Just a few weeks ago California Governor, Jerry Brown, signed into law a piece of legislation that will make it more difficult for some people to obtain a real estate broker license. The bill, Assembly Bill 1718 (Hill), was sponsored by the California Association of Realtors ® (CAR). Why would the association do such a thing?
Under current law (the change will not become effective until 1/1/2013), an applicant for a real estate broker license must generally have two years of full-time experience in the real estate business with a real estate salesperson license. This requirement can be waived if one of the following conditions can be met:
- There is a finding of equivalent experience and education by the Real Estate Commissioner.
- Active membership in the State Bar.
- A degree or course of study from a four-year college which included "a specialization in real estate."
CAR believed (3) to be, or to have caused, a problem. As the association put it "Over the years, the so-called 'degree broker' exception has been interpreted to apply to any degree, and the exception has swallowed the rule. AB 1718 will clarify that the degree claimed as an exception must actually include a major or minor in real estate."
The bill's author wrote, "This [current] optional policy by the Commissioner has evolved into a DRE policy to approve all such requests as opposed to reviewing them on a case-by-case basis. As such, individuals can essentially substitute any four year degree, ex. [sic] in English, physical education, chemistry, etc. for practical real world experience."
He went on to say, "Real estate brokers supervise other sales agents, review transaction documents, etc. Ideally, they should be people with field experience. Barring that, the education background they have should be extensive and pertinent to the practice of real estate."
Indeed, it was once pointed out in debate over the matter that even a four-year graduate with a major in Philosophy could have received the exemption. One can only imagine the damage that might do to the profession.
Although there was no registered opposition to AB 1718, the Senate's bill analyst pointed out that similar legislation had been vetoed by Governor Schwarzenegger in 2006. The analyst wrote, "The education exemption for brokers has been in place for over thirty years. In that time, no evidence has been presented which shows that brokers who substitute the experience requirement for a baccalaureate degree pose any greater risk to the public than individuals who have a special concentration in real estate."
Moreover, the analyst pointed out that the University of California does not offer a major or minor in real estate, and the California State University system offers such specialized courses at only eight of their campuses. He questioned whether it would really be in the state's interest to "delay or prevent aspiring real estate brokers from practicing in their field."
"Narrowing the exemption can also increase barriers for brokers wishing to open small businesses, impeding job creation and economic growth. This can occur by severely limiting the exemption for 4-year general degrees and narrowing the base of potential applicants. In California's economic crisis, is it in the best interest of the state to inhibit job creation?"
In the end, though, proponents of the bill prevailed and the legislation became law. No more Philosophy majors sneaking into the real estate business without first acquiring real-world experience.