BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 2018|
          |Office of Senate Floor Analyses   |                              |
          |1020 N Street, Suite 524          |                              |
          |(916) 651-1520         Fax: (916) |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 
           
                                           
                                       CONSENT


          Bill No:  AB 2018
          Author:   Bocanegra (D)
          Amended:  6/9/14 in Senate
          Vote:     21

           
           SENATE BUSINESS, PROF. & ECON. DEV. COMM.  :  9-0, 6/16/14
          AYES:  Lieu, Wyland, Berryhill, Block, Corbett, Galgiani,  
            Hernandez, Hill, Torres
           
          SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8
           
          ASSEMBLY FLOOR  :  75-0, 5/8/14 - See last page for vote


           SUBJECT  :    Real estate licensees:  fictitious business names

           SOURCE  :     Author


           DIGEST  :    This bill revises the requirements for the use of  
          fictitious business names by real estate licensees to  
          additionally authorize the use of team names subject to  
          specified requirements; and specifies that this bill's  
          provisions shall not be construed to limit or change a real  
          estate broker's duties to supervise a salesperson.

           ANALYSIS  :    

          Existing law:

           1. Licenses and regulates real estate brokers, real estate  
             salespersons, and mortgage loan originator license  
                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          2

             endorsements by the Bureau of Real Estate (BRE) in the  
             Department of Consumer Affairs (DCA).  

           2. Pursuant to the Governor's Reorganization Plan No. 2 of 2012  
             (GRP 2), reorganized, revised, consolidated and eliminated  
             numerous entities of California state government, including  
             transferring the regulation of real estate licensees,  
             effective July 1, 2013, from the Department of Real Estate  
             within the Business, Transportation, and Housing Agency to  
             BRE in the DCA.

           3. Requires a corporate broker licensee to designate an officer  
             who is a broker who shall be responsible for the supervision  
             and control of the activities of the officers, employees and  
             salespersons, as necessary, to secure full compliance with  
             the licensed practice under the law.  

           4. Authorizes BRE to take disciplinary action against a broker  
             who fails to exercise reasonable supervision over the  
             activities of salespersons, or the real estate corporation.  

           5. Requires every applicant for a real estate license who  
             desires the license to be issued under a fictitious business  
             name to file with the application a certified copy of the  
             fictitious business name statement filed with the county  
             clerk.  

           6. Provides that "solicitation materials intended to be the  
             first point of contact with consumers," includes business  
             cards, stationery, advertising fliers, and other materials  
             designed to solicit the creation of a professional  
             relationship between the licensee and a consumer, and  
             excludes an advertisement in print or electronic media and  
             "for sale" signs.  

           7. Authorizes BRE to take disciplinary action to suspend or  
             revoke a real estate licensee, as specified 

           8. Makes willful violation of the Real Estate Law a misdemeanor  
             (crime).  

          This bill:

           1. Provides, for fictitious business name purposes, that a  

                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          3

             supervising broker may, by contract, permit a salesperson to:

              A.    File an application with a county clerk to obtain a  
                fictitious business name.

              B.    Submit an application to BRE, signed by the  
                supervising broker, requesting the approval of the use of  
                a county-approved fictitious business name which shall be  
                identified with the broker's license number.

              C.    Pay the fees associated with filing an application  
                with the county or with BRE to obtain or use a fictitious  
                business name.

              D.    Maintain ownership of a fictitious business name, as  
                defined, which may be used subject to the control of a  
                supervising broker.

           1. Specifies that a salesperson using a fictitious business  
             name under the terms provided above, shall use that name only  
             as permitted by the supervising broker.

           2. Authorizes a person applying to a county for a fictitious  
             business name under the terms above to file the application  
             in the county or counties where the fictitious business name  
             will be used.

           3. Requires all marketing and advertising materials in print or  
             electronic media, "for sale" signage, using a fictitious  
             business name to include the supervising broker's identity in  
             a manner equally as prominent as the fictitious business  
             name.

           4. Requires advertising, including print or electronic media  
             and "for sale" signage, containing a fictitious business name  
             to include the salesperson's name and license number.

           5. Establishes certain advertising requirements for the use of  
             a "team name" including: 

              A.    Advertising that contains a team name, including print  
                or electronic media and "for sale" signage, must include  
                the licensee's name and license number.


                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          4

              B.    The supervising broker's identity must be displayed as  
                prominently as the team name in all advertising.

              C.    Prohibits advertising material from containing terms  
                that imply the existence of a real estate entity  
                independent of the supervising broker.

           1. Establishes certain definitions for purposes of the use of  
             fictitious business names by real estate licensees,  
             including:  

              A.    "Fictitious business name" means a professional  
                identity or brand name under which licensed real estate  
                activity is conducted and is subject to approval by BRE,  
                as specified.

              B.    "Ownership of a fictitious business name" means the  
                right to use, renew, and control the use of a fictitious  
                business name obtained, as specified.

              C.    "Supervising broker" means a designated corporate  
                officer responsible for exercising control of corporate  
                real estate activities, or a licensee subject to  
                discipline for failure to supervise activity requiring a  
                real estate license.  The required supervision of a  
                salesperson is limited to regulatory compliance and  
                consumer protection.

