January 2010 LW

For a total list of all the real estate laws digested by first tuesday for the 2009-2010 legislative session, click here.

Topics:

1. Loan modification and foreclosure consultant rules

2. Residential notice to vacate

3. Mortgage brokers and higher-priced mortgage loans

4. NOD moratoriums, short sales and exchange facilitators

5. Taxation of property damaged or destroyed in a wildfire

6. Changes to the Real Estate Appraisers’ Licensing and Certification Law

7. DRE  licensee continuing education procedures changing

8. Residential tenants and utilities

Reported by Giang Hoang-Burdette

Disclosure of free counseling prior to loan modification agreement

Business and Professions Code §10147.6, 2944.6
Added by S.B. 94
Effective October 11, 2009

Prior to entering into any agreement to provide loan modification services on a loan secured by a one-to-four unit residential property for compensation, a real estate licensee must provide to the borrower the following statement in no less than 14-point bold type:

“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.”

If the loan modification or other loan forbearance service is negotiated in Spanish, Chinese, Tagalog, Vietnamese or Korean, a translated version of the disclosure must be provided to the borrower.  [For translated versions of this required statement, see the Department of Real Estate (DRE)’s Loan Modification Disclosure Requirements webpage]

Violation of this law is punishable by:

• a fine of up to $10,000 and/or one-year imprisonment if the violator if an individual; and
• a fine of up to $50,000 if the violator is a corporation.

This law and its provisions do not apply to a person or his agent offering a loan modification of a loan owned or serviced by that person.

Attorneys subject to loan modification disclosure law

Business and Professions Code §§6106.3; 10085.6
Added by S.B. 94
Effective October 11, 2009

An attorney may be disciplined for violating existing loan modification laws by:

• failing to make the mandatory disclosure to the borrower that nonprofit housing counseling is available; or
• failing to provide a translated copy of that mandatory disclosure if negotiations for the loan modification were conducted in Spanish, Chinese, Tagalog, Vietnamese or Korean.

 

 

Attorneys and DRE licensees prohibited from collecting advance fees

Business and Professions Code §§6106.3; 10085.6
Added by S.B. 94
Effective October 11, 2009

Until January 1, 2013 unless the law is otherwise extended, attorneys and DRE licensees may also be disciplined for violating existing loan modification laws by:

• collecting a fee or any other compensation in advance of performing all services promised in the loan modification agreement; or
• taking a power of attorney from the borrower for any purpose.

Violation of this law is punishable by:

• a fine of up to $10,000 and/or one-year imprisonment if the violator if an individual; and
• a fine of up to $50,000 if the violator is a corporation.

These laws only apply to trust deeds secured by one-to-four unit residential property.

Advance fee definition and forms

Business and Professions Code §§ 10026, 10085
Amended by S.B. 94
Effective October 11, 2009

The definition of advance fee now includes any compensation, regardless of form, that is charged and/or collected from a principal before fully completing every loan modification service the licensee contracts to perform.

The maximum fine for using any advance fee agreement that the Real Estate Commissioner has ordered not to be used has been increased from $1,000 to $2,500.

Counseling organizations

Business and Professions Code § 10133.1
Amended by S.B. 94
Effective October 11, 2009

Organizations that have been approved by HUD to provide free counseling services on the modification of loans secured by one-to-four unit residential properties are exempt from the loan modification laws.

 

Violations of mortgage law affect DRE license

Business and Professions Code § 10177
Amended by S.B. 94
Effective October 11, 2009

A DRE license may be suspended, revoked or denied for violations of the mortgage lending law.

DRE licensees not considered foreclosure consultants

Civil Code § 2945.1
Amended by S.B. 94
Effective October 11, 2009

A real estate licensee is excluded from the definition of a foreclosure consultant when acting under the authority of his license.

Residential notice to vacate

Civil Code § 1946.1
Amended by S.B. 290
Effective: January 1, 2010

The 30-day and 60-day notice to vacate requirements set forth for unspecified term leases no longer have a sunset date of January 1, 2010, and are now in effect indefinitely.  For more information on these notice to vacate requirements, see the November 2007 first tuesday Legislative Watch Residential notice to vacate, 30 or 60 days.

Violation of federal lending laws impacts California real estate licensing

Business and Professions Code § 10177 and Financial Code §§1242, 4995, 14961, 22346, 50505
Amended and Added by AB 260
Effective January 1, 2010

The Department of Real Estate (DRE) Commissioner is now authorized to suspend, revoke, or deny a real estate license based on violation of any provision of:

• the federal Real Estate Settlement Procedures Act (RESPA);
• the federal Truth in Lending Act (TILA, or Reg-Z);
• the federal Home Ownership Equity Protection Act (HOEPA);  and
• California mortgage lending laws.

