with respect to

those loans.Leasing

10135.When a lease or leasing is referred to inthis article, it includes any lease, whether suchlease is the sole transaction involved, or theprincipal or an incidental part of the transactioninvolved.

Action for Compensation

10136. No person engaged in the business oracting in the capacity of a real estate broker or a

real estate salesman within this State shall bringor maintain any action in the courts of this Statefor the collection of compensation for theperformance of any of the acts mentioned in thisarticle without alleging and proving that he wasa duly licensed real estate broker or real estatesalesman at the time the alleged cause of actionarose.

Unlawful Employment or Payment of

Compensation Penalty

10137.It is unlawful for any licensed real estatebroker to employ or compensate, directly orindirectly, any person for performing any of theacts within the scope of this chapter who is not alicensed real estate broker, or a real estatesalesman licensed under the broker employingor compensating him; provided, however, that alicensed real estate broker may pay acommission to a broker of another State.

No real estate salesman shall be employed by oraccept compensation from any person other than


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the broker under whom he is at the timelicensed.

It is unlawful for any licensed real estatesalesman to pay any compensation forperforming any of the acts within the scope ofthis chapter to any real estate licensee except

through the broker under whom he is at the timelicensed.

For a violation of any of the provisions of thissection, the commissioner may temporarilysuspend or permanently revoke the license of thereal estate licensee, in accordance with theprovisions of this part relating to hearings.

Partnership Acting Partners Must Be

Licensed

10137.1.Nothing contained in this division shallpreclude a partnership from performing acts for

which a real estate broker license is required,provided every partner through whom thepartnership so acts is a licensed real estatebroker.

Penalties for Payment of Unlawful

Compensation

10138. It is a misdemeanor, punishable by a fineof not exceeding one hundred dollars ($100) foreach offense, for any person, whether obligor,escrowholder or otherwise, to pay or deliver toanyone a compensation for performing any ofthe acts within the scope of this chapter, who isnot known to be or who does not presentevidence to such payor that he is a regularlylicensed real estate broker at the time suchcompensation is earned.

For a violation of any of the provisions of thissection, the commissioner may temporarilysuspend or permanently revoke the license of the

real estate licensee in accordance with theprovisions of this part relating to hearings.

Penalties for Unlicensed Person

10139. Any person acting as a real estate brokeror real estate salesperson without a license orwho advertises using words indicating that he orshe is a real estate broker without being solicensed shall be guilty of a public offensepunishable by a fine not exceeding twentythousand 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 ifa corporation, be punished by a fine notexceeding sixty thousand dollars ($60,000). If aReal Estate Fraud Prosecution Trust Fund, asdescribed in Section 27388 of the GovernmentCode, exists in the county where a person or

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

False Advertising

10140.Every officer, agent or employee of anycompany, and every other person whoknowingly authorizes, directs or aids in the

publication, advertisement, distribution orcircularization of any false statement orrepresentation concerning any land orsubdivision thereof, as defined in Chapter 1(commencing at Section 11000) of Part 2 of thisdivision, offered for sale or lease, or, if the landis owned by the State or Federal Government,which such person offers to assist another orothers to file an application for the purchase orlease of, or to locate or enter upon, and everyperson who, with knowledge that any

advertisement, pamphlet, prospectus or letterconcerning any said land or subdivision, asdefined in Chapter 1 (commencing at Section11000) of Part 2 of this division, contains anywritten statement that is false or fraudulent,issues, circulates, publishes or distributes thesame, or causes the same to be issued,circulated, published or distributed, or who, inany other respect, willfully violates or fails tocomply with any of the provisions of thissection, 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 thecommissioner under this section, is guilty of apublic offense, and shall be punished by a finenot exceeding one thousand dollars ($1,000), orby imprisonment in a county jail not exceedingone year, or by both such fine andimprisonment, and, if a real estate licensee, heshall be held to trial by the commissioner for a

suspension or revocation of his license, as


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provided in the provisions of this part relating tohearings. The district attorney of each county inthis State shall prosecute all violations of theprovisions of this section in respective countiesin which the violations occur.

