California Assembly Bill AB33 Amended / Bill

 BILL NUMBER: AB 33AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 24, 2009 AMENDED IN ASSEMBLY FEBRUARY 10, 2009 INTRODUCED BY Assembly Member Nava DECEMBER 1, 2008  An act relating to financial services.   An act to amend Sections 30, 31, 7500.3, 7502.1, 7502.2, 7522, 7582.2, 7742, 10003, 10004, 10005, 10071, 10082,   10131.3, 10146, 10147, 10149, 10150.6, 10151.5, 10153, 10159.2, 10175.2, 10176.1, 10177, 10225, 10231.2, 10232.1, 10232.2, 10232.4, 10232.25, 10236.2, 10239, 10249.3, 10249.8, 10249.9, 10451.5, 10470.1, 10471, 10471.5, 10472, 10501, 11000.1, 11000.2, 11001, 11003.4, 11010, 11011, 11012, 11018, 11018.1, 11018.2, 11018.7, 11212, 11225, 11232, 11243, 11302, 11314, 11315, 11315.5, 11316, 11317, 11318, 11325, 11326, 11327, 11328, 11340, 11341, 11344, 11350, 11352, 11360, 11361, 11400, 11401, 11406, 11407, 11408, 11409, 11412, 11422, 11502.5, 17511.1, 17537.2, and 20009 of, and to repeal Sections 10050, 10051, 10052, 10053,   10073, 10075, 10076, 10077, 10078, 10079, 10080, 11301, 11310, 11313 of, the Business and Professions Code, to amend Sections 163, 500, 1001, 1101.1, 1300, 2207, 7813.5, 8011.5, 12504, 12532, 13205, 13406, 13408.5, 14025, 15679.2, 15911.21, 17656, 23000, 25004, 25005, 25014.6, 25100, 25102, 25243.5, 25247, 25254, 25600, 25602, 25604, 25606, 25607, 25612.5, 25614, 25702, 28033, 28505, 28715, 29200, 29503, 31004, 31210, 31408, 31503, 31513 of, and to repeal Sections 25601, 25603, and 25620 of, the Corporations Code, to amend Sections 112, 200, 201, 210, 210.5, 215, 262, 1856, 4057, 4805.055, 4970, 4990, 5104, 12003, 12100, 12104, 12307.4, 14003, 14200.1, 14200.2, 14381, 17002, 17006, 17210.2, 17214, 17303, 17311, 17312, 17320, 17331, 17423.1, 18002, 18002.5, 18339, 18427.9, 18596, 22005, 22159.5, 22160, 22304, 23001, 23070, 23071, 23072, 23073, 23074, 23102, 28000, 30002, 30005, 30217, 31055, 33045.5, 33785, 50003, 50303, 50307.1, 50602, 50702 of, and to add Sections 203 and 210.9 to, the Financial Code, and   to amend Section 13975 of the Government Code, relating to financial services.  LEGISLATIVE COUNSEL'S DIGEST AB 33, as amended, Nava.  Financial services.   Department of Financial Services.  Existing law establishes the Department of Financial Institutions, the Department of Corporations, the Department of Real Estate, and the Office of Real Estate Appraisers in the Business, Transportation and Housing Agency. Existing law provides for the licensing and regulation of, among others, banks, credit unions, and other financial institutions by the Commissioner of Financial Institutions. Existing law provides for the licensing and regulation of, among others, residential mortgage lenders and finance lenders by the Commissioner of Corporations. Existing law provides for the licensing and regulation of, among others, real estate brokers by the Real Estate Commissioner. Existing law provides for the licensure and regulation of real estate appraisers by the Director of the Office of Real Estate Appraisers. This bill would  declare the intent of the Legislature to  do the following: (1) abolish the Department of Corporations (DOC), the Department of Financial Institutions (DFI), the Department of Real Estate (DRE), and the Office of Real Estate Appraisers (OREA), (2) create a new Department of Financial Services (DFS), (3) designate the chief officer of DFS as the Commissioner of Financial Services, (4)  arrange for the consolidation and transfer of various operations and procedures of   transfer the powers, duties, purposes, jurisdiction, responsibilities, and functions of the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers and  those  respective  departments and that office to  the Commissioner of Financial Services and  DFS, and (5) require DFS to regulate those persons, entities, and transactions subject to regulation by, or subject to the jurisdiction of, DOC, DFI, DRE, and OREA. The bill would make  legislative  findings and declarations in  that   this  regard. Vote: majority. Appropriation: no. Fiscal committee:  no   yes  . State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) The regulation and oversight of financial services in California are divided among  three   four  regulators, the Department of Financial Institutions, the Department of Real Estate,  the Office of Real Estate Appraisers,  and the Department of Corporations. (b) California is one of only a few states that separates the regulation of financial services among different licensing agencies. (c) This division of oversight is most apparent in the regulation of home mortgage lending that is split among several licensing schemes, including the California Finance Lenders Law, the California Residential Mortgage Lending Act, the Real Estate Law, and laws governing the operation of state and federally chartered banks or credit unions. (d) This partition of regulation dilutes consumer protection and creates confusion and unnecessary administrative difficulties for financial services entities. (e) The current regulatory system creates licensing arbitrage, with entities seeking out licenses from various regulators in order to obtain an advantage.  SEC. 2.   Section 30 of the   Business and Professions Code   is amended to read:  30. (a) Notwithstanding any other provision of law, any board, as defined in Section 22, and the State Bar and the Department of  Real Estate   Financial Services  shall at the time of issuance of the license require that the licensee provide its federal employer identification number, if the licensee is a partnership, or his or her social security number for all others. (b) Any licensee failing to provide the federal identification number or social security number shall be reported by the licensing board to the Franchise Tax Board and, if failing to provide after notification pursuant to paragraph (1) of subdivision (b) of Section 19528 of the Revenue and Taxation Code, shall be subject to the penalty provided in paragraph (2) of subdivision (b) of Section 19528 of the Revenue and Taxation Code. (c) In addition to the penalty specified in subdivision (b), a licensing board may not process any application for an original license unless the applicant or licensee provides its federal employer identification number or social security number where requested on the application. (d) A licensing board shall, upon request of the Franchise Tax Board, furnish to the Franchise Tax Board the following information with respect to every licensee: (1) Name. (2) Address or addresses of record. (3) Federal employer identification number if the entity is a partnership or social security number for all others. (4) Type of license. (5) Effective date of license or a renewal. (6) Expiration date of license. (7) Whether license is active or inactive, if known. (8) Whether license is new or a renewal. (e) For the purposes of this section: (1) "Licensee" means any entity, other than a corporation, authorized by a license, certificate, registration, or other means to engage in a business or profession regulated by this code or referred to in Section 1000 or 3600. (2) "License" includes a certificate, registration, or any other authorization needed to engage in a business or profession regulated by this code or referred to in Section 1000 or 3600. (3) "Licensing board" means any board, as defined in Section 22, the State Bar, and the Department of  Real Estate   Financial Services  . (f) The reports required under this section shall be filed on magnetic media or in other machine-readable form, according to standards furnished by the Franchise Tax Board. (g) Licensing boards shall provide to the Franchise Tax Board the information required by this section at a time that the Franchise Tax Board may require. (h) Notwithstanding Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code, the social security number and federal employer identification number furnished pursuant to this section shall not be deemed to be a public record and shall not be open to the public for inspection. (i) Any deputy, agent, clerk, officer, or employee of any licensing board described in subdivision (a), or any former officer or employee or other individual who in the course of his or her employment or duty has or has had access to the information required to be furnished under this section, may not disclose or make known in any manner that information, except as provided in this section to the Franchise Tax Board or as provided in subdivision (k). (j) It is the intent of the Legislature in enacting this section to utilize the social security account number or federal employer identification number for the purpose of establishing the identification of persons affected by state tax laws and for purposes of compliance with Section 17520 of the Family Code and, to that end, the information furnished pursuant to this section shall be used exclusively for those purposes. (k) If the board utilizes a national examination to issue a license, and if a reciprocity agreement or comity exists between the State of California and the state requesting release of the social security number, any deputy, agent, clerk, officer, or employee of any licensing board described in subdivision (a) may release a social security number to an examination or licensing entity, only for the purpose of verification of licensure or examination status. () For the purposes of enforcement of Section 17520 of the Family Code, and notwithstanding any other provision of law, any board, as defined in Section 22, and the State Bar and the Department of  Real Estate   Financial Services  shall at the time of issuance of the license require that each licensee provide the social security number of each individual listed on the license and any person who qualifies  for  the license. For the purposes of this subdivision, "licensee" means any entity that is issued a license by any board, as defined in Section 22, the State Bar, the Department of  Real Estate   Financial Services  , and the Department of Motor Vehicles.  SEC. 3.   Section 31 of the   Business and Professions Code   is amended to read:  31. (a) As used in this section, "board" means any entity listed in Section 101, the entities referred to in Sections 1000 and 3600, the State Bar, the Department of  Real Estate   Financial Services  , and any other state agency that issues a license, certificate, or registration authorizing a person to engage in a business or profession. (b) Each applicant for the issuance or renewal of a license, certificate, registration, or other means to engage in a business or profession regulated by a board who is not in compliance with a judgment or order for support shall be subject to Section 11350.6 of the Welfare and Institutions Code. (c) "Compliance with a judgment or order for  support,"   support"  has the meaning given in paragraph (4) of subdivision (a) of Section 11350.6 of the Welfare and Institutions Code.  SEC. 4.   Section 7500.3 of the   Business and Professions Code   is amended to read:  7500.3. A repossession agency shall not include any of the following: (a) Any bank subject to the jurisdiction of the Commissioner of Financial  Institutions   Services  of the State of California under Division 1 (commencing with Section 99) of the Financial Code or the Comptroller of the Currency of the United States. (b) Any person organized, chartered, or holding a license or authorization certificate to make loans pursuant to the laws of this state or the United States who is subject to supervision by any official or agency of this state or the United States. (c) An attorney at law in performing his or her duties as an attorney at law. (d) The legal owner of collateral that is subject to a security agreement or a bona fide employee employed exclusively and regularly by the legal owner of collateral that is subject to a security agreement. With regard to collateral subject to registration under the Vehicle Code, the legal owner shall be the legal owner listed on the records of the Department of Motor Vehicles or the seller or lessor named on a valid conditional sales contract or rental or lease agreement if the seller or lessor is a licensed vehicle dealer as defined in Section 285 of the Vehicle Code. (e) An officer or employee of the United States of America, or of this state or a political subdivision thereof, while the officer or employee is engaged in the performance of his or her official duties. (f) A qualified certificate holder or a registrant when performing services for, or on behalf of, a licensee.  SEC. 5.   Section 7502.1 of the   Business and Professions Code   is amended to read:  7502.1. (a) Any person who violates any provision of this chapter, or who conspires with another person to violate any provision of this chapter, or who knowingly engages a nonexempt unlicensed person to repossess collateral on his or her behalf is guilty of a misdemeanor, and is punishable by a fine of five thousand dollars ($5,000), or by imprisonment in the county jail for not more than one year, or by both the fine and imprisonment. (b) Within existing resources, the Commissioner of Financial  Institutions, the Commissioner of Corporations   Services  , and the Director of Motor Vehicles may each designate employees to investigate and report on violations of this chapter by any of the licensees of their respective departments. Those employees are authorized to actively cooperate with the bureau in the investigation of those activities. (c) A proceeding to impose the penalties specified in subdivision (a) may be brought in any court of competent jurisdiction in the name of the people of the State of California by the Attorney General or by any district attorney or city attorney, or with the consent of the district attorney, by the city prosecutor in any city or city and county having a full-time city prosecutor, for the jurisdiction in which the violation occurred. If the action is brought by a district attorney, the penalty collected shall be paid to the treasurer of the county in which the judgment is entered. If the action is brought by a city attorney or city prosecutor, one-half of the penalty collected shall be paid to the treasurer of the city in which the judgment was entered and one-half to the treasurer of the county in which the judgment was entered. If the action is brought by the Attorney General, all of the penalty collected shall be deposited in the Private Security Services Fund.  SEC. 6.   Section 7502.2 of the   Business and Professions Code   is amended to read:  7502.2. (a) Any financial institution that knowingly engages a nonexempt unlicensed person to repossess collateral on its behalf is guilty of a misdemeanor, and is punishable by a fine of five thousand dollars ($5,000). (b) Within existing resources, the Commissioner of Financial  Institutions and the Commissioner of Corporations   Services  may  each  designate employees to investigate and report on violations of this section by any of the licensees of  their respective departments   the Department of Financial Services  . Those employees are authorized to actively cooperate with the bureau in the investigation of those activities. (c) A proceeding to impose the fine specified in subdivision (a) may be brought in any court of competent jurisdiction in the name of the people of the State of California by the Attorney General or by any district attorney or city attorney, or with the consent of the district attorney, by the city prosecutor in any city or city and county having a full-time city prosecutor, for the jurisdiction in which the violation occurred. If the action is brought by a district attorney, the penalty collected shall be paid to the treasurer of the county in which the judgment is entered. If the action is brought by a city attorney or city prosecutor, one-half of the penalty collected shall be paid to the treasurer of the city in which the judgment was entered and one-half to the treasurer of the county in which the judgment was entered. If the action is brought by the Attorney General, all of the penalty collected shall be deposited in the Private Security Services Fund.  SEC. 7.   Section 7522 of the   Business and Professions Code   is amended to read:  7522. This chapter does not apply to: (a) A person employed exclusively and regularly by any employer who does not provide contract security services for other entities or persons, in connection with the affairs of such employer only and where there exists an employer-employee relationship if that person at no time carries or uses any deadly weapon in the performance of his or her duties. For purposes of this subdivision, "deadly weapon" is defined to include any instrument or weapon of the kind commonly known as a blackjack, slungshot, billy, sandclub, sandbag, metal knuckles, any dirk, dagger, pistol, revolver, or any other firearm, any knife having a blade longer than five inches, any razor with an unguarded blade and any metal pipe or bar used or intended to be used as a club. (b) An officer or employee of the United States of America, or of this state or a political subdivision thereof, while the officer or employee is engaged in the performance of his or her official duties, including uniformed peace officers employed part time by a public agency pursuant to a written agreement between a chief of police or sheriff and the public agency, provided the part-time employment does not exceed 50 hours in any calendar month. (c) A person engaged exclusively in the business of obtaining and furnishing information as to the financial rating of persons. (d) A charitable philanthropic society or association duly incorporated under the laws of this state which is organized and maintained for the public good and not for private profit. (e) An attorney at law in performing his or her duties as an attorney at law. (f) Admitted insurers and agents and insurance brokers licensed by the state, performing duties in connection with insurance transacted by them. (g) Any bank subject to the jurisdiction of the Commissioner of Financial  Institutions   Services  of the State of California under Division 1 (commencing with Section 99) of the Financial Code or the Comptroller of  the  Currency of the United States. (h) A person engaged solely in the business of securing information about persons or property from public records. (i) A peace officer of this state or a political subdivision thereof while the peace officer is employed by a private employer to engage in off-duty employment in accordance with Section 1126 of the Government Code. However, nothing herein shall exempt a peace officer who either contracts for his or her services or the services of others as a private investigator or contracts for his or her services as or is employed as an armed private investigator. For purposes of this subdivision, "armed private investigator" means an individual who carries or uses a firearm in the course and scope of that contract or employment. (j) A licensed insurance adjuster in performing his or her duties within the scope of his or her license as an insurance adjuster. (k) Any savings association subject to the jurisdiction of the Commissioner of Financial  Institutions   Services  or the  federal  Office of Thrift Supervision. () Any secured creditor engaged in the repossession of the creditor's collateral and any lessor engaged in the repossession of leased property in which it claims an interest. (m) The act of serving process by an individual who is registered as a process server pursuant to Section 22350. (n) (1) A person or business engaged in conducting objective observations of consumer purchases of products or services in the public environments of a business establishment by the use of a preestablished questionnaire, provided that person or business entity does not engage in any other activity that requires licensure pursuant to this chapter. The questionnaire may include objective comments. (2) If a preestablished questionnaire is used as a basis, but not the sole basis, for disciplining or discharging an employee, or for conducting an interview with the employee that might result in the employee being terminated, the employer shall provide the employee with a copy of that questionnaire using the same procedures that an employer is required to follow under Section 2930 of the Labor Code for providing an employee with a copy of a shopping investigator's report. This subdivision does not exempt from this chapter a person or business described in paragraph (1) if a preestablished questionnaire of that person or business is used as the sole basis for evaluating an employee's work performance. (o) Any joint labor-management committee established pursuant to the federal Labor Management Cooperation Act of 1978 (Section 175a of Title 29 of the United States Code), or its employees, where either the committee or employee is performing a function authorized by the Labor Management Cooperation Act of 1978, which includes, but is not limited, to monitoring public works projects to ensure that employers are complying with federal and state public works laws.  SEC. 8.   Section 7582.2 of the   Business and Professions Code   is amended to read:  7582.2. This chapter does not apply to the following: (a) A person who does not meet the requirements to be a proprietary private security officer, as defined in Section 7574.1, and is employed exclusively and regularly by any employer who does not provide contract security services for other entities or persons, in connection with the affairs of the employer only and where there exists an employer-employee relationship if that person at no time carries or uses any deadly weapon in the performance of his or her duties. For purposes of this subdivision, "deadly weapon" is defined to include any instrument or weapon of the kind commonly known as a blackjack, slungshot, billy, sandclub, sandbag, metal knuckles, any dirk, dagger, pistol, revolver, or any other firearm, any knife having a blade longer than five inches, any razor with an unguarded blade and any metal pipe or bar used or intended to be used as a club. (b) An officer or employee of the United States of America, or of this state or a political subdivision thereof, while the officer or employee is engaged in the performance of his or her official duties, including uniformed peace officers employed part time by a public agency pursuant to a written agreement between a chief of police or sheriff and the public agency, provided the part-time employment does not exceed 50 hours in any calendar month. (c) A person engaged exclusively in the business of obtaining and furnishing information as to the financial rating of persons. (d) A charitable philanthropic society or association duly incorporated under the laws of this state that is organized and maintained for the public good and not for private profit. (e) Patrol special police officers appointed by the police commission of any city, county, or city and county under the express terms of its charter who also under the express terms of the charter (1) are subject to suspension or dismissal after a hearing on charges duly filed with the commission after a fair and impartial trial, (2) must be not less than 18 years of age nor more than 40 years of age, (3) must possess physical qualifications prescribed by the commission, and (4) are designated by the police commission as the owners of a certain beat or territory as may be fixed from time to time by the police commission. (f) An attorney at law in performing his or her duties as an attorney at law. (g) A collection agency or an employee thereof while acting within the scope of his or her employment, while making an investigation incidental to the business of the agency, including an investigation of the location of a debtor or his or her property where the contract with an assignor creditor is for the collection of claims owed or due or asserted to be owed or due or the equivalent thereof. (h) Admitted insurers and agents and insurance brokers licensed by the state, performing duties in connection with insurance transacted by them. (i) Any bank subject to the jurisdiction of the Commissioner of Financial  Institutions   Services  of the State of California under Division 1 (commencing with Section 99) of the Financial Code or the Comptroller of  the  Currency of the United States. (j) A person engaged solely in the business of securing information about persons or property from public records. (k) A peace officer of this state or a political subdivision thereof while the peace officer is employed by a private employer to engage in off-duty employment in accordance with Section 1126 of the Government Code. However, nothing herein shall exempt such peace officer who either contracts for his or her services or the services of others as a private patrol operator or contracts for his or her services as or is employed as an armed private security officer. For purposes of this subdivision, "armed security officer" means an individual who carries or uses a firearm in the course and scope of that contract or employment. () A retired peace officer of the state or political subdivision thereof when the retired peace officer is employed by a private employer in employment approved by the chief law enforcement officer of the jurisdiction where the employment takes place, provided that the retired officer is in a uniform of a public law enforcement agency, has registered with the bureau on a form approved by the director, and has met any training requirements or their equivalent as established for security personnel under Section 7583.5. This officer may not carry a loaded or concealed firearm unless he or she is exempted under the provisions of subdivision (a) of Section 12027 of the Penal Code or paragraph (1) of subdivision (b) of Section 12031 of the Penal Code or has met the requirements set forth in Section 12033 of the Penal Code. However, nothing herein shall exempt the retired peace officer who contracts for his or her services or the services of others as a private patrol operator. (m) A licensed insurance adjuster in performing his or her duties within the scope of his or her license as an insurance adjuster. (n) Any savings association subject to the jurisdiction of the Commissioner of Financial  Institutions   Services  or the  federal  Office of Thrift Supervision. (o) Any secured creditor engaged in the repossession of the creditor's collateral and any lessor engaged in the repossession of leased property in which it claims an interest. (p) A peace officer in his or her official police uniform acting in accordance with subdivisions (c) and (d) of Section 70 of the Penal Code. (q) An unarmed, uniformed security person employed exclusively and regularly by a motion picture studio facility employer who does not provide contract security services for other entities or persons in connection with the affairs of that employer only and where there exists an employer-employee relationship if that person at no time carries or uses any deadly weapon, as defined in subdivision (a), in the performance of his or her duties, which may include, but are not limited to, the following business purposes: (1) The screening and monitoring access of employees of the same employer. (2) The screening and monitoring access of prearranged and preauthorized invited guests. (3) The screening and monitoring of vendors and suppliers. (4) Patrolling the private property facilities for the safety and welfare of all who have been legitimately authorized to have access to the facility. (r) The changes made to this section by the act adding this subdivision during the  2005-06   2005-06  Regular Session of the Legislature shall apply as follows: (1) On and after July 1, 2006, to a person hired as a security officer on and after January 1, 2006. (2) On and after January 1, 2007, to a person hired as a security officer before January 1, 2006.  SEC. 9.   Section 7742 of the   Business and Professions Code   is amended to read:  7742. Nothing in this article shall apply to any arrangement, contract  ,  or plan for the issuance of securities now or hereafter authorized under a permit of the Commissioner of  Corporations   Financial Services  of this state.  SEC. 10.   Section 10003 of the   Business and Professions Code   is amended to read:  10003. "Commissioner" refers to the  Real Estate  Commissioner  of Financial Services. All references to "commissioner" shall be deemed to refer to the Commissioner of Financial Services  .  SEC. 11.   Section 10004 of the   Business and Professions Code   is amended to read:  10004. "Department" means the Department of  Real Estate   Financial Services  in the Business and Transportation Agency.  All references to the "department" shall be deemed to refer to the Department of Financial Services.   SEC. 12.   Section 10005 of the   Business and Professions Code   is amended to read:  10005. Whenever the terms "division," "State Real Estate Division," or "Real Estate Division" are used in this division, they mean the Department of  Real Estate  Financial Services  . Whenever the terms " State Real Estate Division" or " Real Estate Division" are used in any other law, they mean the Department of  Real Estate   Financial Services  .  SEC. 13.   Section 10050 of the   Business and Professions Code   is repealed.   10050. There is in the Business and Transportation Agency a Department of Real Estate, the chief officer of which department is named the Real Estate Commissioner. It shall be the principal responsibility of the commissioner to enforce all laws in this part (commencing with Section 10000) and Chapter 1 (commencing with Section 11000) of Part 2 of this division in a manner which achieves the maximum protection for the purchasers of real property and those persons dealing with real estate licensees.   SEC. 14.   Section 10051 of the   Business and Professions Code   is repealed.   10051. The commissioner shall be appointed by the Governor.   SEC. 15.   Section 10052 of the   Business and Professions Code   is repealed.   10052. The commissioner shall have been for five years a real estate broker actively engaged in business as such in California, or shall possess related experience associated with real estate activity in California for five years within the last 10 years.   SEC. 16.   Section 10053 of the   Business and Professions Code   is repealed.   10053. The commissioner shall receive an annual salary as provided in Chapter 6 (commencing with Section 11550) of Part 1 of Division 3 of Title 2 of the Government Code, to be paid monthly out of the State Treasury upon a warrant of the Controller, and shall be allowed his actual and necessary expenses in the discharge of his duties.   SEC. 17.   Section 10071 of the   Business and Professions Code   is amended to read:  10071. The commissioner shall enforce the provisions of this part and of Chapter 1 of Part 2. He  or she  has full power to regulate and control the issuance and revocation, both temporary and permanent, of all licenses to be issued under the provisions of this part, and to perform all other acts and duties provided in this part and Chapter 1 of Part 2 and necessary for their enforcement.  SEC. 18.   Section 10073 of the   Business and Professions Code   is repealed.   10073. The commissioner shall employ such deputies, clerks and employees as he may need to discharge in proper manner the duties imposed upon him by law.   SEC. 19.   Section 10075 of the   Business and Professions Code   is repealed.   10075. Deputies, clerks and employees shall perform such duties as the commissioner shall assign to them. Subject to the powers of the State Personnel Board and the Director of Finance, the commissioner shall fix the compensation of such deputies, clerks and employees, which compensation shall be paid monthly on a certificate of the commissioner, and on the warrant of the Controller out of the State Treasury.   SEC. 20.   Section 10076 of the   Business and Professions Code   is repealed.   10076. Each deputy shall, after his appointment, take and subscribe to the constitutional oath of office and file the same in the office of the Secretary of State.   SEC. 21.   Section 10077 of the   Business and Professions Code   is repealed.   10077. The commissioner shall have his principal office in the City of Sacramento, and may establish branch offices in the City and County of San Francisco, the City of Los Angeles and in such other cities as the commissioner may deem necessary, subject to the approval of the Department of Finance.   SEC. 22.   Section 10078 of the   Business and Professions Code   is repealed.   10078. The commissioner shall adopt a seal with the words "Real Estate Commissioner State of California" and such other device as the commissioner may desire engraved thereon, by which he shall authenticate the proceedings of his office. Copies of all records and papers in the office of the commissioner certified under the hand and seal of the commissioner shall be received in evidence in all cases equally and with like effect as the originals.   SEC. 23.   Section 10079 of the   Business and Professions Code   is repealed.   10079. The Attorney General shall render to the commissioner opinions upon all questions of law relating to the construction or interpretation of this part or Chapter 1 of Part 2 or arising in the administration thereof that may be submitted to him by the commissioner. The Attorney General shall act as the attorney for the commissioner in all actions and proceedings brought by or against him under or pursuant to any of the provisions of this part or of Chapter 1 of Part 2.   SEC. 24.   Section 10080 of the   Business and Professions Code   is repealed.   10080. The commissioner may adopt, amend, or repeal rules and regulations that are reasonably necessary for the enforcement of the provisions of this part and of Chapter 1 (commencing with Section 11000) of Part 2 of this division. The rules and regulations shall be adopted, amended, or repealed in accordance with the provisions of the Administrative Procedure Act.   SEC. 25.   Section 10082 of the   Business and Professions Code   is amended to read:  10082. The commissioner may publish or cause to be published at appropriate intervals a directory or list of licensed brokers and  salesmen   sales   persons  and may publish therewith such matter as he  or she  may deem pertinent to this part and Chapter 1  (commencin   (commencing  with Section 11000) of Part 2.  He   The commissioner  shall furnish one copy of  such   the  directory to each licensed broker upon his  or her  request and the payment of an appropriate charge based upon cost of publication.  Such   The  directory may contain copies of the Real Estate Law, Chapter 1 (commencing with Section 11000) of Part 2 of Division 4 of the Business and Professions Code, and the Rules and Regulations of the  Real Estate  Commissioner  of Financial Services  .  SEC. 26.   Section 10131.3 of the   Business and Professions Code   is amended to read:  10131.3. A real estate broker within the meaning of this part is also a person who, for another or others, for compensation or in expectation of compensation, issues or sells, solicits prospective sellers or purchasers of, solicits or obtains listings of, or negotiates the purchase, sale, or exchange of securities as specified in Section 25206 of the Corporations Code. The provisions of this section do not apply to a broker-dealer or agent of a broker-dealer licensed by the Commissioner of  Corporations   Financial Services  under the provisions of the Corporate Securities Law of 1968.  SEC. 27.   Section 10146 of the   Business and Professions Code   is amended to read:  10146. Any real estate broker who contracts for or collects an advance fee from any other person, hereinafter referred to as the "principal," shall deposit any such amount or amounts, when collected in a trust account with a bank or other recognized depository. Such funds are trust funds and not the funds of the agent. Amounts may be withdrawn therefrom for the benefit of the agent only when actually expended for the benefit of the principal or five days after the verified accounts mentioned hereinafter have been mailed to the principal. Upon request of the commissioner, a broker shall furnish to the commissioner an authorization for examination of financial records of the trust account in accordance with the procedures set forth in Section 7473 of the Government Code. The commissioner may issue such rules and regulations as he  or she  deems necessary to regulate the method of accounting, and to accomplish the purpose of the provisions of this code relating to advance fees including, but not limited to, establishing forms for and determining information to be included in such accountings. Each principal shall be furnished a verified copy of such accountings at the end of each calendar quarter and when the contract has been completely performed by the licensee. The  Real Estate  Commissioner  of Financial Services  shall be furnished a verified copy of any account or all accounts on his  or her  demand therefor. Where advance fees actually paid by or on behalf of any principal are not handled in accordance with the preceding paragraph, it shall be presumed that the agent has violated Sections 506 and 506a of the Penal Code. The principal may recover treble damages for amounts so misapplied and shall be entitled to reasonable  attorneys'   attorney's  fees in any action brought to recover the same.  SEC. 28.   Section 10147 of the   Business and Professions Code  is amended to read:  10147. (a) On or before January 1, 1993, the Seismic Safety Commission shall develop, adopt, and publish a Commercial Property Owner's Guide to Earthquake Safety for distribution to licensees for purposes of Section 2079.9 of the Civil Code and, upon request, to any member of the general public. (b) In developing the guide, the Seismic Safety Commission shall consult with the  Office of Emergency Services   California Emergency Management Agency  , the Division of Mines and Geology of the Department of Conservation, the Department of  Real Estate   Financial Services  , and other interested agencies and persons. (c) The commission shall, to the extent possible, rely on currently available data to develop the guide. To the extent necessary, the commission may contract for the development and production of the guide. The commission shall update the contents of the guide whenever it determines that information within the guide is sufficiently inaccurate or incomplete so as to reduce the effectiveness of the guide. The commission shall charge a fee to cover the costs of production, distribution, development, and updating the guide. (d) The guide shall include, but need not be limited to, all of the following: (1) Maps and information on geologic and seismic hazard conditions in the state. (2) Explanations of typical structural and nonstructural earthquake hazards. (3) Recommendations for mitigating the hazards of an earthquake, including references and explanations of what constitutes "adequate wall anchorage" as defined in Section 8893.1 of the Government Code. (4) A statement that there are no guarantees of safety or damage prevention that can be made with respect to a major earthquake and that only precautions, such as retrofitting, can be taken to reduce the risk of various types of earthquake damage. For purposes of preparing the statement, the commission shall confer with insurers and design professional associations. (5) Notice of the obligation to post a sign as required by Section 8875.8 of the Government Code.  SEC. 29.   Section 10149 of the   Business and Professions Code   is amended to read:  10149. (a) On or before July 1, 1992, the Seismic Safety Commission shall develop, adopt, and publish a Homeowner's Guide to Earthquake Safety for distribution to licensees for purposes of Section 2079.8 of the Civil Code and, upon request, to any member of the general public. (b) In developing the guide, the Seismic Safety Commission shall consult with the  Office of Emergency Services   California Emergency Management Agency  , the Division of Mines and Geology of the Department of Conservation, the Department of  Real Estate   Financial Services  , and other interested agencies and persons. (c) The commission shall, to the extent possible, rely on currently available data to develop the guide. To the extent necessary, the commission may contract for the development and production of the guide. The commission shall update the contents of the guide whenever it determines that information within the guide is sufficiently inaccurate or incomplete so as to reduce the effectiveness of the guide. The commission shall charge a fee to cover the costs of production, distribution, development, and updating the guide. (d) The guide shall include, but need not be limited to, all of the following: (1) Maps and information on geologic and seismic hazard conditions for all areas of the state. (2) Explanations of the related structural and nonstructural hazards. (3) Recommendations for mitigating the hazards of an earthquake. (4) A statement that there are no guarantees of safety or damage prevention that can be made with respect to a major earthquake and that only precautions, such as retrofitting, can be taken to reduce the risk of various types of earthquake damage. For purposes of preparing the statement, the commission shall confer with insurers and design professional associations.  SEC. 30.   Section 10150.6 of the   Business and Professions Code   is amended to read:  10150.6. The  Real Estate  Commissioner  of Financial Services  shall not grant an original real estate broker's license to any person who has not held a real estate salesman's license for at least two years and qualified for renewal real estate  salesman   salesperson  status, within the five-year period immediately prior to the date of his  or her  application for the broker's license, and during such time was not actively engaged in the business of real estate  salesman   salesperson  , except that an applicant for a real estate broker's license having at least the equivalent of two years' general real estate experience or graduation from a four-year college or university course, which course included specialization in real estate, files a written petition with the Department of  Real Estate   Financial Services  setting forth his  or her  qualifications and experience, and the commissioner approves, he  or she  may be issued a real estate broker's license immediately upon passing the examination and satisfying the other requirements of this article.  SEC. 31.   Section 10151.5   of the   Business and Professions Code   is amended to read:  10151.5. (a) An applicant who is not a resident of this state shall be eligible for a real estate license provided (1) the applicant qualifies for licensure under this chapter, including Section 10162, and (2) the state or other jurisdiction that is the place of residence of the applicant permits a resident of California to qualify for and obtain a real estate license in that jurisdiction. (b) A foreign corporation shall be exempt from the eligibility requirement set forth in clause (2) of subdivision (a) if, and for so long as, at least one of the officers of the corporation who is designated and licensed as a real estate broker pursuant to Section 10158 or 10211 is a resident of this state. (c) Every nonresident applicant for a real estate license shall, along with his or her application, file with the  Real Estate  Commissioner  of Financial Services  an irrevocable consent that if in any action commenced against him or her in this state, personal service of process upon him or her cannot be made in this state after the exercise of due diligence, a valid service may thereupon be made upon the applicant by delivering the process to the Department of  Real Estate   Financial Services  .  SEC. 32.   Section 10153 of the   Business and Professions Code   is amended to read:  10153. In addition to the proof of honesty and truthfulness required of any applicant for a real estate license, the commissioner shall ascertain by written examination that the applicant, and in case of a corporation applicant for a real estate broker's license that each officer, or agent thereof through whom it proposes to act as a real estate licensee, has all of the following: (a) An appropriate knowledge of the English language, including reading, writing, and spelling and of arithmetical computations common to real estate and business opportunity practices. (b) An understanding of the principles of real estate and business opportunity conveyancing, the general purposes and general legal effect of agency contracts, deposit receipts, deeds, mortgages, deeds of trust, chattel mortgages, bills of sale, land contracts of sale and leases, and of the principles of business and land economics and appraisals. (c) A general and fair understanding of the obligations between principal and agent, of the principles of real estate and business opportunity practice and the canons of business ethics pertaining thereto, of the provisions of this part, of Chapter 1 (commencing with Section 11000) of Part 2, and of the regulations of the  Real Estate  Commissioner  of Financial Services  as contained in Title 10 of the California Administrative Code.  SEC. 33.   Section 10159.2 of the   Business and Professions Code   is amended to read:  10159.2. (a) The officer designated by a corporate broker licensee pursuant to Section 10211 shall be responsible for the supervision and control of the activities conducted on behalf of the corporation by its officers and employees as necessary to secure full compliance with the provisions of this division, including the supervision of salespersons licensed to the corporation in the performance of acts for which a real estate license is required. (b) A corporate broker licensee that has procured additional licenses in accordance with Section 10158 through officers other than the officer designated pursuant to Section 10211 may, by appropriate resolution of its board of directors, assign supervisory responsibility over salespersons licensed to the corporation to its broker-officers. (c) A certified copy of any resolution of the board of directors assigning supervisory responsibility over real estate salespersons licensed to the corporation shall be filed with the  Real Estate  Commissioner  of Financial Services  within five days after the adoption or modification thereof.  SEC. 34.   Section 10175.2 of the   Business and Professions Code   is amended to read:  10175.2. (a) If the  Real Estate  Commissioner  of Financial Services  determines that the public interest and public welfare will be adequately served by permitting a real estate licensee to pay a monetary penalty to the department in lieu of an actual license suspension, the commissioner may, on the petition of the licensee, stay the execution of all or some part of the suspension on the condition that the licensee pay a monetary penalty and the further condition that the licensee incur no other cause for disciplinary action within a period of time specified by the commissioner. (b) The commissioner may exercise the discretion granted under subdivision (a) either with respect to a suspension ordered by a decision after a contested hearing on an accusation against the licensee or by stipulation with the licensee after the filing of an accusation, but prior to the rendering of a decision based upon the accusation. In either case, the terms and conditions of the disciplinary action against the licensee shall be made part of a formal decision of the commissioner. (c) If a licensee fails to pay the monetary penalty in accordance with the terms and conditions of the decision of the commissioner, the commissioner may, without a hearing, order the immediate execution of all or any part of the stayed suspension in which event the licensee shall not be entitled to any repayment nor credit, prorated or otherwise, for money paid to the department under the terms of the decision. (d) The amount of the monetary penalty payable under this section shall not exceed two hundred fifty dollars ($250) for each day of suspension stayed nor a total of ten thousand dollars ($10,000) per decision regardless of the number of days of suspension stayed under the decision. (e) Any monetary penalty received by the department pursuant to this section shall be credited to the Recovery Account of the Real Estate Fund.  SEC. 35.   Section 10176.1 of the   Business and Professions Code   is amended to read:  10176.1. (a) (1) Whenever the commissioner takes any enforcement or disciplinary action against a licensee, and the enforcement or disciplinary action is related to escrow services provided pursuant to paragraph (4) of subdivision (a) of Section 17006 of the Financial Code, upon the action becoming final the commissioner shall notify the Insurance Commissioner  and the Commissioner of Corporations  of the action or actions taken. The purpose of this notification is to alert the departments that enforcement or disciplinary action has been taken, if the licensee seeks or obtains employment with entities regulated by the departments. (2) The commissioner shall provide the Insurance Commissioner  and the Commissioner of Corporations  , in addition to the notification of the action taken, with a copy of the written accusation, statement of issues, or order issued or filed in the matter and, at the request of the Insurance Commissioner  or the Commissioner of Corporations  , with any underlying factual material relevant to the enforcement or disciplinary action. Any confidential information provided by the commissioner to the Insurance Commissioner  or the Commissioner of Corporations  shall not be made public pursuant to this section. Notwithstanding any other provision of law, the disclosure of any underlying factual material to the Insurance Commissioner  or the Commissioner of Corporations  shall not operate as a waiver of confidentiality or any privilege that the commissioner may assert. (b) The commissioner shall establish and maintain, on the  Internet  Web site maintained by the Department of  Real Estate   Financial Services  , a database of its licensees, including those who have been subject to any enforcement or disciplinary action that triggers the notification requirements of this section. The database shall also contain a direct link to the databases, described in Section 17423.1 of the Financial Code and Section 12414.31 of the Insurance Code and required to be maintained on the  Internet  Web  sites   site  of the  Department of Corporations and the  Department of Insurance  , respectively,  of persons who have been subject to enforcement or disciplinary action for malfeasance or misconduct related to the escrow industry by the Insurance Commissioner  and the Commissioner of Corporations  . (c) There shall be no liability on the part of, and no cause of action of any nature shall arise against, the State of California, the Department of  Real Estate   Financial Services  , the  Real Estate  Commissioner  of Financial Services  , any other state agency, or any officer, agent, employee, consultant, or contractor of the state, for the release of any false or unauthorized information pursuant to this section, unless the release of that information was done with knowledge and malice, or for the failure to release any information pursuant to this section.  SEC. 36.   Section 10177 of the   Business and Professions Code   is amended to read:  10177. The commissioner may suspend or revoke the license of a real estate licensee, or may deny the issuance of a license to an applicant, who has done any of the following, or may suspend or revoke the license of a corporation, or deny the issuance of a license to a corporation, if an officer, director, or person owning or controlling 10 percent or more of the corporation's stock has done any of the following: (a) Procured, or attempted to procure, a real estate license or license renewal, for himself or herself or a salesperson, by fraud, misrepresentation, or deceit, or by making a material misstatement of fact in an application for a real estate license, license renewal, or reinstatement. (b) Entered a plea of guilty or nolo contendere to, or been found guilty of, or been convicted of, a felony, or a crime substantially related to the qualifications, functions, or duties of a real estate licensee, and the time for appeal has elapsed or the judgment of conviction has been affirmed on appeal, irrespective of an order granting probation following that conviction, suspending the imposition of sentence, or of a subsequent order under Section 1203.4 of the Penal Code allowing that licensee to withdraw his or her plea of guilty and to enter a plea of not guilty, or dismissing the accusation or information. (c) Knowingly authorized, directed, connived at, or aided in the publication, advertisement, distribution, or circulation of a material false statement or representation concerning his or her designation or certification of special education, credential, trade organization membership, or business, or concerning a business opportunity or a land or subdivision, as defined in Chapter 1 (commencing with Section 11000) of Part 2, offered for sale. (d) Willfully disregarded or violated the Real Estate Law (Part 1 (commencing with Section 10000)) or Chapter 1 (commencing with Section 11000) of Part 2 or the rules and regulations of the commissioner for the administration and enforcement of the Real Estate Law and Chapter 1 (commencing with Section 11000) of Part 2. (e) Willfully used the term "realtor" or a trade name or insignia of membership in a real estate organization of which the licensee is not a member. (f) Acted or conducted himself or herself in a manner that would have warranted the denial of his or her application for a real estate license, or has either had a license denied or had a license issued by another agency of this state, another state, or the federal government revoked or suspended for acts that, if done by a real estate licensee, would be grounds for the suspension or revocation of a California real estate license, if the action of denial, revocation, or suspension by the other agency or entity was taken only after giving the licensee or applicant fair notice of the charges, an opportunity for a hearing, and other due process protections comparable to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and only upon an express finding of a violation of law by the agency or entity. (g) Demonstrated negligence or incompetence in performing an act for which he or she is required to hold a license. (h) As a broker licensee, failed to exercise reasonable supervision over the activities of his or her salespersons, or, as the officer designated by a corporate broker licensee, failed to exercise reasonable supervision and control of the activities of the corporation for which a real estate license is required. (i) Has used his or her employment by a governmental agency in a capacity giving access to records, other than public records, in a manner that violates the confidential nature of the records. (j) Engaged in any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing. (k) Violated any of the terms, conditions, restrictions, and limitations contained in an order granting a restricted license. (l) (1) Solicited or induced the sale, lease, or listing for sale or lease of residential property on the ground, wholly or in part, of loss of value, increase in crime, or decline of the quality of the schools due to the present or prospective entry into the neighborhood of a person or persons having a characteristic listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those characteristics are defined in Sections 12926, 12926.1, subdivision (m), and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1). (m) Violated the Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code) or regulations of the Commissioner of  Corporations   Financial Services  pertaining thereto. (n) Violated the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code) or the regulations of the Commissioner of  Corporations   Financial Services  pertaining thereto. (o) Failed to disclose to the buyer of real property, in a transaction in which the licensee is an agent for the buyer, the nature and extent of a licensee's direct or indirect ownership interest in that real property. The direct or indirect ownership interest in the property by a person related to the licensee by blood or marriage, by an entity in which the licensee has an ownership interest, or by any other person with whom the licensee has a special relationship shall be disclosed to the buyer. (p) Violated Article 6 (commencing with Section 10237). If a real estate broker that is a corporation has not done any of the foregoing acts, either directly or through its employees, agents, officers, directors, or persons owning or controlling 10 percent or more of the corporation's stock, the commissioner may not deny the issuance of a real estate license to, or suspend or revoke the real estate license of, the corporation, provided that any offending officer, director, or stockholder, who has done any of the foregoing acts individually and not on behalf of the corporation, has been completely disassociated from any affiliation or ownership in the corporation.  