BILL ANALYSIS Ó
AB 1650
Page 1
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