Violation of any provision of these federal laws would also violate the licensing provisions of the California Finance Lenders Law, the California Residential Mortgage Lending Act, and the laws which regulate commercial banks and credit unions.

Mortgage broker, defined

Civil Code § 2923.1
Added by AB 260
Effective January 1, 2010

A mortgage broker is:

• an individual who holds a license under:
  • the Real Estate Law as regulated by the Department of Real Estate (DRE);
  • the California Finance Lenders Law as regulated by the Department of Corporations (DOC); or
  • the California Residential Mortgage Lending Act as regulated by the DOC;
  • a commercial or industrial bank;
  • a savings and loan; or
  • a credit union;

AND

• accepts compensation for arranging a residential mortgage loan made by an unaffiliated third party.

A residential mortgage loan is defined as a consumer credit transaction secured by a one-to-four unit residential property.

Mortgage brokers have a fiduciary duty to the borrowers, the violation of which will be a violation of mortgage broker’s license law.

Rules for higher-priced mortgage loans originated on or after July 1, 2010

Financial Code §§ 4995.1-6
Added by AB 260
Effective January 1, 2010

These rules apply to higher-priced mortgage loans originated on or after July 1, 2010.

The maximum prepayment penalty that may be charged on a higher-priced mortgage loan may not exceed:

• 2% of the principal balance prepaid during the first 12 months following origination; or
• 1% of the principal balance prepaid during the second 12 months following origination.

Any prepayment penalty which violates these provisions is unenforceable.

A mortgage broker who arranges only higher-priced mortgage loans must disclose that fact both orally and in writing at the time of his initial engagement of services with the borrower.

A mortgage broker may not, in bad faith:

• fail in his fiduciary duties to his client;
• fail in his TILA duties to his client;
• make any false, deceptive or misleading statements in connection with a higher-priced mortgage loan;
• steer, counsel or direct a borrower towards a higher-priced mortgage loan if the borrower is qualified to receive a lower-cost loan through a third party the mortgage broker regularly does business with;
• receive extra compensation for arranging a higher-priced loan with a prepayment penalty;
• encourage a borrower to default on an existing loan in order to refinance into a higher-priced mortgage loan;
• make a higher-priced mortgage loan which contains a negative amortization provision; or
• receive a different amount of compensation for arranging a borrower’s loan dependent on whether his compensation is coming from the lender, borrower or a third party.

If the mortgage broker violates any of the above provisions in good faith and the violation was caused by a bona fide error, he will not be liable if:

• within 90 days of the loan closing and prior to any action against the broker; or
• within 120 days of the receipt of a complaint from the borrower or discovery of the violation, he:
  • notified the borrower of the violation;
  • tendered restitution;
  • offered the borrower the option of:
    • bringing the existing higher-priced mortgage loan into compliance with the law; or
    • change the terms of the loan to extinguish its ‘higher-priced’ status to benefit the borrower; or
• took appropriate action within a reasonable period of time following the borrower’s remedy election.

A bona fide error includes:

• clerical errors;
• calculation errors;
• computer or programming malfunction; or
• printing errors.

Violation of these provisions would be considered a violation of the broker’s licensing law.  The DRE (and other licensing agencies) may further prohibit brokers from engaging in acts dealing with higher-priced mortgage loans which are intended to evade these laws, or are unfair or deceptive.

Willful and knowing violation of these provisions will subject a broker to a civil penalty of not more than $10,000. Additionally, any yield spread premium in violation of these laws is unenforceable.

[This legislative watch updates information on higher-priced mortgage loans, also called Section-32 or Cal-32 loans, as reported in the May 2008 article Cal-32 high cost loans; see first tuesday Forms 221, 223, 223-1 and 223-2]

30-day NOD moratorium applies only to owner-occupied, one-to-four residential units
Civil Code § 2923.5
Amended by SB 306
Effective January 1, 2010

With written authorization from the borrower, a HUD-certified housing counseling agency may now discuss the borrower’s financial situation with the lender.

A lender may not file a notice of default (NOD) on trust deed recorded between January 1, 2003 and December 31, 2007 secured by an owner-occupied, one-to-four residential unit property until the lender has contacted the owner or made a due diligent effort to do so within 30 days prior to recording the NOD.

