BILL ANALYSIS                                                                                                                                                                                                    



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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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