Disclosure of Name

10140.5.Each advertisement or other statementwhich is published by a real estate broker orsalesman offering to assist persons to fileapplications for the purchase or lease of, or tolocate or enter upon, lands owned by the State orFederal Government shall, when published,indicate the name of the broker for whom it ispublished and state that he is licensed as a realestate broker by the State of California.

Disclosure of Licensed Status in Advertising

10140.6. (a) A real estate licensee shall notpublish, circulate, distribute, or cause to bepublished, circulated, or distributed in anynewspaper or periodical, or by mail, any matterpertaining to any activity for which a real estatelicense is required that does not contain adesignation disclosing that he or she isperforming acts for which a real estate license isrequired.

(b) (1) A real estate licensee shall disclose his

or her license identification number and, ifthat licensee is a mortgage loan originator,the unique identifier assigned to thatlicensee by the Nationwide MortgageLicensing System and Registry, on allsolicitation materials intended to be the firstpoint of contact with consumers and on realproperty purchase agreements when actingas an agent in those transactions. Thecommissioner may adopt regulations

identifying the materials in which a licenseemust disclose a license identificationnumber and, if that licensee is a mortgageloan originator, the unique identifierassigned to that licensee by the NationwideMortgage Licensing System and Registry.

(2) For purposes of this section, "solicitationmaterials intended to be the first point ofcontact with consumers" includes businesscards, stationery, advertising fliers, andother materials designed to solicit the

creation of a professional relationshipbetween the licensee and a consumer, andexcludes an advertisement in print orelectronic media and "for sale" signs.

(3) Nothing in this section shall be construedto limit or change the requirement described

in Section 10236.4 as applicable to realestate brokers.

(c) The provisions of this section shall not applyto classified rental advertisements reciting thetelephone number at the premises of the propertyoffered for rent or the address of the propertyoffered for rent.

(d) "Mortgage loan originator," "uniqueidentifier," and "Nationwide MortgageLicensing System and Registry" have themeanings set forth in Section 10166.01.

Sale Price Information Disclosure Broker or

Escrow

10141.Within one month after the closing of atransaction in which title to real property or inthe sale of a business when real or personalproperty is conveyed from a seller to a purchaserthrough a licensed real estate broker, suchbroker shall inform or cause the information tobe given to the seller and purchaser in writing ofthe selling price thereof and in event anexchange of real property or a businessopportunity is involved, such information shallinclude a description of said property andamount of added money consideration, if any. Ifthe transaction is closed through escrow and theescrow holder renders a closing statement whichreveals such information, that shall be deemedcompliance with this section on the part of thebroker.

Brokers Responsibility Recording TrustDeeds Escrow Compliance

10141.5.Within one week after the closing of atransaction negotiated by a real estate broker inwhich title to real property is conveyed from aseller to a purchaser and a deed of trust securedby real property is executed, such broker shallcause such deed of trust to be recorded with thecounty recorder of the county in which the realproperty is located, or cause it to be delivered tothe beneficiary with a written recommendation


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that it be recorded forthwith, unless writteninstructions not to record are received from thebeneficiary. If the transaction is closed throughescrow and the deed of trust is delivered to theescrow holder within the time prescribed by thissection, that shall be deemed compliance with

this section on the part of the broker. Nothing inthis section shall affect the validity of a transferof title to real property.

Delivery of Agreement

10142.When a licensee prepares or has preparedan agreement authorizing or employing suchlicensee to perform any of the acts for which heis required to hold a license, or when suchlicensee secures the signature of any person toany contract pertaining to such services or

transaction, he shall deliver a copy of theagreement to the person signing it at the time thesignature is obtained.

Report to Commissioner Application for

Government Land

10143.5. Any real estate broker who assistsanother or others, or whose real estate salesmenassist another or others, for a compensation, infiling an application for the purchase or lease of,or in locating or entering upon, lands owned bythe State or Federal Government shall report tothe commissioner the names and addresses of allpersons he or his salesmen have assisted in filingapplications for land owned by the State orFederal Government and the amount ofcompensation received from such persons. Thereport shall be filed quarterly within 10 daysafter the end of each calendar quarter.

