BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1650| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. AB 1650 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). AB 1650 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) AB 1650 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 **** END ****