BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2018|
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THIRD READING
Bill No: AB 2018
Author: Bocanegra (D)
Amended: 8/12/14 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.
Senate Floor Amendments of 8/12/14 correct a typographical
error.
Senate Floor Amendments of 8/6/14 change references in the bill
to a "responsible broker" rather than to a "supervising broker;"
clarify that violation of the bill's provisions shall not be
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punished as a misdemeanor; clarify the information that must be
included in marketing and media materials used by a team under
the bill; provides that a team name must include the surname of
at least one of the licensee members of the team, group or
association; clarify that a team name does not include any term
such as "real estate broker," "real estate brokerage," "broker,"
or "brokerage," or any time that implies or suggests that the
team is independent of a responsible broker; and make technical
and conforming changes.
ANALYSIS :
Existing law:
1. Licenses and regulates real estate brokers, real estate
salespersons, and mortgage loan originator license
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. 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.
5. 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
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excludes an advertisement in print or electronic media and
"for sale" signs.
6. Makes willful violation of the Real Estate Law a misdemeanor
(crime).
This bill:
1. Provides, for fictitious business name purposes, that a
responsible broker may, by contract, permit a salesperson to:
A. File an application on behalf of a responsible broker
with a county clerk to obtain a fictitious business name.
B. Submit an application to BRE, signed by the
responsible 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
responsible 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 responsible 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 solicitation materials, including
business cards, print or electronic media and "for sale"
signage, using a fictitious business name to include the
responsible 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
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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 in all advertising,
and be displayed in a conspicuous manner.
B. The responsible broker's identity must be displayed as
prominently and conspicuously 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 responsible broker.
1. Provides that a violation of the provisions specified above
is not a misdemeanor.
2. Establishes certain definitions for purposes of the use of
fictitious business names by real estate licensees,
including:
A. "Broker identity" means the name under which the
broker operates or conducts business and may include a
sole proprietorship or business entity name.
B. "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.
C. "Ownership of a fictitious business name" means the
right to use, renew, and control the use of a fictitious
business name obtained, as specified.
D. "Responsible broker" means the broker responsible for
exercising control and supervision of salespersons 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.
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E. "Team name" means a professional identity or brand
name used by a salesperson, and one or more other real
estate licensees, for the provision of real estate
licensed services. Using a team name does not require
that a separate license be issued for that name. A team
name does not constitute a fictitious business name for
purposes of the provisions described above if all of the
following apply:
(1) The name is used by two or more real estate
licensees who work together to provide licensed real
estate services, or who represent themselves to the
public as being part of a team, group, or association
to provide these services.
(2) The name includes the surname of at least one of
the licensee members of the team, group, or association
in conjunction with the term "associates," "group," or
"team."
(3) The name does not include term(s), such as "real
estate broker," "real estate brokerage," "broker," or
"brokerage" or any other term that would lead the
public to believe that the team is offering real estate
brokerage services, that imply or suggest the existence
of a real estate entity independent of a responsible
broker.
1. Specifies that the above provisions shall not be construed
to limit or change a real estate broker's duties to supervise
a salesperson.
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
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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
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
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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 responsible broker.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/7/14)
California Association of Realtors
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
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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 8/12/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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