Contract or Agreement Provisions

10144. The commissioner may prescribe byregulation the information which shall be

contained in contracts or other agreements by areal estate broker, or a real estate salesman, toassist another or others in filing an applicationfor the purchase or lease of, or in locating orentering upon, lands owned by the State orFederal Government, including, but not limitedto, information with regard to the servicesagreed to be performed and information withregard to the hazards which may prevent theperson to be assisted in filing an application with

the State or Federal Government ever receiving

any state or federal land under the application.

Handling of Trust Funds Interest-Bearing

Accounts Neutral Escrow Defined

10145.

(a) (1) A real estate broker who accepts funds

belonging to others in connection with atransaction subject to this part shall depositall those funds that are not immediatelyplaced into a neutral escrow depository orinto the hands of the brokers principal, intoa trust fund account maintained by thebroker in a bank or recognized depository inthis state. All funds deposited by the brokerin a trust fund account shall be maintainedthere until disbursed by the broker inaccordance with instructions from the

person entitled to the funds.

(2) Notwithstanding the provisions ofparagraph (1), a real estate broker collectingpayments or performing services forinvestors or note owners in connection withloans secured by a first lien on real propertymay deposit funds received in trust in anout-of-state depository institution insured bythe Federal Deposit Insurance Corporation,if the investor or note owner is any one of

the following:(A) The Federal National MortgageAssociation, the Government NationalMortgage Association, the FederalHome Loan Mortgage Corporation, theFederal Housing Administration, or theUnited States Department of VeteransAffairs.

(B) A bank or subsidiary thereof, bankholding company or subsidiary thereof,

trust company, savings bank or savingsand loan association or subsidiarythereof, savings bank or savingsassociation holding company orsubsidiary thereof, credit union,industrial bank or industrial loancompany, or insurance company doingbusiness under the authority of, and inaccordance with, the laws of this state,another state, or the United Statesrelating to banks, trust companies,


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savings banks or savings associations,credit unions, industrial banks orindustrial loan companies, or insurancecompanies, as evidenced by a license,certificate, or charter issued by theUnited States or a state, district,

territory, or commonwealth of theUnited States.

(C) Trustees of a pension, profit-sharing,or welfare fund, if the pension, profit-sharing, or welfare fund has a net worthof not less than fifteen million dollars($15,000,000).

(D) A corporation with outstandingsecurities registered under Section 12 ofthe Securities Exchange Act of 1934 or

a wholly owned subsidiary of thatcorporation.

(E) A syndication or other combinationof any of the entities specified insubparagraph (A), (B), (C), or (D) that isorganized to purchase the promissorynote.

(F) The California Housing FinanceAgency or a local housing financeagency organized under the Health andSafety Code.

(G) A licensed residential mortgagelender or servicer acting under theauthority of that license.

(H) A licensed real estate broker sellingall or part of the loan, note, or contractto a lender or purchaser specified insubparagraphs (A) to (G), inclusive.

(3) A real estate broker who deposits funds

held in trust in an out-of-state depositoryinstitution in accordance with paragraph (2)shall make available, in this state, the books,records, and files pertaining to the trustaccounts to the commissioner or thecommissioners representatives or pay thereasonable expenses for travel and lodgingincurred by the commissioner or thecommissioners representatives in order toconduct an examination at an out-of-statelocation.

(b) A real estate broker acting as a principalpursuant to Section 10131.1 shall place all fundsreceived from others for the purchase of realproperty sales contracts or promissory notessecured directly or collaterally by liens on realproperty in a neutral escrow depository unless

delivery of the contract or note is madesimultaneously with the receipt of the purchasefunds.

(c) A real estate sales person who accepts trustfunds from others on behalf of the broker underwhom he or she is licensed shall immediatelydeliver the funds to the broker or, if so directedby the broker, shall deliver the funds into thecustody of the brokers principal or a neutralescrow depository or shall deposit the funds into

the brokers trust fund account.(d) If not otherwise expressly prohibited by thispart, a real estate broker may, at the request ofthe owner of trust funds or of the principals to atransaction or series of transactions from whomthe broker has received trust funds, deposit thefunds into an interest-bearing account in a bank,savings and loan association, credit union, orindustrial loan company, the accounts of whichare insured by the Federal Deposit InsuranceCorporation, if all of the following requirementsare met:

(1) The account is in the name of the brokeras trustee for the designated beneficiary orprincipal of a transaction or series oftransactions.

