BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 2018
                                                                Page  1

        CONCURRENCE IN SENATE AMENDMENTS
        AB 2018 (Bocanegra)
        As Amended  August 12, 2014
        Majority vote
         
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        |ASSEMBLY: |75-0 |(May 8, 2014)   |SENATE: |33-0 |(August 14, 2014)    |
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        |COMMITTEE VOTE:  |14-0 |(August 20, 2014) |RECOMMENDATION:  |concur    |
        |(B., P. & C.P.)  |     |                  |                 |          |
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        Original Committee Reference:    B., P. & C.P.   

         SUMMARY  :  Revises the requirements for the use of "fictitious  
        business names" by real estate licensees, and authorizes the use of  
        "team names" subject to specified requirements.   

         The Senate amendments  largely delete the Assembly version of this  
        bill, and instead:   



        1)Authorize a responsible broker to permit, by contract, a  
          salesperson to:



           a)   File an application with a county clerk on behalf of the  
             broker to obtain a fictitious business name;





           b)   Deliver to the California Bureau of Real Estate (BRE) an  
             application, signed by the responsible broker, requesting  
             BRE's approval to use a county-approved fictitious business  
             name that shall be identified with the broker's license  
             number;










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           c)   Pay any related application fees to a county or BRE; and





           d)   Maintain ownership of a fictitious business name that may  
             be used subject to the control of a responsible broker.
         
        1)Require a salesperson using a fictitious business name to use  
          that name only as permitted by his or her responsible broker.

        2)Clarify that nothing in this bill changes a real estate broker's  
          duty to supervise a salesperson.

        3)Authorize a person applying to a county for a fictitious business  
          name to file his or her application in the county or counties  
          where the fictitious business name will be used.

        4)Require 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.

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

        6)Declare that a violation of these provisions is not a  
          misdemeanor.

        7)Impose the following requirements on the use of a "team name":
           a)   Advertising that contains a team name, including print or  
             electronic media and "for sale" signage, shall include the  
             licensee's name and license number and be displayed in a  
             conspicuous manner;

           b)   The responsible broker's identity shall be displayed as  
             prominently and conspicuously as the team name in all  
             advertising; 









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           c)   The advertising material shall not contain terms that imply  
             the existence of a real estate entity independent of the  
             responsible broker; and

           d)   A violation of these provisions is not a misdemeanor, and  
             shall be enforced as specified.

        8)Define "broker identity" to mean "the name under which the broker  
          operates or conducts business and may include a sole  
          proprietorship or business entity name."

        9)Define "fictitious business name" to mean "a professional  
          identity or brand name under which activity requiring a real  
          estate license is conducted and the use of which is subject to  
          approval by the bureau pursuant to [Business and Professions  
          Code] Section 10159.5."

        10)Define "team name" to mean "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.  
          Notwithstanding any other law, the use of a team name does not  
          require that a separate license be issued for that name pursuant  
          to [Business and Professions Code] Section 10159.5.  A team name  
          does not constitute a fictitious business name for purposes of  
          this part if all of the following apply:

           a)   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 a part of a team,  
             group, or association to provide those services.

           b)   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.'

           c)   The name does not include any term or terms, such as 'real  
             estate broker' 'real estate brokerage,' 'broker,' or  
             'brokerage' or any other term that would lead a member of 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."

        11)Define the terms "ownership of a fictitious business name" and  
          "responsible broker." 









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        12)Make other technical or clarifying changes.

         FISCAL EFFECT  :  According to the Senate Appropriations Committee,  
        pursuant to Senate Rule 28.8, negligible state costs.

         COMMENTS  :

        1)Purpose of the bill.  This bill is intended to facilitate the use  
          of "team names" advertised in a real estate context while  
          specifying when a team name is not formally a "fictitious  
          business name" with all the additional requirements that would  
          normally apply.  By clarifying the distinction between a team  
          name and a fictitious business name, the author aims to make it  
          easier for real estate brokers to use team names and thereby  
          avoid the full regulatory burden of formally creating a  
          fictitious business name.  This bill is author-sponsored.

        2)Author's statement.  According to the author, "Real estate  
          licensees are NOT permitted to make any misleading or false  
          representations within their advertisements or marketing  
          materials.  Because salespersons activities are supervised by an  
          employing broker, they are not permitted to hold themselves out  
          as an unsupervised licensee or independent real estate firm.  In  
          recent years, salespersons (real estate licensees) attempting to  
          create their own brand identity, for marketing purposes, has led  
          to an increased use in 'team' marketing approaches within  
          Brokerages.  Throughout California 'team' names (i.e. 'The Smith  
          Team') are often included on for sale signs, billboards, business  
          cards, promotional flyers, emails, and brochures.

          "Filing for a fictitious business names is a very detailed [and]  
          cumbersome process. Additionally, the rules regarding fictitious  
          business names differ depending on the structure of the business.  
           Current law only permits an employing Broker to own a fictitious  
          business name, which may be used by their salespersons.  Those  
          licensees wishing to use a fictitious business name must first  
          register the name with the County that hosts their broker's main  
          office and then submit the approved name to CalBRE for their  
          review."

        3)Fictitious business names.  A fictitious business name is any  
          name under which an individual transacts business in this state,  
          other than his or 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  








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          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 loosen 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.  

        4)Substantial amendments.  This bill was substantially amended in  
          the Senate and the Assembly-approved version of this bill was  
          largely deleted, although the topic remained the same.  The  
          provisions of this bill, as amended in the Senate, have not been  
          heard in an Assembly policy committee. 


         Analysis Prepared by  :    Hank Dempsey / B., P. & C.P. / (916)  
        319-3301                                               


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