BILL NUMBER: AB 2288 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 6, 2010
INTRODUCED BY Assembly Member Blakeslee
FEBRUARY 18, 2010
An act to amend Section 101.1 of the Business and
Professions Code, relating to professions and vocations.
An act to amend Section 10239.4 of the Business and Professions
Code, and to add Section 25119 to the Co rporations Code,
relating to securities.
LEGISLATIVE COUNSEL'S DIGEST
AB 2288, as amended, Blakeslee. Professions and
vocations: boards: review. Issuers of securities: real
estate brokers: hard money lending.
(1) Existing law, the Real Estate Law, provides for the licensing
and regulation of real estate brokers by the Real Estate
Commissioner. Existing law requires a broker to provide specified
notices and disclosures for transactions that involve the sale of, or
offer to sell, a series of notes secured directly by interests in
real property or the sale of undivided interests in a note secured
directly by one or more parcels of real property equivalent to a
series transaction. Existing law requires a real estate broker who
arranges these transactions to clearly indicate in the broker's
transaction file the provisions of the Corporate Securities Law of
1968 pertaining to qualification or exemption from qualification
under which the transaction is being conducted. Existing law makes a
willful violation of the Real Estate Law a crime.
This bill would require a broker arranging those transactions to
provide a copy of the information in the broker's transaction file to
the person with whom the broker arranged the transaction.
Because a willful violation of these provisions by a real estate
broker would be a crime, the bill would impose a state-mandated local
program.
(2) Existing law makes it unlawful for a person to offer or sell
any security in an issuer transaction unless the sale has been
qualified, as specified, or is exempt.
This bill would require an issuer of securities that engages in
hard money lending, as defined, to maintain specified records and a
surety bond and to establish a contractual agreement, that meets
specified requirements, with the person to whom the issuer sells
securities for the purpose of investing in mortgage loans.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Existing law states the intent of the Legislature that all
existing and proposed consumer-related boards or categories of
licensed professionals be subject to a review every 4 years to
evaluate and determine whether each board has demonstrated a public
need for the continued existence of that board, as specified.
This bill would make a nonsubstantive, technical change to these
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10239.4 of the
Business and Professions Code , as added by Section 2 of
Chapter 901 of the Statutes of 2003, is amended to read:
10239.4. This article applies only to the exemption from
securities qualification claimed under Section 25102.5 of the
Corporations Code. This article does not apply to any other exemption
from securities qualification, including subdivision (e) of Section
25102 of the Corporations Code, which may be claimed without
complying with this article, or to any permit to qualify the offer
and sale of securities under the Corporate Securities Law of 1968. A
real estate broker, when engaging in acts for which a license is
required, who arranges a transaction pursuant to this article or
pursuant to an offering subject to the Corporations Code, shall
clearly indicate in the broker's transaction file the provision of
the Corporate Securities Law of 1968 pertaining to qualification or
exemption from qualification under which the transaction is being
conducted, and shall retain this information for the period specified
in subdivision (a) of Section 10148. A copy of the information
shall be provided to the person with whom the real estate broker
arranges the transaction.
SEC. 2. Section 25119 is added to the
Corporations Code , to read:
25119. (a) An issuer engaging in hard money lending shall satisfy
all of the following:
(1) The issuer shall maintain records required pursuant to Section
10148 of the Business and Professions Code.
(2) The issuer shall establish a contractual agreement with the
person to whom the issuer sells a limited or general partnership,
limited liability company, limited liability partnership trust, joint
venture, unincorporated association, or similar organization formed
and operated for the primary purpose of investing in mortgage loans.
The contract shall be signed by the issuer and the person, shall
include a plan for the use of the invested moneys, and shall include
the disclosures set forth in paragraph (5) of subdivision (k) of, and
in subdivision (l) of, Section 10238 of the Business and Professions
Code.
(3) The issuer shall maintain a surety bond for the recovery of
expenses, fines, and fees, or for losses or damages, incurred by
investors as the result of an issuer's default. All of the following
shall apply to the surety bond required under this paragraph:
(A) The bond shall be in an amount no less than 10 percent of the
amount of the total pooled investment.
(B) An issuer shall not make new investments unless the total
value of the pooled investment is covered by a bond meeting the
requirements of subparagraph (A). New investments that exceed the
bonded capacity of the pooled investment shall only be made when a
new bond has been secured to meet the requirements of subparagraph
(A) for the expanded investment fund.
(C) An issuer shall provide the department with evidence on an
annual basis indicating that the requirements of subparagraphs (A)
and (B) have been satisfied.
(D) An original surety bond, including any and all riders and
endorsements executed subsequent to the effective date of the bond,
shall be filed with the department within 10 days of its execution.
(b) For purposes of this section, "hard money lending" means the
offering or selling of a limited or general partnership, limited
liability company, limited liability partnership trust, joint
venture, unincorporated association, or similar organization formed
and operated for the primary purpose of investing in mortgage loans,
commercial property loans, and construction loans.
SEC. 3. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
SECTION 1. Section 101.1 of the Business and
Professions Code is amended to read:
101.1. (a) It is the intent of the Legislature that all existing
and proposed consumer-related boards or categories of licensed
professionals be subject to a review every four years to evaluate and
determine whether each board has demonstrated a public need for the
continued existence of that board in accordance with enumerated
factors and standards as set forth in Division 1.2 (commencing with
Section 473).
(b) (1) In the event that a board, as defined in Section 477,
becomes inoperative or is repealed in accordance with the act that
added this section, or by subsequent acts, the Department of Consumer
Affairs shall succeed to and is vested with all the duties, powers,
purposes, responsibilities and jurisdiction not otherwise repealed or
made inoperative of that board and its executive officer.
(2) Any provision of existing law that provides for the
appointment of board members and specifies the qualifications and
tenure of board members shall not be implemented and shall have no
force or effect while that board is inoperative or repealed. Every
reference to the inoperative or repealed board, as defined in Section
477, shall be deemed to be a reference to the department.
(3) Notwithstanding Section 107, any provision of law authorizing
the appointment of an executive officer by a board subject to the
review described in Division 1.2 (commencing with Section 473), or
prescribing his or her duties, shall not be implemented and shall
have no force or effect while the applicable board is inoperative or
repealed. Any reference to the executive officer of an inoperative or
repealed board shall be deemed to be a reference to the director or
his or her designee.
(c) It is the intent of the Legislature that subsequent
legislation to extend or repeal the inoperative date for any board
shall be a separate bill for that purpose.