BILL ANALYSIS Ó AB 2018 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2018 (Bocanegra) As Amended August 12, 2014 Majority vote ---------------------------------------------------------------------- |ASSEMBLY: |75-0 |(May 8, 2014) |SENATE: |33-0 |(August 14, 2014) | ---------------------------------------------------------------------- ----------------------------------------------------------------------- |COMMITTEE VOTE: |14-0 |(August 20, 2014) |RECOMMENDATION: |concur | |(B., P. & C.P.) | | | | | ----------------------------------------------------------------------- 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; AB 2018 Page 2 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; AB 2018 Page 3 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." AB 2018 Page 4 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 AB 2018 Page 5 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 FN: 0005168