SECTIONS 10230-10236.6 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 10230-10236.6

10230. (a) The provisions of this article do not apply to the
negotiation of a loan by or on behalf of a real estate broker in
connection with a qualifying sale or exchange of real property in
which the broker acted as the agent of one or more of the parties to
the sale or exchange, nor to the sale or exchange by or on behalf of
the broker of a promissory note created for the purpose of financing
a qualifying real property sale or exchange transaction in which the
broker acted as the agent of one or more of the parties to the
qualifying real property sale or exchange regardless of the time of
the sale or exchange of the promissory note. For the purposes of this
subdivision, a "qualifying" sale or exchange of real property is one
that is subject to the requirements of Article 3 (commencing with
Section 2956) of Chapter 2 of Title 14 of Part 4 of Division 3 of the
Civil Code.
(b) Subdivision (a) shall not apply to the negotiation of loans
nor to sales or exchanges of promissory notes in connection with the
financing of a real property sale or exchange transaction in which
the broker had a direct or indirect monetary interest as a party.

10231. Except as authorized by permit issued pursuant to the
applicable provisions of the Corporate Securities Law of 1968
(Section 25000 et seq. of the Corporations Code), no person in doing
any of the acts set forth in subdivision (d) of Section 10131,
subdivision (e) of Section 10131, and Section 10131.1 shall accept
any purchase or loan funds or other consideration from a prospective
purchaser or lender, or directly or indirectly cause such funds or
other consideration to be deposited in an escrow except as to a
specific loan or a specific real property sales contract or
promissory note secured directly or collaterally by a lien on real
property on which loan, contract or note the person has a bona fide
authorization to negotiate or to sell or which has been bought and
completely paid for by the licensee, or has an unconditional written
contract which obligates him to purchase a specific real property
sales contract or promissory note secured directly or collaterally by
a deed of trust.

10231.1. No person in doing any of the acts set forth in
subdivision (d) of Section 10131, subdivision (e) of Section 10131,
and Section 10131.1 shall, as agent or principal, retain funds
payable according to the terms of a promissory note or real property
sales contract secured directly or collaterally by a lien on real
property, for a period longer than 25 days, except pursuant to a
written agreement with the purchaser or lender.

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:
(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.

