New Law Effective January 1, 2008

Published: September 4, 2007

<span><strong>NEW LAW CLARIFIES DISCIPLINARY GROUNDS FOR REAL ESTATE LICENSEES</strong></span><span>On July 27, 2007, Governor Arnold Schwarzenegger signed into law Assembly Bill 840 clarifying the authority of the California Department of Real Estate (DRE) to discipline a real estate licensee on the basis of a criminal conviction. Effective January 1, 2008, the DRE will be able to suspend or revoke a real estate license based upon a misdemeanor conviction (or guilty plea) if the crime is substantially related to the functions of the licensed profession, but regardless of whether the crime involves moral turpitude. The new law does not change the DRE's current authority to revoke a license based upon a felony conviction (or guilty plea).<br /><br />This new legislation addresses the interplay between two existing sections of the California Business &amp; Professions Code. Currently, section 10177(b) allows the DRE to revoke a license if the licensee is convicted of a felony or a crime involving moral turpitude. Section 490, on the other hand, allows a state licensing board to revoke a license if the licensee has been convicted of a crime substantially related to the qualifications, functions, or duties of the licensed profession.<br /><br />Last year, however, a court ruled that sections 490 and 10177(b) are not independent grounds for disciplinary action, but that section 490 limits the DRE's authority to take disciplinary action (<em><span>Petropoulos v. Department of Real Estate</span></em> (2006) 142 Cal. App. 4th 554). Hence, the court decided that, under a two-prong requirement, a real estate license may be revoked based on a misdemeanor conviction only if it is a crime involving moral turpitude and substantially related to the functions of the licensed profession. The new law starting January 1, 2008 does away with the &quot;moral turpitude&quot; prong.<br /><br />To view the full text of Assembly Bill 840, go to <a href=""><b><span></span></b></a>.</span>

Last modified: September 4, 2007 at 11:50 am | Originally published: September 4, 2007 at 11:50 am
Printed: September 29, 2020