SEC. 37.   Section 10225 of the   Business and Professions Code   is amended to re   ad:  10225. An application for a permit to sell real property securities secured by liens on real property situated outside the State of California shall be accompanied by the filing fee together with an amount equivalent to twenty-five cents ($0.25) a mile for each mile going and returning, or where public transportation is available the actual round trip fare pertaining thereto, estimated by the commissioner to be traveled from the office of the Department of  Real Estate   Financial Services  where the application is filed to the location of the property, and the amount estimated to be necessary to cover the expense of the inspection and appraisal of the property, not to exceed seventy-five dollars ($75) a day for each day actually spent in the inspection and appraisal of the property or properties.  SEC. 38.   Section 10231.2 of the   Business and Professions Code   is amended to read:  10231.2. (a) A real estate broker who, through express or implied representations that the broker or any salesperson acting on the broker's behalf is engaging in acts for which a real estate license is required by subdivision (d) or (e) of Section 10131, proposes to solicit and accept funds, or to cause the solicitation and acceptance of funds, to be applied to a purchase or loan transaction in which the broker will directly or indirectly obtain the use or benefit of the funds other than for commissions, fees, and costs and expenses as provided by law for the broker's services as an agent, shall, prior to the making of any representation, solicitation, or presentation of the statement described in subdivision (b), submit the following to the Department of  Real Estate   Financial Services  : (1) A true copy of the statement described in subdivision (b) complete except for the signature of the prospective lender or purchaser. (2) A statement that the submittal is being made to the department pursuant to Section 10231.2. (b) A broker making a solicitation pursuant to subdivision (a) shall deliver, or cause to be delivered, to the person solicited, the applicable completed statement described in Section 10232.5 not less than 24 hours before the earlier of the acceptance of any funds from that person by or on behalf of the broker or the execution of any instrument obligating the person to make the loan or purchase. The statement shall be signed by the prospective lender or purchaser and by the real estate broker or, on the broker's behalf, by a real estate salesperson licensed to the broker. When so executed, an exact copy of the executed statement shall be given to the prospective lender or purchaser, and the broker shall retain a true copy of the executed statement for a period of four years. (c) None of the provisions of subdivision (a) or (b) shall apply in the case of an offering of a security authorized pursuant to applicable provisions of the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000 of Title 4 of the Corporations Code). (d) In the case of a solicitation by a corporate real estate broker, the provisions of subdivisions (a) and (b) shall apply if the funds solicited are intended for the direct or indirect use or benefit of an officer or director of the corporation or of a person with a 10 percent or greater ownership interest in the corporation.  SEC. 39.   Section 10232.1 of the   Business and Professions Code   is amended to read:  10232.1. (a) A real estate broker, prior to the use of any proposed advertisement in connection with the conduct of activities described in subdivisions (d) and (e) of Section 10131 and Section 10131.1, may submit a true copy thereof to the Department of  Real Estate  Financial Services  for approval. The submission shall be accompanied by a fee of not more than forty dollars ($40). The commissioner shall by regulation prescribe the amount of the fee. If disapproval of the proposed advertisement is not communicated by the department to the broker within 15 calendar days after receipt of the copy of the proposed advertisement by the department, the proposed advertisement shall be deemed approved, but the department shall not be precluded from disapproving a later publication or other use of the same or similar advertising. The commissioner shall adopt regulations pertaining to the submittal and clearance of that advertising and establishing criteria for approval to ensure that the public will be protected against false or misleading representations. Except as provided in subdivision (b), "advertisement" includes dissemination in any newspaper, circular, form letter, brochure or similar publication, display, sign, radio broadcast or telecast, which concerns (1) the use, terms, rates, conditions, or the amount of any loan or sale referred to in subdivisions (d) and (e) of Section 10131 or Section 10131.1 or (2) the security, solvency, or stability of any person carrying on the activities described in those sections. (b) "Advertisement" does not include a letter or brochure that meets both of the following criteria: (1) It is restricted in distribution to other real estate brokers and to persons for whom the broker has previously acted as an agent in arranging a loan secured by real property or in the purchase, sale, or exchange of a deed of trust or real property sales contract. (2) It is restricted in content to the identification and a description of the terms of loans, mortgages, deeds of trust, real property sales contracts, or any combination thereof offered for funding or purchase through the broker as agent. (c) Subdivision (a) is not applicable to advertising that is used exclusively in connection with an offering authorized by permit issued pursuant to the applicable provisions of the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000 of Title 4 of the Corporations Code). (d) All advertising approvals shall be for a period of five years after the date of approval. The approval period applies to all advertising, including that which was previously submitted on a mandatory basis.  SEC. 40.   Section 10232.2 of the   Business and Professions Code   is amended to read:  10232.2. A real estate broker who meets the criteria of subdivision (a) of Section 10232 shall annually file the reports referred to in subdivisions (a) and (c) with the Department of  Real Estate   Financial Services  within 90 days after the end of the broker's fiscal year or within any additional time as the  Real Estate  Commissioner  of Financial Services  may allow for filing for good cause: (a) The report of a review by a licensed California independent public accountant of trust fund financial statements, conducted in accordance with generally accepted accounting practices, which shall include within its scope the following information for the fiscal year relative to the business activities of the broker described in subdivisions (d) and (e) of Section 10131: (1) The receipt and disposition of all funds of others to be applied to the making of loans and the purchasing of promissory notes or real property sales contracts. (2) The receipt and disposition of all funds of others in connection with the servicing by the broker of the accounts of owners of promissory notes and real property sales contracts including installment payments and loan or contract payoffs by obligors. (3) A statement as of the end of the fiscal year which shall include an itemized trust fund accounting of the broker and confirmation that the trust funds are on deposit in an account or accounts maintained by the broker in a financial institution. (b) A broker who meets the criteria of Section 10232, but who, in carrying on the activities described in subdivisions (d) and (e) of Section 10131, has not during a fiscal year, accepted for the benefit of a person to whom the broker is a trustee, any payment or remittance in a form convertible to cash by the broker, need not comply with the provisions of subdivision (a). In lieu thereof, the broker shall submit to the commissioner within 30 days after the end of the broker's fiscal year or, within any additional time as the commissioner may allow for a filing for good cause, a notarized statement under penalty of perjury on a form provided by the department attesting to the fact that the broker did not receive any trust funds in cash or convertible to cash during the fiscal year. (c) A report of all of the following aspects of the business conducted by the broker while engaging in activities described in subdivisions (d) and (e) of Section 10131 and in Section 10131.1: (1) Number and aggregate dollar amount of loan, trust deed sales and real property sales contract transactions negotiated. (2) Number and aggregate dollar amount of promissory notes and contracts serviced by the broker or an affiliate of the broker. (3) Number and aggregate dollar amount of late payment charges, prepayment penalties and other fees or charges collected and retained by the broker under servicing agreements with beneficiaries and obligees. (4) Default and foreclosure experience in connection with promissory notes and contracts subject to servicing agreements between the broker and beneficiaries or obligees. (5) Commissions received by the broker for services performed as agent in negotiating loans and sales of promissory notes and real property sales contracts. (6) Aggregate costs and expenses as referred to in Section 10241 paid by borrowers to the broker. (d) The commissioner shall adopt regulations prescribing the form and content of the report referred to in subdivision (c) with appropriate categories to afford a better understanding of the business conducted by the broker. (e) If the broker fails to file either of the reports required under subdivisions (a) and (c) within the time permitted herein, the commissioner may cause an examination and report to be made and may charge the broker one and one-half times the cost of making the examination and report. In determining the hourly cost incurred by the commissioner for conducting an examination and preparing the report, the commissioner may use the estimated average hourly cost for all department audit staff performing audits of real estate brokers. If a broker fails to pay the above amount within 60 days of the mailing of a notice of billing, the commissioner may suspend the broker's license or deny renewal of the broker's license. The suspension or denial shall remain in effect until the above amount is paid or the broker's right to renew a license has expired. The commissioner may maintain an action for the recovery of the above amount in any court of competent jurisdiction. (f) The reports referred to in subdivisions (a) and (c) are exempted from any requirement of public disclosure by paragraph (2) of subdivision (d) of Section 6254 of the Government Code. The commissioner shall annually make and file as a public record, a composite of the annual reports and any comments thereon which are deemed to be in the public interest.  SEC. 41.   Section 10232.4 of the  Business and Professions Code   is amended to read:  10232.4. (a) In making a solicitation to a particular person and in negotiating with that person to make a loan secured by real property or to purchase a real property sales contract or a note secured by a deed of trust, a real estate broker shall deliver to the person solicited the applicable completed statement described in Section 10232.5 as early as practicable before he or she becomes obligated to make the loan or purchase and, except as provided in subdivision (c), before the receipt by or on behalf of the broker of any funds from that person. The statement shall be signed by the prospective lender or purchaser and by the real estate broker, or by a real estate salesperson licensed to the broker, on the broker's behalf. When so executed, an exact copy shall be given to the prospective lender or purchaser, and the broker shall retain a true copy of the executed statement for a period of three years. (b) The requirement of delivery of a disclosure statement pursuant to subdivision (a) shall not apply with respect to the following persons: (1) The prospective purchaser of a security offered under authority of a permit issued pursuant to applicable provisions of the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code) that require that each prospective purchaser of a security be given a prospectus or other form of disclosure statement approved by the department issuing the permit. (2) The seller of real property who agrees to take back a promissory note of the purchaser as a method of financing all or a part of the purchase of the property. (3) The prospective purchaser of a security offered pursuant to and in accordance with a regulation duly adopted by the Commissioner of  Corporations   Financial Services  granting an exemption from qualification under the Corporate Securities Law of 1968 for the offering if one of the conditions of the exemption is that each prospective purchaser of the security be given a disclosure statement prescribed by the regulation before the prospective purchaser becomes obligated to purchase the security. (4) A prospective lender or purchaser, if that lender or purchaser is any of the following: (A) The United States or any state, district, territory, or commonwealth thereof, or any city, county, city and county, public district, public authority, public corporation, public entity, or political subdivision of a state, district, territory, or commonwealth of the United States, or any agency or corporate or other instrumentality of any one or more of the foregoing, including the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Housing Administration, and the Veteran's Administration. (B) Any bank or subsidiary thereof, bank holding company or subsidiary thereof, trust company, savings bank or savings and loan association or subsidiary thereof, savings bank or savings association holding company or subsidiary thereof, credit union, industrial bank or industrial loan company, finance lender, or insurance company doing business under the authority of, and in accordance with, the laws of this state, any other state, or of the United States relating to banks, trust companies, savings banks or savings associations, credit unions, industrial banks or industrial loan companies, commercial finance lenders, or insurance companies, as evidenced by a license, certificate, or charter issued by the United States or any state, district, territory, or commonwealth of the United States. (C) Trustees of pension, profitsharing, or welfare fund, if the pension, profitsharing, or welfare fund has a net worth of not less than fifteen million dollars ($15,000,000). (D) Any corporation with outstanding securities registered under Section 12 of the Securities Exchange Act of 1934 or any wholly owned subsidiary of that corporation. (E) Any syndication or other combination of any of the entities specified in subparagraph (A), (B), (C), or (D) which is organized to purchase the promissory note. (F) A licensed real estate broker engaging in the business of selling all or part of the loan, note, or contract to a lender or purchaser to whom no disclosure is required pursuant to this subdivision. (G) A licensed residential mortgage lender or servicer when acting under the authority of that license. (c) When the broker has custody of funds of a prospective lender or purchaser which were received and are being maintained with the express permission of the owner and in accordance with law, and the broker retains the funds in an escrow depository or a trust fund account pending receipt of the owner's express written instructions to disburse the funds for a loan or purchase, the broker shall cause the disclosure statement to be delivered to the owner and shall obtain the owner's written consent to the proposed disbursement before making the disbursement. Unless the broker has a written agreement with the owner as provided in Section 10231.1, the broker shall transmit to the owner not later than 25 days after receipt, all funds then in the broker's custody for which the owner has not given written instructions authorizing disbursement.  SEC. 42.   Section 10232.25 of the   Business and Professions Code   is amended to read:  10232.25. (a) A real estate broker who meets the criteria of subdivision (a) of Section 10232 shall, within 30 days after the end of each of the first three fiscal quarters of the broker's fiscal year, or within any additional time as the  Real Estate  Commissioner  of Financial Services  may allow for good cause, file with the commissioner a trust funds status report as of the last day of the fiscal quarter which shall include the following: (1) A representation that the form and content of the trust account records of the broker are in compliance with the regulations of the commissioner. (2) A representation that the broker's trust fund bank account is maintained in compliance with the regulations of the commissioner. (3) A statement of the broker's aggregate accountability for trust funds. (4) A report of trust funds in the broker's custody consisting of the trust account bank statements as of the bank's accounting date immediately preceding the end of the fiscal quarter and a schedule of withdrawals and deposits adjusting the account to its true balance as of the end of the fiscal quarter. (5) A statement explaining any difference in amount between the broker's total accountability under paragraph (3) above and the adjusted trust account bank balance under paragraph (4) above. (b) Each report made pursuant to subdivision (a) shall include the following: (1) The name, address, and position or capacity of the person who prepared the report. (2) A declaration under penalty of perjury by the broker that the information and representations in the report are true, complete, and correct to the best of the broker's knowledge and belief. The declaration in a report submitted on behalf of a corporate broker shall be signed by a broker-officer through whom the corporation is licensed as a real estate broker and by the chief executive officer of the corporation if he or she is not the signing broker-officer. (c) If a broker fails to file a report required under subdivision (a) within the time permitted, the commissioner may cause an examination and report to be made and may charge the broker one and one-half times the cost of making the examination and report. In determining the hourly cost incurred by the commissioner for conducting an examination and preparing the report, the commissioner may use the estimated average hourly cost for all department audit staff performing audits of real estate brokers. If a broker fails to pay the above amount within 60 days of the mailing of a notice of billing, the commissioner may suspend the broker's license or deny renewal of the broker's license. The suspension or denial shall remain in effect until the above amount is paid or the broker's right to renew a license has expired. The commissioner may maintain an action for the recovery of the above amount in any court of competent jurisdiction. (d) A broker who meets the criteria of Section 10232, but who, in carrying on the activities described in subdivisions (d) and (e) of Section 10131, did not during a fiscal quarter, accept for the benefit of a person to whom the broker is trustee, any payment or remittance in a form convertible to cash by the broker, need not comply with the provisions of subdivision (a). In lieu thereof, the broker shall submit to the commissioner within 30 days after the end of the fiscal quarter or within any additional time as the commissioner may allow for good cause, a statement under penalty of perjury on a form provided by the department attesting to the fact that the broker did not receive any trust funds in cash or convertible to cash during the fiscal quarter. (e) Any real estate broker who engages in any of the activities specified in subdivision (d) or (e) of Section 10131, but who is not required by this section to file trust funds status reports with the commissioner and who is not exempt therefrom under subdivision (d), shall complete trust funds status reports in accordance with either (1) the requirements of subdivisions (a) and (b) applicable to trust funds status reports filed with the commissioner, or (2) the requirements established by the lender or note owner, if the lender or note owner does all of the following: (i) requires monthly reconciliations of trust account balances; (ii) requires annual, CPA-audited financial statements; and (iii) maintains a contractual right to audit the trust accounts held by the broker on behalf of the lender or note owner. The broker shall retain all trust funds status reports prepared under this subdivision on file at the broker's offices, where they shall be subject to inspection by representatives of the commissioner upon 24 hours' notice.  SEC. 43.   Section 10236.2 of the   Business and Professions Code   is amended to read:  10236.2. (a) A real estate broker who satisfies the criteria of subdivision (a) or (b) of Section 10232 and who fails to notify the Department of  Real Estate   Financial Services  , in writing, of that fact within 30 days thereafter as required by subdivision (e) of Section 10232 shall be assessed a penalty of fifty dollars ($50) per day for each additional day written notification has not been received up to and including the 30th day after the first day of the assessment penalty. On and after the 31st day the penalty is one hundred dollars ($100) per day, not to exceed a total penalty of ten thousand dollars ($10,000), regardless of the number of days, until the department receives the written notification. (b) The commissioner may suspend or revoke the license of any real estate broker who fails to pay a penalty imposed under this section. In addition, the commissioner may bring an action in an appropriate court of this state to collect payment of the penalty. (c) All penalties paid or collected under this section shall be deposited into the Recovery Account of the Real Estate Fund.  SEC. 44.   Section 10239 of the   Business and Professions Code   , as added by Section 2 of Chapter 901 of the Statutes of   2003, is amended to read:  10239. The jurisdiction of the Commissioner of  Corporations   Financial Services  under the Corporate Securities Law of 1968 shall be neither limited nor expanded by this article. Nothing in this article shall be construed to supersede or restrict the application of the Corporate Securities Law of 1968. A transaction under this article shall not be construed to be a transaction involving the issuance of securities subject to authorization by the  Real Estate  Commissioner  of Financial Services  under subdivision (e) of Section 25100 of the Corporations Code.  SEC. 45.   Section 10249.3 of the   Business and Professions Code   is amended to read:  10249.3. (a) The commissioner may by regulation prescribe filing fees in connection with registrations with the department pursuant to the provisions of this article that are lower than the maximum fees specified in subdivision (b) if the commissioner determines that the lower fees are sufficient to offset the costs and expenses incurred in the administration of this article. The commissioner shall hold at least one hearing each calendar year to determine if lower fees than those specified in subdivision (b) should be prescribed. (b) The filing fee for an application for a registration with the department pursuant to the provisions of this article shall not exceed the following for each subdivision or phase of the subdivision in which interests are to be offered for sale or lease: (1) An application for an original registration: One hundred dollars ($100). (2) An application for a renewal registration: One hundred dollars ($100). (3) An application for an amended registration: One hundred dollars ($100). (c) All fees collected by the Department of  Real Estate   Financial Services  under authority of this article shall be deposited into the Real Estate Fund under Chapter 6 (commencing with Section 10450) of Part 1. All fees received by the department pursuant to the provisions of this article shall be deemed earned upon receipt. No part of any fee is refundable unless the commissioner determines that it was paid as a result of mistake or inadvertence.  SEC. 46.   Section 10249.8 of the   Business and Professions Code   is amended to read:  10249.8. (a) Notwithstanding any provision to the contrary in Section 10249 or 11000, it is unlawful for a person, in this state, to sell or lease or offer for sale or lease lots, parcels, or interests in a subdivision, as defined in Section 10249.1, entirely located outside of this state but within the United States, unless any printed material, literature, advertising, or invitation in this state relating to that sale, lease, or offer clearly and conspicuously contains the following disclaimer in at least 10-point type: WARNING: THE  CALIFORNIA DEPARTMENT OF REAL ESTATE   DEPARTMENT OF FINANCIAL SERVICES  HAS NOT INSPECTED, EXAMINED, OR QUALIFIED THIS OFFERING. (b) If an offer on property described in subdivision (a) is not initially made in writing, the disclaimer set forth in subdivision (c) shall be received by the offeree in writing prior to a visit to a location, sales presentation, or contact with a person representing the offeror, when the visit or contact was scheduled or arranged by the offeror or its representative. The deposit of the disclaimer in the United States mail, addressed to the offeree and with first-class postage prepaid, at least five days prior to the scheduled or arranged visit or contact, shall be deemed to constitute delivery for purposes of this section. (c) If a California resident is presented with an agreement or contract to lease or purchase any property described in subdivision (a), where an offer to lease or purchase that property was made to that resident in California, a copy of the disclaimer set forth in this subdivision shall be inserted in at least 10-point type at the top of the first page of that agreement or contract and shall be initialed by that California resident. WARNING: THE  CALIFORNIA DEPARTMENT OF REAL ESTATE   DEPARTMENT OF FINANCIAL SERVICES  HAS NOT QUALIFIED, INSPECTED, OR EXAMINED THIS OFFERING, INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT (IF ANY), ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES (IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS (IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE STATE WHERE THIS SUBDIVISION IS SITUATED.  SEC. 47.   Section 10249.9 of the   Business and Professions Code   is amended to read:  10249.9. (a) Notwithstanding any provision to the contrary in Section 10249 or 11000, it is unlawful for a person, in this state, to sell or lease or offer for sale or lease a lot, parcel, or interest in a subdivision, located outside the United States, unless the printed material, literature, advertising, or invitation in this state relating to that sale, lease, or offer clearly and conspicuously contains the following disclaimer in at least 10-point capital type: WARNING: THE  CALIFORNIA DEPARTMENT OF REAL ESTATE   DEPARTMENT OF FINANCIAL SERVICES  HAS NOT EXAMINED THIS OFFERING, INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT (IF ANY), ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES (IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS (IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE COUNTRY WHERE THIS SUBDIVISION IS SITUATED. (b) If an offer on property described in subdivision (a) is not initially made in writing, the foregoing disclaimer shall be received by the offeree in writing prior to a visit to a location, sales presentation, or contact with a person representing the offeror, when the visit or contact was scheduled or arranged by the offeror or its representative. The deposit of the disclaimer in the United States mail, addressed to the offeree and with first-class postage prepaid, at least five days prior to the scheduled or arranged visit or contact, shall be deemed to constitute delivery for purposes of this section. (c) If any California resident is presented with an agreement or contract to lease or purchase a property described in subdivision (a), where an offer to lease or purchase that property was made to that resident in California, a copy of the disclaimer set forth in subdivision (a) shall be inserted in at least 10-point type at the top of the first page of that agreement or contract and shall be initialed by that California resident.  SEC. 48.   Section 10451.5 of the   Business and Professions Code   is amended to read:  10451.5. (a) All money paid into the State Treasury and credited to the Education and Research Account in the Real Estate Fund pursuant to Section 10450.6 is available for appropriation by the Legislature to be used by the commissioner in carrying out the provisions of this part and Chapter 1 (commencing with Section 11000) of Part 2, in the advancement of education and research in real estate at the University of California, state colleges and community colleges, or in contracting for a particular research project in the field of real estate for the state with any university in the State of California accredited by the Western Association of Schools and Colleges, or with any corporation or association qualified to perform such research. (b) If the balance in the Education and Research Account is more than four hundred thousand dollars ($400,000), the  Real Estate  Commissioner  of Financial Services  may authorize the transfer of all or part of such surplus amount to the Real Estate Fund and may authorize the return to the Education and Research Account of all or part of any amount previously transferred to the Real Estate Fund. (c) Notwithstanding the provisions of subdivision (b), if at any time the amount of funds credited to the Real Estate Fund, including any amounts credited to the separate accounts for Education and Research and Recovery, is less than 25 percent of the department's authorized expenditures for the following fiscal year, the commissioner may transfer any or all of the funds credited to the Education and Research Account to the Real Estate Fund. The commissioner may authorize the return to the Education and Research Account of all or part of any amount previously transferred to the Real Estate Fund.  SEC. 49.   Section 10470.1 of the   Business and Professions Code   is amended to read:  10470.1. (a) In addition to the amount paid into the Recovery Account as set forth in Section 10450.6, the  Real Estate  Commissioner  of Financial Services  may authorize the transfer from the Real Estate Fund to the Recovery Account of any amounts as are deemed necessary. (b) If the balance remaining in the Recovery Account contains more than four hundred thousand dollars ($400,000), the commissioner may authorize the transfer of all or part of the surplus amount into the Real Estate Fund. (c) The commissioner may authorize the return to the Recovery Account of all or any amount previously transferred to the Real Estate Fund under this section.  SEC. 50.   Section 10471 of the   Business and Professions Code   is amended to read:  10471. (a) When an aggrieved person obtains (1) a final judgment in a court of competent jurisdiction, including, but not limited to, a criminal restitution order issued pursuant to subdivision (f) of Section 1202.4 of the Penal Code or Section 3663 of Title 18 of the United States Code, or (2) an arbitration award that includes findings of fact and conclusions of law rendered in accordance with the rules established by the American Arbitration Association or another recognized arbitration body, and in accordance with Sections 1281 to 1294.2, inclusive, of the Code of Civil Procedure where applicable, and where the arbitration award has been confirmed and reduced to judgment pursuant to Section 1287.4 of the Code of Civil Procedure, against a defendant based upon the defendant's fraud, misrepresentation, or deceit, made with intent to defraud, or conversion of trust funds, arising directly out of any transaction in which the defendant, while licensed under this part, performed acts for which a real estate license was required, the aggrieved person may, upon the judgment becoming final, file an application with the Department of Real Estate   Financial Services  for payment from the Recovery Account, within the limitations specified in Section 10474, of the amount unpaid on the judgment that represents an actual and direct loss to the claimant in the transaction. As used in this chapter, "court of competent jurisdiction" includes the federal courts, but does not include the courts of another state. (b) The application shall be delivered in person or by certified mail to an office of the department not later than one year after the judgment has become final. (c) The application shall be made on a form prescribed by the department, verified by the claimant, and shall include the following: (1) The name and address of the claimant. (2) If the claimant is represented by an attorney, the name, business address, and telephone number of the attorney. (3) The identification of the judgment, the amount of the claim and an explanation of its computation. (4) A detailed narrative statement of the facts in explanation of the allegations of the complaint upon which the underlying judgment is based. (5) (A) Except as provided in subparagraph (B), a statement by the claimant, signed under penalty of perjury, that the complaint upon which the underlying judgment is based was prosecuted conscientiously and in good faith. As used in this section, "conscientiously and in good faith" means that no party potentially liable to the claimant in the underlying transaction was intentionally and without good cause omitted from the complaint, that no party named in the complaint who otherwise reasonably appeared capable of responding in damages was dismissed from the complaint intentionally and without good cause, and that the claimant employed no other procedural means contrary to the diligent prosecution of the complaint in order to seek to qualify for the Recovery Account. (B) For the purpose of an application based on a criminal restitution order, all of the following statements by the claimant: (i) The claimant has not intentionally and without good cause failed to pursue any person potentially liable to the claimant in the underlying transaction other than a defendant who is the subject of a criminal restitution order. (ii) The claimant has not intentionally and without good cause failed to pursue in a civil action for damages all persons potentially liable to the claimant in the underlying transaction who otherwise reasonably appeared capable of responding in damages other than a defendant who is the subject of a criminal restitution order. (iii) The claimant employed no other procedural means contrary to the diligent prosecution of the complaint in order to seek to qualify for the Recovery Account. (6) The name and address of the judgment debtor or, if not known, the names and addresses of persons who may know the judgment debtor's present whereabouts. (7) The following representations and information from the claimant: (A) That he or she is not a spouse of the judgment debtor nor a personal representative of the spouse. (B) That he or she has complied with all of the requirements of this chapter. (C) That the judgment underlying the claim meets the requirements of subdivision (a). (D) A description of searches and inquiries conducted by or on behalf of the claimant with respect to the judgment debtor's assets liable to be sold or applied to satisfaction of the judgment, an itemized valuation of the assets discovered, and the results of actions by the claimant to have the assets applied to satisfaction of the judgment. (E) That he or she has diligently pursued collection efforts against all judgment debtors and all other persons liable to the claimant in the transaction that is the basis for the underlying judgment. (F) That the underlying judgment and debt have not been discharged in bankruptcy, or, in the case of a bankruptcy proceeding that is open at or after the time of the filing of the application, that the judgment and debt have been declared to be nondischargeable. (G) That the application was mailed or delivered to the department no later than one year after the underlying judgment became final. (d) If the claimant is basing his or her application upon a judgment against a salesperson, and the claimant has not obtained a judgment against that salesperson's employing broker, if any, or has not diligently pursued the assets of that broker, the application shall be denied for failure to diligently pursue the assets of all other persons liable to the claimant in the transaction unless the claimant can demonstrate, by clear and convincing evidence, either that the salesperson was not employed by a broker at the time of the transaction, or that the salesperson's employing broker would not have been liable to the claimant because the salesperson was acting outside the scope of his or her employment by the broker in the transaction. (e) The application form shall include detailed instructions with respect to documentary evidence, pleadings, court rulings, the products of discovery in the underlying litigation, and a notice to the applicant of his or her obligation to protect the underlying judgment from discharge in bankruptcy, to be appended to the application. (f) An application for payment from the Recovery Account that is based on a criminal restitution order shall comply with all of the requirements of this chapter. For the purpose of an application based on a criminal restitution order, the following terms have the following meanings: (1) "Judgment" means the criminal restitution order. (2) "Complaint" means the facts of the underlying transaction upon which the criminal restitution order is based. (3) "Judgment debtor" means any defendant who is the subject of the criminal restitution order. The amendments to this section made at the July 1997-98 Regular Session shall become operative July 1, 2000.  SEC. 51.   Section 10471.5 of the   Business and Professions Code   is amended to read:  10471.5. (a) The commissioner shall give notice of a decision rendered with respect to the application to the claimant and to a judgment debtor who has filed a timely response to the application in accordance with Section 10471.1. (b) If the application is denied, the notice to the claimant and judgment debtor shall include the following: "Claimant's application has been denied. If the claimant wishes to pursue the application in court, the claimant must file the application as follows in a superior court of this state not later than six months after receipt of this notice, pursuant to Section 10472 of the Business and Professions Code. If the underlying judgment is a California state court judgment, the application shall be filed in the court in which the underlying judgment was entered. If the underlying judgment is a federal court judgment, the application shall be filed in the superior court of any county within California that would have been a proper venue if the underlying lawsuit had been filed in a California state court, or in the Superior Court of the County of Sacramento." (c) If the decision of the commissioner is to make a payment to the claimant out of the Recovery Account, the following notice shall be given to the judgment debtor along with a copy of the decision of the commissioner: "The decision of the  Real Estate  Commissioner  of Financial Services  on the application of ____ is to pay $____ from the Recovery Account. A copy of that decision is enclosed. "Pursuant to Section 10475 of the Business and Professions Code, all of your licenses and license rights under the Real Estate Law will be suspended effective on the date of the payment, and you will not be eligible for reinstatement of any license issued under authority of the Real Estate Law until you have reimbursed the Recovery Account for this payment plus interest at the prevailing legal rate." "If you desire a judicial review of the suspension of your licenses and license rights, you may petition the superior court for a writ of mandamus. If the underlying judgment is a California state court judgment, the petition shall be filed in the court in which the judgment was entered. If the underlying judgment is a federal court judgment, the petition shall be filed in the superior court of any county within California that would have been a proper venue if the underlying lawsuit had been filed in a California state court, or in the Superior Court of the County of Sacramento. To be timely, the petition must be filed with the court within 30 days of receipt of this notice."  SEC. 52.   Section 10472 of the   Business and Professions Code   is amended to read:  10472. (a) A claimant against whom the commissioner has rendered a decision denying an application pursuant to Section 10471 may, within six months after the mailing of the notice of the denial, file a verified application in superior court for an Order Directing Payment Out of the Recovery Account based upon the grounds set forth in the application to the commissioner. If the underlying judgment is a California state court judgment, the application shall be filed in the court in which the underlying judgment was entered. If the underlying judgment is a federal court judgment, the application shall be filed in the superior court of any county within California that would have been a proper venue if the underlying lawsuit had been filed in a California state court, or in the Superior Court of the County of Sacramento. (b) A copy of the verified application shall be served upon the commissioner and upon the judgment debtor. A certificate or affidavit of service shall be filed by the claimant with the court. Service on the commissioner may be made by certified mail addressed to the headquarters office of the department. Service upon a judgment debtor may be made in accordance with Section 10471.1. The notice served upon the judgment debtor shall read as follows: "NOTICE: An application has been filed with the court for a payment from the Recovery Account that was previously denied by the  Real Estate  Commissioner  of Financial Services  . "If the Department of  Real Estate   Financial Services  makes a payment from the Recovery Account pursuant to court order, all of your licenses and license rights under the Real Estate Law will be automatically suspended until the Recovery Account has been reimbursed for the amount paid plus interest at the prevailing rate. "If you wish to defend in court against this application, you must file a written response with the court within 30 days after having been served with a copy of the application. If you do not file a written response, you will have waived your right to defend against the application."  SEC. 53.   Section 10501 of the   Business and Professions Code   is amended to read:  10501. (a) The  Real Estate  Commissioner  of Financial Services  may file a complaint for any violation of Section 10500 or 10500.5 before any court of competent jurisdiction, and the commissioner and the commissioner's counsel, deputies or assistants may assist in presenting the law or facts at the trial. (b) It is the duty of the district attorney of the county in which a violation of Section 10500 or 10500.5 occurs to prosecute the violation. (c) A natural person convicted of a violation of Section 10500 or 10500.5 shall be punished by a fine of not to exceed five hundred dollars ($500) or by imprisonment in the county jail for a term not to exceed six months, or by both such fine and imprisonment, in the discretion of the court. A corporation convicted of a violation of Section 10500 or 10500.5 shall be punished by a fine of not to exceed five thousand dollars ($5,000).  SEC. 54.   Section 11000.1 of the   Business and Professions Code   is amended to read:  11000.1. (a) "Subdivided lands" and "subdivision," as defined by Sections 11000 and 11004.5, also include improved or unimproved land or lands, a lot or lots, or a parcel or parcels, of any size, in which, for the purpose of sale or lease or financing, whether immediate or future, five or more undivided interests are created or are proposed to be created. (b) This section does not apply to the creation or proposed creation of undivided interests in land if any one of the following conditions exists: (1) The undivided interests are held or to be held by persons related one to the other by blood or marriage. (2) The undivided interests are to be purchased and owned solely by persons who present evidence satisfactory to the  Real Estate  Commissioner  of Financial Services  that they are knowledgeable and experienced investors who comprehend the nature and extent of the risks involved in the ownership of these interests. The  Real Estate  Commissioner  of Financial Services  shall grant an exemption from this part if the undivided interests are to be purchased by no more than 10 persons, each of whom furnishes a signed statement to the commissioner that he or she (A) is fully informed concerning the real property to be acquired and his or her interest in that property including the risks involved in ownership of undivided interests, (B) is purchasing the interest or interests for his or her own account and with no present intention to resell or otherwise dispose of the interest for value, and (C) expressly waives protections afforded to a purchaser by this part. (3) The undivided interests are created as the result of a foreclosure sale. (4) The undivided interests are created by a valid order or decree of a court. (5) The offering and sale of the undivided interests have been expressly qualified by the issuance of a permit from the Commissioner of  Corporations   Financial Services  pursuant to the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code).  SEC. 55.   Section 11000.2 of the   Business and Professions Code   is amended to read:  11000.2. (a) A person who has made an offer to purchase an interest in an undivided-interest subdivision specified in subdivision (a) of, and not exempted by subdivision (b) of, Section 11000.1 shall have the right to rescind any contract resulting from the acceptance of that offer until midnight of the third calendar day following the day on which the prospective purchaser executed the offer to purchase. (b) The owner of a subdivision subject to this section or his or her agent shall, in accordance with regulations adopted by the  Real Estate  Commissioner  of Financial Services  , clearly and conspicuously disclose to all prospective purchasers of undivided interests the right of rescission provided for in subdivision (a), and shall furnish to each offeror a form, as prescribed by regulations of the commissioner, for the exercise of the right of rescission. (c) Any certificate bearing the signature of the purchaser of an interest in an undivided-interest subdivision subject to this section which contains an adequate description of the interest or interests sold and a statement by the purchaser that he or she has not exercised the right of rescission within the time limit set forth in subdivision (a) shall constitute conclusive evidence that the right of rescission has not been exercised in any matter involving the rights of a third party who has acted in good faith in reliance upon representations in the certificate.  SEC. 56.   Section 11001 of the   Business and Professions Code   is amended to read:  11001. The  Real Estate  Commissioner  of Financial Services  (hereafter referred to in this chapter as the commissioner) may adopt, amend, or repeal such rules and regulations as are reasonably necessary for the enforcement of this chapter. He  or she  may issue any order, permit, decision, demand  ,  or requirement to effect this purpose. Such rules, regulations, and orders shall be adopted pursuant to the provisions of the Administrative Procedure Act.  SEC. 57.   Section 11003.4 of the   Business and Professions Code   is amended to read:  11003.4. (a) A "limited-equity housing cooperative" is a corporation which meets the criteria of Section 11003.2 and which also meets the criteria of Section 33007.5 of the Health and Safety Code. Except as provided in subdivision (b), a limited-equity housing cooperative shall be subject to all the requirements of this chapter pertaining to stock cooperatives. (b) A limited-equity housing cooperative shall be exempt from the requirements of this chapter if the limited-equity housing cooperative complies with all the following conditions: (1) The United States Department of Housing and Urban Development, the Farmers Home Administration, the National Consumers Cooperative Bank, the California Housing Finance Agency, or the Department of Housing and Community Development, alone or in any combination with each other, or with the city, county, or redevelopment agency in which the cooperative is located, directly finances or subsidizes at least 50 percent of the total construction or development cost or one hundred thousand dollars ($100,000), whichever is less; or the real property to be occupied by the cooperative was sold by the Department of Transportation for the development of the cooperative and has a regulatory agreement approved by the Department of Housing and Community Development for the term of the permanent financing, notwithstanding the source of the permanent subsidy or financing. (2) No more than 20 percent of the total development cost of a limited-equity mobilehome park, and no more than 10 percent of the total development cost of other limited-equity housing cooperatives, is provided by purchasers of membership shares. (3) A regulatory agreement which covers the cooperative for a term of at least as long as the duration of the permanent financing or subsidy, notwithstanding the source of the permanent subsidy or financing has been duly executed between the recipient of the financing and either (A) one of the federal or state agencies specified in paragraph (1) or (B) a local public agency which is providing financing for the project under a regulatory agreement meeting standards of the Department of Housing and Community Development. The regulatory agreement shall make provision for at least all of the following: (A) Assurances for completion of the common areas and facilities to be owned or leased by the limited-equity housing cooperative, unless a construction agreement between the same parties contains written assurances for completion. (B) Governing instruments for the organization and operation of the housing cooperative by the members. (C) The ongoing fiscal management of the project by the cooperative, including an adequate budget, reserves, and provisions for maintenance and management. (D) Distribution of a membership information report to any prospective purchaser of a membership share, prior to purchase of that share. The membership information report shall contain full disclosure of the financial obligations and responsibilities of cooperative membership, the resale of shares, the financing of the cooperative including any arrangements made with any partners, membership share accounts, occupancy restrictions, management arrangements, and any other information pertinent to the benefits, risks, and obligations of cooperative ownership. (4) The federal, state, or local public agency which executes the regulatory agreement shall satisfy itself that the bylaws, articles of incorporation, occupancy agreement, subscription agreement, any lease of the regulated premises, any arrangement with partners, and arrangement for membership share accounts provide adequate protection of the rights of cooperative members. (5) The federal or state agency shall receive from the attorney for the recipient of the financing or subsidy a legal opinion that the cooperative meets the requirements of Section 33007.5 of the Health and Safety Code and the exemption provided by this section. (c) Any limited-equity cooperative which meets the requirements for exemption pursuant to subdivision (b) may elect to be subject to all provisions of this chapter. (d) The developer of the cooperative shall notify the Department of  Real Estate   Financial Services  , on a form provided by the department, that an exemption is claimed under this section. The Department of  Real Estate   Financial Services  shall retain this form for at least four years for statistical purposes.  SEC. 58.   