The NOD must include a provision which ensures that compliance with the 30-day moratorium rule has been met by stating:

• contact with the owner was made;
• contact with the owner was not made after a due diligent effort to contact the owner; or
• no contact was required since the lender’s record does not show the trust deed is secured by an owner-occupied one-to-four unit primary residence.

Unless otherwise extended, the sunset date of these provisions is January 1, 2013.

Extended timeframe for recording a Notice of Sale
Civil Code §§ 2924.8, 2924f
Amended by SB 306
Effective January 1, 2010

Concurrently with the posting of a notice of sale, an additional notice must be sent via first class mail to residents of the property subject to foreclosure.

The time prior to the trustee’s sale for recording the notice of sale has been extended from 14 days to 20 days prior to the date of the trustee’s sale.

Short sale definitions and applications
Civil Code § 2943
Amended by SB 306
Effective January 1, 2010

A short-pay agreement is a written agreement entered into with the owner of any type of encumbered property in which a lender agrees to release its lien on the property in return for payment of an amount less than the outstanding debt.

A short-pay demand statement is a written beneficiary statement, prepared upon a short-pay request for a payoff demand based on a previously entered into short-pay agreement of the price, terms and conditions under which a lender will execute and deliver a reconveyance of the deed of trust. The period of time used to calculate the short-pay will be no greater than 30 days from the date of the lender’s preparation of the payoff demand statement.

A short-pay request, made by the owner of the encumbered property or escrow, is a written request for the lender to provide a short-pay demand statement. The short-pay request must include:

• a copy of a purchase agreement with an agreed-upon purchase price;
• a copy of the short-pay agreement; and
• information regarding the release of any other liens on the property.

Upon the lender’s receipt of a short-pay request from the owner or escrow, the lender has 21 days to prepare and deliver a short-pay demand statement to the requesting party.

A lender’s refusal to issue a payoff demand on the short-pay transaction as agreed must be provided in writing within 21 days of the receipt of the short-pay request.

If the terms and conditions of the short-term agreement require the beneficiary’s approval of escrow closing documents, disapproval must be provided no more than four days after the receipt of the agreement or the short-pay demand statement from the beneficiary is deemed approved.

Exchange facilitators do not need to be members of the Escrow Agents’ Fidelity Corporation
Financial Code § 17312
Amended by SB 306
Effective January 1, 2010

An exchange facilitator is not required to have membership in the Escrow Agents’ Fidelity Corporation when depositing funds or property into escrow for an exchange.

Taxation of property damaged or destroyed in a wildfire

Revenue and Taxation Code §§ 218, 17207
Amended by A.B. 1568
Effective January 1, 2010

The following wildfires were declared disasters by the governor:

• fires in Los Angeles and Ventura counties subject to the disaster declarations of October 13, 2009 and November 15, 2008;
• fires in Santa Barbara county subject to the disaster declaration of November 13, 2008;
• fires in Orange, Riverside and San Bernardino counties subject to the disaster declarations of November 15, 2008 and November 17, 2008; and
• fires in Santa Barbara county subject to the disaster declaration of May 5, 2009.

A property damaged or destroyed by any of the listed wildfires may not be denied the $7,000 California property tax exemption solely on the basis of wildfire damage if it:

• was eligible for the property  tax exemption prior to the commencement of the wildfire; and
• has not changed ownership since the commencement of the wildfire.

Excess losses suffered in these wildfires may be carried over to other taxable years. A taxpayer may also elect to claim a deduction for a loss for the preceding year’s tax return.

Changes to the Real Estate Appraisers’ Licensing and Certification Law (REALCL)

Additional definitions for appraisal management companies

Business and Professions Code §11302
Amended by S.B. 237
Effective January 1, 2010

An appraisal management company is a person or entity that:

• employs 11 or more licensed independent contractor appraisers or maintains a list containing 11 or more licensed independent contractor appraisers;
• receives requests for appraisers from one or more clients; and
• receives compensation for delegating appraisals to employed or licensed independent contractor appraisers.

When contracting with a licensed independent appraiser, the following persons or entities are not considered appraisal management companies:

• any bank or other financial institution doing business under the authority of a federal or state charter;
• a finance lender or broker when acting under the authority of his license;
• a residential mortgage lender or servicer when acting under the authority of his license;
• a real estate broker when acting under the authority of his license; or
• an attorney licensed to practice law when acting on behalf of a client.

A controlling person is an:

• officer or director of an appraisal management company;
• individual who holds 10% or greater ownership in an appraisal management company;
• individual authorized by an appraisal management company to:
  • enter into agreements with clients to provide appraisals; and
  • enter into agreements with licensed independent appraisers to complete appraisals; and
  • individual authorized to direct the management or policies of an appraisal management company.