(2) All of the funds in the account arecovered by insurance provided by an agencyof the United States.

(3) The funds in the account are kept

separate, distinct, and apart from fundsbelonging to the broker or to any otherperson for whom the broker holds funds intrust.

(4) The broker discloses to the person fromwhom the trust funds are received, and to abeneficiary whose identity is known to thebroker at the time of establishing theaccount, the nature of the account, howinterest will be calculated and paid under

various circumstances, whether service


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charges will be paid to the depository and bywhom, and possible notice requirements orpenalties for withdrawal of funds from theaccount.

(5) Interest earned on funds in the accountmay not inure directly or indirectly to the

benefit of the broker or a person licensed tothe broker.

(6) In an executory sale, lease, or loantransaction in which the broker acceptsfunds in trust to be applied to the purchase,lease, or loan, the parties to the contractshall have specified in the contract or bycollateral written agreement the person towhom interest earned on the funds is to bepaid or credited.

(e) The broker shall have no obligation to placetrust funds into an interest-bearing accountunless requested to do so and unless all of theconditions in subdivision (d) are met, nor, in anyevent, if he or she advises the party making therequest that the funds will not be placed in aninterest-bearing account.

(f) Nothing in subdivision (d) shall preclude thecommissioner from prescribing, by regulation,circumstances in which, and conditions underwhich, a real estate broker is authorized todeposit funds received in trust into an interest-bearing trust fund account.

(g) The broker shall maintain a separate recordof the receipt and disposition of all fundsdescribed in subdivisions (a) and (b), includingany interest earned on the funds.

(h) Upon request of the commissioner, a brokershall furnish to the commissioner an

authorization for examination of financialrecords of those trust fund accounts maintainedin a financial institution, in accordance with theprocedures set forth in Section 7473 of theGovernment Code.

(i) As used in this section, neutral escrowmeans an escrow business conducted by aperson licensed under Division 6 (commencingwith Section 17000) of the Financial Code or bya person described in paragraph (1) or (3) ofsubdivision (a) of Section 17006 of that code.

Advance Fees to Be Deposited in Trust

Account

10146.Any real estate broker who contracts foror collects an advance fee from any otherperson, hereinafter referred to as the "principal,"shall deposit any such amount or amounts, when

collected in a trust account with a bank or otherrecognized depository. Such funds are trustfunds and not the funds of the agent. Amountsmay be withdrawn therefrom for the benefit ofthe agent only when actually expended for thebenefit of the principal or five days after theverified accounts mentioned hereinafter havebeen mailed to the principal. Upon request of thecommissioner, a broker shall furnish to thecommissioner an authorization for examinationof financial records of the trust account in

accordance with the procedures set forth inSection 7473 of the Government Code.

The commissioner may issue such rules andregulations as he or she deems necessary toregulate the method of accounting, and toaccomplish the purpose of the provisions of thiscode relating to advance fees including, but notlimited to, establishing forms for anddetermining information to be included in suchaccountings. Each principal shall be furnished a

verified copy of such accountings at the end ofeach calendar quarter and when the contract hasbeen completely performed by the licensee. Thecommissioner shall be furnished a verified copyof any account or all accounts on his or herdemand therefor.

Where advance fees actually paid by or onbehalf of any principal are not handled inaccordance with the preceding paragraph, it shallbe presumed that the agent has violated Sections506 and 506a of the Penal Code. The principalmay recover treble damages for amounts somisapplied and shall be entitled to reasonableattorney's fees in any action brought to recoverthe same.

Commercial Property Owners Guide to

Earthquake Safety

10147. (a) On or before January 1, 1993, theSeismic Safety Commission shall develop,adopt, and publish a Commercial Property

Owners Guide to Earthquake Safety for


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distribution to licensees for purposes of Section2079.9 of the Civil Code and, upon request, toany member of the general public.