Section 11010 of the   Business and Professions Code   is amended to read:  11010. (a) Except as otherwise provided pursuant to subdivision (c) or elsewhere in this chapter, any person who intends to offer subdivided lands within this state for sale or lease shall file with the Department of  Real Estate   Financial Services  an application for a public report consisting of a notice of intention and a completed questionnaire on a form prepared by the department. (b) The notice of intention shall contain the following information about the subdivided lands and the proposed offering: (1) The name and address of the owner. (2) The name and address of the subdivider. (3) The legal description and area of lands. (4) A true statement of the condition of the title to the land, particularly including all encumbrances thereon. (5) A true statement of the terms and conditions on which it is intended to dispose of the land, together with copies of any contracts intended to be used. (6) A true statement of the provisions, if any, that have been made for public utilities in the proposed subdivision, including water, electricity, gas, telephone, and sewerage facilities. For subdivided lands that were subject to the imposition of a condition pursuant to subdivision (b) of Section 66473.7 of the Government Code, the true statement of the provisions made for water shall be satisfied by submitting a copy of the written verification of the available water supply obtained pursuant to Section 66473.7 of the Government Code. (7) A true statement of the use or uses for which the proposed subdivision will be offered. (8) A true statement of the provisions, if any, limiting the use or occupancy of the parcels in the subdivision. (9) A true statement of the amount of indebtedness that is a lien upon the subdivision or any part thereof, and that was incurred to pay for the construction of any onsite or offsite improvement, or any community or recreational facility. (10) A true statement or reasonable estimate, if applicable, of the amount of any indebtedness which has been or is proposed to be incurred by an existing or proposed special district, entity, taxing area, assessment district, or community facilities district within the boundaries of which, the subdivision, or any part thereof, is located, and that is to pay for the construction or installation of any improvement or to furnish community or recreational facilities to that subdivision, and which amounts are to be obtained by ad valorem tax or assessment, or by a special assessment or tax upon the subdivision, or any part thereof. (11) A notice pursuant to Section 1102.6c of the Civil Code. (12) (A) As to each school district serving the subdivision, a statement from the appropriate district that indicates the location of each high school, junior high school, and elementary school serving the subdivision, or documentation that a statement to that effect has been requested from the appropriate school district. (B) In the event that, as of the date the notice of intention and application for issuance of a public report are otherwise deemed to be qualitatively and substantially complete pursuant to Section 11010.2, the statement described in subparagraph (A) has not been provided by any school district serving the subdivision, the person who filed the notice of intention and application for issuance of a public report shall immediately provide the department with the name, address, and telephone number of that district. (13) (A) The location of all existing airports, and of all proposed airports shown on the general plan of any city or county, located within two statute miles of the subdivision. If the property is located within an airport influence area, the following statement shall be included in the notice of intention: NOTICE OF AIRPORT IN VICINITY This property is presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you. (B) For purposes of this section, an "airport influence area," also known as an "airport referral area," is the area in which current or future airport-related noise, overflight, safety, or airspace protection factors may significantly affect land uses or necessitate restrictions on those uses as determined by an airport land use commission. (14) A true statement, if applicable, referencing any soils or geologic report or soils and geologic reports that have been prepared specifically for the subdivision. (15) A true statement of whether or not fill is used, or is proposed to be used, in the subdivision and a statement giving the name and the location of the public agency where information concerning soil conditions in the subdivision is available. (16) On or after July 1, 2005, as to property located within the jurisdiction of the San Francisco Bay Conservation and Development Commission, a statement that the property is so located and the following notice: NOTICE OF SAN FRANCISCO BAY CONSERVATION AND DEVELOPMENT COMMISSION JURISDICTION This property is located within the jurisdiction of the San Francisco Bay Conservation and Development Commission. Use and development of property within the commission's jurisdiction may be subject to special regulations, restrictions, and permit requirements. You may wish to investigate and determine whether they are acceptable to you and your intended use of the property before you complete your transaction. (17) If the property is presently located within one mile of a parcel of real property designated as "Prime Farmland," "Farmland of Statewide Importance," "Unique Farmland," "Farmland of Local Importance," or "Grazing Land" on the most current "Important Farmland Map" issued by the California Department of Conservation, Division of Land Resource Protection, utilizing solely the county-level GIS map data, if any, available on the Farmland Mapping and Monitoring Program Website. If the residential property is within one mile of a designated farmland area, the report shall contain the following notice: NOTICE OF RIGHT TO FARM This property is located within one mile of a farm or ranch land designated on the current county-level GIS "Important Farmland Map," issued by the California Department of Conservation, Division of Land Resource Protection. Accordingly, the property may be subject to inconveniences or discomforts resulting from agricultural operations that are a normal and necessary aspect of living in a community with a strong rural character and a healthy agricultural sector. Customary agricultural practices in farm operations may include, but are not limited to, noise, odors, dust, light, insects, the operation of pumps and machinery, the storage and disposal of manure, bee pollination, and the ground or aerial application of fertilizers, pesticides, and herbicides. These agricultural practices may occur at any time during the 24-hour day. Individual sensitivities to those practices can vary from person to person. You may wish to consider the impacts of such agricultural practices before you complete your purchase. Please be advised that you may be barred from obtaining legal remedies against agricultural practices conducted in a manner consistent with proper and accepted customs and standards pursuant to Section 3482.5 of the Civil Code or any pertinent local ordinance. (18) Any other information that the owner, his or her agent, or the subdivider may desire to present. (c) The commissioner may, by regulation, or on the basis of the particular circumstances of a proposed offering, waive the requirement of the submission of a completed questionnaire if the commissioner determines that prospective purchasers or lessees of the subdivision interests to be offered will be adequately protected through the issuance of a public report based solely upon information contained in the notice of intention.  SEC. 59.   Section 11011 of the   Business and Professions Code   is amended to read:  11011. (a) The commissioner may by regulation prescribe filing fees in connection with applications to the Department of  Real Estate   Financial Services  pursuant to this chapter that are lower than the maximum fees specified in subdivision (b) if the commissioner determines that the lower fees are sufficient to offset the costs and expenses incurred in the administration of this chapter. The commissioner shall hold at least one hearing each calendar year to determine if lower fees than those specified in subdivision (b) should be prescribed. (b) The filing fee for an application for a public report to be issued under authority of this chapter shall not exceed the following for each subdivision or phase of a subdivision in which interests are to be offered for sale or lease: (1) A notice of intention without a completed questionnaire: One hundred fifty dollars ($150). (2) An original public report for subdivision interests described in Section 11004.5: One thousand seven hundred dollars ($1,700) plus ten dollars ($10) for each subdivision interest to be offered. (3) An original public report for subdivision interests other than those described in Section 11004.5: Six hundred dollars ($600) plus ten dollars ($10) for each subdivision interest to be offered. (4) A conditional public report for subdivision interests described in Section 11004.5: Five hundred dollars ($500). (5) A conditional public report for subdivision interests other than those described in Section 11004.5: Five hundred dollars ($500). (6) A preliminary public report for subdivision interests described in Section 11004.5: Five hundred dollars ($500). (7) A preliminary public report for subdivision interests other than those described in Section 11004.5: Five hundred dollars ($500). (8) A renewal public report for subdivision interests described in Section 11004.5: Six hundred dollars ($600). (9) A renewal public report for subdivision interests other than those described in Section 11004.5: Six hundred dollars ($600). (10) An amended public report for subdivision interests described in Section 11004.5: Five hundred dollars ($500) plus ten dollars ($10) for each subdivision interest to be offered under the amended public report for which a fee has not previously been paid. (11) An amended public report to offer subdivision interests other than those described in Section 11004.5: Five hundred dollars ($500) plus ten dollars ($10) for each subdivision interest to be offered under the amended public report for which a fee has not previously been paid. (c) The filing fee to review a declaration as described in Section 11010.10 shall not exceed two hundred dollars ($200). (d) The actual subdivision fees established by regulation under authority of this section and Section 10249.3 shall not exceed the amount reasonably required by the department to administer this part and Article 8 (commencing with Section 10249) of Chapter 3 of Part 1. (e) All fees collected by the department under authority of this chapter shall be deposited into the Real Estate Fund under Chapter 6 (commencing with Section 10450) of Part 1. All fees received by the department pursuant to this chapter shall be deemed earned upon receipt. No part of any fee is refundable unless the commissioner determines that it was paid as the result of a mistake or inadvertence. This section shall remain in effect unless it is superseded pursuant to Section 10226 or subdivision (a) of Section 10226.5, whichever is applicable.  SEC. 60.   Section 11012 of the   Business and Professions Code   is amended to read:  11012. It is unlawful for the owner, his  or her  agent, or subdivider, of the project, after it is submitted to the Department of  Real Estate   Financial Services  , to materially change the setup of such offering without first notifying the Department of  Real Estate   Financial Services  in writing of such intended change. This section only applies to those changes of which the owner, his  or her  agent, or subdivider has knowledge or constructive knowledge.  SEC. 61.   Section 11018 of the   Business and Professions Code   is amended to read:  11018. The  Real Estate  Commissioner  of Financial Services  shall make an examination of any subdivision, and shall, unless there are grounds for denial, issue to the subdivider a public report authorizing the sale or lease in this state of the lots or parcels within the subdivision. The report shall contain the data obtained in accordance with Section 11010 and which the commissioner determines are necessary to implement the purposes of this article. The commissioner may publish the report. The grounds for denial are: (a) Failure to comply with any of the provisions in this chapter or the regulations of the commissioner pertaining thereto. (b) The sale or lease would constitute misrepresentation to or deceit or fraud of the purchasers or lessees. (c) Inability to deliver title or other interest contracted for. (d) Inability to demonstrate that adequate financial arrangements have been made for all offsite improvements included in the offering. (e) Inability to demonstrate that adequate financial arrangements have been made for any community, recreational or other facilities included in the offering. (f) Failure to make a showing that the parcels can be used for the purpose for which they are offered; and in the case of a subdivision being offered for residential purposes failure to make a showing that vehicular access and a source of potable domestic water either is available or will be available. (g) Failure to provide in the contract or other writing the use or uses for which the parcels are offered, together with any covenants or conditions relative thereto. (h) Agreements or bylaws to provide for management or other services pertaining to common facilities in the offering, which fail to comply with the regulations of the commissioner. (i) Failure to demonstrate that adequate financial arrangements have been made for any guaranty or warranty included in the offering.  SEC. 62.   Section 11018.1 of the   Business and Professions Code   is amended to read:  11018.1. (a) A copy of the public report of the commissioner, when issued, shall be given to the prospective purchaser by the owner, subdivider or agent prior to the execution of a binding contract or agreement for the sale or lease of any lot or parcel in a subdivision. The requirement of this section extends to lots or parcels offered by the subdivider after repossession. A receipt shall be taken from the prospective purchaser in a form and manner as set forth in regulations of the  Real Estate  Commissioner  of Financial Services  . (b) A copy of the public report shall be given by the owner, subdivider or agent at any time, upon oral or written request, to any member of the public. A copy of the public report and a statement advising that a copy of the public report may be obtained from the owner, subdivider or agent at any time, upon oral or written request, shall be posted in a conspicuous place at any office where sales or leases or offers to sell or lease lots within the subdivision are regularly made. (c) At the same time that a public report is required to be given by the owner, subdivider, or agent pursuant to subdivision (a) with respect to a common interest development, as defined, in subdivision (c) of Section 1351 of the Civil Code, the owner, subdivider, or agent shall give the prospective purchaser a copy of the following statement: "Common Interest Development General Information The project described in the attached Subdivision Public Report is known as a common-interest development. Read the public report carefully for more information about the type of development. The development includes common areas and facilities which will be owned or operated by an owners' association. Purchase of a lot or unit automatically entitles and obligates you as a member of the association and, in most cases, includes a beneficial interest in the areas and facilities. Since membership in the association is mandatory, you should be aware of the following information before you purchase: Your ownership in this development and your rights and remedies as a member of its association will be controlled by governing instruments which generally include a Declaration of Restrictions (also known as CC&R's), Articles of Incorporation (or association) and bylaws. The provisions of these documents are intended to be, and in most cases are, enforceable in a court of law. Study these documents carefully before entering into a contract to purchase a subdivision interest. In order to provide funds for operation and maintenance of the common facilities, the association will levy assessments against your lot or unit. If you are delinquent in the payment of assessments, the association may enforce payment through court proceedings or your lot or unit may be liened and sold through the exercise of a power of sale. The anticipated income and expenses of the association, including the amount that you may expect to pay through assessments, are outlined in the proposed budget. Ask to see a copy of the budget if the subdivider has not already made it available for your examination. A homeowner association provides a vehicle for the ownership and use of recreational and other common facilities which were designed to attract you to buy in this development. The association also provides a means to accomplish architectural control and to provide a base for homeowner interaction on a variety of issues. The purchaser of an interest in a common-interest development should contemplate active participation in the affairs of the association. He or she should be willing to serve on the board of directors or on committees created by the board. In short, "they" in a common interest development is "you." Unless you serve as a member of the governing board or on a committee appointed by the board, your control of the operation of the common areas and facilities is limited to your vote as a member of the association. There are actions that can be taken by the governing body without a vote of the members of the association which can have a significant impact upon the quality of life for association members. Until there is a sufficient number of purchasers of lots or units in a common interest development to elect a majority of the governing body, it is likely that the subdivider will effectively control the affairs of the association. It is frequently necessary and equitable that the subdivider do so during the early stages of development. It is vitally important to the owners of individual subdivision interests that the transition from subdivider to resident-owner control be accomplished in an orderly manner and in a spirit of cooperation. When contemplating the purchase of a dwelling in a common interest development, you should consider factors beyond the attractiveness of the dwelling units themselves. Study the governing instruments and give careful thought to whether you will be able to exist happily in an atmosphere of cooperative living where the interests of the group must be taken into account as well as the interests of the individual. Remember that managing a common interest development is very much like governing a small community ... the management can serve you well, but you will have to work for its success." Failure to provide the statement in accordance with this subdivision shall not be deemed a violation subject to Section 10185.  SEC. 63.   Section 11018.2 of the   Business and Professions Code   is amended to read:  11018.2. No person shall sell or lease, or offer for sale or lease in this state any lots or parcels in a subdivision without first obtaining a public report from the  Real Estate  Commissioner  of Financial Services  . This section shall not apply to subdivisions for which a notice of intention is not required under the provisions of this chapter.  SEC. 64.   Sect   ion 11018.7 of the   Business and Professions Code   is amended to read:  11018.7. (a) No amendment or modification of provisions in the declaration of restrictions, bylaws, articles of incorporation or other instruments controlling or otherwise affecting rights to ownership, possession, or use of interests in subdivisions as defined in Sections 11000.1 and 11004.5 which would materially change those rights of an owner, either directly or as a member of an association of owners, is valid without the prior written consent of the  Real Estate  Commissioner  of Financial Services  during the period of time when the subdivider or his or her successor in interest holds or directly controls as many as one-fourth of the votes that may be cast to effect that change. (b) The commissioner shall not grant his or her consent to the submission of the proposed change to a vote of owners or members if he or she finds that the change if effected would create a new condition or circumstance that would form the basis for denial of a public report under Sections 11018 or 11018.5. An application for consent may be filed by any interested person on a form prescribed by the commissioner. A filing fee to be fixed by regulation, but not to exceed twenty-five dollars ($25), shall accompany each application. There shall be no official meeting of owners or members nor any written solicitation of them for the purpose of effectuating a change referred to herein except in accordance with a procedure approved by the commissioner after the application for consent has been filed with him or her; provided, however, that the governing body of the owners association may meet and vote on the question of submission of the proposed change to the commissioner.  SEC. 65.   Section 11212 of the   Business and Professions Code   is amended to read:  11212. As used in this chapter, the following definitions apply: (a) "Accommodation" means any apartment, condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals, or any unit or berth on a commercial passenger ship, which is included in the offering of a time-share plan. (b) "Advertisement" means any written, oral, or electronic communication that is directed to or targeted to persons within the state or such a communication made from this state or relating to a time-share plan located in this state and contains a promotion, inducement, or offer to sell a time-share plan, including, but not limited to, brochures, pamphlets, radio and television scripts, electronic media, telephone and direct mail solicitations, and other means of promotion. (c) "Association" means the organized body consisting of the purchasers of time-share interests in a time-share plan. (d) "Assessment" means the share of funds required for the payment of common expenses which is assessed from time to time against each purchaser by the managing entity. (e) "Commissioner" means the  Real Estate  Commissioner  of Financial Services . (f) "Component site" means a specific geographic location where accommodations that are part of a multisite time-share plan are located. Separate phases of a time-share property in a specific geographic location and under common management shall not be deemed a component site. (g) "Conspicuous type" means either of the following: (1) Type in upper and lower case letters two point sizes larger than the nearest nonconspicuous type, exclusive of headings, on the page on which it appears but in at least 10-point type. (2) Conspicuous type may be utilized in contracts for purchase or public permits only where required by law or as authorized by the commissioner. (h) "Department" means the Department of  Real Estate   Financial Services  . (i) "Developer" means and includes any person who creates a time-share plan or is in the business of selling time-share interests, other than those employees or agents of the developer who sell time-share interests on the developer's behalf, or employs agents to do the same, or any person who succeeds to the interest of a developer by sale, lease, assignment, mortgage, or other transfer, but the term includes only those persons who offer time-share interests for disposition in the ordinary course of business. (j) "Dispose" or "disposition" means a voluntary transfer or assignment of any legal or equitable interest in a time-share plan, other than the transfer, assignment, or release of a security interest. (k) "Exchange company" means any person owning or operating, or both owning and operating, an exchange program. () "Exchange program" means any method, arrangement, or procedure for the voluntary exchange of time-share interests or other property interests. The term does not include the assignment of the right to use and occupy accommodations to owners of time-share interests within a single site time-share plan. Any method, arrangement, or procedure that otherwise meets this definition in which the purchaser' s total contractual financial obligation exceeds three thousand dollars ($3,000) per any individual, recurring time-share period, shall be regulated as a time-share plan in accordance with this chapter. For purposes of determining the purchaser's total contractual financial obligation, amounts to be paid as a result of renewals and options to renew shall be included in the term except for the following: (1) amounts to be paid as a result of any optional renewal that a purchaser, in his or her sole discretion may elect to exercise, (2) amounts to be paid as a result of any automatic renewal in which the purchaser has a right to terminate during the renewal period at any time and receive a pro rata refund for the remaining unexpired renewal term, or (3) amounts to be paid as a result of an automatic renewal in which the purchaser receives a written notice no less than 30 nor more than 90 days prior to the date of renewal informing the purchaser of the right to terminate prior to the date of renewal. Notwithstanding these exceptions, if the contractual financial obligation exceeds three thousand dollars ($3,000) for any three-year period of any renewal term, amounts to be paid as a result of that renewal shall be included in determining the purchaser's total contractual financial obligation. (m) "Incidental benefit" is an accommodation, product, service, discount, or other benefit, other than an exchange program, that is offered to a prospective purchaser of a time-share interest prior to the end of the rescission period set forth in Section 11238, the continuing availability of which for the use and enjoyment of owners of time-share interests in the time-share plan is limited to a term of not more than three years, subject to renewal or extension. The term shall not include an offer of the use of the accommodation, product, service, discount, or other benefit on a free or discounted one-time basis. (n) "Managing entity" means the person who undertakes the duties, responsibilities, and obligations of the management of a time-share plan. (o) "Offer" means any inducement, solicitation, or other attempt, whether by marketing, advertisement, oral or written presentation, or any other means, to encourage a person to acquire a time-share interest in a time-share plan, other than as security for an obligation. (p) "Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, government, governmental subdivision or agency, or other legal entity, or any combination thereof. (q) "Promotion" means a plan or device, including one involving the possibility of a prospective purchaser receiving a vacation, discount vacation, gift, or prize, used by a developer, or an agent, independent contractor, or employee of any of the same on behalf of the developer, in connection with the offering and sale of time-share interests in a time-share plan. (r) "Public report" means a preliminary public report, conditional public report, final public report, or other such disclosure document authorized for use in connection with the offering of time-share interests pursuant to this chapter. (s) "Purchaser" means any person, other than a developer, who by means of a voluntary transfer for consideration acquires a legal or equitable interest in a time-share plan other than as security for an obligation. (t) "Purchase contract" means a document pursuant to which a developer becomes legally obligated to sell, and a purchaser becomes legally obligated to buy, a time-share interest. (u) "Reservation system" means the method, arrangement, or procedure by which a purchaser, in order to reserve the use or occupancy of any accommodation of a multisite time-share plan for one or more time-share periods, is required to compete with other purchasers in the same multisite time-share plan, regardless of whether the reservation system is operated and maintained by the multisite time-share plan managing entity, an exchange company, or any other person. If a purchaser is required to use an exchange program as the purchaser's principal means of obtaining the right to use and occupy accommodations in a multisite time-share plan, that arrangement shall be deemed a reservation system. When an exchange company utilizes a mechanism for the exchange of use of time-share periods among members of an exchange program, that utilization is not a reservation system of a multisite time-share plan. (v) "Short-term product" means the right to use accommodations on a one-time or recurring basis for a period or periods not to exceed 30 days per stay and for a term of three years or less, and that includes an agreement that all or a portion of the consideration paid by a person for the short-term product will be applied to or credited against the price of a future purchase of a time-share interest or that the cost of a future purchase of a time-share interest will be fixed or locked-in at a specified price. (w) "Time-share instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a time-share plan and includes the declaration dedicating accommodations to the time-share plan. (x) "Time-share interest" means and includes either of the following: (1) A "time-share estate," which is the right to occupy a time-share property, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof. (2) A "time-share use," which is the right to occupy a time-share property, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a time-share property. (y) "Time-share period" means the period or periods of time when the purchaser of a time-share plan is afforded the opportunity to use the accommodations of a time-share plan. (z) "Time-share plan" means any arrangement, plan, scheme, or similar device, other than an exchange program, whether by membership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years. A time-share plan may be either of the following: (1) A "single site time-share plan," which is the right to use accommodations at a single time-share property. (2) A "multisite time-share plan," which includes either of the following: (A) A "specific time-share interest," which is the right to use accommodations at a specific time-share property, together with use rights in accommodations at one or more other component sites created by or acquired through the time-share plan's reservation system. (B) A "nonspecific time-share interest," which is the right to use accommodations at more than one component site created by or acquired through the time-share plan's reservation system, but including no specific right to use any particular accommodations. (aa) "Time-share property" means one or more accommodations subject to the same time-share instrument, together with any other property or rights to property appurtenant to those accommodations.  SEC. 66.   Section 11225 of the   Business and Professions Code   is amended to read:  11225. A person shall not be required to register a time-share plan with the commissioner pursuant to this chapter if any of the following applies: (a) The person is an owner of a time-share interest who has acquired the time-share interest for the person's own use and occupancy and who later offers it for resale. (b) The person is a managing entity or an association that is not otherwise a developer of a time-share plan in its own right, solely while acting as an association or under a contract with an association to offer or sell a time-share interest transferred to the association through foreclosure, deed in lieu of foreclosure, or gratuitous transfer, if these acts are performed in the regular course of, or as an incident to, the management of the association for its own account in the time-share plan. Notwithstanding the exemption from registration, the association or managing entity shall provide each purchaser of a time-share interest covered by this subdivision a copy of the time-share instruments, a copy of the then-current budget, a written statement of the then-current assessment amounts, and shall provide the purchaser the opportunity to rescind the purchase within seven days after receipt of these documents. Immediately prior to the space reserved in the contract for the signature of the purchaser, the association or managing entity shall disclose, in conspicuous type, substantially the following notice of cancellation: YOU MAY CANCEL THIS CONTRACT WITHOUT ANY PENALTY OR OBLIGATION WITHIN SEVEN CALENDAR DAYS OF RECEIPT OF THE PUBLIC REPORT OR AFTER THE DATE YOU SIGN THIS CONTRACT, WHICHEVER DATE IS LATER. IF YOU DECIDE TO CANCEL THIS CONTRACT, YOU MUST NOTIFY THE ASSOCIATION (OR MANAGING ENTITY) IN WRITING OF YOUR INTENT TO CANCEL. YOUR NOTICE OF CANCELLATION SHALL BE EFFECTIVE UPON THE DATE SENT AND SHALL BE SENT TO (NAME OF ASSOCIATION OR MANAGING ENTITY) AT (ADDRESS OF ASSOCIATION OR MANAGING ENTITY). YOUR NOTICE OF CANCELLATION MAY ALSO BE SENT BY FACSIMILE TO (FACSIMILE NUMBER OF THE ASSOCIATION OR MANAGING ENTITY) OR BY HAND-DELIVERY. ANY ATTEMPT TO OBTAIN A WAIVER OF YOUR CANCELLATION RIGHT IS VOID AND OF NO EFFECT. (c) The person is conveyed, assigned, or transferred more than seven time-share interests from a developer in a single voluntary or involuntary transaction and subsequently conveys, assigns, or transfers all of the time-share interests received from the developer to a single purchaser in a single transaction. (d) (1) The developer is offering or disposing of a time-share interest to a purchaser who has previously acquired a time-share interest from the same developer if the developer has a time-share plan registered under this chapter, which was originally approved by the commissioner within the preceding seven years, and the developer complies in all respects with the provisions of Section 11245, and, further, provides the purchaser with (A) a cancellation period of at least seven days, (B) all the time-share disclosure documents that are required to be provided to purchasers as if the sale occurred in the state or jurisdiction where the time-share property is located, and (C) the following disclaimer in conspicuous type: WARNING: THE CALIFORNIA DEPARTMENT OF  REAL ESTATE   FINANCIAL SERVICES  HAS NOT EXAMINED THIS OFFERING, INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT (IF ANY), ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES (IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS (IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE STATE WHERE THIS TIME-SHARE PROPERTY IS SITUATED. (2) By making such an offering or disposition, the person is deemed to consent to the jurisdiction of the commissioner in the event of a dispute with the purchaser in connection with the offering or disposition. (e) It is a single site time-share plan located outside of the boundaries of the United States or component site of a specific time-share interest multisite time-share plan located wholly outside of the boundaries of the United States, or a nonspecific time-share interest multisite time-share plan in which all component sites are located wholly outside of the boundaries of the United States. However, it is unlawful and a violation of this chapter for a person, in this state, to sell or lease or offer for sale or lease a time-share interest in such a time-share plan, located outside the United States, unless the printed material, literature, advertising, or invitation in this state relating to that sale, lease, or offer clearly and conspicuously contains the following disclaimer in capital letters of at least 10-point type: WARNING: THE CALIFORNIA DEPARTMENT OF  REAL ESTATE   FINANCIAL SERVICES  HAS NOT EXAMINED THIS OFFERING, INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT (IF ANY), ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES (IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS (IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE COUNTRY WHERE THIS TIME-SHARE PROPERTY IS SITUATED. (1) If an offer of time-share interest in a time-share plan described in subdivision (e) is not initially made in writing, the foregoing disclaimer shall be received by the offeree in writing prior to a visit to a location, sales presentation, or contact with a person representing the offeror, when the visit or contact was scheduled or arranged by the offeror or its representative. The deposit of the disclaimer in the United States mail, addressed to the offeree and with first-class postage prepaid, at least five days prior to the scheduled or arranged visit or contact, shall be deemed to constitute delivery for purposes of this section. (2) If any California resident is presented with an agreement or purchase contract to lease or purchase a time-share interest as described in subdivision (e), where an offer to lease or purchase that time-share interest was made to that resident in California, a copy of the disclaimer set forth in subdivision (e) shall be inserted in at least 10-point type at the top of the first page of that agreement or purchase contract and shall be initialed by that California resident. (3) Nothing contained in this subdivision shall be deemed to exempt from registration in this state a nonspecific time-share interest multisite time-share plan in which any component site in the time-share plan is located in the United States.  SEC. 67.   Section 11232 of the   Business and Professions Code   is amended to read:  11232. (a) The commissioner may by regulation prescribe filing fees in connection with applications to the Department of  Real Estate   Financial Services  for a public report pursuant to the provisions of this chapter that are lower than the maximum fees specified in subdivision (b) if the commissioner determines that the lower fees are sufficient to offset the costs and expenses incurred in the administration of this chapter. The commissioner shall hold at least one hearing each calendar year to determine if lower fees than those specified in subdivision (b) should be prescribed. (b) The filing fees for an application for a public report to be issued under authority of this chapter shall not exceed the following for each time-share plan, location, or phase of the time-share plan in which interests are to be offered for sale or lease: (1) One thousand seven hundred dollars ($1,700) plus ten dollars ($10) for each time-share interest to be offered for an original public report application. (2) Six hundred dollars ($600) plus ten dollars ($10) for each time-share plan interest to be offered that was not permitted to be offered under the public report to be renewed for a renewal public report or permit application. (3) Five hundred dollars ($500) plus ten dollars ($10) for each time-share interest to be offered under the amended public report for which a fee has not previously been paid for an amended public report application. (4) Five hundred dollars ($500) for a conditional public report application. (c) Fees collected by the commissioner under authority of this chapter shall be deposited into the Real Estate Fund pursuant to Chapter 6 (commencing with Section 10450) of Part 1. Fees received by the commissioner pursuant to this article shall be deemed earned upon receipt. No part of any fee is refundable unless the commissioner determines that it was paid as a result of mistake or inadvertency. This section shall remain in effect unless it is superseded pursuant to Section 10266 or subdivision (a) of Section 10266.5, whichever is applicable.  SEC. 68.   Section 11243 of the   Business and Professions Code   is amended to read:  11243. The developer shall comply with the following escrow requirements: (a) A developer of a time-share plan shall deposit into an escrow account in an acceptable escrow depository 100 percent of all funds that are received during the purchaser's rescission period. An acceptable escrow depository includes, when qualified to do business in this state, escrow agents licensed by the Commissioner of  Corporations   Financial Services  , banks, trust companies, savings and loan associations, title insurers, and underwritten title companies. The deposit of these funds shall be evidenced by an executed escrow agreement between the escrow agent and the developer, that shall include provisions that state the following: (1) Funds may be disbursed to the developer by the escrow agent from the escrow account only after expiration of the purchaser's rescission period and in accordance with the purchase contract, subject to subdivision (b). (2) If a prospective purchaser properly cancels the purchase contract pursuant to its terms, the funds shall be paid to the prospective purchaser or paid to the developer if the prospective purchaser's funds have been previously refunded by the developer. (b) If a developer contracts to sell a time-share interest and the construction of any property in which the time-share interest is located has not been completed, the developer, upon expiration of the rescission period, shall continue to maintain in an escrow account all funds received by or on behalf of the developer from the prospective purchaser under his or her purchase contract. The commissioner shall establish, by regulation, the types of documentation which shall be required for evidence of completion, including, but not limited to, a certificate of occupancy, a certificate of substantial completion, or an inspection by the State Fire Marshal designee or an equivalent public safety inspection agency in the applicable jurisdiction. Unless the developer submits financial assurances, in accordance with subdivision (c), funds shall not be released from escrow until a certificate of occupancy, or its equivalent, has been obtained and the rescission period has passed, and the time-share interest can be transferred free and clear of blanket encumbrances, including mechanics' liens. Funds to be released from escrow shall be released as follows: (1) If a prospective purchaser properly cancels the purchase contract pursuant to its terms, the funds shall be paid to the prospective purchaser or paid to the developer if the prospective purchaser's funds have been previously refunded by the developer. (2) If a prospective purchaser defaults in the performance of the prospective purchaser's obligations under the purchase contract, the funds shall be paid to the developer. (3) If the funds of a prospective purchaser have not been previously disbursed in accordance with the provisions of this subdivision, they may be disbursed to the developer by the escrow agent upon the issuance of acceptable evidence of completion of construction. (c) In lieu of the provisions in subdivisions (a) and (b), the commissioner may accept from the developer a surety bond, escrow bond, irrevocable letter of credit, or other financial assurance or arrangement acceptable to the commissioner. Any acceptable financial assurance shall be in an amount equal to or in excess of the lesser of (1) the funds that would otherwise be placed in escrow, or (2) in an amount equal to the cost to complete the incomplete property in which the time-share interest is located. However, in no event shall the amount be less than the amount of funds that would otherwise be placed in escrow pursuant to paragraph (1) of subdivision (a). (d) The developer shall provide escrow account information to the commissioner and shall execute in writing an authorization consenting to an audit or examination of the account by the commissioner on forms provided by the commissioner. The developer shall comply with the reconciliation and records requirements established by regulation by the commissioner. The developer shall make documents related to the escrow account or escrow obligation available to the commissioner upon the department's request. The escrow agent shall maintain any disputed funds in the escrow account until either of the following occurs: (1) Receipt of written direction agreed to by signature of all parties. (2) Deposit of the funds with a court of competent jurisdiction in which a civil action regarding the funds has been filed.  SEC. 69.   Section 11301 of the   Business and Professions Code   is repealed.   11301. There is hereby created within the Business, Transportation and Housing Agency an Office of Real Estate Appraisers to administer and enforce this part.   SEC. 70.   Section 11302 of the   Business and Professions Code   is amended to read:  11302. For the purpose of applying this part, the following terms, unless otherwise expressly indicated, shall mean and have the following definitions: (a) "Agency" means the Business, Transportation and Housing Agency. (b) "Appraisal" means a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion in a federally related transaction as to the market value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information. The term "appraisal" does not include an opinion given by a real estate licensee or engineer or land surveyor in the ordinary course of his or her business in connection with a function for which a license is required under Chapter 7 (commencing with Section 6700) or Chapter 15 (commencing with Section 8700) of Division 3, or Chapter 3 (commencing with Section 10130) or Chapter 7 (commencing with Section 10500) and the opinion shall not be referred to as an appraisal. This part does not apply to a probate referee acting pursuant to Sections 400 to 408, inclusive, of the Probate Code unless the appraised transaction is federally related. (c) "Appraisal Foundation" means the Appraisal Foundation that was incorporated as an Illinois not-for-profit corporation on November 30, 1987. (d) "Appraisal Subcommittee" means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.  (e) "Director" means the Director of the Office of Real Estate Appraisers.  (e) "Commissioner" means the Commissioner of Financial Services. All references to "commissioner" shall be deemed to refer to the Commissioner of Financial Services.   (f) "Department" means the Department of Financial Services. All references to the "department" shall be deemed to refer to the Department of Financial Services.   (f)   (g)  "Federal financial institutions regulatory agency" means the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Home Loan Bank System, National Credit Union Administration, the Resolution Trust Corporation, and any other agency determined by the  director   com   missioner  to have jurisdiction over transactions subject to this part.  (g)   (h)  "Federally related real estate appraisal activity" means the act or process of making or performing an appraisal on real estate or real property in a federally related transaction and preparing an appraisal as a result of that activity.  (h)   (i)  "Federally related transaction" means any real estate-related financial transaction which a federal financial institutions regulatory agency engages in, contracts for or regulates and which requires the services of a state licensed real estate appraiser regulated by this part. This term also includes any transaction identified as such by a federal financial institutions regulatory agency.  (i)   (j)  "License" means any license, certificate, permit, registration, or other means issued by the  office   department  authorizing the person to whom it is issued to act pursuant to this part within this state.  (j)   (k)  "Licensure" means the procedures and requirements a person shall comply with in order to qualify for issuance of a license and includes the issuance of the license.  (k) "Office" means the Office of Real Estate Appraisers.   () "Secretary" means the Secretary of the Business, Transportation and Housing Agency.   (m)   (l)  "State licensed real estate appraiser" is a person who is issued and holds a current valid license under this part.  (n)   (m)  "Uniform Standards of Professional Appraisal Practice" are the standards of professional appraisal practice established by the Appraisal Foundation.  (o)   (n)  "Course provider" means a person or entity that provides educational courses related to professional appraisal practice.  SEC. 71.   Section 11310 of the   Business and Professions Code   is repealed.   11310. The Governor shall appoint, subject to confirmation by the Senate, the Director of the Office of Real Estate Appraisers who shall, in consultation with the Governor and secretary, administer the licensing and certification program for real estate appraisers. In making the appointment, consideration shall be given to the qualifications of an individual that demonstrate knowledge of the real estate appraisal profession. (a) The director shall serve at the pleasure of the Governor. The salary for the director shall be fixed and determined by the secretary with approval of the Department of Personnel Administration. (b) The director shall not be actively engaged in the appraisal business or any other affected industry for the term of appointment, and thereafter the director shall be subject to Section 87406 of the Government Code. (c) The director, in consultation with the secretary and in accordance with the State Civil Service Act, may appoint and fix the compensation of legal, clerical, technical, investigation, and auditing personnel as may be necessary to carry out this part. All personnel shall perform their respective duties under the supervision and direction of the director. (d) The director may appoint not more than four deputy directors as he or she deems appropriate. The deputy directors shall perform their respective duties under the supervision and direction of the director. (e) Every power granted to or duty imposed upon the director under this part may be exercised or performed in the name of the director by the deputy directors, subject to conditions and limitations as the director may prescribe.   SEC. 72.   Section 11313 of the   Business and Professions Code   is repealed.   11313. The office is under the supervision and control of the secretary. The duty of enforcing and administering this part is vested in the director and he or she is responsible to the secretary therefor. The director shall adopt and enforce rules and regulations as are determined reasonably necessary to carry out the purposes of this part. Those rules and regulations shall be adopted pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.   SEC. 73.  Section 11314 of the   Business and Professions Code   is amended to read:  11314. The  office   department  is required to include in its regulations requirements for licensure and discipline of real estate appraisers that ensure protection of the public interest and comply in all respects with Title XI of the Financial Institutions Reform, Recovery  ,  and Enforcement Act of 1989, Public Law 101-73 and any subsequent amendments thereto. Requirements for each level of licensure shall, at a minimum, meet the criteria established by the Appraiser Qualification Board of the Appraisal Foundation.  SEC. 74.   Section 11315 of the   Business and Professions Code   is amended to read:  11315. (a) The  director   commissioner  may issue to a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation a citation that may contain an order to pay an administrative fine assessed by the  office   department  if the person or entity is in violation of this part or any regulations adopted to carry out its purposes. (b) A citation shall be written and describe with particularity the nature of the violation, including a specific reference to the provision of law determined to have been violated. (c) If appropriate, the citation may contain an order of abatement fixing a reasonable time for abatement of the violation. (d) (1) If appropriate, the citation may contain an order to enroll in and successfully complete additional basic or continuing education courses. (2) When a citation imposes an education course or courses, the completion of the course or courses by the licensee shall be subject to the following conditions: (A) The citation imposing the education requirement may specify the specific course content, the number of hours to be completed, the date by which the course is to be completed, and the method by which satisfaction of the order is to be reported to the  office   department  . (B) An education course imposed by citation may not be credited towards the licensee's continuing education requirements pursuant to Section 11360. (C) Only courses accredited by the  office   department  shall be accepted for purposes of fulfilling education imposed by citation. (D) Any failure to satisfactorily complete or timely report an education course to the  office   department  by the date specified in the citation shall result in the automatic suspension of the licensee's real estate appraiser license as of that date. (E) Reinstatement of a license suspended pursuant to subparagraph (D) shall be made only if all of the following events occur: (i) Satisfactory verification of the completion of the education course or courses imposed by the citation. (ii) Completion and filing of a reinstatement application. (iii) Payment of all applicable fees, fines, or penalties. (e) In no event shall an administrative fine assessed by the  office   department  by citation or order exceed ten thousand dollars ($10,000) per violation. In assessing a fine, the  office   department  shall give due consideration to the appropriateness of the amount of the fine with respect to factors such as the gravity of the violation, the good faith of the person who committed the violation, and the history of previous violations. (f) A citation or fine assessment issued pursuant to a citation shall inform the person cited that, if he or she desires a hearing to contest the finding of a violation, he or she must request a hearing by written notice to the  office   department  within 30 days of the date of issuance of the citation or assessment. Hearings shall be held pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The citation or fine assessment shall also inform the person cited that failure to respond to the citation or fine assessment shall result in any order or administrative fine imposed becoming final, and that any order or administrative fine shall constitute an enforceable civil judgment in addition to any other penalty or remedy available pursuant to law. (g) (1) If a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation fails to pay a fine, penalty, or required installment payment on the fine or penalty by the date when it is due, the  director   commissioner  shall charge him or her interest and a penalty of 10 percent of the fine or installment payment amount. Interest shall be charged at the pooled money investment rate. (2) Failure of a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation to pay a fine or required installment payment on the fine within 30 days of the date ordered in the citation, unless the citation is being appealed, shall be cause for additional disciplinary action by the  office   department  . (3) If a citation is not contested and a fine or fine payment is not paid within 30 days of the date ordered in the citation or other order of the  director   commissioner  , the full amount of the unpaid balance of the assessed fine shall be added to any fee for renewal of a license. A license shall not be renewed prior to payment of the renewal fee and fine. (4) The  director   commissioner  may order the full amount of any fine to be immediately due and payable if any payment due on a fine is not received by the  office   department  within 30 days of its due date. (5) Any fine, or interest thereon, not paid within 30 days of a final citation or order shall constitute a valid and enforceable civil judgment. (6) A certified copy of the final order, or the citation with certification by the  office   department  that no request for hearing was received within 30 days of the date of issuance of the citation, shall be conclusive proof of the civil judgment, its terms, and its validity. (h) A citation may be issued without the assessment of an administrative fine. (i) Any administrative fine or penalty imposed pursuant to this section shall be in addition to any other criminal or civil penalty provided for by law. (j) Administrative fines collected pursuant to this section shall be deposited in the Real Estate Appraisers Regulation Fund.  SEC. 75.   Section 11315.5 of the   Business and Professions Code   is amended to read:  11315.5. Notwithstanding any other provision of law, the  office   department  may, at any time the  director   commissioner  deems it to be in the public interest, enter into a settlement of any administrative allegation of violation of this part, or of regulations promulgated pursuant thereto, upon any terms and conditions as the  director   commissioner  deems appropriate. Those settlements may include, but are not limited to, a plan for abatement of the violation or rehabilitation or requalification of the applicant, licensed appraiser, course provider, or person acting in a capacity requiring a license or course provider accreditation within a specified time.  SEC. 76.  Section 11316 of the   Business and Professions Code   is amended to read:  11316. (a) The  director   commissioner  may assess a fine against a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation for violation of this part or any regulations adopted to carry out its purposes. (b) (1) Failure of a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation to pay a fine or make a fine payment within 30 days of the date of assessment shall result in disciplinary action by the  office   department  . If a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation fails to pay a fine within 30 days, the  director   commissioner  shall charge him or her interest and a penalty of 10 percent of the fine or payment amount. Interest shall be charged at the pooled money investment rate. (2) If a fine is not paid, the full amount of the assessed fine shall be added to any fee for renewal of a license. A license shall not be renewed prior to payment of the renewal fee and fine. (3) The  director   commissioner  may order the full amount of any fine to be immediately due and payable if any payment on the fine, or portion thereof, is not received within 30 days of its due date. (4) Any fine, or interest thereon, not paid within 30 days of a final order shall constitute a valid and enforceable civil judgment. (5) A certified copy of the final order shall be conclusive proof of the validity of the order of payment and the terms of payment. (c) Any administrative fine or penalty imposed pursuant to this section shall be in addition to any other criminal or civil penalty provided for by law. (d) Administrative fines collected pursuant to this section shall be deposited in the Real Estate Appraisers Regulation Fund.  