Registration is the process through which a person or entity qualifies to do business as an appraisal management company.

Certificate of registration required

Business and Professions Code §§ 11320.5, 11345, 11345.05, 11345.1, 11345.3
Added by S.B.237
Effective January 1, 2010

To transact business as an appraisal management company, a person or entity must obtain a certificate of registration from the Office of Real Estate Appraisers (OREA).

The director of the OREA will adopt regulations for the process of obtaining this certificate. The application for the certificate will contain the following information about the person or entity seeking registration:

• name;
• business address and telephone;
• if not a California resident or business, the agent for service of process in California and an irrevocable consent to service of process from the OREA; and
• a list of names, addresses and contact information for up to ten controlling persons in the appraisal management company.

The appraisal management company must notify the OREA of any changes to or errors in the information contained in the certificate of registration application within ten business days of discovering the change or error.

Additionally, the application for the certificate of registration must confirm all contracts with clients contain a provision ensuring all of the following are standard business practices:

• ensuring all independent contractor appraisers are properly licensed;
• reviewing the work of independent contractor appraisers to ensure performance conforms to the Uniform Standards of Professional Appraisal Practice; and
• maintaining the following records on each service request:
  • date the request was received;
  • name of the person requesting the service;
  • name of the client for whom the request was made, if different from the person requesting the service;
  • name of the appraiser(s) assigned to the service; and
  • date the appraisal was delivered to the client.

The certificate of registration is valid for two years unless otherwise extended or limited by the director of the OREA.

Requirements for a controlling person

Business and Professions Code §11343
Added by S.B.237
Effective January 1, 2010

An individual is disqualified from being the controlling person of an appraisal management company if he has:

• pled guilty to or been convicted of a felony; or
• had an appraiser’s license or similar real estate license denied, revoked or canceled in any state.

An existing controlling person must provide a written statement to the OREA within ten days of learning he falls under either of categories.

Background checks required

Business and Professions Code §11343
Added by S.B.237
Effective January 1, 2010

Appraiser licensing applicants and controlling persons of appraisal management companies must submit fingerprints to the OREA for a background check through the Federal Bureau of Investigation (FBI) via the Department of Justice (DOJ). The DOJ then reviews information received from the FBI and reports the findings to the OREA. The DOJ may charge a reasonable fee for this service.

Improper influence on appraisers and appraisals

Business and Professions Code §§11345.4, 11345.45, 11345.6; Civil Code §1090.5
Amended and added by S.B.237
Effective January 1, 2010

A person or entity, including an appraisal management company, may not improperly influence the value of an appraisal by:

• withholding or threatening to withhold timely payment for an appraisal;
• withholding or threatening to withhold future business, including removal from an approved list of appraisers;
• promising future business, promotions or increased compensation to an independent contractor appraiser;
• conditioning the request for an appraisal, payment for the appraisal or other compensation on a preliminary or conclusive appraised valuation;
• requesting compensation for a higher priority in the assignment of appraisal business; or
• requesting a preliminary, predetermined valuation prior to the appraiser completing his appraisal report;
• providing to the appraiser an anticipated, estimated or desired valuation prior to the appraiser completing his appraisal report; or
• requesting the appraiser provide estimated values of comparable sales prior to the appraiser completing his appraisal report.

Editor’s note —This legislative watch codifies the guidelines released by the Department of Real Estate (DRE) in their Spring 2009 Real Estate Bulletin and the requirements set forth by Fannie Mae and Freddie Mac’s Home Valuation Code of Conduct (HVCC).

In their bulletin, the DRE indicated that giving the appraiser a purchase agreement was acceptable. That practice was called into question with the release of the HVCC and the provisions above, which expressly prohibit providing an appraiser with ‘an anticipated, estimated or desired valuation’ prior to the completion of the appraisal. However, this code does not expressly prohibit, as it could have, providing a purchase agreement to the appraiser. Whether the purchase agreement was meant to be prohibited as a ‘desired valuation’ is a gray issue which the courts and the state’s Attorney General will have to decide when it inevitably comes up.

[For more information on the Spring 2009 Real Estate Bulletin, see the April 2009 first tuesday article “What number do you need to get your deal done?” led to real estate price inflation; for more information on the HVCC, see the July 2009 first tuesday article The Home Valuation Code of Conduct.]

A person or entity may not structure an appraisal assignment or contract to appraise to evade these provisions.