(b) In developing the guide, the Seismic SafetyCommission shall consult with the Office ofEmergency Services, the Division of Mines and

Geology of the Department of Conservation, theDepartment of Real Estate, and other interestedagencies and persons.

(c) The commission shall, to the extent possible,rely on currently available data to develop theguide. To the extent necessary, the commissionmay contract for the development andproduction of the guide. The commission shallupdate the contents of the guide whenever itdetermines that information within the guide is

sufficiently inaccurate or incomplete so as toreduce the effectiveness of the guide. Thecommission shall charge a fee to cover the costsof production, distribution, development, andupdating the guide.

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

(1) Maps and information on geologic andseismic hazard conditions in the state.

(2) Explanations of typical structural andnonstructural earthquake hazards.

(3) Recommendations for mitigating thehazards of an earthquake, includingreferences and explanations of whatconstitutes adequate wall anchorage asdefined in Section 8893.1 of theGovernment Code.

(4) A statement that there are no guaranteesof safety or damage prevention that can be

made with respect to a major earthquake andthat only precautions, such as retrofitting,can be taken to reduce the risk of varioustypes of earthquake damage. For purposes ofpreparing the statement, the commissionshall confer with insurers and designprofessional associations.

(5) Notice of the obligation to post a sign asrequired by Section 8875.8 of theGovernment Code.

Negotiability of Real Estate Commissions

Notice Requirement

10147.5. (a) Any printed or form agreementwhich initially establishes, or is intended toestablish, or alters the terms of any agreementwhich previously established a right to

compensation to be paid to a real estate licenseefor the sale of residential real propertycontaining not more than four residential units,or for the sale of a mobilehome, shall contain thefollowing statement in not less than 10-pointboldface type immediately preceding anyprovision of such agreement relating tocompensation of the licensee:

Notice: The amount or rate of real estatecommissions is not fixed by law. They are set by

each broker individually and may be negotiablebetween the seller and broker.

(b) The amount or rate of compensation shall notbe printed in any such agreement.

(c) Nothing in this section shall affect thevalidity of a transfer of title to real property.

(d) As used in this section, alters the terms ofany agreement which previously established aright to compensation means an increase in therate of compensation, or the amount ofcompensation if initially established as a flat fee,from the agreement which previouslyestablished a right to compensation.

Loan Modification Notice of Free Services

10147.6. (a) Any licensee who negotiates,attempts to negotiate, arranges, attempts toarrange, or otherwise offers to perform amortgage loan modification or other form ofmortgage loan forbearance for a fee or otherform of compensation paid by the borrower,

shall provide the following to the borrower, as aseparate statement, in not less than 14-point boldtype, prior to entering into any fee agreementwith the borrower:

It is not necessary to pay a third party to arrangefor a loan modification or other form offorbearance from your mortgage lender orservicer. You may call your lender directly toask for a change in your loan terms. Nonprofithousing counseling agencies also offer these and

other forms of borrower assistance free of


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charge. A list of nonprofit housing counselingagencies approved by the United StatesDepartment of Housing and Urban Development(HUD) is available from your local HUD officeor by visiting www.hud.gov.

(b) If loan modification or other mortgage loan

forbearance services are offered or negotiated inone of the languages set forth in Section 1632 ofthe Civil Code, a translated copy of thestatement in subdivision (a) shall be provided tothe borrower in that foreign language.

(c) A violation of this section by a natural personwho is a licensee is a public offense punishableby a fine not exceeding ten thousand dollars($10,000), by imprisonment in the county jail fora 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 notexceeding fifty thousand dollars ($50,000).These penalties are cumulative to any otherremedies or penalties provided by law.

(d) This section shall apply only to mortgagesand deeds of trust secured by residential realproperty containing four or fewer dwelling units.

Retention of Records Chargeable Audits

10148. (a) A licensed real estate broker shallretain for three years copies of all listings,deposit receipts, canceled checks, trust records,and other documents executed by him or her orobtained by him or her in connection with anytransactions for which a real estate brokerlicense is required. The retention period shallrun from the date of the closing of thetransaction or f

california real estate law 2010

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