SEC. 77.   Section 11317 of the   Business and Professions Code   is amended to read:  11317. The  office   department  shall publish a summary of public disciplinary actions taken by the  office   department  , including resignations while under investigation and the violations upon which these actions are based, which shall meet, at a minimum, the requirements of the appraisal subcommittee. The  office   department  shall not publish identifying information with respect to private reprovals or letters of warning, which shall remain confidential.  SEC. 78.   Section 11318 of the   Business and Professions Code   is amended to read:  11318. (a) A licensee, applicant for licensure, course provider, or applicant for course provider accreditation shall report to the  office   department  , in writing, the occurrence of any of the following events within 30 days of the date he or she has knowledge of any of these events: (1) The conviction of the licensee, applicant for licensure, course provider, or applicant for course provider accreditation of any of the following: (A) A felony. (B) Any crime related to the qualifications, functions, or duties of a licensee, or to acts or activities committed in the course of the licensee's or course provider's practice. As used in this section, a conviction includes an initial plea, verdict, or finding of guilty, plea of no contest, or pronouncement of sentence by a trial court even though that conviction may not be final, the sentence may not be imposed, or all appeals may not be exhausted. (2) The cancellation, revocation, or suspension of a license, other authority to practice, or refusal to renew a license or other authority to practice as an occupational or professional licensee or course provider, by any other regulatory entity. (3) The cancellation, revocation, or suspension of the right to practice before any governmental body or agency. (b) The report required by subdivision (a) shall be signed by the licensee, applicant for licensure, course provider, or applicant for course provider accreditation and clearly set forth the facts that constitute the reportable event. The report shall include the title of the matter, court or agency name, docket number, and dates of occurrence of the reportable event. (c) The licensee, applicant for licensure, course provider, or applicant for course provider accreditation shall also promptly obtain and submit a certified copy of the police or administrative agency's investigative report and certified copies of the court or administrative agency's docket, complaint or accusation, and judgment or other order. (d) A licensee, applicant for licensure, course provider, or applicant for course provider accreditation shall promptly respond to oral or written inquiries from the  office   department  concerning the reportable events.  SEC. 79.  Section 11325 of the   Business and Professions Code   is amended to read:  11325. (a) The  director   commissioner  shall adopt regulations which determine the parameters of appraisal work which may be performed by licensed appraisers. (b) Regulations adopted by the  director   commissioner  pursuant to this section shall, at a minimum, meet the standards established by federal financial institution regulatory agencies as required by Section 1112 of Title XI of the Financial Institutions Reform, Recovery  ,  and Enforcement Act of 1989, Public Law 101-73.  SEC. 80.   Section 11326 of the   Business and Professions Code   is amended to read:  11326. (a) The county assessor shall, upon request, disclose information, furnish abstracts, copies of maps, construction permits, notices of completion, sales confirmation, and permit access to all records in his or her office or branch offices, to the  Office of Real Estate Appraisers   department  when it is conducting an investigation related to professional conduct of appraisers. (b) Whenever the assessor discloses information, furnishes abstracts, and all of the above and permits access to records to the  Office of Real Estate Appraisers   department  , the  office   department  shall reimburse the assessor for any reasonable cost incurred as a result thereof.  SEC. 81.   Section 11327 of the   Business and Professions Code   is amended to read:  11327. The  director   commissioner  shall adopt regulations governing the process and procedure of applying for a trainee license, which shall meet, at a minimum, the requirements of the Appraisal Foundation.  SEC. 82.   Section 11328 of the   Business and Professions Code   is amended to read:  11328. To substantiate documentation of appraisal experience, or to facilitate the investigation of illegal or unethical activities by a licensee, applicant, or other person acting in a capacity that requires a license, that licensee, applicant, or person shall, upon the request of the  director   commissioner  , submit copies of appraisals, or any work product which is addressed by the Uniform Standards of Professional Appraisal Practice, and all supporting documentation and data to the  office  department  . This material shall be confidential in accordance with the confidentiality provisions of the Uniform Standards of Professional Appraisal Practice.  SEC. 83.   Section 11340 of the   Business and Professions Code  is amended to read:  11340. The  director   commissioner  shall adopt regulations governing the process and the procedure of applying for a license which shall include, but not be limited to, necessary experience or education, equivalency, and minimum requirements of the Appraisal Foundation, if any. (a) For purposes of the educational background requirements established under this section, the  director   commissioner  shall grant credits for any courses taken on real estate appraisal ethics or practices pursuant to Section 10153.2, or which are deemed by the  director   commissioner  to meet standards established pursuant to this part and federal law. (b) For the purpose of implementing and applying this section, the  director   commissioner  shall prescribe by regulation "equivalent courses" and "equivalent experience." The experience of employees of an assessor's office or of the State Board of Equalization in setting forth opinions of value of real property for tax purposes shall be deemed equivalent to experience in federally related real estate appraisal activity. Notwithstanding any other law, a holder of a valid real estate broker license shall be deemed to have completed appraisal license application experience requirements upon proof that he or she has accumulated 1,000 hours of experience in the valuation of real property. (c) The  director   commissioner  shall adopt regulations for licensure which shall meet, at a minimum, the requirements and standards established by the Appraisal Foundation, the Resolution Trust Corporation, and the federal financial institutions regulatory agencies acting pursuant to Section 1112 of the Financial Institutions Reform  ,  Recovery  ,  and Enforcement Act of 1989, Public Law 101-73 (FIRREA). The  director   commissioner  shall, by regulation, require the application for a real estate appraiser license to include the applicant's social security number. (d) In evaluating the experience of any applicant for a license, regardless of the number of hours required of that applicant, the  director   commissioner  shall apply the same standards to the experience of all applicants. (e) No license shall be issued to an applicant who is less than 18 years of age.  SEC. 84.   Section 11341 of the   Business and Professions Code   is amended to read:  11341. A license issued with an effective date of January 1, 2000, or later shall be valid for two years unless otherwise extended or limited by the  director   commissioner  .  SEC. 85.   Section 11344 of the   Business and Professions Code   is amended to read:  11344. (a) Notwithstanding Section 11341, a temporary license may be issued pending the outcome of the fingerprint and background check or as otherwise prescribed by the  director   commissioner  . A temporary license is valid for up to 150 days. Unless otherwise prohibited pursuant to Section 11350.6 of the Welfare and Institutions Code, a temporary license may be renewed once at the discretion of the  director   commissioner  . (b) The  director   commissioner  may issue a probationary license as follows: (1) By term. (2) By conditions to be observed in the exercise of the privileges granted.  SEC. 86.   Section 11350 of the   Business and Professions Code   is amended to read:  11350. The  director   commissioner  shall adopt regulations governing the process and procedure of applying for reciprocity, which shall meet, at a minimum, the requirements of the Appraisal Subcommittee.  SEC. 87.   Section 11352 of the   Business and Professions Code   is amended to read:  11352. The  director   commissioner shall adopt regulations governing the process and procedure of applying for temporary practice, which shall meet, at a minimum, the requirements of the Appraisal Subcommittee.  SEC. 88.   Section 11360 of the   Business and Professions Code   is amended to read:  11360. (a) The  director   commissioner  shall adopt regulations governing the process and procedures for renewal of a license which shall include, but not be limited to, continuing education requirements, which shall be reported on the basis of four-year continuing education cycles. (b) An applicant for renewal of a license shall be required to demonstrate his or her continuing fitness to hold a license prior to its renewal. Applicants shall also fulfill continuing education requirements established pursuant to this section and may certify that they have read and understand all applicable California and federal laws and regulations pertaining to the licensing and certification of real estate appraisers in lieu of being required to take a minimum of four hours of federal and California appraisal-related statutory and regulatory law every four years.  SEC. 89.   Section 11361 of the   Business and Professions Code   is amended to read:  11361. The  director   commissioner  shall adopt regulations for implementation of this chapter to ensure that persons engaged in appraisal activity have current knowledge of real estate appraisal theories, practices, and techniques which will provide a high degree of service and protection to the public.  SEC. 90.   Section 11400 of the   Business and Professions Code   is amended to read:  11400. (a) Initial application fees shall be paid to the  office   department  at the time of application. (b) All issuance-related fees shall be paid to the  office   department  at the time the issuance application is submitted to the  office   department  . (c) All fees shall be paid by cashier's check, certified check, money order, or government purchase order. In addition, the office   department  may accept personal checks or credit cards for the payment of fees. All fees shall be deemed earned by the  office   department  upon receipt and are refundable at the discretion of the  director   commissioner  .  SEC. 91.   Section 11401 of the   Business and Professions Code   is amended to read:  11401. (a) The fee to take an examination or reexamination for a license shall be set at an amount not to exceed the cost to the  office   department  as determined by competitive bid. (b) The  director   commissioner  may provide that the applicant pay the fee directly to the examination provider.  SEC. 92.   Section 11406 of the   Business and Professions Code   is amended to read:  11406. (a) The  director   commissioner  shall by regulation establish fees for approval of basic education and continuing education courses or their equivalent, or for the evaluation of petitions of applicants based upon claims of equivalency pursuant to Section 11340. The fees established by regulation shall be sufficient to cover the costs incurred by the  office   department  in processing applications for course approvals and petitions for equivalency. (b) The  director   commissioner  shall by regulation establish fees for approval of courses of study required to be taken by applicants for licenses. The fees established by regulation shall be sufficient to cover the costs incurred by the  office   department  in processing applications for course approvals and petitions for equivalency.  SEC. 93.   Section 11407 of the   Business and Professions Code   is amended to read:  11407. The  director   commissioner  may by regulation prescribe fees lower than the maximum fees established by this chapter if he or she determines that lower fees will be adequate to offset the costs incurred by the  office   department  and the committee in the administration of this part.  SEC. 94.   Section 11408 of the   Business and Professions Code   is amended to read:  11408. (a) Application for issuance of a license must be submitted to the  office   department  within one year of the successful completion of the examination. (b) Every applicant or licensee shall pay federal registry fees and state registry processing fees to the state as required as part of issuance-related fees.  SEC. 95.   Section 11409 of the   Business and Professions Code   is amended to read:  11409. (a) Except as otherwise provided by law, any order issued in resolution of a disciplinary proceeding may direct a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation found to have committed a violation or violations of statutes or regulations relating to real estate appraiser practice to pay a sum not to exceed the reasonable costs of investigation, enforcement, and prosecution of the case. (b) Where an order for recovery of costs is made and payment is not made within 30 days of the date directed in the  office's   department's  decision, the order for recovery shall constitute a valid and enforceable civil judgment. This judgment shall be in addition to, and not in place of, any other criminal or civil penalties provided for by law. (c) (1) Failure of a licensee, applicant for licensure, person who acts in a capacity that requires a license under this part, course provider, applicant for course provider accreditation, or a person who, or entity that, acts in a capacity that requires course provider accreditation to pay recovery costs or make a recovery cost payment within 30 days of the date ordered, shall result in disciplinary action by the  office   department  . If the person fails to pay recovery costs within 30 days, that person shall pay interest and a penalty of 10 percent of the recovery costs or payment amount. Interest shall be charged at the pooled money investment rate. (2) If recovery costs are not paid as ordered, the full amount of the assessed fine shall be added to any fee for renewal of a license. A license shall not be renewed prior to payment of the renewal fee and recovery costs. (3) The  director   commissioner  may order the full amount of any recovery costs to be immediately due and payable if any payment on the recovery costs, or portion thereof, is not received within 30 days of its due date. (4) Any recovery costs, or interest thereon, not paid within 30 days of a final order shall constitute a valid and enforceable civil judgment. (d) A certified copy of the  office's   department's  decision shall be conclusive proof of the validity of the order and its terms. (e) The  office   department  shall not renew or reinstate the license of any licensee who has failed to pay all of the costs ordered under this section. (f) Nothing in this section shall preclude the  office   department  from including the recovery of the costs of investigation and enforcement of a case in any default decision or stipulated settlement.  SEC. 96.   Section 11412 of the   Business and Professions Code   is amended to read:  11412. (a) On or before January 1, 2002, the  director   commissioner  shall determine the number of complaint cases containing judicial findings of fraud that may be eligible for recovery pursuant to future regulations that are closely analogous to those which have been adopted for the Real Estate Recovery Fund established in Chapter 6.5 (commencing with Section 10470) of Part 1. This information shall be used by the  director   commissioner  to determine whether a real estate appraiser Recovery Account is necessary or whether to recommend that it should be eliminated. (b) On or before January 1, 2004, regulations shall be adopted for administration of the Recovery Account, which shall include claims, funding, and administrative procedures closely analogous to those which have been adopted for the Real Estate Recovery Fund established in Chapter 6.5 (commencing with Section 10470) of Part 1. (c) The statute of limitations for claims against the fund arising between the effective date of this part and the creation of the fund shall be tolled until the date the fund is created.  SEC. 97.   Section 11422 of the   Business and Professions Code   is amended to read:  11422. The  office   department  shall, on or before February 1, 1994, and at least annually thereafter, transmit to the appraisal subcommittee specified in subdivision (d) of Section 11302 a roster of persons licensed pursuant to this part.  SEC. 98.   Section 11502.5 of the   Business and Professions Code   is amended to read:  11502.5. The course related competency examination or examinations and education provided to a certified common interest development manager pursuant to Section 11502 by any professional association for common interest development managers, or any postsecondary educational institution, shall be developed and administered in a manner consistent with standards and requirements set forth by the American Educational Research Association's "Standards for Educational and Psychological Testing," and the Equal Employment Opportunity Commission's "Uniform Guidelines for Employee Selection Procedures," the Unruh Civil Rights Act, the California Fair Employment and Housing Act, and the Americans with Disabilities Act of 1990, or the course or courses that have been approved as a continuing education course or an equivalent course of study pursuant to the regulations of the  Real Estate  Commissioner  of Financial Services  .  SEC. 99.   Section 17511.1 of the   Business and Professions Code   is amended to read:  17511.1. As used in this article, "telephonic seller" or "seller" means a person who, on his or her own behalf or through salespersons or through the use of an automatic dialing-announcing device, as defined in Section 2871 of the Public Utilities Code, causes a telephone solicitation or attempted telephone solicitation to occur which meets the criteria specified in subdivision (a), (b), (c), or (d) and who is not exempted by subdivision (e), as follows: (a) A telephone solicitation or attempted telephone solicitation wherein the telephonic seller initiates telephonic contact with a prospective purchaser and represents or implies one or more of the following: (1) That a prospective purchaser who buys one or more items will also receive additional or other items, whether or not of the same type as purchased, without further cost. For purposes of this subdivision, "further cost" does not include actual postage or common carrier delivery charges, if any. (2) That a prospective purchaser will receive a prize or gift, if the person also encourages the prospective purchaser to do either of the following: (A) Purchase or rent any goods or services. (B) Pay any money, including, but not limited to, a delivery or handling charge. (3) That a prospective purchaser is able to obtain any item or service at a price which the seller states or implies is below the regular price of the item or service offered. This paragraph shall not apply to retailers who, within the previous 12 months, have sold a majority of their goods or services through in-person sales at retail stores. (4) That a prospective purchaser who buys office equipment or supplies will, because of some unusual event or imminent price increase, be able to buy these items at prices which are below those that are usually charged or will be charged for the items. (5) That the seller is a person other than the person he or she is. (6) That the items for sale are manufactured or supplied by a person other than the actual manufacturer or supplier. (7) That the seller is offering to sell the prospective purchaser any gold, silver, or other metals, including coins, diamonds, rubies, sapphires, or other stones, coal or other minerals, or any interest in oil, gas, or mineral fields, wells, or exploration sites, or any other investment opportunity of any type whatsoever. (8) That the seller is offering to make a loan, or to arrange or assist in arranging a loan or to assist in providing information which may lead to the obtaining of a loan, unless no payment of any kind is made until the loan proceeds are disbursed to the borrower. (9) That a prospective purchaser will receive a credit card, as defined in subdivision (a) of Section 1747.02 of the Civil Code, if the purchaser pays an up front or preapplication fee for the credit card to the telephonic seller. (b) A solicitation or attempted solicitation which is made by telephone in response to inquiries generated by unrequested notifications sent by the seller to persons who have not previously purchased goods or services from the seller or who have not previously requested credit from the seller, to a prospective purchaser wherein the seller represents or implies to the recipient of the notification that any of the following applies to the recipient: (1) That the recipient has in any manner been specially selected to receive the notification or the offer contained in the notification. (2) That the recipient will receive a prize or gift if the recipient calls the seller. (3) That if the recipient buys one or more items from the seller, the recipient will also receive additional or other items, whether or not of the same type as purchased, without further cost or at a cost which the seller states or implies is less than the regular price of such items. However, this subdivision does not apply to the solicitation of sales by a catalog seller who periodically issues and delivers catalogs to potential purchasers by mail or by other means. This exception only applies if the catalog includes a written description or illustration and the sales price of each item of merchandise offered for sale, includes at least 24 full pages of written material or illustrations, is distributed in more than one state, and has an annual circulation of not less than 250,000 customers. (c) A solicitation or attempted solicitation which is made by telephone in response to inquiries generated by advertisements on behalf of the telephonic seller wherein it is represented or implied that the seller is offering to sell to the prospective purchaser any gold, silver, or other metals, including coins, diamonds, rubies, sapphires, or other stones, coal or other minerals, or any interest in oil, gas, or mineral fields, wells, or exploration sites, or any other investment opportunity of any type whatsoever. (d) A solicitation or attempted solicitation which is made by telephone in response to inquiries generated by advertisements on behalf of the telephonic seller wherein it is represented or implied that the seller is offering to make a loan or to arrange or assist in arranging a loan or to assist in providing information which may lead to the obtaining of a loan, unless no payment of any kind is made until the loan proceeds are disbursed to the borrower. (e) For purposes of this article, "telephonic seller" or "seller" does not include any of the following: (1) A person offering or selling a security qualified under Section 25110, 25120, or 25130 of the Corporations Code or exempt from qualification under Chapter 1 (commencing with Section 25100) of Part 2 of Division 1 of Title 4 of the Corporations Code. The fact that a notice claiming an exemption under the Corporate Securities Law of 1968 is filed with the Department of  Corporations   Financial Services  does not create an exemption under this paragraph. (2) A person licensed pursuant to Part 1 (commencing with Section 10000) of Division 4, when the solicited transaction is governed by that law. (3) A person licensed pursuant to Chapter 9 (commencing with Section 7000) of Division 3, when the solicited transaction is governed by that law. (4) A person licensed or certificated pursuant to Part 2 (commencing with Section 680) of Division 1 of the Insurance Code, including a person licensed pursuant to Chapter 5 (commencing with Section 1621) thereof, when the solicited transaction is governed by that law. (5) A person offering or selling a franchise registered pursuant to Section 31110 of the Corporations Code or exempt from registration under Chapter 1 (commencing with Section 31100) of Part 2 of Division 5 of Title 4 of the Corporations Code. The fact that a notice claiming an exemption under the Franchise Investment Law is filed with the Department of  Corporations   Financial Services  does not create an exemption under this paragraph. (6) A person soliciting the sale of a seller assisted marketing plan, as defined in Title 2.7 (commencing with Section 1812.200) of Part 4 of Division 3 of the Civil Code, who has filed with the Attorney General the documents required by Section 1812.203 of the Civil Code. (7) A person primarily soliciting the sale of a newspaper of general circulation, as defined in Article 1 (commencing with Section 6000) of Chapter 1 of Division 7 of Title 1 of the Government Code, a magazine, or membership in a book or record club whose program operates in conformity with the requirements of Section 1584.5 of the Civil Code. (8) A person soliciting business from prospective purchasers who have previously purchased from the business enterprise for which the person is calling. (9) A person soliciting without the intent to complete and who does not complete the sales presentation during the telephone solicitation but completes the sales presentation at a later face-to-face meeting between the solicitor and the prospective purchaser. However, if a seller, directly following a telephone solicitation, causes an individual whose primary purpose it is to go to the prospective purchaser to collect the payment or deliver any item purchased, this exemption does not apply. (10) Any supervised financial institution or parent, subsidiary, or subsidiary of parent thereof. As used in this paragraph, "supervised financial institution" means any commercial bank, trust company, savings and loan association, credit union, industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or insurer, provided that the institution is subject to supervision by an official or agency of this state or of the United States. (11) A person soliciting the sale of a preneed funeral arrangement regulated by Article 9 (commencing with Section 7735) of Chapter 12 of Division 3. (12) A person licensed pursuant to Chapter 19 (commencing with Section 9600) of Division 3 when acting pursuant to that licensure. (13) A person soliciting the sale of services provided by a cable television system licensed or franchised pursuant to Section 53066 of the Government Code or any other authority. (14) A person or an affiliate of a person whose business is regulated by the Public Utilities Commission. (15) A person soliciting the sale of a commodity pursuant to Part 2 (commencing with Section 58601) of Division 21 of the Food and Agricultural Code, if the solicitation neither intends to, nor actually results in, a sale which costs the purchaser in excess of one hundred dollars ($100). (16) An issuer or subsidiary of an issuer that has a security listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., if the exchange or interdealer quotation system has been certified by rule or order of the Commissioner of  Corporations   Financial Services  under subdivision (o) of Section 25100 of the Corporations Code. A subsidiary of an issuer that qualifies for exemption under this paragraph is not itself exempt unless not less than 60 percent of the voting power of its shares is owned by the qualifying issuer or issuers. (17) A person soliciting exclusively the sale of telephone answering services to be provided by that person or that person's employer. (18) A person soliciting a transaction regulated by the Commodity Futures Trading Commission if the person is registered or temporarily licensed for this activity with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. Sec. 1 et seq.), and the registration or license has not expired or been suspended or revoked. (19) A person who sells coins or bullion at a price which is not more than 25 percent more than the price at which the seller is concurrently buying the same coins or bullion, if: (A) the seller has had a retail location in California from which he or she has been selling coins or bullion to the public in person for at least three years; (B) the telephonic solicitations are not the person's primary business and sales made telephonically make up less than 20 percent of the person's total retail sales; and (C) the person claiming an exemption pursuant to this subdivision complies with Section 17511.3, as applicable, and subdivision (p) of Section 17511.4. (20) A person licensed pursuant to Chapter 14 (commencing with Section 1800) of Division 1 of the Financial Code to receive money for transmittal to foreign countries if the license has not expired or been suspended or revoked. (21) A person licensed as a residential mortgage lender or servicer pursuant to Division 20 (commencing with Section 50000) of the Financial Code, when acting under the authority of that license. (22) A corporation that meets all of the following conditions: (A) It has been exempt from taxation under Section 23701e of the Revenue and Taxation Code for a minimum of 10 years. (B) It has maintained its principal purpose for a minimum of 10 years. (C) It has been incorporated in the state for a minimum of 25 years. (f) In any civil proceeding alleging a violation of this article, the burden of proving an exemption or an exception from a definition is upon the person claiming it, and in any criminal proceeding alleging a violation of this article, the burden of producing evidence to support a defense based upon an exemption or an exception from a definition is upon the person claiming it. (g) Compliance with this article does not satisfy nor substitute for any requirements for license, registration, or regulation mandated by other laws.  SEC. 100.   Section 17537.2 of the   Business and Professions Code   is amended to read:  17537.2. The following, when used as part of an advertising plan or program defined in Section 17537.1, are deceptive and constitute unfair trade practices: (a) When, in order to utilize the incentive, the recipient is requested to pay any money to any person or entity named or referred to in the offer, or to purchase, rent, or otherwise pay that person or entity for any product or service including a deposit, whether returnable or not, whether payment is for an item, a service, shipping, handling, insurance or payment for anything. Notwithstanding the preceding paragraph, when the offered incentive is a certificate or coupon redeemable for transportation, accommodations, recreation, vacation, entertainment, or like services, the offer may place a condition on the use of the incentive which requires the recipient to pay directly to the transportation company, the accommodation, recreation, vacation or entertainment facility, or similar direct provider of like services, a refundable deposit, not to exceed fifty dollars ($50), to reserve space availability or admission, only if the deposit shall be returned in United States dollars immediately upon the recipient's arrival at the location of the provider to whom the recipient paid the deposit. If the incentive is such a certificate or coupon, and if government-imposed taxes directly related to the service being provided are not included in the incentive, the offer itself, in close proximity to the description of the incentive which is evidenced by the certificate or coupon, shall disclose those government-imposed taxes which will be the recipient's responsibility and the approximate dollar amount of those taxes. A deposit from the recipient may be collected to cover the cost of those government-imposed taxes. (b) Stating or implying in the offer that the recipient is one of a selected group to receive a particular incentive or one or more of a group of incentives, without clearly and conspicuously disclosing in close proximity to the statement or implied statement of selection the total number of persons in that select group or the odds of receiving the incentive or incentives. Statements of selection which require such disclosure include such phrases as "you are a finalist," "we are sending this to a limited number of people," "either you or another named person has won the major prize," "if you do not respond, your incentive will be given to someone else." (c) Stating or implying in the offer that the recipient is likely to receive one or more of the offered incentives because other named people have already received other named incentives, unless the offer clearly and conspicuously discloses in close proximity to the statement the recipient's odds of receiving the identified incentive. (d) When the solicitation states or implies that the recipient is likely to receive an incentive which has a normal retail price which is higher than that of another named incentive unless that statement is true. For purposes of this section, a list of incentives implies that the incentives are in descending or ascending order of value unless the solicitation clearly and conspicuously negates the implication in close proximity to the list. (e) Describing an incentive or incentives in an untrue or misleading manner. Untrue or misleading descriptions include those which imply that the incentive being offered is of greater fair market value or of a different kind or nature than a recipient would be led to believe from a reasonable reading of the offer, or which lists the recipient's name in close proximity to a specific incentive unless the offer clearly and conspicuously discloses immediately next to or immediately under or above the recipient's name the recipient's odds of receiving the specific incentive. (f) Subdivision (a) shall not apply to an incentive constituting an opportunity to stay at a hotel or other resort accommodations at a discount from the standard rate for the hotel or resort accommodations, if all of the following conditions are met: (1) The fee to utilize the incentive and the requirement, if any, to attend a sales presentation are clearly and conspicuously disclosed in close proximity to the description of the offered incentive. (2) A statement appears in close proximity to the description of the offered incentive and in substantially the following form: The recipient is responsible for payment of any government-imposed taxes directly related to the service being provided and any personal expenses incurred when utilizing this offer. (3) The accommodations to be occupied by the recipient of the incentive are within a 20-mile radius of the property on which the accommodations offered for sale are located or, if not within that radius, the accommodations offered for sale are managed and operated by the same person as, an affiliate (as defined in Section 150 of the Corporations Code) of, or a franchisee (as defined in Section 20002) of, the manager and operator of the accommodations to be occupied, and the manager and operator of the accommodations offered for sale or the manager and operator of the accommodations to be occupied is an issuer or subsidiary of an issuer that has a security listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. and the exchange or interdealer quotation system has been certified by rule or order of the Commissioner of  Corporations   Financial Services  under subdivision (o) of Section 25100 of the Corporations Code. A subsidiary of an issuer that qualifies under this paragraph does not itself qualify under this paragraph unless not less than 60 percent of the voting power of its shares is owned by the qualifying issuer or issuers. (4) If the incentive is offered in conjunction with any additional incentive or incentives or as one or more of a group of incentives, the offer of such additional incentive or incentives shall comply with Section 17537.1 and the following: (A) The additional incentive or incentives are typically and customarily included in a vacation package and may include, but not be limited to, transportation, dining, entertainment, or recreation. (B) The fee and additional requirements, if any, to use the additional incentive or incentives are clearly and conspicuously disclosed in close proximity to the description of the offer of them.  SEC. 101.   Section 20009 of the   Business and Professions Code   is amended to read:  20009. The regulations, releases, guidelines and interpretive opinions of the Commissioner of  Corporations   Financial Services  under the Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code) regarding whether or not an agreement constitutes a "franchise" within the meaning of that law shall be prima facie evidence of the scope and extent of coverage of the definition of "franchise" under this chapter; provided, however, the burden of proving an exemption or an exception from a definition is upon the person claiming it.  SEC. 102.   Section 163 of the   Corporations Code   is amended to read:  163. "Corporation subject to the Banking Law" (Division 1 (commencing with Section 99) of the Financial Code) means: (a) Any corporation which, with the approval of the Commissioner of Financial  Institutions  Services  , is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Financial  Institutions   Services  to engage in, the commercial banking business under Division 1 (commencing with Section 99) of the Financial Code. (b) Any corporation which, with the approval of the Commissioner of Financial  Institutions   Services  , is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Financial  Institutions   Services  to engage in, the industrial banking business under Division 1 (commencing with Section 99) of the Financial Code. (c) Any corporation (other than a corporation described in subdivision (d)) which, with the approval of the Commissioner of Financial  Institutions   Services  , is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Financial  Institutions   Services  to engage in, the trust business under Division 1 (commencing with Section 99) of the Financial Code. (d) Any corporation which is authorized by the Commissioner of Financial  Institutions   Services  and the Commissioner of Insurance to maintain a title insurance department to engage in title insurance business and a trust department to engage in trust business; or (e) Any corporation which, with the approval of the Commissioner of Financial  Institutions   Services  , is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Financial  Institutions   Services  to engage in, business under Article 1 (commencing with Section 3500), Chapter 19, Division 1 of the Financial Code.  SEC. 103.   Section 500 of the   Corporations Code   is amended to read:  500. Neither a corporation nor any of its subsidiaries shall make any distribution to the corporation's shareholders (Section 166) except as follows: (a) The distribution may be made if the amount of the retained earnings of the corporation immediately prior thereto equals or exceeds the amount of the proposed distribution. (b) The distribution may be made if immediately after giving effect thereto: (1) The sum of the assets of the corporation (exclusive of goodwill, capitalized research and development expenses and deferred charges) would be at least equal to 11/4 times its liabilities (not including deferred taxes, deferred income and other deferred credits); and (2) The current assets of the corporation would be at least equal to its current liabilities or, if the average of the earnings of the corporation before taxes on income and before interest expense for the two preceding fiscal years was less than the average of the interest expense of the corporation for those fiscal years, at least equal to 11/4 times its current liabilities; provided, however, that in determining the amount of the assets of the corporation profits derived from an exchange of assets shall not be included unless the assets received are currently realizable in cash; and provided, further, that for the purpose of this subdivision "current assets" may include net amounts which the board has determined in good faith may reasonably be expected to be received from customers during the 12-month period used in calculating current liabilities pursuant to existing contractual relationships obligating those customers to make fixed or periodic payments during the term of the contract or, in the case of public utilities, pursuant to service connections with customers, after in each case giving effect to future costs not then included in current liabilities but reasonably expected to be incurred by the corporation in performing those contracts or providing service to utility customers. Paragraph (2) of subdivision (b) is not applicable to a corporation which does not classify its assets into current and fixed under generally accepted accounting principles. (c) The amount of any distribution payable in property shall, for the purposes of this chapter, be determined on the basis of the value at which the property is carried on the corporation's financial statements in accordance with generally accepted accounting principles. (d) For the purpose of applying this section to a distribution by a corporation of cash or property in payment by the corporation in connection with the purchase of its shares, there shall be added to retained earnings all amounts that had been previously deducted therefrom with respect to obligations incurred in connection with the corporation's repurchase of its shares and reflected on the corporation's balance sheet, but not in excess of the principal of the obligations that remain unpaid immediately prior to the distribution. In addition, there shall be deducted from liabilities all amounts that had been previously added thereto with respect to the obligations incurred in connection with the corporation's repurchase of its shares and reflected on the corporation's balance sheet, but not in excess of the principal of the obligations that will remain unpaid after the distribution, provided that no addition to retained earnings or deduction from liabilities under this subdivision shall occur on account of any obligation that is a distribution to the corporation's shareholders (Section 166) at the time the obligation is incurred. (e) This section does not apply to a corporation licensed as a broker-dealer under Chapter 2 (commencing with Section 25210) of Part 3 of Division 1 of Title 4, if immediately after giving effect to any distribution the corporation is in compliance with the net capital rules of the Commissioner of  Corporations   Financial Services  and the Securities and Exchange Commission.  SEC. 104.   Section 1001 of the   Corporations Code   is amended to read:  1001. (a) A corporation may sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets when the principal terms are approved by the board, and, unless the transaction is in the usual and regular course of its business, approved by the outstanding shares (Section 152), either before or after approval by the board and before or after the transaction. A transaction constituting a reorganization (Section 181) is subject to the provisions of Chapter 12 (commencing with Section 1200) and not this section (other than subdivision (d)). A transaction constituting a conversion (Section 161.9) is subject to the provisions of Chapter 11.5 (commencing with Section 1150) and not this section. (b) Notwithstanding approval of the outstanding shares (Section 152), the board may abandon the proposed transaction without further action by the shareholders, subject to the contractual rights, if any, of third parties. (c) The sale, lease, conveyance, exchange, transfer or other disposition may be made upon those terms and conditions and for that consideration as the board may deem in the best interests of the corporation. The consideration may be money, securities, or other property. (d) If the acquiring party in a transaction pursuant to subdivision (a) of this section or subdivision (g) of Section 2001 is in control of or under common control with the disposing corporation, the principal terms of the sale must be approved by at least 90 percent of the voting power of the disposing corporation unless the disposition is to a domestic or foreign corporation or other business entity in consideration of the nonredeemable common shares or nonredeemable equity securities of the acquiring party or its parent. (e) Subdivision (d) does not apply to any transaction if the Commissioner of  Corporations, the Commissioner of Financial Institutions   Financial Services  , the Insurance Commissioner  ,  or the Public Utilities Commission has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142, Section 696.5 of the Financial Code, Section 838.5 of the Insurance Code, or Section 822 of the Public Utilities Code.  SEC. 105.   Section 1101.1 of the   Corporations Code   is amended to read:  1101.1. Subdivision (c) of Section 1113 and the last two sentences of Section 1101 do not apply to any transaction if the Commissioner of  Corporations, the Commissioner of Financial Institutions   Financial Services  , the Insurance Commissioner or, the Public Utilities Commission has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142 or Section 696.5, 5750, or 5802 of the Financial Code, Section 838.5 of the Insurance Code, or Section 822 of the Public Utilities Code.  SEC. 106.   Section 1300 of the   Corporations Code   is amended to read:  1300. (a) If the approval of the outstanding shares (Section 152) of a corporation is required for a reorganization under subdivisions (a) and (b) or subdivision (e) or (f) of Section 1201, each shareholder of the corporation entitled to vote on the transaction and each shareholder of a subsidiary corporation in a short-form merger may, by complying with this chapter, require the corporation in which the shareholder holds shares to purchase for cash at their fair market value the shares owned by the shareholder which are dissenting shares as defined in subdivision (b). The fair market value shall be determined as of the day before the first announcement of the terms of the proposed reorganization or short-form merger, excluding any appreciation or depreciation in consequence of the proposed action, but adjusted for any stock split, reverse stock split, or share dividend which becomes effective thereafter. (b) As used in this chapter, "dissenting shares" means shares which come within all of the following descriptions: (1) Which were not immediately prior to the reorganization or short-form merger either (A) listed on any national securities exchange certified by the Commissioner of  Corporations   Financial Services  under subdivision (o) of Section 25100 or (B) listed on the National Market System of the NASDAQ Stock Market, and the notice of meeting of shareholders to act upon the reorganization summarizes this section and Sections 1301, 1302, 1303 and 1304; provided, however, that this provision does not apply to any shares with respect to which there exists any restriction on transfer imposed by the corporation or by any law or regulation; and provided, further, that this provision does not apply to any class of shares described in subparagraph (A) or (B) if demands for payment are filed with respect to 5 percent or more of the outstanding shares of that class. (2) Which were outstanding on the date for the determination of shareholders entitled to vote on the reorganization and (A) were not voted in favor of the reorganization or, (B) if described in subparagraph (A) or (B) of paragraph (1) (without regard to the provisos in that paragraph), were voted against the reorganization, or which were held of record on the effective date of a short-form merger; provided, however, that subparagraph (A) rather than subparagraph (B) of this paragraph applies in any case where the approval required by Section 1201 is sought by written consent rather than at a meeting. (3) Which the dissenting shareholder has demanded that the corporation purchase at their fair market value, in accordance with Section 1301. (4) Which the dissenting shareholder has submitted for endorsement, in accordance with Section 1302. (c) As used in this chapter, "dissenting shareholder" means the recordholder of dissenting shares and includes a transferee of record.  SEC. 107.   Section 2207 of the   Corporations Code   is amended to read:  2207. (a) A corporation is liable for a civil penalty in an amount not exceeding one million dollars ($1,000,000) if the corporation does both of the following: (1) Has actual knowledge that an officer, director, manager, or agent of the corporation does any of the following: (A) Makes, publishes, or posts, or has made, published, or posted, either generally or privately to the shareholders or other persons, either of the following: (i) An oral, written, or electronically transmitted report, exhibit, notice, or statement of its affairs or pecuniary condition that contains a material statement or omission that is false and intended to give the shares of stock in the corporation a materially greater or a materially less apparent market value than they really possess. (ii) An oral, written, or electronically transmitted report, prospectus, account, or statement of operations, values, business, profits, or expenditures, that includes a material false statement or omission intended to give the shares of stock in the corporation a materially greater or a materially less apparent market value than they really possess. (B) Refuses or has refused to make any book entry or post any notice required by law in the manner required by law. (C) Misstates or conceals or has misstated or concealed from a regulatory body a material fact in order to deceive a regulatory body to avoid a statutory or regulatory duty, or to avoid a statutory or regulatory limit or prohibition. (2) Within 30 days after actual knowledge is acquired of the actions described in paragraph (1), the corporation knowingly fails to do both of the following: (A) Notify the Attorney General or appropriate government agency in writing, unless the corporation has actual knowledge that the Attorney General or appropriate government agency has been notified. (B) Notify its shareholders in writing, unless the corporation has actual knowledge that the shareholders have been notified. (b) The requirement for notification under this section is not applicable if the action taken or about to be taken by the corporation, or by an officer, director, manager, or agent of the corporation under paragraph (1) of subdivision (a), is abated within the time prescribed for reporting, unless the appropriate government agency requires disclosure by regulation. (c) If the action reported to the Attorney General pursuant to this section implicates the government authority of an agency other than the Attorney General, the Attorney General shall promptly forward the written notice to that agency. (d) If the Attorney General was not notified pursuant to subparagraph (A) of paragraph (2) of subdivision (a), but the corporation reasonably and in good faith believed that it had complied with the notification requirements of this section by notifying a government agency listed in paragraph (5) of subdivision (e), no penalties shall apply. (e) For purposes of this section: (1) "Manager" means a person having both of the following: (A) Management authority over a business entity. (B) Significant responsibility for an aspect of a business that includes actual authority for the financial operations or financial transactions of the business. (2) "Agent" means a person or entity authorized by the corporation to make representations to the public about the corporation's financial condition and who is acting within the scope of the agency when the representations are made. (3) "Shareholder" means a person or entity that is a shareholder of the corporation at the time the disclosure is required pursuant to subparagraph (B) of paragraph (2) of subdivision (a). (4) "Notify its shareholders" means to give sufficient description of an action taken or about to be taken that would constitute acts or omissions as described in paragraph (1) of subdivision (a). A notice or report filed by a corporation with the United States Securities and Exchange Commission that relates to the facts and circumstances giving rise to an obligation under paragraph (1) of subdivision (a) shall satisfy all notice requirements arising under paragraph (2) of subdivision (a), but shall not be the exclusive means of satisfying the notice requirements, provided that the Attorney General or appropriate agency is informed in writing that the filing has been made together with a copy of the filing or an electronic link where it is available online without charge. (5) "Appropriate government agency" means an agency on the following list that has regulatory authority with respect to the financial operations of a corporation: (A) Department of  Corporations   Financial Services  . (B) Department of Insurance.  (C) Department of Financial Institutions.   (D)   (C)  Department of Managed Health Care.  (E)   (D)  United States Securities and Exchange Commission. (6) "Actual knowledge of the corporation" means the knowledge an officer or director of a corporation actually possesses or does not consciously avoid possessing, based on an evaluation of information provided pursuant to the corporation's disclosure controls and procedures. (7) "Refuse to make a book entry" means the intentional decision not to record an accounting transaction when all of the following conditions are satisfied: (A) The independent auditors required recordation of an accounting transaction during the course of an audit. (B) The audit committee of the corporation has not approved the independent auditor's recommendation. (C) The decision is made for the primary purpose of rendering the financial statements materially false or misleading. (8) "Refuse to post any notice required by law" means an intentional decision not to post a notice required by law when all of the following conditions exist: (A) The decision not to post the notice has not been approved by the corporation's audit committee. (B) The decision is intended to give the shares of stock in the corporation a materially greater or a materially less apparent market value than they really possess. (9) "Misstate or conceal material facts from a regulatory body" means an intentional decision not to disclose material facts when all of the following conditions exist: (A) The decision not to disclose material facts has not been approved by the corporation's audit committee. (B) The decision is intended to give the shares of stock in the corporation a materially greater or a materially less apparent market value than they really possess. (10) "Material false statement or omission" means an untrue statement of material fact or an omission to state a material fact necessary in order to make the statements made under the circumstances under which they were made not misleading. (11) "Officer" means any person as set forth in Rule 16A-1 promulgated under the Securities Exchange Act of 1934 or any successor regulation thereto, except an officer of a subsidiary corporation who is not also an officer of the parent corporation. (f) This section only applies to corporations that are issuers, as defined in Section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec. 7201 and following). (g) An action to enforce this section may only be brought by the Attorney General or a district attorney or city attorney in the name of the people of the State of California.  