An appraisal management company may not alter or otherwise change a completed appraisal by:

• permanently removing the appraiser’s signature or seal;
• adding information to an appraisal to change the valuation; or
• removing information from an appraisal to change the valuation.

An appraisal management company may not require an appraiser to provide it with the appraiser’s digital signature or seal, however an appraiser may voluntarily provide his seal to another person.

Investigations of violations

Business and Professions Code §11328.1
Added by S.B.237
Effective January 1, 2010

If the director of the OREA has a reasonable belief that a person is acting in violation of the REALCL, the director may investigate by submitting a written request for information from the alleged violator. The violator may submit the requested materials within a reasonable time. All submitted materials will be kept confidential by the director and the OREA.

Violation of the REALCL

Business and Professions Code §§11315.1, 11406.5
Amended by S.B.237
Effective January 1, 2010

A person or entity holding a certificate of registration, known as a registrant, is now subject to all the following regulations.

Violators of the REALCL will be issued a citation describing the nature of violation and a reference to the provision of the law violated. The citation may contain an order to fix the violation within a reasonable amount of time.

The citation may also assess a fine, not to exceed $10,000, for a violation of the REALCL. A citation assessing a fine must inform the violator that he may request a hearing to contest the violation by providing written notice to the OREA within 30 days of the date of the citation’s issuance. A citation will be considered an enforceable civil judgment and final if not contested.

Failure to pay the fine within the 30 days of the date of the citation’s issuance may result in:

• additional disciplinary action;
• the full unpaid balance of the fine being added to the renewal fee for the appraisal management company’s registration certificate;
• the director of the OREA ordering the full amount of the fine immediately due and payable; and
• an accrual of interest on the fine.

Fines collected under this code section will be in addition to any other criminal or civil penalties, and will be deposited into the Real Estate Appraisers Regulation Fund.

Fees to cover administration of new laws

Business and Professions Code §11406.5
Added by S.B.237
Effective January 1, 2010

The director of the OREA will establish the fees to be imposed on appraisal management companies to cover the costs of administering these changes.

Sunset date set by federal regulation

Business and Professions Code §11346
Added by S.B.237
Effective January 1, 2010

The regulation of appraisal management companies will cease to rule 60 days after the effective date of any federal law which mandates the registration of appraisal management companies with an entity other than the state OREA.

Reported by Bradley Markano

Real estate license renewal education undergoes regulatory changes

 

These new regulations from the Department of Real Estate (DRE) affect every California real estate broker and agent, and all educators who provide approved CE courses for broker and agent license renewal.   The regulations set out requirements which fundamentally change the process of completing the CE education necessary to renew a DRE licensee.

CE Restrictions for brokers and agents

 

DRE Regulations §3006
Effective: January 1, 2011

Every broker and agent licensed after October 1, 2007 is required to complete 45 hours of continuing education (CE) every four years in order to renew their license. The sales agent fifteen-hour exception for first-time renewal will no longer exist after September 30, 2011.

To ensure that all non-correspondence CE courses, including live CE presentations, are in fact equivalent to 45 hours of actual study time, all non–correspondence courses must :

• include 50 minutes of instruction per hour of CE Credit;
• require students to be physically present for at least 90% of the time the course is administered (40 hours, 30 minutes, for a 45 hour course), exclusive of the time set for the final exam;
• provide a course outline, with a minimum three pages per credit hour (135 pages for a 45 hour course), each page to have a minimum average of 325 words; and
• comply with the Americans with Disabilities Act (ADA).

To ensure 45-hour equivalence in correspondence CE courses, all correspondence courses must:

• structure their study materials to have a minimum of 3,750 words per credit hour (168,750 words for a 45 hour course). The word count may not include copy in the table of contents, indices or bibliography;
• have a written statement signed under penalty of perjury by students who take the final exam online, affirming that the person who completes the course is the student; and
• monitor access to “online-only” course reading materials to ensure that the course is not completed in fewer hours than the approved number of credit hours (hence, a student in an “online-only” 45 hour CE course will be required to spend a full 45 hours studying online before accessing the final exam to complete the course).

All CE providers, regardless of whether they offer live or correspondence courses, must:

• maintain their legal entities in good standing with California’s Secretary of State;
• provide the following statement to students before beginning a course: “This course is approved for CE credit by the California Department of Real Estate. However, this approval does not constitute an endorsement of the views or opinions which are expressed by the course sponsor, instructors, authors or lecturers.”;
• quiz students periodically throughout the course of study to evaluate the student’s comprehension and provide feedback on these evaluations to the student;
• require the course be completed within one year of registration; and
• refrain from all advertising during the course of study.

