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  ****