              D.    "Team name" means a professional identity or brand  
                name used by a salesperson or broker associate.  A team  
                name does not constitute a fictitious business name if all  
                of the following conditions are satisfied:

                 (1)      The name is used by two or more real estate  
                   licensees.

                 (2)      The name includes a licensee's surname in  
                   conjunction with the term "associates," "group," or  
                   "team."

                 (3)      The name does not include terms that imply the  
                   existence of a real estate entity independent of a  
                   supervising broker.


                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          5

           1. Specifies that the above provisions shall not be construed  
             to limit or change a real estate broker's duties to supervise  
             a salesperson.

           2. Specifies that a violation of the provisions of this bill is  
             not punishable as a misdemeanor, but is subject to  
             disciplinary action to suspend or revoke a real estate  
             license, as specified.

           Background
           
           BRE guidance on the "use of team names  ."  Existing real estate  
          law defines a fictitious business name as any name that is not  
          the licensee's own name.  BRE, in its Spring 2013 Real Estate  
          Bulletin, provided for a stricter standard for what constitutes  
          a fictitious business name for those working under a real estate  
          license. 

          The article addressed numerous questions received by BRE  
          regarding the use of use of "team names" in licensed real estate  
          practice.  Using team names in advertisements and marketing  
          materials has become a popular and general practice among real  
          estate businesses.  BRE noted examples of team names such as  
          "The Smith Team," "The Brown and Smith Team", or "The Robert  
          Brown and Sarah Smith Team," "The John Doe Group, John Doe &  
          Associates," and indicated that such names are often included on  
          "for sale" signs, billboards, business cards, promotional  
          flyers, emails, and brochures.  BRE noted that although "team  
          names" are commonly being used by licensees for real estate  
          advertising and marketing purposes, it should be noted that team  
          names are almost always a fictitious business name and therefore  
          subject to the applicable state laws, rules and regulations,  
          regarding the use of fictitious names.

          The BRE article further pointed out that BRE regulations  
          generally prohibit the approval of a fictitious business name  
          that includes the name of a salesperson employed by a broker  
          unless the employing broker's name is also included in the  
          fictitious business name.  With the common practice of using  
          "team names" this has complicated the approval of "fictitious  
          business names."

          This bill has been introduced to codify the use of "team names,"  
          and provide that under specified circumstances "team names" are  

                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          6

          not considered to be "fictitious business names."  The current  
          provisions in this bill allow the use of team names, but allow  
          consumers to identify and look up the licensees who actually  
          make up the team.

           Fictitious business names  .  A fictitious business name is any  
          name under which an individual transacts business in this state,  
          other than his/her legal name.  The use of a fictitious business  
          name requires filing a fictitious business statement, "doing  
          business as," with the county clerk's office where the business  
          is located.  The fee for filing a fictitious business name  
          statement is $10 for the first fictitious business name and  
          owner, and $2 for each additional fictitious business name or  
          owner filed on the same statement.

          The fictitious business statement is intended to provide the  
          public with a means to learn the identities of individuals doing  
          business under the fictitious name in case a consumer needs to  
          contact the owners of a business to seek help with a problem, or  
          to report owners or licensees to the authorities.  This bill is  
          intended to change the requirements for when an advertised  
          business name is "fictitious" and thereby reduce the filing  
          requirements, on the theory that the criteria provided by this  
          bill (first and last names, license numbers, names of employing  
          broker, etc.) should give consumers enough information to  
          identify responsible individuals if there is a problem or  
          complaint.

           Comments
           
          According to the author's office, this bill clarifies that a  
          real estate "team name" is not a "fictitious business name" if  
          the name is used by two or more real estate licensees, so long  
          as any marketing or advertising materials utilizing the team  
          name include the licensees' real estate license numbers and the  
          name of the employing broker.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  6/30/14)

          California Association of Realtors


                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          7

           ARGUMENTS IN SUPPORT  :    The California Association of Realtors  
          (CAR) states that existing law defines a fictitious business  
          name as any name that is not your own.  In its Spring 2013 Real  
          Estate Bulletin the BRE announced a stricter standard for what  
          constitutes a fictitious business name for those working under a  
          real estate license.  The BRE article suggests that salespersons  
          are only permitted to work under "team" names if the names were  
          bona fide fictitious names that are registered by the employing  
          broker with the county clerk and approved by BRE.  CAR further  
          states, "The lack of clear regulation creates confusion  
          throughout the real estate industry on what is and what is not a  
          fictitious business name.  AB 2018 will resolve this ambiguity  
          by statutorily defining how a salesperson, with their brokers  
          permission, can use a fictitious business name, while also  
          establishing clear standards for the use 'team' names that are  
          not fictitious business names."

           ASSEMBLY FLOOR  :  75-0, 5/8/14
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,  
            Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,  
            Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,  
            Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,  
            Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,  
            Nestande, Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva,  
            Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, 




            Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Eggman, Gorell, Mansoor, V. Manuel Pérez,  
            Vacancy


          MW:k  7/1/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****


                                                                CONTINUED





                                                                    AB 2018
                                                                     Page  
          8














































                                                                CONTINUED