SEC. 108.   Section 7813.5 of the   Corporations Code   is amended to read:  7813.5. (a) A mutual benefit corporation may amend its articles to change its status to that of a public benefit corporation, a religious corporation, a business corporation, or a cooperative corporation by complying with this section and the other sections of this chapter. (b) Except as authorized by Section 7811 or unless the corporation has no members, an amendment to change its status to a public benefit corporation or religious corporation shall: (i) be approved by the members (Section 5034), and the fairness of the amendment to the members shall be approved by the Commissioner of  Corporations   Financial Services  pursuant to Section 25142; (ii) be approved by the members (Section 5034) in an election conducted by written ballot pursuant to Section 7513 in which no negative votes are cast; or (iii) be approved by 100 percent of the voting power. (c) Amended articles authorized by this section shall include the provisions which would have been required (other than the name of the initial agent for service of process if a statement has been filed pursuant to Section 8210), and may in addition only include those provisions which would have been permitted, in original articles filed by the type of corporation (public benefit, religious, business, or cooperative) into which the mutual benefit corporation is changing its status. (d) At the time of filing a certificate of amendment to change status to a public benefit corporation, a corporation shall furnish an additional copy of the certificate of amendment to the Secretary of State who shall forward that copy to the Attorney General. (e) In the case of a change of status to a business corporation or a cooperative corporation, if the Franchise Tax Board has issued a determination exempting the corporation from tax as provided in Section 23701 of the Revenue and Taxation Code, the corporation shall be subject to Section 23221 of the Revenue and Taxation Code upon filing the certificate of amendment.  SEC. 109.   Section 8011.5 of the   Corporations Code   is amended to read:  8011.5. Each membership of the same class of any constituent corporation (other than the cancellation of memberships held by a surviving corporation or its parent or a wholly owned subsidiary of either in a constituent corporation) shall be treated equally with respect to any distribution of cash, property, rights or securities unless: (i) all members of the class consent or (ii) the Commissioner of  Corporations   Financial Services  has approved the terms and conditions of the transaction and the fairness of such terms pursuant to Section 25142.  SEC. 110.   Section 12504 of the   Corporations Code   is amended to read:  12504. (a) A corporation may amend its articles to change its status to that of a nonprofit public benefit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a business corporation by complying with this section and the other sections of this chapter. (b) Except as authorized by Section 12501 or unless the corporation has no members, an amendment to change its status to a nonprofit public benefit corporation or a nonprofit religious corporation shall: (1) be approved by the members (Section 12224), and the fairness of the amendment to the members shall be approved by the Commissioner of  Corporations   Financial Services  pursuant to Section 25142; or (2) be approved by the members (Section 12224) in an election conducted by written ballot pursuant to Section 12463 in which no negative votes are cast; or (3) be approved by 100 percent of the voting power. (c) Amended articles authorized by this section shall include the provisions which would have been required (other than the name of the initial agent for service of process if a statement has been filed pursuant to Section 12570), and may in addition only include those provisions which would have been permitted, in original articles filed by the type of corporation (nonprofit public benefit, nonprofit mutual benefit, nonprofit religious, or business) into which the corporation is changing its status. (d) At the time of filing a certificate of amendment to change status to a nonprofit public benefit corporation, a corporation shall furnish an additional copy of the certificate of amendment to the Secretary of State who shall forward that copy to the Attorney General.  SEC. 111.   Section 12532 of the   Corporations Code   is amended to read:  12532. Each membership of the same class of any constituent corporation (other than the cancellation of memberships held by a surviving corporation or its parent or a wholly owned subsidiary of either in a constituent corporation) shall be treated equally with respect to any distribution of cash, property, rights or securities unless: (a) all members of the class consent or (b) the Commissioner of  Corporations   Financial Services  has approved the terms and conditions of the transaction and the fairness of such terms pursuant to Section 25142.  SEC. 112.   Section 13205 of the   Corporations Code   is amended to read:  13205. No association is subject in any manner to the terms of the Corporate Securities Law and all associations may issue their membership certificates or stock or other securities as provided in this division without the necessity of any permit from the Commissioner of  Corporations   Financial Services  .  SEC. 113.   Section 13406 of the   Corporations Code   is amended to read:  13406. (a) Subject to the provisions of subdivision (b), shares of capital stock in a professional corporation may be issued only to a licensed person or to a person who is licensed to render the same professional services in the jurisdiction or jurisdictions in which the person practices, and any shares issued in violation of this restriction shall be void. Unless there is a public offering of securities by a professional corporation or by a foreign professional corporation in this state, its financial statements shall be treated by the Commissioner of  Corporations   Financial Services  as confidential, except to the extent that such statements shall be subject to subpoena in connection with any judicial or administrative proceeding, and may be admissible in evidence therein. No shareholder of a professional corporation or of a foreign professional corporation qualified to render professional services in this state shall enter into a voting trust, proxy, or any other arrangement vesting another person (other than another person who is a shareholder of the same corporation) with the authority to exercise the voting power of any or all of his or her shares, and any such purported voting trust, proxy or other arrangement shall be void. (b) A professional law corporation may be incorporated as a nonprofit public benefit corporation under the Nonprofit Public Benefit Corporation Law under either of the following circumstances: (1) The corporation is a qualified legal services project or a qualified support center within the meaning of subdivisions (a) and (b) of Section 6213 of the Business and Professions Code. (2) The professional law corporation otherwise meets all of the requirements and complies with all of the provisions of the Nonprofit Public Benefit Corporation Law, as well as all of the following requirements: (A) All of the members of the corporation, if it is a membership organization as described in the Nonprofit Corporation Law, are persons licensed to practice law in California. (B) All of the members of the professional law corporation's board of directors are persons licensed to practice law in California. (C) Seventy percent of the clients to whom the corporation provides legal services are lower income persons as defined in Section 50079.5 of the Health and Safety Code, and to other persons who would not otherwise have access to legal services. (D) The corporation shall not enter into contingency fee contracts with clients. (c) A professional law corporation incorporated as a nonprofit public benefit corporation that is a recipient in good standing as defined in subdivision (c) of Section 6213 of the Business and Professions Code shall be deemed to have satisfied all of the filing requirements of a professional law corporation under Sections 6161.1, 6162, and 6163 of the Business and Professions Code.  SEC. 114.   Section 13408.5 of the   Corporations Code   is amended to read:  13408.5. No professional corporation may be formed so as to cause any violation of law, or any applicable rules and regulations, relating to fee splitting, kickbacks, or other similar practices by physicians and surgeons or psychologists, including, but not limited to, Section 650 or subdivision (e) of Section 2960 of the Business and Professions Code. A violation of any such provisions shall be grounds for the suspension or revocation of the certificate of registration of the professional corporation. The Commissioner of  Corporations   Financial Services  or the Director of the Department of Managed Health Care may refer any suspected violation of such provisions to the governmental agency regulating the profession in which the corporation is, or proposes to be engaged.  SEC. 115.   Section 14025 of the   Corporations Code   is amended to read:  14025. The director shall do all of the following: (a) Administer this part. (b) In accordance with program resources, stimulate the formation of corporations and the use of branch offices for the purposes of making this program accessible to all areas of the state. (c) Expeditiously approve or disapprove the articles of incorporation and any subsequent amendments to the articles of incorporation of a corporation. (d) Require each corporation to submit an annual written plan of operation. (e) Review reports from the Department of Financial  Institutions   Services  and inform corporations as to what corrective action is required. (f) Examine, or cause to be examined, at any reasonable time, all books, records, and documents of every kind, and the physical properties of a corporation. The inspection shall include the right to make copies, extracts, and search records.  SEC. 116.   Section 15679.2 of the   Corporations Code   is amended to read:  15679.2. (a) If the approval of outstanding limited partnership interests is required for a limited partnership to participate in a reorganization, pursuant to the limited partnership agreement of the partnership, or otherwise, then each limited partner of the limited partnership holding those interests may, by complying with this article, require the limited partnership to purchase for cash, at its fair market value, the interest owned by the limited partner in the limited partnership, if the interest is a dissenting interest as defined in subdivision (b). The fair market value shall be determined as of the day before the first announcement of the terms of the proposed reorganization, excluding any appreciation or depreciation in consequence of the proposed reorganization. (b) As used in this article, "dissenting interest" means the interest of a limited partner that satisfies all of the following conditions: (1) Either: (A) The interest was not, immediately prior to the reorganization, either (i) listed on any national securities exchange certified by the Commissioner of  Corporations   Financial Services  under subdivision (o) of Section 25100, or (ii) listed on the list of OTC margin stocks issued by the Board of Governors of the Federal Reserve System, provided that in either such instance the limited partnership whose outstanding interests are so listed provides, in its notice to limited partners requesting their approval of the proposed reorganization, a summary of the provisions of this section and Sections 15679.3, 15679.4, 15679.5, and 15679.6. (B) Demands for payment are filed with respect to 5 percent or more of the outstanding interests of any class of interests described in clause (i) or (ii) of subparagraph (A). (2) Which was outstanding on the date for the determination of limited partners entitled to vote on the reorganization. (3) (i) Which was not voted in favor of the reorganization, or (ii) if the interest is described in clause (i) or (ii) of subparagraph (A) of paragraph (1), was voted against the reorganization; provided, however, that clause (i) rather than clause (ii) of this paragraph applies in any event where the approval for the proposed reorganization is sought by written consent rather than at a meeting. (4) Which the limited partner has demanded that the limited partnership purchase at its fair market value in accordance with Section 15679.3. (5) Which the limited partner submits for endorsement, if applicable, in accordance with Section 15679.4. (c) As used in this article, "dissenting limited partner" means the recordholder of a dissenting interest, and includes an assignee of record of such an interest.  SEC. 117.   Section 15911.21 of the   Corporations Code   is amended to read:  15911.21. (a) If the approval of outstanding limited partnership interests is required for a limited partnership to participate in a reorganization, pursuant to the limited partnership agreement of the partnership, or otherwise, then each limited partner of the limited partnership holding those interests may, by complying with this article, require the limited partnership to purchase for cash, at its fair market value, the interest owned by the limited partner in the limited partnership, if the interest is a dissenting interest as defined in subdivision (b). The fair market value shall be determined as of the day before the first announcement of the terms of the proposed reorganization, excluding any appreciation or depreciation in consequence of the proposed reorganization. (b) As used in this article, "dissenting interest" means the interest of a limited partner that satisfies all of the following conditions: (1) Either: (A) Was not, immediately prior to the reorganization, either (i) listed on any national securities exchange certified by the Commissioner of  Corporations   Financial Services  under subdivision (o) of Section 25100, or (ii) listed on the list of OTC margin stocks issued by the Board of Governors of the Federal Reserve System, provided that in either such instance the limited partnership whose outstanding interests are so listed provides, in its notice to limited partners requesting their approval of the proposed reorganization, a summary of the provisions of this section and Sections 15911.22, 15911.23, 15911.24, and 15911.25. (B) If the interest is of a class of interests listed as described in clause (i) or (ii) of subparagraph (A), demands for payment are filed with respect to 5 percent or more of the outstanding interests of that class. (2) Was outstanding on the date for the determination of limited partners entitled to vote on the reorganization. (3) (A) Was not voted in favor of the reorganization, or (B) if the interest is described in clause (i) or (ii) of subparagraph (A) of paragraph (1), was voted against the reorganization; provided, however, that clause (A) rather than clause (B) of this paragraph applies in any event where the approval for the proposed reorganization is sought by written consent rather than at a meeting. (4) The limited partner has demanded that it be purchased by the limited partnership at its fair market value in accordance with Section 15911.22. (5) The limited partner has submitted it for endorsement, if applicable, in accordance with Section 15911.23. (c) As used in this article, "dissenting limited partner" means the recordholder of a dissenting interest, and includes an assignee of record of such an interest.  SEC. 118.   Section 17656 of the   Corporations Code   is amended to read:  17656. (a) A limited liability company is liable for a civil penalty in an amount not exceeding one million dollars ($1,000,000) if the limited liability company does both of the following: (1) Has actual knowledge that a member, officer, manager, or agent of the limited liability company does any of the following: (A) Makes, publishes, or posts, or has made, published, or posted, either generally or privately to the shareholders or other persons, either of the following: (i) An oral, written, or electronically transmitted report, exhibit, notice, or statement of its affairs or pecuniary condition that contains a material statement or omission that is false and intended to give membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess. (ii) An oral, written, or electronically transmitted report, prospectus, account, or statement of operations, values, business, profits, or expenditures that includes a material false statement or omission intended to give membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess. (B) Refuses or has refused to make any book entry or post any notice required by law in the manner required by law. (C) Misstates or conceals or has misstated or concealed from a regulatory body a material fact in order to deceive a regulatory body to avoid a statutory or regulatory duty, or to avoid a statutory or regulatory limit or prohibition. (2) Within 30 days after actual knowledge is acquired of the actions described in paragraph (1), the limited liability company knowingly fails to do both of the following: (A) Notify the Attorney General or appropriate government agency in writing, unless the limited liability company has actual knowledge that the Attorney General or appropriate government agency has been notified. (B) Notify its members and investors in writing, unless the limited liability company has actual knowledge that the members and investors have been notified. (b) The requirement for notification under this section is not applicable if the action taken or about to be taken by the limited liability company, or by a member, officer, manager, or agent of the limited liability company under paragraph (1) of subdivision (a), is abated within the time prescribed for reporting, unless the appropriate government agency requires disclosure by regulation. (c) If the action reported to the Attorney General pursuant to this section implicates the government authority of an agency other than the Attorney General, the Attorney General shall promptly forward the written notice to that agency. (d) If the Attorney General was not notified pursuant to subparagraph (A) of paragraph (2) of subdivision (a), but the limited liability company reasonably and in good faith believed that it had complied with the notification requirements of this section by notifying a government agency listed in paragraph (5) of subdivision (e), no penalties shall apply. (e) For purposes of this section: (1) "Manager" means a person defined by subdivision (w) of Section 17001 having both of the following: (A) Management authority over the limited liability company. (B) Significant responsibility for an aspect of the limited liability company that includes actual authority for the financial operations or financial transactions of the limited liability company. (2) "Agent" means a person or entity authorized by the limited liability company to make representations to the public about the limited liability company's financial condition and who is acting within the scope of the agency when the representations are made. (3) "Member" means a person as defined by subdivision (x) of Section 17001 that is a member of the limited liability company at the time the disclosure is required pursuant to subparagraph (B) of paragraph (2) of subdivision (a). (4) "Notify its members" means to give sufficient description of an action taken or about to be taken that would constitute acts or omissions as described in paragraph (1) of subdivision (a). A notice or report filed by a limited liability company with the United States Securities and Exchange Commission that relates to the facts and circumstances giving rise to an obligation under paragraph (1) of subdivision (a) shall satisfy all notice requirements arising under paragraph (2) of subdivision (a) but shall not be the exclusive means of satisfying the notice requirements, provided that the Attorney General or appropriate agency is informed in writing that the filing has been made together with a copy of the filing or an electronic link where it is available online without charge. (5) "Appropriate government agency" means an agency on the following list that has regulatory authority with respect to the financial operations of a limited liability company: (A) Department of  Corporations   Financial Services  . (B) Department of Insurance.  (C) Department of Financial Institutions.   (D)   (C)  Department of Managed Health Care.  (E)   (D)  United States Securities and Exchange Commission. (6) "Actual knowledge of the limited liability company" means the knowledge a member, officer, or manager of a limited liability company actually possesses or does not consciously avoid possessing, based on an evaluation of information provided pursuant to the limited liability company's disclosure controls and procedures. (7) "Refuse to make a book entry" means the intentional decision not to record an accounting transaction when all of the following conditions are satisfied: (A) The independent auditors required recordation of an accounting transaction during the course of an audit. (B) The audit committee of the limited liability company has not approved the independent auditor's recommendation. (C) The decision is made for the primary purpose of rendering the financial statements materially false or misleading. (8) "Refuse to post any notice required by law" means an intentional decision not to post a notice required by law when all of the following conditions exist: (A) The decision not to post the notice has not been approved by the limited liability company's audit committee. (B) The decision is intended to give the membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess. (9) "Misstate or conceal material facts from a regulatory body" means an intentional decision not to disclose material facts when all of the following conditions exist: (A) The decision not to disclose material facts has not been approved by the limited liability company's audit committee. (B) The decision is intended to give the membership shares in the limited liability company a greater or a less apparent market value than they really possess. (10) "Material false statement or omission" means an untrue statement of material fact or an omission to state a material fact necessary in order to make the statements made under the circumstances under which they were made not misleading. (11) "Officer" means a person appointed pursuant to Section 17154, except an officer of a specified subsidiary limited liability company who is not also an officer of the parent limited liability company. (f) This section only applies to limited liability companies that are issuers, as defined in Section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec. 7201 and following). (g) An action to enforce this section may only be brought by the Attorney General or a district attorney or city attorney in the name of the people of the State of California.  SEC. 119.   Section 23000 of the   Corporations Code   is amended to read:  23000. "Real estate investment trust" as used in this part means any unincorporated association or trust formed to engage in business and managed by, or under the direction of, one or more trustees for the benefit of the holders or owners (hereinafter in this part "shareowners") of transferable shares of beneficial interest in the trust estate (hereinafter in this part "shares") and which meets one of the following two tests: (a) It received, prior to the effective date of this part, an order, permit or qualification from the Commissioner of  Corporations   Financial Services  pursuant to the provisions of the Corporate Securities Law of 1968 or any predecessor statute finding that it was a real estate investment trust, notwithstanding the subsequent amendment, suspension or revocation of any such finding, order, permit or qualification, and it has for one or more of its three fiscal years immediately prior to the effective date of this part complied with, or in good faith filed a federal income tax return on the basis that it has complied with the requirements for real estate investment trusts set forth in Section 856 of the Federal Internal Revenue Code; or (b) It is formed for the purpose of engaging in business as a real estate investment trust under Part II of Subchapter M of Chapter 1 of Subtitle A of the Federal Internal Revenue Code of 1954, as amended from time to time; the sale of its shares has been qualified at any time by the Commissioner of  Corporations   Financial Services  pursuant to the Corporate Securities Law of 1968; and in good faith it has commenced business as a real estate investment trust. An unincorporated association or trust which otherwise meets the requirements of this section shall not be affected in its status as a real estate investment trust whether or not it is in fact taxable for any year or years under Part II of Subchapter M of Chapter 1 of Subtitle A of the Federal Internal Revenue Code of 1954, as amended from time to time.  SEC. 120.   Section 25004 of the   Corporations Code   is amended to read:  25004. (a) "Broker-dealer" means any person engaged in the business of effecting transactions in securities in this state for the account of others or for his own account. "Broker-dealer" also includes a person engaged in the regular business of issuing or guaranteeing options with regard to securities not of his own issue. "Broker-dealer" does not include any of the following: (1) Any other issuer. (2) An agent, when an employee of a broker-dealer or issuer. (3) A bank, trust company, or savings and loan association. (4) Any person insofar as he buys or sells securities for his own account, either individually or in some fiduciary capacity, but not as part of a regular business. (5) A person who has no place of business in this state if he effects transactions in this state exclusively with (A) the issuers of the securities involved in the transactions or (B) other broker-dealers. (6) A broker licensed by the  Real Estate  Commissioner  of Financial Services  of this state when engaged in transactions in securities exempted by subdivision (f) or (p) of Section 25100 or in securities the issuance of which is subject to authorization by the  Real Estate  Commissioner  of Financial Services  of this state or in transactions exempted by subdivision (e) of Section 25102. (7) An exchange certified by the Commissioner of  Corporations   Financial Services  pursuant to this section when it is issuing or guaranteeing options. The commissioner may by order certify an exchange under this section upon such conditions as he  or she  by rule or order deems appropriate, and upon notice and opportunity to be heard he  or she  may suspend or revoke such certification, if he  or she  finds such certification, suspension, or revocation to be in the public interest and necessary and appropriate for the protection of investors. (b) For purposes of this section, an agent is an employee of a broker-dealer under paragraph (2) of subdivision (a) when the agent is employed by or associated with the broker-dealer under all of the following conditions: (1) The agent is subject to the supervision and control of the broker-dealer. (2) The agent performs under the name, authority, and marketing policies of the broker-dealer. (3) The agent discloses to investors the identity of the broker-dealer. (4) The agent is reported pursuant to subdivision (c) of Section 25210 and the rules adopted thereunder.  SEC. 121.   Section 25005 of the   Corporations Code   is amended to read:  25005. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 122.   Section 25014.6 of the   Corporations Code   is amended to read:  25014.6. "Rollup transaction" means any transaction or series of transactions that directly or indirectly through acquisition or otherwise involves the combination or reorganization of one or more rollup participants and is one of the following: (a) The offer or sale of securities by a successor entity, whether newly formed or previously existing, to one or more investors of the rollup participants to be combined or reorganized. (b) The acquisition of the successor entity's securities by the rollup participants being combined or reorganized; provided however, that a rollup transaction shall not include any transaction that: (1) The Securities and Exchange Commission exempts from the definition of a rollup transaction pursuant to subparagraph (c) (ii) of Item 901 of Regulation S-K adopted by the Securities and Exchange Commission. (2) Is determined to be exempt from this definition by the Commissioner of  Corporations   Financial Services  upon his or her determination that this action is in the public interest and consistent with the protection of investors. (3) Involves one or more limited partnerships all of the securities of which are, prior to the transaction, securities for which transactions are reported under a transaction reporting plan declared effective before January 1, 1991, by the Securities and Exchange Commission under Section 11A of the Securities Exchange Act of 1934. (4) Involves only those issuers not required to register or report under Section 12 of the Securities Exchange Act of 1934 where the resulting issuer is also not required to register or report under Section 12. (5) Involves the reorganization to corporate, trust, or association form or restructuring of a single limited partnership if, as a consequence of the proposed transaction there will be no significant, adverse change in any of the following: voting rights, the term of existence of the entity, management compensation, or investment objectives. (6) Involves the reorganization to corporate, trust, or association form or restructuring of a single limited partnership if each investor is provided an option to retain a security under substantially the same terms and conditions as the original issue. (7) Involves the reorganization to corporate, trust, or association form or restructuring of a single limited partnership if transactions in the security issued as a result of the reorganization or restructuring are not reported under a transaction reporting plan declared effective before January 1, 1991, by the Securities and Exchange Commission under Section 11A of the Securities Exchange Act of 1934.  SEC. 123.   Section 25100 of the   Corporations Code   is amended to read:  25100. The following securities are exempted from Sections 25110, 25120, and 25130: (a) Any security (including a revenue obligation) issued or guaranteed by the United States, any state, any city, county, city and county, public district, public authority, public corporation, public entity, or political subdivision of a state or any agency or corporate or other instrumentality of any one or more of the foregoing; or any certificate of deposit for any of the foregoing. (b) Any security issued or guaranteed by Canada, any Canadian province, any political subdivision or municipality of that province, or by any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor; or any certificate of deposit for any of the foregoing. (c) Any security issued or guaranteed by and representing an interest in or a direct obligation of a national bank or a bank or trust company incorporated under the laws of this state, and any security issued by a bank to one or more other banks and representing an interest in an asset of the issuing bank. (d) Any security issued or guaranteed by a federal savings association or federal savings bank or federal land bank or joint land bank or national farm loan association or by any savings association, as defined in subdivision (a) of Section 5102 of the Financial Code, which is subject to the supervision and regulation of the Commissioner of Financial Institutions of this state. (e) Any security (other than an interest in all or portions of a parcel or parcels of real property which are subdivided land or a subdivision or in a real estate development), the issuance of which is subject to authorization by the Insurance Commissioner, the Public Utilities Commission, or the  Real Estate  Commissioner  of Financial Services  of this state. (f) Any security consisting of any interest in all or portions of a parcel or parcels of real property which are subdivided lands or a subdivision or in a real estate development; provided that the exemption in this subdivision shall not be applicable to: (1) any investment contract sold or offered for sale with, or as part of, that interest, or (2) any person engaged in the business of selling, distributing, or supplying water for irrigation purposes or domestic use that is not a public utility except that the exemption is applicable to any security of a mutual water company (other than an investment contract as described in paragraph (1)) offered or sold in connection with subdivided lands pursuant to Chapter 2 (commencing with Section 14310) of Part 7 of Division 3 of Title 1. (g) Any mutual capital certificates or savings accounts, as defined in the Savings Association Law, issued by a savings association, as defined by subdivision (a) of Section 5102 of the Financial Code, and holding a license or certificate of authority then in force from the Commissioner of Financial Institutions of this state. (h) Any security issued or guaranteed by any federal credit union, or by any credit union organized and supervised, or regulated, under the Credit Union Law. (i) Any security issued or guaranteed by any railroad, other common carrier, public utility, or public utility holding company which is (1) subject to the jurisdiction of the Interstate Commerce Commission or its successor or (2) a holding company registered with the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 or a subsidiary of that company within the meaning of that act or (3) regulated in respect of the issuance or guarantee of the security by a governmental authority of the United States, of any state, of Canada or of any Canadian province; and the security is subject to registration with or authorization of issuance by that authority. (j) Any security (except evidences of indebtedness, whether interest bearing or not) of an issuer (1) organized exclusively for educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes and not for pecuniary profit, if no part of the net earnings of the issuer inures to the benefit of any private shareholder or individual, or (2) organized as a chamber of commerce or trade or professional association. The fact that amounts received from memberships or dues or both will or may be used to construct or otherwise acquire facilities for use by members of the nonprofit organization does not disqualify the organization for this exemption. This exemption does not apply to the securities of any nonprofit organization if any promoter thereof expects or intends to make a profit directly or indirectly from any business or activity associated with the organization or operation of that nonprofit organization or from remuneration received from that nonprofit organization. (k) Any agreement, commonly known as a "life income contract," of an issuer (1) organized exclusively for educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes and not for pecuniary profit and (2) which the commissioner designates by rule or order, with a donor in consideration of a donation of property to that issuer and providing for the payment to the donor or persons designated by him or her of income or specified periodic payments from the donated property or other property for the life of the donor or those other persons. () Any note, draft, bill of exchange, or banker's acceptance which is freely transferable and of prime quality, arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which evidences an obligation to pay cash within nine months of the date of issuance, exclusive of days of grace, or any renewal of that paper which is likewise limited, or any guarantee of that paper or of that renewal, provided that the paper is not offered to the public in amounts of less than twenty-five thousand dollars ($25,000) in the aggregate to any one purchaser. In addition, the commissioner may, by rule or order, exempt any issuer of any notes, drafts, bills of exchange or banker's acceptances from qualification of those securities when the commissioner finds that the qualification is not necessary or appropriate in the public interest or for the protection of investors. (m) Any security issued by any corporation organized and existing under the provisions of Chapter 1 (commencing with Section 54001) of Division 20 of the Food and Agricultural Code. (n) Any beneficial interest in an employees' pension, profit-sharing, stock bonus or similar benefit plan which meets the requirements for qualification under Section 401 of the federal Internal Revenue Code or any statute amendatory thereof or supplementary thereto. A determination letter from the Internal Revenue Service stating that an employees' pension, profit-sharing, stock bonus or similar benefit plan meets those requirements shall be conclusive evidence that the plan is an employees' pension, profit-sharing, stock bonus or similar benefit plan within the meaning of the first sentence of this subdivision until the date the determination letter is revoked in writing by the Internal Revenue Service, regardless of whether or not the revocation is retroactive. (o) Any security listed or approved for listing upon notice of issuance on a national securities exchange or on the National Market System of the Nasdaq Stock Market (or any successor to that entity), if the exchange or Nasdaq Stock Market (or its successor) has been certified by rule or order of the commissioner and any warrant or right to purchase or subscribe to the security. The exemption afforded by this subdivision does not apply to securities listed or approved for listing upon notice of issuance on a national securities exchange or on the National Market System of the Nasdaq Stock Market (or its successor), in a rollup transaction unless the rollup transaction is an eligible rollup transaction as defined in Section 25014.7. That certification of any exchange or the Nasdaq Stock Market (or its successor) shall be made by the commissioner upon the written request of the exchange or Nasdaq Stock Market (or its successor) if the commissioner finds that the exchange or Nasdaq Stock Market (or its successor): (i) in acting on applications for listing of common stock substantially applies the minimum standards set forth in either alternative (A) or (B) of paragraph (1), and (ii) in considering suspension or removal from listing, substantially applies each of the criteria set forth in paragraph (2). (1) Listing standards: (A) (i) Shareholders' equity of at least four million dollars ($4,000,000). (ii) Pretax income of at least seven hundred fifty thousand dollars ($750,000) in the issuer's last fiscal year or in two of its last three fiscal years. (iii) Minimum public distribution of 500,000 shares (exclusive of the holdings of officers, directors, controlling shareholders, and other concentrated or family holdings), together with a minimum of 800 public holders or minimum public distribution of 1,000,000 shares together with a minimum of 400 public holders. The exchange or Nasdaq Stock Market (or its successor) may also consider the listing of a company's securities if the company has a minimum of 500,000 shares publicly held, a minimum of 400 shareholders and daily trading volume in the issue has been approximately 2,000 shares or more for the six months preceding the date of application. In evaluating the suitability of an issue for listing under this trading provision, the exchange or Nasdaq Stock Market (or its successor) shall review the nature and frequency of that activity and any other factors as it may determine to be relevant in ascertaining whether the issue is suitable for trading. A security that trades infrequently shall not be considered for listing under this paragraph even though average daily volume amounts to 2,000 shares per day or more. Companies whose securities are concentrated in a limited geographical area, or whose securities are largely held in block by institutional investors, normally may not be considered eligible for listing unless the public distribution appreciably exceeds 500,000 shares. (iv) Minimum price of three dollars ($3) per share for a reasonable period of time prior to the filing of a listing application; provided, however, in certain instances an exchange or Nasdaq Stock Market (or its successor) may favorably consider listing an issue selling for less than three dollars ($3) per share after considering all pertinent factors, including market conditions in general, whether historically the issue has sold above three dollars ($3) per share, the applicant's capitalization, and the number of outstanding and publicly held shares of the issue. (v) An aggregate market value for publicly held shares of at least three million dollars ($3,000,000). (B) (i) Shareholders' equity of at least four million dollars ($4,000,000). (ii) Minimum public distribution set forth in clause (iii) of subparagraph (A) of paragraph (1). (iii) Operating history of at least three years. (iv) An aggregate market value for publicly held shares of at least fifteen million dollars ($15,000,000). (2) Criteria for consideration of suspension or removal from listing: (i) If a company that (A) has shareholders' equity of less than one million dollars ($1,000,000) has sustained net losses in each of its two most recent fiscal years, or (B) has net tangible assets of less than three million dollars ($3,000,000) and has sustained net losses in three of its four most recent fiscal years. (ii) If the number of shares publicly held (excluding the holdings of officers, directors, controlling shareholders and other concentrated or family holdings) is less than 150,000. (iii) If the total number of shareholders is less than 400 or if the number of shareholders of lots of 100 shares or more is less than 300. (iv) If the aggregate market value of shares publicly held is less than seven hundred fifty thousand dollars ($750,000). (v) If shares of common stock sell at a price of less than three dollars ($3) per share for a substantial period of time and the issuer shall fail to effectuate a reverse stock split of the shares within a reasonable period of time after being requested by the exchange to take that action. A national securities exchange or Nasdaq Stock Market (or its successor), certified by rule or order of the commissioner under this subdivision, shall file annual reports when requested to do so by the commissioner. The annual reports shall contain, by issuer: the variances granted to an exchange's listing standards or Nasdaq Stock Market's (or its successor) criteria, including variances from corporate governance and voting rights' standards, for any security of that issuer; the reasons for the variances; a discussion of the review procedure instituted by the exchange or Nasdaq Stock Market (or its successor) to determine the effect of the variances on investors and whether the variances should be continued; and any other information that the commissioner deems relevant. The purpose of these reports is to assist the commissioner in determining whether the quantitative and qualitative requirements of this subdivision are substantially being met by the exchange in general or with regard to any particular security. The commissioner after appropriate notice and opportunity for hearing in accordance with the provisions of the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, may, in his or her discretion, by rule or order, decertify any exchange or Nasdaq Stock Market (or its successor) previously certified that ceases substantially to apply the minimum standards or criteria as set forth in paragraphs (1) and (2). A rule or order of certification shall conclusively establish that any security listed or approved for listing upon notice of issuance on any exchange, or listed on the National Market System of the Nasdaq Stock Market (or its successor), named in a rule or order of certification, and any warrant or right to purchase or subscribe to that security, is exempt under this subdivision until the adoption by the commissioner of any rule or order decertifying the exchange or the Nasdaq Stock Market (or its successor). (p) A promissory note secured by a lien on real property, which is neither one of a series of notes of equal priority secured by interests in the same real property nor a note in which beneficial interests are sold to more than one person or entity. (q) Any unincorporated interindemnity or reciprocal or interinsurance contract, that qualifies under the provisions of Section 1280.7 of the Insurance Code, between members of a cooperative corporation, organized and operating under Part 2 (commencing with Section 12200) of Division 3 of Title 1, and whose members consist only of physicians and surgeons licensed in California, which contracts indemnify solely in respect to medical malpractice claims against the members, and which do not collect in advance of loss any moneys other than contributions by each member to a collective reserve trust fund or for necessary expenses of administration. (1) Whenever it appears to the commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of Section 1280.7 of the Insurance Code, the commissioner may, in the commissioner's discretion, bring an action in the name of the people of the State of California in the superior court to enjoin the acts or practices or to enforce compliance with Section 1280.7 of the Insurance Code. Upon a proper showing a permanent or preliminary injunction, a restraining order, or a writ of mandate shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. (2) The commissioner may, in the commissioner's discretion, (A) make public or private investigations within or outside of this state as the commissioner deems necessary to determine whether any person has violated or is about to violate any provision of Section 1280.7 of the Insurance Code or to aid in the enforcement of Section 1280.7, and (B) publish information concerning the violation of Section 1280.7. (3) For the purpose of any investigation or proceeding under this section, the commissioner or any officer designated by the commissioner may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the commissioner deems relevant or material to the inquiry. (4) In case of contumacy by, or refusal to obey a subpoena issued to, any person, the superior court, upon application by the commissioner, may issue to the person an order requiring the person to appear before the commissioner, or the officer designated by the commissioner, to produce documentary evidence, if so ordered, or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt. (5) No person is excused from attending or testifying or from producing any document or record before the commissioner or in obedience to the subpoena of the commissioner or any officer designated by the commissioner, or in any proceeding instituted by the commissioner, on the ground that the testimony or evidence (documentary or otherwise), required of the person may tend to incriminate the person or subject the person to a penalty or forfeiture, but no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which the person is compelled, after validly claiming the privilege against self-incrimination, to testify or produce evidence (documentary or otherwise), except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying. (6) The cost of any review, examination, audit, or investigation made by the commissioner under Section 1280.7 of the Insurance Code shall be paid to the commissioner by the person subject to the review, examination, audit, or investigation, and the commissioner may maintain an action for the recovery of these costs in any court of competent jurisdiction. In determining the cost, the commissioner may use the actual amount of the salary or other compensation paid to the persons making the review, examination, audit, or investigation plus the actual amount of expenses including overhead reasonably incurred in the performance of the work. The recoverable cost of each review, examination, audit, or investigation made by the commissioner under Section 1280.7 of the Insurance Code shall not exceed twenty-five thousand dollars ($25,000), except that costs exceeding twenty-five thousand dollars ($25,000) shall be recoverable if the costs are necessary to prevent a violation of any provision of Section 1280.7 of the Insurance Code. (r) Any shares or memberships issued by any corporation organized and existing pursuant to the provisions of Part 2 (commencing with Section 12200) of Division 3 of Title 1, provided the aggregate investment of any shareholder or member in shares or memberships sold pursuant to this subdivision does not exceed three hundred dollars ($300). This exemption does not apply to the shares or memberships of that corporation if any promoter thereof expects or intends to make a profit directly or indirectly from any business or activity associated with the corporation or the operation of the corporation or from remuneration, other than reasonable salary, received from the corporation. This exemption does not apply to nonvoting shares or memberships of that corporation issued to any person who does not possess, and who will not acquire in connection with the issuance of nonvoting shares or memberships, voting power (Section 12253) in the corporation. This exemption also does not apply to shares or memberships issued by a nonprofit cooperative corporation organized to facilitate the creation of an unincorporated interindemnity arrangement that provides indemnification for medical malpractice to its physician and surgeon members as set forth in subdivision (q). (s) Any security consisting of or representing an interest in a pool of mortgage loans that meets each of the following requirements: (1) The pool consists of whole mortgage loans or participation interests in those loans, which loans were originated or acquired in the ordinary course of business by a national bank or federal savings association or federal savings bank having its principal office in this state, by a bank incorporated under the laws of this state or by a savings association as defined in subdivision (a) of Section 5102 of the Financial Code and which is subject to the supervision and regulation of the Commissioner of Financial Institutions, and each of which at the time of transfer to the pool is an authorized investment for the originating or acquiring institution. (2) The pool of mortgage loans is held in trust by a trustee which is a financial institution specified in paragraph (1) as trustee or otherwise. (3) The loans are serviced by a financial institution specified in paragraph (1). (4) The security is not offered in amounts of less than twenty-five thousand dollars ($25,000) in the aggregate to any one purchaser. (5) The security is offered pursuant to a registration under the Securities Act of 1933, or pursuant to an exemption under Regulation A under that act, or in the opinion of counsel for the issuer, is offered pursuant to an exemption under Section 4(2) of that act. (t) (1) Any security issued or guaranteed by and representing an interest in or a direct obligation of an industrial loan company incorporated under the laws of the state and authorized by the Commissioner of Financial  Institutions   Services  to engage in industrial loan business. (2) Any investment certificate in or issued by any industrial loan company that is organized under the laws of a state of the United States other than this state, that is insured by the Federal Deposit Insurance Corporation, and that maintains a branch office in this state.  SEC. 124.   