CE course submissions subject to minimum DRE requirements for approval

DRE Regulations §3007
Effective: January 1, 2011

An educator’s application for DRE approval of a CE course must include:

• for corporations:
  • a current Certificate of Status as a Domestic Corporation, executed by the California Secretary of State in the preceding 30 days; or
  • a current Certificate of Qualification or Certificate of Good Standing as a Foreign Corporation, executed by the California Secretary of State in the preceding 30 days.
• for those operating under a DBA:
  • a Fictitious Business Name Statement filed with the county recorder in their local county (or in Sacramento if the provider’s base of operations is outside of California).
• CE Instructor Certification for all live course instructors;
• a copyright authorization from the copyright holder, stating that the CE course materials may be used by the applicant;
• if the provider is not a California resident, a consent to Service of Process form;
• copies of all instructional materials, including books, cds, dvds, etc.;
• if CDs will be used:
  • the CDs;
  • a table of contents for each CD; and
  • if the CD contains a textbook, a copy of the text cover, publication page and table of contents of the textbook.
• if DVDs are used in the course, a course outline must be included, subdivided to clarify the amount of time for each topic on every DVD;
• a general information page given to all students prior to enrolling in the course. This page must include all requirements and policies affecting enrollment in and completion of the course;
• for live lectures, a course outline detailing topics covered, and the amount of time allocated to each subject;
• detailed statements of the following:
  • methods used to regulate online exams;
  • control and timing of student participation in “online-only” course materials;
  • copies of all quizzes, and a statement of how feedback on these quizzes will be provided to students;
  • a copy of the form to be signed by students, confirming that the student is the one taking the final exam;
  • instructions for paper final exams provided to students and their exam monitors; and
  • for paper exams, the form to be signed by the exam monitor affirming that the test procedures complied with DRE regulations.
• the final exam and answer key. If students are permitted to test more than once, two final exams must be submitted, or a sufficient number of questions must be included in a question bank to constitute two separate exams;
• a sample certificate of completion, which includes:
  • the name and license number of the student;
  • a statement that the student has attended a live course, or completed all exams satisfactorily;
  • the name of the course;
  • the number of credit hours;
  • the registration date;
  • the completion date;
  • the category of the course;
  • the course’s eight-digit DRE approval number;
  • the course provider’s name, address and telephone number; and
  • the printed name, signature and phone number of the individual who confirms the student’s course completion.
• for live courses offered in a maximum of two locations no more than twice a year, covering new or changing subjects in real estate, a cover letter must accompany the course. This letter must identify the course as a one-time offering, and include the first date the course will be offered.

Procedure for changing content in approved CE courses

DRE Regulations §3007.2
Effective: January 1, 2011

For a CE course provider to make changes to any course already DRE approved, they must submit the changes to the DRE for approval before implementing them. This does not apply if the changes are exclusively designed to reflect recent changes in law.

Providers of CE courses approved prior to July 1, 2010 must make changes to meet the requirements of this section. Such changes do not need to be submitted to the DRE for review until the course is renewed.

Regulations for final exams

DRE Regulations §3007.3
Effective: January 1, 2011

All CE courses must include a final exam which determines whether the student enrolled has successfully completed his course. Student access to exams will be limited to prevent cheating or improper distribution of the exam.

For packaged CE courses containing 15 to 45 hours, students may not be given access to more than fifteen credit hours-worth of examination within any 24-hour period. Access to sequential fifteen-hour exams may not be granted until the preceding 24-hour period has passed. This does not require successful completion of one exam stage before proceeding to the next, so long as the student is not permitted to complete more than 15 hours of final examination in any 24-hour period.

In a multiple choice, true/false, or fill-in the blank exam, the minimum number of questions is:

• 5 questions for 1 credit hour;
• 10 questions for 2 credit hours;
• 15 questions for 3 credit hours;
• 20 questions for 4 credit hours;
• 25 questions for 5-7 credit hours;
• 30 questions for 8-10 credit hours;
• 35 questions for 11-13 credit hours;
• 45 questions for 14-15 credit hours;
• 50 questions for 16-18 credit hours;
• 60 questions for 19-21 credit hours;
• 70 questions for 22-24 credit hours;
• 80 questions for 26-28 credit hours;
• 90 questions for 29-31 credit hours;
• 100 questions for 32-34 credit hours; and
• an additional 3 questions for each credit hour over 34.

