BILL ANALYSIS Ó
AB 1650
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CONCURRENCE IN SENATE AMENDMENTS
AB
1650 (Frazier)
As Amended June 8, 2016
Majority vote
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|ASSEMBLY: |79-0 |(April 21, |SENATE: |37-0 |(June 30, 2016) |
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Original Committee Reference: B. & P.
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; and, makes other technical or clarifying amendments.
Specifically, 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, beginning January 1, 2018.
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
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other materials designed to solicit the creation of a
professional relationship between the licensee and a
consumer.
3) Provides that 1) above, 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 disclosure requires on January 1, 2018.
The Senate amendments specify that solicitation materials that
display no licensee identification information are not subject
to the provisions of this bill.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, this bill will result
in negligible state costs.
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.
given name, nickname, team name, etc.). This bill will require
a licensee conducting advertising of any kind to also include
their California Bureau of Real Estate (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
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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 CalBRE'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
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
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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 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.
Analysis Prepared by:
Gabby Nepomuceno / B. & P. / (916) 319-3301 FN:
0003631
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