10232. (a) Except as otherwise expressly provided, Sections
10232.2, 10232.25, 10233, and 10236.6 are applicable to every real
estate broker who intends or reasonably expects in a successive 12
months to do any of the following:
(1) Negotiate a combination of 10 or more of the following
transactions pursuant to subdivision (d) or (e) of Section 10131 or
Section 10131.1 in an aggregate amount of more than one million
dollars ($1,000,000):
(A) Loans secured directly or collaterally by liens on real
property or on business opportunities as agent for another or others.
(B) Sales or exchanges of real property sales contracts or
promissory notes secured directly or collaterally by liens on real
property or on business opportunities as agent for another or others.
(C) Sales or exchanges of real property sales contracts or
promissory notes secured directly or collaterally by liens on real
property as the owner of those notes or contracts.
(2) Make collections of payments in an aggregate amount of two
hundred fifty thousand dollars ($250,000) or more on behalf of owners
of promissory notes secured directly or collaterally by liens on
real property, owners of real property sales contracts, or both.
(3) Make collections of payments in an aggregate amount of two
hundred fifty thousand dollars ($250,000) or more on behalf of
obligors of promissory notes secured directly or collaterally by
liens on real property, lenders of real property sales contracts, or
both.
Persons under common management, direction, or control in
conducting the activities enumerated above shall be considered as one
person for the purpose of applying the above criteria.
(b) The negotiation of a combination of two or more new loans and
sales or exchanges of existing promissory notes and real property
sales contracts of an aggregate amount of more than two hundred fifty
thousand dollars ($250,000) in any three successive months or a
combination of five or more new loans and sales or exchanges of
existing promissory notes and real property sales contracts of an
aggregate amount of more than five hundred thousand dollars
($500,000) in any successive six months shall create a rebuttable
presumption that the broker intends to negotiate new loans and sales
and exchanges of an aggregate amount that will meet the criteria of
subdivision (a).
(c) In determining the applicability of Sections 10232.2,
10232.25, 10233, and 10236.6, loans or sales negotiated by a broker,
or for which a broker collects payments or provides other servicing
for the owner of the note or contract, shall not be counted in
determining whether the broker meets the criteria of subdivisions (a)
and (b) if any of the following apply:
(1) The lender or purchaser is any of the following:
(A) The Federal National Mortgage Association, the Government
National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Federal Housing Administration, and the United
States Department of Veterans Affairs.
(B) A 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
insurer doing business under the authority of, and in accordance
with, the laws of this state, any other state, or 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 insurers, as evidenced by a
license, certificate, or charter issued by the United States or a
state, district, territory, or commonwealth of the United States.
(C) Trustees of a pension, profit-sharing, or welfare fund, if the
pension, profit-sharing, or welfare fund has a net worth of not less
than fifteen million dollars ($15,000,000).
(D) A corporation with outstanding securities registered under
Section 12 of the Securities Exchange Act of 1934 or a wholly owned
subsidiary of that corporation.
(E) A syndication or other combination of any of the entities
specified in subparagraph (A), (B), (C), or (D) that is organized to
purchase the promissory note.
(F) The California Housing Finance Agency or a local housing
finance agency organized under the Health and Safety Code.
(G) A licensed residential mortgage lender or servicer acting
under the authority of that license.
(H) An institutional investor that issues mortgage-backed
securities, as specified in paragraph (11) of subdivision (i) of
Section 50003 of the Financial Code.
(I) A licensed real estate broker selling all or part of the loan,
the note, or the contract to a lender or purchaser specified in
subparagraphs (A) to (H), inclusive.
(2) The loan or sale is negotiated, or the loan or contract is
being serviced for the owner, 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).
(3) The transaction is subject to the requirements of Article 3
(commencing with Section 2956) of Chapter 2 of Title 14 of Part 4 of
Division 3 of the Civil Code.
(d) If two or more real estate brokers who are not under common
management, direction, or control cooperate in the negotiation of a
loan or the sale or exchange of a promissory note or real property
sales contract and share in the compensation for their services, the
dollar amount of the transaction shall be allocated according to the
ratio that the compensation received by each broker bears to the
total compensation received by all brokers for their services in
negotiating the loan or sale or exchange.
(e) A real estate broker who meets any of the criteria of
subdivision (a) or (b) shall notify the department in writing within
30 days after that determination is made.

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 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.

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 within 90
days after the end of the broker's fiscal year or within any
additional time as the Real Estate Commissioner 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.

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
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.

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 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.