All multiple choice, true/false, or fill-in the blank exams are limited to a maximum of 10% true/false questions.

The time limit for completing an exam may allow no more than one minute per question (thus a 15-question test for a three hour course may have a maximum time limit of fifteen minutes).

Final exams may be open or closed-book exams, but must be the same for all students. In an open book exam, only materials approved for use in the student’s specific course may be used.

Final exams taken on paper to complete a correspondence course may only be administered by a proctor, designated by the course provider, who is not related to the student by blood, marriage, domestic partnership or any other relationship which might influence the proctor to improperly administer the exam. The proctor must certify in writing that he has complied with all rules of exam administration.

Final exams administered online may not be printed by the student, accessed multiple times or be available after the time-limit has passed.

Before a student may access the final exams for a correspondence course, the student must be enrolled for a maximum of one day for every eight credit hours of the total course hours which make up the CE package in which the student is enrolled. For an “online-only” CE course, the student must spend the full amount of credit hours on the internet reviewing course materials and taking quizzes before accessing the final exam (a 45 hour course will require the student to spend a full 45 hours studying and taking quizzes; the course provider’s online system must monitor the progress of this). For those who elect to take courses on paper, the eight credit-hour days may begin whenever the student has access to the course material.

 

Students may retake the final exam a second time if they fail on their first attempt. Questions on the second exam must be different from those on the first exam. Students may not take the final exam more than two times. If a student fails both exams, they must re-enroll in the course and complete the full number of credit hours again before testing.

No more than 10% of the questions on the final exam may be used in quizzes and other tests for the same course.

Students are not permitted to possess the final exam except in controlled testing situations.

 

DRE sponsor number to be included in all advertising

DRE Regulations §3007.6
Effective: January 1, 2011

All advertising for CE must contain the course provider’s four digit DRE Sponsor Number. The full eight digit number, used by the DRE to approve completed courses, must be excluded from all advertisements.

 

Non-CE course approval and certification for CE instructors

DRE Regulations §3011.1
Effective: January 1, 2011

Course instructors who present a live real estate-related course which is not approved by the DRE may apply to the DRE for CE credit. This application must include a copy of the course’s table of contents, if applicable, and an outline for the course.

The course provider of any DRE-approved CE course presented live may issue one certificate of completion to the course instructor during the period of approval for instructing a DRE-approved course.

 

Application for CE credit for authorship of a non-approved textbook

DRE Regulations §3011.2
Effective: January 1, 2011

If a writer seeks CE credit for writing a book that has not been approved for use as CE material, the writer must submit an application for credit to the DRE which includes:

• the book/article’s publication date;
• an explanation of how the material fits the DRE’s standards for course materials;
• the number of hours the course provider devoted to writing the book/article; and
• the time period during which the book/article was written.

Application for CE credit for non-approved courses

DRE Regulations §3011.4
Effective: January 1, 2011

If a student applies to the DRE to receive CE credit for a course that has not been approved by the DRE, the student must submit an application that includes the final grade received in the course and a certificate of completion.

 

Records to be kept by CE providers

DRE Regulations §3012.2
Effective: January 1, 2011

Course providers must keep records of every student who registers/attends their courses, and grades received on final exams. These records must be kept for at least five years, and must be extensive enough for the provider to grant a duplicate certificate of completion to students upon request.

Reported by Connor Wallmark:

Notice to residential tenant by utility company prior to termination of their unit’s individually metered service for failure of the management to pay for the services

Public Utilities Code §§777, 10009, 12822, 16481
Amended by S.B. 120
Effective January 1, 2010

The following requires public utility companies, corporations and districts (the Utility) to give prior notice to tenants holding a landlord-tenant relationship in the property when individually metered services the Utility provides to the property in the name of the management will be terminated for lack of payment.

If individually metered utilities are provided to a residential tenant in a detached single family property, multi-unit residential structure, permanent residential property in a labor camp or mobilehome park, and the manager, owner, landlord or operator (the Management) of the dwelling is the customer of record, the Utility will make a good faith effort to notify the tenants if utility service will be terminated due to missed payments.

The written notice must inform the tenant:

• service will be  terminated in:
  • ten days for multi-unit residences; or
  • seven days for detached single family residences; and
• the tenant may elect to become a billed customer of the Utility without paying the delinquent amount.

The notice must be provided in English, Spanish, Chinese, Tagalog, Vietnamese and Korean.

