BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1650|
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CONSENT
Bill No: AB 1650
Author: Frazier (D)
Amended: 6/8/16 in Senate
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/13/16
AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 79-0, 4/21/16 (Consent) - See last page for
vote
SUBJECT: Real estate licensees: advertisements
SOURCE: California Association of Realtors
DIGEST: This bill requires disclosure of a real estate
licensees name, license number, and responsible brokers identity
on solicitation materials; and broadens the scope of
solicitation materials.
ANALYSIS:
Existing law:
1) Establishes within the Department of Consumer Affairs 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.)
AB 1650
Page 2
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
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.
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Page 3
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: (a)
display the responsible broker's identity without reference
to an associate broker or licensee, or (b) display no
licensee identification information.
4) Sunsets the existing section January 1, 2018, and provides
that the new section shall become operative on January 1,
2018.
5) Makes other technical and clarifying changes.
Background
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, Negrete McLeod, Chapter 284).
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Page 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 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, 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 eliminates 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 maintains 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified6/28/16)
California Association of Realtors (source)
OPPOSITION: (Verified6/28/16)
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Page 5
None received
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."
ASSEMBLY FLOOR: 79-0, 4/21/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Ridley-Thomas
Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104
6/29/16 15:50:36
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