Section 25102 of the   Corporations Code   is amended to read:  25102. The following transactions are exempted from the provisions of Section 25110: (a) Any offer (but not a sale) not involving any public offering and the execution and delivery of any agreement for the sale of securities pursuant to the offer if (1) the agreement contains substantially the following provision: "The sale of the securities that are the subject of this agreement has not been qualified with the Commissioner of  Corporations   Financial Services  of the State of California and the issuance of the securities or the payment or receipt of any part of the consideration therefor prior to the qualification is unlawful, unless the sale of securities is exempt from the qualification by Section 25100, 25102, or 25105 of the California Corporations Code. The rights of all parties to this agreement are expressly conditioned upon the qualification being obtained, unless the sale is so exempt"; and (2) no part of the purchase price is paid or received and none of the securities are issued until the sale of the securities is qualified under this law unless the sale of securities is exempt from the qualification by this section, Section 25100, or 25105. (b) Any offer (but not a sale) of a security for which a registration statement has been filed under the Securities Act of 1933 but has not yet become effective, or for which an offering statement under Regulation A has been filed but has not yet been qualified, if no stop order or refusal order is in effect and no public proceeding or examination looking towards an order is pending under Section 8 of the act and no order under Section 25140 or subdivision (a) of Section 25143 is in effect under this law. (c) Any offer (but not a sale) and the execution and delivery of any agreement for the sale of securities pursuant to the offer as may be permitted by the commissioner upon application. Any negotiating permit under this subdivision shall be conditioned to the effect that none of the securities may be issued and none of the consideration therefor may be received or accepted until the sale of the securities is qualified under this law. (d) Any transaction or agreement between the issuer and an underwriter or among underwriters if the sale of the securities is qualified, or exempt from qualification, at the time of distribution thereof in this state, if any. (e) Any offer or sale of any evidence of indebtedness, whether secured or unsecured, and any guarantee thereof, in a transaction not involving any public offering. (f) Any offer or sale of any security in a transaction (other than an offer or sale to a pension or profit-sharing trust of the issuer) that meets each of the following criteria: (1) Sales of the security are not made to more than 35 persons, including persons not in this state. (2) All purchasers either have a preexisting personal or business relationship with the offeror or any of its partners, officers, directors or controlling persons, or managers (as appointed or elected by the members) if the offeror is a limited liability company, or by reason of their business or financial experience or the business or financial experience of their professional advisers who are unaffiliated with and who are not compensated by the issuer or any affiliate or selling agent of the issuer, directly or indirectly, could be reasonably assumed to have the capacity to protect their own interests in connection with the transaction. (3) Each purchaser represents that the purchaser is purchasing for the purchaser's own account (or a trust account if the purchaser is a trustee) and not with a view to or for sale in connection with any distribution of the security. (4) The offer and sale of the security is not accomplished by the publication of any advertisement. The number of purchasers referred to above is exclusive of any described in subdivision (i), any officer, director, or affiliate of the issuer, or manager (as appointed or elected by the members) if the issuer is a limited liability company, and any other purchaser who the commissioner designates by rule. For purposes of this section, a husband and wife (together with any custodian or trustee acting for the account of their minor children) are counted as one person and a partnership, corporation, or other organization that was not specifically formed for the purpose of purchasing the security offered in reliance upon this exemption, is counted as one person. The commissioner may by rule require the issuer to file a notice of transactions under this subdivision. The failure to file the notice or the failure to file the notice within the time specified by the rule of the commissioner shall not affect the availability of this exemption. An issuer who fails to file the notice as provided by rule of the commissioner shall, within 15 business days after discovery of the failure to file the notice or after demand by the commissioner, whichever occurs first, file the notice and pay to the commissioner a fee equal to the fee payable had the transaction been qualified under Section 25110. (g) Any offer or sale of conditional sale agreements, equipment trust certificates, or certificates of interest or participation therein or partial assignments thereof, covering the purchase of railroad rolling stock or equipment or the purchase of motor vehicles, aircraft, or parts thereof, in a transaction not involving any public offering. (h) Any offer or sale of voting common stock by a corporation incorporated in any state if, immediately after the proposed sale and issuance, there will be only one class of stock of the corporation outstanding that is owned beneficially by no more than 35 persons, provided all of the following requirements have been met: (1) The offer and sale of the stock is not accompanied by the publication of any advertisement, and no selling expenses have been given, paid, or incurred in connection therewith. (2) The consideration to be received by the issuer for the stock to be issued consists of any of the following: (A) Only assets (which may include cash) of an existing business enterprise transferred to the issuer upon its initial organization, of which all of the persons who are to receive the stock to be issued pursuant to this exemption were owners during, and the enterprise was operated for, a period of not less than one year immediately preceding the proposed issuance, and the ownership of the enterprise immediately prior to the proposed issuance was in the same proportions as the shares of stock are to be issued. (B) Only cash or cancellation of indebtedness for money borrowed, or both, upon the initial organization of the issuer, provided all of the stock is issued for the same price per share. (C) Only cash, provided the sale is approved in writing by each of the existing shareholders and the purchaser or purchasers are existing shareholders. (D) In a case where after the proposed issuance there will be only one owner of the stock of the issuer, only any legal consideration. (3) No promotional consideration has been given, paid, or incurred in connection with the issuance. Promotional consideration means any consideration paid directly or indirectly to a person who, acting alone or in conjunction with one or more other persons, takes the initiative in founding and organizing the business or enterprise of an issuer for services rendered in connection with the founding or organizing. (4) A notice in a form prescribed by rule of the commissioner, signed by an active member of the State Bar of California, is filed with or mailed for filing to the commissioner not later than 10 business days after receipt of consideration for the securities by the issuer. That notice shall contain an opinion of the member of the State Bar of California that the exemption provided by this subdivision is available for the offer and sale of the securities. The failure to file the notice as required by this subdivision and the rules of the commissioner shall not affect the availability of this exemption. An issuer who fails to file the notice within the time specified by this subdivision shall, within 15 business days after discovery of the failure to file the notice or after demand by the commissioner, whichever occurs first, file the notice and pay to the commissioner a fee equal to the fee payable had the transaction been qualified under Section 25110. The notice, except when filed on behalf of a California corporation, shall be accompanied by an irrevocable consent, in the form that the commissioner by rule prescribes, appointing the commissioner or his or her successor in office to be the issuer's attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against it or its successor that arises under this law or any rule or order hereunder after the consent has been filed, with the same force and validity as if served personally on the issuer. An issuer on whose behalf a consent has been filed in connection with a previous qualification or exemption from qualification under this law (or application for a permit under any prior law if the application or notice under this law states that the consent is still effective) need not file another. Service may be made by leaving a copy of the process in the office of the commissioner, but it is not effective unless (A) the plaintiff, who may be the commissioner in a suit, action, or proceeding instituted by him or her, forthwith sends notice of the service and a copy of the process by registered or certified mail to the defendant or respondent at its last address on file with the commissioner, and (B) the plaintiff's affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within the further time as the court allows. (5) Each purchaser represents that the purchaser is purchasing for the purchaser's own account, or a trust account if the purchaser is a trustee, and not with a view to or for sale in connection with any distribution of the stock. For the purposes of this subdivision, all securities held by a husband and wife, whether or not jointly, shall be considered to be owned by one person, and all securities held by a corporation that has issued stock pursuant to this exemption shall be considered to be held by the shareholders to whom it has issued the stock. All stock issued by a corporation pursuant to this subdivision as it existed prior to the effective date of the amendments to this section made during the 1996 portion of the 1995-96 Regular Session that required the issuer to have stamped or printed prominently on the face of the stock certificate a legend in a form prescribed by rule of the commissioner restricting transfer of the stock in a manner provided for by that rule shall not be subject to the transfer restriction legend requirement and, by operation of law, the corporation is authorized to remove that transfer restriction legend from the certificates of those shares of stock issued by the corporation pursuant to this subdivision as it existed prior to the effective date of the amendments to this section made during the 1996 portion of the 1995-96 Regular Session. (i) Any offer or sale (1) to a bank, savings and loan association, trust company, insurance company, investment company registered under the Investment Company Act of 1940, pension or profit-sharing trust (other than a pension or profit-sharing trust of the issuer, a self-employed individual retirement plan, or individual retirement account), or other institutional investor or governmental agency or instrumentality that the commissioner may designate by rule, whether the purchaser is acting for itself or as trustee, or (2) to any corporation with outstanding securities registered under Section 12 of the Securities Exchange Act of 1934 or any wholly owned subsidiary of the corporation that after the offer and sale will own directly or indirectly 100 percent of the outstanding capital stock of the issuer, provided the purchaser represents that it is purchasing for its own account (or for the trust account) for investment and not with a view to or for sale in connection with any distribution of the security. (j) Any offer or sale of any certificate of interest or participation in an oil or gas title or lease (including subsurface gas storage and payments out of production) if either of the following apply: (1) All of the purchasers meet one of the following requirements: (A) Are and have been during the preceding two years engaged primarily in the business of drilling for, producing, or refining oil or gas (or whose corporate predecessor, in the case of a corporation, has been so engaged). (B) Are persons described in paragraph (1) of subdivision (i). (C) Have been found by the commissioner upon written application to be substantially engaged in the business of drilling for, producing, or refining oil or gas so as not to require the protection provided by this law (which finding shall be effective until rescinded). (2) The security is concurrently hypothecated to a bank in the ordinary course of business to secure a loan made by the bank, provided that each purchaser represents that it is purchasing for its own account for investment and not with a view to or for sale in connection with any distribution of the security. (k) Any offer or sale of any security under, or pursuant to, a plan of reorganization under Chapter 11 of the federal bankruptcy law that has been confirmed or is subject to confirmation by the decree or order of a court of competent jurisdiction. () Any offer or sale of an option, warrant, put, call, or straddle, and any guarantee of any of these securities, by a person who is not the issuer of the security subject to the right, if the transaction, had it involved an offer or sale of the security subject to the right by the person, would not have violated Section 25110 or 25130. (m) Any offer or sale of a stock to a pension, profit-sharing, stock bonus, or employee stock ownership plan, provided that (1) the plan meets the requirements for qualification under Section 401 of the Internal Revenue Code, and (2) the employees are not required or permitted individually to make any contributions to the plan. The exemption provided by this subdivision shall not be affected by whether the stock is contributed to the plan, purchased from the issuer with contributions by the issuer or an affiliate of the issuer, or purchased from the issuer with funds borrowed from the issuer, an affiliate of the issuer, or any other lender. (n) Any offer or sale of any security in a transaction, other than an offer or sale of a security in a rollup transaction, that meets all of the following criteria: (1) The issuer is (A) a California corporation or foreign corporation that, at the time of the filing of the notice required under this subdivision, is subject to Section 2115, or (B) any other form of business entity, including without limitation a partnership or trust organized under the laws of this state. The exemption provided by this subdivision is not available to a "blind pool" issuer, as that term is defined by the commissioner, or to an investment company subject to the Investment Company Act of 1940. (2) Sales of securities are made only to qualified purchasers or other persons the issuer reasonably believes, after reasonable inquiry, to be qualified purchasers. A corporation, partnership, or other organization specifically formed for the purpose of acquiring the securities offered by the issuer in reliance upon this exemption may be a qualified purchaser if each of the equity owners of the corporation, partnership, or other organization is a qualified purchaser. Qualified purchasers include the following: (A) A person designated in Section 260.102.13 of Title 10 of the California Code of Regulations. (B) A person designated in subdivision (i) or any rule of the commissioner adopted thereunder. (C) A pension or profit-sharing trust of the issuer, a self-employed individual retirement plan, or an individual retirement account, if the investment decisions made on behalf of the trust, plan, or account are made solely by persons who are qualified purchasers. (D) An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, each with total assets in excess of five million dollars ($5,000,000) according to its most recent audited financial statements. (E) With respect to the offer and sale of one class of voting common stock of an issuer or of preferred stock of an issuer entitling the holder thereof to at least the same voting rights as the issuer's one class of voting common stock, provided that the issuer has only one-class voting common stock outstanding upon consummation of the offer and sale, a natural person who, either individually or jointly with the person's spouse, (i) has a minimum net worth of two hundred fifty thousand dollars ($250,000) and had, during the immediately preceding tax year, gross income in excess of one hundred thousand dollars ($100,000) and reasonably expects gross income in excess of one hundred thousand dollars ($100,000) during the current tax year or (ii) has a minimum net worth of five hundred thousand dollars ($500,000). "Net worth" shall be determined exclusive of home, home furnishings, and automobiles. Other assets included in the computation of net worth may be valued at fair market value. Each natural person specified above, by reason of his or her business or financial experience, or the business or financial experience of his or her professional adviser, who is unaffiliated with and who is not compensated, directly or indirectly, by the issuer or any affiliate or selling agent of the issuer, can be reasonably assumed to have the capacity to protect his or her interests in connection with the transaction. The amount of the investment of each natural person shall not exceed 10 percent of the net worth, as determined by this subparagraph, of that natural person. (F) Any other purchaser designated as qualified by rule of the commissioner. (3) Each purchaser represents that the purchaser is purchasing for the purchaser's own account (or trust account, if the purchaser is a trustee) and not with a view to or for sale in connection with a distribution of the security. (4) Each natural person purchaser, including a corporation, partnership, or other organization specifically formed by natural persons for the purpose of acquiring the securities offered by the issuer, receives, at least five business days before securities are sold to, or a commitment to purchase is accepted from, the purchaser, a written offering disclosure statement that shall meet the disclosure requirements of Regulation D (17 C.F.R. 230.501 et seq.), and any other information as may be prescribed by rule of the commissioner, provided that the issuer shall not be obligated pursuant to this paragraph to provide this disclosure statement to a natural person qualified under Section 260.102.13 of Title 10 of the California Code of Regulations. The offer or sale of securities pursuant to a disclosure statement required by this paragraph that is in violation of Section 25401, or that fails to meet the disclosure requirements of Regulation D (17 C.F.R. 230.501 et seq.), shall not render unavailable to the issuer the claim of an exemption from Section 25110 afforded by this subdivision. This paragraph does not impose, directly or indirectly, any additional disclosure obligation with respect to any other exemption from qualification available under any other provision of this section. (5) (A) A general announcement of proposed offering may be published by written document only, provided that the general announcement of proposed offering sets forth the following required information: (i) The name of the issuer of the securities. (ii) The full title of the security to be issued. (iii) The anticipated suitability standards for prospective purchasers. (iv) A statement that (I) no money or other consideration is being solicited or will be accepted, (II) an indication of interest made by a prospective purchaser involves no obligation or commitment of any kind, and, if the issuer is required by paragraph (4) to deliver a disclosure statement to prospective purchasers, (III) no sales will be made or commitment to purchase accepted until five business days after delivery of a disclosure statement and subscription information to the prospective purchaser in accordance with the requirements of this subdivision. (v) Any other information required by rule of the commissioner. (vi) The following legend: "For more complete information about (Name of Issuer) and (Full Title of Security), send for additional information from (Name and Address) by sending this coupon or calling (Telephone Number)." (B) The general announcement of proposed offering referred to in subparagraph (A) may also set forth the following information: (i) A brief description of the business of the issuer. (ii) The geographic location of the issuer and its business. (iii) The price of the security to be issued, or, if the price is not known, the method of its determination or the probable price range as specified by the issuer, and the aggregate offering price. (C) The general announcement of proposed offering shall contain only the information that is set forth in this paragraph. (D) Dissemination of the general announcement of proposed offering to persons who are not qualified purchasers, without more, shall not disqualify the issuer from claiming the exemption under this subdivision. (6) No telephone solicitation shall be permitted until the issuer has determined that the prospective purchaser to be solicited is a qualified purchaser. (7) The issuer files a notice of transaction under this subdivision both (A) concurrent with the publication of a general announcement of proposed offering or at the time of the initial offer of the securities, whichever occurs first, accompanied by a filing fee, and (B) within 10 business days following the close or abandonment of the offering, but in no case more than 210 days from the date of filing the first notice. The first notice of transaction under subparagraph (A) shall contain an undertaking, in a form acceptable to the commissioner, to deliver any disclosure statement required by paragraph (4) to be delivered to prospective purchasers, and any supplement thereto, to the commissioner within 10 days of the commissioner's request for the information. The exemption from qualification afforded by this subdivision is unavailable if an issuer fails to file the first notice required under subparagraph (A) or to pay the filing fee. The commissioner has the authority to assess an administrative penalty of up to one thousand dollars ($1,000) against an issuer that fails to deliver the disclosure statement required to be delivered to the commissioner upon the commissioner's request within the time period set forth above. Neither the filing of the disclosure statement nor the failure by the commissioner to comment thereon precludes the commissioner from taking any action deemed necessary or appropriate under this division with respect to the offer and sale of the securities. (o) An offer or sale of any security issued by a corporation or limited liability company pursuant to a purchase plan or agreement, or issued pursuant to an option plan or agreement, where the security at the time of issuance or grant is exempt from registration under the Securities Act of 1933, as amended, pursuant to Rule 701 adopted pursuant to that act (17 C.F.R. 230.701), the provisions of which are hereby incorporated by reference into this section, provided that (1) the terms of any purchase plan or agreement shall comply with Sections 260.140.42, 260.140.45, and 260.140.46 of Title 10 of the California Code of Regulations, (2) the terms of any option plan or agreement shall comply with Sections 260.140.41, 260.140.45, and 260.140.46 of Title 10 of the California Code of Regulations, and (3) the issuer files a notice of transaction in accordance with rules adopted by the commissioner no later than 30 days after the initial issuance of any security under that plan, accompanied by a filing fee as prescribed by subdivision (y) of Section 25608. The failure to file the notice of transaction within the time specified in this subdivision shall not affect the availability of this exemption. An issuer that fails to file the notice shall, within 15 business days after discovery of the failure to file the notice or after demand by the commissioner, whichever occurs first, file the notice and pay the commissioner a fee equal to the maximum aggregate fee payable had the transaction been qualified under Section 25110. Offers and sales exempt pursuant to this subdivision shall be deemed to be part of a single, discrete offering and are not subject to integration with any other offering or sale, whether qualified under Chapter 2 (commencing with Section 25110), or otherwise exempt, or not subject to qualification. (p) An offer or sale of nonredeemable securities to accredited investors (Section 28031) by a person licensed under the Capital Access Company Law (Division 3 (commencing with Section 28000) of Title 4). All nonredeemable securities shall be evidenced by certificates that shall have stamped or printed prominently on their face a legend in a form to be prescribed by rule or order of the commissioner restricting transfer of the securities in the manner as the rule or order provides. (q) Any offer or sale of any viatical or life settlement contract or fractionalized or pooled interest therein in a transaction that meets all of the following criteria: (1) Sales of securities described in this subdivision are made only to qualified purchasers or other persons the issuer reasonably believes, after reasonable inquiry, to be qualified purchasers. A corporation, partnership, or other organization specifically formed for the purpose of acquiring the securities offered by the issuer in reliance upon this exemption may be a qualified purchaser only if each of the equity owners of the corporation, partnership, or other organization is a qualified purchaser. Qualified purchasers include the following: (A) A person designated in Section 260.102.13 of Title 10 of the California Code of Regulations. (B) A person designated in subdivision (i) or any rule of the commissioner adopted thereunder. (C) A pension or profit-sharing trust of the issuer, a self-employed individual retirement plan, or an individual retirement account, if the investment decisions made on behalf of the trust, plan, or account are made solely by persons who are qualified purchasers. (D) An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, each with total assets in excess of five million dollars ($5,000,000) according to its most recent audited financial statements. (E) A natural person who, either individually or jointly with the person's spouse, (i) has a minimum net worth of one hundred fifty thousand dollars ($150,000) and had, during the immediately preceding tax year, gross income in excess of one hundred thousand dollars ($100,000) and reasonably expects gross income in excess of one hundred thousand dollars ($100,000) during the current tax year or (ii) has a minimum net worth of two hundred fifty thousand dollars ($250,000). "Net worth" shall be determined exclusive of home, home furnishings, and automobiles. Other assets included in the computation of net worth may be valued at fair market value. Each natural person specified above, by reason of his or her business or financial experience, or the business or financial experience of his or her professional adviser, who is unaffiliated with and who is not compensated, directly or indirectly, by the issuer or any affiliate or selling agent of the issuer, can be reasonably assumed to have the capacity to protect his or her interests in connection with the transaction. The amount of the investment of each natural person shall not exceed 10 percent of the net worth, as determined by this subdivision, of that natural person. (F) Any other purchaser designated as qualified by rule of the commissioner. (2) Each purchaser represents that the purchaser is purchasing for the purchaser's own account (or trust account, if the purchaser is a trustee) and not with a view to or for sale in connection with a distribution of the security. (3) Each natural person purchaser, including a corporation, partnership, or other organization specifically formed by natural persons for the purpose of acquiring the securities offered by the issuer, receives, at least five business days before securities described in this subdivision are sold to, or a commitment to purchase is accepted from, the purchaser, the following information in writing: (A) The name, principal business and mailing address, and telephone number of the issuer. (B) The suitability standards for prospective purchasers as set forth in paragraph (1) of this subdivision. (C) A description of the issuer's type of business organization and the state in which the issuer is organized or incorporated. (D) A brief description of the business of the issuer. (E) If the issuer retains ownership or becomes the beneficiary of the insurance policy, an audit report of an independent certified public accountant together with a balance sheet and related statements of income, retained earnings, and cashflows that reflect the issuer's financial position, the results of the issuer's operations, and the issuer's cashflows as of a date within 15 months before the date of the initial issuance of the securities described in this subdivision. The financial statements listed in this subparagraph shall be prepared in conformity with generally accepted accounting principles. If the date of the audit report is more than 120 days before the date of the initial issuance of the securities described in this subdivision, the issuer shall provide unaudited interim financial statements. (F) The names of all directors, officers, partners, members, or trustees of the issuer. (G) A description of any order, judgment, or decree that is final as to the issuing entity of any state, federal, or foreign country governmental agency or administrator, or of any state, federal or foreign country court of competent jurisdiction (i) revoking, suspending, denying, or censuring for cause any license, permit, or other authority of the issuer or of any director, officer, partner, member, trustee, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interest or equity securities of the issuer, to engage in the securities, commodities, franchise, insurance, real estate, or lending business or in the offer or sale of securities, commodities, franchises, insurance, real estate, or loans, (ii) permanently restraining, enjoining, barring, suspending, or censuring any such person from engaging in or continuing any conduct, practice, or employment in connection with the offer or sale of securities, commodities, franchises, insurance, real estate, or loans, (iii) convicting any such person of, or pleading nolo contendere by any such person to, any felony or misdemeanor involving a security, commodity, franchise, insurance, real estate, or loan, or any aspect of the securities, commodities, franchise, insurance, real estate, or lending business, or involving dishonesty, fraud, deceit, embezzlement, fraudulent conversion, or misappropriation of property, or (iv) holding any such person liable in a civil action involving breach of a fiduciary duty, fraud, deceit, embezzlement, fraudulent conversion, or misappropriation of property. This subparagraph does not apply to any order, judgment, or decree that has been vacated, overturned, or is more than 10 years old. (H) Notice of the purchaser's right to rescind or cancel the investment and receive a refund pursuant to Section 25508.5. (I) The name, address, and telephone number of the issuing insurance company, and the name, address, and telephone number of the state or foreign country regulator of the insurance company. (J) The total face value of the insurance policy and the percentage of the insurance policy the purchaser will own. (K) The insurance policy number, issue date, and type. (L) If a group insurance policy, the name, address, and telephone number of the group, and, if applicable, the material terms and conditions of converting the policy to an individual policy, including the amount of increased premiums. (M) If a term insurance policy, the term and the name, address, and telephone number of the person who will be responsible for renewing the policy if necessary. (N) That the insurance policy is beyond the state statute for contestability and the reason therefor. (O) The insurance policy premiums and terms of premium payments. (P) The amount of the purchaser's moneys that will be set aside to pay premiums. (Q) The name, address, and telephone number of the person who will be the insurance policy owner and the person who will be responsible for paying premiums. (R) The date on which the purchaser will be required to pay premiums and the amount of the premium, if known. (S) A statement to the effect that any projected rate of return to the purchaser from the purchase of a viatical or life settlement contract or a fractionalized or pooled interest therein is based on an estimated life expectancy for the person insured under the life insurance policy; that the return on the purchase may vary substantially from the expected rate of return based upon the actual life expectancy of the insured that may be less than, equal to, or may greatly exceed the estimated life expectancy; and that the rate of return would be higher if the actual life expectancy were less than, and lower if the actual life expectancy were greater than the estimated life expectancy of the insured at the time the viatical or life settlement contract was closed. (T) A statement that the purchaser should consult with his or her tax adviser regarding the tax consequences of the purchase of the viatical or life settlement contract or fractionalized or pooled interest therein and, if the purchaser is using retirement funds or accounts for that purchase, whether or not any adverse tax consequences might result from the use of those funds for the purchase of that investment. (U) Any other information as may be prescribed by rule of the commissioner.  SEC. 125.   Section 25243.5 of the   Corporations Code   is amended to read:  25243.5. (a) A broker-dealer or investment adviser, or an agent or representative thereof, shall not use a senior-specific certification, credential, or professional designation in connection with the offer, sale, or purchase of securities, or the provision of advice as to the value of or the advisability of investing in, purchasing, or selling securities, either directly or indirectly or through publications or writings or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the broker-dealer, investment adviser, or an agent or representative thereof, has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person. (b) The prohibited use of these certifications, credentials, or professional designations includes, but is not limited to, the following: (1) The use of a certification, credential, or professional designation by a person who has not actually earned or is otherwise ineligible to use the certification, credential, or designation. (2) The use of a nonexistent or self-conferred certification, credential, or professional designation. (3) The use of a certification, credential, or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the person using the certification, credential, or professional designation does not have. (4) The use of a certification, credential, or professional designation that was obtained from a designating, credentialing, or certifying organization where any of the following apply: (A) The organization is primarily engaged in the business of instruction in sales marketing. (B) The organization does not have reasonable standards or procedures for assuring the competency of individuals to whom it grants a certification, credential, or professional designation. (C) The organization does not have reasonable standards or procedures for monitoring and disciplining individuals with a certification, credential, or professional designation for improper or unethical conduct. (D) The organization does not have reasonable continuing education requirements for individuals with a certification, credential, or professional designation in order to maintain the certificate, credential, or professional designation. (c) There is a rebuttable presumption that a designating, credentialing, or certifying organization is not disqualified solely for the purposes of paragraph (4) of subdivision (b) when the organization has been accredited by the American National Standards Institute, the National Commission for Certifying Agencies, or an organization that is on the United States Department of Education's list entitled "Accrediting Agencies Recognized for Title IV Purposes" and the certification, credential, or professional designation issued therefrom does not primarily apply to sales and/or marketing. (d) In determining whether a combination of words, or an acronym standing for a combination of words, constitutes a certification, credential, or professional designation indicating or implying that a person has special certification or training in advising or serving senior citizens or retirees, factors to be considered shall include both of the following: (1) Use of one or more word such as "senior," "retirement," "elder," or like words combined with one or more words such as "certified," "registered," "chartered," "adviser," "specialist," "consultant," "planner," or like words, in the name of the certification, credential, or professional designation or credential. (2) The manner in which those words are combined. (e) This section shall not apply to the use of a job title by a person within an organization that is licensed or registered by the Department of  Corporations   Financial Services  or a federal financial services regulatory agency, when that job title indicates seniority or standing within the organization, or specifies a person's area of specialization within the organization. For the purposes of this subdivision, federal financial services regulatory agency includes, but is not limited to, an agency that regulates brokers or dealers, investment advisers, or investment companies as described under the Investment Company Act of 1940 (15 U.S.C. Sec. 809-1 et seq.). (f) (1) This section shall not apply to a broker or agent who is licensed by the Department of Insurance and is in compliance with the requirements of Section 787.1 of the Insurance Code. (2) This subdivision shall be operative only if Assembly Bill 2150 of the 2007-08 Regular Session is chaptered and becomes effective and that bill adds Section 787.1 to the Insurance Code. (g) This section shall become operative on July 1, 2009.  SEC. 126.   Section 25247 of the   Corporations Code   is amended to read:  25247. (a) Upon written or oral request, the commissioner shall make available to any person the information specified in Section 6254.12 of the Government Code and made available through the Public Disclosure Program of the National Association of Security Dealers, Incorporated (NASD) with respect to any broker-dealer or agent licensed or regulated under this part. The commissioner shall also make available the current license status and the year of issuance of the license of a broker-dealer. Any information disclosed pursuant to this subdivision shall constitute a public record. Notwithstanding any other provisions of law, the commissioner may disclose either orally or in writing that information pursuant to this subdivision. There shall be no liability on the part of and no cause of action of any nature shall arise against the State of California, the Department of  Corporations   Financial Services  , the Commissioner of  Corporations   Financial Services  , or any officer, agent, or employee of the state or of the Department of  Corporations   Financial Services  for the release of any false or unauthorized information, unless the release of that information was done with knowledge and malice. (b) Any broker-dealer or agent licensed or regulated under this part shall upon request deliver a written notice to any client when a new account is opened stating that information about the license status or disciplinary record of a broker-dealer or an agent may be obtained from the Department of  Corporations   Financial Services  , or from any other source that provides substantially similar information. (c) The notice provided under subdivision (b) shall contain the office location or telephone number where the information may be obtained. (d) A broker-dealer or agent shall be exempt from providing the notice required under subdivision (b) if a person who does not have a financial relationship with the broker-dealer or agent, requests only general operational information such as the nature of the broker-dealer's or agent's business, office location, hours of operation, basic services, and fees, but does not solicit advice regarding investments or other services offered. (e) Upon written or oral request, the commissioner shall make available to any person the disciplinary records maintained on the Investment Adviser Registration Depository and made available through the Investment Advisor Public Disclosure Web site with respect to any investment adviser, investment adviser representative, or associated person of an investment adviser licensed or regulated under this part. The commissioner shall also make available the current license status and the year of issuance of the license of an investment adviser. Any information disclosed pursuant to this subdivision shall constitute a public record. Notwithstanding any other provision of law, the commissioner may disclose that information either orally or in writing pursuant to this subdivision. There shall be no liability on the part of and no cause of action of any nature shall arise against the State of California, the Department of  Corporations   Financial Services  , the Commissioner of  Corporations   Financial Services  , or any officer, agent, or employee of the state or of the Department of  Corporations   Financial Services  for the release of any false or unauthorized information, unless the release of that information was done with knowledge and malice. (f) Section 461 of the Business and Professions Code shall not be applicable to the Department of  Corporations   Financial Services  when using a national, uniform application adopted or approved for use by the Securities and Exchange Commission, the North American Securities Administrators Association, or the National Association of Securities Dealers Regulation, Inc. that is required for participation in the Central Registration Depository or the Investment Adviser Registration Depository. (g) This section shall not require the disclosure of criminal history record information maintained by the Federal Bureau of Investigation pursuant to Section 534 of Title 28 of the United States Code, and the rules thereunder, or information not otherwise subject to disclosure under the Information Practices Act of 1977.  SEC. 127.   Section 25254 of the   Corporations Code   is amended to read:  25254. (a) If the commissioner determines it is in the public interest, the commissioner may include in any administrative action brought under this part a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the administrative law judge shall have jurisdiction to award additional relief. (b) In an administrative action brought under this part, the commissioner is entitled to recover costs, which in the discretion of the administrative law judge may include an amount representing reasonable attorney's fees and investigative expenses for the services rendered, for deposit into the State Corporations Fund for the use of the Department of  Corporations   Financial Services  .  SEC. 128.   Section 25600 of the   Corporations Code   is amended to read:   25600. There is in the state government, in the Business and Transportation Agency a Department of Corporations, which shall administer the provisions of this division. The chief officer of the Department of Corporations is the Commissioner of Corporations. The commissioner shall be appointed by the Governor and shall hold office at the pleasure of the Governor. He or she shall receive an annual salary as fixed in the Government Code. Within 15 days from the time of his or her appointment the commissioner shall take and subscribe to the constitutional oath of office and file it in the office of the Secretary of State. Whenever   25600.   Whenever  the term "Division of Corporations" is used in the law, it means the Department of  Corporations   Financial Services. All references to the "department" shall be deemed to refer to the Department of Financial Services. All references to the "commissioner" shall be deemed to refer to the Commissioner of Financial Services  .  SEC. 129.   Section 25601 of the   Corporations Code   is repealed.   25601. The commissioner shall have his principal office in the City of Sacramento, and may establish branch offices in the City and County of San Francisco, in the City of Los Angeles and in the City of San Diego. The commissioner shall from time to time obtain the necessary furniture, stationery, fuel, light, and other proper conveniences for the transaction of the business of the Department of Corporations.   SEC. 130.   Section 25602 of the   Corporations Code   is amended to read:  25602. In accordance with the laws governing the state civil service, the commissioner shall employ and, with the approval of the Department of Finance, fix the compensation of such personnel as the commissioner needs to discharge properly the duties imposed upon the commissioner by law, including legal counsel to act as the attorney for the commissioner in actions or proceedings brought by or against the commissioner under or pursuant to any provision of any law under the commissioner's jurisdiction, or in which the commissioner joins or intervenes as to a matter within the commissioner's jurisdiction, as a friend of the court or otherwise, and stenographic reporters to take and transcribe the testimony in any formal hearing or investigation before the commissioner or before a person authorized by the commissioner.  The personnel of the Department of Corporations shall perform such duties as the commissioner assigns to them.  Such employees as the commissioner designates by rule or order shall, within 15 days after their appointments, take and subscribe to the constitutional oath of office and file it in the office of the Secretary of State.  SEC. 131.   Section 25603 of the   Corporations Code   is repealed.   25603. The commissioner shall adopt a seal bearing the inscription: "Commissioner of Corporations, State of California." The seal shall be affixed to or imprinted on all orders and certificates issued by him and such other instruments as he directs. All courts shall take judicial notice of this seal.   SEC. 132.   Section 25604 of the   Corporations Code   is amended to read:  25604. The administration and enforcement of, and the education of the public relative to, the laws and programs of the Department  of Corporations   Financial Services  shall be supported from the State Corporations Fund. Funds appropriated from the State Corporations Fund and made available for expenditure for any law or program of the department may come from fees collected from the following: (a) Section 25608, except for fees collected pursuant to subdivisions (o) to (r), inclusive, of Section 25608. (b) Section 25608.1.  SEC. 133.   Section 25606 of the   Corporations Code   is amended to read:  25606. (a) The Attorney General shall render to the commissioner opinions upon all questions of law, relating to the construction or interpretation of any law under the commissioner's jurisdiction or arising in the administration thereof, that may be submitted to the Attorney General by the commissioner, and upon the commissioner's request shall act as the attorney for the commissioner in actions and proceedings brought by or against the commissioner under or pursuant to any provision of any law under the commissioner's jurisdiction. (b) Sections 11041, 11042 and 11043 of the Government Code do not apply to the Commissioner of  Corporations   Financial Services  .  SEC. 134.   Section 25607 of the  Corporations Code   is amended to read:  25607. (a) Neither the commissioner nor any of the commissioner's assistants, clerks, or deputies shall be interested as a director, officer, shareholder, member (other than a member of an organization formed for religious purposes), partner, agent, or employee of any person who, during the period of the official's or employee's association with the Department of  Corporations   Financial Services  , (1) was licensed or applied for license as a broker-dealer or investment adviser under this division, or (2) applied for or secured the qualification of the sale of securities under this division. (b) Nothing contained in subdivision (a) shall prohibit the holding or purchasing of any securities by any assistant, clerk, or deputy in accordance with rules as the commissioner shall adopt for the purpose of protecting the public interest and avoiding conflicts of interest. (c) Nothing contained in subdivision (a) shall prohibit the holding or purchasing of any securities by the commissioner if any of the following criteria is met: (1) The securities held or purchased by the commissioner are exempt from the qualification requirements of Sections 25110, 25120, and 25130 by virtue of Section 25100, provided that the holding or purchasing of those securities is in accordance with rules adopted for the purpose of protecting the public interest and avoiding conflicts of interest. (2) The securities held or purchased by the commissioner are not subject to Sections 25110, 25120, and 25130 by virtue of Section 25100.1, provided that the holding or purchasing of those securities is in accordance with rules adopted for the purpose of protecting the public interest and avoiding conflicts of interest. (3) The holding or purchasing of any securities by the commissioner meets each of the following requirements: (A) The securities are held or purchased through a management account or trust administered by a bank or trust company authorized to do business in this state, and the bank or trust company has sole investment discretion regarding the holding, purchase, and sale of securities. (B) The commissioner did not, directly or indirectly, advise, counsel, command, or suggest the holding, purchase, or sale of any security or furnish any information relating to the security to the bank or trust company. (C) The account or trust does not at any time have more than 10 percent of its total assets invested in the securities of any one issuer or hold more than 5 percent of the outstanding shares or units of any class of securities of any one issuer. (D) The commissioner shall report to the Attorney General not less often than quarterly all holdings, purchases, and sales of securities by him or her as authorized in paragraph (3), which reports shall be retained by the Attorney General as public documents.  SEC. 135.   Section 25612.5 of the   Corporations Code   is amended to read:  25612.5. (a) To encourage uniform interpretation and administration of this law and the Franchise Investment Law (Division 5 (commencing with Section 31000)) and effective securities and franchise regulation and enforcement, the commissioner may cooperate with the securities agencies or administrators of one or more states, Canadian provinces or territories, or other countries, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Securities Investor Protection Corporation, any self-regulatory organization, any national or international organization or securities officials or agencies, and any governmental law enforcement or regulatory agency. (b) The cooperation authorized by subdivision (a) includes, but is not limited to, the following actions: (1) Prescribing rules and forms with a view to achieving maximum uniformity in the form and content of registration statements, applications, and reports wherever practicable. (2) Participating in a nationwide central depository for qualification or registration of securities under this law and for documents or records required or allowed to be maintained under this law. (3) Participating in the Central Registration Depository, or any successor or alternative nationwide or regional depository, for the registering, certifying, or licensing of broker-dealers or agents, or both. (4) Participating in the Investment Adviser Registration Depository, or any successor or alternative nationwide or regional depository, for the registering, certifying, or licensing of investment advisers or investment adviser representatives, or both. (5) Cooperating in any regulatory activity necessary in the administration of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56; USA Patriot Act), consistent with state law. (c) Notwithstanding any other provision of law, any application for qualification, amendment to the application or related securities qualification or registration document or notice under Sections 25100.1, 25101.1, 25102, 25102.1, 25110, 25120, 25130, and 25230.1 or record otherwise required to be signed that is filed in this state as an electronic record pursuant to a nationwide central depository for qualification or registration of securities, or any electronic record filed through the Central Registration Depository or the Investment Adviser Registration Depository, shall be deemed to be a valid original document upon reproduction to paper form by the Department of  Corporations   Financial Services  . (d) For purposes of this section, "electronic record" has the same meaning as in subdivision (g) of Section 1633.2 of the Civil Code.  SEC. 136.   Section 25614 of the   Corporations Code   is amended to read:  25614. All rules of the commissioner (other than those relating solely to the internal administration of the Department of  Corporations)   Financial Services)  shall be made, amended or rescinded in accordance with the provisions of the Administrative Procedure Act, Chapter 4 (commencing with Section 11370) of Part 1 of Division 3 of Title 2 of the Government Code. Rules may be adopted prior to the effective date of this law to become effective upon its effective date.  SEC. 137.   Section 25620 of the   Corporations Code   is repealed.   25620. (a) Notwithstanding any other provision of law, the commissioner may by rule or order prescribe circumstances under which to accept electronic records or electronic signatures. However, nothing in this section requires the commissioner to accept electronic records or electronic signatures. (b) For purposes of this section, the following terms have the following meanings: (1) "Electronic record" means a record created, generated, sent, communicated, received, or stored by electronic means, and includes a record transmitted by means of facsimile machine or other telephone transceiving equipment. (2) "Electronic signature" means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record. (c) The Legislature hereby finds and declares that the Department of Corporations has continuously implemented methods to file records electronically, including broker-dealer and investment adviser applications, and is encouraged to continue to expand its use of electronic filings to the extent feasible, as budget, resources, and equipment are made available to accomplish that goal.   SEC. 138.   Section 25702 of the   Corporations Code   is amended to read:  25702. Whenever a person is entitled under this law to a hearing in accordance with the provisions of the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, a formal hearing before the Department of  Corporations   Financial Services  may be substituted with the consent of such person and of the commissioner for such hearing before an independent hearing officer; and in that case after such hearing before the Department of  Corporations   Financial Services  such person shall not be entitled to any further administrative remedy.  SEC. 139.   Section 28033 of the   Corporations Code   is amended to read:  28033. "Commissioner" means the Commissioner of  Corporations   Financial Services  or his or her designee with respect to a particular matter.  SEC. 140.   Section 28505 of the   Corporations Code   is amended to read:  28505. Subject to the provisions of Rules 250.10 and 250.10.5 of the Commissioner of  Corporations   Financial Services,  (10 C.C.R. Secs. 250.10 and 250.10.5), the commissioner may make available to the public any report filed with him or her under this division or under any regulations or order issued under this division.  SEC. 141.   Section 28715 of the   Corporations Code   is amended to read:  28715. Sections 11041, 11042, and 11043 of the Government Code do not apply to the Commissioner of  Corporations   Financial Services  .  SEC. 142.   Section 29200 of the   Corporations Code   is amended to read:  29200. Every person doing business as a broker or making contracts as a broker or agent for the purchase or sale of any securities or commodities on any board of trade or exchange shall keep or cause to be kept at his  or her  office or place of business correct and permanent records or books of account showing each of  such   those  transactions as a separate item. The failure so to keep or cause to be kept  such   those  records or books of account is prima facie evidence that any such contract was bucketing or bucketshopping.  Such   Those  records or books of account shall at all times be open to inspection by the Commissioner of  Corporations   Financial Services  or by any deputy, investigator, or auditor of the Department of  Corporations   Financial Services  to whom he  or she  may delegate  such   that  authority in writing.  SEC. 143.   Section 29503 of the   Corporations Code   is amended to read:  29503. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 144.   Section 31004 of the   Corporations Code   is amended to read:  31004. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 145.   Section 31210 of the   Corporations Code   is amended to read:  31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless such person is: (1) identified in an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division, (2) licensed by the California Department of  Real Estate   Financial Services  as a real estate broker or real estate  salesman   salesperson  , or (3) licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.  SEC. 146.   Section 31408 of the   Corporations Code   is amended to read:  31408. (a) If the commissioner determines it is in the public interest, the commissioner may include in any administrative action brought under this division, including a stop order, a claim for ancillary relief, including, but not limited to, a claim for rescission, restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the administrative law judge shall have jurisdiction to award additional relief. The person affected may be required to attend remedial education, as directed by the commissioner. (b) In an administrative action brought under this part the commissioner is entitled to recover costs, which in the discretion of the administrative law judge may include any amount representing reasonable attorney's fees and investigative expenses for the services rendered, for deposit into the State Corporations Fund for the use of the Department of  Corporations   Financial Services  .  SEC. 147.   Section 31503 of the   Corporations Code   is amended to read:  31503. All rules of the commissioner, other than those relating solely to the internal administration of the Department of  Corporations   Financial Services  , shall be made, amended or rescinded in accordance with the provisions of Chapter  4.5   3.5  (commencing with Section  11371)   11340)  of Part 1 of Division 3 of Title 2 of the Government Code.  