The Utility is not required to provide service to the tenants unless every tenant agrees to the Utility’s terms. However, if one or more tenants elect to reestablish service and the Utility is physically and legally able to terminate only the service of the tenants who elect not to, the Utility will provide the requested service if the tenants meet the requirements of the Utility.

If prior service is required by the Utility to establish credit, and no prior service has been sold directly to the tenant, proof of residence at the unit and timely rental payments are an acceptable equivalent to the prior service requirement.

A tenant who elects to reestablish service with the Utility may deduct the cost of service from his rental payment unless the cost of utilities is stated separate from the rent in the rental or lease agreement.

Effective July 1, 2010, a tenant reestablishing service who occupies a detached single family residence must prove the customer failing to pay for services is the Management, not the tenant. Acceptable proof can take the form of:

• a lease or rental agreement;
• rental receipts;
• government documentation verifying the tenancy; or
• other documentation written by the management establishing the tenancy if it was entered into orally.

Notice to residential tenant by utility company prior to termination of master metered service for failure of the management to pay for the services

Public Utilities Code §§777.1, 10009.1, 12822.1, 16481.1
Amended by S.B. 120
Effective January 1, 2010

The following requires public utility companies, corporations and districts (the Utility) to give tenants prior notice when services the Utility provides through a master meter at the property in the name of the management will be terminated for lack of payment.

If utilities are provided through a master meter in a multi-unit residential structure, permanent residential property in a labor camp or mobilehome park, and the manager, owner, landlord or operator (the Management) of the dwelling is the customer of record, the Utility will make a good faith effort to notify the tenants if service will be terminated due to missed payments. The written notice must be posted on the door of each unit 15 days prior to termination and contain:

• the date for termination;
• notice to the tenant of their option to become a billed customer of the Utility without  paying the delinquent amount;
• instructions to prevent termination or reestablish service;
• the estimated cost of monthly service;
• the title, address and phone number of a representative of the Utility who can continue service; and
• the address and phone number of a legal service recommended by the county bar association.

If the Utility is unable to post notice on the tenants’ doors, it must post two copies of the notice in every:

• accessible common area; and
• point of access to the property.

The notice must be provided in English, Spanish, Chinese, Tagalog, Vietnamese and Korean. The notice must also use clear wording and boldface type and contain detailed instructions.

The Utility need not provide service to the tenants unless every tenant agrees to the Utility’s terms for service. However, if one or more tenants elect to reestablish service and the Utility is physically and legally able to separately supply the service to individual tenants while terminating only the service of the tenants who elect not to, the Utility will provide the requested service if the tenants meet customer  requirements.

If prior service to the tenant is required to establish credit, and no prior service has previously been sold to the tenant, proof of residence at the unit and timely rental payments are an acceptable equivalent to the prior service requirement.

A tenant who elects to reestablish service with the Utility may deduct the cost of service from his rental payment if the cost of the utilities is not stated as a separate amount from the rent in the rental or lease agreement.

The Utility may not terminate service:

• during the Utility’s investigation of a customer complaint or dispute;
• if the Utility granted the customer an extension on the delinquent payment;
• due to the customer’s indebtedness to any other public agency;
• for delinquent accounts on other properties receiving service from the Utility; or
• if a public health or building officer certifies termination would cause a significant threat to health or safety.

If the Management fails to prevent the termination of service in an occupied residential unit, the tenant may recover from the Management:

• all money losses related to the termination of service;
• costs incurred by the tenant to reestablish service; and
• attorney fees.

A lien may be placed on the Management’s property by the tenant to enforce recovery.

The Utility must comply with these notice requirements before terminating service. If service is wrongfully terminated by the Utility, it will be reestablished without cost to the tenant. If the service was wrongfully terminated and the tenant made a good faith effort to retain uninterrupted service, the Utility may also be liable for damages and attorney fees resulting from the termination.

No punitive damages may be recovered from the Management for involuntary termination of services and no costs may be recovered related to the formation, maintenance and termination of a tenant’s association, preempting all local ordinances to the contrary, such as those contained in rent control provisions.

Tenant deduction from rent of utility charges incurred by tenant after service terminated for lack of payment by management who provided for the service

Civil Code §1942.2
Amended by S.B. 120
Effective January 1, 2010

A tenant of a detached single family property, multi-unit residential structure, permanent residential property in a labor camp or mobilehome park who elects to reestablish utilities from a corporation, public utility or district (the Utility) after it has been terminated due to nonpayment by the manager, owner or operator of the dwelling (the Management), may deduct the cost of utility service from his rental payment if the cost of the utilities is not stated as a separate amount from the rent in the rental or lease agreement.