10232.5. (a) If the real estate broker is performing acts described
in subdivision (d) of Section 10131 in negotiating a loan to be
secured by a lien on real property or on a business opportunity, the
statement required to be given to the prospective lender shall
include, but shall not necessarily be limited to, the following
information:
(1) Address or other means of identification of the real property
that is to be the security for the borrower's obligation.
(2) Estimated fair market value of the securing property as
determined by an appraisal, a copy of which shall be provided to the
lender. However, a lender may waive the requirement of an independent
appraisal in writing, on a case-by-case basis, in which case, the
real estate broker shall provide the broker's written estimated fair
market value of the securing property, which shall include the
objective data upon which the broker's estimate is based.
(3) Age, size, type of construction and a description of
improvements to the property if contained in the appraisal or as
represented to the broker by the prospective borrower.
(4) Identity, occupation, employment, income, and credit data
about the prospective borrower or borrowers as represented to the
broker by the prospective borrower or borrowers.
(5) Terms of the promissory note to be given to the lender.
(6) Pertinent information concerning all encumbrances which
constitute liens against the securing property and, to the extent of
actual knowledge of the broker, pertinent information about other
loans that the borrower expects or anticipates will result in a lien
being recorded against the property securing the promissory note to
be created in favor of the prospective lender.
As used in this paragraph, actual knowledge with respect to any
anticipated or expected loan, means knowledge gained by the broker
through arranging that other loan or receipt of written notification
of that other loan. In this regard, the broker shall also provide to
the prospective lender the option to apply to purchase a title
insurance policy or an endorsement to an existing title insurance
policy covering the securing property, and a copy of a written loan
application, and a credit report.
(7) Provisions for servicing of the loan, if any, including
disposition of the late charge and prepayment penalty fees paid by
the borrower.
(8) Detailed information concerning any proposed arrangement under
which the prospective lender along with persons not otherwise
associated with him or her will be joint beneficiaries or obligees.
(9) If the solicitation is subject to the provisions of Section
10231.2, a detailed statement of the intended use and disposition of
the funds being solicited including an explanation of the nature and
extent of the benefits to be directly or indirectly derived by the
broker.
(b) If the real estate broker is performing acts described in
subdivision (e) of Section 10131 or in Section 10131.1 in negotiating
the sale of a real property sales contract or promissory note
secured directly or collaterally by a lien on real property, the
statement required to be given to the prospective purchaser by
Section 10232.4 shall include, but shall not necessarily be limited
to, the following information:
(1) Address or other means of identification of the real property
that is the security for the trustor's or vendee's obligation.
(2) Estimated fair market value of the real property as determined
by an appraisal, a copy of which shall be provided to the
prospective purchaser. However, a purchaser may waive the requirement
of an independent appraisal in writing, on a case-by-case basis, in
which case, the real estate broker shall provide the broker's written
estimated fair market value of the securing property, which shall
include the objective data upon which the broker's estimate is based.
(3) Age, size, type of construction and a description of
improvements to the real property if known by the broker.
(4) Information available to the broker relative to the ability of
the trustor or vendee to meet his or her contractual obligations
under the note or contract including the trustor's or vendee's
payment history under the note or contract.
(5) Terms of the contract or note including the principal balance
owing.
(6) Provisions for servicing of the note or contract, if any,
including disposition of late charge, prepayment penalty or other
fees or charges paid by the trustor or vendee.
(7) Detailed information concerning any proposed arrangement under
which the prospective purchaser along with persons not otherwise
associated with him or her will be joint beneficiaries or obligees.
In this regard, the broker shall also provide to the prospective
purchaser the option to apply to purchase a title insurance policy or
an endorsement to an existing title insurance policy covering the
real property and, if available from the seller of the note or
contract or from the original lender, a copy of a written loan
application, and a credit report.
(8) A statement as to whether the dealer is acting as a principal
or as an agent in the transaction with the prospective purchaser.

10232.6. (a) A real estate broker, acting within the course and
scope of his or her license, who arranges for or engages the services
of an appraiser licensed or certified by the Office of Real Estate
Appraisers for the applicable transaction, and delivers the resulting
appraisal to the prospective lender and prospective purchaser as
required by Section 10232.5, has met the broker's obligation of full
and complete disclosure solely pursuant to paragraph (2) of
subdivision (a) of Section 10232.5 and paragraph (2) of subdivision
(b) of Section 10232.5, and is not required to provide a separate
estimate of fair market value under Section 10232.5.
(b) This section shall not apply in instances where the licensed
or certified appraiser is an employee of the broker. However, the
duty of disclosure shall not be deemed met where the broker knew or
should have known that the referral was negligently made or that the
fair market value provided by the appraiser was inaccurate.
(c) Nothing in this section is intended to relieve the broker of
any obligation or requirement to disclose what he or she knows about
the value of the property.
(d) This section shall apply only to loan transactions and shall
have no effect on a real estate broker's duties of disclosure in
purchase or sales transactions.