SEC. 148.   Section 31513 of the   Corporations Code   is amended to read:  31513. Whenever a person is entitled under this law to a hearing in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, a formal hearing before the Department of  Corporations   Financial Services  may be substituted with the consent of  such   that  person and of the commissioner for  such   that  hearing before an independent hearing officer; and in that case after  such   that  hearing before the Department of  Corporations such   Financial Services that  person shall not be entitled to any further administrative remedy.  SEC. 149.   Section 112 of the   Financial Code   is amended to read:  112. "Commissioner" means the Commissioner of Financial  Institutions   Services  and "department" means the Department of Financial  Institutions   Services  .  SEC. 150.   Section 200 of the   Financial Code   is amended to read:  200. (a) In this section: (1) "Business and industrial development corporation" means a corporation licensed under Division 15 (commencing with Section 31000). (2) "Payment instrument" has the same meaning as set forth in Section 33059. (3) "Traveler's check" has the same meaning as set forth in Section 1852. (b) There is in the state government, in the Business, Transportation and Housing Agency, a Department of Financial  Institutions   Services  which has charge of the execution of, among other laws, the laws of this state relating to any of the following:  (1) banks or trust companies or the banking or trust business; (2) savings associations or the savings association business; (3) credit unions or the credit union business; (4) persons who engage in the business of receiving money for transmission to foreign nations or such business; (5) issuers of traveler's checks or the traveler's check business; (6) issuers of payment instruments or the payment instrument business; (7) business and industrial development corporations or the business and industrial development corporation business, or (8) insurance premium finance agencies or the insurance premium finance business.   (1) The Real Estate Law (Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code).   (2) The Subdivided Lands Law (Chapter 1 (commencing with Section 11000) of Part 2 of Division 4 of the Business and Professions Code).   (3) The Vacation Ownership and Time-Share Act of 2004 (Chapter 2 (commencing with Section 11210) of Part 2 of Division 4 of the Business and Professions Code).   (4) The Real Estate Appraisers' Licensing and Certification Law (Part 3 (commencing with Section 11302) of Division 4 of the Business and Professions Code).  (5) Broker-dealers and the agents or registered representatives of broker-dealers (Chapter 2 (commencing with Section 25210) of Part 3 of Division 1 of Title 4 of the Corporations Code).   (6) Investment advisers and investment adviser representatives or associated persons (Chapter 3 (commencing with Section 25230) of Part 3 of Division 1 of Title 4 of the Corporations Code).   (7) Capital access companies (Division 3 (commencing with Section 28000) of Title 4 of the Corporations Code).   (8) The Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code).  (9) Banks and trust companies (Division 1 (commencing with Section 99)).   (10) Foreign banks (Chapter 13.5 (commencing with Section 1700) of Division 1).   (11) Money transmitters (Chapter 14 (commencing with Section 1800) of Division 1).   (12) Issuers of traveler's checks (Chapter 14A (commencing with Section 1851) of Division 1).   (13) Bank holding companies (Chapter 21 (commencing with Section 3700) of Division 1).   (14) Checksellers, billpayers, and proraters (Division 3 (commencing with Section 12000)).   (15) Credit unions (Division 5 (commencing with Section 14000)).   (16) Escrow agents (Division 6 (commencing with Section 17000)).   (17) Industrial loan companies (Division 7 (commencing with Section 18000)).   (18) The Finance Lenders Law (Division 9 (commencing with Section 22000)).   (19) Deferred deposit originators (Division 10 (commencing with Section 23000)).   (20) Securities depositories (Division 14 (commencing with Section 30000)).   (21) Business and industrial development corporations (Division 15 (commencing with Section 31000)).   (22) Sellers of payment instruments (Division 16 (commencing with Section 33000)).   (23) The California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000)).   (24) Any other persons, entities, or transactions subject to regulation and oversight by, or subject to the jurisdiction of, the former Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, or the Office of Real Estate Appraisers.   SEC. 151.   Section 201 of the   Financial Code   is amended to read:  201. This chapter is applicable to  this division, Division 1 (commencing with Section 99), Division 1.5 (commencing with Section 4800), Division 5 (commencing with Section 14000), Division 7 (commencing with Section 18000), Division 15 (commencing with Section 31000), and Division 16 (commencing with Section 33000).   any of the persons, entities, or transactions described in subdivision (b) of Section 200.   SEC. 152.   Section 203 is added to the   Financial Code   , to read:   203. Notwithstanding any other provision of law, all references to the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, or the Office of Real Estate Appraisers shall be deemed to refer to the Department of Financial Services.   SEC. 153.  Section 210 of the   Financial Code   is amended to read:  210. The chief officer of the Department of Financial  Institutions   Services  is the Commissioner of Financial  Institutions   Services  . The Commissioner of Financial  Institutions   Services  is the head of the department and, except as otherwise provided in this code, is subject to the provisions of the Government Code relating to department heads, but need not reside in Sacramento.  SEC. 154.   Section 210.5 of the   Financial Code   is amended to read:  210.5. As of the operative date of this section: (a) In this section, "order" means any approval, consent, authorization, exemption, denial, prohibition, requirement, or other administrative action, applicable to a specific case. (b) The office of the Superintendent of Banks and the State Banking Department are abolished. All powers, duties, responsibilities, and functions of the Superintendent of Banks and the State Banking Department are transferred to the Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  , respectively. The Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  succeed to all the rights and property of the Superintendent of Banks and the State Banking Department, respectively; the Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  are subject to all the debts and liabilities of the Superintendent of Banks and the State Banking Department, respectively, as if the Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  had incurred them. Any action or proceeding by or against the Superintendent of Banks or the State Banking Department may be prosecuted to judgment, which shall bind the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  , respectively, or the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  may be proceeded against or substituted in place of the Superintendent of Banks or the State Banking Department, respectively. References in the Constitution of the State of California or in any statute or regulation to the Superintendent of Banks or to the State Banking Department mean the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  , respectively. All agreements entered into with, and orders and regulations issued by, the Superintendent of Banks or the State Banking Department shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions  Services  , respectively. (c) The office of the Savings and Loan Commissioner and the Department of Savings and Loan are abolished. All powers, duties, responsibilities, and functions of the Savings and Loan Commissioner and the Department of Savings and Loan are transferred to the Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  , respectively. The Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  succeed to all the rights and property of the Savings and Loan Commissioner and the Department of Savings and Loan, respectively; the Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  are subject to all the debts and liabilities of the Savings and Loan Commissioner and the Department of Savings and Loan, respectively, as if the Commissioner of Financial  Institutions   Services  and the Department of Financial  Institutions   Services  had incurred them. Any action or proceeding by or against the Savings and Loan Commissioner or the Department of Savings and Loan may be prosecuted to judgment, which shall bind the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  , respectively, or the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  may be proceeded against or substituted in place of the Savings and Loan Commissioner or the Department of Savings and Loan, respectively. References in the Constitution of the State of California or in any statute or regulation to the Savings and Loan Commissioner or to the Department of Savings and Loan mean the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  , respectively. All agreements entered into with, and orders and regulations issued by, the Savings and Loan Commissioner or the Department of Savings and Loan shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial  Institutions   Services  or the Department of Financial  Institutions   Services  .  (d) All powers, duties, responsibilities, and functions of the Commissioner of Corporations and the Department of Corporations with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business are transferred to the Commissioner of Financial Institutions and the Department of Financial Institutions, respectively. The Commissioner of Financial Institutions and the Department of Financial Institutions succeed to all the rights and property of the Commissioner of Corporations and the Department of Corporations, respectively, with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business; the Commissioner of Financial Institutions and the Department of Financial Institutions are subject to all the debts and liabilities of the Commissioner of Corporations and the Department of Corporations, respectively, with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business, as if the Commissioner of Financial Institutions and the Department of Financial Institutions had incurred them. Any action or proceeding by or against the Commissioner of Corporations or the Department of Corporations with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business may be prosecuted to judgment, which shall bind the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively, or the Commissioner of Financial Institutions or the Department of Financial Institutions may be proceeded against or substituted in place of the Commissioner of Corporations or the Department of Corporations, respectively. References in the Constitution of the State of California or any statute or regulation to the Commissioner of Corporations or to the Department of Corporations with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business mean the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively. All agreements entered into with, and orders and regulations issued by, the Commissioner of Corporations or the Department of Corporations in the exercise of authority under any law relating to credit unions, the credit union business, industrial loan companies, or the industrial loan business, shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial Institutions or the Department of Financial Institutions.   SEC. 155.   Section 210.9 is added to the   Financial Code   , to read:   210.9. (a) The Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers are abolished. (b) All powers, duties, purposes, jurisdiction, responsibilities, and functions of the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers and the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers are transferred to the Commissioner of Financial Services and the Department of Financial Services, respectively. (c) The Commissioner of Financial Services and the Department of Financial Services succeed to all the rights and property of the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers and the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers, respectively; the Commissioner of Financial Services and the Department of Financial Services are subject to all the debts and liabilities of the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers and the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers, respectively, as if the Commissioner of Financial Services and the Department of Financial Services had incurred them. (d) Any action or proceeding by or against the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers or the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers may be prosecuted to judgment, which shall bind the Commissioner of Financial Services or the Department of Financial Services, respectively, or the Commissioner of Financial Services or the Department of Financial Services may be proceeded against or substituted in place of the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers and the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers, respectively. (e) The following funds and accounts shall be under the jurisdiction of the Commissioner of Financial Services: (1) The Real Estate Fund created by Section 10450 of the Business and Professions Code. (2) The Education and Research Account, of the Real Estate Fund created by Section 10450.6 of the Business and Professions Code. (3) The Recovery Account, of the Real Estate Fund created by Section 10450.6 of the Business and Professions Code. (4) The Real Estate Appraisers Regulation Fund created by Section 11410 of the Business and Professions Code. (5) The Administration Account, of the Real Estate Appraisers Regulation Fund created by Section 11411 of the Business and Professions Code. (6) The Recovery Account, of the Real Estate Appraisers Regulation Fund created by Section 11411 of the Business and Professions Code. (7) The Financial Institutions Fund created by Section 265. (8) The Credit Union Fund created by Section 14354. (9) The Guaranty Corporation Fund created by Section 18535. (10) The State Corporations Fund created by subdivision (b) of Section 13978.6 of the Government Code. (11) Any other fund or account subject to the jurisdiction of the former Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, or the Office of Real Estate Appraisers. (f) References in the Constitution of the State of California or in any statute or regulation to the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers or the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers shall mean the Commissioner of Financial Services or the Department of Financial Services, respectively. (g) All agreements entered into with, and orders and regulations issued by, the Commissioner of Corporations, the Commissioner of Financial Institutions, the Real Estate Commissioner, and the Director of the Office of Real Estate Appraisers or the Department of Corporations, the Department of Financial Institutions, the Department of Real Estate, and the Office of Real Estate Appraisers shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial Services or the Department of Financial Services.   SEC. 156.   Section 215 of the   Financial Code   is amended to read:  215. The commissioner is responsible for the performance of all duties, the exercise of all powers and jurisdiction, and the assumption and discharge of all responsibilities vested by law in the department. The commissioner has and may exercise all the powers necessary or convenient for the administration and enforcement of, among other laws, the laws described in  subdivision (b) of  Section 200. The commissioner may issue such rules and regulations consistent with law as he or she may deem necessary or advisable in executing the powers, duties, and responsibilities of the department.  SEC. 157.   Section 262 of the   Financial Code   is amended to read:  262. (a) The commissioner shall inform the  Commissioner of Corporations and other  appropriate state and federal officials charged with the regulation of financial institutions or securities transactions of any enforcement actions, including, but not limited to, civil or criminal actions, cease and desist orders, license or authorization suspensions or revocations, or an open investigation. (b) The commissioner shall inform the  Commissioner of Corporations and other  appropriate state and federal officials charged with the regulation of financial institutions or securities transactions if it appears that any bank, bank holding company, savings association, savings and loan holding company, credit union, industrial loan company, industrial loan holding company, or other licensee of the department is conducting its business in a fraudulent, unsafe, unsound, or injurious manner, or has suffered or will suffer substantial financial loss or damage, and it appears to the commissioner that the information is relevant to the regulatory activities of the other agency.  SEC. 158.   Section 1856 of the   Financial Code   is amended to read:  1856. Each application for a license shall be accompanied by such information and documents as the commissioner may by regulation or order reasonably require, including but not limited to: (a) The most recent audited and unconsolidated statement of income and statement of condition of applicant as prepared by an independent certified public accountant in conformity with generally accepted accounting principles applied on a consistent basis. (b) Description of applicant's business and mode of operation. (c) Enumeration of names of parent and active subsidiary organizations of applicant, if any. (d) Copies of the applicant's filings for the preceding year with the Securities and Exchange Commission, and copies of the most recent filings for the preceding year with the  California Corporations  Commissioner  of Financial Services  , or other California state agency. (e) Detailed statement of eligible securities of applicant, including identification by name and present value, which applicant intends to use in the conduct of its business of issuing traveler's checks. (f) Amount of issuer's liability for traveler's checks outstanding in California, and in the United States, as of the last business day of the preceding calendar quarter. (g) Name and principal office of each agent, selling or to be selling traveler's checks in California. (h) Name of other states, in which applicant has been granted a license or authorization to sell or is selling traveler's checks.  SEC. 159.   Section 4057 of the   Financial Code   is amended to read:  4057. (a) An entity that negligently discloses or shares nonpublic personal information in violation of this division shall be liable, irrespective of the amount of damages suffered by the consumer as a result of that violation, for a civil penalty not to exceed two thousand five hundred dollars ($2,500) per violation. However, if the disclosure or sharing results in the release of nonpublic personal information of more than one individual, the total civil penalty awarded pursuant to this subdivision shall not exceed five hundred thousand dollars ($500,000). (b) An entity that knowingly and willfully obtains, discloses, shares, or uses nonpublic personal information in violation of this division shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) per individual violation, irrespective of the amount of damages suffered by the consumer as a result of that violation. (c) In determining the penalty to be assessed pursuant to a violation of this division, the court shall take into account the following factors: (1) The total assets and net worth of the violating entity. (2) The nature and seriousness of the violation. (3) The persistence of the violation, including any attempts to correct the situation leading to the violation. (4) The length of time over which the violation occurred. (5) The number of times the entity has violated this division. (6) The harm caused to consumers by the violation. (7) The level of proceeds derived from the violation. (8) The impact of possible penalties on the overall fiscal solvency of the violating entity. (d) In the event a violation of this division results in the identity theft of a consumer, as defined by Section 530.5 of the Penal Code, the civil penalties set forth in this section shall be doubled. (e) The civil penalties provided for in this section shall be exclusively assessed and recovered in a civil action brought in the name of the people of the State of California in any court of competent jurisdiction by any of the following: (1) The Attorney General. (2) The functional regulator with jurisdiction over regulation of the financial institution as follows: (A) In the case of banks, savings associations, credit unions, commercial lending companies, and bank holding companies, by the Department of Financial  Institutions   Services  or the appropriate federal authority; (B) in the case of any person engaged in the business of insurance, by the Department of Insurance; (C) in the case of any investment broker or dealer, investment company, investment advisor, residential mortgage lender or finance lender, by the Department of  Corporations   Financial Services  ; and (D) in the case of a financial institution not subject to the jurisdiction of any functional regulator listed under subparagraphs (A) to (C), inclusive, above, by the Attorney General.  SEC. 160.   Section 4805.055 of the   Financial Code   is amended to read:  4805.055. "Commissioner" means the Commissioner of Financial  Institutions   Services  .  SEC. 161.   Section 4970 of the   Financial Code   is amended to read:  4970. For purposes of this division: (a) "Annual percentage rate" means the annual percentage rate for the loan calculated according to the provisions of the federal Truth in Lending Act and the regulations adopted thereunder by the Federal Reserve Board. (b) "Covered loan" means a consumer loan in which the original principal balance of the loan does not exceed the most current conforming loan limit for a single-family first mortgage loan established by the Federal National Mortgage Association in the case of a mortgage or deed of trust, and where one of the following conditions are met: (1) For a mortgage or deed of trust, the annual percentage rate at consummation of the transaction will exceed by more than eight percentage points the yield on Treasury securities having comparable periods of maturity on the 15th day of the month immediately preceding the month in which the application for the extension of credit is received by the creditor. (2) The total points and fees payable by the consumer at or before closing for a mortgage or deed of trust will exceed 6 percent of the total loan amount. (c) "Points and fees" shall include the following: (1) All items required to be disclosed as finance charges under Sections 226.4(a) and 226.4(b) of Title 12 of the Code of Federal Regulations, including the Official Staff Commentary, as amended from time to time, except interest. (2) All compensation and fees paid to mortgage brokers in connection with the loan transaction. (3) All items listed in Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, only if the person originating the covered loan receives direct compensation in connection with the charge. (d) "Consumer loan" means a consumer credit transaction that is secured by real property located in this state used, or intended to be used or occupied, as the principal dwelling of the consumer that is improved by a one-to-four residential unit. "Consumer loan" does not include a reverse mortgage, an open line of credit as defined in Part 226 of Title 12 of the Code of Federal Regulations (Regulation Z), or a consumer credit transaction that is secured by rental property or second homes. "Consumer loan" does not include a bridge loan. For purposes of this division, a bridge loan is any temporary loan, having a maturity of one year or less, for the purpose of acquisition or construction of a dwelling intended to become the consumer's principal dwelling. (e) "Original principal balance" means the total initial amount the consumer is obligated to repay on the loan. (f) "Licensing agency" shall mean the Department of  Real Estate   Financial Services  for licensed real estate brokers,  the Department of Corporations for  licensed residential mortgage lenders and licensed finance lenders and brokers, and  the Department of Financial Institutions for  commercial and industrial banks and savings associations and credit unions organized in this state. (g) "Licensed person" means a real estate broker licensed under the Real Estate Law (Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code), a finance lender or broker licensed under the California Finance Lenders Law (Division 9 (commencing with Section 22000)), a residential mortgage lender licensed under the California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000)), a commercial or industrial bank organized under the Banking Law (Division 1 (commencing with Section 99)), a savings association organized under the Savings Association Law (Division 2 (commencing with Section 5000)), and a credit union organized under the California Credit Union Law (Division 5 (commencing with Section 14000)). Nothing in this division shall be construed to prevent any enforcement by a governmental entity against any person who originates a loan and who is exempt or excluded from licensure by all of the licensing agencies, based on a violation of any provision of this division. Nothing in this division shall be construed to prevent the Department of  Real Estate   Fin   ancial Services  from enforcing this division against a licensed salesperson employed by a licensed real estate broker as if that salesperson were a licensed person under this division. A licensed person includes any person engaged in the practice of consumer lending, as defined in this division, for which a license is required under any other provision of law, but whose license is invalid, suspended or revoked, or where no license has been obtained. (h) "Originate" means to arrange, negotiate, or make a consumer loan. (i) "Servicer" has the same meaning provided in Section 6 (i)(2) of the Real Estate Settlement Procedures Act of 1974.  SEC. 162.   Section 4990 of the   Financial Code   is amended to read:  4990. (a) Any person convicted of a felony violation of any of the provisions specified in subdivision (b) shall not serve in any capacity as a director or officer or in any other position involving any management duties with a financial institution in this state with accounts insured by an agency or instrumentality of the United States or a private share insurance or guaranty arrangement. This subdivision does not, however, apply to any director or officer of a financial institution, or to persons serving in managerial positions for financial institutions, whose office or employment with a financial institution commenced, and whose felony conviction occurred, prior to January 1, 1991. (b) Subdivision (a) applies to felony convictions of offenses specified in Chapter 18 (commencing with Section 3350) of Division 1, Article 4 (commencing with Section 5300) of Chapter 1 of Division 2, Article 8 (commencing with Section 14750) of Chapter 4 of Division 5, and Chapter 6 (commencing with Section 18435) of Division 7. Subdivision (a) also applies to felony convictions of offenses specified in provisions of the laws of the United States added or amended by the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Public Law 101-73). (c) On and after January 1, 1991, any person who seeks employment by, or a controlling interest in, a financial institution specified in subdivision (a) shall, as a condition to obtaining that employment or controlling interest, permit the financial institution, its regulatory agency, or both to have access to that person's state summary criminal history information, as defined in Section 11105 of the Penal Code, for purposes of determining whether the person has a prior conviction of a felony offense specified in subdivision (b) or any theft offense. (d) Any state summary criminal history information obtained pursuant to this subdivision shall be kept confidential and no recipient under this subdivision shall disclose the contents other than for the purpose of determining eligibility for employment by, or acquisition of a controlling interest in, a financial institution specified in subdivision (a). (e) The authority granted by this section to the Commissioner of Financial  Institutions   Services  and other regulatory agencies shall be in addition to any other authority granted by law to obtain information about the background of any person. Nothing in this section shall be construed to limit any authority of the Commissioner of Financial  Institutions   Services or any regulatory agency otherwise provided by law.  SEC. 163.   Section 5104 of the   Financial Code   is amended to read:  5104. "Commissioner" means the Commissioner of Financial  Institutions   Services  .  SEC. 164.   Section 12003 of the   Financial Code   is amended to read: 12003. "Commissioner" means the Commissioner of  Corporations   Financial Services  of the State of California, or any deputy, investigator, auditor, or any other person employed by him.  SEC. 165.   Section 12100 of the   Financial Code   is amended to read:  12100. This division does not apply to any of the following: (a) Any person, or his or her authorized agent, doing business under license and authority of the Commissioner of Financial Institutions   Services  under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000). (b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any traveler's check, as defined in Section 1852, which is issued by the person. (2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person. (c) The services of a person licensed to practice law in this state, when the person renders services in the course of his or her practice as an attorney-at-law, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller. (d) Any transaction in which money or other property is paid to a "joint control agent" for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property. (e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency. (f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title. (g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she is licensed under that part. (h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditor's committee. (i) The services of a person licensed as a certified public accountant or a public accountant in this state, when the person renders services in the course of his or her practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller. (j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5. (k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial  Institutions   Services  under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency traveler's check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency traveler's check. () Any transaction of the type described in Section 1854.1.  SEC. 166.   Section 12104 of the   Financial Code   is amended to read:  12104. A nonprofit community service organization that meets all of the following criteria shall be exempt from any requirements imposed on proraters pursuant to this division: (a) The nonprofit community service organization incorporates in this state or any other state as a nonprofit corporation and operates pursuant to either the Nonprofit Public Benefit Corporation Law, Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code or the Nonprofit Mutual Benefit Corporation Law, Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code. (b) The nonprofit community service organization limits its membership to retailers, lenders in the consumer credit field, educators, attorneys, social service organizations, employer and employee organizations, and related groups that serve educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes. (c) The nonprofit community service organization has as its principal functions the following: (1) Consumer credit education. (2) Counseling on consumer credit problems and family budgets. (3) Arranging or administering debt management plans. "Debt management plan" means a method of paying debtor's obligations in installments on a monthly basis. (4) Arranging or administering debt settlement plans. "Debt settlement plans" means a method of paying debtor's obligations in a negotiated amount to each creditor on a one-time basis. (d) The nonprofit community service organization receives from a debtor no more than the following maximum amounts to offset the organization's actual and necessary expenses for the services described in subdivision (c): a one-time sum not to exceed fifty dollars ($50) for education and counseling combined in connection with debt management or debt settlement services; and for debt management plans, a sum not to exceed 8 percent of the money disbursed monthly, or thirty-five dollars ($35) per month, whichever is less, and for debt settlement plans a sum not to exceed 15 percent of the amount of the debt forgiven for negotiated debt settlement plans. Nonprofit community service organizations shall not require any upfront payments or deposits on debt settlement plans and may only require payment of fees once the debt has been successfully settled. For purposes of this subdivision, a household shall be considered one debtor. The fees allowed pursuant to this subdivision shall be the only fees that may be charged by a nonprofit community service organization for any services related to a debt management plan or a debt settlement plan. (e) The nonprofit community service organization maintains and keeps current and accurate books, records, and accounts relating to its business in accordance with generally accepted accounting principles, and stores them in a readily accessible place for a period of no less than five years from the end of the fiscal year in which any transactions occurred. (f) The nonprofit community service organization deposits any money received from a debtor for the services described in subdivision (c) in a noninterest-bearing trust account in a federally insured state or federal bank, savings bank, savings and loan association, or credit union, which account is maintained specifically for purposes of administering a debt management plan or debt settlement plan. The nonprofit community service organization shall provide the commissioner the following prior to engaging in business in this state and claiming this exemption: (1) A written notice with the name, address, and telephone number of the bank, savings bank, savings and loan association, or credit union where the trust account is maintained, and the name of the account and the account number. The account information required in this paragraph shall be kept confidential pursuant to the laws governing disclosure of public records, including the California Public Records Act, Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code, and the rules adopted thereunder. (2) An irrevocable written consent providing that upon the commissioner taking possession of the property and business of the nonprofit community service organization, all books, records, property and business, including trust accounts and any other accounts holding debtors' funds, shall be immediately turned over to the commissioner or receiver appointed pursuant to this division. The consent shall be signed by the nonprofit community service organization and the bank, savings bank, savings and loan association, or credit union where the trust account is maintained. The consent shall be binding upon the nonprofit community service organization and the bank, savings bank, savings and loan association, or credit union, and any objection to it must be raised pursuant to the laws of the State of California and only in the forum in which the proceeding to take possession or appointment of the receiver has been filed. The nonprofit community service organization and the bank, savings bank, savings and loan association, or credit union shall further consent to the jurisdiction of the commissioner for the purpose of any investigation or proceeding under Sections 12105 and 12106 or any other provision of this division. The consent required by this paragraph shall include the name, title, and signature of an official of the bank, savings bank, savings and loan association, or credit union holding the authority to consent on behalf of that institution, and the name, title, and signature of the chief executive officer or president of the nonprofit community service organization. (g) The nonprofit community service organization maintains at all times a surety bond in the amount of twenty-five thousand dollars ($25,000), issued by an insurer licensed in this state. The bond shall be conditioned upon the obligor faithfully conforming to and abiding by the provisions of Section 12104 of the Financial Code, honestly and faithfully applying all funds received, honestly and faithfully performing all obligations and undertakings required under this section, and paying to the state and to any person all money that becomes due and owing to the state or to any person owed by the obligor of the bond. (h) The nonprofit community service organization reports all of the following to the debtor at least once every three months, or upon the debtor's request, for any debt management plan or debt settlement plan: (1) Total amount received from the debtor. (2) Total amount paid to each creditor. (3) Total amount any creditor has agreed to accept as payment in full on any debt owed by the debtor. (4) Any amount paid to the organization by the debtor. (5) Any amount held in reserve. (i) The nonprofit community service organization submits to the commissioner, at the organization's expense, an audit report containing audited financial statements covering the calendar year or, if the organization has an established fiscal year, then for that fiscal year, within 120 days after the close of the calendar or fiscal year. (j) The nonprofit community service organization submits with the annual financial statements required under subdivision (i) a declaration that conforms to Section 2015.5 of the Code of Civil Procedure, is executed by an official authorized by the board of the organization, and that states that the organization complies with this section. The annual financial statements shall also include a separate written statement that identifies the name, address, contact person, and telephone number of the organization. (k) The nonprofit community service organization maintains accreditation by an independent accrediting organization, including either the Council on Accreditation or the International Standards Organization, with sector certification. () The nonprofit community service organization does not engage in any act or practice in violation of Section 17200 or 17500 of the Business and Professions Code. (m) The nonprofit community service organization inserts the following statement, in not less than 10-point type, in its debt management plan and debt settlement plan agreements: "Complaints related to this agreement may be directed to the  California  Department of  Corporations   Financial Services  . This nonprofit community service organization has adopted best practices for debt management plans and debt settlement plans, and a copy will be provided upon request." (n) The nonprofit community service organization adopts and implements on a continuous basis policies or procedures of best practices that are designed to prevent improper debt management or debt settlement practices and prevent theft and misappropriation of funds. Failure to do the following shall constitute improper debt management or debt settlement practices, as applicable: (1) Obtain counselor certification conducted by a nationally recognized third-party certification program that certifies that all of the agency's counselors receive proper training and are qualified to provide financial assistance prior to performing counseling services in this state. (2) Disburse funds no later than 15 days after receipt of valid funds, or by a scheduled disbursement date, whichever is the greater amount of time. (3) Transmit funds utilizing electronic payment processing when available. (4) Implement an inception date policy, which shall include an agreement that a consumer's first disbursement pursuant to a debt management plan shall be received within 90 days of agreeing to the debt management plan service. The debt management plan shall include all items described in subdivision (h) and shall be provided to the consumer at the inception date of the plan. A description of best practices of the agency and of the consumer complaint resources shall be issued no later than the first payment date. (5) Respond to and research any complaint initiated by a consumer within five business days of receipt of the complaint. (6) Prohibit a policy requiring debt management plan consumers from being required to utilize additional ancillary services. (7) Provide consumer access to debt management plan services regardless of the consumer's ability to pay fees related to the debt management plan, lack of creditor participation, or the amount of the consumer's outstanding debt. (8) Implement policies that specifically prohibit credit counselors from receiving financial incentives or additional compensation based on the outcome of the counseling process. (9) Prohibit the practice of paying referral fees to consumers or other third parties who refer new clients to the agency. (10) Disclose in all written contracts with consumers the portion of funding for the agency that is provided by creditors. (11) Disclose in all written contracts for debt management plans or debt settlement plans that these plans are not suitable for all consumers and that consumers may request information on other options, including, but not limited to, bankruptcy. (12) Fully disclose all services to be provided by the agency and any initial and ongoing fees to be charged by the agency for services, including, but not limited to, contributions to the agency. (13) Prohibit the agency or any affiliate of the agency from purchasing debt from a consumer. (14) Prohibit the agency from offering loans to consumers involving the charging of interest. (15) Prominently disclose in written contracts with consumers of any financial arrangement between the agency and any lender or any provider of financial services if the agency receives any form of compensation for referring consumers to that lender or provider of financial services. (16) Provide professional liability insurance coverage. (17) Provide the debtor a written individualized evaluation of his or her financial status and an initial debt management plan for the debtor's debts with specific recommendations regarding actions the debtor should take. (18) Provide the debtor enrolling in a debt management plan a written reliable estimate of the length of time it will take to complete the plan and identifies the total debt owed to each creditor included in the plan, the proposed payment to each creditor, and any fees that would be charged for administering the plan. The estimate shall be provided prior to receipt of the debtor's first deposit. (o) The nonprofit community service organization provides a copy of the best practices described in subdivision (n) to its debtor, upon request. (p) The nonprofit community service organization resolves in a prompt and reasonable manner complaints from debtors relating to the organization's debt management plans or debt settlement plans. (q) The nonprofit community service organization provides written notice to the commissioner within 30 days of dissolution or termination of engaging in the activities of a prorater, as defined in Section 12002.1. (r) This section shall become inoperative upon the enactment of a statute requiring the licensure and regulation of nonprofit community service organizations providing consumer credit counseling.  SEC. 167.   Section 12307.4 of the   Financial Code   is amended to read:  12307.4. Whenever the commissioner has taken possession of the property and business of a licensee the commissioner may petition the superior court for the appointment of a receiver to liquidate the affairs of the licensee. During the time that the commissioner retains possession of the property and business of a licensee the commissioner shall have the same powers and authority with reference to the licensee as are vested in the Commissioner of Financial  Institutions   Services  with respect to banks pursuant to Chapter 17 (commencing with Section 3100) of Division 1 and the licensee shall likewise have the same rights to hearings and judicial review as are granted to banks. While in possession of the property and business of a check seller, a receiver shall have the same powers and authority as are vested in the Commissioner of Financial  Institutions   Services  while in possession of the property and business of a bank.  SEC. 168.   Section 14003 of the   Financial Code   is amended to read:  14003. "Commissioner" means the Commissioner of Financial  Institutions   Services  of the State of California.  SEC. 169.   Section 14200.1   of the   Financial Code   is amended to read:  14200.1. There is in the Department of Financial  Institutions   Services  , the Division of Credit Unions. The Division of Credit Unions has charge of the execution of the laws of this state relating to credit unions or to the credit union business.  SEC. 170.   Section 14200.2 of the   Financial Code   is amended to read:  14200.2. The Chief Officer of the Division of Credit Unions is the Deputy Commissioner of Financial  Institutions   Services  for the Division of Credit Unions. The Deputy Commissioner of Financial  Institutions   Services  for the Division of Credit Unions shall administer the laws of this state relating to credit unions or the credit union business under the direction of and on behalf of the commissioner. The Deputy Commissioner of Financial  Institutions   Services  for the Division of Credit Unions shall be appointed by the Governor and shall hold office at the pleasure of the Governor. The Deputy Commissioner of Financial  Institutions  Services  shall receive an annual salary as fixed by the Governor.  SEC. 171.   Section 14381 of the   Financial Code   is amended to read:  14381. The Credit Union Advisory Committee shall advise the commissioner and the Deputy Commissioner of Financial  Institutions   Services  for the Division of Credit Unions on matters relating to credit unions or the credit union business.  SEC. 172.   Section 17002 of the   Financial Code   is amended to read:  17002. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 173.   Section 17006 of the   Financial Code   is amended to read:  17006. (a) This division does not apply to: (1) Any person doing business under any law of this state or the United States relating to banks, trust companies, building and loan or savings and loan associations, or insurance companies. (2) Any person licensed to practice law in California who has a bona fide client relationship with a principal in a real estate or personal property transaction and who is not actively engaged in the business of an escrow agent. (3) Any person whose principal business is that of preparing abstracts or making searches of title that are used as a basis for the issuance of a policy of title insurance by a company doing business under any law of this state relating to insurance companies. (4) Any  real estate  broker licensed by the  Real Estate  Commissioner  of Financial Services  while performing acts in the course of or incidental to a real estate transaction in which the  real estate  broker is an agent or a party to the transaction and in which the  real estate  broker is performing an act for which a real estate license is required. (b) The exemptions provided for in paragraphs (2) and (4) of subdivision (a) are personal to the persons listed, and those persons shall not delegate any duties other than duties performed under the direct supervision of those persons. Notwithstanding the provisions of this subdivision, the exemptions provided for in paragraphs (2) and (4) of subdivision (a) are not available for any arrangement entered into for the purpose of performing escrows for more than one business.  SEC. 174.   Section 17210.2 of the  Financial Code   is amended to read:  17210.2. (a) No escrow agent shall disseminate, or cause or permit to be disseminated, in any manner whatsoever, any statement or representation which is false, misleading, or deceptive, or which omits to state material information, or which refers to the supervision of that agent by the State of California or any department or official thereof. (b) A licensed escrow agent, in referring to the corporation's licensure under this law in any written or printed communication or any communication by means of recorded telephone messages or spoken on radio, television, or similar communications media, shall include the following statement: "This escrow company holds  California  Department of  Corporations   Financial Services  Escrow License No. ____." (c) The commissioner may order any person to desist from any conduct which the commissioner finds to be a violation of this section.  SEC. 175.   Section 17214 of the   Financial Code   is amended to read:  17214. (a) There is established in the Department of  Corporations   Financial Services  an Escrow Law Advisory Committee consisting of 11 members. The members shall consist of the commissioner or his or her designee; the chairman of the board and the immediate past chairman of the board for the Escrow Agents' Fidelity Corporation; the current chairman of the board and the immediate past chairman of the board for the Escrow Institute of California; a person selected by the commissioner to represent a different type of business ownership under this division; a person selected by the commissioner to represent a different type of business specialization; a person selected by the commissioner to represent small businesses operating pursuant to this division; a person selected by the commissioner to represent medium-sized businesses operating pursuant to this division; an attorney at law experienced in escrow matters selected by the commissioner; and a certified public accountant experienced in the escrow business selected by the commissioner. Except for the members from the Escrow Agents' Fidelity Corporation and the Escrow Institute of California, members appointed by the commissioner shall serve for a term of two years. The committee shall meet at least quarterly. The commissioner or his or her designee shall chair the committee. All members shall serve without compensation or reimbursement for expenses. Where the chairman of the board or the immediate past chairman of the board of the Escrow Agents' Fidelity Corporation is the same person, or is unable to serve on the advisory committee, then the commissioner after consultation with the board of directors of the Escrow Agents' Fidelity Corporation, shall choose a member of the board of directors to serve on the committee. Where the president or past president of the Escrow Institute of California is the same person, or is unable to serve on the advisory committee, then the commissioner after consultation with the board of directors of the Escrow Institute of California, shall choose a member of the board of directors to serve on the committee. (b) The purpose of the committee is to assist the commissioner in the implementation of the commissioner's duties under this chapter.  SEC. 176.   Section 17303 of the   Financial Code   is amended to read:  17303. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 177.   Section 17311 of the   Financial Code   is amended to read: 17311. (a) Persons licensed pursuant to this division shall maintain a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Escrow Agents' Fidelity Corporation. (b) The State of California, the Department of  Corporations   Financial Services  , or any officer, agent, or employee of either shall not be liable in any way for the conduct of Fidelity Corporation, its directors, officers, agents, employees, or members.  SEC. 178.   Section 17312 of the   Financial Code   is amended to read:  17312. (a) Each person licensed pursuant to this division who is engaged in the business of receiving escrows specified in subdivision (c) and whose escrow business location is located within the State of California shall participate as a member in Fidelity Corporation in accordance with this chapter and rules established by the board of directors of Fidelity Corporation. Fidelity Corporation shall not deny membership to any escrow agent holding a valid unrevoked license under the Escrow Law who is required to be a member under this subdivision. (b) Upon filing a new application for licensure as required by Section 17201, persons required to be a member of Fidelity Corporation shall file a copy thereof concurrently with Fidelity Corporation. If an application for licensure submitted to Fidelity Corporation contains personal or confidential information, Fidelity Corporation and its board shall maintain this information in confidence to protect the privacy of the information. The copy of the application shall include the three thousand dollar ($3,000) fee specified in subdivision (a) of Section 17320 and all required Fidelity Corporation Certificates set forth in Sections 17331 and 17331.1. Fidelity Corporation shall promptly furnish to the commissioner a compliance letter confirming that the applicant has satisfied the requirements to be a member of Fidelity Corporation. (c) The required membership in Fidelity Corporation shall be limited to those licensees whose escrow business location is located within the State of California and who engage, in whole or in part, in the business of receiving escrows for deposit or delivery in the following types of transactions: (1) Real property escrows, including, but not limited to, the sale, encumbrance, lease, exchange, or transfer of title, and loans or other obligations to be secured by a lien upon real property. (2) Bulk sale escrows, including, but not limited to, the sale or transfer of title to a business entity and the transfer of liquor licenses or other types of business licenses or permits. (3) Fund or joint control escrows, including, but not limited to, transactions specified in Section 17005.1, and contracts specified in Section 10263 of the Public Contract Code. (4) The sale, transfer of title, or refinance escrows for manufactured homes or mobilehomes. (5) Reservation deposits required under Article 2 (commencing with Section 11010) of Chapter 1 of Part 2 of Division 4 of the Business and Professions Code or by regulation of the Department of  Real Estate   Financial Services  to be held in an escrow account. (6) Escrows for sale, transfer, modification, assignment, or hypothecation of promissory notes secured by deeds of trust. (d) Coverage required to be provided by Fidelity Corporation under this chapter shall be provided to members only for loss of trust obligations with respect to those types of transactions specified in subdivision (c). If a loss covered by Fidelity Corporation is also covered by a member's general liability, dishonesty, or indemnity policy, or other private insurance policy, then the member's private policy shall first be applied as the primary indemnity to cover the loss. However, the failure of the member's private primary policy to indemnify the member's loss within the time specified for Fidelity Corporation indemnity in subdivision (a) of Section 17314 shall not limit the indemnity obligations of Fidelity Corporation as defined in this chapter. Indemnity coverage for those types of transactions not specified in subdivision (c) shall be provided by escrow agents in accordance with Section 17203.1.  