BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 1650 Hearing Date: June 13,
2016
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|Author: |Frazier |
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|Version: |June 8, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Real estate licensees: advertisements
SUMMARY: Requires disclosure of a real estate licensee's name, license
number, and responsible broker's identity on solicitation
materials; broadens the scope of solicitation materials.
Existing law:
1) Establishes within the Department of Consumer Affairs (DCA)
the Bureau of Real Estate (CalBRE), which regulates the
licensing of real estate agents, brokers, and mortgage loan
originators. (Business and Professions Code (BPC) § 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 § 10140.6(a))
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 § 10140.6(b)(1))
4) Authorizes the Real Estate Commissioner to adopt regulations
identifying the materials in which a licensee must disclose a
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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 § 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 § 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 §
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
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 display a
broker's identity or no licensee identification information
at all.
4) Sunsets the existing section January 1, 2018 and provides
that the new section shall become operative on January 1,
2018.
AB 1650 (Frazier) Page 3
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5) Makes other technical and clarifying changes.
FISCAL
EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the April 28, 2016 Assembly Committee on
Appropriations analysis, this bill would have minor and
absorbable costs to the CalBRE to modify existing regulations.
COMMENTS:
1. Purpose. California Association of Realtors (CAR) is the
sponsor of this bill. 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. 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."
2. Background on CalBRE. Real estate licensing in California
commenced in 1917. CalBRE is the state entity currently
charged with responsibility to enforce the Real Estate Law,
the Subdivided Lands Act, and the Vacation Ownership and
Time-share Act of 2004. CalBRE's programs are in place to
satisfy the Bureau's statutorily mandated obligations of
licensing and regulating salespersons, brokers, mortgage loan
originators, real estate and prepaid listing service
licensees, reviewing and approving subdivision and time share
offerings, and approving continuing education (CE) and
pre-license courses. Within the framework of requirements of
Division 4 of the BPC and the Regulations of the Real Estate
Commissioner as contained in the California Code of
Regulations, each of CalBRE's programs contribute toward
satisfying its mission of protecting and serving the
interests of the public in real estate transactions and
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providing related services to the real estate industry.
Specifically, BPC § 10050 requires the Real Estate
Commissioner to enforce all laws commencing with BPC § 10000
and BPC § 11000 of Part 2 in a manner which achieves the
maximum protection for the purchasers of real property and
those persons dealing with real estate licensees.
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 CalBRE's online database. SB 1461
expressly excluded electronic and print advertisements from
this requirement, as well as "for sale" signs.
3. Piecemeal 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 piecemeal 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 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).
4. 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
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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.
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.
5. Arguments in Support. According to the California
Association of Realtors (Sponsor), "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."
SUPPORT AND OPPOSITION:
Support:
California Association of Realtors (Sponsor)
Opposition:
None on file as of June 7, 2016.
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