BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1650


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          Date of Hearing:  March 29, 2016


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                  Rudy Salas, Chair


          AB 1650  
          (Frazier) - As Amended March 28, 2016


          SUBJECT:  Real estate licensees:  advertisements.


          SUMMARY:  Requires disclosure of the real estate licensee's  
          name, license number, and responsible broker's identity on  
          solicitation materials.  Broadens the scope of solicitation  
          materials.  Makes other technical or clarifying amendments.


          EXISTING LAW:


          1)Establishes within the Department of Consumer Affairs (DCA)  
            the Bureau of Real Estate (BRE), which regulates the licensing  
            of real estate agents, brokers, and mortgage loan originators.  
            (Business and Professions Code (BPC) Section 10000 et seq.)



          2)Provides that a real estate licensee shall not publish or  
            circulate any matter pertaining to any activity for which a  
            real estate license is required that does not contain a  
            designation disclosing that he or she is performing acts for  
            which a real estate license is required.  (BPC Section  
            10140.6(a))









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          3)Requires a real estate licensee to disclose his or her license  
            identification number, and if applicable, his or her mortgage  
            loan originator number on all solicitation materials intended  
            to be the first point of contact with consumers and on real  
            property purchase agreements when acting as an agent in those  
            transactions. (BPC Section 10140.6(b)(1))



          4)Authorizes the Real Estate Commissioner to adopt regulations  
            identifying the materials in which a licensee must disclose a  
            license identification number and, if that licensee is a  
            mortgage loan originator, the unique identifier assigned to  
            that licensee by the Nationwide Mortgage Licensing System and  
            Registry. (BPC Section 10140.6(b)(1))

          5)Defines "solicitation materials intended to be the first point  
            of contact with consumers" to include business cards,  
            stationary, advertising fliers, and other materials. The  
            definition specifically excludes advertisements in print or  
            electronic media and "for sale" signs.  (BPC Section  
            10140.6(b)(2))

          6)Provides that the provisions of this section shall not apply  
            to classified rental advertisements reciting the telephone  
            number at the premises of the property offered for rent or the  
            address of the property offered for rent. (BPC Section  
            10140.6(c))



          THIS BILL:


          1) Requires a real estate licensee to additionally disclose his  
             or her name, license identification number, and responsible  
             broker's identity on all solicitation materials intended to  








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             be the first point of contact with consumers and on real  
             property purchase agreements when acting as an agent in those  
             transactions.

          2) Expands the definition of "solicitation materials intended to  
             be the first point of contact with consumers" to include  
             business cards, stationery, advertising fliers,  
             advertisements on television, in print, or electronic media,  
             "for sale", rent, lease, "open house," directional signs, and  
             other materials designed to solicit the creation of a  
             professional relationship between the licensee and a  
             consumer.

          3) Provides that this section does not apply to "for sale,"  
             rent, lease, "open house" or directional signs that provide a  
             broker's identity, but no reference to an individual real  
             estate licensee.

          4) Sunsets the existing section January 1, 2018.

          5) Provides that the new section shall become operative on  
             January 1, 2018, which creates a one year delay.



          FISCAL EFFECT:  Unknown.  This bill is keyed fiscal by the  
          Legislative Counsel. 


          COMMENTS:


          Purpose.  This bill is sponsored by the  California Association  
          of Realtors (CAR)  .  According to the author, "Current law has  
          created confusion about what identity information is required to  
          be included on real estate advertising materials.  Existing law  
          varies greatly depending on the type of advertisement (i.e. 'for  
          sale' signs, print and electronic media, business cards,  
          brochures, etc.) and the name being used by the licensee (i.e.  








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          given name, nickname, team name, etc.).  This bill will require  
          a licensee conducting advertising of any kind to also include  
          their CalBRE license number and responsible broker's identity.   
          'Open house' and directional signs without a reference to agent  
          name or branding would be exempt from this requirement.   
          Creating a uniform advertising standard for real estate  
          licensees would alleviate the existing competing standards and  
          would serve to create more transparency for consumers in the  
          market place."


          Background.  Prior to 2008, there were no disclosure  
          requirements for real estate advertisements, other than to state  
          that the services being advertised require a real estate  
          license. After the onset of the housing market crisis, SB 1461  
          (Negrete-McLeod), Chapter 284, Statutes of 2008 was enacted to  
          require a licensee to disclose his or her license number on  
          specified solicitation materials for consumer protection  
          purposes.  The presence of a license identification number on  
          solicitation materials makes it easier for consumers to check  
          the status of a licensee on the BRE's online database.  SB 1461  
          expressly excluded electronic and print advertisements from this  
          requirement, as well as "for sale" signs.


          Inconsistent Advertising Standards.  Recently, AB 2018  
          (Bocanegra), Chapter 892, Statutes of 2014 was enacted to  
          clarify and expand disclosure requirements for real estate  
          advertisements under "fictitious business names" and "team  
          names" to include the responsible broker's identity.  It also  
          expanded the scope of advertising and solicitation materials to  
          include online and print advertisements, as well as "for sale",  
          rent, and lease signs.  Yet, the requirements set by AB 2018 do  
          not apply to real estate licensees advertising under their given  
          names.  These inconsistent standards have created some confusion  
          among licensees.  There is also confusion among licensees  
          regarding which types of advertising materials require  
          disclosure.  Current law requires disclosure generally on  
          solicitation and advertising materials by real estate  








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          salespersons, but there are express exemptions for online and  
          print advertisements, as well as "for sale" signs.  The  
          legislative history cites cost as the main factor behind the  
          exemption for these items in the original 2008 legislation (SB  
          1461).


          Consumers Identification of a Salesperson's Responsible Broker.   
          Under California real estate law, every licensed real estate  
          salesperson must be affiliated with and must operate under the  
          supervision of a licensed real estate broker.  However, existing  
          law does not require real estate licensees' marketing materials  
          to identify a responsible broker.  If a salesperson does not  
          disclose the identity of his or her responsible broker, it can  
          be misleading to consumers.  The broker is the actual  
          representative for the client, and is a resource for consumers  
          to access regarding problems with a salesperson.  On September  
          1, 2015, the California Bureau of Real Estate (CalBRE) released  
          a "Licensee Alert" threatening licensee sanctions against  
          salespersons holding themselves out to the public as  
          "independent" real estate professionals.  The CalBRE also  
          cautioned brokers against allowing this behavior among their  
          retained salespersons.   
          (http://www.calbre.ca.gov/files/pdf/adv/Independent%20Real%20Esta 
          te%20Professionals.pdf).


          This bill would eliminate exemptions for disclosure on  
          personalized solicitation and advertising materials by real  
          estate salespersons.  It also makes the disclosure requirements  
          the same for salespersons operating under given names, "team  
          names," and "fictitious business names."  This bill would  
          maintain the exemptions for general "for sale", rent, lease,  
          "open house" and directional signs that only reference a  
          responsible broker's identity.  To address any potential  
          concerns about cost of implementation to individual licensees,  
          the author indicated that the new section will become operative  
          on January 1, 2018 after a one year delay.









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          ARGUMENTS IN SUPPORT: 


          According to the  CAR  , "Creating a uniform advertising standard  
          for real estate licensees would alleviate confusion for real  
          estate licensees and would create more transparency for  
          consumers in the market place."


          REGISTERED SUPPORT:  


          California Association of Realtors (Sponsor)




          REGISTERED OPPOSITION:  
          None on file.




          Analysis Prepared by:Tessa Nevarez / B. & P. / (916) 319-3301