10233. A real estate licensee who undertakes to service a
promissory note secured directly or collaterally by a lien on real
property or a real property sales contract shall comply with each of
the following requirements:
(a) The licensee shall have a written authorization from the
borrower, the lender, or the owner of the note or contract, that is
included within the terms of a written servicing agreement that
satisfies the requirements of paragraphs (1), (2), (4), and (5) of
subdivision (k) of Section 10238.
(b) The licensee shall provide the lender or the owner of the note
or contract with at least the following accountings:
(1) An accounting of the unpaid principal balance at the end of
each year.
(2) An accounting of collections and disbursements received and
made during each year.
(3) Each accounting required under this subdivision shall identify
the person who holds the original note or contract and the deed of
trust evidencing and securing the debt or obligation for which the
accounting has been provided.
(c) The licensee shall provide to the lender or the owner of the
note or contract written notification within 15 days of the
occurrence of any of the following events:
(1) The recording of a notice of default.
(2) The recording of a notice of trustee's sale.
(3) The receipt of any payment constituting an amount greater than
or equal to five monthly payments, together with a request for
partial or total reconveyance of the real property, in which case the
notice shall also indicate any further transfer or delivery
instructions.
(4) The delinquency of any installment or other obligation under
the note or contract for over 30 days.

10233.1. If a real estate broker in servicing a real property sales
contract or a promissory note secured directly or collaterally by a
lien on real property for the mortgagee, beneficiary, or owner of the
note or contract, causes funds other than funds received from the
obligor of the note or contract to be applied toward a payment to
protect the security of the note or contract being serviced,
including the payment of debt service on an obligation secured by the
same real property having priority over the mortgage or deed of
trust securing the promissory note that the broker is servicing, the
broker shall, not later than 10 days after making any such payment,
give written notice to the mortgagee, beneficiary, or owner of the
date and amount of payment, the name of the person to whom payment
was made, the source of funds, and the reason for making the payment.

10233.2. For the purposes of Division 3 (commencing with Section
3101) and Division 9 (commencing with Section 9101) of the Commercial
Code, when a broker, acting within the meaning of subdivision (d) or
(e) of Section 10131 or Section 10131.1, has arranged a loan or sold
a promissory note or any interest therein, and thereafter undertakes
to service the promissory note on behalf of the lender or purchaser
in accordance with Section 10233, delivery, transfer, and perfection
shall be deemed complete even if the broker retains possession of the
note or collateral instruments and documents, provided that the deed
of trust or an assignment of the deed of trust or collateral
documents in favor of the lender or purchaser is recorded in the
office of the county recorder in the county in which the security
property is located, and the note is made payable to the lender or is
endorsed or assigned to the purchaser.

10234. (a) Except as provided in subdivision (d), every real estate
licensee who negotiates a loan secured by a trust deed on real
property shall cause the trust deed to be recorded, naming as
beneficiary the lender or his or her nominee (who shall not be the
licensee or the licensee's nominee), with the county recorder of the
county in which the real property is located prior to the time that
any funds are disbursed, except when the lender has given written
authorization for prior release.
(b) If funds are released on the lender's written authorization as
described in subdivision (a), the trust deed shall be recorded, or
delivered to the lender or beneficiary with a written recommendation
that it be recorded forthwith, within 10 days following release.
(c) Every real estate licensee who sells, exchanges, or negotiates
the sale or exchange of a real property sales contract or a
promissory note secured by a trust deed on real property shall cause
a proper assignment of the real property sales contract or trust deed
to be executed and shall cause the assignment to be recorded, naming
as assignee the purchaser or his or her nominee (who shall not be
the licensee or the licensee's nominee), with the county recorder of
the county in which the real property is located within 10 working
days after the licensee or seller receives any funds from the buyer
or after close of escrow; or shall deliver the real property sales
contract or trust deed to the purchaser with a written recommendation
that the assignment thereof be recorded forthwith.
(d) A trust deed may be recorded in the name of the real estate
broker negotiating the loan if all of the following apply: (1) the
lender or purchaser is any person or entity set forth in paragraph
(1) of subdivision (c) of Section 10232, (2) the trust deed is
recorded with the county recorder of the county in which the real
property is located, and (3) the real property securing the loan as
described in the trust deed is not a dwelling as defined in Section
10240.2 or unimproved real property.