SEC. 179.   Section 17320 of the   Financial Code   is amended to read:  17320. Fidelity Corporation shall establish and maintain the following funds for payment of claims and for payment of costs of administration: the membership fund, the operations fund, and the fidelity fund. (a) An applicant or a licensee shall, at the time an application is filed for a license, pay to Fidelity Corporation a membership fee of three thousand dollars ($3,000) for each location for which a license is applied. If the application is denied, withdrawn, or abandoned, Fidelity Corporation may retain two hundred dollars ($200) from the membership fee to cover costs of administration. (1) The membership fund shall be reserved for payment of claims which exceed the fidelity fund balance and for payment of extraordinary operational costs. (2) Any member who, on the effective date of this section, has an account balance which exceeds the three thousand dollars ($3,000) membership fee times the number of its licensed locations shall be credited in a special reserve account for the excess amount. This balance shall be credited against future assessments made pursuant to subdivision (b) of Section 17321 in an amount not exceeding four hundred dollars ($400) per licensed location per year. Any member whose account balance is less than three thousand dollars ($3,000) times the number of its licensed locations shall, on or before December 1, 1988, pay to Fidelity Corporation an amount sufficient to allow the member's account to be maintained at three thousand dollars ($3,000) times the number of licensed locations. Fidelity Corporation shall provide each member with an accounting of the amounts being reserved for the members' membership account and amounts being held as a special reserve. (3) The membership fee, less any unpaid assessments and related costs, shall be refunded to the member in accordance with Fidelity Corporation's bylaws not less than 30 months and no more than 36 months after the effective date of surrender of a license. (4) Any member who does not engage in any escrow transactions pursuant to subdivision (c) of Section 17312 may terminate its membership in Fidelity Corporation by written notice to Fidelity Corporation and the Department of  Corporations   Financial Services  , as provided in the Fidelity Corporation's bylaws and rules and regulations. The membership fee, less any unpaid assessments and related costs, shall be refunded to the member in accordance with Fidelity Corporation's bylaws not less than 30 months and no more than 36 months after the effective date of the member's written request to terminate its membership in Fidelity Corporation. Before a licensee resumes those escrow transactions, it shall first be required to become a member of Fidelity Corporation, as provided in this subdivision. (b) Fidelity Corporation shall prepare, prior to its fiscal year end, an estimated annual operational budget projecting the costs of operations and administration for the succeeding fiscal year, excluding the amount paid for claims and premiums paid for excess coverage bonding. The amount of the assessment shall be 150 percent of the budgetary projection. In succeeding years, the assessment shall be adjusted by adding the prior year's deficit or deducting unused surplus from the prior year. (c) Fidelity Corporation shall establish a fidelity fund for the payment of claims and for the payment of the premium for the fidelity bond or insurance policy, if any. All claims shall be paid from the fidelity fund, provided that, to the extent that the fidelity fund balance is not sufficient to pay claims, the claim shall be paid from the membership fund by charging each member's membership account a pro rata share of the excess. (d) All interest earned on the membership fund and the operations fund shall be credited to the fidelity fund.  SEC. 180.   Section 17331 of the   Financial Code   is amended to read:  17331. (a) An applicant applying for licensure as an escrow agent under this division is required to apply for a Fidelity Corporation Certificate, prepared and issued by Fidelity Corporation, for each proposed shareholder, officer, director, trustee, manager, or employee who is to be directly or indirectly compensated by the escrow agent, prior to licensure of the escrow agent by the commissioner. (b) A shareholder, officer, director, trustee, manager, or employee of an escrow agent, directly or indirectly compensated by an escrow agent within this state, is required to complete and execute a Fidelity Corporation Certificate application, prepared and issued by Fidelity Corporation, as a condition of his or her employment or entitlement to compensation, before the person may continue the regular discharge of his or her duties, or have access to moneys or negotiable securities belonging to or in the possession of the escrow agent, or draw checks upon the escrow agent or the trust funds of the escrow agent. (c) Fidelity Corporation Certificates may also be known as Escrow Agent's Fidelity Corporation Certificates or EAFC Certificates. The certificate at all times remains the property of Fidelity Corporation, and is not transferable by either a member or employee. The certificate is not a warranty or guarantee by Fidelity Corporation of the integrity, veracity, or competence of the person. (d) An application for a Fidelity Corporation Certificate shall be in writing and in the form prescribed by Fidelity Corporation. The application may include (1) a fee not to exceed fifty dollars ($50), (2) two passport-size photographs, and (3) a set of fingerprint images and related information using the process established by the Department of Justice for requesting state summary criminal history information, plus the fee charged by the Department of Justice for processing noncriminal applicant fingerprint images and related information, in a manner established by the Department of Justice pursuant to subdivision (l). The Department of Justice shall honor the Fidelity Corporation report request form and issue a report to Fidelity Corporation, notwithstanding any other provision of law or regulation to the contrary. Fidelity Corporation is also entitled to submit a set of fingerprint images and related information in the Department of Justice specified noncriminal applicant fingerprint format for the purpose of requesting and obtaining a report from the Department of Justice, for the officers and employees of Fidelity Corporation. A member shall cause the filing of applications for all existing employees as required by this section within 30 days of written notice by Fidelity Corporation to the member. (e) The application form shall include a provision for binding arbitration to allow for arbitration of any appeal or dispute as to a decision by Fidelity Corporation concerning the certificate, as follows: A DISPUTE AS TO WHETHER THE DENIAL OF THIS CERTIFICATE APPLICATION OR ANY SUBSEQUENT SUSPENSION OR REVOCATION OF THE CERTIFICATE IS UNNECESSARY OR UNAUTHORIZED OR WAS IMPROPERLY, NEGLIGENTLY, OR UNLAWFULLY RENDERED, MAY BE DETERMINED BY SUBMISSION TO ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND NOT BY A LAWSUIT OR RESORT TO COURT PROCESS EXCEPT AS CALIFORNIA LAW PROVIDES FOR JUDICIAL REVIEW OF ARBITRATION PROCEEDINGS OR EXCEPT AS PROVIDED BY SECTION 17331.3 OF THE FINANCIAL CODE. THE APPLICANT MAY, SUBJECT TO AGREEMENT, SUBMIT ANY ISSUE ARISING FROM A DECISION BY FIDELITY CORPORATION TO DENY THIS CERTIFICATE APPLICATION OR TO SUSPEND OR REVOKE THE CERTIFICATE TO BE DECIDED BY BINDING NEUTRAL ARBITRATION. UPON AN AGREEMENT TO SUBMIT TO BINDING NEUTRAL ARBITRATION, THE APPLICANT HAS NO RIGHT TO HAVE ANY DISPUTE CONCERNING THIS CERTIFICATE APPLICATION LITIGATED IN A COURT OR JURY TRIAL NOR ANY JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, EXCEPT AS SPECIFICALLY PROVIDED IN THE ESCROW LAW. ARBITRATION MAY BE COMPELLED AS PROVIDED BY LAW. (f) There is no liability on the part of and no cause of action of any nature may arise against Fidelity Corporation or its members, directors, officers, employees, or agents, the State of California, the Department of  Corporations   Financial Serv   ices  , or any officer, agent, or employee of the state or the Department of  Corporations   Financial Services  for statements made by Fidelity Corporation in reports or recommendations made pursuant to this division, or for reports or recommendations made pursuant to this division to Fidelity Corporation by its members, directors, officers, employees or agents, the State of California, the Department of  Corporations   Financial Services  , or any officer, agent, or employee of the state or the Department of  Corporations   Financial Services  , unless the information provided is false and the party making the statement or providing the false information does so with knowledge and malice. Reports or recommendations made pursuant to this section, or Section 17331.1, 17331.2, or 17331.3, are not public documents. (g) There is no liability on the part of and no cause of action of any nature may arise against Fidelity Corporation or its members, directors, officers, employees, or agents, the State of California, the Department of  Corporations   Financial Services  , or an officer, agent, or employee of the state or the Department of  Corporations  Financial Services  for the release of any information furnished to Fidelity Corporation pursuant to this section unless the information released is false and the party, including Fidelity Corporation, its members, directors, officers, employees, or agents, the state, the Department of  Corporations   Financial Services  , or any officer, agent, or employee of the state or the Department of  Corporations   Financial Services  , who releases the false information does so with knowledge and malice. (h) There is no liability on the part of and no cause of action of any nature may arise against Fidelity Corporation or its directors, officers, employees, or agents, for any decision to deny an application for a certificate or to suspend or revoke the certificate of any person or for the timing of any decision or the timing of any notice to persons or members thereof, or for any failure to deny an application under subdivision (a) of Section 17331.2. This subdivision does not apply to acts performed in bad faith or with malice. (i) Fidelity Corporation, any member of Fidelity Corporation, an agent of Fidelity Corporation or of its members, or any person who uses any information obtained under this section for any purpose not authorized by this chapter is guilty of a misdemeanor. (j) Section 17331, 17331.1, or 17331.2 does not constitute a restriction or limitation upon the obligation of Fidelity Corporation to indemnify members against loss, as provided in Sections 17310 and 17314. The failure to obtain a certificate, the denial of an application for a certificate, or the suspension, cancellation, or revocation of a certificate does not limit the obligation of Fidelity Corporation to indemnify a member against loss. (k) Notwithstanding Section 11105 of the Penal Code, Fidelity Corporation is entitled to receive state summary criminal history information and subsequent arrest notification from the Department of Justice as a result of fingerprint images and related information submitted to the Department of Justice by the Department of  Corporations   Financial Services  , pursuant to subdivision (g) of Section 17209, Section 17212.1, and subdivision (d) of Section 17414.1, by or on behalf of escrow agents, shareholders, officers, directors, trustees, managers, or employees of an escrow agent, directly or indirectly compensated by an escrow agent. The Department of Justice and Fidelity Corporation shall enter into an agreement to implement this subdivision. The Department of  Corporations   Financial Services  shall forward to Fidelity Corporation, weekly, a list of names of individual fingerprints submitted to the Department of Justice. (l) (1) The fingerprint images and related information required pursuant to subdivision (d) shall be submitted by the Department of  Corporations   Financial Services  to the Department of Justice, in a manner established by the Department of Justice, for the purposes of obtaining information as to the existence and content of a record of state or federal convictions, state or federal arrests, and information as to the existence of and content of a record of state or federal arrests for which the Department of Justice establishes that the person is free on bail or on his or her own recognizance pending trial or appeal. (2) Upon receipt, the Department of Justice shall forward to the Federal Bureau of Investigation requests for federal summary criminal history information received pursuant to this section. The Department of Justice shall review the information returned from the Federal Bureau of Investigation and compile and disseminate a response to the Department of  Corporations   Financial Services  and a fitness determination to Fidelity Corporation pursuant to subdivision (p) of Section 11105 of the Penal Code. (3) The Department of Justice shall charge a fee sufficient to cover the costs of processing the requests pursuant to this subdivision.  SEC. 181.   Section 17423.1 of the   Financial Code   is amended to read:  17423.1. (a) (1) Whenever the commissioner takes any enforcement or disciplinary action pursuant to Section 17423, upon the action becoming final the commissioner shall notify the  Real Estate Commissioner and the  Insurance Commissioner of the action or actions taken. The purpose of this notification is to alert the  departments   department  that enforcement or disciplinary action has been taken, if the person seeks or obtains employment with entities regulated by the  departments   department  . (2) The commissioner shall provide the  Real Estate Commissioner and the  Insurance Commissioner, in addition to the notification of the action taken, with a copy of the written accusation, statement of issues, or order issued or filed in the matter and, at the request of the  Real Estate Commissioner or  Insurance Commissioner, with any underlying factual material relevant to the enforcement or disciplinary action. Any confidential information provided by the commissioner to the Insurance Commissioner  or the Real Estate Commissioner  shall not be made public pursuant to this section. Notwithstanding any other provision of law, the disclosure of any underlying factual material to the Insurance Commissioner  or the Real Estate Commissioner  shall not operate as a waiver of confidentiality or any privilege that the commissioner may assert. (b) The commissioner shall establish and maintain, on the  Internet  Web site maintained by the Department of  Corporations   Financial Services  , a separate and readily identifiable database of all persons who have been subject to any enforcement or disciplinary action that triggers the notification requirements of this section. The database shall also contain a direct link to the databases, described in Section 10176.1 of the Business and Professions Code and Section 12414.31 of the Insurance Code and required to be maintained on the  Internet  Web  sites   site  of the  Department of Real Estate and the  Department of Insurance  , respectively,  of persons who have been subject to enforcement or disciplinary action for malfeasance or misconduct related to the escrow industry by the Insurance Commissioner  and the Real Estate Commissioner  . (c) There shall be no liability on the part of, and no cause of action of any nature shall arise against, the State of California, the Department of  Corporations   Financial Services  , the Commissioner of  Corporations   Financial Services  , any other state agency, or any officer, agent, employee, consultant, or contractor of the state, for the release of any false or unauthorized information pursuant to this section, unless the release of that information was done with knowledge and malice, or for the failure to release any information pursuant to this section.  SEC. 182.   Section 18002 of the   Financial Code   is amended to read:  18002. "Commissioner" means the Commissioner of Financial  Institutions   Services  of the State of California.  SEC. 183.  Section 18002.5 of the   Financial Code   is amended to read:  18002.5. "Department" means the Department of Financial  Institutions   Services  .  SEC. 184.   Section 18339 of the   Financial Code   is amended to read:  18339. As of the operative date of this section: (a) There is established an Industrial Loan Account in the Financial Institutions Fund in the State Treasury. (b) All money on deposit with the Treasurer in the State Corporations Fund that has been received or collected by the Commissioner of Corporations   Financial Services  under this division or any other law relating to industrial loan companies or the industrial loan business, all other assets of the State Corporations Fund that have been acquired by the Commissioner of  Corporations   Financial Services  under this division or any other law relating to industrial loan companies or the industrial loan business, and all liabilities of the State Corporations Fund that have been incurred under this division or any other law relating to industrial loan companies or the industrial loan business shall be transferred to the Industrial Loan Account.  SEC. 185.   Section 18427.9 of the   Financial Code   is amended to read:  18427.9. There shall be exempted from the provisions of Section 18427.1 all of the following: (a) (1) Any offer, not involving a public offering, to an affiliate or to a person of the type described in subdivision (i) of Section 25102 of the Corporations Code or in the regulations of the Commissioner of  Corporations   Financial Services  adopted thereunder. (2) The execution and delivery of an agreement for the sale of securities to any person of the type described in paragraph (1), subject to all of the following: (A) The agreement shall contain substantially the following provision: "The sale of the securities which are the subject of this agreement has not been authorized by a permit issued by the Commissioner of Financial  Institutions   Services  of the State of California. The issuance of the securities or the payment or receipt of any part of the consideration therefor prior to the issuance of a permit is unlawful, unless the sale of securities is exempt from Section 18427.1 of the California Financial Code. The rights of all parties to this agreement are expressly conditioned upon the issuance of a permit, unless the sale is so exempt." (B) No part of the purchase price may be paid or received, and none of the securities may be issued, until a permit authorizing the sale of the securities is issued, unless the sale is exempt from Section 18427.1. (b) Any transaction or security which the commissioner by regulation or order exempts as not being comprehended within the purposes of this article and the regulation of which he or she finds is not necessary or appropriate in the public interest or for the protection of investors.  SEC. 186.   Section 18596 of the   Financial Code   is amended to read:  18596. A premium finance company may issue or sell investment certificates only (a) to its customers directly in connection with the financing of premiums for such customers, provided that the aggregate finance charges, including interest paid or not paid on such investment certificates, do not exceed those charges permitted under Section 18626 and (b) to any such institutional investors, governmental agency or instrumentality as the Commissioner of  Corporations   Financial Services  may designate by rule.  SEC. 187.  Section 22005 of the   Financial Code   is amended to read:  22005. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 188.   Section 22159.5 of the   Financial Code   is amended to read:  22159.5. (a) The commissioner may, as he or she deems necessary, require licensees to provide reports concerning their residential mortgage loan servicing activities, including, but not limited to, information similar to that collected in connection with the Mortgage Servicers Survey, first published by the Department of  Corporations   Financial Services, successor to the Department of Corporations  in December 2007. The commissioner is additionally authorized to seek and accept information provided on a voluntary basis by residential mortgage loan servicers not subject to the commissioner's jurisdiction. The commissioner shall post only aggregated survey results on the department's Internet Web site, and shall note the number of loan servicers submitting data included in the aggregated totals and the estimated percentage of outstanding mortgage loans to Californians that are serviced by these loan servicers, to the extent information on the number of outstanding loans is available from a reliable source. Nothing in this section is intended to reduce or change the commissioner's authority to request and demand reports under Sections 22150 and 22159. (b) For purposes of this section, "mortgage loan servicing activity" means receiving more than three installment payments of principal, interest, or other amounts placed in escrow, pursuant to the terms of a mortgage loan, and performing services relating to that receipt or the enforcement of its receipt, on behalf of the holder of the note evidencing that loan.  SEC. 189.   Section 22160 of the   Financial Code   is amended to read:  22160. The commissioner shall make and file annually with the Department of  Corporations   Financial Services  as a public record a composite of the annual reports and any comments on the reports that he or she deems to be in the public interest.  SEC. 190.   Section 22304 of the   Financial Code   is amended to read:  22304. As an alternative to the charges authorized by Section 22303, a licensee may contract for and receive charges at the greater of the following: (a) A rate not exceeding 1.6 percent per month on the unpaid principal balance. (b) A rate not exceeding five-sixths of 1 percent per month plus a percentage per month equal to one-twelfth of the annual rate prevailing on the 25th day of the second month of the quarter preceding the quarter in which the loan is made, as established by the Federal Reserve Bank of San Francisco, on advances to member banks under Sections 13 and 13a of the Federal Reserve Act, as now in effect or hereafter from time to time amended, or if there is no single determinable rate for advances, the closest counterpart of this rate as shall be determined by the Commissioner of Financial  Institutions   Services  . Charges shall be calculated on the unpaid principal balance. (c) This section does not apply to any loan of a bona fide principal amount of two thousand five hundred dollars ($2,500) or more as determined in accordance with Section 22251.  SEC. 191.  Section 23001 of the   Financial Code   is amended to read:  23001. As used in this division, the following terms have the following meanings: (a) "Deferred deposit transaction" means a transaction whereby a person defers depositing a customer's personal check until a specific date, pursuant to a written agreement for a fee or other charge, as provided in Section 23035. (b) "Commissioner" means the Commissioner of  Corporations   Financial Services  . (c) "Department" means the Department of  Corporations   Financial Services  . (d) "Licensee" means any person who offers, originates, or makes a deferred deposit transaction, who arranges a deferred deposit transaction for a deferred deposit originator, who acts as an agent for a deferred deposit originator, or who assists a deferred deposit originator in the origination of a deferred deposit transaction. However, "licensee" does not include a state or federally chartered bank, thrift, savings association, industrial loan company, or credit union. "Licensee" also does not include a retail seller engaged primarily in the business of selling consumer goods, including consumables, to retail buyers that cashes checks or issues money orders for a minimum fee not exceeding two dollars ($2) as a service to its customers that is incidental to its main purpose or business. "Licensee" also does not include an employee regularly employed by a licensee at the licensee's place of business. An employee, when acting under the scope of the employee's employment, shall be exempt from any other law from which the employee's employer is exempt. (e) "Person" means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government entity, or a political subdivision of a government entity. (f) "Deferred deposit originator" means a person who offers, originates, or makes a deferred deposit transaction.  SEC. 192.   Section 23070 of the   Financial Code   is amended to read:  23070. (a) The Legislature finds and declares that it is in the public interest for the administration and enforcement of this division to be undertaken by the Department of  Corporations   Financial Services  . (b) It is therefore the intent of the Legislature to transfer the existing responsibilities relating to administration and enforcement of check cashers that engage in activities subject to this division from the Department of Justice to the Department of  Corporations   Financial Services  .  SEC. 193.   Section 23071 of the   Financial Code   is amended to read:  23071. The Commissioner of  Corporations   Financial Services  and the Department of  Corporations   Financial Services  shall succeed to, and are vested with, all duties, powers, purposes, responsibilities, and jurisdiction of the Department of Justice as they relate to check cashers who engage in the activities subject to this division.  SEC. 194.   Section 23072 of the   Financial Code   is amended to read:  23072. The Department of  Corporations   Financial Services  may use the unexpended balance of funds available for use in connection with the performance of duties of the Department of Justice to which the Department of  Corporations   Financial Services  succeeds pursuant to Section 23071.  SEC. 195.   Section 23073 of the   Financial Code   is amended to read:  23073. All officers and employees of the Department of Justice who, on the operative date of this division, are performing any duty, power, purpose, responsibility, or jurisdiction to which the Department of  Corporations   Financial Services  succeeds, and who are serving in the civil service, other than as temporary employees or persons in positions exempted from civil service, shall be transferred to the Department of  Corporations   F   inancial Services  . The status, position, and rights of those persons shall not be affected by the transfer and shall be retained by those persons as officers and employees of the Department of  Corporations   Financial Services , pursuant to Part 2 (commencing with Section 18500) of Division 5 of Title 2 of the Government Code.  SEC. 196.   Section 23074 of the   Financial Code   is amended to read:  23074. The Department of  Corporations   Financial Services  shall have possession and control of all records, criminal history information, papers, equipment, supplies, moneys, funds, appropriations, licenses, permits, contracts, claims, judgments, land, and other property, real or personal, connected with the administration of, or held for the benefit or use of, the Department of Justice for the performance of the functions transferred to the Department of  Corporations   Financial Services  pursuant to Section 23071.  SEC. 197.   Section 23102 of the   Financial Code   is amended to read:  23102. The deferred deposits made pursuant to a permit issued under Section 1789.37 of the Civil Code prior to December 31, 2004, shall be subject to and enforced to the extent valid under Sections 1789.30 to 1789.37, inclusive, of the Civil Code, as if those sections were not repealed. Any regulation, order, or other action adopted, prescribed, taken, or performed by the Department of Justice or by an officer of that department in connection with deferred deposit transactions made prior to December 31, 2004, shall continue to apply to those transactions. No suit, action, or other proceeding lawfully commenced by or against the Department of Justice or any other officer of the state in relation to deferred deposit transactions made prior to December 31, 2004, shall abate by reason of the transfer of authority concerning deferred deposit transactions to the Department of  Corporations   Financial Services  pursuant to Section 23071.  SEC. 198.   Section 28000 of the   Financial Code   is amended to read:  28000. (a) Pursuant to the authority contained in Section 1 of Article XV of the State Constitution, and subject to subdivision (b), educational institutions of collegiate grade are authorized to make loans or forbearances to finance student educational expenses including tuition, room, and board, and other costs of attendance or living at the institution, at rates not to exceed the higher of: (1) Ten percent per annum. (2) Five percent per annum plus the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act as now in effect or hereafter from time to time amended or, if there is no such single determinable rate of advances, the closest counterpart of this rate as shall be designated by the Commissioner of Financial  Institutions   Services  of the State of California unless some other person or agency is delegated such authority by the Legislature. The date of determining the applicable rate established by the Federal Reserve  bank   Bank  shall be the 25th day of the month preceding the earlier of the date of execution of the contract to make the loan or forbearance, or the date of making the loan or forbearance. (b) Where the institution has obtained a loan specifically in order to make loans to finance student educational expenses, the rate of interest shall not exceed the lower of: (1) The rate determined pursuant to subdivision (a). (2) One percentage point in excess of the interest rate imposed upon the loan made to the institution, as of the date of execution of the contract to make the student loan to such extent the foregoing creates and authorizes a class of exempt persons pursuant to Section 1 of Article XV of the Constitution. (c) Solely with respect to loans or forbearances made by educational institutions of collegiate grade to their faculty or staff, secured by real property consisting of a residential dwelling, these institutions are hereby declared to be an exempt class of persons as this term is used in Section 1 of Article XV of the Constitution.  SEC. 199.   Section 30002 of the   Financial Code   is amended to read:  30002. "Commissioner" means the Commissioner of  Corporations   Financial Services  .  SEC. 200.   Section 30005 of the   Financial Code   is amended to read:  30005. This division does not apply to: (a) A securities depository which is operated by a corporation, all of the capital stock (other than directors' qualifying shares, if any) of which is held by or for a national securities exchange or association registered under a statute of the United States such as the Securities Exchange Act of 1934, or by a corporation all of the capital stock (other than directors' qualifying shares, if any) of which is held by or for such a wholly owned subsidiary of a registered national securities exchange. (b) A securities depository which is registered with the Securities and Exchange Commission pursuant to any provision of federal law or which is regulated by the Comptroller of the Currency, the Federal Reserve Board, or the Federal Deposit Insurance Corporation pursuant to any provision of federal law, or which is regulated by the Commissioner of Financial  Institutions   Services  under Division 1 (commencing with Section 99)  of the Financial Code  .  SEC. 201.   Section 30217 of the   Financial Code   is amended to read:  30217. The commissioner may from time to time make, amend, and rescind such rules, forms, and orders as are necessary to carry out the provisions of this law, including rules defining any terms, whether or not used in this law, insofar as the definitions are not inconsistent with the provisions of this law. For the purposes of rules and forms, the commissioner may classify persons and matters within his jurisdiction and may prescribe different requirements for different classes. The commissioner may in his discretion waive any requirement of any rule or form in situations where in his opinion such requirement is not necessary in the public interest or for the protection of investors. All rules of the commissioner other than those relating solely to the internal administration of the Department of  Corporations   Financial Services  shall be made, amended, or rescinded in accordance with the provisions of Chapter 4.5 (commencing with Section 11371) of Part 1 of Division 3 of Title 2 of the Government Code.  SEC. 202.   Section 31055 of the   Financial Code   is amended to read:  31055. "Commissioner" means the Commissioner of Financial  Institutions   Services  or any person to whom the Commissioner of Financial  Institutions   Services  delegates the authority to act for him or her in the particular matter.  SEC. 203.   Section 33045.5 of the   Financial Code   is amended to read:  33045.5. "Commissioner" means the Commissioner of Financial  Institutions   Services  or any person to whom the Commissioner of Financial  Institutions   Services  delegates the authority to act for the Commissioner of Financial  Institutions   Services  in this matter.  SEC. 204.   Section 33785 of the   Financial Code   is amended to read:  33785. No licensee shall appoint or continue as a California agent any person whom the Commissioner of  Corporations   Financial Services  has, pursuant to Section 12301.4, ordered a check seller licensed under Division 3 (commencing with Section 12000) to terminate as its agent, unless the Commissioner of  Corporations   Financial Services  shall have first, pursuant to Section 12301.4, vacated such order or given his written consent for any check seller licensed under Division 3 to appoint such person as its agent.  SEC. 205.   Section 50003 of the   Financial Code   is amended to read:  50003. (a) "Annual audit" means a certified audit of the licensee' s books, records, and systems of internal control performed by an independent certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards. (b) "Borrower" means the loan applicant. (c) "Buy" includes exchange, offer to buy, or solicitation to buy. (d) "Commissioner" means the Commissioner of  Corporations   Financial Services  . (e) "Control" means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a licensee under this division, whether through voting or through the ownership of voting power of an entity that possesses voting power of the licensee, or otherwise. Control is presumed to exist if a person, directly or indirectly, owns, controls, or holds 10 percent or more of the voting power of a licensee or of an entity that owns, controls, or holds, with power to vote, 10 percent or more of the voting power of a licensee. No person shall be deemed to control a licensee solely by reason of his or her status as an officer or director of the licensee. (f) "Engage in the business" means the dissemination to the public, or any part of the public, by means of written, printed, or electronic communication or any communication by means of recorded telephone messages or spoken on radio, television, or similar communications media, of any information relating to the making of residential mortgage loans, the servicing of residential mortgage loans, or both. "Engage in the business" also means, without limitation, making residential mortgage loans or servicing residential mortgage loans, or both. (g) "Exempt person" means any of the following: (1) Any bank, trust company, insurance company, or industrial loan company doing business under the authority of or in accordance with a license, certificate, or charter issued by the United States or any state, district, territory, or commonwealth of the United States that is authorized to transact business in this state. (2) A federally chartered savings and loan association, federal savings bank, or federal credit union that is authorized to transact business in this state. (3) A savings and loan association, savings bank, or credit union organized under the laws of this or any other state that is authorized to transact business in this state. (4) A person engaged solely in business, commercial, or agricultural mortgage lending. (5) A wholly owned service corporation of a savings and loan association or savings bank organized under the laws of this state or the wholly owned service corporation of a federally chartered savings and loan association or savings bank that is authorized to transact business in this state. (6) Any person making residential mortgage loans with his, her, or its own funds for his, her, or its own investment without intent to resell more than eight residential loans in any one calendar year. (7) An agency, or other instrumentality of the federal government, or state or municipal government. (8) An employee or employer pension plan making residential mortgage loans only to its participants, or a person making those loans only to its employees or the employees of a holding company, owner who controls that person, affiliate, or subsidiary of that person. (9) A person acting in a fiduciary capacity conferred by the authority of a court. (10) A real estate broker licensed under California law, when making, arranging, selling, or servicing a residential loan. (11) A California finance lender licensed under Division 9 (commencing with Section 22000), when acting under the authority of that license. (12) A trustee under a deed of trust pursuant to the Civil Code, when collecting delinquent loan payments, interest, or other loan amounts, or performing other acts in a judicial or nonjudicial foreclosure proceeding. (h) "In this state" means any activity of a person relating to making or servicing a residential mortgage loan that originates from this state and is directed to persons outside this state, or that originates from outside this state and is directed to persons inside this state, or that originates inside this state and is directed to persons inside this state, or that leads to the formation of a contract and the offer or acceptance thereof is directed to a person in this state (whether from inside or outside this state and whether the offer was made inside or outside the state). (i) "Institutional investor" means the following: (1) The United States or any state, district, territory, or commonwealth thereof, or any city, county, city and county, public district, public authority, public corporation, public entity, or political subdivision of a state, district, territory, or commonwealth of the United States, or any agency or other instrumentality of any one or more of the foregoing, including, by way of example, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. (2) Any bank, trust company, savings bank or savings and loan association, credit union, industrial bank or industrial loan company, personal property broker, consumer finance lender, commercial finance lender, or insurance company, or subsidiary or affiliate of one of the preceding entities, doing business under the authority of or in accordance with a license, certificate, or charter issued by the United States or any state, district, territory, or commonwealth of the United States. (3) Trustees of pension, profit-sharing, or welfare funds, if the pension, profit-sharing, or welfare fund has a net worth of not less than fifteen million dollars ($15,000,000), except pension, profit-sharing, or welfare funds of a licensee or its affiliate, self-employed individual retirement plans, or individual retirement accounts. (4) A corporation or other entity with outstanding securities registered under Section 12 of the Securities Exchange Act of 1934 or a wholly owned subsidiary of that corporation or entity, provided that the purchaser represents either of the following: (A) That it is purchasing for its own account for investment and not with a view to, or for sale in connection with, any distribution of a promissory note. (B) That it is purchasing for resale pursuant to an exemption under Rule 144A (17 C.F.R. 230.144A) of the Securities and Exchange Commission. (5) An investment company registered under the Investment Company Act of 1940; or a wholly owned and controlled subsidiary of that company, provided that the purchaser makes either of the representations provided in paragraph (4). (6) A person licensed to make residential mortgage loans under this law or an affiliate or subsidiary of that person. (7) Any person who is licensed as a securities broker or securities dealer under any law of this state, or of the United States, or any employee, officer or agent of that person, if that person is acting within the scope of authority granted by that license or an affiliate or subsidiary controlled by that broker or dealer, in connection with a transaction involving the offer, sale, purchase, or exchange of one or more promissory notes secured directly or indirectly by liens on real property or a security representing an ownership interest in a pool of promissory notes secured directly or indirectly by liens on real property, and the offer and sale of those securities is qualified under the California Corporate Securities Law of 1968 or registered under federal securities laws, or exempt from qualification or registration. (8) A licensed real estate broker selling the loan to an institutional investor specified in paragraphs (1) to (7), inclusive, or paragraph (9) or (10). (9) A business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940 or a Small Business Investment Company licensed by the United States Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958. (10) A syndication or other combination of any of the foregoing entities that is organized to purchase a promissory note. (11) A trust or other business entity established by an institutional investor for the purpose of issuing or facilitating the issuance of securities representing undivided interests in, or rights to receive payments from or to receive payments primarily from, a pool of financial assets held by the trust or business entity, provided that all of the following apply: (A) The business entity is not a sole proprietorship. (B) The pool of assets consists of one or more of the following: (i) Interest-bearing obligations. (ii) Other contractual obligations representing the right to receive payments from the assets. (iii) Surety bonds, insurance policies, letters of credit, or other instruments providing credit enhancement for the assets. (C) The securities will be either one of the following: (i) Rated as "investment grade" by Standard and Poor's Corporation or Moody's Investors Service, Inc. "Investment grade" means that the securities will be rated by Standard and Poor's Corporation as AAA, AA, A, or BBB or by Moody's Investors Service, Inc. as Aaa, Aa, A, or Baa, including any of those ratings with "+" or "--" designation or other variations that occur within those ratings. (ii) Sold to an institutional investor. (D) The offer and sale of the securities is qualified under the California Corporate Securities Law of 1968 or registered under federal securities laws, or exempt from qualification or registration. (j) "Institutional lender" means the following: (1) The United States or any state, district, territory, or commonwealth thereof, or any city, county, city and county, public district, public authority, public corporation, public entity, or political subdivision of a state, district, territory, or commonwealth of the United States, or any agency or other instrumentality of any one or more of the foregoing, including, by way of example, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. (2) Any bank, trust company, savings bank or savings and loan association, credit union, industrial loan company, or insurance company, or service or investment company that is wholly owned and controlled by one of the preceding entities, doing business under the authority of and in accordance with a license, certificate, or charter issued by the United States or any state, district, territory, or commonwealth of the United States. (3) Any corporation with outstanding securities registered under Section 12 of the Securities Exchange Act of 1934 or any wholly owned subsidiary of that corporation. (4) A person licensed to make residential mortgage loans under this law. (k) "Law" means the California Residential Mortgage Lending Act. () "Lender" means a person that (1) is an approved lender for the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Government National Mortgage Association, Federal National Mortgage Association, or Federal Home Loan Mortgage Corporation, (2) directly makes residential mortgage loans, and (3) makes the credit decision in the loan transactions. (m) "Licensee" means, depending on the context, a person licensed under either Chapter 2 (commencing with Section 50120) or Chapter 3 (commencing with Section 50130). (n) "Makes or making residential mortgage loans" or "mortgage lending" means processing, underwriting, or as a lender using or advancing one's own funds, or making a commitment to advance one's own funds, to a loan applicant for a residential mortgage loan. (o) "Mortgage loan," "residential mortgage loan," or "home mortgage loan" means a federally regulated mortgage loan as defined in Section 3500.2 of Title 24 of the Code of Federal Regulations, or a loan made to finance construction of a one to four family dwelling. (p) "Mortgage servicer" or "residential mortgage loan servicer" means a person that (1) is an approved servicer for the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Government National Mortgage Association, Federal National Mortgage Association, or Federal Home Loan Mortgage Corporation, and (2) directly services or offers to service mortgage loans. (q) "Net worth" has the meaning set forth in Section 50201. (r) "Own funds" means (1) cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on a lender's financial statements, whether secured or unsecured, or (2) a lender's affiliate's cash, corporate capital, or warehouse credit lines at commercial banks or other sources that are liability items on the affiliate's financial statements, whether secured or unsecured. "Own funds" does not include funds provided by a third party to fund a loan on condition that the third party will subsequently purchase or accept an assignment of that loan. (s) "Person" means a natural person, a sole proprietorship, a corporation, a partnership, a limited liability company, an association, a trust, a joint venture, an unincorporated organization, a joint stock company, a government or a political subdivision of a government, and any other entity. (t) "Residential real property" or "residential real estate" means real property located in this state that is improved by a one-to-four family dwelling. (u) "Service" or "servicing" means receiving more than three installment payments of principal, interest, or other amounts placed in escrow, pursuant to the terms of a mortgage loan and performing services by a licensee relating to that receipt or the enforcement of its receipt, on behalf of the holder of the note evidencing that loan. (v) "Sell" includes exchange, offer to sell, or solicitation to sell.  SEC. 206.   Section 50303 of the   Financial Code   is amended to read:  50303. Neither the commissioner nor any employee of the Department of  Corporations   Financial Services  shall be precluded from obtaining a residential mortgage loan from a lender licensed under this division, subject to the rules that may be adopted hereunder or pursuant to other proper authority.  SEC. 207.   Section 50307.1 of the   Financial Code   is amended to read:  50307.1. The commissioner may, as he or she deems necessary, require licensees to provide reports concerning their residential mortgage loan servicing activities, including, but not limited to, information similar to that collected in connection with the Mortgage Servicers Survey, first published by the Department of  Corporations   Financial Services  in December 2007. The commissioner is additionally authorized to seek and accept information provided on a voluntary basis by residential mortgage loan servicers not subject to the commissioner's jurisdiction. The commissioner shall post only aggregated survey results on the department's Internet Web site, and shall note the number of loan servicers submitting data included in the aggregated totals and the estimated percentage of outstanding mortgage loans to Californians that are serviced by these loan servicers, to the extent information on the number of outstanding loans is available from a reliable source. Nothing in this section is intended to reduce or change the commissioner's authority to request and demand reports under Section 50307.  SEC. 208.   Section 50602 of the   Financial Code   is amended to read:  50602. This division is repealed on January 1, 1996, unless the following two conditions are met. First, the Commissioner of  Corporations   Financial Services  must receive, on or before March 1, 1995, from no fewer than 150 persons, a notice of intention to file an application for licensure as a residential mortgage lender or residential mortgage loan servicer, accompanied by the application filing fee and an annual financial report for calendar year 1994 that meets the requirements of subdivision (a) of Section 50401. Second, the Legislature shall appropriate money for the implementation of this division to the Department of  Corporations   Financial Services  from Item 2180-001-067 of the 1995-96 Budget Act. If the above two conditions are not met, all persons who have paid fees or assessments under this division shall receive a refund prior to the date of repeal.  SEC. 208.   Section 50702 of the   Financial Code   is amended to read:  50702. (a) The annual report required by Section 50401(a) shall include both of the following: (1) The number and the aggregate principal amount of closed residential mortgage loans secured by residential real estate in which the licensee provides brokerage services, as defined in this chapter. (2) The number and aggregate principal amount of residential mortgage loans made by the licensee under this division. (b) The sum total of the aggregate principal loan amounts reported in paragraphs (1) and (2) of subdivision (a) shall be deemed the aggregate principal amount of mortgage loans secured by residential real property originated by the licensee, for purposes of determining a licensee's annual assessment under subdivision (a) of Section 50401. (c) The commissioner shall provide copies of the annual reports required by subdivision (a) of Section 50401 to the Department of  Real Estate   Financial Services  upon request of the  Real Estate  Commissioner  of Financial Services  .  SEC. 210.   Section 13975 of the   Government Code   is amended to read:  13975. The Business and Transportation Agency in state government is hereby renamed the Business, Transportation and Housing Agency. The agency consists of the State Department of Alcoholic Beverage Control, the Department of the California Highway Patrol,  the Department of Corporations,  the Department of Housing and Community Development, the Department of Motor Vehicles,  the Department of Real Estate,  the Department of Transportation, the Department of Financial  Institutions   Services  , the Department of Managed Health Care, and the Board of Pilot Commissioners for the Bays of San Francisco, San Pablo, and Suisun; and the California Housing Finance Agency is also located within the Business, Transportation and Housing Agency, as specified in Division 31 (commencing with Section 50000) of the Health and Safety Code.  SEC. 2.   It is the intent of the Legislature to do all of the following: (a) Abolish the Department of Corporations (DOC), the Department of Financial Institutions (DFI), the Department of Real Estate (DRE), and the Office of Real Estate Appraisers (OREA) in the Business, Transportation and Housing Agency. (b) Create a new Department of Financial Services (DFS) in the Business, Transportation and Housing Agency. (c) Designate the chief officer of DFS as the Commissioner of Financial Services. (d) Cause DFS and the Commissioner of Financial Services to succeed to and be vested with all the duties, powers, purposes, responsibilities, and jurisdiction currently vested in DOC, DFI, DRE, and OREA, and the Commissioner of Corporations, the Commissioner of Financial Institutions, the Commissioner of Real Estate, and the Director of Real Estate Appraisers. (e) Authorize the Controller to transfer funds from DOC, DFI, DRE, and OREA to DFS. (f) Consolidate the operations and licensing frameworks of DOC, DFI, DRE, and OREA and transfer them to DFS and, specifically, require DFS to regulate the following persons, entities, and transactions currently subject to regulation and oversight by, or subject to the jurisdiction of, DOC, DFI, DRE, and OREA: (1) Broker-dealers and the agents or registered representatives of broker-dealers (Chapter 2 (commencing with Section 25210) of Part 3 of Division 1 of Title 4 of the Corporations Code). (2) Investment advisers and investment adviser representatives or associated persons (Chapter 3 (commencing with Section 25230) of Part 3 of Division 1 of Title 4 of the Corporations Code). (3) Capital access companies (Division 3 (commencing with Section 28000) of Title 4 of the Corporations Code). (4) The Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code). (5) Banks and trust companies (Division 1 (commencing with Section 99) of the Financial Code). (6) Foreign banks (Chapter 13.5 (commencing with Section 1700) of Division 1 of the Financial Code). (7) Money transmitters (Chapter 14 (commencing with Section 1800) of Division 1 of the Financial Code). (8) Issuers of travelers checks (Chapter 14A (commencing with Section 1851) of Division 1 of the Financial Code). (9) Bank holding companies (Chapter 21 (commencing with Section 3700) of Division 1 of the Financial Code). (10) Checksellers, billpayers, and proraters (Division 3 (commencing with Section 12000) of the Financial Code). (11) Credit unions (Division 5 (commencing with Section 14000) of the Financial Code). (12) Escrow agents (Division 6 (commencing with Section 17000) of the Financial Code). (13) Industrial loan companies (Division 7 (commencing with Section 18000) of the Financial Code). (14) The Finance Lenders Law (Division 9 (commencing with Section 22000) of the Financial Code). (15) Deferred deposit originators (Division 10 (commencing with Section 23000) of the Financial Code). (16) Securities depositories (Division 14 (commencing with Section 30000) of the Financial Code). (17) Business and industrial development corporations (Division 15 (commencing with Section 31000) of the Financial Code). (18) Sellers of payment instruments (Division 16 (commencing with Section 33000) of the Financial Code). (19) The California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000) of the Financial Code). (20) The Real Estate Law (Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code). (21) The Subdivided Lands Law (Chapter 1 (commencing with Section 11000) of Part 2 of Division 4 of the Business and Professions Code). (22) The Vacation Ownership and Time-Share Act of 2004 (Chapter 2 (commencing with Section 11210) of Part 2 of Division 4 of the Business and Professions Code). (23) The Real Estate Appraisers' Licensing and Certification Law (Part 3 (commencing with Section 11302) of Division 4 of the Business and Professions Code). (24) Any other persons, entities, or transactions subject to regulation and oversight by, or subject to the jurisdiction of, DOC, DFI, DRE, or OREA.