10234.5. In addition to the requirements of Section 10234, in the
placing of any loan, a broker shall deliver or cause to be delivered
conformed copies of any deed of trust to both the investor or lender
and the borrower within a reasonable amount of time from the date of
recording.

10235. No real estate licensee shall knowingly advertise, print,
display, publish, distribute, telecast or broadcast, or cause or
permit to be advertised, printed, displayed, published, distributed,
televised or broadcast, in any manner any statement or representation
with regard to the rates, terms, or conditions for making,
purchasing or negotiating loans or real property sales contracts
which is false misleading or deceptive.
Indicating or otherwise implying any specific yield or return on
any note other than the interest rate specified in said note shall be
prima facie evidence that such advertisement is misleading or
deceptive unless the advertisement sets forth the actual interest
rate specified in the note and the discount from the outstanding
principal balance at which it is being offered for sale.

10235.5. (a) No real estate licensee or mortgage loan originator
shall place an advertisement disseminated primarily in this state for
a loan unless there is disclosed within the printed text of that
advertisement, or the oral text in the case of a radio or television
advertisement, the Department of Real Estate license number and the
unique identifier assigned to that licensee by the Nationwide
Mortgage Licensing System and Registry under which the loan would be
made or arranged.
(b) "Mortgage loan originator," "unique identifier," and
"Nationwide Mortgage Licensing System and Registry" have the meanings
set forth in Section 10166.01.

10236. The commissioner in his or her discretion may honor requests
from interested persons for interpretive opinions with respect to
any provision of this article or with respect to any regulation for
implementation of provisions of this article.
No provision of this article imposing any liability applies in the
case of an act done or omitted in good faith in conformity with a
written interpretive opinion of the commissioner or an opinion of the
Attorney General, notwithstanding that the opinion may later be
amended or rescinded or be determined by judicial or other authority
to be invalid for any reason.

10236.1. No real estate licensee shall advertise to give or to
offer to give to a prospective purchaser or lender any premium, gift
or any other object of value as an inducement for making a loan, or
purchasing a promissory note secured directly or collaterally by a
lien on real property or a real property sales contract.

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, 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.

10236.4. (a) In compliance with Section 10235.5, every licensed
real estate broker shall also display his or her license number on
all advertisements where there is a solicitation for borrowers or
potential investors. Every mortgage loan originator, as defined in
Section 10166.01, shall also display the unique identifier assigned
to that individual by the Nationwide Mortgage Licensing System and
Registry on all advertisements where there is a solicitation for
borrowers.
(b) The disclosures required by Sections 10232.4 and 10240 shall
include the licensee's license number, the mortgage loan originator's
unique identifier, if applicable, and the department's license
information telephone number.
(c) "Mortgage loan originator," "unique identifier," and
"Nationwide Mortgage Licensing System and Registry" have the meanings
set forth in Section 10166.01.

10236.5. A real estate broker shall notify the department when he
or she is no longer servicing or arranging loans subject to the
reporting requirements of Section 10232. If a broker has already made
reports required by this article within the year, he or she shall
continue reports for that year, but shall notify the department prior
to the expiration of that year that he or she will no longer be
servicing or arranging loans for which reports are required. The
department's records, including those which may be disclosed by
calling the license information telephone number of the department,
may then be appropriately updated.

10236.6. (a) The commissioner, in his or her discretion, may audit
any broker who conducts transactions subject to the provisions of
this article. The audit shall be conducted after reasonable notice to
the broker and shall include an examination of both of the
following:
(1) Trust accounts under the control of the broker or in any
manner affiliated with the broker.
(2) Nontrust accounts under the control of the broker or in any
manner affiliated with the broker to which funds from trust accounts
have been deposited other than for the payment of commissions, fees,
costs, or expenses due to or incurred by the broker.
(b) The authority to audit these nontrust accounts shall be
limited to instances where either an annual review or audit conducted
by an independent certified public accountant or a departmental
audit reveals unauthorized transfers of money to those accounts.